A top Manchester law firm is facing High Court allegations it failed a businessman client over a £1m land deal. Court papers allege that a paralegal at Abbey Solicitors, Nick Henesy - working under the supervision of the law firm's owner and founder Nadeem Ullah - lodged a 'deed of priority' which effectively diverted funds into a company Mr Henesy controlled.
A former client of Abbey, David Rose, 58, says only £200,000 was ever paid and that he has lost almost £800,000 on the deal. He has lodged a High Court claim against Abbey, alleging 'negligence and breach of fiduciary duty'. He claims he has lost his life savings in the dispute. The law firm denies his allegations but has failed in a bid to persuade a judge to throw out his claim.
The dispute concerns a plot of land on Bury Old Road in Broughton Park which has been granted planning permission for the building of 12 town houses. In the claim lodged at the High Court in Manchester, David Rose and a Cyprus-registered company he controlled, Karunia Holdings, jointly allege Abbey Solicitors advised him on the sale of the land despite 'substantial conflict of interests'.
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Karunia, now in administration, owned the freehold to the plot of land, said to be worth about £1m on Bury Old Road. It handed management of the property to Abbey, according to the claim.
The claim names a paralegal at Abbey, Nick Henesy, who was said to be acting 'under the supervision' of the firm's owner, Nadeem Ullah, 52, from Hale. In 2013, Mr Henesy offered to arrange the sale of the property to an 'off-market buyer' for a £50,000 commission via a 'special purpose vehicle', Transom Developments Ltd, a company set up to buy or rent properties in a tax-efficient manner.
The claim alleges: "The high level of commission was justified by Nick Henesy on three bases. The first was the certainty of being able to secure the sale of 168-170 Bury Old Road at £1,000,000. The second was that the defendant, with all of its staff and resources, would be able to take control over the entire process, including the negotiation with the buyer, the legal advice to the claimants, and the conveyancing. Finally, the claimants were assured that their long history of instructing the defendant as their legal representative ensured that they could trust the defendant to represent their interests."
Following its sale to Transom, it is alleged Nick Henesy advised Mr Rose to borrow £320,000 from CreativityEtc Ltd to be secured against the Bury Old Road property and two others owned by Mr Rose. The claim alleges the sole director and shareholder of CreativityEtc was Mr Henesy's cousin, Stephen Henesy, who it is claimed 'acted on the instructions' of Nick Henesy.
Abbey 'purported to exchange contracts' for the sale in June 2014 but never provided the 'full unredacted original sale file', according to the claim. The property was finally sold to Transom on February 25, 2015, for £999,999, with £199,000 paid immediately and the balance deferred.
But Mr Rose and Karunia say they had 'no recollection of executing or authorising' a 'deed of priority' filed on the same day which it is alleged relegated Karunia's claim on the balance in favour of Cascade Commercial Finance Ltd, another Stephen Henesy firm said to be controlled by Nick Henesy.
"The claimants never received anything by way of the deferred purchase price following the sale," states the High Court claim. The property was told to another company, Mayfair & Co Development Ltd, for £765,000 in January 2019, and Cascade received the proceeds rather than Karunia, according to the claim. Mayfair & Co was granted planning permission to build twelve houses on the land in January last year.
The claim alleges Abbey Solicitors 'knew' Transom was 'at risk of being unable to pay' the balance but didn't inform Mr Rose or Karunia. "On the contrary, Mr Henesy represented to the claimants that Transom was a company of substance backed by an experienced and well-resourced property developer, whereas in reality it was impecunious and reliant on funding from Mr Henesy himself," states the claim.
Abbey failed to carry out due diligence on the deal, train its staff properly or supervise paralegals at the firm or 'manage the obvious conflicts of interest', according to the claim. Last month the law firm failed in a bid to get a judge to throw out the High Court claim.
David Halpern QC, representing Abbey, told District Judge Ranj Matharu, sitting at Manchester's Civil Justice Centre, the allegations of negligence were 'disputed'. He argued it was a 'bad claim' which should have been brought by the shareholders of Karunia rather than the 'beneficial owner' Mr Rose, who nominated those shareholders.
The QC criticised Mr Rose, who was 'happy to make very serious allegations'.
Samuel McNeil, the junior barrister representing Mr Rose, told the court it would be 'wholly inappropriate' to strike out the claim before Abbey had even submitted a defence to the original claim. His client was the 'indirect shareholder' of Karunia, he said.
Abbey had advised his client since 2004 and so owed Mr Rose a 'common duty of care', said Mr McNeil. The application to strike out the claim was 'premature' and Abbey had demonstrated a 'conflict of interest', he said.
Mr McNeil said a 'cynical view' was that Abbey was seeking to 'make the claim go away entirely because administrators are very risk averse'. Karunia is in administration.
Dismissing the strike out application, District Judge Matharu said: "This is a case that does require further consideration because if it is the case that what Mr Rose has to say is true and has some real prospect of being successful based on oral evidence as to what the relationship was then it would be an injustice to dismiss the claim."
She went on that 'there's absolutely no doubt there's a need for oral evidence' and she said Abbey should file its defence to the claim.
The judge went on that although Mr Rose was not a shareholder, Abbey 'repeatedly advised in a personal capacity' and so owed him a common law duty of care and 'therefore justice does require the defendant's application is dismissed'. The judge ordered Abbey to pay £10,500 towards the claimants' costs.
After the hearing, father-of-three Mr Rose, a residential and commercial landlord from Prestwich, said: "This dispute has been going on for over five years. I've lost virtually all of my life savings to seek justice. I trusted Abbey Solicitors. That land was owned by me and my family since the 1980s and was debt-free until my dealings with Abbey. I have never seen any deed of priority."
The founder and owner of Abbey Solicitors, Nadeem Ullah, hit the headlines in 2019 when he dragged his estranged wife into court after she allegedly withdrew £28,000 from a joint account.
He was granted an injunction preventing the mother of his two children from selling a property she owns while he embarked on a legal battle to retrieve the disputed money. At the High Court in Manchester, his ex-partner Anbreen Nadeem, 47, pleaded poverty and slammed her wealthy husband for 'dragging me down here'.
After a courtroom character assassination of her watching husband in which she alleged he was a 'very odd man' who was 'not bothered' about their children, a judge agreed to impose a 'freezing order' on a property she owns until the row over company account she emptied was resolved.
Her ex alleged Mrs Nadeem, who was listed as company secretary for nine years until September 2018, 'dishonestly transferred or procured the transfer of money' totalling £27,945 from a company account. She denied the claim. It was the latest legal battle involving the pair, who have two children together, following an acrimonious split in 2018.
The estranged couple were also in court in April 2019 in a row about the ownership of £2m mansion in Hale Barns which was supposed to end up as their family home. But following their split, Nadeem Ullah claimed that he and Mrs Nadeem have 'never been lawfully married to each other' - although the pair celebrated a Muslim religious marriage (a nikah) in Manchester in 1999.
For her part, Mrs Nadeem said he had always led her to believe their marriage was legal and valid in the UK and that they lived together as husband and wife until he left the family home in April 2018.
Following the latest High Court dispute involving Mr Rose, Abbey Solicitors has been approached for a comment.
