Partner and law firm fined for breaching multiple undertakings

SDT: Failures caused harm

A partner and his law firm have each been fined after failing to deliver on 32 undertakings and confirmations within the agreed timescale – with six still outstanding five years after the transaction concluded.

The Solicitors Disciplinary Tribunal (SDT) ordered Richard Andrew Seddon and Gowlings Solicitors to pay £12,000 each for their admitted misconduct.

Mr Seddon is a director of Preston firm Gowlings. The firm had two directors and four fee-earners at the time, although he is now the sole owner.

An agreed outcome with the Solicitors Regulation Authority (SRA) and approved by the SDT said they were instructed in September 2016 by longstanding clients to secure a “better commercial lending facility” on their properties, involving a loan and overdraft facility.

Eight properties were involved in the refinance transaction, with first legal charges the security.

The SRA said Mr Seddon and Gowlings provided 38 undertakings and confirmations relating to seven further items before the transaction completed in November 2016.

They failed to perform “32 of the clauses within the undertaking/confirmation in the agreed time scale”, six of which are still outstanding. Delays in performing the undertakings ranged from around two months to almost a year.

The SRA said the delays persisted “notwithstanding the consistent repeated chasing by Brabners”, the law firm acting for the lender, which reported Mr Seddon to the SRA.

“Due to the delays and non-compliance, the lender was left in a vulnerable position with respect to their security on some of the properties.”

The regulator said the application by the lender to register the legal charge on one of the properties was cancelled because Mr Seddon “failed to respond to requisitions” raised by the Land Registry.

“The lease to the borrower remains unregistered and the undertaking remains outstanding.”

There was a delay of almost a year in the registration of a lease to the borrower, preventing the lenders’ charge being registered.

The SRA continued: “Many consents required from landlords were provided late or not at all. Uncertainty remains as to whether the lender’s interest is noted on building insurance policies and whether loss of rent is insured against.

“Delay was experienced in original insurance policies being provided to the lender. In turn, undertakings given by Brabners to the lender could not be fulfilled.”

In non-agreed mitigation, Mr Seddon argued that there were “commercial pressures to complete the matter” and performance of some of the undertakings was out of his control – for example the Land Registry “taking longer to process applications than had been envisaged”.

Approving the agreed outcome, the SDT said Mr Seddon “appreciated the importance of complying with any undertakings given” and the failure “to comply with the undertakings at all, or late compliance had caused harm to the lender and to the reputation of the profession”.

He and Gowlings were also ordered to pay costs of £5,250 on a joint and several basis.

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