Can a party wall surveyor be sued for negligence?

The vast majority of surveyors who work within the party wall arena discharge their duty in a competent and ethically driven manner. 

There are however, a small minority who continue to let the side down. They operate outside the ambit of their statutory appointment and with little attention or care for the interests of the home owners they touch along the way. 

This presents a problem for many, since once appointed it is very difficult to remove a party wall surveyor. The involvement of an unethical surveyor can often lead to a whole heap of misery and financial loss for the unwitting appointee and or adjoining owner. 

I am often asked whether faced with this situation is it possible to bring an action against the rogue surveyor to seek legal redress for loss stemming from the negligent delivery of the service provided. In other words, can a party wall surveyor be sued for negligence. 

For an action in negligence to succeed the claimant will need to show that a duty of care exists, that the surveyor involved has breached that duty, and that there is a causal link between the breach and the actual loss suffered by the claimant. All of these elements must exist. So for example, if there is no loss then there is no entitlement to damages even if a breach can be proved. 

Duty of Care 

There is a clear contractual and common law duty owed by a party wall surveyor to the appointing home owner. The duty is to undertake work with reasonable care and skill. 

Following a section 10 of the Party Wall Act 1996 appointment, there is also a statutory duty owed, not only to the appointing owner, but also to the adjoining owner.

It has been suggested that each surveyor owes a duty of impartiality to each of the appointing parties and that this must take priority to the interests of their own appointing client ( Anstey, J., Party walls and what to do with them, RICS Books 1996, p. 15. See also Anstey, J., Trouble with the Neighbours, College of Estate Management 1983, p. 21). 

This was recognised in Lahrie Mohamed and Shehara Lahrie V Philip Antino and Raymond Stevens ( 2017) where HHJ Bailey recored in his judgment the following:

'It is important to note that the provisions of section 10 arise when a “dispute arises or is deemed to have arisen”. Once there is such a dispute, whether actual or deemed, either a single agreed surveyor or three surveyors are appointed, or, strictly, in the case of the third surveyor, selected. Where there are three surveyors two of them will have been appointed by (or occasionally for) one of the owners, whether building owner or adjoining owner. These party-appointed owners do (or should) not however act in any sense as agent for the owner appointing them. As the Earl of Lytton said when introducing the Party Wall Bill in the House of Lords on 31 January 1996: 

“The duty of party wall surveyors is quasi-arbitral. Once appointed they have a duty of act properly in the interests of both parties as statutory surveyors, which is a most important safeguard.”

Breach of Duty 

So in what circumstances could a breach arise?

The most obvious breach is bias, where a surveyor clearly fails to take into account the interests of both parties. This is not to say one surveyor should not be able to adopt a position which is contrary to that of the other surveyor. Indeed, this is the reason a third surveyor is often appointed. There is nothing wrong with positioning, however the Act has more to do with serving the interests of the parties. 

As explained the surveyors are under a duty to act fairly and within the spirt of the Act, and to ensure they do not lose sight of the enabling purpose of the Act. The parties are not interested in the construction and interpretation of the Act, the building owner is looking to complete the works, and the neighbouring owner is keen to know what work is to be carried out and what measures will be in place to protect the neighbouring property. 

So those surveyors who look to create disputes which do not exist and or who use the statutory procedure to constantly argue for no purpose other than to cost build, could clearly be viewed as failing to discharge their statutory and common law duty of care.

Equally, a surveyor who fails to assist parties to reach a quick and inexpensive resolution of issues could also be exposed to a negligence clam. It is clear from the Court of Appeal decision in Gray v Elite Town Management (2016) that the “the statutory procedure is intended to be a simple, inexpensive dispute resolution mechanism”. 

It could also be argued that a breach could result from a surveyor failing to advise his appointing owner or indeed both owners of alternative dispute resolution options, such as mediation, when, as often occurs, there is a deadlock between the parties. 

