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Mistake on Indemnity form was dishonest

Solicitor makes a mistake on indemnity proposal form to question ‘ practiced in a firm subject to an investigation or intervention by the Law Society’ and is struck off for being dishonest.

In the recent decision of Ijomanta v Solicitors Regulation Authority   2013 WL 6451059, Mr Justice Phil;lips upheld a decision of the Solicitors Disciplinary Tribunal which found that the appellant was guilty of giving false and misleading information in an application for professional indemnity insurance contrary to rule 1 (d) of the Solicitors Practice Rules 1990 ( as amended). The Tribunal ordered that Mr Ijomanta be struck off the roll of solicitors and further ordered tht he pay the costs of the matter in the sum of £7825.50.

Mr Imomanta was in practice in a firm named Mantas and Co. The firm applied for solicitors professional indemnity insurance from Novae Insurance Company Limited, known as PYV Legal. His answer no to the question about earlier Law Society interest in his practice was wrong, in 2005 there had been an inspection by a senior investigation officer from the Law Society. As a result of that investigation an extensive report was produced.

The mistake came to light when it turned out that one of 27 claims made against the firm had been made in the previous year. It is said that, not suprisingly, the insurers looked carefully at the proposal that had been made to them. There had also been a vist in respect of an application to join the Assigned Risks Pool [ARP]. There does not seem to have been any evidence that the insurer was mislead at the time, or that insurance would have been declined if the true position had been set out. The Appellant thought that the question related to previous firms, not his current firm.

The Tribunal however rejected Mr Ijomanta’s contentions. His evidence was not credible. He knew that the firm had been in the  ARP. He did not have an honest belief that he answered the question correctly and therefore he knew what he was doing was dishonest by the standards of reasonable and honest people. The test in Twinsecctra Ltd v Yardley and Others [2012] UKHL 12 that is cited as the leading definition of dishonesty in disciplinary proceedings was expressley adopted.

Phillips J held that the Appellant’s case that he didnt think the inspections amounted investigations was a ‘red herring’ as he accepted he would have answered ‘yes’ had he realised that the questions related to Mantras & Co. He held.

‘The Tribunal expressly found that Mr Ijomanta was not a credible witness and his various explanations were not reasonable. They held that he knew the relevance of the enquiries on the proposal form to the issue of whether he would be granted insurance and the premium he would be charged, and that insurance contracts are contracts of the utmost good faith, but he chose not to reveal investigations to which his firm had been subject.√جª¬ø’

In the cirucmstances, the decision was upheld as the Appellant ‘must have understood that such inspections would be of interest to the insurers’. 

Practitioners should therefore take great care in not only reading the insurance proposal form in detail, but should make a full note of any conversation that they may have had with their broker in respect of difficulties in filling out the form and any advice received from the broker, who is often an agent of the insurer and under a duty to pass information on when it has been disclosed by the applicant.

Originally posted 2013-12-18 00:00:00.

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