Scots lawyer fined £2,500 over failure to act in client’s best interests in property deal
A Scots lawyer who acted on behalf of a woman who was seeking to buy her estranged husband’s share in their former matrimonial home so she could remain in the property with her children, while also acting for the woman’s new partner who had agreed to fund the purchase and let the property to her until she could afford to obtain a mortgage, has been found guilty of “professional misconduct”.
Alan Livingstone was censured and fined £2,500 by the Scottish Solicitors’ Discipline Tribunal (SSDT) over his failure to act in his client’s best interests, after a minute of agreement he drafted on behalf of the parties failed to include an enforceable right in favour of the woman to compel transfer of the property to her - as a result of which she and her children were forced to leave their home when the couple’s relationship broke down.
‘Transfer of title’
The tribunal heard that in 2005 the 60-year-old solicitor, a partner of Kelso-based firm Borders Legal Limited, trading as Hastings Legal, had been acting for the complainer Ms A in relation to her separation from her husband Mr B.
Ms A, who along with the children of the marriage had continued to live in the family home, which was in the joint names of Ms A and Mr B, had formed a new relationship with Mr C and together they had agreed a way to enable her to buy out her husband’s interest in the property.
The plan was that Mr C was to obtain ownership of the property and let it to Ms A, and that when she was in a financial position to obtain a mortgage he would convey the property to her.
Ms A and Mr C met the respondent in January 2009, during which the solicitor advised that he would arrange for the transfer of ownership of the property from Ms A and Mr B to the sole ownership of Ms A, which would involved a payment to Mr B of £40,000; repayment of the outstanding mortgage; transfer of ownership from Ms A to Mr C, completion of a standard security in favour of Mr C’s lender; and a minute of agreement in terms of the plan agreed by Ms A and Mr C.
Following the meeting and having received the loan instructions from Mr C’s lender, which identified the property value as £135,000, the respondent issued a letter of engagement and terms of business letter to Mr C only.
‘Minute of Agreement’
The lawyer then drafted the disposition from Ms A and Mr B to Ms A; drafted a discharge of the standard security; drafted the disposition from Ms A to Mr C and competed the report in title; drafted the new standard security; and prepared the minute of agreement between Ms A and Mr C.
However, the disposition from Ms A to Mr C recorded the purchase price as £100,000, meaning it was sold at undervalue, and the minute of agreement provided that Mr C would grant a short assured tenancy to Ms A, who be responsible for the mortgage repayments, and that she could “at any time request that Mr C transfer the tile of the power-to into her name” subject to the mortgage being transferred into her name only or her paying off the loan obtained by Mr C.
But the respondent never advised Ms A that he was not acting on her behalf in relation to the minute of agreement and did not assist her in securing a legal right to remain in the property after the sale.
When the respondent presented the disposition in favour of Mr C he did not explain the legal consequences of Ms A signing the document or that she should seek independent legal advice, nor did he advise her of the legal implications of the minute of agreement.
In 2015 the couple’s relationship broke down and Mr C instructed his lawyers to recover the property and to serve notices to quit on Ms A and her children, as they only right she had was to “request” to transfer the title of the property into her name and no words of compulsion by which she could enforce the transfer.
‘Conflict of interest’
The SSDT fined the respondent after ruling that he failed to act in his client’s best interests.
In a written decision, tribunal vice chair Beverley Atkinson said: “The practice rules provide that solicitors must not act for parties whose interests conflict. They must act the best interests of their clients.
“Provided no dispute arises or might reasonably be expected to arise between the parties, solicitors can sometimes act. However, parties must be advised by the solicitor at the earliest practicable opportunity that the solicitor or firm has been requested to act for all the parties and if a dispute arises, they or one of them will require to consult an independent solicitor.
“No document requiring signature of another party should be issued without informing that party in writing that such signature may have legal consequences and the party should seek independent legal advice before signing.
‘The respondent breached these rules… The respondent’s conduct constituted a serious and reprehensible departure from the standards expected of competent and reputable solicitors.
“The conflict of interest between these parties was clear. The respondent appears not to have identified it and therefore did not comply with his obligations under the rules.
“The respondent carried out various conveyancing transactions and minute of agreement of the parties. This should have provided time to reflect and take appropriate action.
“The financial and emotional consequences for the secondary complainer in not having an enforceable right to purchase the property could have been very serious. The respondent did not appear to have applied his mind to what might go wrong for the secondary complainer.”
She added: “The tribunal noted that this was an isolated incident in a long career throughout which the respondent had contributed to the profession.
“Balanced against this was the serious nature of the respondent’s failure to identify and act upon a clear conflict of interest and his failure to act in his client’s best interests.
“In all the circumstances, the tribunal was satisfied that a censure and a fine of £2,500 was appropriate.”
© Scottish Legal News Ltd 2020