Causation and Loss 

In the case of a surveyor acting outside of his or her statutory appointment, through, for example, raising countless argument on issues which are no longer in dispute, and or constantly moving the ‘goal posts’, and or unnecessary protraction of the process, and or obstructing/hindering the proceedings and or acting in a confrontational manner, and or using the Act for personal gain, there may exist sufficient evidence to prove a breach. 

If it can be shown that there is link between the breach(s) and actual financial loss, then the affected party or parties could very well be in a position to bring a negligence claim against the offending surveyor to claim damages. 

The general aim of an award of damages in tort is to restore the claimant to his pre-incident position. In contract, on the other hand, the aim of a damages award is to put the innocent party in the position he would have been in had the contract been performed.

A damage claim could therefore include :

Extra surveyor fees due to the unnecessary protraction of the process - that is for both building and neighbouring owners

Extra cost/penalties due to the delay in the commencement/continuation of works

Damage to incomplete building works due to prolonged exposure to the elements 

Legal costs incurred in addressing issues created by a rogue surveyor 

The cost for establishing and running an alternative dispute resolution option

Negligence actions are not for the faint-hearted, though do keep in mind that surveyors operate with professional indemnity insurance cover, and that once a claim is intimated you should find yourself dealing with the surveyor’s insurers rather than the surveyor direct. 

David Pett - Property Solicitor with MJP Conveyancing

Avoiding the Cowboy Party Wall Surveyor

Home extensions whether to create more space or to redesign existing layouts are on the increase.  The availability of cheap loans and the stress associated with moving has made home improvement more popular than ever.   

Most home owners are well aware of the need to consider planning and building regulations but are often less mindful of the important role neighbours play in the process.   

The reality is they cannot be ignored, and indeed it is a point of law that neighbours must be given clear notice before work close to the neighbour’s boundary commences.  This includes work on an existing wall, ceiling or floor structure shared with another property, building on or at the boundary with another property and or Excavating near a neighbouring building or structure. 

Making sure this is not missed will or should provide the build proceeds smoothly.  Get it wrong then this could cause delay and add to the cost of the build.

There are plenty of websites out there with good advice on the procedure to be followed when the work proposed falls within the Party Wall Act, and providing the correct notice is given, and the party wall notice drawn in the correct form is served two months before the notifiable works commence, all should be well with the works.

A lot of emphasis is placed on the procedure, yet little focus is given to the those who are actually involved in the administration and delivery of the process, namely the large band of party wall surveyors.  In this article I provide some guidance on the factors to consider when it comes to engaging a party wall surveyor.

What is a ‘Party Wall Surveyor’?

A party wall surveyor is a person who specialises in resolving disputes arising under the Party Wall Act 1996.  Surprisingly there are no specific qualifications required to act as a party wall surveyor.  The Act is now over twenty years old and there is therefore a generation of experienced surveyors who have acquired a good working knowledge of the legislation and case law.   

Many of these surveyors are supported and provided with clear guidance form the Faculty of Party Wall Surveyors, The Party Wall Academy, The Pyramus and Thisbe Club, and RICS.   As with most industries there are good and bad participants. The difficulty for the lay person is in spotting the less ethical of the established surveyors and those who have are seen by some as using the Act as a ‘cash cow’.   

There are endless accounts of home owners who have had to shell out a lot of hard earner money because of the actions or inactions of certain surveyors who have gone out of their way to operate outside the spirit and requirements of the Act.

So, when do you need to appoint a party wall surveyor?

I have identified the type of works which attract the requirements of the Act.    If a Party Wall Notice is required and served and the neighbour agrees to the works in writing then work can commence. If a dispute later arises then both the home owner and the neighbour can look to appoint a party wall surveyor to assist with the resolution of the dispute.   If there is no response within 14 days or the neighbour objects a deemed dispute arises and the need for the appointment of a party wall surveyor arises.  

