High Court: Solicitor ‘grossly negligent’ in fraudulent property transaction by daughter against her parents

About this case:

• Citation:
  [2022] IEHC 740
• Judgment:
  External link
• Court:
  High Court
• Judge:
  Mr Justice Brian Cregan

Although the home had been valued at €250,000, the daughter procured the transfer of the property to her for no consideration and, further, took out a €190,000 loan with First Active.

Delivering judgment in the case, Mr Justice Cregan was highly critical of the conduct of the solicitor, Mr Kevin O’Gorman. Although he purported to act for the parents in the transfer, he gave no advice to them at any point.

Further, Mr O’Gorman falsified dates on various documents to misrepresent the date of transfer to Revenue and avoid stamp duty, destroyed two pages of the original deed of transfer and signed documents confirming that the parents had signed in his presence which he knew to be untrue.

Background

The plaintiff was Mrs Marie Gibson. In 1977, she and her husband agreed to buy their home from Dublin City Council for IR£2,500 through the Home Purchase Scheme. The final payment was made in March 2009. As part of the Scheme, there was a covenant that the Gibsons could not alienate, mortgage or charge the property without the consent of DCC.

In 2003, the Gibsons had five surviving children, including Ms Pauline Gibson. At that time, their daughter approached the couple seeking a loan to carry out renovations on Pauline’s home. Pauline had also mentioned borrowing from the bank “against the house”. The parents agreed because they trusted their child in all matters, although it appeared that they had a limited understanding of what borrowing “against the house” meant.

Pauline approached First Active plc and obtained a €190,000 loan secured against her parents’ property. This was arranged by Mr Martin Leahy (financial advisor) and Mr O’Gorman gave an undertaking that the parents had good marketable title to transfer the property.

The plaintiff and her husband met with Pauline in a pub in 2003, where they were asked to sign some forms. A man walked in, who the parents thought was from the bank, and the documents were signed. Unbeknownst to the parents, the documents allegedly provided for a full transfer of the property to their daughter.

The plaintiff outlined that they had never received any legal advice (written or oral) from any solicitor on the transfer. However, Mr O’Gorman claimed that he acted for the parents and Pauline in the transaction. Mr O’Gorman claimed that part of the proceeds of the bank loan was to allow the parents to renovate their house, but the plaintiff stated that her husband was very handy and did all housework himself.

Further, it was said that the loan was provided to allow the parents to purchase a taxi for Mr Gibson to operate, but the plaintiff outlined that she had sold her car and put the proceeds towards the taxi.

Following the purported transfer in 2003, matters became “complex and difficult to follow”. Documents were amended, re-dated and allegedly re-executed over several years.

In 2009, Mr O’Gorman was contacted by the bank, where it was clear that the deed of transfer and mortgage had not been stamped or registered. He gave evidence that he may have put the first page of the two-page transfer document “in the bin” and printed off a new front page dated 22 May 2009. Mr O’Gorman admitted that he did this to avoid pay stamp duty and interest for six years.

Mr O’Gorman then applied to register the deed of transfer and mortgage with the Land Registry. The Registry noted that the unconditional consent of the local authority was required for the registration. Subsequently, in March 2010, a transfer order was drawn up by DCC which vested the property in the name of the parents.

The transfer order was apparently signed by the plaintiff and her husband, but it transpired that the signatures did not belong to either of them and were forged.

Mr O’Gorman outlined that he decided the deed of transfer had to be re-executed and discarded the second page of the original deed of transfer. He asked Pauline to come to the office, collect the deed and get it re-executed by the parents. Pauline later returned with the deed apparently re-signed. The document stated that it was “re-executed…in the presence of Kevin O’Gorman”.

In a second application by Mr O’Gorman to the Land Registry, the Registry required clarification as to who should properly receive the freehold interest in the property. Eventually, Mr O’Gorman dealt with the issue in 2012, where he changed the date on the deed again from 22 May 2009 to 16 March 2010. The plaintiff gave evidence that her initials were forged on this amendment to the document. The application to the PRA was completed in April 2014.

Title deeds were forwarded to Ulster Bank (successor in title to First Active) in April 2015. The plaintiff’s husband died in 2017 and this was the first occasion in which the plaintiff learned that the property was now owned by her daughter. She instituted proceedings against Mr O’Gorman, her daughter and a receiver appointed by Ulster Bank after her daughter defaulted on loan repayments.

High Court

Mr Justice Cregan began by identifying the matter as a “lamentable case”. The court noted that Pauline had not defended the matter and judgment had been obtained in default of defence. The court proceeded to determine the liability between the plaintiff and the defendants before considering subsequent issues in the case.

The expert evidence adduced by both the plaintiff and Mr O’Gorman acknowledged that he had been negligent in the case. Accordingly, liability was admitted on day three of the trial, but Mr O’Gorman defended his conduct by stating that the plaintiff had obtained independent legal advice from Mr Leahy.

The court held that Mr Leahy’s evidence that he advised the plaintiff was not credible in circumstances where the plaintiff allegedly transferred her only asset for no consideration to her daughter. It was held that Mr Leahy’s real client was Pauline, who he knew would obtain the money in the case and who he had acted for in other matters. He was “clearly not an independent financial adviser”, the court held.

Given Mr O’Gorman’s evidence in the case, the court held that Mr O’Gorman falsified documents to avoid being personally liable for stamp duty and interest payments. He destroyed two pages of the original deed of transfer by putting them in the bin. While he had not personally forged signatures, he knew that the parents had not signed documents in his presence.

Mr O’Gorman was held to be acting for the plaintiff and her husband in the property transfer and it was “clear beyond doubt” that he was grossly negligent in not providing any advice to them, the court held. On his evidence, Mr O’Gorman paid all the loan monies to Pauline and “not a cent” went to the parents. The court said “this was a transaction of such extreme improvidence that no reasonable solicitor could possibly have advised their client to engage in such a transaction”.

The court held that it was extraordinary that Mr O’Gorman put the plaintiff to the time, expense and stress of a three-day trial to “defend what was clearly indefensible from the very start”.

The court held that the only evidence that the deed of transfer had been signed by the plaintiff and her husband in 2003 was that of Mr O’Gorman. The court did not accept him as a credible witness given his actions in the case.

Conclusion

There was no evidence that the Gibsons actually signed the deed of transfer from 2003 or any other time. Further, the court held that they never intended to transfer the property to Pauline. The court held as a fact that the subsequent deeds of transfer were not signed by the Gibsons and their signatures were forged.

As such, Pauline was not entitled to title in the property as no transfer had ever lawfully occurred. Mr O’Gorman was also held to be negligent in acting in the matter. The court adjourned the matter to a later date for the parties to consider the implications of the judgment.

Gibson v. Kevin O’Gorman practising under the style and title of Kevin O’Gorman and Company Solicitors [2022] IEHC 740