Clark: Exchange not valid
A judge has refused to order the sale of a house after finding that the buyer’s solicitor “cut corners” thinking he would not be caught and did not hold a signed contract at the point of exchange, despite claiming he did.
Master Clark described aspects of Sean McCarthy’s evidence as a “fabrication” and that the solicitor was not a witness whose evidence could be relied upon “when unsupported by contemporaneous documents”.
Shill Properties Ltd v Bunch [2023] EWHC 2135 (Ch) was a claim for specific performance of a contract of sale for a house dated Friday 7 December 2018. The claimant buyer was an investment company and the defendant seller an elderly woman, now 91.
No original or copy of the contract signed by or on behalf of the claimant has been found – only one signed by the defendant – and the judge held that the exchange was therefore invalid for non-compliance with section 2 of the Law of Property (Miscellaneous Provisions) Act 1989.
Mr McCarthy’s written evidence was that, at the time of exchanging contracts, he held Shill’s signed contract, having been authorised to sign it himself.
But Master Clark said there was no evidence that he had been sent the draft contract before 7 December, while there was no attendance note to back up Mr McCarthy’s assertion that Shill authorised him to exchange, nor of the exchange itself.
On the following Monday, he requested a copy of the draft contract from a paralegal. Mr McCarthy said in oral evidence that the version signed by him had been “misplaced” over the weekend. He said he printed off a duplicate and added in various late amendments and additions in manuscript.
The judge said: “None of this is found in his witness statement. Mr McCarthy did not explain how a document of such importance could have been lost in a solicitors’ office over a weekend (or why he did not send the signed contract to [the seller’s solicitors] on 7 December having undertaken to do so).
“In my judgment, his explanation is a recent fabrication to explain the inconvenient fact that the draft contract was not sent to him by [the paralegal] until 10 December. I reject it.”
Shill’s counsel submitted that this would be a finding of dishonesty, and that Mr McCarthy had no apparent reason or benefit in misrepresenting the position to another conveyancer.
Master Clark said: “As to this, the position on 7 December was that neither the claimant, or [assistant solicitor Mehreen] Iqbal (or Mr McCarthy) had taken any steps to progress the conveyancing. Ms Iqbal had not sent him the draft contract.
“Given the history of the matter, Mr McCarthy knew that there was a risk that Mrs Bunch’s other buyers would increase their offer (as in fact they did), or that Mrs Bunch would just change her mind. He was under pressure from [a Shill director] to exchange contracts as soon as possible.
“Going through the motions of exchange without actually having a signed contract was ‘corner cutting’ i.e. achieving the result the client was pressing for, with a reasonable belief that in the normal course of events this would not be detected.”
The master noted that the deposit was not sent on 7 December, contrary to the undertaking required by the exchange, which was conducted pursuant to Law Society formula B.
“Mr McCarthy’s initial evidence was that he would not have exchanged contracts unless his firm was holding the deposit. However, it is clear and I find that he did do so.” He did not send the deposit until 17 December, she found.
Shortly after exchange, it was proposed that another company, Safety Investment, would take over the purchase from Shill. Mr McCarthy told Safety’s lender’s solicitors that Shill had acted as its nominee on exchange.
Master Clark said: “In cross-examination, Mr McCarthy accepted that the statement that on exchange Shill acted as nominee was untrue, though he said it was not deliberately so, because by that stage (i.e. 6 February 2019) those were his instructions.
“I do not accept that. He was setting out the position as at the date of exchange, and that statement was either intentionally untrue, or carelessly so to the point of recklessness.”
Completion did not proceed amid allegations that Mrs Bunch entered into the contract under duress and undue influence.
The judge held that, if she was wrong on the validity of the exchange, Mrs Bunch had established a defence of fraudulent misrepresentation on the grounds that she had been told that Shill was a cash buyer when it was not.
In explaining why she could not rely on Mr McCarthy’s evidence, Master Clark highlighted the lack of attendance notes and aspects of his testimony, particularly the “fanciful explanation of why he was provided with the draft contract on Monday 10 December 2018 after the apparent exchange on Friday 7 December 2018”.
We have approached Mr McCarthy, a partner at Spencer West since 2021, for comment.
There are parts of the conveyancing process that are better carried out, if the person has Autism. People with Autism are better at tasks that, it essential to have attention to detail. They don’t attempt to take short cuts!