Bevan Ashford loses negligence battle against fraudster's wife

Bevan Ashford was negligent in failing to properly advise a woman that giving up her share in a house and other investments was 'highly unlikely' to save her fraudster husband from prosecution, the Court of Appeal has ruled.

Bevan Ashford demerged in 2004, leading to the creation of Ashfords and Bevan Brittan. Garry Mackay, the partner named in the case, is currently partner and head of commercial services at Ashfords, which acted for the former firm.

The Court of Appeal overturned a High Court ruling that Bevan Ashford had complied with its duty of care in January 2012, with Lord Neuberger giving the leading judgment, and ordering a retrial. This took place in November 2012 and the firm was ordered to pay just over £67,000 damages plus £6,370 in interest.

The latest appeal was on causation, with Bevan Ashford arguing that the judge's conclusions were wrong.

Delivering the leading judgment in Padden v Bevan Ashford [2011] EWCA Civ 824, Lord Justice McCombe said the latest High Court ruling had concluded that if Heather Padden had been properly advised, she would not have signed the documents.

The court heard that her husband's solicitor wrote to her in 2003 saying she had agreed to give up her interest in the house, and in certain endowment policies, pensions and shares, to help her husband and she should seek independent legal advice.

Mrs Padden had previously been told by her husband that he had stolen money from a client and he needed £200,000 to avoid prosecution. She saw Rebecca Shinner, a newly qualified solicitor, at Bevan Ashford's Tiverton branch.

Shinner told Padden not to go ahead with the transaction, as there was a "huge or big risk" that her husband would face criminal charges anyway. However, Padden repeatedly told her that she had to do it, and Shinner wrote to the husband's solicitor saying the wife had consented to transferring the property to her husband.

The final documents were signed by Padden at Bevan Ashford in Exeter, with her husband and in the presence of Mackay.

Mackay witnessed their signature on the four documents, including a charge over the house which specified that its consequences had been explained.

Padden's husband was later convicted of obtaining around £2m by deception and sentenced to six years in prison. The couple divorced in 2010 and the husband died shortly afterwards.

Bevan Ashford argued that Padden had been told by her husband's solicitor to ignore any advice not to sign the documents and been warned by Shinner that she was taking a "huge or big risk".

The firm said the likelihood of a criminal prosecution was hard to assess. It argued that Padden had agreed to do anything possible to avoid her husband going to prison and advised her not to sign the documents.

However, Lord Justice McCombe rejected the defendants' arguments.

"Mrs Padden gave the clearest possible evidence that she would not have signed the documents if she had been advised, as she clearly should have been by any competent lawyer, that the completion of the proposed transactions would have been very unlikely to prevent a prosecution."

He went on: "The judge's conclusion was indeed unsurprising as the purpose of independent advice, in circumstances such as these, is precisely to incline the victim of undue influence towards backing away from the transaction being advanced under improper influence."

McCombe LJ said Padden denied suggestions that she was taken to a separate room at the defendant's offices, away from her husband, and advised on the consequences of signing the documents, and the trial judge accepted her evidence.

The lord justice concluded that a solicitor should have advised her, "as would have been plain as a pikestaff", that the prosecution and jailing of her husband was "highly unlikely to be avoided", with the result that she would not have signed the documents.

He dismissed Bevan Ashford's appeal. Lady Justice Arden and the Master of the Rolls agreed.

A spokesman for Ashfords said: "We are obviously disappointed with the decision in the claim against Bevan Ashford relating to events back in 2003.  

"We would simply comment that like all well managed law firms, Ashfords LLP constantly monitors and updates its systems and procedures.

"The various legal quality-marks awarded to the firm over the years, such as ISO 9001 certification and three LEXCEL  quality awards in a row, demonstrate our continuing commitment to client service."