SOLICITORS FETED.

Press, Volume LX, Issue 18236, 21 November 1924, Page 11

SOLICITORS FETED.

IRREGULAR TRUST ACCOUNTS,

(srscuii 10 "the. pesss. ''") . TIMARU, November -0. At the Timaru Magistrate's Court to-day, before Mr E. D. Hosier, S.M., two '■■ well-know- Timaru solicitors, Martin Joseph O'Brien, and John William .White, were convicted and fined £25 and costs, and £lO and costs respectively, on charges of knowingly Dot holding all moneys .received on behalf of persons exclusively for such persons in a bank in a General or separ-ate-truss account. ••

Mr F. W. Johnston represented the Canterbury. District Law Society. .

The case against O'Brien was taken first, Mr J. Emslie, who represented defendant, entering a plea of not guilty. Mr Johnston said eases, of this sort were rare, and no one in this caw had been defrauded. Under the Statute it was 'the privilege of Law Societies to exercise disciplinary measures in respect of its officers. Defendant had been in partnership with Mr White, and defendant had!'been keeping the books. A similar offence had occurred the year previously in regard to the same trust account, hut he had absolved'.White from all blame. The Law Society .on that occasion did not takeaction because each of the partners had given a written undertaking that no such irregularity would occur" again. . The nartnership was dissolved on 'December 31st, 1923. The firm, in contravention of a part of the.trust account, had, paid out £636 15s ody.. Out of this, however, there wore expenses amounting to £315 lSe. Defendant sought to explain away his error in this case by a' duplicate credit in respect, of a bank cheque' which he forgot to cash. It'was impossible that this, could have been done by defendant Unknowingly after the explanation of last year. Only about "six cheques were signed by White. Tho thing practically amounted to the fact that defendant had been using trust .funds as cauital for paying fees for clients who had not paid them. The vice of the whole thins: was that supposing largo amounts had been paid out of trust funds for clients who were financial, but who, by subsequent events became Unfinancial, then someone whose money was in trust, must lose.' W. D. Revcll, public accountant, gave evidence as to examining the books. He said that the deficient money which should have been in. the trust account was £320 16s; Sd.' Payments had been got in in order tec reduce this deficiency, and the trust account was now slightly in credit. He would not call defendant' an expert accountant. It was.a very bad! praetico for'firms ' to j havo overdrawn • trust accounts. Tho Magistrate: It is an abominable practice, and should not be tolerated. This concluded the case for the prosecution. '

Mr Einslie- said defendant had control of ,the books, and had been a little negligent. Tho idea of juggling with a trust account was radically wrong, but defendant could not see that. Now that the facts had gone beforo his Worship, they withdrew their plea of not guilty, and pleaded guilty. A-pen-alty of £IOO could:bo inflicted, but he. asked that it b© as low as possible. His; Worship said! the irregularities revealed in this case were •of a most serious- character.. Several men in North; Canterbury had got themselves into gaol simply through a policy of drift. Good, honest practitioners'had gone through a practicp similar to this; '3>efferidanb was fined'£2s and costs;. Fourteen days : were allowed in .which to. pay. . - ; The-case against John William White was then proceeded with.

• Mr Johnston said.this caso was somewhat different in that' in respect of the irregularity pointed out last year, defendant had"been in ignorance of it. At.that time ho had given an undertaking to see that it did • not occur again. Since then he- had signed cheques for payment, out. of the trust account. It "might bo that his Worship would hold, after hearing the evidence, that defendant did j not knowingly act unlawfully.. At his age (86) he had not the same ability to grasp matters, and was more dependent on others., '.'''''.. Cross-examined by Mr Campbell, W. D: Revell said defendant would know of-the position in regard to the trust account' after the annual balance cheques had been drawn for costs and various matters- from trust accounts, and that was. how the account had gone wrong. • Witness .said the actuai trust account at the bank was never in-debit.' Defendant had asked him if he wouki be. justified in paying a certain sum to a client whose trust -account was in credit, and he advised him that he could do ' so. That w,as after the undertaking given in respect of the previous irregularity. __ , •Mr Campbell said defendant had had his attention drawn to the matter, and nfter that he signed all cheques, and required vouchers as Y c "v, P 6 " fendant was a pood age, and had left a <rood deal to O'Brien, who had been with him 20 years,- and m whom he had <reab confidence. , O'Brien had a blank cheque in his possession to be paid into the trust' account, and he was to nu. it up for whatever amount was required. . His \Vorshio: It is hardly feasible that any solicitor would accept a blank signed cheque. .• , Continuing, Mr Campbell said the trustees of a,certain estate had met and out of £453.t0 be paid.-into the trust account, £IOO was to go to de- ■ Defendant, gave- evidence that the first-he-knew of the matter was there- \ ceipt of a letter from the bank stating that "the account had been overdrawn. He asked O'Brien why he had not told him of the-matter, and O'Bnensaid he did not want to bother him. Witness, then sent a, note to the bank atm S that in future all cheques would be sinned by him. Before signing the cheques he asked to see the vouchers to make sura that.the amounts were actually due. His- Worship sai<l a breach of tne Law Practitioners Act had been committed, but the accounts were all right now, and at the time the offence was committed were in process or being nut ri-ht. Although the defendant was a good- law practitioner he -was not i % JoocV accountant, but the Court was satisfied tliat defendant's accounts were now satisfactory. It was a disagreeable dutv for the Court to have, to hit a case against' defendant who was perhaps the senior member ot tne Bar Re P w Zealand, The offence of which he was technically gmltyjas not of A serious nature, and renectea not on his legal ability, but on his ability-'as a business man. - Defendant was convicted and nnea £lO and costs. '