Senior Partner Being Sued By Charities For Theft
A senior partner is being accused of stealing millions from client’s estates by multiple charities, including the Church of England.
It was revealed this week that a senior partner, Linda Box, of Wakefield law firm Dixon Coles McGill, along with her former partner, the firm and its insurer were being sued by multiple charities in two separate claims.
In 2016 the SRA, following two partners in the firm uncovering the fraud, closed down the 200 year old firm and Box was struck off the same year.
Box, dubbed as “Gangster Granny” by the press, pleaded guilty in 2017 to nine counts of fraud, two of forgery and one of theft, and was sentenced to seven years. It emerged that Box stole as much as £10m, mainly from estates over the course of 12 years, so as to pay for her lavish lifestyle.
In a preliminary ruling on the 3rd August 2020 it emerged that along with the firm’s insurer, HDI Global Speciality SE, Box’s former partner Julian Gill, was also being sued. Mr Gill was unaware of the fraud and there has been no suggestion that he acted dishonestly, a point that was stressed by the High Court Judge, His Honour Judge Saffman.
The first claim brought is by Guide Dogs for the Blind Association, Yorkshire Cancer Research, the British Heart Foundation and the National Trust. This claim centres on an allegation that Box, acting as co-executor of the estate of Ernest Scholefield, appropriated monies payable by his will to the claimants.
The second claim has been brought by the Bishop of Leeds on behalf of various Church of England organisations and charities. All claimants have stated that they have sustained loss due to Box’s criminal activities and are asserting direct cause of action against the insurer.
Mr Gill and the firm have denied any involvement or liability, despite the insurer stating that the firm will be vicariously liable if the estate suffered loss due to the theft, however the insurer argues that there is no such loss.
HHJ Saffman stated:
“The insurer asserts that Mrs Box’s modus operandi was a process known as ‘teeming and lading’, by which monies are transferred to and from the firm’s client account ledgers, presumably in much the same way as a Ponzi scheme operates.
“A characteristic of a Ponzi scheme is that some innocent parties dealing with the wrongdoer suffer no loss because monies that the wrongdoer has misappropriated from them is replenished by money misappropriated from the funds of other innocent parties.”
A point in the case is that of an aggregation clause, under which multiple claims can be subject to one policy limit. The insurer is stating that the £2m of cover provided to the firm has been exhausted and it cannot be liable for any further claims.
In the second claim by the Bishop, an application has been made for summary judgment against the firm and, on the basis it succeeds, for summary judgment against the insurer for a declaration that it is not entitled to aggregate his claims with those of other clients.
Though the latter application has also been made in the Scholefield claim, the former application has not been sought.
The preliminary issue before the court was the insurer’s contention that, as a result, the court could not make the declaration sought in the Scholefield claim.
The insurer has denied that the claimants are entitled to bring a claim against the insurer under the Third Part (Rights Against Insurers) Act 1930, prior to having obtained a judgement against its insured.
The claimants had argued that they had “stepped into the shoes of the firm”, and therefore could claim the same right of indemnity as the firm, which the judge rejected. The judge had also rejected that the firm would be entitled to seek a declaration as to whether it is covered for further claims over the £2m.
In a third argument however, the judge accepted that the court had an inherent jurisdiction at its discretion to make the declaration, even if the jurisdiction to make the declaration on the aggregation point was not permissible under the 1930 Act.
HHJ Saffman stated that it would “serve a useful purpose” in determining the future direction of the litigation to consider the application for a declaration on the aggregation point:
“Indeed, it is hard to understand why the insurer itself might not be, at the very least, curious to know what the court makes of its aggregation point so that it can give consideration as to whether it is necessary to tailor its approach to this litigation.
“I should add that it does not seem to me that there needs to be a finding of liability by Mr Gill and/or the firm is a prerequisite to a consideration of the merits of the aggregation point.
“I cannot see any reason why the aggregation point cannot be considered as a discrete point on the basis that the arguments marshalled by the insurer in its defence relating to the aggregation point are fairly self-contained.”
Though the Act itself did not permit such a pre-emptive application, he added, “that does not mean that such an application is not permissible under any circumstances and by a different route – in this case the court’s inherent jurisdiction”.
Both applications will be heard together next month.
Attributed to Legal Futures.