Bad advice on stamp duty - a negligent solicitor?

J

jaguar1619

Registered User
Messages
6
My elderly parents have recently recieved a bill for nearly 20000 euro for late payment of stamp duty. They had taken out a bridging loan and were advised by their solicitor when they bought the house that they did not need to pay the stamp duty. They waited ten months and paid the solicitor who then waited a further 5 months before he paid the stamp duty.
This happened 4 years ago. Recently my mother was checking that her name was on the deeds of our house, to her shock it wasn't she rang the solicitor who then informed her of this penalty, which she had no idea of. The solicitor has offered to pay 5000 towards the penalty as he recognises he is culpable for some of the delay. My parents, as you can imagine, are very scared and do not have the money. I have been trying to sort this out for them but they do not want to sue or go to court as they are afraid they may lose. Surely if a solicitor has given bad advice and appears that he didn't know the stamp duty rules, then he is clearly negligent and a case could be made against him. I would appreciate any thoughts people have on this matter.
 
Where does anyone begin to try and even look at this.

You are not explaining anything very well, you have arrived at a certain conclusion, (that the solicitor is negligent) but you confirm that your parents do not want to sue , as they may lose. Although you are absolutely certain that the solicitor is clearly negligent and a case COULD be made on this matter.

Start at the beginning:

When did they buy a house?
Why should there have been no stamp duty? Was it a new house or a second hand house? Or do you mean that there was stamp duty payable but that there was no urgency about paying it?
What does this mean? "They waited ten months and paid the solicitor who then waited a further 5 months before he paid the stamp duty."
There was a bridging loan - was it a mortgage? Or a loan pending the sale of another property?
Are you saying that the property title is in the sole name of your father? That can be easily rectified.
Has the stamp duty been paid now? Or is the deed still unstamped?

Tell your parents to get themselves off to another solicitor pronto. Having first made themselves clearly aware of all the facts. If there is negligence, it will be resolved.

mf
 
Thanks for your reply. I'm sorry my explanation is not very clear but I am trying to put together the pieces of what happened.
The house in question was bought at auction by my parents in 2005. To finance the buying of this house my parents had to take out a bridging loan, while their old house was being sold. There was stamp duty on the house, which my parents were fully aware of, but the solicitor told them they should wait for their old house to be sold before paying the stamp duty as they would save money by borrowing less money on the bridging loan and saving on the interest - which my parents were very grateful to the solicitor for.The fact that there is a penalty if stamp duty is not paid was never mentioned.
The house was sold ten months later and my parents paid the money for the stamp duty to the solicitor who then paid the stamp duty five months after that. Which is why now he is accepting responsibility for the 5 months where the stamp duty wasn't paid.
In 2008, their was a letter to my parents saying that all issues had been resolved and that as far as they were concerned was that.
My parents were listening to a radio program recently about house deeds and decided to check that the house deeds were in their name(the property is in both their names.) They rang up and found that it wasn't. They rang the solicitor to find out why not and for the first time found out about this penalty. The solicitor claimed that he had been trying to get the penalty reduced and hadn't told them that the inland revenue were involved because "he didn't want to worry them."
The bank has since gone to the Law Society, about the solicitor regarding this issue. The solicitor in his most recent letter to my parents has said that he wants the issue sorted out quickly as the Law Society are waiting for his response. He has verbally offered to pay 5000 euro towards the penalty. My parents said that they simply could not afford the money and he replied that "im sure you would find it if your daughter was trapped in some hole in India!"
My parents are elderly people and are extremely scared of going to court as you can imagine. However, they would never had not paid the stamp duty if they had known there was a penalty, it would have been a simple case of extending the bridging loan. I have never been involved in anything to do with the law but I do believe that the solicitor has been negligent by giving advise that could cost my parents 20,000 Euro. Especially as he indicated in letters to my parents two years previously that all issues were now finalised.
I hope I have made the situation clearer. Your response is very much appreciated mf.
 
You will find it very difficult to find another solicitor that will persue the first for negligence. Solicitors in this country have a lovely agreement that they dont sue each other. Your best chance is to go to a different county/area of the country where you might get one to sue the first (as they will not deal with each other on a day to day basis there is a chance the second would persue the first.) Isnt it a great profession, you mess up rightly and have the knowledge that no other solicitor will take a case on behalf of a client against you
 
roytheboyo said:
You will find it very difficult to find another solicitor that will persue the first for negligence. Solicitors in this country have a lovely agreement that they dont sue each other. Your best chance is to go to a different county/area of the country where you might get one to sue the first (as they will not deal with each other on a day to day basis there is a chance the second would persue the first.) Isnt it a great profession, you mess up rightly and have the knowledge that no other solicitor will take a case on behalf of a client against you
Click to expand...

