The Dreamvar Appeal and the game of 'ping pong' it has created

The decision of the Court of Appeal in  Dreamvar (UK) Ltd v Mishcon de Reya and the linked claim in P & P Property Ltd v Owen White and Catlin LLP has created more uncertainty and will without doubt lead to conveyancers playing ‘ping pong’ with each other as I hope this article looking at the practical implications will demonstrate. 

So a buyer solicitor will be asking the seller for a warranty that the conveyancer’s client is the legal owner of the property. In return the seller conveyancer will or should say that all money laundering checks required by statute have been undertaken but that no warranty should be implied into the response as to the true identity of the seller.  

The ball now firmly back in the buyer’s conveyancer’s court, the competent buyer’s conveyancer should challenge this, and say this is not good enough, and to specifically enquire as to whether the seller’s conveyancer has seen evidence to link the client to the ownership of the property. For example, evidence of building insurance or recent payment of council tax. This I submit is a reasonable request and one which the seller’s conveyancer should be required to answer.  If the seller’s conveyancer refuses then the buyer should be made aware that there is a refusal to provide the evidence, and be advised that he or she should not proceed without it. Make sure the seller’s conveyancer is made aware of the consequence of failing to answer this question. 

If confirmation is given I am not sure the buyer’s conveyancer can do more. I consider it would in the absence of any other red flags be sufficient to take the reply as read.  If there are however red flags present then the buyer’s conveyancer may decide to ask for the sight of the evidence. The risk here is by asking for this and then receiving it, the buyer’s conveyancer is then taking on responsibility for checking the authenticity of the documents supplied. 

This line of enquiry should be undertaken in each and every transaction. 

If the buyer’s conveyancer following this enquiry has on going doubts then as I say this should be made aware to the buyer, and it may be that the advice is not to proceed, and if the buyer wishes to do so then a disclaimer should be signed. 

The buyer in these circumstances should check the adequacy of the seller’s conveyancers PPI cover to make sure that off an issue arises the buyer is not exposed if a claim needs to be made. 

The buyer’s conveyancer should also insist that the Law Society’s Code of Completion should be adhered too, which is of particular importance if the seller conveyancer is a licensed conveyancer or a conveyancer which operates outside the Law Society Protocol ( if the Protocol applies the Code is implied).  If the Code does not apply then the buyer’s conveyancer should insist on the seller’s conveyancer undertaking that they have the legal owner’s authority to receive the purchase monies. This should be sought before exchange.

If this is not forthcoming my view is that the buyer should be advised not to proceed without it and if the buyer says he or she still wishes to proceed make sure a disclaimer is sought. 

There is no outright winner in this game - its all about compromise and making the client aware of the risks where these exist. 

David Pett - Property Law Solicitor 

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 david@mjpconveyancing.com

GDPR- What, How When, Where, Who?

In an increasingly digital world, it is arguably harder to keep track of what we have bought, who we have spoken to, what we have signed up to and more importantly, where our data is held. When we receive the telephone calls about accidents that we never had or emails from a friend who is supposedly stuck in Thailand after being involved in a tuk tuk collision, it often worries us how our details ended up in the hands of these rather ominous places. 

Organisations have become wise to the trends in consumer behaviour; namely, we want things done quickly and efficiently with as little bureaucracy as possible. A trend that has been exploited by firms using pre-ticked boxes and electronic receipts as consent to marketing as a way of increasing their customer base and decreasing consumer knowledge.

Well, four letters have the potential to shift the power back to the consumer and those four letters are G.D.P.R. You may have only just started to hear the acronym being used or might not be aware of what it even means but organisations all over Europe are currently working on becoming compliant with what is being dubbed the biggest change to data protection law in the last 20 years. 

This article will give you a brief understanding on the EU General Data Protection Regulations (GDPR) and what MJP Conveyancing has been doing to ensure compliance for our clients.

What?

1998; the era of chunky Nokia flip phones and dial up computers. 1998 was also the year that the Data Protection Act was introduced setting out 8 principles governing the use of personal information. Since 1998 we have witnessed technological growth on a scale far greater than we can process resulting in inadvertent cultural trends and an increasing imbalance of power in favour of the producer rather than the consumer.

 Let’s take the Tesco Clubcard as an example. Introduced in 1995, the Club Card was arguably introduced to gain a competitive advantage against its rivals by offering perks to returning customers. Since 1995 however, the growth in technology and types of data collected through the Club Card has enabled Tesco to gain a better understanding of their customers’ shopping habits such as what meals people like to eat, whether people like to cook from scratch or how many people are in the household based on the number of toilet rolls a customer purchases. My point? It is clear to see how data collection and analytics are changing at a rapid pace and there has been a growing need to modernise data protection legislation in order to protect how our data is shared and utilised by organisations.

The General Data Protection Regulation (amongst many other functions) seeks to bring data protection legislation into the 21^st Century by protecting the fundamental rights and freedoms of natural persons and in particular their right to the protection of personal data.  

How?

How does GDPR seek to modernise data protection regulation? There are various ways in which GDPR seeks to modernise data protection laws such as appointing a Data Protection Officer, Free Subject Access Requests and the relationship between data processors and controllers.

One particular modernisation of the GDPR under Chapter 3 lays out 8 rights for individuals, namely:

1. The right to be informed
2. The right of access
3. The right to rectification
4. The right to erasure
5. The right to restrict processing
6. The right to data portability 
7. The right to object 
8. Rights in relation to automated decision making and profiling.

These 8 rights amongst other things aim to provide individuals with a higher degree of access to their data as well as more transparency around how it is processed. What’s more, the GDPR explains how companies must provide a ‘reasonable’ level of protection which in itself provides the Information Commissioner’s Office with a lot of scope to fine companies who are in breach of these rights under the regulations.  

Another modernisation to the data protection act through GDPR is the mandatory requirement to report Data Breaches within 72 hours to the ICO which was not under the Data Protection Act. Companies such as Carphone Warehouse, Facebook, Under Armour and My Fitness Pal have been in the press recently for Data Protection breaches, but it is not just the big guys that face liability. Small and large companies are under an obligation through Article 33 of the GDPR. With fines as large as €20 Million or 4% of total global turnover as versus maximum fines of £500,000 under the Data Protection Act, not only is GDPR enabling regulatory bodies to clamp down on bad practice, but are also providing clients with a satisfying remedy knowing that their data has not financially benefited business.

Overall, these regulations reflect a changing technological landscape which in turn has required our legislation to impose a greater degree of responsibility for those who control and process as part of their business.

When?

GDPR comes into force on the 25^th of May 2018. MJP Conveyancing have been working since December 2017 to ensure full compliance with the regulations. A dedicated team of inhouse staff have worked through a project list and we are now confident that we are compliant with the regulations.

Where?

You may be thinking why I have taken then time to write this article given that the GDPR regulations are a piece of EU legislation and doesn’t apply to us because of Brexit. This is in fact wrong and the UK will have to prepare for GDPR as with all the other organisations within the EU in line with Article 3 of the GDPR .  

To end…

MJP Conveyancing has been working tirelessly to comply with the GDPR regulations having successfully run a re-permissioning campaign, risk assessments and audits, staff training and various policy changes. We feel ready for the regulations and hope to provide our clients with a safe, transparent and reliable service which is really the ultimate aim of these regulations. 

See you on the other side of May 25^th!

Written by Emily Chawawa.

MJP Compliance Officer 

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