Both home owners can appoint the same party wall surveyor though it is usual for each to appoint their own surveyor and also what is referred to as a third surveyor who will be utilised if the two appointed surveyors are unable to agree on aspects between themselves.   

The purpose of appointing party wall surveyors when there is a dispute is for the surveyors to make a party wall award which lays out the requirements the builder will need to adhere too when carrying out the party wall works.

What questions do you need to ask when the need to appoint a party wall surveyor arises?

Is there in fact a dispute?

The first question and one of the most important to ask is there in fact a dispute?

For a party wall surveyor to be lawfully appointed there must exist a dispute.  

If the neighbour fails to respond to the party wall notice, or objects it does not necessarily mean there is in fact a dispute requiring the appointment of a surveyor.

It is always advisable to engage with the neighbour, find out what the basis of the objection is, and see whether an agreement can be reached. If successful this can always be recorded in what is known as a ‘Party Wall Agreement’.

Alternatively consider mediation. There are some really good property mediators out there.  This may involve some cost (£1000 - £1500), but if successful it could avoid a protracted and expensive party wall dispute.  It may also preserve that long standing relationship which has existed between the owner and the neighbour.

Even if the neighbour consents a problem could occur during or after the works are completed.   If a party feels aggrieved by the other party the temptation is to look for advice from a party wall surveyor.   It is unfortunately pot luck as to whether the surveyor contacted will provide good morally based advice or not.  

There are a minority group of party wall surveyors who practice in what is known as ‘ambulance chasing’ and who look to use the Act to create or fuel disagreements between home owners.  The majority of surveyors would enquire about the nature of the disagreement and ask the right questions.  They would enquire about the ‘dispute’ and ensure that there is in fact a dispute before looking to send out a letter of engagement.  For example, if the home owner has admitted notifiable works have caused damage then there is not a dispute and there is no need for a party wall surveyor to be appointed.

The party wall surveyor is not there to look for or generate disputes which do not exist.  In fact, the party wall surveyor is there to look after the interests of both owner irrespective of who has appointed the surveyor.  They must act without bias and should do all they can to promote early and cost-effective resolution of all relevant issues.  They should not stray from their statutory appointment by for example becoming embroiled in disputes over boundaries, trespass or other non-party wall works or issues. 

How experienced is the party wall surveyor?

Before appointing ask the party surveyor for a copy of his or her CV.  Ask how often the surveyor has been appointed by a home owner and by a neighbouring owner to make the appointee has plenty of experience of looking after the interests of both.   Ask for references.  Speak to other owners who the surveyor has acted for in the past.   Ask if they have ever been on the end of a RICS or similar body investigation.  Do your homework.  Go onto Google and enter the surveyor’s name.  Those surveyors who have faced previous disciplinary action can often be identified by this type of inquiry, though do please be aware of ‘fake news’.  Look at external reviews and be suspicious of those surveyors who have a whole sting of 5 star reviews!  As I say wider research of the surveyor may be required. 

Ask if the surveyor will act on a fixed fee.   This will limit exposure to your own surveyor’s fees.   If the surveyor says he or she will charge according to the time spent make sure a financial cap on the ‘spend’ is applied and to avoid entering into arrangements where the hourly fee is in excess of £200 per hour.   Beware of the surveyor who says don’t worry about your fees as these will be paid by the other party.   It is normal, but never guaranteed for the building owner to pay the surveyor’s fees of the neighbour.   Do keep in mind however that the surveyor has the right to still charge you for the work not covered by or recovered from the home owner. 

Third Surveyors

The appointed party wall surveyors may need to appoint but not call upon the services of a third party wall surveyor.   Always ask your surveyor to consult with you before agreeing the appointment.   They are not obliged to do so though if asked they may agree.  The same due diligence on the proposed third surveyor should be undertaken to make sure there is no link between the appointed surveyors and the third surveyor that could potentially expose you to the consequence of bias. 

