Karmjeet Singh Kandola v Mirza Solicitors LLP
| Jurisdiction | England & Wales |
| Judge | HHJ David Cooke |
| Judgment Date | 27 February 2015 |
| Neutral Citation | [2015] EWHC 460 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC 2013 000302 |
| Date | 27 February 2015 |
[2015] EWHC 460 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
The Rolls Building,
London, WC4A 1NL
HHJ David Cooke
Case No: HC 2013 000302
Gavin Hamilton (instructed by Thomson Snell & Passmore LLP) for the Claimant
Benjamin Wood (instructed by Mills & Reeve LLP) for the Defendant
Hearing dates: 16–18 February 2015
The claimant seeks damages against the defendant solicitors, who acted for him in the proposed purchase of a property in 2010. On exchange of contracts a deposit of £96,000 was paid on terms, unusually, that it be held by the vendor's solicitor as agents for the vendor. The vendor did not complete and the deposit has been lost. Since then the vendor has been made bankrupt and the solicitors who acted for him have disappeared. The SRA has intervened in their practice and the two principals of the firm have been struck off, the Law Society having found allegations of fraudulent misuse of client money (not in relation to this transaction) proved in their absence. Mr Kandola's central complaint is that he should have received better advice about the risks involved which would inter alia have revealed that a bankruptcy petition was outstanding against the vendor, in which case he would not have proceeded with the transaction on those terms. The defendant's case is that Mr Kandola was fully and properly advised throughout, including specific advice which he acknowledged in writing not to exchange contracts on that basis, but he elected not to follow that advice.
Behind that bare outline of the facts is a history that the claimant's counsel described as 'murky'. That is largely because the claimant himself has not chosen to dispel the murk. There is a reasonable amount of contemporary documentary evidence, particularly from the defendant's file in relation to the matters it dealt with, but it is apparent that the defendant was not aware of all aspects of the transaction and much was going on directly between Mr Kandola and the vendor or a middleman, and even between Mr Kandola and the vendor's solicitor, in respect of which there is very little if any by way of documents and an explanation emerged only by dint of Mr. Wood's very able cross examination.
The witnesses
I heard only from two witnesses, Mr Kandola and Mr Elahi, who is head of the defendant's conveyancing department and was responsible for the purchase file, initially supervising an assistant Mr. Husain but dealing directly with Mr Kandola and the vendor's solicitor at the time of exchange. Mr. Husain provided a short witness statement, which was agreed. Mr Elahi is accepted to be an experienced conveyancing solicitor, and is clearly knowledgeable and well familiar with the conveyancing process, The Law Society's Conveyancing Handbook and the standard conditions of sale, with a good understanding of the reasons for the various provisions of those documents. He accepted that he was not always the most conscientious at making file notes, and that some documents he would have expected to be on his file (such as copies of the draft contract as amended and returned by him) were not there, for reasons he could not explain. He said that Mr Kandola was a client for whom he dealt on many transactions; he very rarely gave instructions in writing but had Mr Elahi's mobile number and was in the habit of ringing many times a day to give him instructions or make enquiries as to progress. Mr Elahi could be anywhere when these calls came through and may not have the opportunity to make a written note. In some cases he would simply do what had been asked, eg to write a letter the content of which reflected the instructions given. He would make a note if the matter was of importance, however. He was adamant that the notes he had made were accurate reflections of his instructions and advice. Mr Elahi came across as an experienced solicitor dealing pragmatically but carefully with a somewhat cavalier and entrepreneurial client. He was anxious and perhaps for that reason somewhat prone to lengthy theoretical explanations of the reasons for various steps in the conveyancing process, but those explanations did show a good understanding on his part. In my judgment he was an honest and credible witness.
Mr Kandola is a successful businessman who owns a number of care homes through a limited company and owns or controls several buy to let residential properties, either in his own name or in the names of various members of his family. By his own account something over 20 such properties have passed through his hands over the years. He was introduced to Mr. Elahi in the 1990s and has since then been on friendly terms with him and instructed him in a considerable number (though not all) of his property transactions. Mr. Elahi in his witness statement said he had acted in about 23 such transactions for Mr Kandola or his family or friends on Mr Kandola's introduction. Mr Kandola was thus both a long established client and one who was commercially sophisticated.
