The High Court has ruled that a law firm should have the chance to defend its position after being instructed by a client who turned out to be a fraudster.

In Social Money Ltd v Attwells Solicitors LLP  Master Pester ruled ithat the dispute should go to trial rather than be decided in favour of the claimant.

Claimant SoMo, a company providing short-term bridging financing, had offered to lend £775,000 to an individual purportedly named Linford Gayle, the registered owner of two London properties. East Anglia practice Attwells was instructed on the matter. Both parties now agree that the client had stolen an identity, although there is no suggestion anyone involved on the transaction knew that at the time.

It only became clear that the imposters, Attwells’ client, was an imposter when the real Mr Gayle contacted the firm to ask why his mortgage had been redeemed.

SoMo sought summary judgment on the basis of a breach of a contractual undertaking and breach of trust. It sought the summary enforcement of two undertakings given by Attwells requiring it to use SoMo’s moneys only for specific purposes and to obtain registration of legal charges. It was further submitted that Attwells held the advance on trust and had no authority to release it.

Attwells submitted that the matter was more complex and not suitable for summary judgment. Counsel for the firm stressed that it was premature to decide questions of liability at this stage, given that the law relating to solicitors’ undertakings could properly be described as ‘still evolving and in somewhat of a state of flux’.

The judge ruled that although Attwells may face difficulties at trial, the case put forward by the firm was properly arguable and had a real as opposed to fanciful chance of succeeding at trial. ‘There is a real issue to be tried on the construction of the undertakings, and the matter needs to go to trial,’ he added.

The court dismissed SoMo’s application and heard further directions for progressing the proceedings.