TRUST MONEYS

Southland Times, Issue 22052, 27 June 1933, Page 6

TRUST MONEYS

FRAUDS ALLEGED INTERESTING LEGAL POINT CLAIM ON GUARANTEE FUND (Per United Press Association.) Wellington, June 26, Arising out of defalcations by George Grey, who formerly practised as a solicitor in New Plymouth and who some time ago was struck off the rolls of solicitors of the Dominion, is a claim which is being made against the New Zealand Law Society under the Law Practitioners’ (Fidelity Guarantee Fund) Act by Fred Allies Hooker, of New Plymouth, the present trustee of the deceased estate of William George Grey, brother of George Grey. The material facts set out in the statement of claim filed by plaintiff are that George Grey, after the death of testator, became registered as proprietor by transmission as executor and trustee of the will of the testator of two properties under the Land Transfer Act. He also received £656, the proceeds of life policies on testator s life, as well as the rents of a trust property amounting to a further £192. The total amount expended by him for the purposes of the trust came to £312 and it is alleged the balance of £535 was fraudulently stolen and misappropriated by him for his own purposes. In addition to this, it is alleged, he fraudulently mortgaged the two properties belonging to the estate and misappropriated the amounts received thereon, approximately £Bl2, to his own use. To facilitate the disposal of this claim certain questions of law were stated by the parties for the opinion of the Court and these questions have been removed by order of Mr Justice MacGregor, and are being argued in the Court of Appeal to-day.

An important question for the decision of the Court is, assuming the persons beneficially entitled to the estate of William George Grey have suffered a pecuniary loss by reason of the theft under the circumstances set out in the statement of claim and have given all the necessary notice, are they entitled to reimbursement from the solicitor’s fidelity guarantee fund under Section 84 of the Act? A further question to be decided is whether or not, in fact, plaintiff had the consent of the Council of the New Zealand Law Society to commence the action. Mr O’Leary, for the plaintiff, . said the point was whether a “solicitor trustee” (whose defalcations are covered by Section 84), means any solicitor who happens to be a trustee or only, a solicitor trustee who acts as a solicitor to an estate. For the plaintiff it was submitted that theft by a solicitor trustee need not be of moneys received in the course of his practice as a solicitor. The society, on the other hand, contended that moneys must be received in the course of practice as a solicitor. On his reading of the section it appeared any solicitor who happened to be a trustee, whether or not he rendered legal services to an estate, came within the wording of the section. He admitted that this interpretation resulted in a very wide liability on the part of the Law Society and must of necessity extend to solicitors who received trust moneys in their private capacity and not as legal practitioners.

Mr von Haast, for the society, contended this was not a case of a solicitor trustee receiving trust moneys in the course of his practice as a solicitor. Here the moneys in question had been collected by Messrs Grey and Grey, solicitors of New Plymouth, then handed to George Grey as trustee of the estate, who banked them in his own account. He submitted that the Fidelity Guarantee Act was intended to cover a person who was practising as a solicitor and who was also acting as trustee and who received trust moneys entrusted to him as a solicitor. The Court reserved decision.