Supervising partner fined last month
A senior paralegal has received a written rebuke after he requested that at least £1.85 million be released to a property development client before it was properly due, causing a breach of contract.
This finding comes after the Solicitors Disciplinary Tribunal (SDT) fined Mark Shepherd, the client partner on the matter, £14,000 for authorising these payments, failing to personally check whether the terms of the contracts had been met and whether the payments were properly due to the client.
Shaun Sloyan was a senior paralegal who had been working in the plot sales team at DWF’s Manchester office for six years when he took on day to day responsibility for the construction and sale of a number new-build residential properties.
Solicitors for the buyers of these properties paid deposits and instalments towards the purchase prices to DWF. The firm were responsible for holding these funds until deposit warranty insurance was in place and supervisors certificates had been issued to confirm that construction of the properties was progressing.
Between 17 December 2019 and 30 November 2020, £1,852,853.56 was wrongly paid from the firm’s client account to the developer, despite no supervisor’s certificate having been issued. These payments were requested by Sloyan and authorised by Shepherd.
Two firms of solicitors representing plot buyers raised queries with Sloyan, asking about the supervisor’s certificate and requesting a copy of it. In his email response to one firm, Sloyan said that the supervisor’s certificate would follow “nearer to practical completion” and “should not hold up exchange”, against the terms of the contract.
Following these exchanges, Mr Sloyan continued to make payment requests related to this plot development.
The SRA said that Sloyan had simply followed the process which applied to other developments rather than checking the specific contract position in relation to this matter, resulting in a contract breach.
Sloyan told the SRA that he believed that Shepherd’s authorisation of the payments was confirmation that the payments were properly due and he was not aware that Shepherd was not in fact checking the payments.
Nearly £2.6 million was “paid erroneously” by DWF to the property developer in instalments. £1.85 million was released without supervisor’s certificates and £747,000 without deposit warranty insurance.
Sloyan brought the error to Shepherd’s attention after he discovered that development works on the plots had not begun, and the site was still bare land. Shepherd immediately raised the matter with the correct internal escalation procedures.
When DWF attempted to recover these sums from their client, they discovered that the client had gone into administration, leaving the firm to repay buyers by claiming on its professional indemnity insurance. The firm self-reported to the SRA in March 2021.
Following an internal investigation by DWF, the firm accepted that there was no formal or documented process which required either client partners to supervise matters referred to the plot sale team, or for the plot sale team to escalate queries to client partners or other partners. The firm no longer conducts plot sale work.
The SRA found that Sloyan’s conduct was of “moderate seriousness”. He failed to protect client money and, in doing so, caused “much angst, concern and worry” to over 40 buyers, risking undermining public confidence in the profession. However, the SRA took into account Sloyan’s previously clean regulatory record and the fact that he believed his payment requests were being checked.
In addition to the written rebuke, Sloyan was ordered to pay £600 in costs to the SRA.