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Real Estate & Residential property

Mortgage Fraud and Negligence – the case of Stoffel & Co v Grondona



Judgment has now been handed down in the appeal by the Appellant, Stoffel and Co, in the case of Stoffel & Co v Grondona [2018] EWCA Civ 2031 (13 September 2018). This case concerns what some see as the more juicy bits of property law and others see as a nightmare; that being negligence, illegality and mortgage fraud.

A claim was originally brought by Ms Grondona as her solicitors negligently failed to register the transfer of her property together with the discharge of the existing charge and registering a new legal charge. All fairly standard things to be done in a conveyancing transaction.

When the case was brought to appeal by the Appellant, they sought to use a defence of illegality – as Ms Grondona had been a participant in a mortgage fraud to deceive the mortgagee.

It seems harsh on first glance that this defence was not successful. However, the Appellant had no knowledge of the deception, they were not party to it and they could not therefore seek to use this to escape their negligence. The judgment is therefore a clear reminder that the question to be considered is whether relief should be granted and not whether a transaction is tainted with illegality (as per Lord Toulson in Patel v Mirza [2016] UKSC 42 at [107])



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Aimee Stevens