We’ve no doubt all heard of it but what really is whistleblowing?

Whistleblowing is quite simply when an employee, member of staff or worker informs the employer, someone in authority or even the public about dangerous or illegal activities taking place in the workplace.

It could be either the employer or employees carrying out these underhand activities and the whistleblower has every right to report them and remain protected so long as he follows the correct procedure when doing so.

The type of activities which may prompt the whistleblower to literally ‘blow the whistle’ can include failing to comply with a legal obligation, health and safety risks and criminal offences.

Whistleblowing is also known as making a disclosure in the public interest and, so long as the whistleblowing is carried out correctly, the employer or worker has employment law rights which are protected and should not be victimised or punished by the employer for blowing the whistle.

Protection

To ensure they remain protected the whistleblower must follow the correct course of action by making a qualifying disclosure about the malpractice they wish to blow the whistle on.

The disclosure must be honest and the whistleblower must believe, to the best of their knowledge, that the information within the disclosure is true.

The whistleblower must also ensure that the disclosure is made to the correct person/authorities, for example, if the disclosure is in reference to a breach in health and safety in the workplace then the disclosure should be made to a health and safety representative.

Should the employee responsible for blowing the whistle suffer from victimisation or unfair treatment such as demotion from their employer as a result of the whistleblowing then the employee can make a claim against the employer for ‘Detrimental Treatment’.

If, as a result of the whistleblowing, the employee loses their job they can then put in a claim for unfair dismissal.

Recent Cases of Whistleblowing

Tom Lake

Policeman Tom Lake blew the whistle on his colleague when he discovered that he had taken a piece of human skull from a victim of a fatal rail crash and was intending to keep it as a souvenir.

As a result of his whistleblowing Mr. Lake subsequently lost his job for ‘grassing up’ a fellow officer.

After a lengthy three year legal battle Mr. Lake won his case for unfair dismissal and was awarded £400,000 in compensation.

Jim Glencross

A railway worker from Carlisle, Mr. Jim Glencross, was sacked from his job because he brought to light faulty equipment which had been responsible for a personal injury to his colleague and had refused to lie about the accident when asked to do so by his managers.

During his tribunal Mr. Glencross was indeed found to have been unfairly dismissed and was awarded £200,000 in compensation.

Sharmilla Chowdhury

An NHS radiology service manager with a highly commendable 27 year career was sacked from her job for blowing the whistle on two senior doctors working at the same hospital.

Mrs. Chowdhury lost her job when she blew the whistle on the doctors who, whilst being paid to diagnose NHS patients, were moonlighting at a private hospital and dishonestly claiming literally thousands every month from the NHS.

Mrs. Chowdhury had warned the hospital’s senior managers on numerous occasions about the illegal activities but no action was taken.

The judge at Mrs. Chowdhury’s tribunal ordered the trust to reinstate Mrs. Chowdhury but, despite the serious nature of the fraud allegations, no action was taken against the two doctors responsible.

According to an article recently published in the Independent it looks as though attitudes towards both whistleblowing and the whistleblower are set to change, especially in the medical sector.

Now doctors who don’t blow the whistle on the sub-standard care of patients could find themselves out of a job.

The General Medical Council (GMC) have taken this breakthrough one step further by imposing a ban on doctors signing ‘gagging clauses’ which prevent them from raising issues regarding patient safety and care.

Although this shake up comes too little, too late for the families of the 1,200 patients who died unnecessarily in several Mid Staffordshire hospitals, it does mean that, from now on, standards in patient care can only get better.

Cyprus International Business Companies (Cyprus IBCs) as most of you know are private limited companies with loads of shareholders. These shareholders are usually not the residents of the country and the operations that these companies carry out are also usually outside Cyprus. However, the company needs to be registered within the country. The main aim of Cyprus IBC is to provide certain sorts of commodities to businesses and customers in other countries. The range of these commodities is quite diversified.

There are certain important uses of the Cyprus IBC; firstly, the country is considered to be the one with a lot of tax incentives and holds an honored reputation amongst other tax incentive countries. Moreover, the business forms that usually operate are the ones offering limited liability. This gives an invite to investors who want to play safe in the investing game.  Private limited companies with the advantage of limited liability; Cyprus IBCs can also operate in a business form such as partnership. Also, it could be one of the branches of a registered company that operates in another country.

Cyprus IBCs are taxed on the profits they make in case they operate within Cyprus. However, in case they do not, there is no such compulsion for them. Hen Cyprus IBC as well as others shall submit their accounts to the Tax Authorities for the respective procedures. Cyprus IBCs do a lot of profitable business via the buying and selling of the shares of these IBCs.  Mostly because the dividends the shareholders receive from IBCs operating outside the country do not require the shareholder to pay any tax on the dividend received.

The types of Cyprus IBCs vary in the services they provide. Here’s a list of Cyprus IBCs, via which you can evaluate the kind of potential services Cyprus IBCs have to offer:

1. Employment Companies
2. Trading Companies
3. Real Estate companies
4. Royalty Companies
5. Cyprus Resident Companies
6. Cyprus non-resident companies.

The list may go on and on.  Cyprus IBCs are of great help to businesses and their operations. For example, such companies can help businesses to set up its structure. Moreover, these companies also guide businesses in the way they manage their corporation in Cyprus in the best possible way which also suits the firms these IBCs are helping. Also, because these IBCs are so experienced at helping a number of firms; they could provide you with expert advice that could be of great help. The counseling and the legal advice these Cyprus IBCs can provide cannot be seconded by other companies. Starting from the scratch i.e. registration of firms; the administration counseling; funds and other legal requirements. All as a complete package is dropped your way via Cyprus IBCs.

Hence, if you need any counseling regarding your firm, be it regarding its registration, funds, management or legal formalities, IBCs is the route to your destiny. They will surely make it a piece of cake and serve it to you with tea.

For more information on Cyprus International Business Companies and Cyprus corporate tax system its recommended to visit Oxford Management website, a 3 times award winning company by the Cyprus government in the last 5 years.

More and more customers are beginning to complain about breach of contract after purchasing deals on voucher site Groupon, after experiencing a lack of communication from deal issuers and a bad quality service (or in some instances, the paid for service never happening).

