The importance of lawyers’ professional undertakings in Bermuda

MJM, a Bermuda law firm, publishes an informative and interesting Bermuda Law Blog, which covers a wide variety of subject areas.

One of their recent Blogposts caught my attention.

It is entitled “Bermuda’s Supreme Court confirms that property owners have an indefeasible right to title deeds“, and it describes the facts and outcome of a recent piece of litigation in the Supreme Court of Bermuda, before Chief Justice Kawaley.

Curiously, Kawaley CJ’s judgment does not appear to have been committed to writing or published on the Bermuda Government’s judiciary webpage, and the Blog has anonymised the names of the parties involved.

For those who may be particularly interested, however, it is possible to piece together the details of the case, and the parties and law firms involved in it, by reviewing the Supreme Court Cause Book, and Offshore Alert’s website (which publishes certain Court filings on a periodic basis).

MJM’s blog summary describes a case whose outcome appears to be so blindingly obvious to anybody familiar with property and conveyancing law in a common law system involving unregistered land and title deeds (such as Bermuda), that it is quite hard to understand how the dispute ever found its way to Court, let alone to a hearing before a Judge.

One of the oddities in the case is that the Purchaser’s attorneys appear to have misunderstood the nature and effect of their own professional undertaking to hold the Vendor’s title deeds to the order of the Vendor (it being customary for the Purchaser’s attorneys to review the original title deeds to assist them with their conveyancing work).

The Purchaser’s attorneys appear to have deliberately (!) taken the position that they were entitled to disregard or breach their undertaking to the Vendor, on the basis of instructions received from their client, the Purchaser (who was at risk of forfeiting his deposit for non-completion of the transaction, and appears to have hoped to use the title deeds as some form of leverage against the Vendor).

For the avoidance of any doubt, Bermuda lawyers are NOT entitled to breach their undertakings on the basis that their clients have instructed them to do so.

This is pellucidly clear from at least four sources (none of which can be remotely controversial, and are just the tip of the iceberg of the law on this issue):

  • Rule 109 of the Bermuda Barristers’ Code of Professional Conduct 1981 expressly provides that “A barrister shall give no undertaking he cannot fulfil and he must fulfil every undertaking he gives. Undertakings should be written or confirmed in writing and they should be absolutely unambiguous in their terms. If a barrister giving an undertaking does not intend to accept personal responsibility, he should state this in the undertaking itself. In the absence of such a statement, the person to whom the undertaking is given should be deemed to expect that the barrister giving it will honour it personally.”
  • The United Kingdom Supreme Court has recently confirmed, in Lord Hodge’s majority judgment in the case of Impact Funding Solutions Ltd v AIG Europe Insurance Ltd [2016] UKSC 57 (26 October 2016), that “As officers of the court solicitors are expected to abide by undertakings given by them professionally, and if they do not do so they may be called upon summarily to make good their defaults” (John Fox v Bannister, King & Rigbeys (Note) [1988] 1 QB 925, 928, per Nicholls LJ)”.
  • The Supreme Court of Ireland has recently confirmed, in Mr. Justice Clarke’s judgment in Allied Irish Bank plc -v- Maguire & ors p/a Maguire & Co., Solicitors & ors [2016] IESC 57 (13 October 2016)  that, in the context of a conveyancing transaction involving a breach of undertaking by a solicitor, “the actions of that solicitor were in serious breach of the undertaking given and, indeed, amounted to a serious breach of professional ethics [that] cannot be doubted and is not disputed“.
  • The English High Court made clear, in Briggs & Anor v Law Society [2005] EWHC 1830 (Admin) (19 July 2005), that Undertakings are the bedrock of our system of conveyancing. The recipient of an undertaking must be able to assume that once given it will be scrupulously performed. If property purchasers and mortgage lenders cannot have complete confidence in the safety of the money they put into the hands of a solicitor in the course of a property transaction, our system of conveyancing would soon break down. The breach of an undertaking given by a solicitor damages public confidence in the profession and in the system of undertakings upon which property transactions depend. Accordingly, if fault is shown, as it has been here, the matter must be treated seriously“.

It remains to be seen whether or not the lawyers involved in the case are to be sanctioned by the Bermuda Bar’s Professional Conduct Committee (whose members appear to include a lawyer from the law firm involved), but, pending any regulatory decision, it is interesting that the Court did not consider it appropriate to publish a written ruling, identifying the law firm concerned.

It is quite hard to see how the public interest is served by anything other than publicity in a case of this sort – especially where the breach of undertaking appears to have been deliberate, rather than inadvertent, and therefore serious.

But perhaps the Judge took the charitable view that it was an honest mistake by an inexperienced lawyer, and that the lawyer involved deserved a second chance.

 

 

 

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