‘Actively dishonest’ partner disregarded obligations as a solicitor’, judge finds

An 'actively dishonest' law firm partner who showed a ‘complete disregard for his professional obligations’ to check the source of funds assisted the misappropriation of £2.4 million, a judge has found. 

In Grosvenor Property Developers Limited (In Liquidation) v Portner Law Limited, Saira Salimi, sitting as a deputy High Court judge, found London firm Portner Law Limited to be vicariously liable for the actions of Daniel Broughton.

Grosvenor Property Developers, established to convert a former hotel in Bristol into student accommodation, raised funds from investors but went into liquidation without taking any steps to acquire or convert the building. Its sole statutory director, Jonathan England and its de facto director, Sanjiv Varma, have since been found liable in other proceedings for the misappropriation of approximately £7m. Varma has also been found in contempt of court and has left the country.

Portner was instructed to act by Varma and his son in relation to London property transactions involving sums amounting to £2,399,000. Broughton, admitted in 2006 and a partner in the firm, worked on each of the transactions. He and the firm denied dishonestly assisting in breaches of duty by Varma and England resulting in loss to Grosvenor Properties. 

Salimi said Broughton’s explanation for his repeated failure to obtain evidence of the source of his clients' funds and to follow up on inquiries was ‘simply not credible, especially in an experienced solicitor who was also a partner’.

She added: ‘Mr Broughton was a clear and coherent witness and accepted, with hindsight, that he had not always acted in accordance with his professional obligations.’ Broughton was prepared in dealing with the lender on one property to ‘make statements that were not true,’ the judgment stated. ‘That is not the conduct of an honest solicitor.' 

There were no ‘credible reasons to justify' Broughton 's failure to make further inquiries and he was ‘knowingly cutting corners in the carrying out of essential checks’, the judge said. ‘Taken together, as I have set out this sorry history, Mr Broughton’s interactions with the Varmas show a pattern of disregard for his obligations as a solicitor, and repeated turning of a blind eye to obvious causes for concern. I have also found that in certain matters he was actively dishonest and made false representations concerning matters that were within his knowledge.'

The sum to be recovered will be decided by the judge following further submissions by the parties.

Portner Law merged with Bromley-based Judge & Priestley LLP, in May this year. Steven Taylor, managing partner at Judge & Priestley, said: ‘This is a serious matter which is subject to regulatory review. As such, we have no comment while that process continues.’