Property: solicitor used estates’ money to play market
The Solicitors Disciplinary Tribunal (SDT) this month struck off a solicitor who used more than £500,000 from the estates of deceased clients over seven years, mainly to play the property market and repay debts.
The SDT said David Christopher James Barr had used client account “as a lending facility when the opportunity arose for the purchase of property and onwards sale for a profit”.
In an agreed outcome – a procedure whereby the tribunal can make a judgment on agreed facts without the cost of a substantive hearing – Mr Barr admitted a number of counts of dishonesty relating to the period 2008-15.
Mr Barr, who was born in 1951 and admitted in 1975, was a partner at Brighouses Solicitors in Southport until he resigned in May 2015. He had not practised as a solicitor since.
His actions came to light after his own brother made a complaint to the Solicitors Regulation Authority about the solicitor failing to administer the estate of their late father.
Despite his firm not having been instructed on any legal aspect of the estate, between 2007 and 2012 over £243,000 was received into and paid out of its client account, in breach of the rules against using a firm’s account as a banking facility.
Among the other nine allegations made and admitted, a number involved dishonestly using sums of client money ranging from about £30,000 to £120,000, taken from the estates of deceased clients. Half involved the purchase of properties, the sale of which netted Mr Barr thousands of pounds in profits, from which in most cases he repaid the sums taken.
The tribunal recorded that in relation to one property bought using client funds of £120,000, which was not repaid to the estate, Mr Barr said “it was just a horrendous oversight” when confronted with the omission. He initially denied having acted dishonestly but later admitted it.
One allegation related to the dishonest withdrawal of £40,000 from an estate in order to compensate unrelated clients, after the solicitor made a costly error when acting for them on a property matter. When questioned later about the payment by his then partners, Mr Barr falsely claimed it was a legacy paid out from a secret trust.
Compounding the lie, before the matter was investigated by prosecuting authorities the solicitor backdated a letter in an attempt to obscure the payment and inserted it into the file. But the investigating officer discovered he had used a version of the firm’s notepaper that only came into existence six months after the date on the letter.
Another allegation involved dishonestly withdrawing £60,000 from client account to repay a personal loan to his brother. A little over two months later, Mr Barr repaid the sum with interest from the profits on the sale of a property bought using funds obtained improperly from the estate of a deceased client.
A further allegation involved numerous improper payments from client account in 2013 and 2015, ranging from £29.50 up to £15,000 and totalling £120,000 – almost all connected to property purchases.
The final allegation was that Mr Barr failed to follow the letter of wishes from a deceased client or administer the trust in a timely manner, and also that he overcharged that and another estate, by over £16,000 and £22,000 respectively.
In mitigation Mr Barr said he suffered from a “crippling arthritic condition” and that the use of prescribed drugs brought about behavioural changes. He had “persistent problems coping with stress and his workload” and made “catastrophic errors of judgement” for which he had sought mental health treatment.
The tribunal was told: “When the respondent made each withdrawal from client account, he intended to make a repayment with interest. He had lost sight of what a solicitor can and cannot do.”
The tribunal approved the outcome agreed between the parties that Mr Barr should be struck off. It was satisfied he was “wholly culpable” for his actions over a “long period”. He had repaid the money improperly used but he had clearly made a profit.
Apart from admissions to misconduct, Mr Barr had shown no real insight, the tribunal recorded. Because dishonesty had been found, with no exceptional circumstances, striking off was the only appropriate sanction.
He was also ordered to pay costs of £32,659.
As someone else’s money was being used to make a profit is not the owner of that money not entitled to the profits made?