If a referral to the Third Surveyor becomes necessary then ask the surveyor appointed if he can get the Third Surveyor to take on the role more of a mediator than an adjudicator.   This way rather than making a decision that may fuel the dispute the Third Surveyor may be able to speak to the parties and bring about an amicable resolution of the issues. 

Beware some surveyors will use the referral to the Third Surveyor as a means of building further costs.  No one should have to be responsible for costs when the argument is between the surveyors and  amounts to an academic one.   As mentioned the surveyors involved should be protecting and promoting the interests of both parties and not just those of the appointing party. 

What happens if it all goes wrong?

It does happen.  Even with the best will in the world a home owner may find him or herself entrapped  by the actions of a ‘rogue’ surveyor.  So if this happens what can you do?

First of all, ask the good surveyor to speak with the other party direct.  There is nothing to prevent this from happening as the party wall surveyor owes a statutory duty to both owners.  If this doesn’t work resist the temptation to go down the route of a Third Surveyor referral.  This could prove costly.  Instead consider speaking with the other party direct and suggesting mediation. 

Mediation is a good medium for quick and cost effective resolution, and if an agreement is reached this will then exclude the offending party wall surveyor. 

If that doesn’t work the there is a possibility of registering a complaint with RICS or other governing body.  

It may also be possible to explore the possibility of bringing a professional negligence claim against the rogue surveyor.  There is a duty of care, and if it can be shown this has been breached and actual loss has been suffered then  there may very well be a claim. 

At the end of the day the hard working and committed party wall surveyors are suffering as a result of the sharp and wrongful actions of a small minority.  To help these surveyors we must all be more careful in who is appointed  since bringing about a decline in appointments will be the only way, at least for the moment, to rid the profession of its rotten element. 

David Pett

Property solicitor with MJP Conveyancing Limited

davidp@mjpconveyancing.com

Gifts Donors and Anti Money Laundering

The rise in gifted deposits has without doubt created further work for conveyancers.  Not only is there a need to check the nature of the contribution and to take steps to ensure a lender is aware of the gift, a conveyancer is also  obliged to consider exposure to liability under the anti money laundering legalisation.    

On the face of it the donor of the gift is not a client, there is no retainer. This raises the question of whether the legislation can be said to impose an obligation.  Interesting the Legal Sector Affinity Group Anti-Money Laundering Guidance for the Legal Sector ( March 2018) contains no reference whatsoever to the donation of gifts and of any requirements in relation to the donation of funds towards the purchase of a property. 

The customer due diligence (‘CDD’) obligation clearly only relates to a person who retains a conveyancer to undertake a service which is regulated under the The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 ( ‘Regulations’).  Strictly speaking a donor is not a client, and would not on the face of it be covered by Regulation 27 of the Regulations, that requires CDD to be applied when establishing a business relationship. Logically this must be correct,  The Donor has no direct relationship with the conveyancer, there is no retainer to provide a service, and the only connection is the existence of a relationship between the client and the donor.  

In fact, there is a duty on the conveyancer to advise the donor to seek independent legal advice before gifting the funds.  Clearly, if independent advice is sought the legal advisor would need to carry out CDD on the donor before providing that advice.  The same would apply if the contributor was looking to acquire a beneficial interest in the property to be purchased and sought separate legal advice for that purpose. 

So the starting point is there is no obligation on a conveyancer to undertake CDD on a donor unless with reference to Regulation 27 there is a suspicion of money laundering or terrorism funding.   

It could also be argued that if the donor is to send the funds directly into the conveyancer’s client account and the amount is £15,000 or over that this could be viewed as an ‘occasional transaction’, in which event there would be a need to undertake CDD on the donor. 

The more tricky question is whether there is a need to undertake a source of fund and wealth check on the donor where no suspicion of money laundering exists.  There is clearly an obligation to make checks on the funds to be used by a client to purchase a property as well as on the general wealth of the client.  But the question is does that obligation extend to checking where the donor has acquired the funds and  whether the amount of funds made available fits with the profile of the donor?  Again, the Guidance is not very helpful and has little if anything on what checks should be made. 

