Purrunsing v A'Court & Company (A Firm) and another
| Jurisdiction | England & Wales |
| Judge | HH Judge Pelling |
| Judgment Date | 14 April 2016 |
| Neutral Citation | [2016] EWHC 789 (Ch) |
| Docket Number | Case No: HC 2013 000250 |
| Court | Chancery Division |
| Date | 14 April 2016 |
[2016] EWHC 789 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Rolls Building
7 Rolls Buildings
Fetter Lane
London
EC4A 1NL
His Honour Judge Pelling QC
SITTING AS A JUDGE OF THE HIGH COURT
Case No: HC 2013 000250
Mr Paul Marshall (instructed by Anthony Gold) for the Claimant
Mr William Flenley QC (instructed by Caytons Law) for the First Defendant
Mr Simon Hale (instructed by Plexus Law) for the Second Defendant
Hearing dates: 15–18 March 2016
HH Judge Pelling QC:
Introduction
This is a claim arising out of the purported sale to the claimant of 35 Merton Hall Gardens, Wimbledon ("the property") by a fraudster who claimed to be, but was not, 'Mr Nicholas Robert Dawson', the registered proprietor of the property. Where I refer to Mr Dawson hereafter I am referring to the fraudster, not the true registered proprietor of the property. By the time the fraud was discovered, the whole of the purchase price (£470,000 odd) had been paid by the claimant to the registered conveyancer retained by him to act on his purchase of the property (the second defendant ("HOC")), by HOC to Mr Dawson's solicitors (the first defendants ("ACC")), and by ACC to an account at a bank in Dubai on the instructions of Mr Dawson. None of the money paid over by the claimant has been recovered.
It is common ground that there was never a genuine completion of the transaction notwithstanding the provision of a TR1 signed by Mr Dawson and that the monies paid away by HOC to ACC and by ACC to Mr Dawson's order were payments made in breach of trust and thus that both defendants are liable to the claimant for breach of trust. It is also common ground that the claimant has no other claims available to him as against ACC but he sues HOC not merely for breach of trust but also for breach of contract and duty.
The payments I have referred to took place in October 2012. These proceedings were commenced initially against ACC in July 2013. By an Order made on 10 April 2014, judgment was entered for the claimant against ACC on the claimant's claim that the purchase money had been paid away by ACC in breach of trust with a direction that the application by ACC for relief under s.61 of the Trustee Act 1925 be determined at trial. HOC was joined as a defendant in November 2014. HOC admitted breach of trust by its Defence but applied for relief under s.61. By its Defence, HOC has denied liability for breach of contract and/or duty. Both defendants have issued Contribution Notices against the other. No allegations of dishonesty are made by the claimant against either defendant or by either defendant against the other. In the result the issues to be determined at this trial are:
i) Whether either defendant should be granted relief under s.61;
ii) Whether HOC is liable to the claimant either for breach of contract or negligence; and
iii) Whether and if so what contribution should each defendant be ordered to bear in respect of any liability that they might have to the claimant.
The trial took place on 15–18 March 2016. I heard oral evidence from the claimant, Mr Charles Bennett, a mortgage broker and advisor to the claimant, Mr A'Court of ACC, Mr Martin Beach, a licensed conveyancer and director of HOC, and Mr Mark Abrahams, the owner of an estate agency called Mark Ashley & Co, the agents who introduced the claimant to the property.
The Facts
There is relatively little in dispute between the parties at a factual level. On or about 20 September 2012, Mr Dawson retained ACC to act on his behalf in relation to the sale of the property. Mr Dawson's instructions to Mr A'Court were that he was not living at the property; the property was vacant and had been givcn to him by his father in 2008 and that a speedy exchange and completion would be required because he needed the money. Mr Dawson told Mr A'Court that he was living at Flat 1, 14 Market Street, in Maidenhead. He produced a water bill dated 20 August 2012 addressed to him at that address, an electricity bill dated 28 August 2012, also addressed to him at that address, a bank statement addressed to Mr Dawson and his wife at that address for the period 10 July to 9 August 2012 and what appeared to be a British Passport for Mr Dawson. It is common ground that the passport was a forgery but it is not alleged that Mr A'Court should have been able to detect that such was the case.
