In Santander UK Plc v RA Legal Solicitors (A Firm)  EWCA Civ 183 (24.2.14) V agreed to purchase a house in London E16 for £200,000 and obtained an advance from Abbey of £150,000. He instructed RA. The seller instructed Sovereign Law LLP.
The completion monies were transferred to Sovereign Law and the transaction apparently completed.
In fact it did not complete. Although the seller did want to sell the property, she had not contracted with V and had not instructed Sovereign Law to act for her.
Abbey sued RA on the basis that completion never took place and RA paid away the advance in breach of trust. At first instance the judge relieved RA under section 61.
Court of Appeal: RA had Abbey’s implied authority to transfer the money to the client account of the solicitor acting for the vendor. They did not have authority to transfer it to the client account of a solicitor who was not acting for the vendor. RA acted in breach of trust.
RA had not acted reasonably and did not bring itself within section 61. Lord Justice Briggs at paragraph 98:
“In the present case I have come to the clear conclusion that the particular failures which I have described, beginning with the inadequate making of Requisitions on Title, transferring the completion money without the adoption of the Completion Code by Sovereign, and then failing to deal with the absence of a prior mortgage discharge on the pretended completion, were indeed unreasonable, and sufficiently connected with Abbey's loss. In any event, those failings of R.A. Legal formed part of a larger picture of the shoddy performance of a conveyancing transaction from start to finish, which leaves me in no doubt that it would not be fair to excuse the firm from liability, in whole or in part.”
RA did not obtain relief under section 61.
One question that arises from this decision is, when can departure from standard practice in a conveyancing transaction be reasonable and therefore engage section 61? The CML Handbook (last revised 12.7.13) 1.4 states that the standard of care is that of a reasonably competent solicitor or licensed conveyancer acting on behalf of a mortgagee. The retainer does not require strict adherence to standard pratice, although I accept departure would need to be justified.
An application for permission to appeal was filed with the Supreme Court in March 2014. Perhaps this question will be answered.