High Court: Wrong to assume it is “more improbable” that professionals will be dishonest

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26 January 2016


RCJ

Judge Saffman: claimant argued that solicitor was “essentially being dishonest”

It would be wrong to assume that it is “inherently more improbable” that a professional person will be dishonest than anyone else, the High Court has said.

Ruling on a negligence claim, HHJ Saffman, sitting as a High Court judge, found that an attendance note made by sole practitioner Baljinder Hayre had misrepresented “the true position”.

Judge Saffman said the claimant’s position was that Mr Hayre was “essentially being dishonest” in denying he had attached the wrong plan to a property transfer form, reducing the value of part of the land.

“This is not a case where matters can be determined on the basis that one or other party had ‘misremembered’ or otherwise made an innocent error,” Judge Saffman said.

He said it was proper to ask whether it was any more likely that the claimant, Raj Khan, would seek to “dishonestly mislead” the court than the solicitor.

“True it is that he has something of an incentive because not insubstantial damages are at stake, but it is likely too that Mr Hayre would be affected by an adverse outcome in this case.

“Even though he is no doubt insured, there may well be an excess and an adverse finding may result in an increase in future insurance premiums. In addition there is the reputational damage caused to a professional person in having a finding of negligence made against him or her.

“On the other hand it is proper to ask oneself in considering the issue as a whole if it is likely that a solicitor would possibly risk his career to avoid a finding of negligence?

“However, in my view it would be wrong to assume that it is inherently more improbable that a professional person will be dishonest than anyone else. If ever such a view validly had traction, I do not think it can do so in the modern world.”

The court heard in Mansion Estates v Hayre & Co [2016] EWHC 96 (Ch), that the director of Mansion Estates, Mr Khan, retained Hayre & Co to act on its behalf in the purchase of land in Bradford.

Mr Khan claimed that Hayre & Co was negligent in its handling of a subsale of part of the land, leaving the remainder blighted because Mr Hayre “negligently attached the wrong plan” to the TP1 form.

It was also alleged that Mr Hayre was negligent in the advice he gave on stamp duty for the whole site, with the result that Mr Khan paid more than was appropriate.

The law firm argued that the plan attached to the transfer form was the one given to Mr Hayre by Mr Khan, and the solicitor advised him of the risk of blight.

Judge Saffman said the claimant’s position was that Mr Hayre “did not give the advice that he asserts he gave and that the letter and attendance notes that he produces in support of his contention that he did, have been fabricated”.

The parties agreed that the reduction in the value of the retained land as a result of restrictions in its use was £211,500.

Judge Saffman said there were several aspects of Mr Khan’s evidence which troubled him, including the fact he sought damages for loss of profit of £1.9m, having already accepted an offer for the retained land of £950,000 before he had known about the problems with it.

However, he said Mr Hayre’s evidence on the land claim troubled him “even more” and “explanations that the fax machine showed the wrong time or the recorded times for meetings were unreliable because Mr Hayre does not wear a watch were far from convincing”.

On balance, he preferred Mr Khan’s evidence, taking also into account how the two gave evidence. “Both gave their evidence forcefully and unhesitatingly but I have to say that I detected indignation in the demeanour of [Mr Khan] about the conduct of Mr Hayre which suggested to me that he did genuinely believe that the claimant had been wronged. That is by no means anything like a determinative factor but it must weigh to some small extent in the scales.”

Judge Saffman found that, despite Mr Hayre’s submissions, he attached the wrong plan to the transfer form and did not advise Mr Khan of the access problems. He awarded Mr Khan a total of £229,970 in damages, including £470 for an attempt to mitigate the loss and £18,000 for additional stamp duty.

A spokesman for the Solicitors Regulation Authority said Hayre & Co closed on 15 January this year.

“Now we are aware of the situation, we will obtain all the necessary information and decide on the appropriate course of action,” he said.

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