Sister and brother struck off for work on dubious investment schemes

Car parks and storage pods: 6,792 transactions handled

A sister and brother have been struck off as solicitors for putting their own financial interests ahead of clients who lost money in dubious parking space and storage pod investment schemes.

The Solicitors Disciplinary Tribunal (SDT) found that Margaret Bridget Hetherington and Patrick Clement Hetherington were more concerned with maintaining the flow of cases and income through the Wirral firm they ran together and so provided inadequate advice to their clients.

Over six years, £101m passed through the Hetherington Partnership’s client account while providing conveyancing services on the purchase of 5,085 storage pods and 1,707 parking spaces from companies linked to Group First.

The buyers were either individuals or the providers of self-invested personal pensions (SIPPs) referred to them by Group First.

The firm received £2.9m in fees in that time and the work was its main source of income: in 2013/14, its turnover was £845,000, falling to £530,000 the following year and £490,000 the year after.

Ms Hetherington, who qualified in 1994, was responsible for the work. Her brother, admitted to the roll in 1986, held the firm’s various compliance roles.

The Solicitors Regulation Authority (SRA) highlighted how the scheme threw up multiple red flags, such as “guaranteed” high returns to purchasers against purportedly low levels of risk; promising an immediate capital growth of at least 25%; contracts which purchasers “would be likely to find complex and difficult to understand”; and the implied approval of major bodies including HM Revenue & Customs and the Royal Institute of Chartered Surveyors.

The Hetheringtons were accused of ignoring these and other warning indicators, which also included allowing their clients’ purchase monies to be sent to the seller’s solicitors on a non-refundable basis at the very outset of their instruction, before contracts had even been exchanged.

The pair argued before the SDT that, as they were only instructed to undertake the commercial conveyancing, they did not, and had no reason to, investigate the merits of the transactions.

The tribunal concluded that the pro forma advice provided to clients on the various contracts was not incorrect, but it was deliberately inadequate – even if the firm’s obligations only extended to the conveyancing itself.

As just one example, they failed to advise on a “dangerous and onerous” clause whereby the seller had the right to resell the parking space if the client failed to respond to any communication within 21 days.

The SDT said: “The information provided by the respondents in their various reports fell far below the advice that was necessary to ensure that their clients were in possession of all necessary information in relation to their transactions.

“The tribunal did not consider that [they] were required to advise clients as to the prudence of the transactions; however, it was their role to advise clients as to the nature of the transactions generally and as to the effectiveness of the documents to achieve their purported purposes. The respondents failed so to do.”

The SDT said the pair had also not given any proper consideration to SRA and Action Fraud warning notices that highlighted issues relevant to the schemes.

Mr Hetherington said he had no recollection of an email in 2015 from a SIPP provider which said it was halting investments in parking spaces following receipt of an Action Fraud notice or whether he took any action as a result.

The SDT said this evidence was “incapable of belief”. It explained: “The tribunal did not accept that an experienced solicitor would not recall investigating whether the work which formed the largest part of its income was in fact a Ponzi scheme.”

It went on to find that the solicitors did not want to disturb their main source of income and that their conduct was dishonest.

“The tribunal considered that ordinary and decent people would find it dishonest for solicitors to deliberately provide limited advice so as to ensure that the transactions upon which they were instructed would proceed.

“Further, it would be considered dishonest for solicitors to prefer their own interests over the interests of their clients.”

Their failings had caused significant financial harm to a number of their clients who lost substantial amounts of money as a result and damaged the reputation of the profession.

Striking them off, the SDT concluded: “Their conduct was deliberate, calculated and repeated over a number of years and over 6,000 transactions.

“The respondents had been evasive in their evidence and had deliberately failed to answer straightforward questions put to them in cross-examination. Their conduct was a complete departure from the standards of integrity, probity and trustworthiness expected of solicitors.

“Their clients ought to have been given full and proper advice. That did not occur. The tribunal found many of the respondents’ answers to questions to be incapable of belief, and demonstrative of their disregard for their clients’ interests.”

The Hetheringtons were also ordered to pay costs of £98,000 on a joint and several basis.

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