You are very far off the mark here.

Yes- people who work together regularly would have a difficulty in issuing proceedings against each other on behalf of a client BUT someone out side the area won't.

There is a panel of solicitors willing to act in such cases. The Law Society will issue it to a complainant.

The biggest issue here is trying to get the OP's parents to address the issue and seek independent legal advice.

mf
 
I have managed to persuade my parents to see an independent solicitor. Thank you for your advice.
 
I had a situation with Revenue a few years ago where an accountancy firm made an error and forgot to file a return on behalf of, normally, compliant client. Surcharge in excess of €25k. It was the firm's fault and not the client's. The firm acted immediately by holding their hands up, accepting responsibility and (more importantly) vouched for the bona fides of the client, the reason for the error and also the bona fides of the firm in prior dealings with Revenue.

I would echo the requirement to talk to another solicitor but is there any merit is also approaching the revenue with a complete explanation? My understanding is that this is a penalty imposed for delayed payment as opposed to a fraudulent act or a situation where Revenue were facing a financial loss. I suppose a lot would depend on the solicitors dealings with Revenue to date.

If there is merit in pursuing this course of action then you could be lucky and get a sympathetic ear. I would expect it is worth a try and would be a lot less hassle and less stressful than having to go through the legal channels (although I would expect both options would be started at the same time)
 
Agree with Mf1 - Roythe boyo is wrong. Solicitors do act against other solicitors.

The story here is complicated. A new solicitor could place the full facts before the Revenue - they may mitigate the penalty.
 
Assuming that Jaguar has recounted the full facts, and there doesn't seem to be any reason for believing that he hasn't, this seems to me to be a simple case:

There was stamp duty on the house, which my parents were fully aware of, but the solicitor told them they should wait for their old house to be sold before paying the stamp duty as they would save money by borrowing less money on the bridging loan and saving on the interest - which my parents were very grateful to the solicitor for.The fact that there is a penalty if stamp duty is not paid was never mentioned.
Click to expand...
The bank has since gone to the Law Society, about the solicitor regarding this issue. The solicitor in his most recent letter to my parents has said that he wants the issue sorted out quickly as the Law Society are waiting for his response.
Click to expand...
I would think that the solicitor is negligent if he gave this advice. If the bank complained, it suggests that there might be a case to answer.

How the penalties are calculated

1% per month or part thereof before 01/09/02
  • per day or part of a day from the date the electronic message was generated to the date of payment of the unpaid duty, and
  • an amount equivalent to:
    • 10% of the unpaid duty, where the duty is paid not later than 6 months after the date the electronic message was generated, or
    • 20% of the unpaid duty, where the duty is paid more that 6 months but not later than 12 months after the date the electronic message was generated, or
    • 30% of the unpaid duty, where the duty is paid more than 12 months after the date on which the electronic message was generated.
Click to expand...
Presumably the penalty was 45% (30% + 15%) of the amount due.

Was the stamp duty €44,000? ( €44,000@ 45% = €20,000)

If your parents had been responsible, the charge should have been 30% of the stamp duty liability. (20% + 10%)

Your parents saved only around €1k by paying the stamp duty late.

Assuming the facts as they are, then your parents should only contribute €1,000 to the bill.

Your parents are in no hurry to sort this out, apart from removing the worry.

You should write a letter to the solicitor and forward a copy to the Law Society.

What is the benefit of getting independent legal advice at this stage?

If the solicitor refuses to accept your parents' offer, then you should consult a solicitor.

Brendan
 
daveccork said:
I would echo the requirement to talk to another solicitor but is there any merit is also approaching the revenue with a complete explanation?
Click to expand...

I agree with this suggestion. I might add I would like to think that if I owed revenue a penalty for late payment of stamp duty by my solicitor that they would contact me directly with all the details. Surely there is an onus on revenue to bill your parents if the money is owed. The interest and penalties have been mounting up since 2005....that's a long time to be kept in the dark.
 
Brendan Burgess said:
What is the benefit of getting independent legal advice at this stage?
Click to expand...

The benefit is that the independent solicitor will actually be able to get all the facts, not rely on a possibly incomplete account from the internet, act as a buffer between the parents and this solicitor, advise on whether a complaint to the law society is in order or indeed another action, and ensure that the registration is completed in a timely manner and do all this while being able to obtain their fees from the other solicitor.

