Determining Liability After Property Fraud

For Sale - No strings attached

P&P Property Limited v (1) Owen White & Catlin LLP and (2) Crownvent Limited t/a Winkworth [2016] EWHC 2276 (Ch) ("P&P")

Summary

In this case a legitimate and unfortunate purchaser was unable to recover its losses resulting from a fraudulent transaction where the fraudster had disappeared with the money.

The Court found that neither the seller's solicitors nor the estate agents were liable as they had not given an express warranty as to the identity of the seller. It also refused to impose a duty of care on estate agents in respect of purchasers.

The case gives a useful insight on warranties of authority and their application to solicitors and estate agents. It also considers the extent to which solicitors and estate agents are liable to ascertain the true identities of their clients. It should sound a warning note for anyone who is considering purchasing property to ensure that these checks are carried out and to consider whether warranties should be sought.

It should be noted that various legal issues were considered by the Court. This article focusses on P&P's claim for breach of warranty of authority and negligence.

The facts

An imposter posing as the legitimate owner of a property in Hammersmith (the "Property") instructed Winkworth estate agents and solicitors Owen White & Catlin ("OWC") to sell the Property. Both OWC and Winkworth believed they were acting for the legitimate owner.

Winkworth contacted P&P to ask if P&P would be interested in purchasing the Property. A sale was agreed and OWC duly met with an individual whom they believed to be the legitimate owner. In fact...