Solicitors on BOTH sides of a conveyancing transaction have been found liable for negligence in a case involving stolen identity and fraud on the buyer.
The April 2016 case of Purrunsing v A’Court & Co (a firm) and another strikes a chilling warning to those engaged in residential conveyancing to take due care when dealing with transactions and for those unfortunate enough to fall victim to such unfortunate events, to be sure to seek the services of an expert in the field of professional negligence claims.
The High Court found that the firm of solicitors who acted for a fraudulent seller was equally liable alongside the conveyancer that acted for the buyer. Both were liable for the buyer’s loss, even though there was no suggestion that the solicitors were dishonest or involved in the fraud. This case involved identity theft from criminals in Dubai. Neither the seller’s nor the buyer’s solicitors were aware, but the buyer lost their life savings.
Money held on trust
The case against the buyer’s solicitor may perhaps be plainer to see: the buyer had not been protected. However, the seller’s solicitors that received money from the buyer’s conveyancer held the completion monies on trust for the buyer pending completion. The seller’s solicitors, in this case, were not proactive in relation to a series of warning signs that should have alerted them to the need to investigate whether their client was actually the owner of the property that he wanted to sell. This meant that they failed to carry out their obligations under the Money Laundering Regulations 2007 and that failure increased the buyer’s loss. As the solicitors had not discharged the burden of proof to show that they had acted reasonably, the court refused to exercise its discretion to grant relief for breach of trust pursuant to section 61 of the Trustee Act 1925.
More and more substantial properties that are mortgage-free are going to be the target of identity theft. Those dealing with conveyancing need to bear in mind that they often have the duties of a trustee over money that belongs to another party and this case shows that a seller’s solicitors can be liable to a buyer even though there is no contractual relationship between them. Those affected need the help of an expert in professional negligence claims.
Contact Kevin Rogers for advice or assistance.