The claims arose out of the misappropriation of over £4 million by a former equity partner (Mrs Box) of Dixon Coles and Gill (DCG), a firm of solicitors. Mrs Box pled guilty to theft offences in March 2017 and was sentenced to imprisonment of seven years. In the resulting civil claims, the victims of the fraud sought to recover their losses from Mrs Box’s former partners and from DCG’s professional indemnity insurers, HDI Global Specialty SE (HDI).
The victims fell into two categories, each of which brought their claim separately:
- The Scholefield claimants – various charity residuary beneficiaries of the estate of Mr Scholefield, of which Mrs Box was co-executor with Mr Gill and
- The Diocese claimants – the Bishop of Leeds and the Leeds Diocesan Board of Finance. Until 2005, Mrs Box was the Registrar of the Diocese of Wakefield (whose assets subsequently vested in the Diocese of Leeds).
The court was told that Mrs Box engaged in wholesale ‘teeming and lading’ to hide the misappropriations by:
- Replacing misappropriated funds from one DCG client ledger with amounts from another client ledger or other fund Mrs Box administered
- Misappropriating funds from probate estates and obscuring deficits by paying money directly to beneficiaries of the affected ledger from an unconnected client ledger
- When monies were received by DCG, instead of crediting funds to the client ledger that the funds related to, crediting it instead to a different client ledger in order to conceal a shortfall due to earlier fraudulent activity
DCG’s policy provided for the minimum possible cover of £2 million and contained an aggregation clause consistent with the SRA Minimum Terms and Conditions of Professional Indemnity Insurance (MTC). In circumstances where the misappropriations were likely to exceed £2 million, HDI asserted that the claims aggregated.
Both sets of claimants applied for summary judgment concerning the construction of the aggregation clause in the MTC – and, particularly, whether thefts from the Scholefield claimants and the Diocese claimants should aggregate.