Lawyers who suffered ‘years of anxiety’ cleared of fraud allegations

A solicitor and legal executive who suffered ‘years of anxiety’ over a case that ‘should not have been brought’ have been cleared of wrongdoing after a seven-day Rolls Building hearing involving allegations of fraud. 

In judgment in Mortgage Agency Services Number One Limited v Cripps Harries LLP, Mr Justice Mann, sitting in the Chancery Division, said Cripps Harries solicitor Helen Francis and a legal executive named as Mrs Glavin, should be completely exonerated.

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Mortgage company Masnol, trading as Britannia Commercial Lending, had accused the firm of deliberately misleading it in a case related to funds lent to property developer Spencer McGuinness for a Docklands development. However Mann said that in its efforts to maximise recovery of a 'disastrous' loan, the claimant had  turned up its 'fraud detection goggles' and made allegations which came close to ones which 'should not have been made or sustained'. 

According to the judgment, in 2006 McGuinness acquired the top half of a development, financed by a loan from West Bromwich Building Society. However when he sought to acquire the remainder, he used a dispute about the quality of the building work to delay completion. He borrowed £11.4 million from Masnol, a lending arm of Britannia, to refinance.  However the judgment states that by this time  McGuinness was in arrears on the West Bromwich loan and receivers had been appointed. According to the judgment, this was not disclosed to Masnol. When completion took place, more than £350,000 was still owing to West Bromwich. 

When McGuinness fell into arrears on the Masnol loan, receivers were appointed leaving a ’substantial unrecovered balance’.

Masnol claimed Cripps Harries, which was acting for McGuinness, made several misrepresentations, including describing outstanding works as ‘snagging’ when they were more serious.

Masnol claimed that the firm also lied in preliminary inquiries about correspondence that failed to disclose the existence of the West Bromwich receivership and said the redemption figure for the West Bromwich loan was £11.1m when the true figure included ‘substantial unsecured borrowings’.

However dismissing the case, Mann said Francis (now Helen Hunnisett) and Glavin ‘stand entirely exonerated of the serious matters alleged against them’.

‘One might wonder how a claim can be brought and sustained over so many points and yet fail on all of them so comprehensively and it be found that there is nothing in the claim or allegations at all,’ Mann wrote. He noted that the prospect of establishing fraud is not directly proportional to the number of allegations made - and suggested that not enough attention had been paid to the motives for filing the suit.

‘The claimant was anxious to maximise its recovery in what was a fairly disastrous loan,’ Mann wrote. He added: ‘When attention turned to Cripps Harries the claimant donned its fraud detection goggles, turned the sensitivity up to high and attributed a dishonest motive to every interesting feature in the landscape. That led to a large number of accusations of dishonesty being made. Some allegations came close to being allegations which should not have been made or sustained.’

He concluded: 'Miss Francis and Mrs Glavin have had years of anxiety, culminating in a trial, which they should not have had. They should now be freed from that anxiety.'

Ben Hubble QC and Hugh Evans, instructed by Burges Salmon LLP acted for the claimant; Jonathan Seitler QC and Jonathan Chew, instructed by Triton Global Ltd, for the defendant. 

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Lawyers who suffered ‘years of anxiety’ cleared of fraud allegations