The curious case of the client that disappeared in the night

30 November 2009

Gill Steel, LawSkills Ltd

What should a solicitor do when the client does not like the advice and fails to respond to repeated requests for instructions? In the normal case, the answer is simple, terminate the retainer with a clear and final letter; invoice for any outstanding charges or decide to write them off; pass the matter for review to the complaint manager in the firm.

But what if the solicitor was instructed to act in an intestate estate; obtained a grant; collected in some assets and the reason for the lack of instruction was the client did not wish to pay the genealogist’s fee to identify the rest of the family tree?

It is important to protect and preserve the estate and a Grant might be issued to the found beneficiary and the work started in managing the assets whilst this nutty issue is investigated.

Example
What if Joan dies intestate and her cousin Barbara is found and established that all her side of the family have died so that Barbara is the only living person eligible; although she did have other aunts and uncles who had children and she is not sure about their particular descendents.

Barbara was related to Joan on her mother’s side as Joan father and Barbara’s mother were siblings; but Barbara knows nothing of Joan’s mother’s family and whether there are any aunts and uncles on that side.

Given Joan’s age it is likely that her parents were part of large Victorian families and there could be many aunts and uncles on her mother’s side as well as the descendants of all the deceased aunts and uncles on her father’s side. It is highly likely that Barbara is not the sole beneficiary of the estate. The Grant is obtained by the firm instructed by Barbara on her behalf and monies collected and placed on client account.

When the quote from the genealogist is rejected and Barbara’s children decide on her behalf to arrange the sale of the deceased’s house through another firm the matter goes downhill until the point where no response is received to the solicitor’s letters. The retainer is clearly terminated but what happens to the money?

Stray funds
If you were the original solicitor then letting time pass will make the matter difficult to resolve through mediation and before long you have stray funds sitting on client account forever.

Where you have no valid instructions as to who was entitled to the funds then where it was reasonable to suppose that there were beneficiaries who had not been found who were as equally entitled as those originally instructing your firm the only option is to pay the money into court under s.63 Trustee Act 1925. Further details on paying funds into court can be found in the Practice Direction Miscellaneous Provisions About Payments into Court (supplementing CPR part 37)

Paying money into Court
The payment is effected by submitting a lodgement schedule in form 103 accompanied by a sworn affidavit in Form N432. The affidavit must contain a description of the trusts arising under the intestacy rules and the circumstances which have arisen which make it necessary to lodge the funds at court.

Where the names and addresses of any persons who may be interested in the money or entitled to some or all of it are known then these should be referred to in the affidavit. Your address for service should be included. The District Judge may request further information from you. Notice must be sent to those identified in the affidavit as having an interest in or entitlement to the money.

The lodgement schedule must also be authenticated by an officer of the court when payment is made in the County Court. The current County Court limit is £30,000. In theory it is possible to make the payment into the County Court but many County Courts do not accept Chancery payments.

Lodgement under s.63 Trustee Act 1925 can also be effected by post directly to the Principal Court Funds Office, 22 Kingsway, London WC2B 6LE and this is the preferred option. In practice the completed Form 103 and N432 affidavit be sent, without payment, to: Andrew Pooley – Chancery Associate, Chancery Chambers, Royal Courts of Justice, Strand, London WC2A 2LL.
He will then arrange for the request to be put before a Judge to approve. On the Judge’s approval the Court Funds Office will be notified who will then send a form requesting payment in to them.

Practice points

• Try to avoid stray funds arising in the first place
• Consider suggesting mediation
• If you have reasonable suspicion of tax evasion as a result of assets being sold for more than you estimated in obtaining the Grant then make a report to SOCA
• Notify those originally instructing you of your intention to pay into Court
• Pay the funds into Court

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