Conveyancers’ worst nightmares have been realised by the Court of Appeal in P&P Property Ltd v Owen White & Catlin LLP and Dreamvar v Mishcon de Reya [2018] EWCA Civ 1082 (18 May 2018).  A link to the judgment can be found on www.legalrisk.co.uk/news.

Mishcon de Reya acted for a purchaser, buying a property from a fraudster posing as its owner.  It was common ground that they were not negligent.  But because a purchaser’s solicitors hold the purchase money on trust to pay it to the true owner, they inadvertently committed a breach of trust in paying it to the imposter’s solicitors.  The judge had power to forgive them the breach of trust, but declined to do so, on the grounds that they were the handiest ‘deep pocket’.  The Court of Appeal declined to overturn the judge’s decision.

In effect, the purchaser’s solicitors are the guarantors of the identity of the seller.  The next stop may be the Supreme Court.

The only positive aspect to the outcome in the Court of Appeal is that the way was opened for a claim for contribution by Mishcon de Reya against the vendor’s solicitors (as the Court of Appeal, unlike the judge at first instance, found that they committed a breach of trust).

For advice on ways to protect against liability in this situation, contact info@legalrisk.co.uk.

‹ Back to Publications