On Tuesday 15 May, the Court of Appeal handed down judgment in the ground-breaking identity fraud case of Dreamvar (UK) Ltd v Mishcon de Reya  EWCA Civ 1082 (heard in February/March together with the appeal in P&P Property Ltd v Owen White & Catlin LLP).
At first instance, Mishcon de Reya (which had acted for the defrauded buyer) was held to have behaved reasonably and not to have been negligent. However, it was deprived of a remedy against its co-defendant, Mary Monson Solicitors Ltd (which had failed properly to verify the identity of its client, the purported seller), as a result of the court’s interpretation of paragraphs 3 and 7(i) of the Law Society’s Code for Completion by Post.
The Court of Appeal (which also received written submissions from the Law Society) held that the trial judge had been wrong to dismiss Mishcon de Reya’s claim for an indemnity against Mary Monson: see paragraphs  and [122(iii)] in the leading judgment of Lord Justice Patten. He considered that, correctly interpreted, the undertaking in paragraph 7(i) of the Code amounts to an undertaking that a seller’s solicitors have the authority of the person who would be genuinely entitled to complete the sale (and not merely the authority of whoever happens to be their client). Moreover, paragraph 3 of the Code does not operate to absolve from liability for breach of trust seller’s solicitors who receive the purchase money and then dissipate it to a fraudster with no genuine completion having taken place.
The Court of Appeal also dismissed an appeal by the defrauded buyer, Dreamvar (UK) Ltd, against the first instance finding that Mishcon de Reya, its own solicitors, had not been negligent in not seeking from Mary Monson a non-standard undertaking over and above the express undertaking in paragraph 7(i) of the Code.