For all its undoubted legal and practical significance, the recent Court of Appeal case of Ashraf v Lester Dominic and others is not a great advertisement for the human condition.
It involves not just one but two property frauds, both suffered by an unfortunate gentleman called Mr Ul Haq. (Things did not get better for Mr Ul Haq – he passed away shortly afterwards, presumably with a very low view of his fellow man, and the task of advancing the litigation fell to his executrix, a Ms Ashraf.) The property frauds both took place in the context of the sale of a property to a Mr Attarian.
The first thing that happened was that money advanced by Mr Attarian’s lender (the Bank) to complete the purchase was appropriated by an employee of a firm of solicitors (which was acting for both Mr Ul Haq and Mr Attarian).
The second thing that happened was that, as part of the process of regularising matters after the first fraud, a solicitor acting for the Bank (the Solicitor) endeavoured to get a TR1 signed by Mr Ul Haq, and a signed version was duly obtained. Unfortunately, this TR1 was itself forged (at least on the facts assumed for the purpose of the application). The TR1 was nevertheless lodged at the Land Registry by the Solicitor, and title duly passed to Mr Attarian.
Mr Ul Haq brought a claim against several parties, including against the Solicitor for negligence (note: this was not the first defendant, Lester Dominic, but another firm). His claim was met by widespread applications for strike-out or summary judgment, including one by the Solicitor. The Solicitor’s principal contention was that he acted for the Bank and did not owe any duty of care to Mr Ul Haq. This contention succeeded before the Master and the Judge, who granted summary judgment. It was, however, rejected by the Court of Appeal, which (by a decision dated 13 January 2023) allowed the appeal and dismissed the application, with the consequence that Mr Ul Haq’s claim against the Solicitor must go to trial.
The intended claim, at least as the matter developed before the Court of Appeal, turned on the AP1 completed by the Bank for the purpose of registering Mr Attarian’s title. The AP1 is a form which will be familiar to conveyancing solicitors. It contains, at Box 13, a section requiring the solicitor to identify the parties and to state whether or not they have a conveyancer acting for them. If any of them do not, the person completing the form must complete a second section, indicating what evidence of identity they have seen.
In this instance, the Solicitor had stated that that Mr Ul Haq was acting by a conveyancer. He named the firm of solicitors which had been acting at the time of the first attempt at the conveyance, and whose employee had stolen the mortgage advance. But, at the time of the TR1 designed to regularise the position after this botched first attempt at the conveyance, that was not the case. The Solicitor had simply received in the post a version of the TR1 bearing a signature purporting to be that of Mr Ul Haq, witnessed by another solicitor called Mr Kan. It was Mr Kan who worked at Lester Dominic (that firm also successfully obtained summary judgment). Enquiries made of Mr Kan revealed that Mr Ul Haq was not known to Mr Kan, and that Mr Kan had not seen any evidence of identity.
So, the AP1 was (or at least was arguably) inaccurate, and the question was whether the Solicitor owed Mr Ul Haq a duty of care to complete it accurately. It seems that this had not been quite the way the case had been argued in the lower courts – but the Court of Appeal, displaying the healthily flexible approach to matters of procedure beloved by respondents to appeals and their representatives, shaped (and indeed allowed) the appeal by reference to that point.
In considering it, the court reviewed the situations in which solicitors have been held to owe duties to entities other than their client. Nugee LJ identified three different categories of case to this effect. The first is where the purpose of the retainer is where the client wishes the solicitor to confer a benefit on a third party. Into this category come, most obviously, the wills cases. The second is where a solicitor for one party makes representations on which it is foreseeable that the other party will rely, and on which it does rely. This class of cases was considered in detail in the Supreme Court in NRAM Ltd v Steel. And the third type of case is where the solicitor steps outside its role as solicitor for one of the parties and has assumed some other role which has widened the scope of its duties. The paradigm example of this category is the well-known case of Al Kandari v JR Brown and Co in which solicitors for a husband in divorce proceedings agreed to hold his passport pursuant to a consent order, and fulfilled this obligation negligently with the consequence that the husband was able to leave the jurisdiction with the children of the marriage.
The Court of Appeal held that, while there was no prospect of Ms Ashraf establishing that the Solicitor owed Mr Ul Haq a duty up until the time when he completed the AP1, there was a reasonable prospect of her establishing that a duty was owed at that point. This was on the basis of the third category of cases identified above. The reasoning was that in completing the AP1, the Solicitor was (or was arguably) stepping outside his usual role and acting for all the parties. It was an important plank in the court’s reasoning that the Land Registry was not a commercial business looking after its own interests, but a public body providing a service to those engaging in land transactions. There is a suggestion in the judgment that the court would, if asked, have been prepared to go further and find affirmatively that such a duty was owed – but, in the end, they stopped short of that, and have merely held that the point is arguable.
So, the matter goes for trial, but in the meantime, solicitors charged with completing these forms will need to be mindful that they may be doing so not merely for the benefit of their client, nor indeed for their client and the Land Registry, but for the benefit of all parties to the transaction in question. The implications of that are far-reaching – for example, it will or may mean refusing to carry out a client’s instruction unless there is a clear basis for being satisfied that identity checks have been properly carried out. That may be an onerous burden to place on solicitors, which may lead to difficult ethical questions and perhaps even disputes between them and their own clients. But it is hard to argue that it will be anything other than an important safeguard against fraudulent property transactions.
