Conveyancers held responsible for rogue client
22nd Apr 2016
The High Court has ruled that conveyancers on both sides of a transaction are liable for the actions of a rogue client who committed a £470,000 property fraud.
His Honour Judge Pelling said that the firm A’Court & Co made no serious attempt to comply with anti-money laundering regulations to prevent the fraud, and obtained no documentation which linked the seller to the property. He also ruled that the buyer’s conveyancer, House Owners Conveyancers Limited (HOC), was responsible for not drawing attention to any concerns after asking whether the purported owner was entitled to sell the property.
The decision tested the reasonableness of a seller conveyancer’s conduct where there was no allegation of dishonesty or fraud against him or her. The judge ruled that both firms should bear an equal part of the loss.
The unknown fraudster had claimed to be Nicholas Dawson, the registered owner of a property in Wimbledon, and convinced Hurry Purrunsing to transfer the whole purchase price to Dawson’s registered conveyancer. The money then passed through A’Court to an account at a bank in Dubai on the purported instructions of Dawson.
Nothing has been recovered by Purrunsing, who then claimed for breach of trust against A’Court and breach of trust and negligence against HOC.
In Purrunsing v A’Court & Co & Anor, Pelling said that HOC was under a professional obligation to ensure the client was informed at all times, whilst it was A’Court’s responsibility to carry out risk-based assessments with due diligence.
London firm Anthony Gold, which represented Purrunsing, said the case will be a landmark judgment in the evolving area of negligence in property fraud cases.
Claimant solicitor Beth Holden said the decision will resonate across the profession, as “Old doctrines of buyer-beware and solicitors’ warrantees of identity are not substitutes for compliance with strict requirements of anti-money laundering regulations and the duty to actively protect the transaction from fraud.”