If you act for a lender, as well as the buyer, then how should you respond to a request from the lender to hand over your file? 


The starting point is that a solicitor should not disclose the parts of the file that are privileged or which are confidential to the borrower. As the Code of Conduct says: ‘If the client does not consent, you should only send those parts of the file which relate to the work being done for the lender.’ This is because ‘you cannot, without the consent of the borrower, send the whole file to the lender, unless the lender can show to your satisfaction that there is a prima facie case of fraud’. Moreover, in Nationwide [1999] it was said that ‘it was the lawyer’s duty to claim privilege on behalf of the client or former client whose privilege it is, at any rate where it is at least arguable that the privilege exists’. 


As we noted in last month’s issue (p31) many lenders are getting around this problem by including pro-forma ‘consents’ on their mortgage application forms (‘I irrevocably authorise my conveyancer to send their entire file relating to the whole transaction – not just the loan – to you at your request’). The validity of such a provision was upheld in Mortgage Express [2010] and the end result will be that in most instances the solicitor will feel there is little choice but to hand over the whole file. 


Whilst that decision received considerable publicity, there was much less attention paid to the separate costs judgment – in which no order for costs was made against the solicitor. There were several reasons for this (including the lender’s conduct) but a particular reason was that the solicitor was not only entitled to raise the issue of privilege, but had a duty to do so (see Nationwide [1999]). It shows that a solicitor should not necessarily face costs sanctions if they do not provide the complete file to the lender on request. For instance, consider these two scenarios: 


Scenario 1: a lender requests the file, relying upon the consent given by the borrower on the mortgage application form. You contact the borrower client who says that you are not to hand over the file. In that situation, the client is entitled to instruct you not to agree to to produce their part of the file, and may want to put all manner of arguments to the court as to why that should be the case. In this situation you should not hand over the documents, and it is argued that costs sanctions should not apply against you;


Scenario 2: the same situation, but you are unable to contact the client. In that situation, you have to ask yourself whether you can really rely on a signature at the foot of a mass of small print (at the bottom of the mortgage application form) that may be several years old. You might decide that it is safer to conclude that without current instructions you should assume that privileged material remains privileged, and decline to send the file until ordered to do so by the court. Whether such an approach would be upheld from a costs point of view remains to be seen, but it might be possible to rely upon Mortgage Express as a precedent for no costs order being made. 


At the end of the day it seems there is no definitive answer as to whether to provide a borrower client’s file on request by a lender. The Professional Ethics Helpline is a useful resource for those in doubt. See article in [2011] NLJ 177 on Mortgage Express v Sawali [2010] EWHC 90181(Costs) (access free at www.practicalconveyancing.co.uk).