[1]Property: no evidence of sub-sale
The Solicitors Disciplinary Tribunal (SDT) has struck off a solicitor who colluded with his non-solicitor employee wife, an estate agent, to misappropriate £10,000 after submitting to the Land Registry that a property had sold for less than the price actually paid.
Michael Lyons was born in 1969 and admitted in 2002. He had practised as Lyons Solicitors in Herne Bay, Kent, and his wife, Kelly Lyons, worked as a clerk at the firm.
Both were found by the tribunal to have acted dishonestly. Neither attended the hearing last month in person and neither was represented. The Solicitors Regulation Authority (SRA) intervened in the practice in 2015.
As well as jointly misappropriating the £10,000 of client funds, Mr Lyons faced charges over accounts rule breaches, a failure to co-operate with the regulator – the SRA had to seek a court order to force production of certain documents – and a failure to disclose relevant information to his client.
In addition to the misappropriation, Mrs Lyons was charged with falsely attesting to the Land Registry that a person had signed a document in her presence when he had not.
The discrepancy between the transaction price and the registered value emerged when the buyer (WH) noticed a website showing property prices indicated his flat had been sold for £115,000, not the £125,000 he had paid.
WH contacted the seller who confirmed he had accepted an offer of £115,000 from a Robert Saunders, Mrs Lyons’ father. Mr Lyons acted for both vendor and purchaser without disclosing the fact to either client.
In explanation, Mr Lyons told WH there had been a sub-sale to Mr Saunders. The Land Registry confirmed the property was transferred directly from vendor to WH, with no apparent sub-sale.
The tribunal found “no tangible evidence” of a sub sale having taken place. It said: “The respondent had failed to act in the best interests of his clients; [the vendor] had received £10,000 less than the price paid by WH; WH’s title had been registered with a purchase price of £115,000 as opposed to the £125,000 he paid;
“Nationwide had a charge over a property valued at £115,000 by HMLR whereas they had advanced a mortgage to WH based on the valuation of £125,000.”
In the course of its investigations, the SRA also found suspicious payments from client account between 2005 and 2013. The largest was for £205,000 to Orchards, the estate agency run by Mrs Lyons. The tribunal found the withdrawals were improper and the only legitimate payments to Orchards could be for estate agent fees. It said: “The amounts involved could not feasibly be for that purpose.”
Striking off Mr Lyons, the tribunal recorded that he was “was an experienced solicitor, who had been calculatedly dishonest, and who, when first questioned about the discrepancy in the sale and purchase price, had sought to deny any impropriety”.
On both Mr and Mrs Lyons (the second respondent), it said: “[Their] dishonest conduct was engineered and deliberate; the second respondent having received one offer, communicated a different offer to [the vendor]… [They] had routed the misappropriated difference (£10,000) between their businesses so as to disguise that difference.”
Further, as well as Mr Lyons failing to co-operate fully with the SRA, the tribunal found his conduct “to be aggravated by his proven dishonesty which was deliberate, calculated and a complete departure from the standards expected of a solicitor”.
Given Mrs Lyons’ “calculated dishonesty and lack of integrity”, the tribunal made an order under section 43 of the Solicitors Act 1974 that she should not be employed by a solicitor without the SRA’s permission. Because she was unadmitted, the tribunal’s disciplinary powers were limited to the imposition of a fine.
Mrs Lyons was fined £10,000 and ordered jointly with Mr Lyons to pay costs of £38,800.