Category: Insurance case law · Reviewed by Jake Leat, Associate Director · Last reviewed June 2026
The Court of Appeal decision, heard with Dreamvar, holding the vendor’s solicitor in an identity-fraud conveyancing liable for breach of warranty of authority, breach of trust and breach of completion undertaking, while the purchaser’s solicitor was not negligent.
P&P Property Ltd, a property investment company, agreed to buy a freehold residential property in Hammersmith, London, for £1,030,000 in 2014. P&P was advised by Lawrence Stephens, a firm of solicitors. The vendor was represented by Owen White & Catlin LLP (OWC). Estate agents Winkworth were involved as marketing agents.
The supposed vendor was in fact a fraudster who had impersonated the registered proprietor, a Mr Harper, who was the genuine and unsuspecting owner of the property. The fraudster instructed OWC to act on the sale, providing identity documents (a Nigerian driver’s licence and a TV-licence-style utility-style document) which OWC accepted as part of its client due diligence. OWC made no inspection of the property and did not communicate with the genuine owner by means independent of the fraudster.
The transaction proceeded under the Standard Conditions of Sale and was completed using the Law Society Code for Completion by Post. P&P transferred the purchase money to Lawrence Stephens, who in turn forwarded the sum to OWC on completion. The funds were then distributed onwards to accounts under the fraudster’s control and lost.
The fraud was discovered when P&P attempted to register the transfer with HM Land Registry. The application was rejected because the real Mr Harper could be located and had not sold. P&P had paid £1.03 million and had no title to the property.
P&P sued OWC, Lawrence Stephens and Winkworth. The case was joined on appeal with Dreamvar (UK) Ltd v Mishcon de Reya LLP, a strikingly similar fraud, because the appeals raised common questions of principle about the liability of solicitors in identity-fraud conveyancing transactions. The single Court of Appeal judgment under neutral citation [2018] EWCA Civ 1082 covers both cases.
The principal issues mirrored those in Dreamvar. First, did the vendor’s solicitor, OWC, warrant to the purchaser’s solicitor that it had authority to act for the true registered proprietor of the property? Second, did OWC hold the purchase monies received from Lawrence Stephens on trust, and was that trust breached when the monies were paid away in furtherance of a fraudulent transaction? Third, was the purchaser’s solicitor, Lawrence Stephens, negligent in any aspect of its handling of the transaction or the verification of the vendor? Fourth, what was the proper construction and effect of the Law Society Code for Completion by Post in such a situation?
The Court of Appeal held OWC liable to P&P on three principal bases. First, OWC was liable for breach of warranty of authority. By acting in the transaction, OWC had impliedly warranted to Lawrence Stephens (and through it to P&P) that it had authority to act for the true registered proprietor. Because OWC’s apparent client was in fact a fraudster, that warranty was breached, and OWC was liable in damages.
Second, OWC was held liable for breach of trust. Once received from the purchaser’s solicitor, the monies were held by OWC on trust to be applied only on completion of a genuine purchase. Paying them away in a fraudulent transaction was a breach of that trust. Although OWC sought relief under section 61 of the Trustee Act 1925, on the ground that it had acted honestly and reasonably, the court declined to grant such relief in the round given the position of the wholly innocent purchaser.
Third, OWC was liable for breach of the undertaking implied by adoption of the Law Society Code for Completion by Post, in particular the undertaking that the seller’s solicitor had authority to receive the purchase monies on completion.
The Court of Appeal exonerated Lawrence Stephens from a finding of negligence on the facts; the purchaser’s solicitor had performed its duties to the standard expected in the conveyancing of a property of this kind. The estate agents Winkworth were not liable on the relevant grounds advanced.
The decision substantially shifted the loss from the innocent purchaser to the vendor’s solicitor.
The vendor’s solicitor in a conveyancing transaction warrants to the purchaser’s solicitor that it has authority to act for the true registered proprietor of the property. Where the apparent vendor is in fact a fraudster impersonating the proprietor, the warranty is breached and the vendor’s solicitor is liable for the resulting loss. The vendor’s solicitor also holds the purchase monies on trust for use only in a genuine completion, and is liable for breach of trust where the monies are dissipated in a fraudulent transaction. Section 61 of the Trustee Act 1925 will not ordinarily relieve the vendor’s solicitor where to do so would leave an innocent purchaser without recourse.
P&P Property is the companion case to Dreamvar and, taken together, the two decisions transformed solicitors’ professional indemnity exposure in conveyancing. P&P emphasises in particular the position of the vendor’s solicitor — historically often less anxious about identity-fraud risk than the purchaser’s solicitor — and confirms that the vendor side bears very substantial residual risk through warranty of authority, breach of trust and breach of completion undertaking.
For PI underwriting and broking this has several practical effects. First, firms acting for sellers of unencumbered London (and other high-value) residential property face heightened risk and should expect targeted underwriting questions about source-of-funds and identity-verification procedures, particularly where the supposed vendor is purportedly resident overseas or recently inherited the property. Second, the breach of warranty of authority head of claim is strict in nature and is not a negligence claim; PI policies should respond on a civil liability basis to ensure cover regardless of the cause of action, and aggregation language must be considered carefully. Third, the case reinforces that the law allocates loss with the available insurance cover in mind, which makes well-structured PI essential to the profession’s ability to function.
P&P Property is also relevant to firms acting in commercial transactions, lender transactions and at-distance instructions where the verification of the apparent client is necessarily document-based. The decision underscores the importance of rigorous client-onboarding controls, robust file management and clear policy responses to conveyancing-fraud-type losses.
By Matt Bartlett, Director, on 2026-06-06. Next review: 2026-12-06.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-06. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.
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