High Court clears law firms over “fraudulent” property transfers

Marsh: Transaction was entirely normal

The High Court has thrown out a claim that two law firms and three solicitors were responsible for two allegedly fraudulent transfers of a property.

Bakrania & Anor v Shah & Ors [2019] EWHC 949 (Ch) concerned a property in north London initially owned by brother and sister Vallabh and Hansa Bakrania, and another sibling, Jayanti.

In December 2009, the property was transferred into the names of Hansa and Jayanti for no money. Shah London Ltd, which was at the time a firm of solicitors, handled the transaction and acted for both sides.

The first two defendants, Rajesh Shah and Jawarhala Teeluck (now deceased) were directors of the firm.

In July 2010, the title was transferred to third parties for £440,000. The fourth defendant, Bedford firm Premier Solicitors, acted for the transferors, and partner Bhupendra Khetia was the fifth defendant.

Jayanti died on 18 September 2010, and 18 months later Vallabh and Hansa applied to HM Land Registry to alter the register to show them as the proprietors of the property.

In 2015, after the First-tier Tribunal had rejected the claimants’ bid to rectify the Land Register, they launched the legal action.

Their case, which for the purposes of the application was not challenged, was that both transfers were executed by fraudsters and that neither they nor Jayanti knew anything about their execution or the registration of title that followed.

They claimed neither firm of solicitors was instructed by them or Jayanti, and that the instructions to the solicitors were provided by or on behalf of the fraudsters.

They said Shah London was in breach of its duty in relation to the first transfer, causing loss to Vallabh.

Chief Master Marsh first struck out the claim in relation to Mr Shah and the estate of Mr Teeluck, on the basis that neither undertook the legal work and the claim was not pleaded on the basis that they assumed personal liability. The duty, the master held, was owed by the firm.

In any case, service was not effected properly and he rejected the suggestion that the fact the particulars were sent to the firm was sufficient.

In relation to the claim against Shah London, Master Marsh held that whether the position was analysed by reference to Vallabh’s entitlement to rectify the register, or to the subsistence of the trust between the three siblings, the position remained the same.

This was, he said, that “Vallabh has no claim he can made in light of the manner in which the fraud was carried out…

“It is not pleaded that Shah London LLP should have foreseen that a second fraud would take place. Such a claim would have been unarguable. It could not be said that it was within the scope of their responsibility to foresee that there would be another fraud.

“All they were doing was acting on a transfer from three joint owners to two without payment and such a transaction is entirely normal.”

Hansa pursued a claim against Premier Solicitors and Mr Khetia in relation to the second transfer, but this was struck out in February as result of the claimants’ failure to comply with an unless order, and the claimants’ application for relief from sanctions was dismissed.

Both claimants made a claim against the Land Registry for an indemnity in respect of the costs of the First-tier Tribunal proceedings, but the master dismissed this too for lacking “any real merit”.

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