A mortgage lender was entitled to see copies of solicitors’ files to investigate whether the transaction showed indications of fraud, the High Court has ruled.
mortgage lender was entitled to see copies of solicitors’ files to investigate whether the transaction showed indications of fraud, the High Court has ruled.
In Mortgage Express v Sawali, in Birmingham High Court on this week, Judge Simon Brown QC ordered the files to be delivered up to the lender so that they could see whether the advance was part of a sub-sale or back-to-back transaction.
The defendant had argued this would breach client confidentiality and legal professional privilege.
John de Waal, barrister at Hardwicke chambers, who acted for the claimant, said the decision would be welcomed by “mortgage lenders seeking copies of solicitors’ files to investigate suspicious transactions”.
“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 delivery up of the files.
“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.”
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