Fine for solicitor who acted on both sides in “undue influence” house sale

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SDT: Solicitor was highly culpable

A solicitor who acted for both sides in a house sale at an undervalue, set aside by the High Court on the grounds of undue influence, has been fined by the Solicitors Disciplinary Tribunal (SDT).

The SDT heard that ‘Ms G’, aged 78, was in a relationship with ‘Mr D’, aged 34, when she agreed to sell him for £70,000 a house she had bought six years earlier for £238,500.

It later emerged that Mr D had criminal convictions for fraud against another elderly woman and assault against his uncle.

Maxine Madderson, who qualified in 2002, ran two-partner Maddersons Solicitors in Hertfordshire.

The SDT said she was “highly culpable” for acting when there was a clear conflict of interest.

The house was sold to Mr D in February 2012, with a declaration of trust giving Ms G a life interest.

A statement of agreed facts and outcome put forward by the Solicitors Regulation Authority (SRA) said Ms G had “repeatedly” stated that she and Mr D had been in a relationship for some years and loved each other.

Ms G asked the solicitor to act for them both in a bid to save fees, although “it does not appear there was such a saving” as Ms Madderson charged each of them £894.

She recognised it was a sale at an undervalue – even writing on the cover of the file – and the risk of a conflict of interest by creating a “three-way” Chinese wall.

This was to operate with her advising Ms G on the “nature and consequences” of the action, another fee-earner carrying out the conveyancing work for Ms G and a third fee-earner doing the conveyancing for Mr D.

In fact, Mrs Madderson advised Ms G, acted for Mr D and supervised a junior fee-earner acting on behalf of Ms G, “and therefore any ‘Chinese wall’ in place was ineffective”, the agreement said.

Two years after the transaction, responding to concerns from Ms G’s daughter, Ms M, Ms Madderson said she was satisfied her mother had full capacity to sell the property and did so “of her own free will”.

The SDT said Ms M “bore the stress and expense of challenging the conveyance before the Chancery Division of the High Court”. It was “eminently foreseeable” that the sale of the house “at a substantial undervalue” would give rise to the challenge.

The High Court found that “no effort had been made” before the house was sold to ascertain whether Ms G had mental capacity.

In April 2019, Master Price gave summary judgment in favour of Ms M, setting aside the transaction on the basis of undue influence. Ms G had died by then and Ms M has since sold the property.

Master Price described the letter sent by Ms Madderson to Ms M as “self-serving” and said it “impossible to describe Ms Madderson as independent” since she was acting for Mr D.

Ms Madderson admitted acting where there was significant risk of a conflict of interest and failing to take adequate steps to ensure that independent advice was given.

In mitigation, the SDT said there was “no evidence of dishonesty or malicious intent” on the part of the solicitor, who engaged fully with the SRA investigation and disciplinary proceedings.

There was also “no apparent financial benefit or motive” for Ms Madderson’s misconduct, which appeared to be an “isolated incident in respect of one transaction in an otherwise unblemished career”.

The solicitor was fined £8,000 and ordered pay £4,000 in costs.

Ms Madderson merged her firm last year with Guardian Wills and Probate Services to form Guardian Solicitors, where she is a solicitor and mediator.