If a client says funds are coming from Granny then clearly there is a need for the client to produce evidence that is so, and to see a bank statements showing the money leaving Granny’s account and being credited to the clients account.  

If the funds are to be paid directly into the client account then there would be a need to make sure the source of those funds is checked and verified.   I mention that CDD would also need to be performed.    

The Guidance makes reference to ‘Know Your Client’ and of the need to capture information which will allow a conveyancer to create a profile of the client to assess the whether there is a fit between this and the nature and size of the transaction.  The difficulty with a donor is that as he or she is not your client it might be difficult without asking the right questions to carry out this assessment.  There are also data protection to consider and the related practical difficulties  in relation to privacy notices. 

There are some interesting academic questions surrounding the application of the Regulations  in relation to gift donations and the answer may be that conveyancers should be insisting that a donor instructs an independent advisor and requests that adviser to confirm that all CDD and AML checks have been undertaken.   

In the absence of that step, it seems the safest solution would be to always carry out CDD on donors as well as checks on the source of funds and wealth.  We treat a donor in the same way as the client and have  created a ‘pack’ which we send the donor to provide a privacy statement, to explain what is required, and to obtain the information we need to make sure that can carry out adequate checks on the donor’s funds and wealth.  

This may be viewed as excessive, but with the presence of some serious  crime sanctions for non compliance it is far better in my mind to be over cautious. 

MJP Conveyancing are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877067 or via email at davidp@mjpconveyancing.com

Financial Crime - Conveyancing File Access Requests

The focus on financial crime detection is unlikely to diminish. On the contrary, it I likely to intensify and with this there will no doubt be a marked increase in requests from law enforcement agencies for access to client files.  

There are several powers available to those conducting financial crime investigations, and there is a need for all conveyancers to understand the obligations these create, and how the discharge of these should be balanced with the requirement to keep client’s information confidential. 

The probability of receiving a request for access is high, and the need to be prepared, and to prepare your staff on what to do if a request is received, is one which you would be foolish to ignore. 

The conflicting professional obligations are contained in Chapter 4 and 5 of the SRA Code of Practice. The former places an obligation on you to keep the affairs of clients confidential, unless disclosure is required at law, or the client consents. The latter Chapter states you must comply with court orders which place obligations on you. 

Normally, the starting point for the enforcement agent is to serve a S29 Data Protection Act notice asking for information on a client for the purposes of the prevention, detection or investigation of a crime. The notice, if you comply with it, provides a defence to a claim of a data protection breach, yet it will not, and this is important to note, override your obligation of confidentiality.  

So what do you do? To begin with, you should make sure that the request is referred to the appropriate person within your organisation. It should go without saying, that you should have a plan in place to be relied on in the event of a request, for responding, dealing with clients and other relevant third parties and advisers. 

It is important to remember, that unless you are in receipt of instructions from the client under investigation relating to the enquiry, it is a breach of confidentiality to confirm or deny you act for the client. If however your engagement is already known, ( for example you are advised that your details were found during the investigation ), then there would be no harm in accepting your connection to the client. 

Either way, you should advise the enforcement agency that you will not be able to grant access without a court order. 

You should also advise your professional indemnity insurers of the request straight away. Some policies will enable you to seek specialist advice on how best to respond, and on the more complex issue of which parts of the file are privileged from disclosure, and those which are not. Also consider contacting the SRA Ethics Helpline to seek guidance. 

You should also ensure that all files are available, since once an order for the production of the file is made you will normally only have 7 days to respond. 

Ask the investigator whether it is possible to contact the client to seek consent for the disclosure. Normally you will be told not to ‘tip off’ the client, and if you are, then you must make sure there is no contact with the client. Instead wait for the Order to be produced. Make sure all staff who have involvement in the transaction ( if ongoing ) are alerted and open a separate file to record and retain documents relating to the request. 

