THE Bishop of Leeds, the Rt Revd Nick Baines, and the Leeds diocesan board of finance (LDBF) remain in doubt whether money stolen from the diocese by the imprisoned solicitor Linda Box can be retrieved, after two court judgments, in July and August, on Mrs Box, a former Diocesan Registrar of Wakefield and Chancellor of Southwell & Nottingham.
Mrs Box, one of three partners in the Wakefield law firm Dixon, Coles & Gill (DCG), stole more than £4 million between 2003 and 2016 from more than 75 client funds and the estates of ten deceased people. More than £3 million was spent using American Express cards in her own and her sons’ names.
DCG held all client money in one general account, instead of keeping it separate, which, the court said, would have made it easier to identify whose money had been stolen every time Mrs Box committed a theft.
The judges in the Court of Appeal reflected: “If each client’s money was in the form of gold coins in a separate box, it would depend on which box of gold coins Mrs Box raided on each occasion. Each client’s claim would then result from one particular theft of that client’s money. This is analogous to a single box containing gold coins belonging to all the clients of the firm: if Mrs Box dips into the box and helps herself to a handful of coins, whose are they?”
She was expelled from the partnership in 2016 on discovery of the fraud, and, on pleading guilty to 12 offences of theft, fraud, and forgery in 2017, was sentenced to seven years in prison. DCG, which closed in 2016, had a long association with the Church, acting for the Bishop of Wakefield and the Wakefield DBF. Mrs Box stole £65,000 from the Bishop of Wakefield’s Fund, and more than £1 million from the estates of deceased clients.
The diocese (now Leeds) was among the multitude of clients, including four prominent charities, who sued Mrs Box, the law firm, and the insurers to retrieve their money (News, 4 September 2020).
The insurers, HDI Global Specialty SE, have since paid out £2 million: their limit for any one claim. They have an aggregation clause that regards all claims arising from one series of related “acts or omissions” as one single claim, and so they plead that their obligations have been met. Those clients whose claims had not been settled sought judgment first on whether the remaining two partners were still liable for breach of trust, even though they were not implicated in the frauds.
The diocese said that each of the three partners was a trustee of the money held in the client account, and each was therefore liable to account for what had happened to the money held in that account on behalf of the diocese.
The court ruled on 20 July, however, that a co-trustee was not to be treated as “party or privy” to another trustee’s fraudulent breaches of trust, and that the innocent partners were able to rely on the Limitation Act, under which they are not liable for transactions carried out more than six years before the initiation of court proceedings. This would rule out any claims relating to thefts before 25 September 2012.
Bishop Baines and the LDBF therefore lost that appeal. But the second judgment was in their favour. This was the issue of aggregation: the lumping together of all claims as one. The justices concluded that Mrs Box’s actions, perpetrated over a number of years, could not be considered one act, and that each misappropriation was a separate breach and thus a separate claim: “These acts resulted in different losses to different clients. That cannot in my view be said to be a single loss.”
The issue now hinges on whether the innocent partners have a right to indemnity for the outstanding claims from clients such as the Bishop and the Leeds DBF.
When she was sentenced, Mrs Box was ordered to pay back £1,943,045 in three months, or face a further eight years on top of the seven. Her son, Edward, who was not involved with her criminal activities but who benefited from more than £1 million, was ordered by Leeds Crown Court in March this year to pay that sum back.
A spokesperson for the Anglican diocese of Leeds said: “We have no comment to make at this stage as proceedings are ongoing.”