Mishcon settles ‘tainted funds’ claim for £5.5mn

2 min

88 shares, 149 points

City law firm Mishcon de Reya has paid a group of property investment companies £5.5mn to settle a High Court claim that it accepted potentially “tainted” money from a former client as payment for legal fees. 

The lawsuit dates back to a bitter family dispute involving property executive Edward Wojakovski and Tonstate Group, which he owned with his former father-in-law. Mishcon represented Wojakovski when Tonstate Group accused him of wrongfully taking £13.5mn from the company.

Mishcon was then sued by a group of companies that form part of Tonstate Group — which is now in liquidation — for allegedly accepting about £3mn from Wojakovski that it knew or should have known had been taken unlawfully. This week Mishcon settled the claim and agreed to pay the claimants’ legal costs.

The Tonstate companies alleged in the 2021 lawsuit that Mishcon made only “belated and halfhearted inquiries of their client” about the source of his funds.

In one legal filing, the companies said Mishcon “by their own admission . . . failed to obtain from Mr Wojakovski a single document as a source of wealth or source of funds when he became Mishcon’s client.”

The companies cited a 2017 WhatsApp message from Mishcon’s executive chair Kevin Gold to Wojakovski’s then-wife Nadine Wojakovski, which allegedly referred to a Singapore bank account from which the law firm received Wojakovski’s fees.

The message read: “It’s not ideal, but I don’t know of anything else. The funds are potentially tainted but I suspect there is enough around to make sure that everyone is made good.”

In a legal filing this year, Mishcon said Gold had not been referring to money in the Singapore bank account, but was instead making a “generalised reference” to the fact accusations had been made that both Wojakovski and his former father-in-law had misappropriated funds from Tonstate Group. 

In its legal filing, Mishcon said Gold had not asked Wojakovski for further proof of the source of the money in the Bank of Singapore account because “he accepted the truth of what his client told him and the did not consider that he/Mishcon needed further to investigate the issue”. Wojakovski had claimed the money was his own and his late father’s.

Mishcon admitted Wojakovski had taken £13.5mn from some or all of the Tonstate companies, and that the fees paid to the law firm had come from those proceeds. But it denied that it knew where the money originated from at the time it was received. 

Mishcon represented Wojakovski between 2017 and 2019 in the battle with his ex-wife’s family over the funds they claim he took from Tonstate Group. A High Court ruling on that dispute said Wojakovski admitted to taking money from the group but argued it was with the extended family’s agreement.

In 2019, Wojakovski was ordered to repay almost £13mn by a judge. The following year, a freezing order was imposed and he was declared bankrupt. Wojakovski’s former father-in-law, Arthur Matyas, also admitted to taking money from the Tonstate companies and agreed to repay the money in 2020.

Mishcon claims it is still owed fees by Wojakovski and is a creditor in his bankruptcy according to a person close to the firm, who said Mishcon is trying to recover the unpaid fees.

Shlomo Rechtschaffen, the lawyer who represented the Tonstate companies said: “We always found it surprising that Mishcon felt it sufficient to rely on an oral explanation from their client about the source of funds and never obtained documentary evidence.”

Source: Financial Times

Like it? Share with your friends!

88 shares, 149 points

What's Your Reaction?

Cute Cute
Fun Fun
Hate Hate
Confused Confused
Fail Fail
Geeky Geeky
Love Love
Choose A Format
Personality quiz
Series of questions that intends to reveal something about the personality
Trivia quiz
Series of questions with right and wrong answers that intends to check knowledge
Voting to make decisions or determine opinions
Formatted Text with Embeds and Visuals
The Classic Internet Listicles
The Classic Internet Countdowns
Open List
Submit your own item and vote up for the best submission
Ranked List
Upvote or downvote to decide the best list item
Upload your own images to make custom memes
Youtube, Vimeo or Vine Embeds
Soundcloud or Mixcloud Embeds
Photo or GIF
GIF format