The Court of Appeal has rejected an appeal against a High Court judge’s refusal to strike out a claim brought against the Law Society concerning liability for information obtained from its Find a Solicitor website.
In The Law Society of England and Wales v Schubert Murphy  EWCA Civ 1295, three judges including the master of the rolls today backed a ruling that a claim brought against the Society following a conveyancing fraud was not suited to either a strike out or summary judgment.
The case arose from a property transaction in May 2010 in which London firm Schubert Murphy was instructed to act for a purchaser. The firm was told that a John Dobbs of Acorn Solicitors in Rotherham had been instructed to act for the vendor. Schubert partner Pamela Murphy checked Dobbs' Find a Solicitor listing and accepted Acorn's undertaking to discharge a mortgage on the property. However, this was not done and Acorn ceased trading, apparently having stolen the money.
A Solicitors Regulation Authority investigation the following month concluded that Dobbs was not a solicitor and Acorn not a genuine legal practice. According to the judgment, the fraudster had stolen the identity of a retired solicitor and made false applications to the SRA for a practising certificate and approval to operate under the name Acorn.
Schubert Murphy's insurers settled a negligence claim by the purchaser but the Law Society refused to pay out from the Compensation Fund on the ground that the fraudster was not a solicitor. In 2014 the High Court dismissed a request by the Law Society that a claim against it be struck out or subjected to summary judgment. Permission to appeal was granted in December 2015.
In today's Court of Appeal ruling, Lord Justice Beatson states that, while a regulator 'does not generally owe a duty of care in relation to the way it carries out its regulatory functions'... making information available online was arguably an additional but voluntary service. 'By choosing to provide the facility... I consider that it is arguable that the actions of the Law Society... created the risk that it would be relied on' in a way going beyond the confines of statutory obligations, the judgment states.
Beatson LJ concludes that a full trial is a more appropriate forum for determining questions such as the potential cost to solicitors who suffer losses through reliance on incorrect information and whether the absence of a duty of care would increase the cost of professional indemnity insurance. Lady Justice Gloster agreed. The master of the rolls, Sir Terence Etherton, added that 'the outcome of the case will turn on matters of fact which have not yet been fully explored and also on important issues of principle and policy'.
A Law Society spokesperson said: 'We note the judgment of the Court of Appeal and will be considering it in detail over the coming days. It would be inappropriate for us to comment further at this stage.'
Timothy Dutton QC and Rupert Allen of Fountain Court Chambers, instructed by Bevan Brittan, appeared for the Law Society; Charles Dougherty QC of 2 Temple Gardens and Matthew Thorne of 4 Pump Court, instructed by XL Catlin Services SE, for Schubert Murphy.