Tuesday, 14 February 2012

Now this is genuinely frightening! Lloyds TSB v. Markandan and Uddin

The property market is in the doldrums and the problems which beset lenders find their way inevitably to the doors of the surveyors and solicitors who advise them.  However, the Court of Appeal has just handed down judgement in a case against a firm of solicitors which is rather out of the ordinary.  It's the case of the fake solicitors!  It's the rather shocking tale of a firm of solicitors having its identity stolen.


Deen Solicitors was a legitimate firm in Luton.  So far as I can tell, they no longer trade but back in 2007 they certainly did.  One of their solicitors was Jagtar S. Dhuphar.  In August 2007, someone called Victor Davies presented himself at another firm of solicitors, Markandan and Uddin, in Wanstead, saying that he had agreed to buy a house and was getting a mortgage of close to £750,000 to complete on it.  He instructed M & U to act for him and soon they heard from the Holland Park office of Deen Solicitors.  Unfortunately, although Deen Solicitors wrote on appropriate letterhead and talked the right language, the firm didn't actually have a Holland Park office - they had been the victims of identity theft!  Mr. Dhuphar didn't work in Holland Park and had nothing to do with this correspondence, even though it was purportedly his reference and signature on the letters.

The transaction meandered through to its intended conclusion, which was a planned simultaneous exchange of contracts and completion and this was the first error. If there had been a traditional exchange and completion separated by about a week, in which a deposit had been sent and signed contracts exchanged, perhaps the eventual problem would have been detected - well perhaps, anyway!

You see the true situation was that the owners of the house had no idea that their home was supposedly being sold! They were in America and the house was occupied by tenants.

Now there were various signs which could have made M & U suspicious, not least the fact that their client purportedly made payment of the difference between the purchase price and the mortgage direct to "Deen" and not via themselves.  The conspiracy was so brazen that at one stage apparently, someone claiming to be Mr. Dhuphar came to M & U's office for some reason or other - doubtless to add artistic verisimilitude to an otherwise bald and unconvincing narrative, as W S Gilbert might have put it.  Suitably lulled, M & U agreed completion by post and, bizarrely, after some unsatisfactory correspondence, sent over £700,000 to "Deen" without receiving even a signed contract, still less an executed transfer.

By the end of September, "Deen" had vanished, having never actually existed of course.  Unsurprisingly, the bank's £700,000 plus vanished with it and does not seem to have been seen since.

There are two big worries arising for solicitors as a result.  One is the potential for identity theft of solicitors firms where a criminal determinedly fakes a practice.  There is huge scope for stealing money as a result and not just by this particular type of mortgage based scam.  In fact, this should have been one of the harder frauds to pull off.  There were clear warning signs that something was badly amiss, as the Court of Appeal found when dismissing M & U's appeal.  However, suppose that those signs had not been present - what then?  Suppose that instead of failing to supply the necessary documents, "Deen" had sent through forged documents.  The fact is that solicitors are used to dealing with firms from all over the country, especially since the advent of referrers sending work to whichever firm is prepared to pay them a referral fee.  It never occurs to us to seek evidence confirming the identity of another firm of solicitors - are we now going to have to?

More troubling is an aside made by the Court in the judgment.  " If any such forgeries had duped the purchaser's solicitors, they might also have duped HM Land Registry, and the outcome might have been that purchaser and chargee would have been respectively registered as proprietors of the property and charge. By statutory magic, that would have given them titles to the property and charge respectively, albeit titles vulnerable to claims by the victims of the fraud to have the register rectified against them (see Schedule 4 to the Land Registration Act 2002). Such claims might or might not succeed."  (My emphasis).  It's this last point which will alarm the public.  One would have thought that if documents are nothing more than forgeries, there should be no question about setting aside a transfer, surely?  Is it really possible that a more competent fraudster could have deprived the legal owners of their property?

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3 comments:

  1. things like this do happen. you will be just shocked that somebody knocks on your door and say that your house has been sold to them. you should be prepared to have the necessary documents to prove that the property is really yours.

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