Solicitor who let one mistake “snowball” fined by tribunal

SDT: Solicitor should be able to find another job

A solicitor who let one mistake on a property sale snowball so that it affected multiple transactions in a portfolio has been fined £10,000.

The Solicitors Disciplinary Tribunal (SDT) issued a financial penalty even though Paul Geoffrey Hayward said he preferred to be struck off for breaching undertakings and not registering charges in a timely fashion.

Mr Hayward worked his whole career at Bristol firm Wards, qualifying in 1999 and becoming a partner in 2007. Following an internal investigation into what happened, he left on 31 October 2019 and has not practised since.

The SDT heard that he had acted for Client A and his family for several years in relation to a property portfolio.

His initial mistake concerned ‘Property A’, which was part of an umbrella charge in favour of The Mortgage Works. It was sold and the proceeds used to release a charge on another property within the portfolio, which would then be used to replace Property A within the umbrella charge.

The SDT recorded: “However, the application for the substitution was not dealt with, resulting in sale proceeds from other properties eventually being used to release the charge on Property A.

“That had the consequence of affecting use of funds going forward and causing late redemptions across a number of properties.”

Wards said 15 properties were affected and the Solicitors Regulation Authority (SRA) identified issues on 12 of them.

On three, Mr Hayward breached undertakings to redeem mortgages or discharge charges on completion – they were eventually done some time later – while on nine the solicitor failed to either remove or register a charge and/or a title. In some cases, these actions were taken many months later but in others they were not done at all.

However, ultimately no client suffered any financial loss.

Mr Hayward admitted what he had done. In mitigation, he explained that, after making the error on Property A, “the resulting transactions were carried out solely to try to rectify the situation without any loss to any lender or client”.

Mr Hayward explained that he was worried that his mistake would cause a disciplinary issue at work, cause a problem with a good client, “and he wished to avoid that if possible”. But he had expected matters would be resolved far more quickly than they were.

The SDT heard that Mr Hayward did not wish to remain on the roll as he did not consider that he could find a job because of the prosecution. Accordingly, his future earning prospects were likely to be minimal and, given his financial situation, he preferred to be struck off than receive a financial penalty.”

In deciding sanction, the SDT said: “Mr Hayward tried to rectify the initial error made. He accepted that in doing so, the error snowballed and effected other matters. Mr Hayward’s misconduct was motivated by his desire to try to correct his initial mistake.

“His actions were not planned, but were a reaction to the circumstances arising on each of the transactions…

“Notwithstanding that there was no financial loss to his clients and other third parties, he had caused harm both to third parties and to the reputation of the profession.”

The tribunal noted that Mr Hayward had a previously unblemished record and fully admitted his misconduct, first to Wards and then to the SRA.

It concluded that a £10,000 fine “adequately reflected the seriousness of his misconduct”, adding that its findings should not be a bar to Mr Hayward returning to the profession if he chose to do so.

The SDT reduced the SRA’s costs by more than £10,000 to almost £21,000, saying that “given the issues to be determined, and in circumstances where matters had been admitted from the outset, the legal fees claimed were excessive”.

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