With conveyancers often falling under strict scrutiny by not only regulators, but also clients themselves, it is encouraging to note a recent case that has ruled in favour of the solicitors firm.
In 2010, Mirza Solicitors were instructed by Karmjeet Singh Kandola for the purchase of an additional Buy-to-Let property. This was to add to the reportedly growing portfolio of the claimant, who is said to be well versed in the buying of residential property.
This particular case looked into whether, given the circumstances, the conveyancing firm should have advised the buyer beyond their standard duties.
As part of an agreement between Singh Kandola and the vendor, the deposit of £96,000 that was intended for the purchase of the property was to be transferred to the vendor’s solicitors as agents of the vendor. The intention was for the deposit to act as a loan for the vendor – a purpose unknown by Mirza Solicitors.
The firm advised Singh Kandola against the deposit transfer to the vendor in such a way, due to a similar previous experience with a former client, whereby money was lost in a comparable arrangement.
No further investigations were carried out on the vendor, however a credit check search would have revealed that the vendor, at the time, was in the process of being made bankrupt.
Singh Kandola subsequently failed to follow Mirza Solicitors’ advice. Following the transfer of the deposit, vendor was then made bankrupt and the vendor’s solicitors were struck off by the Solicitors Regulation Authority (SRA) for fraudulent misuse of client money.
During the High Court hearing, His Honour Judge David Cooke determined that, though the terms of the transaction were not standard, this did not justify the duties of the solicitor to go beyond advising on general risks relating to the release of a deposit. The formal duty as set out in the Law Society’s Conveyancing Handbook is to provide advice on risks in unusual circumstances, but unless instructed to do so, there is no duty to investigate further into the risks of any particular case. The decision is a commercial one and therefore falls to the client.
The fact that the claimant is known to be experienced in property and/or financial transactions is also taken into consideration. In these circumstances in particular, it is only up to the solicitor to ensure the client appears to have sufficient understanding of the advice given, even if the client denies knowledge and understanding at a later date.
What are your thoughts on this case – do you feel the duties of conveyancers should go beyond best practice duties in order to protect the client? Or do you think that the experienced property clients in particular need to take responsibility for their actions, despite advice given by the conveyancer?
Please share your opinions in the comments section below.