Also consider whether there is a need to submit a suspicious activity report. This is mainly relevant when you are acting for a client in a property transaction at the time the access request is received. This should put you on immediate alert of a possible money laundering offence, and if doubts about the source of funds or wealth also exist, your Money Laundering Reporting Officer will need to consider whether a SAR should be submitted. 

So to recap, never disclose a file without your client’s consent ( assuming you are in a position to seek this) , always invite the enforcement agency to apply for a production order, ensure you seek professional specialist advice either though your PII insurers or by going direct to an adviser, and then make sure you start preparing for the arrival of the production order. 

The agency will normally give you notice of when the application for the production order is to made ( normally within a 28 day period ), and will ask if you wish to be in attendance at the hearing of the application. Unless advised otherwise, there is no real need to attend the hearing, though it is worth asking for the time to comply with the order to be extended from 7 ( the standard ) to 14 days. 

There are several different notices and orders that can be sought depending on the nature of the investigation. Normally when property is concerned, and money laundering is suspected, the enforcement agency will seek a production order under s345 of the Proceeds of Crime Act 2002. The other likely option is to seek a production order under schedule 1 Police and Criminal Evidence Act 1984. 

Neither of these two orders will require your to produce material that is subject to legal professional privilege. 

On receiving the production order immediately refer this to your advisor, and begin copying the material in readiness for production. You will need to consider whether the order has been obtained correctly, whether it is clear in its terms ( not, for example, drafted too widely ) and whether there are any parts of the file which should be redacted or excluded under legal professional privilege.  

What amounts to legal professional privilege is not an easy question to address, and even specialist advisors often struggle to provide definitive guidance on this issue. In the conveyancing arena the relevant head of privilege is advice privilege.  In a conveyancing transaction all communication between you and a client is covered by privilege even though it does not contain advice e.g communication with, instructions from, and advice given to the client in the performance of your legal duty as adviser. This includes all working papers, your bill of costs and completion statement, and information imparted by prospective clients in advance of a retainer. Advice privilege does not however attach to the clients ledger and the actual conveyancing documents. 

Legal professional privilege can be displaced by the crime/fraud exception where documents form part of a criminal or fraudulent act or communications which take place in order to obtain advice with the intention of carrying out of an offence. This applies even when you are not aware that you are being used for that purpose.  Arguably, in the context of a conveyancing transaction where there is prima facie evidence of money laundering or attempted money laundering, this could mean that the whole of your file would need to be produced. 

As you will see this is a very complex area of law and specialist advice should always be sought. 

MJP Conveyancing are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877067 or via email at davidp@mjpconveyancing.com

Your obligations under the Criminal Finances Act 2017

The pages of legal journals, and other publications, are currently filled with information and guidance on GDPR and Anti Money Laundering, yet there is very little commentary on the far-reaching obligations imposed by the Criminal Finances Act 2017 (‘Act’). It received royal assent the 27th April last year, and contains some of the most far-reaching changes to anti-money laundering since the passing of the Proceeds of Crime Act 2002, as well as new powers designed to address the seizure of suspected criminal property.

Equally as important the Act has also created new offences in relation to the facilitation of tax evasion which will affect all companies, LLPs and partnerships, such as lawyers.

A company or LLLP or partnership can now be held to account for the actions of its directors, employees and others businesses with which it might contractually engage (“Associated Persons”) in relation to a failure to prevent facilitation of tax evasion – not only in relation to UK tax but also in relation to foreign tax evasion offences.  

This includes any specific statutory tax evasion offence or the common law offence of cheating the public revenue. There must also be an element of fraud or deliberate dishonest conduct, so liability would not arise, for example, through failure or even a refusal to complete a tax return or breach of other similar notice requirement offences. There need not be a conviction for a tax evasion offence.

