The claimant sought damages saying that the defendant firm of solicitors had failed to deal properly with a conveyance having paid across the mortgage funds to a non-existent firm of solicitors and without obtaining the appropriate documents at all. The defendant was not suspected of being involved in the fraud. The court was asked whether the claimant could recover under section 61 of the 1925 Act, having paid the funds across to be held in express trust until the defendant could complete, and if so, whether the defendant could raise a defence of contributory negligence.
Held: The issue as to whether the Defendant made sufficient checks as to the identity of the solicitors purportedly acting on behalf of the vendors of the Property was not one of breach of trust. The express trusts created by the form of certificate of title did not extend to all the matters on it. However, the advance money had been paid away without receiving the proper documentation for completion and without an undertaking for them. The defendant was in breach of trust when so acting.
Any relief from liability under section 61 required the defendant to have acted both honestly and reasonably. His honesty was not challenged, but it was said that he had acted unreasonably. The defendant said that the claimant should itself have been alerted to the dangers by the circumstances of the transaction. The court found the defendant to have acted unreasonably, irrespective of any failing by the claimant. There was nothing in the case of Vesta v Butcher to allow the extension of the defence of contributory negligence to cases involving breach of trust.
The loss suffered was the entire loan amount.
Roger Wyand QC J
[2010] EWHC 2517 (Ch), [2011] PNLR 6
Bailii
Trustee Act 1925 61
England and Wales
Citing:
Cited – Edward Wong Finance Co Ltd v Johnson Stokes and Master PC 1984
(Hong Kong) The defendant’s solicitors completed a mortgage in ‘Hong Kong style’ rather than in the old fashioned English style. Completion in Hong Kong style provides for money to be paid over against an undertaking by the solicitors for the . .
Cited – Target Holdings Ltd v Redferns (A Firm) and Another HL 21-Jul-1995
The defendant solicitors had acted for a purchaser, Crowngate, which had agreed to buy a property from a company called Mirage for andpound;775,000. Crowngate had arranged however that the property would first be passed through a chain of two . .
Cited – Forsikringsaktieselskapt Vesta v Butcher HL 1988
A contract of insurance and a facultative reinsurance, under which part of the original risk was reinsured, contained warranties in identical terms.
Held: The warranty in the reinsurance policy, which was governed by English law, should be . .
Cited – Patel and Another v Daybells (a Firm) CA 27-Jul-2001
Land was purchased and a resale negotiated before it was registered. An undertaking was accepted that the seller’s solicitor would discharge all charges. The purchasers sought to avoid completion by saying the Act required them to be registered . .
Cited – Mothew (T/a Stapley and Co) v Bristol and West Building Society CA 24-Jul-1996
The solicitor, acting in a land purchase transaction for his lay client and the plaintiff, had unwittingly misled the claimant by telling the claimant that the purchasers were providing the balance of the purchase price themselves without recourse . .
Cited by:
Cited – Cook v The Mortgage Business Plc CA 24-Jan-2012
The land owners sought relief from possession orders made under mortgages given in equity release schemes: ‘If the purchaser raises all or part of the purchase price on mortgage, and then defaults, the issue arises whether the mortgagee’s right to . .
Appeal from – Lloyds TSB Bank Plc v Markandan and Uddin (A Firm) CA 9-Feb-2012
The defendant solicitors appealed against judgment. They and the lenders had been subject to a mortgage fraud. Fraudsters had set up a false branch office of a firm of solicitors, and secured payment of a mortgage advance. . .
Lists of cited by and citing cases may be incomplete.
Legal Professions, Trusts, Professional Negligence
Updated: 01 November 2021; Ref: scu.425358