Buyer’s conveyancers and fake seller’s solicitors equally liable to victim of property fraud

A solicitors firm and conveyancers have been held equally liable for a near-£500,000 property fraud perpetrated by a client, in a case highlighting the professional duties for those acting on each side of a transaction. Judge Pelling QC said that the claim by Hurry Narain Purrunsing arose  out of the purported sale of 35 Merton Hall Gardens, Wimbledon, by a fraudster who claimed to be, but was not, “Mr Nicholas Robert Dawson”, the registered proprietor of the property. By the time the fraud was discovered, the whole of the purchase price of more than £470,000 had been paid by Purrunsing to the registered conveyancer retained by him to act on his purchase of the property, House Owners Conveyancers Ltd (HOC), then on to the solicitors acting for the fraudster, A’Court & Co (ACC), then on to an account at a bank in Dubai. None of the money paid over by the claimant has been recovered. The judge ruled that each firm was liable for Purrunsing’s loss in equal shares, in what the claimant’s solicitors have described as a landmark decision defining the obligations owed to a purchaser. Beth Holden of Anthony Gold Solicitors said: “In this case we see the court saying that conveyancers on opposite sides of the transaction have joint responsibility to protect the purchaser’s money, no matter who their client is. 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.” In his judgment, Judge Pelling said it was clear that HOC and ACC must “each bear equal liability for the loss”. He said: “HOC were acting for the claimant. It was under a professional obligation to ensure that the claimant proceeded at all times on an informed basis. HOC had asked a question for the purpose of satisfying itself that Mr Dawson was entitled to sell the property. The answer that it received could not reasonably have satisfied HOC on that issue and the unsatisfactory nature of the response ought reasonably then to have been reported to the client. “By the same token ACC has significant responsibility for what occurred. It was the responsibility of ACC to carry out risk-based due diligence. The reality is that ACC made no serious attempt to do so. They knew that the property was unoccupied, knew that it was not subject to a charge, and knew that Mr Dawson had given an address that was not either the address for the property or the alternative service address that appeared in the proprietorship register for the property. “Mr A’Court made no attempt to obtain an explanation as to why that was so and made no attempt whatsoever to obtain from Mr Dawson any documentation of any sort that established a link between that individual and the property. The reality is that Mr A’Court simply did not know of the terms of the rules and guidance to which he was subject. Had these enquiries been made as and when they should have been, it is unlikely the fraud would have occurred in the way it did.”   Purrunsing v A’Court & Co and another Chancery (Judge Pelling QC) 14 April 2016 Paul Marshall (instructed by Anthony Gold) for the claimant William Flenley QC (instructed by Caytons Law) for the first defendant Simon Hale (instructed by Plexus Law) for the second defendant