A Guardian article outlines a case study of one man who purchased a Groupon deal for a full service for his gas boiler. The company was called Homecall+, and its Groupon voucher stated that bookings should be made using the online system, which could take up to 10 days. The man in question entered his credit card details, purchasing the voucher for £39. This money was deducted from his account the very next day. After over a month of waiting for a response, and trying to contact the company in order to speak to someone, this particular individual still did not have a booking for his boiler service. What’s worse is that despite contacting Groupon to report this, all they did was reiterate the contact details for Homecall+ that the customer already had and was using. 2 months after the initial purchase of the voucher, and the individual has yet to sort out when his boiler will be serviced. It is worth noting that Homecall+ have received many complaints by Groupon customers, not just in securing bookings, but in their negligent provision of services. One man received their service, and yet found that after the contractor had left, his boiler begun leaking gas.

Another case study sees an individual purchase teaching sessions for herself and her family in Milton Keynes, with a company called SNO!zone, at a cost of £180. After purchasing the vouchers in October, she attempted to book evening/weekend sessions (these had to be booked by the 1^st of December). Even in early October, the company stated they could no longer take bookings for evenings and weekends, due to what they called ‘unprecedented demand’. This meant that this woman would have to take time off work and take her kids out of school, in order to redeem the voucher, which at the time of purchase made her believe she could redeem it on the weekend or on evenings. After attempting to contact them for over a month to complain, she is yet to receive a response, from both Groupon and SNO!zone.

These case studies are not isolated incidents, and what they do demonstrate is a lack of communication not only the part of the businesses whose services are being provided, but also a lack of communication from Groupon itself. It is remarkable that a company which is so big (having a share value of over £7 billion) can have such problems in its communication structure to enable this sort of thing to happen. This may result in a loss of credibility for both Groupon and the companies it promotes.

It is interesting to note that despite having a subscriber base of over 116 million, the company itself is yet to make a profit. Emails complaining of companies’ failure to provide services often go unanswered for weeks. Attempts to get through on the telephone line often take over 30 minutes. Perhaps this is due to the fact that companies who advertise through Groupon become inundated with customers after floating a deal, and so cannot cope with the demand. Groupon then becomes inundated with consumers who want to complain about those companies (who are often small business looking to promote themselves and expand their customer base). It then becomes difficult for them to deal with all the complaints.

All of us like a deal, and the internet is a great place to find great offers, but the lesson in this is also surely that what appears to be very cheap is often so for a a good reason, that just because the next big thing on the internet seems great and everyone you know is talking about it, this doesn’t mean it is completely safe and also that if you encounter a problem when dealing online for a relatively small amount of money, once you have parted with your money, threatening litigation or involving solicitors in these circumstances is rarely if ever going to be cost effective. It is also of course indicates that going to the cheapest supplier of anything, particularly if it is something important, is rarely a great idea.  the same sorts of issues have beleaguered many service sectors, including, ironically the legal sector in such areas as conveyancing.

During the lifetime of your business, there will be a number of times where you will need to negotiate contracts; whether between you and your employees, you and your suppliers, you and your clients and/or you and other third parties.

If you do not have a legal background, it is always advisable to seek professional, legal advice, particularly when negotiating a contract, but in any event it is always worth bearing in mind the following practical factors.

Point 1: Information About the Other Party

If you have not had any previous course of dealings with the other party that you are considering entering a contract with, it is well worth doing a credit check on them to ensure all their finances are in order, and they are a legitimate and genuine company.

You should also ensure that you take the right steps to find out what protection and legal redress is available to you should something go wrong and to prevent litigation. This is particularly important if the company you are dealing with is based abroad as there may be legal jurisdiction issues.

Point 2: Is the Performance of the Contract based on the Identity of the Other Party?

It is important to be aware of any specific individuals in the other party who may be imperative to the performance of the contract. You may want to be provided with additional information on that specific individual if that is the case.

You will also need to consider whether you are happy for the other party to subcontract the work specified in your contract to other parties. If you are not happy with this, you will need to explicitly state this in the contract.

Other considerations you may want to think about are what impact a change of ownership in the other party would have on your contract, and whether you are happy with this.

Point 3: What are you Buying/Selling and How much for?

Ensure that the goods/services on offer are described clearly and accurately. The same applies to the price of these goods/services, and how these payments will be made.

Never rely on verbal assurances – if there is something you have agreed upon orally, make sure it is also present in the written contract.

Point 4: Provisions Should Things go Wrong

Consider what provisions should be laid out should the contract fall through, or should the other party breach the contract. When provisions for this are laid out clearly in the original contract, it is often a lot easier to deal with issues that arise should something go wrong on either party’s end.

It is also important to consider at what point you may want to pull out of the contract, and making provisions for this in the document,

Point 5: Time provisions

It is imperative a clear deal time is stated in the contract, to ensure that both parties know what deadline they are working towards and whether or not a fixed term for the contract is required or notice and when dealing with goods or services, if timings are important for delivery, these should be stated. If time is of the essence this should be stated.

Point 6: Are a Party’s Standard Terms of Business Being Used?

If your terms of business conflict with the terms and conditions of the party who you are dealing with it will be necessary either to ensure your terms and conditions apply or to negotiate what extra provisions are going to be entered into the contract so there is a fairer balance between the parties.

Be aware of the fact that the protection offered by a contract is only really as good as the person who is a party to it. If anything goes wrong, you need to be comfortable in the knowledge that you will be able to obtain remedies from the other side. If you are not sure this should come into your thinking and you may need guarantees from financial institutions or other third parties to cover default by the other party to your contract.

As is apparent from the above, each contract is different and a large part of the value of having an experienced business lawyer on your side is the value of his or her experience as well as ability to draft legal clauses.

Since the Companies Act 2006 was introduced, private companies are no longer required to have a formal company secretary appointed. Yet, whether the company is a public company or a private company, the company secretarial services still need to be carried out. Despite this people sometimes overlook this critical area of company law with the view that it is merely an administrative burden with little real effect. So what exactly are the benefits of quality company secretarial services?

A company secretary has a wide range of responsibilities but the core ones can be broken down as follows:

Ownership

The company secretary will normally maintain the company’s statutory registers including the register of members. This is the document that ultimately determines who owns the company. It’s not the share certificate, a contract or the records at Companies House that determine this, but the register of members. There have been numerous occasions where poorly maintained records have lead to confusion as to the ownership of a company sometimes with disastrous consequences.

Company Law

A good company secretary will be there to advise the directors on the key aspects of company law. This will generally include the requirements for declaring a dividend; issuing new shares or taking different decisions. Without this advice, the actions of the directors may be invalid or quite possibly illegal and criminal in nature.

