CLAIM ON FIDELITY FUND

Taranaki Daily News, 23 April 1932, Page 7

CLAIM ON FIDELITY FUND

BISHOP TO BE PAID £52/10/-

ACTION FOR £lOOO UNSUCCESSFUL

ECHO OF THOMSON-DARLOW CASE.

Judgment in favour of Nelson Ben Bishop for £52 10s., but against him on his dlaim for £lOOO from the solicitors’ fidelity guarantee fund was given by Air. Justice Blair in the course of a. lengthy reserved decision released at New Plymouth yesterday. The New Zealand Law Society was the defendant. Each party was ordered to pay its own costs.

Described at the hearing in February as the first claim brought to the Court .under the Law Practitioners’ Amendment Act, 1929, the case arose out of the conviction of H. J. Al. Thomson and S. R. Darlow for the theft of moneys held in trust by the legal firm at Inglewood with which they were connected. The £lOOO claimed was represented in certain deeds. The money itself was misappropriated before the Act came into force on January 1, 1930, but it was maintained that the documents in connection with the matter were not completed until February 5. On behalf of Bishop it was claimed that on that date Thomson stole the documents representing £'looo, and that his action came within the definition of theft, in that he fraudulently and without colour of. right converted “valuable documents,” the result being a pecuniary loss to Bishop of £lOOO. His Honour has held, however, that Thomson could not have been convicted of the theft of these documents, though it was clear he could have been convicted of false pretences in relation to them. The second, branch of the claim related to £52 10s. (£35 and £l7 10s.) paid by Thomas to Bishop as interest, but which the Law Society claimed as a setoff against an admitted liability for £3OO. His Honour finds that the £3OO was stolen by Thomson in November, 1930, that the first payment ( £35) was made by him to Bishop in the preceding August, and that both sums were paid as interest on the £lOOO. He could not, therefore, treat either sum as a partial repayment of the £3OO. The judgment pointed out that the indemnity provided by the fund, was, -by section 15, limited to losses by thefts committed after January 1, 1930, the date of the coming into operation of the Act. This limitation was necessary because until the fund was created there was no means of meeting the claims. In the case of Thomson, the defalcations ‘extended over some years prior to the coming into operation of the Act, but these older defalcations, having been made good by him by funds coming into Thomson’s hands after the coming into force of the Act, thus had the effect of giving the benefit of the Act in respect of misappropriation committed long prior to the commencement of the indemnity fund. The Law Society nevertheless did not dispute that the indemnity provided by the fund applied to recent thefts substitutionary of old ones outside the Atet. DISPUTE ABOUT INFERENCE. There was no dispute as to the facts in the present case, said his Honour, the Law Society having admitted all necessary facts and facilitated Bishop’s inquiry in all possible respects. The real difference between the plaintiff and the defendant was as to the inference to be drawn from the admitted facts. After setting out the facts, his Honour proceeded: “The elements necessary to found a successful claim on the fund for reimbursement of loss appear to be: (a) A theft by a solicitor dr solicitortrustee; (b) the thing stolen must be money or other valuable property; (c) the theft must have ’ been committed subsequent to January 1, 1930; (d) the thing stolen must have been entrusted to the solicitor, qua -solicitor or solicitortrustee.” He said the second, element mentioned, had been satisfied, and no question aroge whether Thomson, when he got the deeds in question, was acting as a solicitor. The question of whether a solicitor who by false pretences obtained possession of a valuable thing could -be said to be "entrusted” with it might arise for decision. The question in this case was whether Thomson’s conduct in this matter was theft so far as Bishop was concerned. The events upon which the claim was based occurred in February, 1930, and ,were thus within the time. . . . Bishop did not base his claim upon the theft by Thomson of the £'1000; the claim was based upon the fact that Thomson misappropriated deeds to the value of £lOOO. - It. was. not disputed that Bishop got the second mortgage for £450. The Act advisedly made .use of the word "theft.” It was theft by a solicitor that was indemnified against. His Honour then referred to the wide application of the word “theft” in accordance with section 240 of the Grimes Act. FALSE PRESENCE'S, NOT THEFT. ’There was a marked, distinction between theft and false pretences, he said. In this case' Bishop intended Thomson to have- the deeds for the purpose of exchanging. them for a second mortgage from Mrs. Weston for £450 and the sum of £lOOO. Thomson, after he received the £lOOO, was to invest it. When he obtained Bishop’s signature to the documents Thomson had no intention of getting the £lOOO or of re-investing it, and there was no £l6OO to get, because it had been spent. He thus obtained the deeds from Bishop by, false pretences, and with intent to defraud Bishop. That was not' theft, and the statute gave indemnity only in the case of theft by a Site? of moneys or .other valuable property entrusted to him. Thomson, so far as disposing, of the deeds was concerned, did with them pi ecisely what Bishop had instructed him to do. “To my mind,” said his Honour, "Thomson could not have -been convicted of the theft of these documents, although it is clear that he could have ■been convicted for false pretences in relation to them. As the plaintiff has not in relation to the documents, established a case of theft against Thomson, I do not consider that the plaintiff is entitled to succeed, in respect. of the £1000.” , x . xDealing with th© second branch of the claim im relation to the £35 and £l7 10s his Honour said that when the £looo’ allegedly lent to the fictitious person Campbell, or Cameron, became due- Thomson’s clerk went to Bishop and’informed him that the £lOOO had been repaid, that they had an investment for £l3OO, and required another ■eSOO to make up the amount. The investment for £l3OO was, as Darlow put it “genuine if the £lOOO had been- in existence.” Thomson was during this time stealing from one client to make good, a theft ' from another' client, and h© m-io-ht- have - intended then to make good the £lOOO he owed Bishop by making use of some other client’s money. Bishop provided this additional £3OO and Thomson misappropriated it. Bishop made a claim on the indemnity fund for ■ this sum, and the claim was admitted by the Law Society, but against the admitted sum of £3OO the society had deducted £52 10s. by way of set-off.

The judgment said that on August 29, 1930, Bishop received from Thomson a cheque for £35 purporting to be interest on th© £lOOO supposed to b© invested, and on November 26, which was a little over two weeks after Bishop had paid to Thomson the £3OO, Bishop called at Thomson’s office and received payment of £l7 10s. purporting to be mor© interest from Campbell. These two items made up the sum of £52 10s. which, the Law Society claimed to set off against the £3OO. t

The submissions by th© society were that Thomson, in making these payments, was returning to Bishop some of his own money, -and that the Act required claimant to give credit -to the fund for all benefits received. . • and the same section forbade the allowance of interest on any claims admitted against the fund. Tt seemed dear that the first payment by Thomson of £35 . . . could not have reference to the £3OO stolen by Thomson in November, 1930, as it was paid by Thomson long prior to the payment by Bishop of this £3OO. The payments Thomson made to Bishop were allocated, by Thomson to interest on the £lOOO, a«d his Honour did not- think he was - entitled to treat either of them (the £35 or th© £l7 10s.) as partial repayments of the £3OO. For th© reasons he had stated, the judge thought Bishop was entitled to judgment for the £52 10s. only, and that his claim, for the £lOOO worth of deeds must fill. Under the circumstances he considered each side should pay ills own costs.