Ikbal v Sterling Law [2013] EWCH 3291 (Ch)

In the latest s.61 case, a firm of solicitors was found to be in breach of trust for parting with funds to criminals without effective completion.

The Claimant (I) instructed Sterling Law (S) to act for him on the purchase of a property for £350,000.

The transaction proceeded normally until, without any express agreement, S assumed the Law Society’s Code for Completion by Post and remitted the balance of £315,000 to the vendor’s solicitors, F. 

S received no title documents and they delayed chasing the title documents whilst I began to carry out building works on the property.
The SRA consequently intervened into F’s practice and found no record of this transaction. It soon transpired that the sale was by someone other than the true owner of the property. It is assumed that an employee of F handled the transaction with the intention of committing fraud.
I brought a claim against S for full reconstitution of the wrongly remitted funds. S denied liability and sought relief under S.61 Trustee Act 1925.
S was found to have acted in breach of trust for remitting funds using the Postal Code without express agreement from the other side.
I was therefore prima facie entitled to full reconstitution of £315,000. In considering s.61 relief, though the court was satisfied that S acted honestly, it was not reasonable to (a) fail to make an express agreement on use of the Postal Code and (b) delay chasing for the title documents. S was however entitled to s.61 relief as there was no causal connection between the failure to expressly agree to the Postal Code and I’s loss.
This case demonstrates the importance of a causal link between the breach and loss in s.61 cases.
It is not a set of case facts focusing on vendor conveyancer fraud, but it serves as yet another reminder that these cases are happening.  A criminal (whether an employee of the firm or not) was able to dupe both I and S into believing that this was a real transaction.
If criminals can accurately clone a real firm, how do you know that you are dealing with the legitimate firm?
Lawyer Checker checks the account details of where you are sending funds against a database of historical conveyancing transactions to tell you if that account has a track record of successful use in conveyancing.
A Lawyer Checker search could have prevented this situation. Call us now on 0845 835 4666 or email [email protected] to organise a FREE web demo.
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