The Defendants had been instructed by C&G to act in accordance with the Council of Mortgage Lenders’ Handbook and to provide a certificate of title in a specified form. Clearly, given their apparent carelessness in making the loan in the first place despite the suspicious circumstances, any damages recoverable by C&G could be substantially reduced if contributory negligence applied. Unlike claims for breach of contract or negligence, damages for beach of trust cannot be reduced due to any contributory negligence by the claimant. However, unlike other cases, the Defendants were not involved in the fraud.Ĭ&G argued that the Defendants were in breach of trust and, accordingly, they were entitled to recover their entire losses from them. The funds disappeared and it became apparent that this was just one of a number of similar frauds carried out by the alleged Mr Davies. Mr and Mrs Green had no knowledge of any sale of their property. Needless to say, the whole transaction was a fraud. The Defendants genuinely believed they were transferring the funds to solicitors. In an extraordinary sequence of events, the Defendants, prior to not only completion but before any contract was entered into, advanced the mortgage monies for the alleged Deen Solicitors to hold. A gentleman calling himself Mr Duphar actually attended at the Defendants’ offices with supposed documentary proof of the existence of this branch office. There is a firm called Deen Solicitors in Luton and it was falsely claimed they also had an office in Holland Park. They were contacted by someone holding themselves out as Deen Solicitors trading from offices in Holland Park who stated they were acting for the sellers, Mr and Mrs Green. The Defendants were instructed to act as solicitors for Mr Davies and C&G. He sought 90% of the price but C&G (now part of Lloyds TSB Bank) had the property valued at £825,000 and, notwithstanding the substantial difference between their valuation and the supposed purchase price, they then offered to lend £742,500 on the basis that Mr Davies had secured a price reduction to £825,000. The High Court has had to decide whether solicitors have to bear the whole loss suffered by a negligent lender who is defrauded by the borrower In 2007, a Mr Victor Davies applied for a mortgage loan from Cheltenham & Gloucester plc to finance the purchase of a property in Barnet at a price of £1,150,000. Solicitors can be the victims of fraud on lenders.
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