SDT: Trainee should not have been given autonomy he was
The boss of a Manchester law firm has been fined £12,500 for failing to supervise his trainee properly in conveyancing transactions that “bore the hallmarks of property hijacks”.
His co-owner was fined £15,000 for paying out £100,000 from client account without authority, resulting in a client account deficit that the partners had to cover.
The Solicitors Disciplinary Tribunal (SDT) heard that Gurpralad Landa Singh, admitted in 1981, owned 60% of HSK Solicitors and held the compliance roles. Kim Singh Landa, admitted in 2006, owned 39% of the firm.
In an agreed outcome approved by the SDT, the Solicitors Regulation Authority (SRA) said it was not known whether the two suspect transactions were in fact property hijacks but they “bore some hallmarks” of being so.
A trainee solicitor under Mr Singh’s supervision had day-to-day conduct of the matters and “failed to spot the obvious hallmarks and make enquiries about them”.
The SDT said the public “would be alarmed” by a trainee being put into this position. If the trainee was “unable to spot these obvious hallmarks”, he “should not have been given the degree of autonomy he was”, and if a system allowed this to happen it was inadequate.
In one of the transactions, the law firm was presented with a “crudely forged letter” purporting to be from Leeds City Council. This supposedly confirmed it had been given first refusal and decided not to buy the property.
At one point, the vendor attended the firm’s office with someone who purported to be her son to direct that the sale proceeds be sent to his bank account. He was said to live in Clackmannan in Scotland.
The SRA noted that the vendor was a Chinese lady and her son white. The firm said this did not raise any questions as he could have been adopted.
The second transaction, with different parties, began before the first completed and the vendor also asked for the proceeds to be sent to a (different) man in Clackmannan.
“Clackmannan is a small town with an estimated population of approximately 3,260 in mid-2020,” the SRA said. “It was extremely unlikely to be a coincidence.”
The trainee argued that this only became apparent with the benefit of hindsight.
The SRA said there were other red flags missed, including pressure to complete the sales quickly and being asked to transfer the funds directly to third parties, which is against the SRA rules unless directly connected with the transaction, such as estate agents’ fees.
Mr Singh failed to provide the trainee with sufficient training, it said. They spoke several times a day and there was a file review before both exchange and completion. The red flags should have been picked up as part of this.
Mr Landa admitted that he had paid out £100,000 received from a member of a consortium as a down payment on another property without “adequate authority”, resulting in a £32,000 deficit on client account.
Mr Landa did not have her authority for another member of the consortium to give instructions on her behalf; indeed, he did not speak to her “at all” until all the funds had been dissipated.
The purpose of some of the payments was unclear too and two transfers were made without an underlying transaction, which Mr Landa said had been errors.
The firm’s partners replaced the funds with interest.
Mr Singh also admitted that he “failed to ensure adequate systems were in place for accurately recording dealings with client money”.
The SRA said HSK “did not have a system in place for updating ledgers with sufficient regularity”.
This meant they could show more funds on client account than was in fact the case “and funds could therefore be paid out when no funds were available”.
This led to 37 overpayments being made, and an overall client account deficit of £37,470 by October 2019. The SRA said the problem “was a systemic one”.
In mitigation, Mr Singh said his failures on the two transactions were of omission, rather than commission, and pointed to a hitherto unblemished 41-year career in the law. Mr Landa said he knew all the parties involved and the client who had provided the down payment had spoken in support of him.
But this was Mr Landa’s second appearance before the SDT, having been fined £5,000 in 2016 for failing to register a property form and to provide accurate information to a party to the transaction.
Mr Singh was fined £12,500 and Mr Landa £15,000 as the SDT considered the latter’s failures more serious. They were ordered to pay £30,000 in costs, split equally between them.
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