Social Money Limited v Attwells Solicitors LLP & Phillip Hewett [2024] EWHC 3288 (Ch) - Case Summary

The High Court examined the application for summary judgment in a complex case of identity fraud involving solicitors' undertakings in a bridging finance transaction, highlighting the nuanced interpretation of contractual obligations and potential breach of trust.

TLDR:

• High Court denied summary judgment in a case involving alleged breach of solicitors' undertakings.
• Case involved identity fraud where an imposter obtained bridging finance.
• Complex legal issues included breach of contract, breach of trust, and solicitor liability.
• Court emphasized the need for a full trial to resolve factual and legal complexities.

Background: The case arose from a fraudulent transaction where an imposter, pretending to be the owner of two properties, secured a loan from Social Money Limited (SoMo) with Attwells Solicitors LLP acting as the imposter's legal representatives. The imposter used false identity documents to deceive both SoMo and Attwells, leading to a loan of £775,000 being advanced. SoMo sought to enforce undertakings given by Attwells, claiming breach of contract and breach of trust, while Attwells argued against the enforceability of these undertakings due to the fraudulent nature of the transaction.

Legal Issues: The primary legal questions revolved around the interpretation and enforceability of solicitors' undertakings in the context of identity fraud. The court examined whether Attwells breached contractual obligations by failing to register a legal charge over the properties and whether there was a breach of trust in releasing funds to the imposter. The court also considered whether Attwells could be relieved from liability under s. 61 of the Trustee Act 1925, which allows for relief from personal liability for breach of trust if the trustee acted honestly and reasonably.

Judgment Summary: Master Pester denied SoMo's application for summary judgment, finding that Attwells had a real prospect of successfully defending the claims at trial. The court highlighted the need for a detailed examination of the factual matrix and the interpretation of the undertakings. The judgment acknowledged the complexity of the legal issues, particularly the construction of undertakings and the potential for a defence under s. 61 of the Trustee Act 1925.

Practical Implications: This case underscores the importance of precise drafting and understanding of solicitors' undertakings in financial transactions. It highlights the potential for identity fraud to complicate legal obligations and the importance of thorough due diligence by legal professionals. The decision also emphasizes the courts' cautious approach in granting summary judgment where complex factual and legal issues are involved.

Legal representatives: Nicole Sandells KC (instructed by Brightstone Law LLP) for the Claimant; Simon Wilton KC (instructed by Browne Jacobson) for the Defendant.

Judicial Panel: Master Pester

Case Citation Reference: [2024] EWHC 3288 (Ch)

For more information, visit becivil.co.uk.