Corporate Governance

Good corporate governance is key to ensuring that the company runs as it should and the interests of the shareholders are properly protected. Professionally delivered company secretarial services will ensure that the directors decisions and their engagement with the shareholders is run, not just legally, but as a matter of best practice.

Company Records

The company secretary will often be in charge of the company’s records. In smaller and less developed companies these can often be left to chance with the unfortunately consequence that the company relies on the (fading) memory of one or two individuals rather than well maintained records.

The role of company secretaries varies hugely from company to company and they can often end up being a lot broader than the above, but irrespective of their eventual role their are inevitably key to the successful running of a company.

Elemental CoSec are professional providers of company and corporate secretarial services in the UK and if you would like to get in touch with them to discuss your needs please see here.

Introduction: Central Bank of Nigeria v Williams [2012] EWCA Civ 415 (03 April 2012)

We are pleased to welcome again Solicitor Mr Anis Waiz who recently joined forces with Simon Mckay  of  Mckay law. They are soon to launch a new firm Mckay Law LLP.

In another in depth case review, as published on CaseCheck, Anis consider this important decision on Limitation. This surrounded a number of technical issues on Limitation and the reader is referred to the Judgment in full.

At its heart lay some very fine distinctions.  However at the outset it will be noted the court was not asked to consider whether the Trustee Act 1888 was intended to abolish the distinction between express and constructive trustees, introducing a single regime of limitation that would apply to constructive trustees of both categories. Neither was it invited   to consider the approach the Privy Council took in Taylor v Davies [1920] AC 636. 

Background

In essence this was a claim by the claimant to recover monies as a result of a fraud by his solicitor.  He alleged that in May 1986 the solicitor fraudulently paid away $6,020,190 of monies held by him for the claimant to an account of the central Bank ofNigeria(“CBN”) inEnglandand that  CBN was a party to the fraud.

CBN sought to Appeal an order  dismissing their application  that service of the claim form and amended particulars of claim be set aside.

Crucially for these proceedings and the issue of limitation the claim against CBN was:

1          CBN received and/or retained $6,020,190 paid by the solicitor into its account knowing that they were paid in breach of trust and/or in circumstances where it would be unconscionable to retain this sum.

2          By reason of its dishonest assistance in the breach of trust CBN is liable to account to him as a constructive trustee of $6,520,190 paid away by the solicitor in fraudulent breach of trust.

The Limitation issue

It was not disputed that the Claimant’s claim was

1    an action by a beneficiary under a trust

2    in respect of a fraudulent breach of trust

3     to which the trustee the Solicitor was a party.

In other words as against the solicitor the claim fell within section 21 of the Limitation Act 1980 (“the Act”) and therefore there was no period of Limitation.

The key issue was whether the claim against CBN fell within section.21 (1) (a) of the Act  ”to which the trustee was a party or privy” and thus  triggered an exception to the time bar prescribed by s.21(3) to actions brought against that trustee.

CBN’s argument was  that to come within section 21(1)(a), the action has to be against the trustee.  Thus CBN sought to argue that  s.21(1)(a) did  not extend to actions brought against anyone other than the trustee who was party or privy to the relevant breach of trust.

Section 21 of the Act provides:

“(1) No period of limitation prescribed by this Act shall apply to an action by a beneficiary under a trust, being an action-

(a) in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy; or

(b) to recover from the trustee trust property or the proceeds of trust property in the possession of the trustee, or previously received by the trustee and converted to his use.

(3) Subject to the preceding provisions of this section, an action by a beneficiary to recover trust property or in respect of any breach of trust, not being an action for which a period of limitation is prescribed by any other provision of this Act, shall not be brought after the expiration of six years from the date on which the right of action accrued.

Derivation

The Court of Appeal went on to consider the derivation of section 21 of the Act. The reader is referred to the Judgment. However of note are the following points:

1                     The first statute to provide for a period of limitation in respect of actions for a breach of trust was Trustee Act 1888. S.8(1) “In any action or other proceeding against a trustee or any person claiming through him except where the claim is founded upon any fraud or fraudulent breach of trust to which the trustee was party or privy, or is to recover trust property, or the proceeds thereof still retained by the trustee, or previously received by the trustee and converted to his use, the following provisions shall apply…

2                     The  expression ‘trustee’ was defined by s.1(3) as including “a trustee whose trust arises by construction or implication of law as well as an express trustee.” S.1(4) provided that the provisions of the Act relating to a trustee should apply as well to several joint trustees as to a sole trustee. Each of those persons is entitled to rely on the time bar for which sub-section (1)(b) provides but subject to exceptions comparable to those for which s.21(1) now provides. Ss. 1 and 8 Trustee Act 1888 remained unaltered until 1939.

3                     The Limitation Act 1939 was both an amending and consolidating measure. Its enactment was preceded by the Law Revision Committee’s Fifth Interim Report… At paragraph 11 it considered “Limitations of Actions against Trustees”. Having referred to the terms of s.8 Trustee Act 1888 it noted that those provisions were considered to be satisfactory when Trustee Act 1925 was enacted.

4                     The committee noted “It is difficult to find any real justification for the rule that an executor or other person holding property as a trustee, but not on an “express” trust, can plead the statute, though he still retains the trust property or has converted it to his own use.

5                     The Limitation Act 1939 incorporated the definition of trustee contained in s.68 (17) Trustee Act 1925. “The expressions “trust” and “trustee” extend to implied and constructive trusts”.

6                     Section .21 of the 1980 Act reproduces without any relevant change the provisions of s.19 of the Limitation Act 1939. That subsection provides that subject to an immaterial exception “the expressions “trust” and “trustee” extend to implied and constructive trusts”.

7                      Section 19 provided:

(1) No period of limitation prescribed by this Act shall apply to an action by a beneficiary under a trust, being an action –

(a) In respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy; or

(b) To recover from the trustee trust property or the proceeds thereof in the possession of the trustee, or previously received by the trustee and converted to his use.

(2) Subject as aforesaid, an action by a beneficiary to recover trust property or in respect of any breach of trust, not being an action for which a period of limitation is prescribed by any other provision of this Act, shall not be brought after the expiration of six years from the date on which the right of action accrued.

The parties submissions

CBN argued that  section .21(1)(a) did  not extend to actions brought against anyone other than the trustee who was party or privy to the relevant breach of trust .Counsel for CBN  contended  that just as s.21(1)(b) is limited to claims against the trustee s.21(1)(a) should be similarly regarded because  there was no  justification for treating that paragraph as including an action against anyone else.

