The Court of Appeal will be tasked with offering landmark guidance on the liability of professionals where property is purchased through an ID fraud. The Gazette exclusively revealed last week that City firm Mishcon de Reya faced a £1m payout after its client Dreamvar was duped into buying a London property from a tenant posing as the owner.

The case has sparked widespread confusion over the scope of a solicitor’s liabilities and what reasonable checks they can make during the buying process.

The High Court has since granted leave to appeal and the case is likely to be heard at the end of this year – possibly conjoined with a similar case (P&P Property Ltd v Owen White & Catlin LLP & Anor).

A statement from Mishcons said the judgment had been ‘unequivocal’ in finding no allegation of negligence or dishonesty. The firm said the ruling, which is stayed pending the appeal, has consequences for the wider profession.

‘This judgment has major implications for solicitors and for the professional indemnity market,’ said the firm. ‘This goes beyond real estate and the result will impact on all transactional lawyers.’

The Law Society is considering whether to intervene in the appeal. Additional guidance may also be issued to practitioners on how to protect themselves from ID fraud.

Solicitors have told the Gazette they are ‘baffled’ by the current rules on liability for what is widely acknowledged to be a growing problem. Tim Prior, a director of Bristol risk and compliance firm PNCR Legal, said the judgment will have property lawyers and their insurers ‘running for cover’.

A spokeswoman for Land Registry said solicitors and their clients can minimise the risk of fraud by making sure the property is registered. Land Registry has prevented frauds on 204 applications representing properties valued at more than £92m.