Take care of your letterhead ...
In UCB Home Loans Corporation Ltd v Soni & Co the Court of Appeal has found that a partner in a solicitor's firm was not liable under the S14 Partnership Act 1980 for fraudulent representations made by another partner to a mortgage lender.
Mr Soni, the First Defendant, was a solicitor who defrauded the Claimant lender, UCB Home Loans Corporation Ltd. Mr Soni took out 5 mortgages on properties in his own name from UCB and handled the conveyancing himself through his practice based at Ansdell Street. He represented to UCB that the Ansdell Streeet practice had two partners and that the conveyance would be handled by the other partner, Ms Kherdin. Mr Soni forged Ms Kherdin's signature on the certificate of title and gave no security for the loans.
In fact, Ms Kherdin was not a partner in the Ansdell Street practice. She was in partnership with Mr Soni in a different practice which had offices elsewhere including at Gants Hill where she was based.
UCB sought to prove that Ms Kherdin was liable for the fraudulent representations made by Mr Soni under s14 of the Partnership Act 1980. In order to do so, UCB was required to show that (a) a representation had been made that Ms Kherdin was a partner with Mr Soni in 'a particular firm' (ie the Ansdell Street practice), (b) that the representation was knowingly permitted by her to be made and that (c) in reliance on that representation, UCB gave credit to the Ansdell Street practice. If UCB were able to prove that Ms Kherdin knowingly suffered the representation that she was a partner to be made, then they did not have to show that she knew that the representation was in fact made to UCB.
UCB relied on a general letterhead which listed Ms Kherdin as a partner of Soni & Co, and also listed a number of office addresses including Gants Hill, but not stating Ansdell Street. UCB claimed that Ms Kherdin therefore made the representation or knowingly suffered it to be made that she was a partner with Mr Soni in a single entity and/or of businesses at a number of different addresses (including Ansdell Street).
However, the letterhead upon which Mr Soni had made the fraudulent representations to UCB, listed an old and incorrect address which Mr Soni no longer used and did not mention the Gants Hill address at all.
The Court found that Ms Kherdin would not have accepted the use of letterhead which did not list the Gants Hill address nor one which listed an out of date address. It therefore followed that UCB did not give credit to the firm based on any representation made by Ms Kherdin by way of the general letterhead. The representations that Ms Kherdin had made or knowingly suffered to be made (ie that she was in partnership with Mr Soni from the Gants Hill address) were therefore different to the representations that had been made to UCB. Section 14 of the Partnership Act 1980 was therefore not satisfied and the appeal was dismissed.