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GAZETTE
MARCH1992
Copies of the complaint form may
be obtained from the Bar Council
Office, P.O. Box 2424, Law Library,
Four Courts, Dublin 7.
Lawbrief
is grateful to Mr.
John
Dowling,
Director of the Bar
Council for information relating to
the Barristers' Professional Conduct
Tribunal.
Solicitors Arranging Investments
through Advisers or Brokers
Maurice R. Curran,
Chairman of the
Solicitors' Mutual Defence Fund
Ltd., has written to members
pointing out that solicitors may be at
risk in certain circumstances where
they assist clients in arranging
investments through certain advisers
or brokers.
With a view to improving the risk
management among members, the
Solicitors' Mutual Defence Fund
Limited suggests the following
precautions which should be taken
by solicitors:
1. It is highly inadvisable to
recommend any particular broker or
agent to a client unless the solicitor
has the most up-to-date and firm
information as to the solvency and
reliability of the agent in question. If
a solicitor recommends a particular
agent to a client, it is important to
advise the client to take all necessary
measures to satisfy himself as to the
standing of the agent and to check
with the appropriate association with
regard to his registration with the
association and his bonding.
2. If a solicitor is instructed to
invest monies directly, always make
sure that the cheque, marked " A /C
Payee only", is payable to the
primary institution or insurance
company directly and not to the
broker. This, of course, does not
apply to direct investment in shares
in public companies quoted on
the Stock Exchange where they can
only be bought through a
stockbroker.
3. If an investment has been made
through a solicitor's office and even
Maurice Curran
if the solicitor has made the cheque
payable directly to the primary
institution or insurance company, a
solicitor should make sure that the
investment is followed up and that
the client receives his certificate of
deposit, stock certificate, insurance
policy or whatever.
Liability For a Client's Fraud
The decision of the Court of Appeal
in
Agip (Africa) Ltd.
-v-
Jackson
[1991] 3 W L R 116 suggests that a
professional adviser, such as a
solicitor or banker, who assists in a
client's financial transactions and
who later discovers that the assets
involved had been acquired by fraud,
may be liable as a constructive
trustee of the money for "knowing
assistance".
Steven Fennell
in an
article "Professional Liability" in
Professional Negligence,
September
1991, 151-156, states that, in
appropriate cases, the adviser may
have to take steps to verify his
client's account of the purpose of
the transaction or even reveal
information acquired from the client
to an injured third party.
In
Agip (Africa) Ltd.
-v-
Jackson,
the plaintiff company was engaged
in oil exploration in North Africa.
Over a period of years its chief
accountant, a Mr. Zdiri, had been
defrauding it of substantial sums of
money by substituting the names of
companies in the United Kingdom
for the name of the rightful
payees on the company's payment
orders. The defendants set up
companies, received the payments
and passed them on, acted as
directors of the companies and
authorised payment of the assets on
to a subsequent nominee of Mr.
Zdiri. Finally they put the dummy
companies into liquidation. The
defendants did not act directly on
behalf of the chief accountant, and
they do not appear to have known
of his existence or the precise nature
of the fraud; rather they took
instructions from a French lawyer
who was acting as an intermediary.
When Ag ip finally discovered the
fraud it sued the defendant
accountants in respect of a payment
of half a million dollars which had
been received and then passed on to
a dummy company called "Baker
Oil Services Ltd". The defendants
were the only party involved with
sufficient funds to satisfy a
judgment in the plaintiff's favour.
Millet J held that the defendants
were not liable at common law for
money had and received, and neither
were they liable in equity for
"knowing receipt and dealing," but
that they were liable as constructive
trustees for knowing assistance in a
breach of trust (i.e. the fiduciary
relationship between the plaintiff
company and its chief accountant).
The Court of Appeal unanimously
upheld this decision. Fox LJ gave the
only full judgment, with which
Butler-Sloss and Beldam LJJ agreed.
For further discussion on this issue,
see the article by Steven Fennell,
"Professional Liability" in
Professional Negligence,
September
1991, 151-156.
Lawbrief
is grateful to
Mr.
David R. Pigot,
solicitor, a
former President of the Society and
a director of the Solicitors' Mutual
Defence Fund Limited for drawing
this issue to our attention.
Corpus Juris Humorous
Readers may be interested in light
reading and may well be planning
their summer reading!
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