On 21 September 2012, Mr A'Court sent to Mr Dawson by email a copy of ACC's standard client care letter, some property information questionnaires that Mr A'Court asked Mr Dawson to complete, sign and return to him, and informed him that he was applying to the Land Registry for Office Copy Entries for the property. As is apparent on their face, Office Copy Entries were issued to ACC on 21 September 2012. Those showed the registered proprietor to be:
"(06.05.2008) PROPRIETOR: NICHOLAS ROBERT DAWSON of 35 Merton Hall Gardens, Wimbledon … and of 163 Huntingdon Road, Cambridge
(06.05.2008) The value as at 6 May 2008 was stated to be between £200,001 and £500,000
…"
As will be appreciated, none of the utility bills supplied by Mr Dawson to ACC were addressed to him at either the property or 163 Huntingdon Road, Cambridge ("the Cambridge address"). It is common ground, but in any event I find, that had ACC attempted to contact Mr Dawson at the Cambridge address they would have made contact with the real owner and the fraud would have failed. I make this finding because, when an attempt was made to register the claimant's title, the Land Registry made contact with (as it turned out) the true owner at the Cambridge address and it was this that led to the discovery of the fraud. Mr A'Court maintained in the course of his evidence that it would have been wrong for him to have attempted to contact Mr Dawson at the Cambridge address without seeking instructions from him to do so. He accepted however that he did not seek such instructions. I am satisfied that it did not occur to Mr A'Court to do so. Mr A'Court could have asked for utility bills or council tax documentation for the property. Given Mr Dawson's instructions that the property was empty this ought not to have been a difficulty. Mr A'Court did not do so. It was common ground that the valuation as set out in the Office Copy Entries was consistent with the transfer to the registered proprietor being by way of gift since it gives a value in a range rather than a price paid.
On or about 25 September 2012, Mr Dawson returned the property information forms. The Property Information Form included the question " When was the property purchased?" The answer that Mr Dawson gave was "[ MAY] Month [—— manuscript crossing out—-] 2008 year". The text that is in bold was inserted in manuscript by or on behalf of Mr Dawson. The text that is not in bold was part of the printed form. It looks to me as though the form provided empty square bracketed space for the insertion of the month and the year. Thus I am not able to accept Mr Marshall's submission that the answer given was wrong as to date. Accepting his submission on this point involves reading as "1" what is in fact a square bracket. Whilst the copying is not perfect, I am satisfied that would be wrong.
Mr Marshall suggested that the fact that Mr Dawson had responded to a question asking about the date of purchase when in fact Mr Dawson had said the property had been given to him ought to have put Mr A'Court on notice of a possible problem that required further investigation or discussion with Mr Dawson. In my judgment that point would not be justified when taken in isolation given that the response was to a printed question and there was no alternative provided for sellers of property given to the vendor. It may be more significant however when considered in the round with the other factors to which I refer below.
Question 9 of the Home Use Form asked whether any building work had been carried out to the building while in the ownership of the vendor to which question Mr Dawson had answered " no". However, a few days later solicitors acting for the first proposed purchaser of the property requested a Certificate of Lawfulness and a Building Control Certificate in respect of building work that a local authority search had revealed had been carried out at the property. As I explain below, Mr Dawson did not dispute that building work had been carried out when this request was passed to him by ACC. This is an inconsistency that may on one view suggest ignorance on the part of Mr Dawson as to what had happened at the property. However other explanations are possible and on its own the significance of this point must be open to doubt. However that is not the central point. It will be necessary to consider all the information available to ACC together at key stages for the purpose of deciding the issues that arise on ACC's claim for relief under s.61 rather than each item of information separately.
By an email dated 25 September 2012, Mr Dawson informed Mr A'Court that he had a potential buyer, that his name was Mr Crompton and that his solicitors were Peacock & Co. ("Peacocks"). By an email of the following day, Mr Dawson told Mr A'Court that he had agreed a price with Mr Crompton of £430,000 on condition that the sale completed by 2 October 2012 – that is a period of 7 days. Although there was some suggestion that property transactions could be completed in a shorter period than this, in my judgment that does not detract from the fact that this was on any view a speedy transaction when considered in the context of a sale of an investment residential property.
On 26 September 2012, Peacocks wrote to ACC by a letter sent by email that referred to Mr Alexander Barnett of Lakeside Real...
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