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LSEW fails to have "find a solicitor" negligence claim struck out

30 August 2017

The Law Society of England & Wales has failed to have struck out a negligence claim based on information about a legal firm contained on the Society’s online "Find a Solicitor" facility.

An appeal by the Society against a first instance decision that a claim by legal firm Schubert Murphy should go to trial, was upheld by the Court of Appeal, despite an argument that the case could not meet the legal test for liability..

The claim arose from a property transaction in which Schubert Murphy, acting for the purchaser, searched the facility in order to confirm that the solicitor acting for the seller, and his firm, were registered. In fact the details had been entered by a fraudster who had stolen the identity of a retired solicitor, and submitted a deed poll to change that solicitor's name in support of an application to the Solicitors Regulation Authority for a practising certificate and then for approval as a recognised sole practitioner. When Schubert Murphy transferred the purchase price, the fraudster absconded with the funds.

Mr Justice Mitting, whose decision was appealed, decided that he was unable to say, without further inquiry, that no duty of care on the part of the Society could be held to exist. He observed that the Society was "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 [apt] 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".

On appeal the Society argued that the judge had failed to give weight to the fraud of a third party as the direct and immediate cause of loss, and should have held that the case did not meet the test for a duty of care in Caparo v Dickman (1990).

Lord Justice Beatson, with whom Sir Terence Etherton, Master of the Rolls and Lady Justice Gloster agreed, said that in the absence of findings of fact, it was hard to say that in no conceivable circumstances could there be a relationship of proximity between the Society and Schubert Murphy. "I consider that, on the material before the court, the FAS [Find a Solicitor] facility appears to actively encourage use of solicitors rather than other conveyancers", he commented. "It may therefore be necessary at trial to consider the extent to which providing the FAS facility goes above and beyond the Law Society's regulatory function, and is more akin to marketing. The question of proximity is plainly policy-driven and, on the facts as presented at this stage of the proceedings, this case is not in my judgment suitable for disposal on an application to strike out the claim or for summary judgment... It will be necessary to consider in full the impact of imposing or not imposing a duty on the Law Society in respect of the FAS facility. Determining such questions is more appropriate after the factual situation has been ascertained by evidence which has been tested at a trial."

He also rejected a submission that there was no prospect of showing that the Society's response involved a representation.

The judge concluded by observing that a judge at an earlier stage had "noted that the Law Society advanced powerful reasons why it has a very strong prospect of a successful defence to the claim but concluded that on a full appeal the court would be unlikely to reverse a discretionary decision that the issue deserved a trial. He was also concerned that a full appeal at this stage might cause significant delay. In my judgment, both these assessments were correct".

Click here to view the judgments.

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