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High Court judge examines solicitor’s ‘highlighted’ LPC textbook in court battle over £4.6 million mortgage fraud bill

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The book was “annotated in many parts”

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An LPC textbook has taken centre stage in a High Court battle involving a multi-million pound mortgage fraud.

The court found yesterday that Shirin Rahim, a solicitor and mother of three, cannot rely on professional indemnity insurance to cover potential losses arising out of mortgage fraud because the insurers, Arch Insurance Co. (Europe) Ltd, can rely on the dishonesty exclusion in the policy. The losses could amount to a staggering £4.6 million.

Three judgments have been successfully entered against Rahim, a partner in a firm formerly known as O’Sullivan Law (OSL), by Barclays Bank and Heritable Bank in relation to mortgage fraud. The claims did not allege that Rahim had any personal involvement in the frauds but that she was a partner of the firm at the material times and therefore potentially liable.

The mortgage frauds involved misleading lenders on the true sale price of particular properties, representing the price as being higher than it was, so that the lenders would advance larger mortgages. During the hearing, Rahim tried to argue that she was not aware that she was acting for the mortgage lender as well as the buyer in the property transaction (and, so the argument went, did not know that she should have reported any price discrepancy to the lender).

However, as part of the case, the judge had examined Rahim’s LPC textbook (the second edition of Abbey and Richards’ ‘A Practical Approach to Conveyancing’ (2000)) and found it “well thumbed and highlighted and annotated in many parts” including the crucial paragraphs relating to the conflict of interest when acting for borrower and lender.

Shariful Islam, who ran the firm, lost his case at the Solicitors Disciplinary Tribunal on a number of charges connected with mortgage fraud. He was subsequently struck off. Earlier this year, he stood trial in the Crown Court for fraud and was found guilty, sentenced to four years in prison.

Although Rahim was not found to have acted dishonestly in the mortgage frauds, His Honour Judge Waksman QC, the judge in the case, found that the dishonesty exclusion was valid because:

In my view, there can be no doubt that Ms Rahim knew perfectly well that she was part of a significant and systematic mortgage fraud being perpetrated at OSL.