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£1.35m bill for firm which broke undertakings

10 November 2009

A Berkshire firm which failed to comply with its undertakings in a commercial property transaction must pay two housing associations a total of £1.35m, the High Court has ruled.

Willmett Solicitors was acting for Elegant Homes in the development of a site in Berkshire.

Giving judgment in Thames Valley Housing Association and others v Elegant Homes and others [2009] EWHC 2647 (Ch), Mr Justice Mann said that undertakings were an important part of the conveyancing process and a valuable protection for purchasers.

“A purchaser who accepts such an undertaking should be entitled to rely on it, and to know that the solicitor relying on it will have to comply with it,” he said.

The court heard that Elegant Homes secured a loan of over £6m from the Bank of Scotland to fund the development, in return for various charges over the land. Elegant later agreed to sell some plots of land to two housing associations for around £975,000, and Willmett gave undertakings that it would secure release of the relevant charge.

The charge was not removed, but the sale proceeds transferred by a former partner at Willmett, Jonathan Gilbert, to Elegant. The Bank of Scotland knew nothing about the sale and did not consent to it.

Mann J went on: “At the beginning of March 2009, Mr Gilbert sent his partners an email in which he apologised for the mess he had left them in relation to various matters and summarily resigned. Since then he has not been available to Willmetts [sic] to explain what happened in this transaction and why it happened.”

Mr Justice Mann said that the bank had indicated that it would be prepared to release the charge over the plots for around £1.35m.

He added: “The associations are innocent in this matter. It is Willmetts who are at fault. One does, of course, have sympathy with the other partners in Willmetts who seem, prime facie, to have been let down by Mr Gilbert, but there is no reason why the associations should be saddled with the consequences of that.”

He ordered that the court should enforce the undertakings.

Categorised in:

Procedures Conveyancing