Who’s Fault? Solicitors? Usually.

A [Temporary?] check upon the ever widening scope of a Solicitor’s liability?

For many years, a solicitor more or less knew where s/he stood. If the work done for a client was careless and the client lost money because of that, then the solicitor must repay.

But, if someone else, who was not a paying client of the solicitor, lost money because the solicitor was careless, then tough luck for them. The Solicitor was liable to his clients ONLY, end of story.

Until 1995, when [link here] White v Jones decided that a Solicitor must compensate intended beneficiaries of the client who wanted to make a Will in their favour, who gave clear instructions to that effect, and then died before the Solicitor could find time to see him and do the work.

If you read the case you will see that the case caused real difficulty to the Judges, who were well aware that in reaching this decision they were doing so in the face of all earlier precedent and established law. They were saying in so many words that “times have moved on” and that new law needed to be written

They considered that the facts
• that the law of 1995 did indeed say that the only person who “could” sue was the deceased – but he couldn’t because he was dead and he had suffered no loss, and that
• The intended beneficiaries who had suffered loss had no right to sue,
meant that there was a gap in the Law which was in their view intolerable to justice in this day and age.

And ever since, many solicitors feel that the principle has been widening until now the profession is basically seen as an insurer of last resort, which can pick up the tab whenever anything goes wrong, or whenever anyone suffers loss and a solicitor has been involved.

So perhaps there is a feeling that the tide may be turning, or at least has stopped coming in, in a recent case of Land Registry v Caffrey [link here].

Long story short, Mr and Mrs Turner, two crooks, turn up in the offices of Solicitors Caffrey & Co with a mortgage receipt which they have forged, and request Caffreys to submit it to the Land Registry. Nice plan. Of course most people clear off their mortgages by the more conventional means of repaying their debt but that does take longer.

So the receipt form was duly posted off and the Land Registry did clear the mortgage from the title and so the Turners were then, being crooks, able to mortgage their property all over again with another lender. Later the first Bank claimed successfully, and got its money back from the Land Registry.

In this case the Land Registry was chasing reimbursement from Caffrey & Co. Their case, they told the Judge, was that the Solicitors first owed a duty of care to take reasonable care in discharging the mortgage – which included checking that the discharge form was genuine – and second that by submitting the form to the Registry the Solicitors were implicitly representing that the form was properly executed and not a forgery.

The first claim was rejected, and it is clear from the judgment that the second claim would have failed also if the solicitors had bothered to contest it.

The Judge concluded that it was not fair, just, or reasonable to make the Solicitors responsible to the bank or the Land Registry for the risks of fraud “within a system which was inherently risky”. The Land Registry systems were not designed by the Bank and they were not designed by the Solicitors. So the Land Registry not the Solicitors, are responsible for any loopholes in that system.

So Hooray – if you are a Solicitor.

Even so, it seems to me that it would be a bit cavalier if the lesson from this case is taken to be that there is no need to worry about the genuineness of documents you as a Solicitor are asked to submit to the Land Registry. As a Solicitor, you are not just a postman. And even if you are vindicated after a long and expensive trial process, I think you would prefer not to be in that position in the first place.

The moral maybe, is that you can’t be too careful. Trouble is, in the real world, being careful costs money. Only you can decide where to draw the line between cost and risk. [Between caution and paranoia? – cue for a song [link here]

And may I suggest that this case would not have occurred if the Turners had approached Notaries to do their fraudulent bidding?

As always, Please do contact me or Louise whenever you need Notarial certification or Legalisation for your Documents– at http://www.atkinsonnotary.com – or phone me on 0113 816 0116 (internationally 0044 113 8160116)