Potential conflict of interest

Ms B and her partner Mr H decided to purchase a property in their joint names. The property in which they were currently living, which was in the sole name of Mr H, was to be re-mortgaged and the additional borrowing used to provide a deposit for the new property. Ms B did not have any savings or capital but it was intended that the mortgage on the new property would be paid by them out of joint income.


Mr H instructed solicitors, who had previously acted for him, to act in relation to the re-mortgage and new purchase. The solicitors' papers showed that both transactions were dealt with on the same file and that they regarded Mr H as their client. The only costs information that was given was a quote for the conveyancing costs on the new property which was addressed to Mr H.


About 12 months after completion, the relationship between Ms B and Mr H broke down. She remained in the new property and he returned to the original one. He refused to pay anything towards the new mortgage and she couldn't afford to meet the payments on her own. Mr H started proceedings to obtain an order for sale of the property and only then did Ms B discover that the property had been vested in them as tenants-in-common not, as she believed, joint tenants. Those proceedings were eventually compromised by Ms B agreeing to purchase Mr H's interest in the property. However, in the meantime, she suffered much stress and inconvenience from the threat of re-possession proceedings and resolving the dispute with Mr H.


Ms B complained about the service from the solicitors. They initially protested that she was not their client but a third party to the transaction. That argument could not succeed; there was no evidence that the solicitors had, at any stage, advised her that they could not act for her or that she should seek independent advice.


In this case, it was clear that Mr H had hidden his true intentions from Ms B throughout. At one stage, he had asked the solicitors to draw up a declaration of trust in relation to the parties' unequal interests in the property. A letter sent by the solicitors to both of them about this had been withheld from her. However, there was no evidence to suggest that the solicitors had considered whether any potential conflict of interest could exist or take any steps to ensure that they had clear instructions from Ms B.


In such situations, a solicitors' duty under principle 15.03 of the Guide to the Professional Conduct of Solicitors, 1999, eighth edition, is clear and a failure to follow that can result in findings of professional misconduct as well as inadequate service.


Cases before the Law Society's adjudication panel are decided on their individual facts. This case study is for illustration only and should not be treated as a precedent