Law partner had affair with fraudster

A long-term relationship between a woman who defrauded Christchurch law firm Saunders and Co of about $2.7 million and a partner in the firm has been revealed in a High Court ruling.

The two-year affair between Karen Barr, who was jailed for five years in 2000, and lawyer Robin McSporran was detailed in a Christchurch judgment released on Wednesday.

Mr McSporran was for a time the partner in charge of the firm's trust account, which Barr manipulated and stole from to finance a lavish lifestyle and the building of a new house.

Barr has since been released from jail.

Saunders and Co were suing Barr's brother-in-law, John Hague, for $112,253. The firm said the money did not belong to him and represented funds stolen by Barr, a former trust account manager at the practice.

Mr Hague allegedly received the money through Barr in 1996. The money went into a new house.

The firm claimed there was no record of Mr Hague having any money in the firm's trust account at the time, and alleged he had been unjustly enriched.

Mr Hague said he had provided Barr with money over several years for investment.

Justice Lester Chisholm ruled that Mr Hague was entitled to a payment of between $51,000 and $59,000 in 1996 and had been overpaid between $53,000 and $60,000.

But Justice Chisholm said the relationship between Barr and Mr McSporran was highly inappropriate and "opened up the possibility that Mr McSporran might be manipulated and that his ability to detect irregularities in the trust account might be impaired."

Nothing in the evidence, however, had connected Mr McSporran with any wrongdoing, he said.

The relationship between Barr and Mr McSporran spanned 1992 and 1993.

Barr began working for the firm in 1987, becoming the trust account manager in 1990. Offending after 1993 was assessed at $2.7 million, but an unknown amount was taken before 1993.

In defending the Saunders and Co claim, Mr Hague contended that the relationship between Barr and Mr McSporran and accounting irregularities at the firm should have stacked the scales of justice in his favour.

Mr Hague told the court he had continually been in contact with Mr McSporran during the 1990s both professionally and socially because of Mr McSporran's "close attention" to Barr.

Mr McSporran is overseas, but the firm's managing partner, Cran Bull, said Mr McSporran clearly had no idea Barr was defrauding the firm.

"The relationship at the time was not known to most partners and having heard about it subsequently, one must be careful not to be judgmental," Mr Bull said.

"Clearly it shouldn't have happened, but he is a partner of Saunders and Co and remains one. Ever since we've been aware of the situation we have been solid with each other throughout the whole traumatic experience."

Mr Hague's lawyer, David Wood, said his client was considering an appeal and was disappointed at the ruling, although he regarded it as a partial victory.

- NZPA