CBN also sought to argue that  if s.21(1)(a) was  not restricted in its application to claims against the trustee then the time bar for which the section provides is inconsistent with the substantive law and would  give rise to undesirable consequences. This submission was based on the decision of the Privy Council in Royal Brunei Airlines v Tan [1995] 2 AC 378 and of the Court of Appeal in Bank of Credit and Commerce International (Overseas) Ltd v Akindele [2001] Ch 437, 450.

It was said there would be an anomaly  if dishonesty on the part of the trustee was not a necessary ingredient of the cause of action against the dishonest assistant but was required if the dishonest assister is to remain liable after the expiration of the limitation period. Thus the extension of the application of s.21(1)(a) for which the claimant  contended  would lead to an increase in the number of stale claims requiring determination and the complexity of the defences of laches and acquiescence compared to the relative simplicity of a time bar.

For the claimant Counsel disputed both these propositions. First, there was nothing anomalous in allowing the beneficiary to sue outside the limitation period only if the trustee was dishonest. Second, the relative merits of a time bar and the defences of laches and acquiescence were either irrelevant or a matter for Parliament, not a court.

The claimant relied upon a number of authorities including  G.L.Baker Ltd v Medway Building and Supplies Ltd [1958] 1 WLR 1216. In that case  the plaintiff sought to recover from the defendant money of the plaintiff the defendant had received from the auditor of the plaintiff who had dishonestly misappropriated it more than six years previously. The question arose whether the defendant was entitled to rely on the time bar.

Danckwerts J concluded that the claim was not time barred, in part because of the terms of s.19(1)(a). At p.1221 the judge observed:

… “The point is taken by counsel on behalf of the defendant that the defendant does not claim through the fraudulent trustee. He also said with regard to s 19(1) that the action was not in respect of any fraud or fraudulent breach of trust, because the action against the defendant in the present case is based on the receipt by it without any fraud of moneys which were part of the trust fund belonging to the plaintiff. I think that the words “in respect of any fraud or fraudulent breach of trust” are wide enough to cover the present case, because it is the fraudulent payment by Titley to the defendant which is the origin of the proceedings against the defendant. It is because the defendant received that payment by virtue of Titley’s fraudulent breach of trust that the plaintiff is able to bring this action against it. Consequently, so far as those words are concerned the provision seems to me wide enough”

 The Decision

The Court of Appeal noted:

1    The Limitation Act 1939 was an amending act. It could not be assumed that s.19 of the 1939 Act was intended exactly to reproduce the effect of s.8 Trustee Act 1888.

2    It did not follow that the distinction between category 1 and category 2 constructive trusts in Taylor v Davies [1920] AC 636 when considering the Canadian equivalent to s.8 Trustee Act 1888 has been imported into the definition of trust and trustee contained in s.68(17) Trustee Act 1925 and applied to Limitation Act 1939 by s.50 .

3    The time bar imposed by s.19(2) was intended to cover all claims by a beneficiary to recover trust property or in respect of any breach of trust, other than those excepted by s.19(1), against whomsoever the claim was made, not only the trustee and others claiming through him.

4    The expressions ‘trust’ and ‘trustee’ used in s.19 extend to implied and constructive trusts generally without reference to any particular category of constructive trust.

5 CBN submissions that the claimant construction would produce an anomaly or inconsistency with the substantive law was rejected.  The requirement in paragraph (a) of fraud or fraudulent breach of trust on the part or with the privity of the trustee was  a restriction on the range of claims available against a dishonest assistant because the decision of the Privy Council in Royal Brunei Airlines v Tan [1995] 2 AC 378 only requires dishonesty on the part of the assistant. Thus the  addition of this requirement does not involve any extension of the range of cases for which no limitation period is prescribed.

6    Section 19 was re-enacted in s.21 Limitation Act 1980. It is in the latter context that the proper construction of the relevant provision must be ascertained. That context includes the decision of Danckwerts J in G.L.Baker Ltd v Medway Building and Supplies Ltd.

7    The  principle of Farrell v Alexander [1977] AC 59 applied  namely that the legislative history of an unambiguous provision in a consolidating act is irrelevant.

8    The Court of Appeal was not prepared to assume that section 19 of the Limitation Act 1939 was merely section 8 of the Trustee Act 1888 clothed in slightly different clothing.

Conclusion

In essence the Court of Appeal rejected a technical argument by a defendant  and held that there was  no explicit requirement that to be within section 21  (1)(a) the action must be against the trustee.

As noted above some fine distinctions were made by the Defendant in order to rely upon a technical Limitation defence. However clearly the Court of Appeal would not allow historical legislative ambiguity to defeat  what on the face was a claim to recover monies paid away as a result of a fraud.

Perhaps an application of the maxim  Equity will not allow a statute to be used as a cloak for fraud rings true.

Kind regards

Solicitor and Partner Mr. Anis Waiz continues his critical review of case law. Here we look at a very important case arising from alleged mortgage frauds.

Introduction

Whilst this is a criminal case, for the purpose of this blog we will examine the issues surrounding the solicitor’s conduct and the role of solicitors in lending transactions.  Somewhat ironically a failure to understand the mechanics of the Land registration Act 2002 and the meaning of “mortgagor” led the prosecution to error.

From the outset this is an unusual case and was  an appeal on an issue as  to Dishonesty under R v  Ghosh [1982] QB 1053  (In determining whether the prosecution has proved that the defendant was acting dishonestly, a jury must first of all decide whether according to the ordinary standards of reasonable and honest people what was done was dishonest. If it was not dishonest by those standards, that is the end of the matter and the prosecution fails)

Background

The appellant a solicitor built up an expertise in property and conveyancing. Apart from his work as a solicitor, he made his own investments in property through contacts in the local property market.

He became aware that a certain lender   had changed the way it provided buy-to-let mortgages. The Lender was prepared to relax the six month rule which had prevented an owner from obtaining a mortgage on a buy-to-let basis until the owner had owned the property for more than six months.

The appellant acted in a number of transactions.  In some of these x was the purchaser and in others y. Materially the appellant provided a bridging loan to the purchaser who used the loan to pay cash for the property where a cash price would secure the property at less than its market value.

As security for the  loan the appellant required a declaration of trust. The declaration provided that the purchaser would hold the property and net proceeds of sale and net income upon trust for sale for the appellant (or for the appellant and the purchaser in equal shares).

