Lease: Client refused to sign
A London law firm that breached an undertaking given during a property transaction – in part because of a recalcitrant client – has been rebuked and fined £2,000.
This is the severest sanction the Solicitors Regulation Authority (SRA) can hand out without referring the matter to a disciplinary tribunal.
Child & Child has entered into a regulatory settlement agreement with the SRA to end the investigation.
According to the agreement, the firm was instructed by its client, called Mrs A, on the sale of her £1m property, which comprised both a headlease, a sublease and a share in the freehold.
In preparation for completion, Mrs A attended the firm’s office to sign the various transfer deeds. The matter completed in July 2011.
“Because of the nature of the transaction, the completion arrangements were unusual. However, the firm undertook to provide a copy of each of the transfer deeds, properly executed by Mrs A, to the buyers’ solicitor.”
However, in October 2011, it emerged that the sublease had not been executed by Mrs A.
The firm attempted to rectify this, but Mrs A did not sign the document, despite initially indicating that she would.
Mrs A’s stance then changed and by September 2012 she stated that she had not instructed Child & Child to sell her property, only to re-finance it.
This led to a “protracted dispute” between the firm, Mrs A and the buyers that was eventually resolved in late 2016 when Mrs A signed the transfer deed. The buyers had incurred “significant legal fees” in the process.
Child & Child admitted that the five-year delay in providing the buyers’ solicitor with a properly executed transfer deed breached its undertaking.
In deciding that the agreed outcome was proportionate, the SRA said it took into account the firm’s admissions and mitigation.
This pointed out that there was no pattern of similar misconduct at Child & Child and that it had not intended to breach the undertaking; but once it had completed the transaction, “it had no way to compel Mrs A to provide a signed copy of the transfer”.
Further, “the harm suffered by [the buyers] is not something the firm could have easily anticipated as a result of the misconduct. The firm could not have expected Mrs A to act in the way she did”.
The SRA recorded that the firm had accepted its failure from the outset, “showing insight and an attempt at remedial action”.