Federal Court: Solicitor Who Acts for Fraudster Landowner Owes No Duty of Care to the Real Landowner
07 February 2019
On 29 January 2019, the Federal Court held that a solicitor who acted for a fraudster owner of land who sold the said land does not owe a duty of care to the real owner of the land. This landmark decision definitively settles an issue of law of utmost importance to the legal profession which was previously uncertain due to two conflicting decisions by the Court of Appeal.
The decision was in answer to the following question of law:-
“In deciding whether a solicitor who acted for a fraudster owner of land who sold the said land owes a duty of care to the real owner of the land, whether the Court of Appeal decision in Yap Ham Seow v Fatimawati bt Ismail & Ors or the Court of Appeal decision below is the correct decision.”
This appeal involved a fraudster who flew in from India and possessed an Indian passport bearing a name identical to the real landowner per the land title particulars. The solicitor acted for the fraudster in a sale and purchase transaction to sell the land to a company. Soon thereafter, the company sold the land to another purchaser company in a second sale and purchase transaction, which the solicitor in question was not involved in.
The Federal Court in arriving at its decision held that there was no foreseeability nor legal proximity as the solicitor did not know of the existence of the real landowner. The Federal Court also held that there were policy considerations against imposing such a duty of care on solicitors. The Federal Court therefore allowed the solicitor’s appeal against the decision of the Court of Appeal which had ruled that the solicitor owed a duty of care and had breached such duty of care.
Our Mr Leong Wai Hong and Ms Brenda Chan Qing Wen represented the solicitor at the Federal Court and the courts below.