The Court of Appeal’s ruling that a solicitor was not liable for a building society’s losses after being duped by a fraudster has been hailed as a ‘return to common sense’.
Birmingham firm Davisons was instructed by Nationwide to act in respect of the purchase of a property in Sutton Coldfield and a £187,500 mortgage. Davisons sent the money to a fake branch office of a legitimate firm. The bogus office, which was listed on the Law Society’s ‘Find a Solicitor’ website and in Solicitors Regulation Authority records, defrauded Davisons.
In a judgment published last week, the Court of Appeal reversed a High Court ruling that said Davisons was liable for Nationwide’s loss. The latter had said Davisons should have obtained an express undertaking to discharge the existing mortgage on completion, as well as confirmation that the bogus firm would follow the Law Society’s code for completion by post.
But the Court of Appeal found that Davisons had acted honestly and reasonably.
Giving judgment, Sir Andrew Morritt said: ‘The loss sustained by Nationwide was caused by the fraud of an unconnected third party.’ Even if Davisons had insisted on answers to requisitions and separate written undertakings, the matter might still have proceeded and the fraudster have taken the money.
Eddie Goldsmith, chair of the Conveyancing Association, said the decision ‘shows a return to common sense’. He added: ‘The court clearly indicated a conveyancer can only be asked to do so much to verify the conveyancer on the other side and that, provided the conveyancer does this, then they will not be found responsible.’