The property was independently valued and on the basis of that valuation a mortgage was provided by the Lender  at 80% of the value. In eight transactions the loans amounted to between £63,750 and £106,695.

The  appellant acted for the purchaser and lender  and provided  a standard Certificate of Title as  per the  then  Solicitors’ Code of Conduct 2007. Once the monies had been advanced by the Lender the amount of the loan provided  by the appellant was repaid.

There was evidence the lender  would not have advanced funds to the purchasers under the mortgages, if they had known of the appellant’s personal interest in the transactions.

The Criminal  Investigations

The police investigated the affairs of one of the purchasers. They attended the offices of the firm where the appellant was employed and  obtained the files relating to the transactions.

The appellant, told  the police that x  was his client, but did not mention any personal or business connection. The conveyancing files were delivered to a solicitor specialising in the field of solicitors’ regulation and conveyancing. They concluded that the personal interest of the appellant in the transactions breached the conditions of the Council of Mortgage Lenders’ Handbook and that  he had acted where he had a personal conflict of interest which was in breach of  the then Rule 3 of the Solicitors’ Code of Conduct. It was also noted there had been no disclosure to the lender of any details of the appellant’s interest.

The appellant was arrested and served with a restraint order under the Proceeds of Crime Act 2002. He faced two counts of fraud and transferring criminal property contrary to s.327(1)(d) of the Proceeds of Crime Act 2002. The appeal was only concerned with the count relating to fraud.

The Key issues

1                    The prosecution case was that the lender would not have advanced the funds if the false representation as to the Certificate of Title had not been made.

2                     The appellant was representing by signing the Certificate that the title of the purchasers was unencumbered. He plainly knew what he was doing was dishonest.

3                    As an experienced solicitor, he would have known that the lender would not have allowed him to act in the transaction for the lender and the purchasers as he was lending the latter money and that gave rise to a conflict of interest.

4                     He must have known he was in breach of the Council of Mortgage Lenders’ Handbook and the Solicitors’ Code of Conduct. The fact he knew he had acted dishonestly could be inferred from the way in which he had covered up the transactions in the books of the firm.

5                    The appellant argued although it was admitted that the transactions were carried out in the way described and though he may have unknowingly been in breach of the Solicitors’ Code of Conduct and the Council of Mortgage Lenders’ Handbook, the appellant had not acted dishonestly.

6                     The title was going to be unencumbered once the bridging loan he had advanced had been repaid with the money received from the mortgage provided by the lender. Thus the appellant he had no intention of enforcing the declarations of trust. He had not tried to obscure the dealings by falsifying the accounts, as the book-keeper at the firm must have been aware of what had been done.

The appellant was convicted. The reader is referred to the decision as to the issues of dishonesty in the criminal proceedings. However for the purpose of the Appeal the issues surrounded the proper construction of the certificate of title.

The certificate of title

The Court of Appeal Criminal Division considered the certificate in the light of the Ghosh test for Dishonesty.  If there were no false representation it was common ground that there was no case to answer and the convictions on all the counts must be quashed.

The following is germane:

1                    The prosecution relied on two paragraphs in the certificate

“(i) … we have investigated the title to the Property, we are not aware of any other financial charges secured on the Property which will affect the Property after completion of the mortgage, and upon completion of the mortgage, both you and the mortgagor … will have a good and marketable title to the Property and to Appurtenant rights free from prior mortgages or charges and from onerous encumbrances which title will be registered with absolute title (“the Encumbrances”)

x) neither the principal nor any other solicitor or registered European lawyer in the firm giving this certificate nor any spouse, child, parent, brother or sister of such a person is interested in the property (whether alone or jointly with any other) as mortgagor (“the Conflict”)

2                    The court noted that in interpreting forms of Certificate the court must apply consistent interpretations and not draw fine distinctions. The Certificate was  drafted by the Council of Mortgage Lenders; and if they wish to impose liability on conveyancers, they must do so in clear terms: Barclays Bank plc v Weeks Legg & Dean [1999] QB 309; Midland Bank plc v Cox McQueen [1999] PNLR 593.

3                     Many  of the phrases used in these paragraphs have well recognised technical meanings derived from centuries of conveyancing practice. For example the  phrase “good and marketable title” was explained by Millett LJ in Barclays Bank plc v Weeks Legg & Dean [1999] QB 309.

4                    The prosecution  relied on the existence of the trust deed and its non-disclosure as amounting to a breach of both the Encumbrances and the Conflict in  the Certificate . The trust deed was executed by the registered proprietor and declared a trust in favour of the appellant. It was not expressed to be a trust by way of security. It’s  existence did not appear on the register of title at HM Land Registry. The appellant was not in actual occupation of any of the properties in question.

5                    As to the Encumbrances as any conveyancer  will be aware  the court  considered section 29 of the  Land Registration Act 2002 and overriding interests  as set out in schedule 3 of the Act. The interests created by the trust deeds were not overriding interests. Thus on the registration of a registrable disposition, for example the mortgages  any equitable interests binding the disponer did  not bind the disponee as interests in land, even if the disponee was a party to the creation of those interests: Halifax plc v Curry Popeck [2008] EWHC 1692 (Ch).

6                    Consequently the mortgages to the lender  executed by the purchasers took priority over the interests created by the trust deeds. Therefore the lender acquired a good and marketable title free from the interest created by the trust. Even if it could be described as an encumbrance (which was  doubtful) it could not be described as an “onerous” encumbrance. Accordingly paragraph (i) of the Certificate was true

7                    As to the Conflict the Certificate was  qualified by the two words at the end: “as mortgagor“. It was submitted by the prosecution  that this should be construed widely to protect lenders. The phrase as “mortgagor” should be read so as to capture those interested in the transaction “as if” they were mortgagor.  The Court of Appeal disagreed.

“The word “mortgagor” is a technical term. It means the person who grants the mortgage. It would be wrong to interpret this technical term more widely, given that this is a standard form of Certificate, the text of which was agreed in the manner we have set out. The appellant did not grant the mortgage: it was granted by the registered proprietor. Accordingly paragraph (x) was also true”.     

Conclusion

The Court of Appeal found the representations set out in the indictment were not false, the convictions on the fraud counts could not be sustained, as the appellant was not only indicted on the basis that the representations were false, but the judge left the case to the jury on the basis that they had to be sure that the representations were false.

