Insurers have been told they are on the hook for the estimated £4m losses suffered by clients of a fraudster solicitor. Linda Box, who was one of three equity partners at Wakefield firm Dixon Coles and Gill, pleaded guilty to 12 offences of theft, fraud and forgery and was sentenced to seven years in prison in 2017.
In Lord Bishop of Leeds v Dixon Coles And Gill (A Firm) & Ors, the High Court was required to decide who would make good on the losses. The firm, which closed in 2016, had the minimum permissible cover of £2m with indemnity insurer HDI Global Specialty SE, with the policy including an aggregation clause.
The two remaining partners claimed under the policy as they were entitled to do, but with losses expected to significantly exceed £2m, the court had to rule on whether claims for misappropriated funds from different parties could be treated as one claim or aggregated.
In his ruling, His Honour Judge Saffman concluded that thefts from different parties did not have a ‘sufficient interconnection or unifying factor’ with any other claims to bring them within the minimum terms and conditions. The ruling effectively means the personal exposure of the two innocent partners is considerably reduced.
It was not Box’s dishonesty which was the proximate cause of client losses but rather the thefts themselves, so there could not be a single loss identified.
The judge added that one set of thefts did not ‘fit together’ with thefts from other claimants just because they were committed by the same person and perhaps through the same process.
‘I do not accept that the way that Mrs Box concealed her nefarious activities can provide a unifying factor,’ he said.
HDI had submitted that claims against the firm arise from one act or omission and thus fell within the definition in MTC as being ‘one claim’. Alternatively, they were one series of related acts or omissions and thus were deemed to be ‘one claim’.
The current position on the claims is that different proceedings have been started against the firm, Box and HDI by the Bishop of Leeds and the Leeds Diocesan Board (beneficiaries of one of the estates Box took money from), and by four charities who were residuary beneficiaries. As claimants they asserted that all the equity partners in the firm were liable as partners and trustees for Box’s misappropriations of their funds. The respective claims have not been formally consolidated but have been case managed and heard together.