Court of Appeal gets tough on solicitors acting for lenders — 28 February 2014
It is common in mortgage fraud for lenders to lose advances where their solicitors are innocently duped by fraudsters. It is often the solicitors’ mandatory professional indemnity insurance that provides the most likely source of recovery for lenders.
The solicitors may not have been negligent, but the Court of Appeal has said this week (Santander UK PLC v RA Legal Solicitors) that even where solicitors’ unreasonable conduct does not directly cause the loss, they may not be relieved from liability as trustees of the lender’s advance.
In two decisions in 2012, the Court of Appeal had held that where funds are released without the lender’s solicitors obtaining a completed legal charge, and solicitors hold money on trust pending completion of the purchase, they will necessarily commit a breach of trust if they part with the advance otherwise than on completion (Davisons Solicitors v Nationwide BS; Lloyds TSB Bank Plc v Markandan & Uddin). However, the court has a discretion, under section 61 of the Trustee Act 1961, to relieve solicitors of liability for automatic breach of trust in relation to mortgage advances handed over in the course of a fraudulent transaction…
Click on the link below to read the rest of the Addleshaw Goddard briefing.
Sign in or Register to continue reading this article
It's quick, easy and free!
It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.Register now
Why register to The Lawyer
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.
More relevant to you
To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.
News from Addleshaw Goddard
News from The Lawyer
Briefings from Addleshaw Goddard
Neither financial services firms nor law firms should underestimate the cultural sea-change in behaviour the FCA expects.
Also: retrospective alternative service of claim form; judicial comment on costs budgeting; and more.
Analysis from The Lawyer
Which firms are cutting it in this era of slimline rosters, and who are the GC new brooms making clean sweeps? The Lawyer can reveal all
Could Slater & Gordon achieve its stated aim of becoming a top consumer brand by acquiring Pannone?