Or they could just rely on advice from the internet, and try to calculate duty themselves and potentially get it wrong and deal with every thing themselves, adding to their stress levels.
 
Hi Vanilla

I presume that the duty has been calculated and paid.

The interest is calculated by the Revenue, but as I am suggesting at this stage, that the parents don't pay it, then it's up to the solicitor to calculate it and pay it.

I did mean to say that the parents should contact the Revenue and explain the situation and say that they are sorting it out.

The first stage here is to try to get the objective they wish which is
1) the solicitor pays the penalty
2) The house is properly registered.

A competent layperson should be able to get the solicitor to pay the penalty.

I have no doubt that if the parents contacted a competent, efficient solicitor that they could do it for them and promptly. However, there is a very significant risk that the solicitor will not be too pushed about it and will add to the delay.

When the first solicitor has paid the penalty, then they should contact a separate solicitor to verify that all the paperwork is in order.

Brendan
 
Why do you say there is a significant risk that the solicitor will not be too pushed about it and add to the delay? Where is your evidence for this? You couldn't possibly be relying on Joe Duffy type anecdotal evidence or relying on your own, limited, experiences in order to give competent unbiased advice, surely?

With all due respect, having a solicitor act for them now makes complete sense, it will cost them nothing and will remove them from the stress of the situation.
 
Hi Vanilla

Just to restate the position:

A competent layperson should be able to get the solicitor to pay the penalty.

I have no doubt that if the parents contacted a competent, efficient solicitor that they could do it for them and promptly. However, there is a very significant risk that the solicitor will not be too pushed about it and will add to the delay.
Click to expand...

The person most involved in an issue is usually the most motivated to sort it out. If I was facing a penalty of €20,000 which I thought was due to the negligence of my solicitor, I would certainly negotiate it directly with the solicitor.

If you use someone else (a solicitor, an accountant, a tax consultant) to do something you can do yourself, then you are making it more complex. That consultant will have multiple projects going on at the same time, and will often give higher priority to more interesting, less dull cases.

So, there is no advantage and there is a significant disadvantage.

Vanilla, you know that I am very impressed with the good practical advice you, MF1, MO'B, and other solicitors provide on this site.

I don't listen to Joe Duffy. My direct experience of solicitors has been very mixed - some good, some very poor. In two separate cases, a solicitor who had been very good, became very bad. I can't explain it. I also am very slow to recommend solicitors (or accountants for that matter) because although I may have found them excellent, they did not provide a good service to the person to whom I recommended them.

That is my direct experience. My indirect experience has been really horrific. I dealt with a lot of Irish Nationwide cases. I was gobsmacked at how bad the solicitors for the borrowers were, with two exceptions.

Do you not come across it yourself in doing conveyancing and other legal work? Poorly drafted documents. Slow in responding. (of course this could well be due to the clients in most cases).
 
Brendan Burgess said:
So, there is no advantage and there is a significant disadvantage.
Click to expand...


You're wrong. There is a huge advantage in having someone knowledgeable advocate on your behalf. This is because:

1. The solicitor will become their buffer from the stress of the situation.

2. The solicitor will advise them on their tax obligations.

3. The solicitor will advise them as to the point where their previous solicitor's obligations started and ended.

4. The solicitor can negotiate the penalty on their behalf with the Revenue. The Revenue can mitigate penalties where a good case is presented. A certificate of escrow can be given. Where the decision is not favourable it can be 'appealed'.

5. The solicitor can advise them on whether there is any other causal action against their previous solicitor including a complaint to the Law Society.

6. The solicitor can advise them through the processes including retrieving their fees and/or an application to the Compensation Fund.

I don't accept the argument that by adding a solicitor you are adding complexity, it is the opposite. Their lives will in fact be made considerably easier, they will get independent advice and guidance.

And do I accept your presumption that solicitors or advisors in general are slow or what seems to be your argument that many solicitors are actually bad at their job- no, I don't, not for a minute. But sure if you repeat it often enough it sounds true.
 
The biggest risk for the OP's parents is that they may not issue their writ/claim against the solicitor in question before he renews his professional indemnity insurance. If the solicitor does not get new cover, and the claim is made after cover expires then the old cover will not provide any protection.

(Professional indemnity insurance coveres claims notified while the insurance is in place. This is different to public liability insurance which covers incidents occuring while the insurance was in place no matter when the claim is notified.)

Accordingly, the OP's parents need to address this as a matter of extreme urgency and need to highlight this to any solicitor taking on the case for them. BTW solicitors generally have no problems suing other solicitors.
 
You must log in or register to reply here.
Back
Top