High Court lifts threat to solicitor in wake of former partner’s mortgage fraud

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23 March 2018


High Court: delay just short of abuse of process

A threat to make a former partner of a corrupt solicitor who was part of a £30m mortgage fraud pay over £200,000 in damages has been lifted, years after the original offences.

The High Court struck out the claim by one of the defrauded mortgage companies, Mortgage Trust Limited (MTL).

The judge, Master Teverson, said the company, by postponing its claim of nearly £206,000 against the solicitor, had come “close to… an abuse of process”.

He said MTL had needlessly delayed by more than two and a half years before pursuing solicitor Kerry Smith, with negative effects on her health.

Ms Smith was formerly a family law partner at Maidenhead, Berkshire firm Willmett, which went into administration in 2009.

Conveyancing partner Jonathan Gilbert had taken out multiple bogus mortgages on strangers’ homes. He was struck off after being sentenced in 2014 to 12 years in jail.

In MTL v Willmett Solicitors and Kerry Smith [2018] EWHC 488 (Ch), the company argued that part of its strategy was to wait for judgment in Godiva Mortgage Limited v Travelers Insurance Company Limited, an attempt by Willmett’s insurers to cap claims against them, in which the Law Society was an interested party.

The case settled in October 2014 without the issue being determined.

Another reason MTL gave for the delay in pursuing Ms Smith was that only belatedly it had become aware she had been an equity, rather than salaried, partner at Willmett. However, the judge said it could have taken steps earlier to discover this.

In the end, MTL proceeded because of the approaching expiry of the limitation period. The judge said that waiting until this point “put [MTL] under a higher duty to prosecute the claim with diligence”.

He described the case as “exceptional” and in which “it would be wrong to allow any judgment obtained by [MTL] to be enforced against the personal estate of Ms Smith”.

He continued: “Ms Smith has been living for around 10 years with the potential effects on her of Mr Gilbert’s conduct. There is evidence before the court as to the effect on her health.

“She was visibly distressed in court before me and had to leave court.”

He concluded that “[MTL’s] decision not to pursue its application for a judgment in November 2014 and to leave the proceedings in abeyance until May 2017…  come[s] close to being an abuse of process but do[es] not quite cross that line.”

This, “combined with the substantial and significant prejudice to Ms Smith caused by that inactivity, leads firmly to the conclusion that these proceedings should be struck out.”

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