High Court throws out £5m fraud claim against solicitor and legal executive

High Court: lawyers entirely exonerated

High Court: lawyers entirely exonerated

The High Court has thrown out a £5m fraud and conspiracy claim against a newly qualified solicitor and experienced legal executive who acted for a Docklands developer.

Mr Justice Mann said solicitor Helen Francis and legal executive Helen Glavin, both working for what was then Cripps Harries Hall (CHH), had suffered “years of anxiety” as a result of the claim, “culminating in a trial which they should not have had”.

Mann J said the two women “should now be freed from that anxiety”, having been “entirely exonerated of the serious matters alleged against them”.

Delivering judgment in Mortgage Agency Services Number One Limited (Mansol) v Cripps Harries LLP [2016] EWHC 2483 (Ch), Mr Justice Mann said Masnol, trading as Britannia Commercial Lending, claimed damages for fraud and conspiracy over a loan to developer and former Olympic gymnast Spencer McGuiness.

Masnol claimed it was “deliberately misled” by Ms Francis and Mrs Glavin, leading to the mortgage lender agreeing to lend Mr McGuiness £11.4m. The judge said the fact that he was in arrears on a loan to the West Bromwich Building Society and receivers had been appointed was not disclosed to Masnol.

Mann J said the existence of a dispute about the quality of the building works at Mizzen Mast House in London’s Docklands was also not disclosed.

Ms Francis, whom he described as “very newly qualified at the time”, was the principal CHH solicitor acting for Mr McGuiness before Mrs Glavin took over.

“It was not very long before Mr McGuinness fell into arrears on the Masnol loan and in due course receivers were appointed. A sale generated a shortfall. Part of the shortfall has been recovered from surveyors said to have been negligent, leaving a very substantial unrecovered balance which Masnol now seeks to recover from CHH.”

Damages of £5.2m had been agreed in the event of the court finding in the company’s favour.

Mann J said he was aware he had dismissed a large number of allegations made by Masnol.

“One might wonder how a claim can be brought and sustained over so many points (some merely evidential, some going to the actual claim itself) and yet fail on all of them so comprehensively and it be found that there is nothing in the claim or allegations at all. The answer to that is twofold.

“The first is that the prospects of establishing a fraud are not directly proportional to the number of adverse allegations made. The second lies in what I think seems to have happened in the genesis of this case. The claimant was anxious to maximise its recovery in what was a fairly disastrous loan.”

Mann J said Masnol “did not recover in full from its valuers”, and, turning its attention to the law firm, “donned its fraud detection goggles, turned the sensitivity up to high and attributed a dishonest motive to every interesting feature in the landscape (in very delayed proceedings).

“That led to a large number of accusations of dishonesty being made. Some allegations came close to being allegations which should not have been made or sustained (though I acknowledge that the claimant did exercise sufficient judgment to abandon some allegations after the close of evidence).

“Whilst motive is not a necessary ingredient in the claim, as I have frequently said, it is obviously important and I doubt if sufficient attention was paid to the realities of that part of the case, especially once the defendant’s evidence was complete.”

Mr Justice Mann dismissed all the claims made against Ms Francis and Mrs Glavin.

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