Interest: Solicitor set rate at what he thought a short-term lender would charge
A solicitor has been fined £20,000 after loaning his client money at an annual interest rate of 60% and eventually repossessing her house, selling it and making a return of nearly twice what he lent her.
Richard Gregory Barca, born in 1955 and qualified in 1986, admitted the allegations on the morning of the hearing before the Solicitors Disciplinary Tribunal (SDT).
It heard that Mr Barca had acted for a Mrs JWB, who was in financial difficulties and facing possession proceedings brought by her mortgage lender. In January 2011, he loaned her £27,000 through a company he owned at an interest rate of 60%.
Mrs JWB soon defaulted and in December 2012 Mr Barca repossessed her house and sold it just over a year later for £235,000. He received nearly £77,000 and her mortgage lender most of the rest.
In mitigation, Mr Barca said he had initially refused to provide a loan, but Mrs JWB had put “emotional pressure” on him. He eventually relented so that the woman, a childminder, could keep her home. He raised the money by increasing the mortgage on his own home.
Among the rule breaches were that Mr Barca had allowed his independence to be compromised and acted where there was a clear conflict of interest. He had not acted with integrity.
The SDT accepted that the solicitor’s motivation was to help Mrs JWB stay in her home and retain her livelihood, and that he had always intended that the loan would only be in place for two to three months – he said the rate was what he thought a short-term lender would charge.
“But at the same time [he] had a financial motivation… He had not ensured Mrs JWB had received independent legal advice and he had placed his own interests above hers as he continued to benefit while the loan was outstanding,” the SDT said.
“Whilst [he] may have ensured that Mrs JWB continued to have a home, he was adding to her financial difficulties with the high interest loan he had given her.”
The tribunal said Mr Barca should not have made the loan in the first place – which he agreed with in his mitigation – and that having made it, he should not have allowed the loan to continue as long as it did; he should have taken action to foreclose the loan as soon as Mrs JWB defaulted.
“The tribunal was satisfied that the misconduct was not planned. However, [he] had acted in breach of a position of trust.”
Mr Barca admitted two other charges. One was that during proceedings brought to challenge the validity of his charge over the property, he had wrongly said in a witness statement that he had not acted for Mrs JWB when he had registered it.
Though this was a rule breach too, the SDT found that it had been a “careless mistake”.
The other charge related to his work on another matter, when he acted for client Mrs PS, whose brother (Mr K) had guaranteed a loan she had taken out.
The lender started proceedings against Mr K, on which Mrs PS asked Mr Barca to act. She said she had Mr K’s authority to give instructions on his behalf, but Mr Barca did not check this and – after acting in the case, which led to an interim charging order being made over Mr K’s property – it turned out not to be true.
The SDT said Mr Barca had “genuinely believed” that Mrs PS had been authorised to give him instructions, but he “should have known that it was not acceptable to take instructions from a third party and to file court documents through an agent without any direct instructions from the client”.
He had acted, the tribunal said, in a “cavalier fashion”.
Deciding sanction, the SDT concluded that Mr Barca was not a risk to the public and it was therefore not necessary to interfere with his ability to practise.
A fine of £20,000 was the “appropriate and proportionate sanction”, reflecting the seriousness of the misconduct and maintaining public confidence in the profession.
Mr Barca also agreed to pay £26,000 in costs.
This was the solicitor’s second appearance before the SDT. He was reprimanded in 2015 [1] for asking a solicitor in an email to behave “like a normal person instead of a complete plonker”.
He was also at the centre of an employment tribunal case last year, in which a paralegal who was subjected to a “long accumulation of abuse” by him was found to be the victim of harassment [2] on the grounds of sex.
However, most of the incidents cited did not amount to harassment because the paralegal received the same kind of general abuse that Mr Barca meted out to all staff at Wilson Barca.