Conveyancers on both sides of a transaction are liable for the actions of a rogue seller who committed a £470,000 property fraud, the High Court has ruled.

His Honour Judge Pelling (pictured) said that Windsor firm A’Court & Co made no serious attempt to comply with anti-money laundering regulations to prevent the fraud, and, critically, obtained no documentation linking the seller to the property.

Pelling also ruled that the buyer’s conveyancer, north-west London firm House Owners Conveyancers Limited (HOC), was responsible for not drawing attention to any concerns after asking whether the purported owner was entitled to sell the property.

The decision tested the reasonableness of a seller conveyancer’s conduct where there was no allegation of dishonesty or fraud against him or her. The judge ruled against both firms and said they should bear an equal part of the loss.

The unknown fraudster had claimed to be Nicholas Dawson, the registered owner of a property in Wimbledon, and convinced Hurry Purrunsing to transfer the whole purchase price to Dawson’s registered conveyancer. The money then passed through A’Court to an account at a bank in Dubai on the purported instructions of Dawson.

Nothing has been recovered by Purrunsing, who then claimed for breach of trust against A’Court and breach of trust and negligence against HOC.

London firm Anthony Gold, which represented Purrunsing, said the case will be a landmark judgment in the evolving area of negligence in property fraud cases.

Claimant solicitor Beth Holden said the decision will resonate across the profession.

She added: ‘We see the court saying that conveyancers on opposite sides of the transaction have joint responsibility to protect the purchaser’s money, no matter who their client is. Old doctrines of buyer-beware and solicitors’ warrantees of identity are not substitutes for compliance with strict requirements of anti-money laundering regulations and the duty to actively protect the transaction from fraud.’

In Purrunsing v A’Court & Co & Anor, Pelling said HOC was under a professional obligation to ensure the client was informed at all times. Given the speed at which Dawson was insisting the transaction took place, and the exceptional financing arrangements, it was more ‘probable than not’ Purrunsing would have pulled out had all information been available. Equally, it was A’Court’s responsibility to carry out risk-based due diligence.