SRA: Serious failure to comply
A solicitor who paid away proceeds of a property sale in breach of an undertaking and then loaned the client the money to make up the shortfall, has been fined for misconduct.
James Prusram Ramdhun, the owner, manager and compliance officer for legal practice at South London firm Clapham Law, charged the client interest at 8%.
According to a regulatory settlement agreement published yesterday by the Solicitors Regulation Authority (SRA), Clapham Law was instructed in October 2019 on the sale of a property, with a separate firm acting for the client’s wife on the transaction.
In January 2020, the firm provided an undertaking to those solicitors to hold the net proceeds of sale in its client account until the parties agreed their respective shares, failing which the matter would be referred to a court or arbitration.
In return, the wife’s solicitors undertook to remove her matrimonial home rights restriction from the title of the property.
The sale completed soon after but the parties could not reach an agreement and, in December 2020, the client issued proceedings for a declaration as to the beneficial entitlement to the proceeds.
Some 18 months later, during a case management conference, counsel acting for the client informed the court that he was professionally embarrassed and could no longer act – he said he had been informed that his fees had been paid from the proceeds
Evidence then provided by Clapham Law at the direction of the court showed that, between 27 January 2020 and 6 May 2022, it had made 16 payments totalling £37,545 from the money it held under the undertaking – 14 of them after Mr Ramdhun had received advice from the SRA’s professional ethics department that he needed the joint instruction of both parties before any payments could be made.
The payments included fees to both the firm and counsel for acting in the proceedings, costs orders made against the client during the case, and transfers to the client.
Clapham Law told the client that it was his responsibility to replace the money, not the firm’s.
The client had no funds and so Mr Ramdhun loaned them £39,000 via his private company, at an interest rate of 8% per annum, to make up the shortfall.
Six months later, in November 2022, the client paid interest of £1,559 to Mr Ramdhun’s company.
The SRA said he took unfair advantage of his client and acted in an own-interest conflict, or a significant risk of one.
In deciding a fine was “an appropriate and proportionate sanction”, the SRA said Mr Ramdhun was guilty of a “serious failure to comply with his regulatory obligations”. He had shown a “reckless disregard” for the risk of harm to his client and the other party, and to public trust and confidence.
“He did not take any remedial action,” the notice said. “The firm only stopped making payments out of the proceeds of sale when the firm’s breach of the undertaking was notified to the court at a court hearing.
“He took unfair advantage of a vulnerable client to the financial benefit of his company.”
Further, knowingly making the payments in breach of the undertaking showed a lack of integrity and was again reckless.
Mr Ramdhun, the SRA said, had shown “no insight or remorse for his conduct”, and there were no mitigating factors.
The SRA’s fining formula led to a penalty of 65% of the solicitor’s annual gross income, a sum of £7,946.
He was also ordered to pay costs of £1,350.