SRA: No abuse of process to discipline solicitor found in breach of undertaking by court

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14 March 2017

SRA: firm should have reported breach

The Solicitors Regulation Authority (SRA) has rebuked and fined £2,000 a solicitor already found by the High Court to be in breach of an undertaking, rejecting the argument that this was an abuse of process.

Handing him the maximum penalty it can without a referral to the Solicitors Disciplinary Tribunal, the SRA said that Edward Abenson breached an undertaking by failing to register a legal charge within seven days of completion, and later failed to report the breach.

During the court proceedings, Judge Hodge QC described Mr Abenson, founder and managing director of Liverpool firm Abensons, as “by far the worst solicitor witness I have ever seen”.

The SRA described as “inexplicable” Mr Abenson’s failure to register the charge.

The regulator went on: “Members of the public expect, and are entitled to expect, that solicitors will comply with the undertakings given.

“Undertakings form a key role in most property transactions and it is essential to these transactions that solicitors comply with and discharge the undertakings given.

“In circumstances where no satisfactory explanation has been provided as to why he did not comply with the undertaking given, we are of the view that his conduct failed to maintain the trust placed in him and in the legal profession.”

Judge Hodge ruled that the claim brought by LSC Finance against Abensons Law should succeed on the basis of breach of undertaking, breach of warranty of authority and breach of a Quistclose resulting trust.

However, the judge made it clear that LSC was the victim of a mortgage fraud, and that Mr Abenson and his firm were in no way involved in that fraud.

Judge Hodge later entered judgment in favour of LSC for nearly £176,000. Lord Justice Kitchin rejected the law firm’s application for permission to appeal last year.

In a highly unusual seven-page decision notice, the SRA rejected the arguments of Mr Abenson’s lawyers, Legal Risk, that it would be an abuse of process for Mr Abenson to be sanctioned, given that he had already received “disciplinary action by the High Court”.

The SRA said that its disciplinary action was concerned with a different undertaking, but even if it concerned the same one, this would not amount to an abuse of process.

“[The court] proceedings were not brought under the court’s inherent supervisory jurisdiction but were an ordinary action for damages for non-performance of an undertaking (in other words for breach of contract).

“As such, as the court’s inherent supervisory jurisdiction was not being used, there is no question of disciplinary action having already occurred.

“Further and in any event, when the court does award compensation for non-performance of an undertaking under its supervisory jurisdiction this is primarily compensatory and not punitive in nature.”

Along with the breach of an undertaking and failure to report the breach, the SRA found that Mr Abenson failed to comply with the firm’s own policy on identifying clients, which underlined the importance of examining original documents.

The SRA said that, despite this, the solicitor relied on a certified copy of a water bill that Legal Risk accepted was forged. Although Mr Abenson failed to comply with procedures, the SRA’s adjudicator rejected an allegation that by doing this he had breached the Money Laundering Regulations.

The regulator said the fact that the firm was “facing litigation” over the breach of an undertaking demonstrated the “seriousness” of the matter and the need to report it.

The SRA said it did not “think it credible” to maintain that there was “nothing to report” once Mr Abenson knew of the possibility of a mortgage fraud and that he given undertakings that could not be complied with.

The SRA also ordered the solicitor to pay costs of £1,350.

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