The SRA has issued a warning to solicitors stating “We are concerned about a relatively new type of practice that targets the public by misleading them into investing in land for future development under false pretences. You should be wary of getting involved in any transactions of this kind.”
With the FSA indicating that , UK investors have lost an estimated £200 million in land-banking scams. conveyancers are often at its heart.
The SRA Case Study relates to a case on 1 March 2011 when Stephen Peter David Murrell, formerly of Staple Inn Partnership, was struck off the roll of solicitors for his involvement in a Collective Investment Scheme and for breaches of the Solicitors’ Code of Conduct and Solicitors’ Accounts Rules. He was ordered to pay costs of £42,180.95.
The Solicitors Disciplinary Tribunal found eight allegations proven against Stephen Murrell.
The SRA case study states “The tribunal was satisfied that, by his involvement with property investment company, Hamilton Bentley, he had with his firm created a scheme which appeared to have involved Hamilton Bentley receiving substantial profits and by which some investors had received leases which were effectively worthless in that they conveyed minimal rights on them. Others had received no leases, and investors had lost substantial sums of money.
The tribunal was satisfied that the respondent had displayed gross recklessness in ignoring all the evidence that the scheme should have been regulated, including numerous letters from the FSA and opinions of two counsel. As a result the hearing found that members of the public had suffered and the reputation of the profession had been severely damaged in that members of the public should be able to trust solicitors in all their actions and dealings. Stephen Murrell’s lamentable failures in this regard, including completely failing to advise investors of their rights, had undermined public trust in the profession. The tribunal felt it had no choice but to strike the respondent off the roll of solicitors.”
The SRA is warning solicitors to be on their guard against unwittingly, or otherwise, getting involved in this difficult and evolving area.
Solicitors are reminded of rule 10.01–not to take unfair advantage especially where parties are not represented, and particularly when it comes to the signing of and submission to Land Registry of an AP1 Application to register. (See chapter 11 of SRA Code of Conduct 2011, outcome 11.1.)