A HIGH Court judge has set aside a deed of conveyance and deed of mortgage in a bizarre land-fraud case involving the sale of land in Barataria, not by its owner but by a “fraudster” with the same name.
Justice Frank Seepersad’s ruling on Tuesday reversed the land sale and the eventual mortgage agreement between the buyer and a local bank, with the biggest payback coming from the attorney and firm that facilitated the transactions.
The judge’s ruling for the law firm and its principal to repay some $1.2 million, which includes interest and costs, could possibly be the largest sum ever awarded in this jurisdiction to be paid by lawyers for professional negligence.
The case before the judge involved legal challenges by the land’s owner, Robert John, against the person who bought the land, Keelan Aaron Hunte; First Citizens Bank (FCB); attorney Richard Beckles and his firm, The Legal Consultancy; and Robert Ferguson John, who was named as the “fraudster” and identity thief.
In the end, Beckles and the Legal Consultancy had to pay FCB, Hunte, and Robert John.
According to the evidence at the trial, the “fraudster,” Robert Ferguson John, impersonated Robert John, the land’s true owner, and entered into a sale agreement with Hunte in December 2019. The land in Barataria was sold to Hunte for $840,000.
Hunte then mortgaged the property, using the land as security with FCB for a loan.
The deed of conveyance and the mortgage were executed by the Legal Consultancy.
Robert John discovered the fraud when his estate agent noticed her “For sale” sign had been removed from the property. She did a title search and found the fraudulent deed and mortgage.
The matter was reported to the Fraud Squad but Robert Ferguson John has not yet been arrested or charged, the judge pointed out.
Robert John lives in Minnesota in the US. He was adamant he did not sell his land to Hunte.
In his ruling, the judge said the trial proceeded on the acceptance that it was the fraudster and not Robert John who executed the deed, and since the former did not own the land, and had no legal interest in it, he could not sell it. This, the judge said, raised the
nemo dat principle, which says a person who does not have adequate ownership of goods or property cannot transfer the ownership of those goods.
“Accordingly, the court is resolute in its view that the deed must be set aside. As a logical consequence, the mortgage effected over the subject property must also be discharged.”
In finding against The Legal Consultancy, the judge held the firm was negligent in the conveyance and when it advised FCB to take the mortgage.
“Lawyers have a duty of care towards their clients and they must exercise a reasonable degree of caution and skill in the discharge of their professional obligations.
“When they act for purchasers, they must ensure that the legal and full equitable ownership of the acquired land is transferred to their client.”
He said lawyers were paid significant fees to look after the legal interests of their clients.
“The Legal Consultancy must have been aware of the nature of criminality which exists and operates in this society.”
A key part of the evidence was that identification documents presented by the fraudster were inconsistent, with ascertainable discrepancies. These included different serial numbers on the biometric page of a passport; different signatures with obvious spelling errors on the documents; and different addresses given for the fraudster in Port of Spain.
The judge faulted the Legal Consultancy for failing to identify them.
“The Legal Consultancy abdicated its responsibility to its clients, engaged in shoddy work and as a consequence failed to protect Mr Hunte’s interest or FCB’s interest.
“The lawyers did not properly investigate the identity of the fraudster and they did not detect the significant discrepancies which ought to have alerted them as to the bona fides of the fraudster.
“...This is not a circumstance where hindsight provides a clearer perspective. In a conveyancing transaction, identification is presented so as to establish that the parties are who they purport to be."
It was also revealed at the trial that the fraudster was able to obtain copies of the title deed, a WASA clearance certificate, land and building tax receipts and a valuation report, some of which Robert John’s agent had provided to him.
It was also for this reason the judge advised that vendors must always hire an attorney for such transactions, since having these documents was not “incontrovertible proof” of ownership.
Seepersad said before the deed and mortgage were executed, there were a plethora of red flags and because of this, the Legal Consultancy had an obligation to do a more thorough review.
He also said, “The factual matrix in this case demonstrates that fraud is not confined to simple 'smartman' ventures, but there now operate multifaceted and well executed enterprises which have the capacity to evade the police service, generate fraudulent documents and provide multiple actors at various stages of the fraudulent schemes.”
He was also critical of the police for not making an arrest, saying it was “unfathomable, and their processes must be reviewed and revamped.
“In this matter, there was a clear paper trail which would have bank deposits and withdrawals from the fraudster’s account, as well as a picture ID of the fraudster.
“Diligent and timely detection of this type of criminal activity has to be prioritised if the scourge of fraudulent endeavours is to be stopped.”
Seepersad said an “all-hands-on-deck” approach was needed, as well as focused law enforcement, greater professional vigilance and "a cultural shift to an attitude which rejects corruption and unlawful conduct.”
He also suggested that Parliament urgently consider further amendments to the Registration of Deeds Act to impose a requirement to file a form of picture ID for each party to a conveyance.
“There would be a visual reference as to the appearance of the relevant parties and this may provide a further level of insulation against identity fraud in the future.”