Wednesday, 17 July 2013

Fraud unravels all

"Fraud unravels all" (or fraus omnia corrumpit, if you prefer) is one of the more useful legal maxims: once it has been shown that a transaction has been procured by fraud then the innocent party should be able to set aside the transaction and all of its ancillary effects. The law looks on the victims of fraud very sympathetically, even if they have been rash or foolhardy themselves.

But fraud unravels all in life as well as in law, and in life it is harder to put things right. This is a case in point.

"Mrs. Padden and her husband, Mr. Nicholas Padden, were married in 1977. Three children were born in 1985, 1988 and 1991 respectively. For most of their married life they lived in the village of Broadclyst, near Exeter in Devon. She is a history graduate and had worked as a teacher until the birth of her children. She returned to part-time work as they grew up. Mr. Padden was a financial advisor with his own business in Exeter which, in about 1998, was acquired by a company called ... Arbuthnot... Mr. Padden became regional manager in southwest England for Arbuthnot and remained in their employment until 2002 when he went back into business on his own account.

In 1989 Mr. and Mrs. Padden had purchased a long leasehold interest in a property at Broadclyst known as Willow Cottage in School Lane."

Nicholas and Heather Padden; three children; Arbuthnot; Willow Cottage, School Lane, Broadclyst, Devon: it could be the happy ending of a particularly reassuring middle-brow English novel. But, this being a decision of the Court of Appeal rather than chicklit, it is instead the beginning of an awful true story.

It turned out that Mr Padden had been dipping his hand in the till at work. He had stolen about £2 million from his clients. When this came to light in 2003, Mrs Padden signed away her house, her shares and her interest in Mr Padden's pension in a hopeless attempt to keep him out of prison for the sake of their children. In 2005, Mr Padden was sentenced to six years in prison.

On 16 July 2013, the Court of Appeal confirmed that Mrs Padden could get £67,000 compensation, together with interest, from a firm of solicitors who didn't do enough to stop her signing away her assets. Anyone who reads the judgment will see the tortuous route she took to get there. Many will feel sympathy for the solicitors too. Mr Padden's fraud unravelled a great deal - and £67,000 will not put everything back together again.

I conclude with the one part of Mrs Padden's evidence quoted by the Court of Appeal.

It would not have mattered what anyone told you though, Mrs Padden, would it? You were quite clear you had made up your mind. This was a chance, a lifeline for your family to possibly keep your husband out of prison and you decided to take that chance.

Mrs Padden
It would have mattered very much to me, very much to me, if it had been properly explained to me that this was not going to save him going to prison or that the chance of him being saved was very, very small.

It would have mattered hugely because my life since this time, in the last 10 years, has been extremely difficult and it has been extremely difficult for my children.

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