There is a defence. Liability will not arise if the Associated Persons “demonstrate that it has put in place a system of reasonable prevention procedures that identifies and mitigates its tax evasion facilitation risks” (ss.45(2) and 46(3) of the Act).

For liability to arise (according to the HMRC Practice Notes) there needs to be a deliberate and dishonest action to facilitate the evasion. This suggests that boa fide advice on, for example, a tax avoidance scheme, should not present a risk, though where the SRA has issued a warning notice about a particular arrangement, the line between potential liability under the Act and not, may prove, in my view, be less clear.  

Liability under the Act will not arise simply because a client is known to be committing tax evasion.  For the offence to be committed the adviser must be seen, as mentioned above, to be taking “deliberate and dishonest action” to facilitate the evasion. This would suggest that there is not a need to report a client for suspected tax evasion. Indeed, it is worth stressing that, since legal professional privilege applies to this offence no liability will arise for the firm under the Act if it fails to report tax evasion by the client where it knows that evasion is taking place.

Great care should however be exercised here, since if it is known the client is committing tax evasion and funds from that client are to be used say, to purchase a property, the tax evasion will mean the funds are criminally tainted, and to receive those funds into your client account would clearly amount to money laundering.  The tax evasion would clearly in these circumstances need to be reported to the NCA since failure to do so could constitute a criminal office under the anti-money laundering legislation.

The Act does not restrict the ability of a client to seek advice as to how legally to minimise tax liabilities.  It is to prevent the unlawful evasion of tax.  Thus, there is nothing to prevent a solicitor from defending criminal charges of tax evasion or providing advice to the client on how they may regularise their tax position through legal means. Similarly, a firm cannot be held to be liable if their advice to a client to cease tax evasion goes unheeded, though do keep in mind here your AML obligations.

So, what should we be doing to comply with the Act?

To begin with, there should be an immediate evaluation undertaken to assess the risk areas within the business.  In Conveyancing, the areas of risk center around tax advice on capital gains tax and stamp duty. The risk is heightened where the turnover of clients is high, and in offices where work is undertaken by individual case handlers rather than teams. If clients are referred on to outside advisors, for example to seek advice on Wills, this would also be viewed as a risk area. The HRMC Guidance notes are helpful in identifying both low and high-risk areas, and is a good starting point when putting together a risk assessment. Your AML risk assessment will also assist.

Once you have identified the areas of risk you can then look to form a policy on detection and prevention measures and controls.  How are staff vetted when they join?  Do you obtain references and carry out back ground checks? In my firm we undertake criminal background checks.   How do you carry ongoing monitoring and supervision of staff and third-party contractors?  Are files reviewed regularly?  Making sure there are good accounting protocols is a must.  How are transfers of money out of the office approved.  In this office no transfer is made without ensuring adequate source of funds and wealth checks are made and a director has paperwork to enable bank details can be checked before funds are sent out.  This helps to mitigate the risk of funds being transferred out to an account established by, for example, an employee.

One area of major risk of collusion is where the business acts for a family member or friend of an employee or the employee.  Stricter monitoring in these circumstances should be implemented, and a policy on who can work on those files should be formed and implemented.

As for third party contractors, make sure contracts are reviewed, that you formulate and issue a statement of your stance on tax evasion, and that you seek details of the business’s policy on the Act.  There is good argument to suggest that unless the contractor has a workable policy you should consider terminating the contract.

Putting together a policy is the first step.  Making sure you can demonstrate the implementation of the policy is the next step, and perhaps for establishing the defence to liability if required, is the most important one to take.  Organise staff training, create and maintain monitoring records, ask external file reviewers to include checks within the review.  Also review the risk assessment and policy regularly.

In short, do what you can to demonstrate that you are taking the obligations seriously, and that you are implementing adequate controls to detect signs of dishonesty within the work place.  Including a statement of your intent on your website and in your terms and conditions is also advisable.

MJP Conveyancing are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877067 or via email at davidp@mjpconveyancing.com

Is a source of funds check a complete waste of time?

