P&P Property Ltd v Owen White & Catlin LLP

P&P Property Ltd v Owen White & Catlin LLP

Vendor's solicitors who receive and release purchase monies in a fraudulent transaction, where there is no genuine completion, act in breach of trust and are not entitled to relief under section 61 of the Trustee Act 1925 if they failed to carry out adequate identity checks. The Law Society Code for Completion by Post does not absolve them of liability, and the undertaking to have the seller's authority refers to the true owner named in the contract. No duty of care in negligence is owed by vendor's solicitors or agents to the purchaser in these circumstances.

Parties
Appellant/claimant: P&P Property Limited; Respondent/defendant: Owen White & Catlin LLP; Respondent/defendant: Crownvent Limited; Appellant/claimant: Dreamvar (UK) Limited; Appellant/defendant: Mishcon de Reya (a firm); Respondent/defendant: Mary Monson Solicitors Limited; Intervener: The Law Society
Jurisdiction
England and Wales
Judgment Date
15 May 2018
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeals From High Court Decisions
Outcome
Appeals allowed in part; vendor's solicitors found liable for breach of trust and breach of undertaking; no liability in negligence or for breach of warranty of authority; relief under section 61 refused; costs order against Winkworth set aside.
Legal Topics
Solicitor Liability for Breach of Trust, Breach of Warranty of Authority, Negligence in Conveyancing, Breach of Undertaking, Money Laundering Regulations Compliance, Section 61 Trustee Act 1925 Relief
Property Law Professional Negligence Trusts Law Solicitor Liability for Breach of Trust Breach of Warranty of Authority Negligence in Conveyancing Breach of Undertaking Money Laundering Regulations Compliance +1 more

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Parties

P&P Property Limited

Appellant/claimant

Owen White & Catlin LLP

Respondent/defendant

Crownvent Limited

Respondent/defendant

Dreamvar (UK) Limited

Appellant/claimant

Mishcon de Reya (a firm)

Appellant/defendant

Mary Monson Solicitors Limited

Respondent/defendant

The Law Society

Intervener

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeals From High Court Decisions

Legal Issues

  1. 1 Whether solicitors acting for a fraudulent vendor are liable to the purchaser for breach of trust when releasing purchase monies in a fraudulent transaction
  2. 2 Whether vendor's solicitors and estate agents owe a duty of care in negligence to the purchaser regarding identity checks under the Money Laundering Regulations
  3. 3 Whether vendor's solicitors give a warranty of authority or breach an undertaking under the Law Society Code for Completion by Post when acting for an imposter

Ratio Decidendi

Vendor's solicitors who receive and release purchase monies in a fraudulent transaction, where there is no genuine completion, act in breach of trust and are not entitled to relief under section 61 of the Trustee Act 1925 if they failed to carry out adequate identity checks. The Law Society Code for Completion by Post does not absolve them of liability, and the undertaking to have the seller's authority refers to the true owner named in the contract. No duty of care in negligence is owed by vendor's solicitors or agents to the purchaser in these circumstances.

Court Disposition

Appeals allowed in part; vendor's solicitors found liable for breach of trust and breach of undertaking; no liability in negligence or for breach of warranty of authority; relief under section 61 refused; costs order against Winkworth set aside.

Orders

  • P&P's appeal allowed against OWC for breach of trust and breach of undertaking; relief under s.61 refused to OWC.
  • P&P's appeal dismissed against OWC and Winkworth in negligence and breach of warranty of authority.