Mortgage lenders seeking copies of solicitors’ files to investigate suspicious transactions will, according to a leading property litigator, benefit from today’s ruling in the High Court.
In Mortgage Express v Sawali, HH Judge Simon Brown QC, in the High Court in
AWP’s insurer had argued that the court had no jurisdiction to order the delivery up of the “client’s part” of the joint file held by its client on the basis that this was confidential to the borrower and would have breached Solicitors Regulation Authority guidance.
Following the ruling, John de Waal, counsel for the lender, said: “Success for AWP would have prevented Mortgage Express from seeing material covered by the borrower’s legal professional privilege, hampering its investigations – in particular, the question of whether the advance was part of a sub-sale or back-to-back transaction – classic indicators of fraud.
“Mortgage Express anticipated the problem and was able to rely on a declaration signed by the borrower when applying for the loan: ‘I/We declare and agree that… I/We irrevocably authorise my/our conveyancer to send their entire file relating to the whole transaction (not just the loan) to you at your request.’
“The judge held that as a matter of commercial common sense it was necessary to give effect to this declaration to make the transaction work. He decided that he did have jurisdiction under the Solicitors Act 1974 to order the delivery up of the files.”
He continued: “Most lenders make borrowers sign such a declaration when applying for a loan. This decision makes it easier for lenders to obtain copies of entire files to see whether solicitors are in breach of the standard Council of Mortgage Lenders’ conditions.”
