£10,000 Fine Plus Costs For Veteran Solicitor
David Hayhurst, a senior partner of closed Merseyside firm 174 Solicitors Ltd, has ruined his 40-year unblemished record after being fined £10,000 and having to pay £15,000 costs by the Solicitors Disciplinary Tribunal (SDT) after admitting he failed to advise his clients adequately about investing in four high-risk schemes.
An investigation conducted by the Solicitors Regulation Authority (SRA), revealed that Mr Hayhurst acted on behalf of buyers to three ‘fractional’ development schemes, where purchasers from East Asia paid deposits between 40-80% of the price for as-yet unbuilt units. He was lead partner in the sale of 118 units, for which almost £2.9m was deposited.
Both developers involved went bust, resulting in none of the developments being completed. The SRA said the schemes were not inherently dubious but were inherently risky, with the investment being effectively worthless unless the development was completed.
My Hayhurst admitted that his clients should have been given advice about the risks, and he failed in his duty to do this.
However, Mr Hayhurst pointed out that the clients had paid reservation fees of up to £5,000 before he got involved. The SRA were unhappy with this, as they still believed as the solicitor Mr Hayhurst should have provided advice, regardless of the reservation fee.
The SDT heard that 174 Solicitors Ltd, was a panel member for each of the schemes and so received referrals from their promoters.
Hayhurst said he had exercised his professional judgement in an honest and genuine way, providing clients with a client care letter and terms and conditions making express reference to risk. The retainer had set out the limits of his input, but he accepted now he failed to advise adequately.