A controversial question, but one I must raise given information received today from Lloyds Banking Group to the effect that it is not their policy to pass on bank details of the person transferring funds into a client account, without the consent of the transferor. It seems that depending on the type of transfer only the sort code of the transferor’s bank is captured and made available. This is not the case on all transfers however.

The consequence of this apparent data protection issue, is that without this information it is impossible to carry out a full and complete source of funds check, and to fully comply with obligations imposed by anti-money laundering and counter terrorism legislation.

Take the following example.

Client A provides Solicitor Firm B with bank statements and other documents to enable source of wealth and source of funds to be undertaken.  These checks are made and details of the account or accounts from which funds are to be transferred are recorded by Solicitor Firm B.  Client A then makes the transfer of funds into Solicitor Firm B’s client account. How is it possible for Solicitor Firm B to complete with its regulatory and statutory obligations and complete the source of funds check when Solicitor Firm B’s bankers refuse to provide details of the transferor’s account? A client with criminal intentions could have provided Solicitor Firm B the bank statements from a legitimate account only to later use an account holding criminal tainted funds for the transfer. 

This example demonstrates in my view a massive hole in anti-money laundering and counter terrorism measures and makes a complete mockery of the hard work that many of us are undertaking to assist the enforcement agencies with their fight against crime.

I know Lloyds is looking into this, and has referred the concern to the SRA and their legal department to seek urgent guidance. It will be interesting to see what comes of this referral when it is clear that there a legal obligation placed on a bank to obtain details of the account from which a transfer is to be made. The question whether this information should be passed onto a regulated body to discharge a legal obligation to adhere to anti-money and anti-money laundering and counter terrorism legislation is less clear.

In the meantime, the absence of joined up writing on this aspect of effective detection will leave the whole of the legal and other sectors covered by the legislation completely exposed.  I have asked Lloyds if this now means it is safe to assume that if the money is coming through the UK banking system the risk of money laundering and terrorism funding is low. I suggest this as the situation currently stands only the Bank knows from where the money has originated.  I have also asked whether a warranty to that effect can be given! I am not, needless to say, expecting a positive reply! 

David Pett - Solicitor

Moving home in the snow

Moving house is a highly stressful event for most people, and even though most factors can be planned for weather is not one of them. As anyone moving in the last few days and in the coming week will be aware of, weather is unpredictable and often not considered fully.

If you are due to exchange contracts and the weather forecast is predicting adverse weather, the best approach is to delay matters.

Once you have exchanged contracts, you are contractually bound to move on the agreed completion date. In a property contract, unlike many commercial contracts, there is no provision that deals with unforeseen circumstances like the weather we've recently experienced.

You should be aware that if you are unable to move on the agreed date you could face penalties for being in breach of contract. The sensible approach therefore is to keep an eye on the forecast and wait until the weather has cleared, before committing yourself to an exchange.

So if you are unlucky enough to complete your property transaction during adverse weather conditions, here are a few helpful tips to keep in mind;

• Safety: this must always be at the forefront of your thoughts when making decisions about your move
• Be careful when packing: ensure to fully protect your temperature sensitive household goods such electrical items, delicate furniture, plants and animals, and any boxes are labelled 'keep dry'
• Prepare for the day: clear paths and driveways to your current property so that movers can safely access your property
• Protect: Limit damage to the flooring in both your current property and new home by using plastic sheeting and thick cardboard
• Be wise: Remember not to pack your warm winter clothing on moving day
• Make sure all utilities are connected, and you know how the heating and boiler operate in your new home
• Morale: Have equipment ready for making hot drinks for all your helpers
• Plan ahead: Have a back-up plan in case conditions worsen

Moving in any kind of adverse weather can take longer than anticipated, so keep calm and stay warm!

BEN PETT AND ANNA MCNEIL

MJP Conveyancing are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877067 or via email at davidp@mjpconveyancing.com