Three members of the same practice have been sanctioned over a car park investment scheme which saw over £100m pass through the firm’s client account.
Peter Jan Bujakowski and Craig Nicholas Hollingdrake, who were directors at JWK Legal Group Limited, were fined £20,000 and £7,500 respectively by the Solicitors Disciplinary Tribunal.
Meanwhile, Elaine Saunders, who is a graduate member of CILEx and not a solicitor, received a section 43 order stating that no solicitor shall employ or remunerate her in connection with practice as a solicitor. All three were ordered to pay costs of £9,093.
The sanctions relate to a scheme organised by ‘Client A’, an entity which, through group companies, purchased land which could be redeveloped into storage units or car parking and then sold on the individual units or spaces to various buyers.
Client A produced marketing materials for the parking spaces and storage pods. The contracts between Client A and various buyers contained a 'buy back' clause, in which the buyer had a window of one month, five years after purchase, to give formal notice of a wish to exercise the buy-back option. Even if such notice was given, Client A did not have any obligation to do so.
According to the tribunal’s judgment, the amount of the money received and distributed by the firm in the relevant period was in the region of £101,500,000. JWK acted in about 15,000 transactions across over 23 sites and some of the buyers were unrepresented.
Bujakowski admitted that he caused or allowed contractual documents to be sent to buyers - including unrepresented buyers - in circumstances in which the marketing materials were inconsistent with the contractual documents; and/or misleading, or capable of misleading potential buyers as to one or more of the security, future returns, or value of the assets being sold.
Meanwhile, Hollingdrake admitted that he failed to take any or adequate measures to prevent the firm from providing a banking facility to the Client A group. Saunders admitted that she failed to consider whether the contents of the marketing materials overstated the likely returns to potential buyers and failed to consider whether the buy back arrangement in the contractual documents provided meaningful security for buyers.
The tribunal said Hollingdrake’s breaches were ‘inadvertent and did not cause loss to clients or the purchasers of the store pods/parking spaces’. However, it said he should have been ‘more vigilant’.
It also noted that whilst Saunders was not a qualified solicitor she was 'not without experience' and again she should have exercised more vigilance and thought.