Santander UK Plc v R.A. Legal Solicitors
2014
COURT OF APPEAL (CRIMINAL DIVISION)
United Kingdom
CORAM
- MRS JUSTICE PROUDMAN
Areas of Law
- Contract Law
- Equity and Trusts
- Property and Real Estate Law
2014
COURT OF APPEAL (CRIMINAL DIVISION)
United Kingdom
CORAM
AI Generated Summary
In May 2009, Santander UK PLC agreed to lend £150,000 to Mr. Srinivas Vadika for a property purchase. R.A. Legal Solicitors, overseeing the transaction, transferred £200,000 to Sovereign Chambers LLP's client account, only to discover that Sovereign was a fraudster. Abbey sued R.A. Legal for breach of trust. The trial judge found R.A. Legal in breach of trust but excused them based on section 61 of the Trustee Act 1925. On appeal, it was concluded that R.A. Legal had not acted reasonably in material respects, and their failings directly connected to Abbey’s loss, leading to a reversal of complete relief from liability.
Judgment
Lord Justice Briggs :
Introduction
In May 2009 Santander UK PLC (formerly Abbey National) (“Abbey”) agreed to lend £150,000 plus fees to a Mr. Srinivas Vadika for the ostensible purpose of assisting him in the purchase of a residential property known as 8 Opal Close, London E16 (“the Property”). Mr. Vadika and Abbey instructed R.A. Legal Solicitors to act for them in connection both with the purchase and the obtaining of first mortgage security for Abbey. The purchase price for the Property was £200,000 and Mr. Vadika was to contribute the balance of £50,000 from his own resources.
R.A. Legal were advised that the owner and vendor of the Property was a Ms. Emma Slater, and that her solicitors were Sovereign Chambers LLP (“Sovereign”).
From the perspective of those dealing with the matter at R.A. Legal, the matter proceeded as an entirely ordinary and unremarkable residential conveyancing transaction. Having been put in funds by Abbey and Mr. Vadika, R.A. Legal transferred £200,000 to Sovereign’s client account on 28 th July 2009, and the transaction apparently completed on the following day, simultaneous exchange of contracts and completion being confirmed by a telephone conversation between the two firms on 29 th July, in the early afternoon.
Unfortunately for Abbey and R.A. Legal, and possibly for Mr. Vadika, the transaction did not complete on 29 th July, or at all. Although Ms. Slater was indeed the registered proprietor of the Property, and apparently seeking to sell it, she had never retained Sovereign for that purpose, never agreed to sell it to Mr. Vadika, and was until early November 2009 entirely unaware that it had been purportedly sold on her behalf by Sovereign.
Although a firm of solicitors in good standing with the Law Society, Sovereign was in fact a fraudster. No part of the purchase money was used either to pay Ms. Slater or to discharge the mortgage which she had granted over the Property. It disappeared from the Sovereign client account on 13 th August 2009 and has not been traced or recovered. The result was that Abbey received nothing of substance by way of security for its advance of £150,000 to Mr. Vadika. On the face of it, he lost his own contribution of £50,000 for nothing in return, and incurred a personal liability to repay Abbey £150,000, again for nothing in return. The dispute and litigation which has led to this appeal is however only between Abbey and R.A. Legal. The trial judge Andrew Smith J. made no find