Mr. Hamilton said that despite his commercial experience Mr Kandola was not sophisticated with documents. He accepted that Mr Kandola's evidence was confusing and at times inconsistent, but nevertheless submitted that in relation to the crucial parts of his evidence, he could be accepted as a witness of truth. There are however many reasons why in my view Mr Kandola's evidence should be treated with great caution. In many respects his oral evidence was substantially inconsistent with his pleaded case. It was also apparent that he had been prepared to tailor his evidence and production of documents for the purposes of making a claim. Both these aspects are illustrated by the events surrounding undertakings at one point offered by Aston Solicitors ("Astons"), the solicitors acting for the vendor, which I refer to in more detail below. Two letters were sent to Mr Elahi offering undertakings that if Mr Kandola advanced funds to their client Astons would repay stated amounts on receipt of funds on completion of a transaction they said they were instructed in. Mr Kandola's pleaded case was that these were connected with the Dymoke Rd purchase and intended to provide security for his deposit, and that Mr Elahi should have accepted them, or taken proper instructions before refusing to do so. Mr Elahi's evidence was that the proposal to lend on the security of undertakings was separate from the Dymoke Rd purchase, that he had advised Mr Kandola not to proceed on any such transaction as the undertakings were not good security and another client had lost money in a similar transaction and Mr Kandola had accepted that advice. Mr Kandola's first witness statement said he was not aware that the undertakings had been rejected until after contracts were exchanged. However he accepted in cross examination that Mr Elahi had, before exchange, spoken to him about the first letter offering an undertaking and made it clear that he was not prepared to act on the basis of accepting such undertakings. He knew therefore at the date of exchange that, whether or not he considered them connected with the purchase, Mr Elahi had refused to accept the undertakings, but Mr Kandola proceeded nonetheless. Mr. Hamilton abandoned in closing any claim based on failure to accept or advise about these undertakings.
Further, and more seriously for Mr Kandola's credibility, after the purchase fell through he made a claim on the SRA Compensation Fund alleging failure by Astons to comply with the undertakings they had offered. For that purpose he provided his new solicitors with copies of the letters offering the undertakings. He did not however show his solicitors a letter of 2 July 2010 from Astons in which Astons said they had been contacted direct by Mr. Kandola who asked them to comply with the undertakings, but that the undertakings offered had been refused and so were of no effect. Nor apparently had he told his solicitors, as he has now accepted, that he was aware that the undertakings had been refused before exchange of contracts.
In other respects Mr Kandola's pleaded case denied advice in respects in which there are file notes to the effect that he was advised. He amended his evidence to say that he had no recollection, or that matters were not explained to him clearly enough. In particular in relation to a key meeting on the day before exchange, his witness statement said he had only a limited recollection of what was discussed at that meeting. When questioned about specific matters recorded in the file note however he claimed that he did recall such discussion, but it was not as recorded. I concluded that, at the least, his later recollection was less reliable than the contemporary notes and Mr Elahi's recollection which corresponded with those notes.
The facts
The property in question in this case was at 40–42 Dymoke Rd Hornchurch in Essex. It consisted of 3 adjacent plots and was owned by (or at least registered in the name of) Mr. Shahid Qamar Siddiqui. Mr Kandola negotiated to buy the property at about the beginning of May 2010. He produced a series of emails dated on or about 5 May 2010 in which he offered first £460,000 and then £425,000 to a firm of agents acting on the sale. His witness statement said he had offered £415,000 but eventually negotiated £425,000, but the emails do not support that. His evidence is that at some point he became aware of the seller's name and that Mr Siddiqui was the business partner of his nephew Sukhvir, and he then cut out the agent and began to deal with Sukhvir as middleman between himself and Mr Siddiqui. His witness statement said this was after Astons first contacted Mr Elahi on 18 May, but in cross examination he accepted the agents must have been out of the picture...
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