Whilst this was a technical Appeal on the issue of dishonesty what is surprising is the failure to consider the representations in the Context of  well known principles in conveyancing and the application of the Land Registration Act 2002.

The appellant clearly had little sympathy from the Court.

Sir Thomas President of the Queen’s Bench noting

“The appellant has now spent almost a year in custody. Given his conviction for perverting the course of justice, quite apart from his conduct in these transactions, it is unlikely that he will ever be permitted to practice again”

Yet again as all conveyancers will know signing a certificate of title is a key issue and one which has far reaching implications for lawyers and lenders.

Kind regards   

 Introduction

Solicitor and partner Mr Anis Waiz of Mohindra Maini LLP continues his critical review of current case law.  Here we examine a very important and perhaps unnoticed   decision of the Adjudicator to HM Land Registry which raised two substantive legal issues. The  execution of a lease  and who has the right to seek rectification.

As a result of this case the Land Registry replaced its earlier guide to Rectification and indemnity in January 2012 . http://www.landreg.gov.uk/upload/documents/pg39.html

Background

Mr and Mrs Garguilo  applied to the land registry to  rectify the register of a title to property in surrey.  They and another party were the registered owners.  They sought to cancel  a  lease purportedly granted to a third party and a  charge  in favour of a Bank . Both the Lease and the Charge were registered in September 2008. The background facts are  somewhat complicated and the reader is referred to the judgment.

The third party a borrower of the bank  failed to make payment to the Bank and accordingly the Bank appointed LPA receivers over the property. The LPA receivers were  respondents to the application.

The  application was made on the basis  the Lease was a nullity because a third party did not knowingly sign the Lease.

Between the parties it was common ground that if the Lease was  void then the registration of the Lease constituted a ‘mistake’ for the purposes of paragraph 5(a) of Schedule 4 to the Land Registration Act  2002 (the 2002 Act)

In addition under  paragraph 6(2) of Schedule 4  of the 2002 Act there was an  important issue as to who could apply  to remove both the Lease and the Charge.

Issues

Mr and Mrs Garguilo  submitted  that the Lease was invalid as it was not validly executed as a deed because it did not comply with section 1(3) of the Law of Property (Miscellaneous Provisions) Act 1989 (the 1989 Act).  The Respondents’ position  was to put Mr and Mrs Garguilo  to strict proof of their case.

The adjudicator set out the key facts as to the execution of the lease and again the reader is referred to the Judgment.  Of note is the adjudicator’s conclusions on the evidence and the legal  analysis.

Findings

The adjudicator  found that:

1          The central factual issue in this case is whether a third party executed the Lease that is to say whether he signed the execution page and the plan knowing that they related to the Lease.  It is not in dispute that he did not do so at the meeting where the other leases were executed.

2          However she found that the pages signed by him (the final execution page, and the plan) were, at the time of signature, separate from the remainder of the Lease.   This conclusion was  inescapable in the light of certain correspondence. There was also  a hand written, undated, note which appears to have been written by a solicitor during the course of a meeting (or phone call)  ”Me to send you lease for 4.Pages”

3          No evidence was given to counter the evidence of the third party . However she was satisfied he did sign the relevant pages knowingly and willingly. There were a number of reasons. First, the entire deal between the parties  and the Bank, depended on the execution of leases. Without the execution of the Lease the third party would not have become the joint freeholder . It was clearly in his financial interest to make sure the deal went through.

  Secondly  the third party’s  evidence was  that he expected another party  to make arrangements to satisfy the Bank and may  have convinced himself, or have been convinced, that those arrangements could be made once the deal was done, and that another  would, in due course, transfer the Lease to Mr and Mrs Garguilo (free of the Bank’s Charge).

More importantly the third party  did not have any satisfactory explanation as to how his signature came to be on the relevant pages.  It was not accepted  he was signing so many documents, or so many plans, that he did not know what he was doing.

Execution of the lease

The Adjudicator found:

1          the signature page and the plan were signed by the third party and that he did so knowingly and willingly.  The Lease was therefore not a forged document.

2              As to  section 1 (3) of the 1989 Act Mr and Mrs Garguilo  submitted that  even if the  signatory pages of the Lease were, as  found, executed separately and inserted into the Lease  this invalidates the instrument  as a matter of law.

Section 1 (3) provides

An instrument is validly executed as a deed by an individual if, and only if,

(a)   it is signed -

(i)    by him in the presence of a witness who attests his signature’

It was submitted that the word it in the section must refer back to the deed in other words the  entire document, and not merely the execution pages or any other page. The point was considered by Underhill J in R v Her Majesty’s Commissioners of Revenue and Customs [2008] EWHC 2721.  The  claimants sought judicial review of the decision of HMRC to seek warrants to search their offices and the decision of the Crown Court to grant the warrants.  HMRC’s case was that the scheme (trust deed)  in question was flawed and that the claimants sought dishonestly to conceal the flaws. The judge therefore had to consider whether the scheme was flawed. There were differences between the drafts and the final versions.

 The court in that case  considered  as an  additional factor that each of the three key documents was intended to be a deed. Noting  section 1(3) Underhill J  said: ‘Mr Bird submitted, and I agree, that that language necessarily involves that the signature and attestation must form part of the same physical document (the ‘it’) referred to at (a) which constitutes the deed.’ [40]. He also stated: ‘ I accept that the flaws on which HMRC rely are essentially formal. But I see nothing wrong in applying a strict test of formality to the validity of the agreements with which we are concerned in this case. The entire raison d’etre is to create – and demonstrably to create – a series of formal legal relationships: if they do not do that, they do nothing.

3          Here the Adjudicator found that  section 1(3) clearly provides that the signature and attestation must form part of the physical instrument at the moment of signing.  The policy argument is that the signature should reflect the proper agreement. If the signature is obtained separately the maker cannot be sure of the terms of the deed and the risk of fraud or mistake remains.

The question must always be whether the signature page and other relevant pages formed part of the same physical document.  That will be a question of fact in each case.

 In this case, the relevant pages were clearly separate from the remainder of the Lease: they were signed separately and returned separately (and not by the third party) at some unspecified time after the other leases were executed (and after the third party had stated, initially, that he did not intend to execute the Lease) and were accordingly not in any sense part of the ‘it’ referred to in the statute.

4          By   Section 52(1)  Law of Property Act 1925 all conveyances of land are void for the purpose of creating a legal estate in land unless made by deed. Accordingly, in the adjudicators judgment, the Lease was  void as it was not made by deed.

