The widening of a lawyer’s duties to third parties? Ashraf v Lester Dominic Solicitors & Ors considered

There were several interesting cases in 2022 which considered the scope of a lawyer’s duties. 2023 began in a similar vein, with an interesting case in the Court of Appeal around a lawyer’s duties to third parties: Ashraf v Lester Dominic Solicitors & Ors. 

Facts

The late Syed Ul Haq owned a property in Ealing which he agreed to sell to Bijan Attarian for £1,250,000. The Bank of Scotland was both the lender for Mr Ul Haq’s existing mortgage and Mr Attarian’s proposed new mortgage.

Unusually, FLP Solicitors acted for all three parties in the transaction. The Bank of Scotland advanced the sale proceeds to FLP in the usual way, but they were stolen by the firm’s office manager.

FLP was subsequently intervened upon. The parties sought to complete the transaction. The Bank of Scotland instructed Rees Page Solicitors in place of FLP, and Mr Attarian also instructed new solicitors. However, Mr Ul Haq did not.

Rees Page, under pressure from its client (the Bank of Scotland), filed an application to the Land Registry to amend the register, using form AP1.

Box 13 of the form asks for the details of each party’s conveyancers. As to Mr Ul Haq, Rees Page listed ‘FLP Solicitors’. Of course, this was not correct: the firm was no longer trading, and Mr Ul Haq was now unrepresented.

The AP1 also contains the following wording:

"Where a party is not represented by a conveyancer you must also complete (2) below".

This section (2) asks the applying conveyancer to confirm that they are satisfied as to the identity of any unrepresented party. Rees Page left this part blank, despite Mr Ul Haq being unrepresented. The application was approved by the Land Registry.

Mr Ul Haq brought a claim against various parties arising from the transaction, including Rees Page. Rees Page obtained summary judgment on the basis that they did not owe Mr Ul Haq any duty of care given that he was never a client of the firm. Mr Ul Haq’s personal representative (he had since died) appealed that decision.

The issues considered

The key issue was whether Rees Page arguably owed Mr Ul Haq a duty of care. Mr Ul Haq was never a client of Rees Page, and throughout the transaction the firm did not provide him with any substantive advice. Accordingly, the default position was that no duty arose.

However, the court found that by completing the AP1 as they had, which stated that Mr Ul Haq was represented by solicitors in the transaction, Rees Page had arguably assumed a duty to him.

The practical effect of the AP1 being drafted as it was, with confirmation that Mr Ul Haq was legally represented, is that the Land Registry did not take any further steps to verify his identity. This potentially exposed him to fraud.

Counsel for Rees Page argued that the task of confirming a party’s identity for these purposes was similar to money laundering checks that firms are obliged to undertake. The argument goes that this is ultimately for the benefit of society as a whole, rather than the parties to any particular transaction. Conversely, counsel for Mr Ul Haq’s estate referred to the AP1 explicitly stating that identity checks were to reduce the risk of property fraud, which is primarily for the benefit of the parties to a transaction, rather than society as a whole. The court preferred the latter argument.

The court did not make a finding of whether a duty was in fact owed, only that the case was arguable (and thus outside of the remit of summary judgment). The claim will now continue.

Comment

The courts have generally been reluctant to find that solicitors owe duties to non-clients. While every claim is decided on its own facts, this case, if decided in Mr Ul Haq’s favour, could potentially significantly broaden the type of cases where a court is likely to find that a duty was assumed to a non-client third party. After all, Rees Page did not act for Mr Ul Haq, nor did they ever provide him with advice: the action which it is argued created a duty was completing a Land Registry form in a particular way. The claim will be followed with interest.