Solicitor fined after sale of elderly client's property to 34-year-old fraudster
The solicitor acted for both parties to the transaction where a 'clear conflict' existed
The Solicitors Disciplinary Tribunal (SDT) has fined the partner of a law firm £8,000 and ordered her to pay £4,000 costs after she was found to have acted for two individuals on a property transaction where a conflict, or significant risk of a conflict, existed. An elderly client’s home was sold at an undervalue to a man 44 years’ her junior, who had previously been convicted of fraud.
Maxine Madderson was a partner at Maddersons Solicitors, which is now a part of Guardian Solicitors. In June 2018, the Solicitors Regulation Authority (SRA) were notified of a concern by a solicitor acting on behalf of the daughter of one of Madderson’s former clients, Mrs G. Mrs G had since died and her daughter, Mrs M, had concerns regarding the sale of her mother’s property in February 2012.
Madderson had acted for, or supervised a junior fee earner acting for, Mrs G in relation to the sale of her home to Mr D, a 34-year-old man 44 years’ her junior, who she was in a relationship with.
Mrs G owned the property outright with no mortgage. The property had been sold for £238,500 in 2006. However, Mrs G instructed Madderson to arrange the sale of the property to Mr D for £70,000, at a significant undervalue, but to retain the right to continue to live in the property. The firm also acted for Mr D in the transaction.
The SDT accepted a statement of agreed facts in which Madderson admitted she had failed to ensure that Mrs G had independent advice prior to the sale of the property at undervalue, breaching the SRA Principles 2011 and SRA Code of Conduct 2011.
Madderson had been aware at the time of the sale that Mrs M was concerned that Mrs G was being unduly influenced by Mr D, but in a letter to Mrs M in 2014 said that she was “satisfied” that Mrs G “had full capacity to make the decision to transfer the property for just £70,000 to Mr D and that she did so entirely of her own free will.”
In 2017, a solicitor acting for Mrs M wrote to Maddersons setting out concerns, including a lack of evidence on the case file to show that any steps were taken to assess Mrs G’s capacity, the absence of any advice to Mrs G about how the transaction may be disadvantageous to her or that there may be other ways to release equity in the property, or that the right to remain in her home could be compromised.
The solicitor also raised concerns about a potential conflict of interest and enclosed copies of press articles from July 2010 and November 2011 relating to Mr D’s previous convictions for fraud against an elderly woman and assault.
In 2019, there was a high court case between Mrs M as personal representative of the late Mrs G, and Mr D as defendant, and Mrs M successfully had the transaction set aside on the basis of undue influence.
The judge examined the role of Maddersons in the transaction and described the 2104 letter from Madderson to Mrs M as “self-serving” and highlighted the fact it did not “reflect any attendance note or correspondence on the file itself.”
The judge also took the view that Madderson “was in fact not acting for [Mrs G], but for [Mr D] in connection with the transaction in question” and so deemed it “impossible” to regard Madderson as independent.
The matter was referred to the SRA and SDT and the parties agreed an outcome. The SDT found that Madderson was ‘highly culpable’ in the matter where there was a ‘clear conflict of interest’.
It found that Mrs M had suffered the ‘stress and expense’ of taking the matter to court when it was ‘eminently foreseeable’ that the sale of Mrs G’s home at an undervalue ‘would give rise to challenge’ and was ‘avoidable and indeed should have been avoided’.
The SDT accepted that there was ‘no evidence of dishonesty or malicious intent’ on Madderson’s part and that she attempted to ‘mitigate the risk inherent in the conflict of interests’, though ineffectively.
She had ‘engaged fully’ with the investigation and proceedings and there was no apparent financial benefit or motive for her conduct. This appeared to be ‘an isolated incident in respect of one transaction in an otherwise unblemished career.’