A lender has failed in its appeal against a finding that a solicitor was not liable under the Partnership Act for mortgage fraud committed by her former partner as she was unaware of the misrepresentations made by him. In UCB Home Loans Corporation Ltd v Soni & Soni & Co [2013] EWCA Civ 62, the Court of Appeal dismissed the argument by the lender that a Ms Kherdin was also liable for the fraud.
UCB was the victim of an elaborate fraud by a Mr Soni in which he borrowed £2.5 million from UCB which was to be secured on five properties. Soni practiced as a solicitor on his own although he also had another practice in which he was also in partnership with Ms Kherdin at another location in Essex. Soni falsely informed UCB that he was in a two partner firm and that the transactions would be handled by Ms Kherdin. He forged her signatures on the reports on title.
UCB had argued that Ms Kherdin was also liable for its substantial losses as she was being held out as a partner of Soni in the solicitors practice. It relied upon section 14 (1) of the Partnership Act 1890. This makes provision under which someone who is held out as a partner but is not one, can be liable to someone who relied on that representation. This will depend upon whether the apparent partner made the representation or knowingly suffered it to be made.
Notwithstanding that UCB believed that it had instructed the partnership, the High Court held that their retainer was only with Soni as a sole practioner and Ms Kherdin knew nothing of Soni’s false representations about the partnership. On appeal, UCB challenged the findings of Ms Kherdin’s lack of knowledge. The Court of Appeal said that there was no evidence that Ms Kherdin knew of these representations and the appeal was dismissed.
Mo Afzal
Latest posts by Mo Afzal (see all)
- UCB Home Loans Corporation Ltd v Soni & Soni & Co 2013 EWCA Civ 62 - March 6, 2013
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