Does Crime Pay?

If you involve yourself in mortgage fraud and end up without your ill-gotten gains, can you really complain? Well the answer in the case of Stoffel & Co v Grondona is yes!

The Court of Appeal was asked to consider a case where a client who made misrepresentations to her mortgage lender, was suing her solicitors for failing to register a transfer document which would have resulted in her receiving the legal title to the property.

The Court accepted that the sale agreement was “tainted with illegality” because it was entered into with the object of deceiving high street lenders. However, dismissing an appeal by the Law Firm and allowing the claimant to recover damages in respect of negligence and breach of duty, the Court said her illegal conduct was not central or indeed relevant to the otherwise proper and legitimate contract of the retainer between her and her solicitors.

It was decided that it would be entirely disproportionate to deny the Claimant’s claim. The Solicitors had failed in their duties and should not be left of the hook because of something they were not part to or even aware of and which was “simply part of the background story” to the transaction. The illegality was not closely or inextricably linked with the claim against the solicitors and it would not be proper to allow them to avoid their professional obligations.

The Court undoubtedly wanted to send a strong message that negligent solicitors cannot avoid their responsibilities even if the client may have been doing something illegal. This case of professional negligence obviously was decided on its own facts and would not necessarily decide every case but it is a stark reminder that professionals will be held to their professional obligations.