The Mortgage Business Plc and Bank of Scotland Plc (t/a Birmingham Midshires) v Thomas Taggart and Sons

Factual and Procedural Background

The plaintiffs seek the delivery up of files held by their former solicitors, the defendant firm, relating to 28 properties on which the plaintiffs held mortgages. The defendant acted for both the plaintiffs and the borrowers/purchasers of the properties. The plaintiffs' application was brought under the inherent jurisdiction of the court and pursuant to Article 71C of the Solicitors (NI) Order 1976, which empowers the court to order solicitors to deliver documents in their possession. Prior to the hearing, the parties agreed on some categories of documents to be disclosed and some to be excluded, with four categories remaining in dispute, including correspondence between the parties, pre-completion searches, correspondence between the defendant and borrowers, and other relevant documents.

Legal Issues Presented

1. Whether the plaintiffs are entitled to delivery of certain categories of documents held by their former solicitors, particularly correspondence and pre-completion searches.
2. The extent of a lender's right to access documents relating to borrowers when the solicitor acted for both parties.
3. Whether the mortgage deeds' Power of Attorney clause authorizes the plaintiffs to inspect and copy documents held by the solicitors concerning the property and ownership.
4. The appropriate costs regime for disclosure and inspection of documents under the court's order.

Arguments of the Parties

Plaintiffs' Arguments

• The plaintiffs assert a right to access correspondence with their former solicitors if their own records are incomplete, subject to payment of reasonable copying and professional fees.
• They contend that the Power of Attorney clause in the mortgage deeds authorizes them to inspect and copy documents about the property or ownership held by solicitors, including correspondence with borrowers.
• The plaintiffs seek to determine whether the solicitors discharged all their legal duties, with the hope of establishing a claim similar to the precedent in Mortgage Express Ltd v Bowerman & Partners.
• They argue that "security" in the Power of Attorney clause includes the value of the property, not merely good title, and that the clause permits acting on behalf of the borrower for the lender's benefit.

Defendant's Arguments

• The defendant accepts disclosure of some documents but resists wholesale disclosure of correspondence, relying on the principle that certain solicitor's documents remain their property.
• Citing In Re Wheatcroft, the defendant argues that original letters and solicitor's letter books remain the solicitor's property and should not be disclosed.
• The defendant contends that the plaintiffs' application amounts to a "fishing expedition" to find grounds for litigation, particularly as the borrowers defaulted and properties were resold at a loss.
• They submit that the Power of Attorney clause does not authorize the extensive inspection sought and that the solicitor fulfilled their duty by ensuring good title enabling resale.
• The defendant maintains that any disclosure should be accompanied by payment of professional fees and costs associated with searching and copying documents.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Nationwide Building Society v Various Solicitors [1999] P.N.L.R. 52	Limits on lender's right to access all solicitor files when solicitor acts for both lender and borrower.	Referenced to support the principle that lenders do not have a general right to see all borrower-related files.
In Re Wheatcroft (1877) 6 Ch. D. 97	Solicitor's entitlement to retain original letters and copies of their own letters as their property.	Accepted as good law but distinguished; does not preclude former clients from receiving copies of correspondence subject to costs.
Mortgage Express Limited v Bowerman and Partners [1996] 2 All ER 836	Solicitor's duty owed to both borrower and lender; solicitor liable for negligence failing to disclose material facts affecting security value.	Cited as the type of claim plaintiffs hope to establish by inspecting documents.
Howkins & Harrison (a firm) v Tyler and another, E.W.C.A., 12 July 2000	Interpretation of benefit under Power of Attorney clauses in mortgage deeds.	Used to argue whether plaintiffs act "on behalf" of borrower for borrower’s benefit; court did not need to decide this point definitively.
Attwood v Munnings (1827) 7 B & C. 278	Construction of powers of attorney; purpose for which authority is given.	Supported the court’s interpretation that "security" includes ongoing protection of loan value, not just good title.

Court's Reasoning and Analysis

The court began by applying the general principle from Halsbury's Laws of England that documents prepared for the client or received as agent belong to the client, whereas documents prepared for the solicitor’s own protection remain the solicitor’s property. The court acknowledged the dual role of the solicitor acting for both lender and borrower and the limited rights of the lender to access borrower-related correspondence absent specific authority.

Regarding correspondence between the parties, the court found that while the solicitor's original letter books remain their property, the plaintiffs are entitled to copies of correspondence if their own files are incomplete, subject to paying reasonable costs for copying and professional time.

On pre-completion searches, the court accepted the defendant’s statement that these had been forwarded to the plaintiffs and were not retained; however, the plaintiffs could seek an affidavit confirming this if they assert non-possession.

The principal dispute concerned correspondence between the defendant and borrowers and other relevant documents. The defendant argued the plaintiffs were seeking to "fish" for grounds to sue the solicitor following borrower defaults and property repossessions. The plaintiffs aimed to verify whether the solicitor fulfilled all legal duties, referencing the precedent in Mortgage Express Ltd v Bowerman & Partners.

The court examined the Power of Attorney clause in the mortgage deeds, which authorized the lender to act as attorney for the borrower "by way of security," including the right to inspect and copy documents about the property or ownership. The court construed the phrase "by way of security" broadly to include the value of the property, not merely good title, and found that the plaintiffs were entitled to rely on this clause to access relevant documents.

The court rejected the defendant’s submission that the clause did not permit such inspection, emphasizing that the power could be exercised until full repayment of the loan and that the phrase "on your behalf" did not limit the plaintiffs’ actions to benefit solely the borrower.

Finally, the court held that the defendant is entitled to recover reasonable professional fees for searching, copying, and delivering documents, as well as any related administrative costs. The plaintiffs may inspect the files but must bear reasonable costs incurred by the defendant.

Holding and Implications

The court held that the plaintiffs are entitled to delivery and inspection of the requested categories of documents, including correspondence and documents related to the property and ownership, pursuant to the Power of Attorney clause in the mortgage deeds and the court's inherent jurisdiction.

The defendant solicitors must comply with the order to deliver or permit inspection of the documents, subject to the plaintiffs paying reasonable professional fees and administrative costs incurred in the process.

The decision clarifies the scope of a lender’s rights under a Power of Attorney clause in mortgage deeds to inspect documents held by solicitors acting for both lender and borrower. It does not create a new precedent beyond the facts of this case but confirms the balance between solicitor property rights and client entitlement to documents, as well as the costs regime for such disclosure.