The issue of estoppel was raised by the respondents. However  it was held that the lack of a (valid) signature could not  be cured by estoppel.

Who could apply for rectification ?

Schedule 4 para 6 (2) (a) (b) makes provision as to alteration of the register .  It provides

“No alteration affecting the title of the proprietor of a registered estate in land may be made under paragraph 5 without the proprietor’s consent in relation to land in his possession unless—

(a)he has by fraud or lack of proper care caused or substantially contributed to the mistake, or

(b)it would for any other reason be unjust for the alteration not to be made”

In this case

1          The Respondents, as  LPA receivers (and as agents for the borrower)  were not in possession of the property. Neither was the borrower.

2          However  the question was whether the borrower was  deemed to be in possession  by virtue of section 131(2) of the  2002Act. This section provided that the possession of a tenant is deemed to be that of the landlord; of the Lender that of the borrower of the licensee that of the licensor

There was no  direct relationship of landlord or tenant or licensor and licensee between the borrower and another . However on the evidence, the borrower  consented to another going into occupation, and knew of the arrangement made between them.

 On these facts, and for the purpose of this section, the Adjudicator found that  occupation of another  could be said to be that of the borrowers  licensee.

Alternatively pursuant to schedule 4 para 6 (2) (a)    the question becomes whether the borrower  caused or contributed to the mistake (the invalidity of the lease) by fraud or lack of proper care.

It was held  there was lack of proper care either by the borrower or by his solicitor in allowing the Lease to be executed as it was.  In any event, even if this were not the case, there were a  number of factors which, make it unjust for the alteration of the register not to be made.

 Conclusion

The register was rectified by cancelling the lease and the charge. That no doubt has very serious consequences  for the lender and ultimately may lead to various claims .

 Whilst the factual background is rather complex this case serves a timely reminder to conveyancers  and lenders as to basic principles . Ignore  proper execution of deeds  at your peril.

Of  significant interest is the adjudicator’s  use of section 131 (2) of the 2002 Act and the key as to who is in possession   and thus  who was entitled to apply for alteration.  Indeed the land registry have now altered its practice note.

Sometimes a company has been incorporated and its purpose has run its course or the expected reason for the company has been removed. Often these companies will remain dormant within larger groups of companies for years; yet the company secretarial services still need to be carried out and the directors are still liable for any issues around the company. It therefore makes sense to strike off any companies that are no longer needed as in the long run it will save time and money as well as reducing the risks to the officers.

To provide an estimate of the size of this issue, last year approximately 50,000 more companies were incorporated than were struck off the register. In what is generally accepted to be a stagnant economy at the moment, it is hard to imagine that these companies are all being used for commercial purposes. Many are likely sitting dormant and costing their owners time and money.

Striking off a company from the official register is a procedure that is available to dormant companies that are not insolvent. It is much cheaper and quicker to go through a striking off procedure than a full insolvency and is a relatively simple way to close a company down.

It has the advantage that, if done properly, it removes the costs and potential liability associated with an ongoing company and ensures that there is no blemish against the directors name for a company being struck off incorrectly. Although, striking off a company does not remove any liabilities that would otherwise have attached to the directors, officers or members.

It is carried out under section 1003 Companies Act 2006 and, in order to be eligible, the company must not have done any of the following in the preceding three months:

• traded or otherwise carried on business;
• changed its name;
• made a disposal for value of property or rights that, immediately before ceasing to trade or otherwise carry on business, it held for the purpose of disposal for gain in the normal course of trading or otherwise carrying on business. For example, a company in business to sell oranges would not be able to continue selling apples during the three month period but it would be able to sell the truck it once used to deliver the apples; and
• engaged in any other activity except one which is necessary or expedient for the purpose of:
• making an application for strike off or deciding whether to do so (which would include contacting Elemental CoSec to discuss the striking off procedure);
• concluding the affairs of the company;
• complying with any statutory requirement.

As part of the process, the directors need to confirm that the above has been complied with and this can be a complicated area. It is also a fairly long process as it involves publishing notices in the Gazette to inform any potential creditors of the striking off procedure. It is therefore recommended that you get expert advice before starting down this route.

If you would like any advice or assistance on striking off a company, then please get in touch with Elemental CoSec. They are professional providers of company secretarial services and the can advise on removing a company from the register.

Solicitor and partner Mr Anis Waiz of Mohindra Maini LLP continues his critical review of current case law, as first published on leading case law website CaseCheck. This important case arose from a mortgage fraud and facts which are all too familiar to lenders and solicitors.

There are a number of key issues as to completion and breach of trust in the judgment which are essential to grasp and of keen interest to conveyancers and Lenders .

Part of the claim against the defendant was that they were in breach of trust in paying away the advance. The defendant sought to rely on section 61 of the Trustee Act 1925 (“the 1925 Act”). Lord Justice Rimer noted

“The careful, conscientious and thorough solicitor, who conducts the transaction by the book and acts honestly and reasonably in relation to it in all respects but still does not discover the fraud, may still be held to have been in breach of trust for innocently parting with the loan money to a fraudster. He is, however, likely to be treated mercifully by the court on his section 61 application”

Background

In 2007 Cheltenham & Gloucester PLC (C&G) now a wholly owned subsidiary of Lloyds instructed the defendant solicitors to act for it on a proposed mortgage loan of £742,500 to a purported borrower.

The loan was to buy a property. The repayment was to be secured by a first legal charge over certain property. In fact the genuine owners of the property had not agreed to sell it to the purported borrower or to anyone, and were ignorant of the fraud that was being carried on.

Upon what they claimed was the completion of the purchase and charge, the defendant remitted the loan money to (so they believed) a firm of solicitors acting for the vendors. The bogus firm had contacted M&U to inform them that they were acting for the owners of the property, on the proposed sale to the borrower.

However this was a fictitious branch office. One or more individuals pretended to be carrying on practice of a branch office for which they printed some bogus notepaper. The fraudsters duped the defendant into paying the loan money to them.

As a result C&G received no legal charge over the property . The only potential recovery was from the defendant.

The reader is referred to the Judgment for the full facts including a number of anomalies in the application for the mortgage and startling facts.

The defendants Retainer

C&G’s letter of instruction to the Defendant noted

‘C&G has adopted the CML [Council of Mortgage Lenders] Lenders’ Handbook for England and Wales (the “Handbook”) and we therefore require you to act in accordance with the instructions contained in it.”

