Mishcon to be sued over fees from client who misappropriated millions of pounds

Law firm Mishcon de Reya is being sued for around £3m by a property investment group over allegations that Mishcon received payment from a client using misappropriated funds. The case is being brought by Tonstate Group, a property investment business that is currently in voluntary liquidation. The claim arises from a legal dispute between businessman Edward Wojakovski involving Tonstate group. Wojakovski was a Mishcon client. Tonstate had alleged that Wojakovski had been extracting money from the company. They won their lawsuit and High Court judge Mr Justice Zacaroli ordered Wojakovski pay Tonstate around £13m. Tonstate is now suing Mishcon, alleging that the £3m Wojakovski paid the law firm for its work came from extracted funds, due to the company. In a ruling handed down last week, specialist judge Iain Pester Master of the High Court (Chancery Division) agreed that the legal fees came from money that Wojakovski had extracted from Tonstate. However, he ruled that there should be a full trial to decide whether the money is recoverable on the grounds that Mishcon should have known that the money was misappropriated. In his ruling Master Pester said that it was “surprising” that Mishcon didn’t appear to have been suspicious about the source of the money. However, he said it was “important to resist adopting a hindsight approach,” and the matter should be settled later, after a full trial. Tonstate Group Limited (In Liquidation) and Others v Mishcon De Reya LLP, Business and property courts (Master Pester) 9 November 2022