FIDELITY FUND LIABILITY

Taranaki Daily News, 11 July 1933, Page 9

FIDELITY FUND LIABILITY

DUAL CAPACITY ESSENTIAL THEFT BY SOLICITOR TRUSTEE. BEARING ON NEW PLYMOUTH CASE DECISION OF COURT OF APPEAL. By Telegraph—Press Association. Wellington, July 10. Delivering a reserved decision upon questions of law arising before trial in the action of Fred Allies Hooker (New Plymouth) against the New Zealand Law Society, the Court of Appeal this morning held that before liability under the Law Practitioners Act, 1931 (Fidelity Guarantee Fund), could attach in connection with the alleged defalcations of a solicitor trustee (in this instance George Grey, New Plymouth) it had to be shown that the money or other valuable property was entrusted to or held by the person in the dual capacity of trustee and practising solicitor, that it was stolen during the co-existence of such dual capacity, and that, if the money was held by a person in his capacity as trustee only, and was stolen by such a person during the time that it was held by him only in -that capacity, the guarantee fund was not liable, although the trustee might be a practising solicitor. Dealing with the actual case before it, the judgment of the Court was delivered by the Chief Justice. After referring to the fact that the moneys in question were paid out of the trust account of Grey and Grey and into the account of the defaulting trustee and were afterwards stolen by him, the judgment proceeds: “It seems to us that from the point of the time when the moneys were so paid out of the firm’s account the firm and the defaulting person ceased as far as those moneys were concerned to have any duties as solicitors and the defaulting trustee held those moneys as trustee and only as trustee.”

Regarding the question of leave being obtained to commence the action, the Court held on the facts that the Law Society must be deemed to have made an election in favour of the plaintiff which it was not in the circumstances of the case entitled, to withdraw. Costs were fixed at 30 guineas, the . question by whom they were to be borne being left to the Supreme Court upon the hearing of the action.