Professional Negligence and Mortgage Fraud Case Studies

The Lender Services Team at JCP Solicitors is currently dealing with a wide range of Professional Negligence and Mortgage Fraud cases on behalf of our Lender clients, including many complex and high value claims. Here are some examples of the team’s work:-

The team is currently acting on behalf of a lender client whose legal charge over a development site has been challenged by a previous lender who alleges this their former legal charge was removed/ discharged fraudulently.  The case concerns disputed allegations of fraud, in particular whether the alleged simulation of another party’s signature was made with or without that party’s authority, and whether the other party is bound by it.  There are complex legal arguments in dispute regarding the issue of “mistake” in the context of claims for rectification of the Land Register, and complex issues regarding validitiy and priority of competing charges/ interests/ claims.

The team recently settled a claim for one of our lender clients against solicitors who had acted for the lender several years earlier in the conduct of a transfer of equity and re-mortgage. One of two joint borrowers successfully contested the lender client’s possession proceedings on the ground that she had been co-erced to enter into the transfer of equity and mortgage by undue influence on the part of her husband.  Unable to enforce its security, and with our client facing significant losses, we were instructed to pursue claims against the solicitors who had acte in the original transaction.  Claims focussed upon solicitor’s failure to follow the lender’s instructions as to the procedure for execution of the proposed security, and failure to ensure that independent advice was provided (and certified as having been provided) to the wife.  Secured sudstantial recovery in settlement.

The team recently settled claims on behalf of a lender client in a case of suspected mortgage fraud involving multiple properties in the same development. The client had taken assignment of mortgages from the original mortgage lender which was now in liquidation. Properties had been substantially over-valued by the original valuers but no claim could be pursued against them, because they had also gone into liquidation without run off insurance cover. We pursued claims against the completing solicitors based upon allegations of failure to report matters including back-to-back sales between connected parties and discrepancies in relation to deposits, incentives and discounts. Claims involved complex issues in dispute in relation to the scope of the solicitors' duties, contributory negligence alleged against the original lender, causation and loss. Significant evidential difficulties existed as a result of the liquidation of the original lender and valuers and incomplete documentation from the completing solicitors' firm which had ceased trading during the period since completion of the transactions. Case was successfully settled at mediation on payment of £300,000 against projected claim value of approximately £450,000. Costs incurred in the case were £45,000 and settlement achieved within 20 months from date of instruction.
The team successfully settled a claim on behalf of a lender client against solicitors who had acted for the borrower, but not for our client, for substantial damages for breach of trust and breach of warrant of authority. Client had suffered losses of approximately £900,000 in relation to a bridging loan where the purported purchase was fictitious/ fraudulent (involving two firms of solicitors who have been intervened by the S.R.A and whose partners have been the subject of regulatory action for alleged mortgage fraud).

We acted for client in pursuing claims in negligence against the solicitors who acted for the Bank in certifying title in the transaction, but who did not act for the purported purchaser/ borrower; and breach of trust claims against the solicitors who acted for the purported purchaser/ borrower and who received and paid away the mortgage advance.

The team successfully recovered £400,000 on behalf of our client in claims arising out of a remortgage transaction completed five months after initial purchase. Claims were brought against the solicitors, for alleged failure to report the discrepancy between the valuation of the property at the date of purchase and the mortgage valuation provided to our client and  against the valuers who had provided that mortgage valuation. The loss claimed was £498,000. Issues arose in relation to allegations of contributory negligence against our client and coverage issues in relation to the valuers’ professional indemnity insurance cover. The claim was settled at mediation for payment of £400,000. Total costs incurred in the claim were £35,000. The lifespan of claim from instructions to settlement was 17 months.

Fraud/ breach of trust claim against solicitors. Fictitious transaction - genuine valuation of a property against which loan was made, but property was not in fact for sale. The Solicitor's employee was party to the fraud and the claim was against the solicitors for fraud/ breach of trust. The insurers tried to raise issues regarding coverage, but accepted the claim after proceedings were issued. JCP recovered £390,000 on behalf of our client, the full value of the claim. Total costs incurred were £14,000. Lifespan of claim was 10 months from instructions to recovery.

The team achieved groundbreaking success in an appeal on behalf of a leading national bank under the SRA Compensation Fund Rules 2009. Our client had suffered the loss of its mortgage advance as a result of fraud/ breach of trust by the completing solicitors in a purchase/ mortgage transaction.  The solicitors’ professional indemnity insurers excluded cover for the resulting claim, on the ground of fraud in which all partners were complicit.  Our client’s subsequent claim was rejected by the Compensation Fund in the first instance, the panel, relying on Rule 18 of the 2009 Rules, finding that our client’s lending decision and procedures had caused or substantially contributed to its loss.  We appealed the decision on behalf of our client, the most substantial ground of the appeal being that the panel had misinterpreted the provisions of Rule 18. The appeal was successful in its entirety and resulted in an award in our client’s favour of approximately £200,000.  We understand from the SRA that the successful appeal was one of the most substantial appeals brought under the 2009 rules, which, for the first time, had introduced provisions enabling claimants to appeal against decisions of the compensation fund.    Total costs incurred in the claim against the original solicitors, the compensation fund claim and appeal amounted to £12,000. The lifespan of the case from initial instruction to conclusion of the successful appeal was 16 months.

 

  • Chris Davies
      • 01792 529639
      • View profile
  • Emma Gilroy
      • 01792 529 629
      • View profile
  • Kevin OBrien
      • Kevin OBrien
      • Director & Head of Recoveries and Professional Liability
      • 01792 529 625
      • View profile
  • Sophie Thomas
      • 01792 525 441
      • View profile
  • Michael Williams
      • 01792 529 685
      • View profile
  • Andrew Murphy
      • 01792 525 418
      • View profile
  • David Owen
      • David Owen
      • Associate Solicitor - Recoveries & Professional Liability
      • 01792 525 431
      • View profile
  • Simone Ashcroft
      • 01792 529659
      • View profile