Penningtons ordered to repay ‘misused’ £200K” />South East firm Penningtons has been forced to repay more than £200,000 after a judge ruled that it had misused money held in a trust in a property transaction.
Mr Justice Lewison ruled that the firm had to repay the money after Penningtons was found to have broken the terms under which it was paid £500,000 by Templeton Insurance on behalf of a client. It is understood that the firm is seeking leave to appeal.
Joseph Hannah, a litigation partner at Hannah & Mould, who represented Templeton, said: “In our opinion the judgments are entirely in accordance with the law and we’re surprised Penningtons wants to continue to fight this case.”
In early 2005, Templeton agreed to provide short-term funding for the purchase by two companies of a property in Thorpe, Surrey. The plan was for the properties to be bought and then sold on for a profit.
Templeton asked Penningtons, which was acting for the purchasers, to give a solicitor’s undertaking that the money would be used for that purpose. When the undertaking was given, Templeton paid £500,000 into Penningtons’ client account.
However, only £247,000 was used for the actual purchase of the property, with a further £175,000 paid out by Penningtons for its client on disbursements and for purposes unrelated to the purchase of the property.
At a preliminary hearing in November 2005, Mr Justice Lewison ruled that the money had been held in a Quistclose Trust. This meant the money could only be used for Penningtons’ clients’ purchase of the property.
At a further hearing in February, Lewison J ruled that the money paid from the client account, which was not for the purchase of the property, was in breach of trust and had to be paid back to Templeton. Penningtons must now repay £228,650.25 and costs to date of £74,000.
Hannah advised Templeton and instructed Roger ter Haar QC of Crown Office Chambers and Alistair Walton of Maitland Chambers. Beachcroft Wansbroughs partner Richard Beaty acted for Penningtons, instructing Glenn Campbell of Deans Court Chambers.
Penningtons declined to comment.