Solicitor fined £7,500 for failing to address transaction’s ‘dubious features’
15 May 2017
A partner in a CQS-accredited firm has been fined £7,500 after accepting he had been ‘sloppy’ when carrying out a conveyance involving several investors, instructions by a third party, and several ‘dubious features’.
Ruling in SRA v Daniel Mun Kin Tang, the Solicitors Disciplinary Tribunal made clear it did not suggest the transaction itself was dubious but that ‘it had a number of dubious features’ and that Tang ‘had not addressed his mind to the relevant questions’.
Tang, who qualified in 2006, acted in the purchase of a residential property involving the setting up of a company for two private investors. When registering a charge on the property, however, Tang, a partner with Wembley firm Christopher Mathew Solicitors, registered one of the owners as sole lender without securing the consent of the other, despite a written agreement to the contrary.
Tang, 37, was initially instructed by SK in respect of a property to be bought at auction in 2012. He had been instructed by the family before. The property was to be purchased by a company, TP, jointly owned by a friend of SK’s, Ms FA, and – Tang was made to understand – SK’s nephew, HD.
FA had contributed half of the money, £150,000, as did HD, who had been loaned the same amount by his father. SK had also asked Tang to draft an investor agreement for FA, who would be channelling the fund for the purchase via SK.
Tang, the tribunal said, ‘had not behaved in a way that maintained the trust the public placed in him and in the provision of legal services’. Even though Tang had previously been instructed by SK’s family – and by FA – the tribunal said he had ‘a duty to assess each case on its individual circumstances’ and that his enquiries had been ‘superficial’.
‘The respondent was required to undertake due diligence in respect of every person involved, not only to protect the clients but to ensure that if the transaction was dubious he had protected himself and the reputation of the profession,’ the tribunal said.
The SDT also found that Tang had undermined public trust in the profession by failing to obtain FA’s consent when registering a charge on the property naming HD as the lender, as required under the investment he had drafted. ‘If an agreement required consent to a charge being registered the public would not expect a solicitor to not obtain the relevant consent,’ the tribunal noted.
The tribunal reserved its most damning criticism of Tang’s behaviour when it considered the allegation that the solicitor had compromised his independence by allowing SK to take control of the transaction. The SDT ultimately found the allegation not proved after Tang gave evidence that HD had told him he could take instructions from SK, but the panel said ‘[the solicitor’s] description of his conduct as “sloppy” was an understatement’.
‘For a solicitor with six years’ post-qualification experience at the time, who was a relatively experienced conveyancer, to conduct a file in this way was to place himself, the reputation of the firm, and the reputation of the profession at risk and was not adequate,’ the tribunal found. ‘The lack of file was not acceptable. The respondent appeared to have fallen into a trap where he failed to distinguish between the personal and professional when he was doing business with a family with whom he was acquainted.’
The SDT rejected the claim that Tang had failed to advise FA that she should seek independent financial advice in relation to the investment agreement. A separate allegation, which was accepted by Tang, that he should have advised her to seek independent legal advice was found in breach of principle 6.
However, the tribunal said, FA had been a client of the firm, she was a qualified lawyer, and she had represented herself before in transactions involving the K family. There was therefore no evidence that Tang had taken unfair advantage of her.
The tribunal found in mitigation that Tang acknowledged that this was not ‘a shining example of his work’ and that he ‘sincerely regretted his failures’. It also noted that the firm, which is accredited on the Law Society’s conveyancing quality scheme, had since ‘implemented rigorous conveyancing compliance checks and client care procedures’.
Having referred earlier to Tang as ‘a relatively experienced conveyancer’ at the time of the transaction, the SDT also accepted that his six years’ post-qualification experience made him ‘relatively inexperienced’.
Tang’s misconduct was ‘at the higher end of moderately serious’ and he was fined £7,500 based on the fact the allegations arose out of a single transaction, that his actions hadn’t been planned, and that he had not gained from it. The solicitor had been lucky that no great harm was caused, according to the tribunal, as it issued a reminder to all solicitors to ‘satisfy themselves against the risks of money laundering concerns arising from any transaction, but particularly in any transaction that contained unusual features such as this one’.
The tribunal also recommended that Tang undertook training ‘to ensure he did not find himself in this position again.’ The solicitor was also ordered to pay the SRA’s costs in full, assessed at £32,469.86.
This story was first published on Solicitors Journal on 15 May 2017 and is reproduced by kind permission