Landmark Ruling On Solicitors Liability

Tue, 19 Apr 2016

Purrunsing v A'Court and Co and Anor [2016] EWHC 789 (ChD)

A landmark ruling by the High Court has declared that a firm of conveyancing solicitors are liable for a £500,000 property fraud carried out by their client.

Barrister Paul Marshall, of No5 Chambers, represented Mr Hurry Purrunsing in a successful claim against both the solicitor acting for the fraudulent house vendor as well as his own conveyancer.

The three year legal battle involved the sale of a house in Wimbledon, whose owner was targeted by a Dubai-based network of fraudsters. The Fraudster posed as the seller of the property using his identity to sell the property to the claimant. 

Paul Marshall, instructed by David Wedgwood and Beth Holden of Anthony Gold Solicitors, represented Mr Purrunsing in his claim against the putative vendor's solicitor, A’Court and Co (ACC) and against his conveyancer, House Owners Conveyancers Ltd (HOC).

Mr Marshall said: “This appears to be the first occasion on which the court has considered, in this way, the liability of a vendor's solicitor when innocently caught up in identity fraud.  

“The decision is of particular interest and potentially far-reaching importance because His Honour Judge Pelling QC, sitting as a judge of the High Court in the Chancery Division, declined to relieve the vendor's solicitor from liability for breach of trust under section 61 of the Trustee Act 1925 because of failures to comply with the 2007 Money Laundering Regulations and relevant guidance given by the Law Society.  

“In particular, there was a failure to undertake proper client due diligence.” 

The court similarly declined to relieve HOC of liability for breach of trust under section 61 of the act, for failure to respond appropriately to an unsatisfactory response to an inquiry as to the putative vendor's title, as well as holding them liable for breach of contract and in negligence.  

Paul Marshall added: “The decision is an important example of risks to professionals presented by the intersection of regulatory law with the common law and reveals limits on 'caveat emptor' in conveyancing transactions.”

Judgment was entered against the first defendant under CPR part 24, the second defendant had admitted breach of trust but denied liability for breach of contract and negligence.

Paul Marshall was called to Bar in 1991 and is a member of the Banking, Finance and Financial Regulation group at No5 Chambers.

No5 Chambers is one of the UK’s largest sets of barristers’ chambers with its head office in Birmingham and further offices in London, Bristol and East Midlands. It boasts more than 240 members including 33 Queens Counsel.

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