Problem conveyancing cases do not mean systemic issues: Bowen report
Problem cases that have arisen do not indicate systemic issues in Scottish conveyancing practice, according to a report by a former sheriff principal.
Edward Bowen QC was engaged by the Law Society of Scotland to undertake an independent review of consumer protections for people buying and selling property in Scotland, following difficulties that emerged affecting Sinclair Brebner, who bought a flat in Aberdeen, and the proprietors of houses in the Happy Valley development in West Lothian.
The two cases, as the sheriff principal observes, arose for very different reasons but each involved clients being left without proper title to land for which they had paid, and with no obvious remedy.
In Mr Brebner's case, "a dishonest act, likely to have been that of a solicitor who did not act for him, appears to be the root cause of the problem", the sheriff principal reports. Although he might have a claim against the Guarantee Fund operated by the Society – a matter which has not yet been established – before he could make a claim he had to exhaust other possible remedies, a process that had been lengthy, protracted and expensive, "as well as creating the perception of members of the legal profession pointing the finger of blame at each other with no one prepared to take ultimate responsibility".
Happy Valley was caused by a builder building on land beyond what he had title to, compounded by the company that purchased the adjoining land making an "exorbitant demand" in the mistaken belief that its claim would ultimately be met by professional indemnity insurers. There had also been a division of opinion as to whether the solicitors who originally acted for the house purchasers had been negligent.
Emphasising that it was not his task to resolve the particular cases, Sheriff Principal Bowen concluded that they both arose from highly complex and unusual facts and "are not indicative of a systemic problem in conveyancing practice". He continued: "However, both have resulted in processes which have been protracted; expensive and highly stressful for consumers of a routine legal service; and neither displays immediate prospect of resolution. They are very damaging to the image of the legal profession."
His report makes a number of recommendations (some of which would require legislation), including:
- consideration of the widening of the scope of the Guarantee Fund, to add a discretionary power to make a payment from the Fund without havng to exhaust legal processes, where there is strong prima facie evidence of dishonesty on the part of a solicitor, leading or likely to lead to pecuniary loss;
- a possible change of name to "Compensation Fund", to avoid confusion as to when payments will be made;
- possible introduction of a new system of protection for purchasers of newly built houses to protect from the builder's insolvency – which would have to be brought forward by Scottish ministers;
- clarification of the legal duty of a solicitor acting for the purchaser of such a house.
Alistair Morris, President of the Law Society of Scotland, said the Society took its duty to protect the interests of the consumers of legal services extremely seriously, and he was very grateful to the sheriff principal for carrying out such a thorough analysis.
He commented: "It is notable that Sheriff Principal Bowen has concluded that the cases in Aberdeen and West Lothian arose for very different reasons and were highly complex and unusual.
“These findings are reassuring for both the legal profession and members of the public who rely on the knowledge and expertise of their solicitor when buying a new home. We fully appreciate however, that it does not provide much comfort for the people currently going through the dispute over ownership of what they thought were their homes. We are continuing to liaise with those concerned to discuss how outstanding issues can be progressed.
“Sheriff Principal Bowen has made a number of recommendations, several of which are being considered through the separate independent review of our Guarantee Fund which is currently being carried out by KPMG. We will be taking forward actions in response to the other recommendations, whilst some of the suggestions made, such as the establishment of a possible new fund for homebuyers, would be a matter for Scottish ministers.”