High Court orders regulator to consider £2.3m compensation claims

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By Legal Futures

19 July 2012


High Court: claims eligible under compensation scheme

The High Court has ordered the Council for Licensed Conveyancers (CLC) to consider £2.3m claims for compensation after it overturned an internal decision that the CLC was unable to make any grants at all.

The CLC’s licensing and practising committee had rejected the claims of Nigel Coatman and Andrew Golub on the basis that the apparent fraud arose solely from unregulated activity and had no connection with a firm of licensed conveyancers.

However, on judicial review the Administrative Court ruled that the committee got this wrong.

The case arose from money the pair claimed to have lost arising from payments made between 2005 and 2009 to a licensed conveyancing firm and its business manager, who was not a licensed conveyancer.

He solicited the payments purportedly acting with the authority of the firm on the basis that they were to provide secured bridging loans to clients for whom the firm was acting in the purchase of property, and that they would be secured on those properties.

The manager committed suicide in 2009. Mr Justice King noted: “The firm have been unable to account for what happened to the claimants’ payments. All the indications are that security does not exist and the claimants have been the victim of fraud.” The CLC intervened in the practice in January 2010, but after claims for compensation were lodged, its committee decided that the losses arose solely from the unregulated activity of arranging the loans.

However, King J ruled that “if the money was received purportedly for a purpose in connection with the provision or purported provision of conveyancing services” for a third-party client of the firm, or for the claimants themselves, then it was “in connection” with the firm and so eligible for consideration under the CLC’s compensation scheme.

A CLC statement said: “The CLC is complying with the court order and reconsidering the claimants’ applications.”

 

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