Solicitors Liable In Linked Dreamvar And P&P Appeals

Dreamvar (UK) Limited v Mishcon de Reya and Mary Monson Solicitors Limited, and P & P Property Limited v Owen White & Catlin LLP

The judgment still transfers the risk of property fraud onto solicitors, but it shifts the position as to which solicitors should bear the losses where a fraudster impersonates the owner of a property in a sale. Solicitors representing imposter vendors can now face exposure to the losses of innocent purchasers on the basis of breach of trust, breach of undertaking and, potentially, for breach of warranty of authority.

Solicitors representing innocent purchasers in an imposter sale scenario will still face a breach of trust finding, but should be able to obtain a contribution (potentially amounting to a full indemnity) from the solicitors acting for the imposter vendor, given that those solicitors are best placed to identify the fraud. On the basis of the judgment, they will not be relieved of this breach of trust.

Facts

Dreamvar (UK) Ltd ("Dreamvar") v Mishcon de Reya ("Mishcon") & Mary Monson Solicitors ("MMS")

Dreamvar instructed Mishcon to act on its behalf in respect of the purchase of a property in Earls Court, London ("Property 1") for £1.1m. Mr Haeems was the registered owner of Property 1. MMS were instructed in respect of the sale of Property 1, but their instructions were from a fraudster impersonating Mr Haeems. The sale went through with monies transferred to the imposter vendor. The fraud was identified by the Land Registry prior to registration, leaving Dreamvar with substantial losses. P & P Property Limited ("P & P") v Owen White & Catlin LLP ("OWC")

P & P instructed Peter Brown & Co to act on its behalf in respect of the purchase of a property at 52 Brackenbury Road, London ("Property 2") for £1.03m. Mr Harper was the registered owner of Property 2. OWC were instructed in respect of the sale of Property 2, but their instructions came from a fraudster impersonating Mr Harper. The sale went through with monies transferred to the imposter vendor. Thereafter the fraud was identified, leaving P & P with substantial losses. High Court decisions

Dreamvar sought to recover its losses from Mishcon and MMS. At first instance it was held that:

MMS had not acted in breach of trust, breach of undertaking or in breach of warranty of authority; Mishcon were not negligent but were in breach of trust; Mishcon were not granted relief for breach of trust, in essence due to the financial consequences of the breach...