Francesca Kaye & Mary Hodgson offer some hope for solicitors pursued for breach of trust
A number of lenders are seeking to reduce losses sustained after the sale of repossessed properties by pursuing breach of trust claims. This may be because solicitors are perceived to have deep pockets, but with no deduction for contributory negligence, breach of trust claims can also avoid close scrutiny of lending policies and mortgage applications.
There have been several recent decisions of note on the application of s 61 of the Trustee Act 1925, as well as consideration of what constitutes a breach of trust. These are covered briefly below along with the decision in Nationwide Building Society v Davisons Solicitors (a firm) [2012] EWCA Civ 1626, which offers some hope to firms pursued for breach of trust in the event of being involved (however inadvertently) in a fraud.
Completion & breach of trust
The Council of Mortgage Lenders’ Handbook for England and Wales establishes at cl 10, that completing solicitors acting for a lender “must hold the loan on trust for us until completion”.
