Schubert Murphy (A Firm) v The Law Society: QBD 17 Dec 2014

The claimant solicitors’ firm had acted in a purchase, but the vendors were represented by fraudsters presenting themselves as solicitors, registering with the defendant in names of retired solicitors, and who made off with the money intended for the redemption of the vendor’s mortgage. The defendants had shown the name as registered on the Roll.
Held: The defendants’ application to strike out the claim as without hope f success failed: ‘The defendant is . . encouraging ordinary members of the public to rely on its published information about who is a solicitor. If an ordinary member of the public reliant on that information consults an imposter operating an office on a high street near him and entrusts that person with money, as people are at to do with solicitors, then if he loses it, he might well be rather shocked to find that he had no recompense against the representative and regulatory body that held out that person as a solicitor on its website.’
A factual enquiry would be necessary to ascertain whether the third part of the test – fairness, justice and reasonableness – was established. The court would identify what ‘at least some of those facts might be’, because as well as analysing the three parts of the test independently, it was necessary to analyse the interaction of the three parts with each other. Mitting J stated that: ‘[A]t least the following facts would need to be established: (i) What are the defendants required to do and what in fact do they do to check the identity of an applicant for entry on the Roll or Register and his entitlement to be so entered? Whether the decision involves an exercise of judgment or is simply a box-ticking exercise or semi-automatic. Whether there are circumstances which should alert those responsible for making checks to anomalies in applications which require investigation. What resources are available to the defendant to permit them to make checks to a satisfactory standard? (ii) What, if any, additional financial burden would be imposed by carrying out checks sufficient to eliminate or more likely minimise the risk of fraudulent entry on the Roll. (iii) What is the scale of the problem? How many fraudulent applications are detected each year and what would be the financial exposure of the defendant if it were to be held liable for careless failure to carry out adequate checks? (iv) What insurance is available and at what cost to the defendant and/or those practising as solicitors in the conveyancing market if liability for carelessness on the part of the defendant is acknowledged or disavowed. (v) To what extent, if at all, can the defendant escape a liability which it might otherwise have for an erroneous answer given personally by an employee by telephone or by letter or by email by relying on an automated response given by a page on its website?

Mitting J
[2014] EWHC 4561 (QB)
England and Wales
CitedHedley Byrne and Co Ltd v Heller and Partners Ltd HL 28-May-1963
Banker’s Liability for Negligent Reference
The appellants were advertising agents. They were liable themselves for advertising space taken for a client, and had sought a financial reference from the defendant bankers to the client. The reference was negligent, but the bankers denied any . .
DistinguishedYuen Kun-Yeu v Attorney-General of Hong Kong PC 1987
(Hong Kong) The claimant deposited money with a licensed deposit taker, regulated by the Commissioner. He lost his money when the deposit taker went into insolvent liquidation. He said the regulator was responsible when it should have known of the . .
CitedCaparo Industries Plc v Dickman and others HL 8-Feb-1990
Limitation of Loss from Negligent Mis-statement
The plaintiffs sought damages from accountants for negligence. They had acquired shares in a target company and, relying upon the published and audited accounts which overstated the company’s earnings, they purchased further shares.
Held: The . .
CitedDavisons Solicitors (A Firm) v Nationwide Building Society CA 12-Dec-2012
. .
CitedSantander UK Plc v RA Legal Solicitors CA 24-Feb-2014
. .

Cited by:
Appeal FromThe Law Society of England and Wales v Schubert Murphy (A Firm) CA 25-Aug-2017
The solicitors had made use of the online facility provided by the appellant Law Society to verify the bona fides of a firm of solicitors acting for a third party to a transaction. Relying upon the information, they suffered losses, and claimed in . .

Lists of cited by and citing cases may be incomplete.

Legal Professions, Negligence

Updated: 01 November 2021; Ref: scu.542501