A solicitor who wrongly advised 115 clients about the timing of their rent reviews has been fined £15,000 by a tribunal and ordered to pay £13,350 in costs.
David Carter Hughes, of Bannister Preston in Manchester, accepted giving incorrect advice over six years and reached an agreed outcome with the Solicitors Regulation Authority, which the Solicitors Disciplinary Tribunal approved.
Hughes, who is now a partner at the firm, advised the clients that ground rent on leasehold properties they were buying would double every 25 years when in fact it would double every 10 years.
The company received a complaint in 2019 from a client who said he had been wrongly advised on the terms of the lease and the cost implications. An internal investigation found that from 2008 to 2015 the firm used a precedent report on title in relation to Taylor Wimpey conveyancing matters.
Historically, the developer had operated a 25-year rent review but on this particular development it changed this to 10 years. As soon as the error was spotted the precedent report was updated.
The tribunal heard was told that the full extent of direct harm caused by the wrong information offered by Hughes was not known, but that 115 clients had been adversely affected which in some cases had led to litigation. Claims were also made to insurers and to the solicitors compensation fund.
The tribunal found that Hughes should have been familiar with the fact his negligence could result in a breach of his professional obligations and duties. But he accepted the error and openly informed his company, the RA and the tribunal from the moment of the client’s complaint and showed genuine insight and acceptance of accountability.
He explained that his clients received the wrong advice partly because he was in the process of improving client service through a more detailed report on title documents, but there had been a failure of systems and controls which led to the errors.
Claims on their PII and a hefty fine, ouch!
Would be interesting to know the loss (or possible loss)
suffered by the clients?
Apparently the harm to clients would have been mitigated to
some extent by Taylor Wimpey publishing a voluntary scheme to vary the ground
rent provisions for properties in the development.
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At last!!!! It’s about time the duty a care and skill between conveyancers and their clients was tested on lease detail and building control sign off.
The material information changes the industry is going through is solely down to the NLC campaign where purchasers conveyancers were rubber stamping purchases they had obviously never read.
Let’s hope this opens the floodgates for all those stuck with the liability of unsaleable, zero value homes because of the toxic term leases and known to be flammable claddings
Do they still ring the Lloyds bell?
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When professional estate agents were facing an onslaught from unethical, amateur and unprofessional practices a few good people banded together to highlight and stop the wrong-doing. The lobbying and campaigning was successful and the malpractices highlighted were fairly much stopped.
Do I take it from the dislikes that the conveyancing industry doesn’t like the fact they have some bad apples who either disregarded their duties to clients or who were complicit in allowing clients to purchase homes that would become a liability likely to bankrupt them?
Whatever the true cause of the lack of advice or misadvice it doesn’t matter PI will bear the cost. It’s a shame for the professional conveyancers their PI premiums will pay for the wrongs
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Having worked at a factory firm for a short time, to get a feel of them as much as anything else, believe me, this sort of error is commonplace. Indeed it is the tip of the iceberg, I have seen far, far worse. Behaviour that would cause my colleagues in the profession to suggest I had lost it completely if I repeated what I had seen from unqualified staff.
It is good to see the SRA are finally showing an interest, because when I told them at the time what I had seen they did not even bother to respond to my email. So no surprise it has gone on for so long.
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Is this all down to factory and offshore conveyancers completing purchases they neither read nor understood Alan?
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Basically the factory firm I was at operated a NewBuild department acting for buyers on new Estates, on the premise that the legal title to all properties would be the same, and therefore all reports would be identical. Do the first transaction, then the others could simply be done at the press of a button and therefore costs could be minimal whilst the developer would be happy at 28 day deadlines being met. None of the staff were qualified. Indeed none knew what they were doing other than pressing a button. Oh dear, the issues that caused.
The principle is the same followed by many firms these days, and presumably in this case, though the firm are not a factory and many others who do this kind of work are not. They probably employ a better quality of staff than the firm I was at. But making assumptions property one will be the same as property 21, 31 etc is where the problem can occur where there are not quality control checks.
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That is a mistake any busy conveyancer/solicitor could make Alan. If one becomes au fait with a certain development or developer lots of the documents are identical. Yes, you should always accept that changes might be made but this guy, reading a more fuller report, does not really need to be pilloried more than he has been already. Certainly not by his own kind.
My view is, there but for the grace of God.
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I am not criticising the chap who made the mistake. I am pointing out that it is undoubtedly something that happens throughout the profession, speaking with the benefit of experience having seen it with my own eyes (and much worse).
I have no doubt if the SRA are looking into firms who operate this work model, more errors will sadly come to light.
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Is there no requirement for duty of care and skill in conveyancing such that no-one is actually liable for clients getting wrong, bad or conflicted advice on the home they’re purchasing?
From what’s been explained to me about these these toxic leaseholds by those holding all the liability for mortgages on properties that have effectively no value at all, no advice would have been better than the reassurances they were given.
I don’t know the extent of what is going on with toxic leases but somehow a perfectly practical means of communal building ownership has been utterly discredited to the extent ‘all leasehold is bad’
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If you are implying this was a ‘factory firm’ Alan, you are incorrect.
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I know it was not a factory firm, nor did I specifically say this case was??
I was speaking from personal experience of how the factory firm I worked at operated.
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