There were some key provisions in the handbook which the court considered. Again the reader is referred to the judgment:

1 Clause 5.8 On completion, we require a fully enforceable first charge by way of legal mortgage over the property..

2 Clause 10.3.1 You are only authorised to release the loan when you hold sufficient funds to complete the purchase of the property and pay all stamp duty land tax and registration fees to perfect the security as a first legal mortgage or, if you do not have them, you accept responsibility to pay them yourself.

3 Clause 10.3.4 You must hold the loan on trust for us until completion. If completion is delayed, you must return it to us when and how we tell you (see part 2)….

As was standard the defendant signed a certificate of title for the property and sent it to C&G. The certificate was in the terms of the Appendix to Rule 6(3) of the Solicitors’ Practice Rules 1990.

Completion

Completion was to be by post. The then applicable Law Society’s code for completion by post applied. Under that code, the defendant should have received from the Vendor’ solicitors the signed part of the vendors’ contract, the executed transfer, the DS1 certificate of discharge in respect a prior charge and the charge certificate. In fact they received nothing.

From the Judgment the reader will note some unusual facts surrounding payment of the purchase price and the TR1

At a later date the defendants remitted from their client account £702,613.25 to another account of the supposed Vendors solicitors. No transfer was ever produced by the Purported vendors.

Matters then came to light. when the real owners of the property re mortgaged . The claimant had thus parted with the loan and had no security.

The Claims

C&G issued proceedings against the defendant under three alternative heads.

1 In parting with the loan money, they acted in breach of trust and were liable to reconstitute the trust fund (the loan money) and restore it to C&G.

2 They had parted with the money in breach of its undertakings to C&G.

3 They were liable in negligence and breach of contract.

The Issues

The defendants admitted in their Defence that they had held the loan money ‘on bare trust for C&G with C&G’s authority to pay it away in connection with the purchase of the property. Accordingly the court directed a trial of certain preliminary issues:

1 had there been a breach of trust by the defendant?

2 If ‘yes’, could the defendant rely on the 1925 Act to relieve them from liability?

3 was any loss or damage suffered by C&G caused or contributed to by C&G’s own fault?

Those issues were tried in 2010 before Mr Roger Wyand QC,. He held there had been a breach and the defendant could not rely on the 1925 Act. As to question 3 he entered judgment against the defendant for £742,500, with interest.

As to the 1925 Act , the court noted that section empowered the court to relieve a defendant wholly or partly from personal liability if they had ‘acted honestly and reasonably, and ought fairly to be excused for the breach of trust.

There was no question as to the defendant’s honesty. However there was a challenge to the reasonableness of their actions. In his judgment, the judge gave his reasons for concluding that their conduct had not been reasonable. There was no appeal on that point.

The defendant appeal was on the basis they had not committed a breach of trust and as a matter of causation even if there was a breach that had not caused any loss to C&G.

The Appeal

There was no dispute that upon C&G’s payment of the loan money to the defendant, the defendant , held it upon trust for C&G until ‘completion’. Clause 10.3.4 of the CML Handbook expressly provided for that.

Importantly the Court of Appeal noted even if this was not provided for the money would anyway have been held on such a trust. Money held by a solicitor on client account is trust money (see Target Holdings Ltd v. Redferns (a Firm) and Another [1996] 1 AC 421, at 436A to C, per Lord Browne-Wilkinson).

A number of issue arose on the Appeal:

1 Was there completion?

The instructions provided that the defendant were authorised to release the money for the purpose of completing the purchase (clause 10.3.1 of the Handbook); and upon such release, the trust would come to an end.

The key was the meaning of completion in clause 10.3.4 of the handbook. Lord Justice Rimer noting:

In my view, therefore, the judge was right to hold that ‘completion’ in clause 10.3.4 did not refer to the successive moments when the transfer and charge were respectively registered. It referred to the prior date when conventional completion occurred. M&U were authorised by C&G to release the loan money to enable such completion to take place. The trust was only destined to subsist until such time as it did.

The defendant sought to argue that completion had taken place. To enable it to take place, the defendant had remitted the required moneys to the vendors solicitors and expected those solicitors to honour their undertakings to send them by first class post the documents listed in paragraph 3.2 of replies to requisitions on title.

However there was no solicitors for the vendors. There were no vendors, in fact selling the property; they had no intention of paying any of the loan money in the redemption of a prior charge; and they had no genuine documents to send to the defendants.

The Court of Appeal agreed with the judge at first instance who held there was no completion. The defendant parted with the advance money without receiving either (i) ‘the requisite documents’ or (ii) a solicitor’s undertaking to provide such documents. A number of reasons were given.

1.1 The purported contract was a nullity, since the vendor had not agreed to sell their property, nor had they authorised anyone to sell it to him in their name;

1.2 The purported completion of that nullity by way of the exchange of purchase money for forged documents could not have amounted to completion.

1.3 Completion must mean the completion of a genuine contract by way of an exchange of real money in payment of the balance of the purchase price for real documents that will give the purchaser the means of registering the transfer of title to the property that he has agreed to buy and to charge.

1.4 An exchange of real money for worthless forgeries in purported performance of a purported contract was a nullity and not completion at all.

2 The trust point.

For the defendant it was argued that it was unfair that they were liable having become innocently mixed up in the fraud and be held accountable as trustees for parting with the loan money in the belief that they were doing so for the purposes of completing a genuine transaction.

However as noted by the Court of Appeal they failed to obtain relief under the 1925 Act , although they had acted honestly because they had not acted reasonably and so were not deserving of the merciful exercise by the court of its exculpatory discretion.

Their material failings were numerous and include failing to check the vendors solicitors which constituted a breach of clause A3.2 of Section 3 (Safeguards) of the Handbook; and to part for a second time with the money when they knew that the purported solicitors had breached their earlier undertakings.

The defendant Appealed was dismissed.

Conclusion

This may appear to be a harsh decision. However there were clear failings by the solicitors to conduct the transaction properly and in accordance with accepted practice and their professional duties.

A warning for lawyers and a useful reminder as to the courts exercise of discretion under the 1925 Act. The final word goes to Lord Justice Rimer

“Whilst it is impossible not to have sympathy for M&U in becoming enmeshed in the fraud, the judge’s conclusion was that, by these two shortcomings, they brought their misfortune upon themselves. If they had instead performed their role as solicitors with exemplary professional care and efficiency, but had still parted with the loan money in circumstances that were objectively reasonable, the decision on the section 61 application might have been different“