The delayed claim against legal partner Kerry Smith followed a £30m mortgage fraud by her conveyancing partner Jonathan Gilbert who took out multiple bogus mortgages on strangers’ homes.
Smith was formerly a family law partner at Maidenhead, Berkshire firm Willmett, which went into administration in 2009.
Gilbert was struck off as a solicitor and sentenced to 12 years in jail in 2014.
The judge, Master Teverson, was critical of the lender saying it had delayed by more than two and a half years before pursuing solicitor Kerry Smith, with negative effects on her health.
Mortgage Trust was one of many firms defrauded by Gilbert and it argued that it needed to wait for the judgment of another case, Godiva Mortgage Limited Vs Travelers Insurance Company, which was a bid by Willmett’s solicitors to cap claims against the legal firm. This case settled with no determination on the issues.
In court, another reason the lender gave for the delay in pursuing Ms Smith was that only belatedly it had become aware she had been an equity, rather than salaried, partner at Willmett.
From the court papers, MTL proceeded because of the approaching expiry of the limitation period.
The judge described the case as “exceptional” and in which “it would be wrong to allow any judgment obtained by MTL to be enforced against the personal estate of Ms Smith”.
He continued: “Ms Smith has been living for around 10 years with the potential effects on her of Mr Gilbert’s conduct. There is evidence before the court as to the effect on her health.”
Mortgage Trust was unavailable to comment.