Which set of lawyers has the duty of care when an ‘impersonator’ makes off with the money paid by a would-be buyer?

Suppose a law firm draws up a land sale agreement between a client ‘well known to them’ and an outside party, and one of its lawyers witnesses the agreement, accompanies the parties to the bank and witnesses the payment of the funds to that same client. If that sale goes bad because the ‘seller’ (the client well known to the firm) was actually only impersonating the seller and previous owner of that land, and has since disappeared with the funds without giving over the land, where does that leave the firm in a negligence claim by the disappointed, not to mention aggrieved, would-be buyer? If the legal firm argued it had ‘no duty of care’ to the would-be buyer, would the court agree?

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When Barbara Namayega bought land in Kampala she had no idea she would soon land in deep trouble, paying the full sale price to someone who had merely ‘impersonated’ the owner and thus conned her out of her money. Indignant and determined to get her money back, she has now sued the lawyer who drafted and witnessed the sale agreement.

He, however, claimed he was the wrong target. In a preliminary skirmish, he said she should be suing her own lawyers, not him.

But what would the court say?

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Judge Henry Adonyo of Uganda’s high court, commercial division, laid out the sad facts: Nanfuka Kintu Bakia told Barbara Namayega that she was the registered owner of a certain piece of land and that she wanted to sell it.

Namayega was keen and asked her lawyers, Mukiibi Sentamu and Co, for help. They conducted a search and found that the registered owner was Nanfuka. Soon afterwards Namayega went with the person she believed was Nanfuka to the legal firm acting for the latter, Waluku, Mooli and Co. There she met one of the firm, lawyer Denis Etot, who drafted a sale agreement for the parties, had them sign it and witnessed their signatures. He also prepared the necessary transfer forms.

Etot, with the two parties, then went to the bank where Namayega paid over UGX62,000,000 to Nanfuka. She, in turn, was given a land title and the seller was to hand over vacant possession to Namayega the following day.

'Evasive'

That’s when the trouble started. She couldn’t find Nanfuka; the woman became ‘evasive’. She even switched off her phone and she could not be traced. After searching and inquiring further, Namayega found out that Nanfuka had ‘impersonated the registered owner of the land and had conned [Namyega] out of her monies’.

The main preliminary question for the court to decide was whether Namayega was suing the correct person. According to Etot, her troubles were caused by her own negligence. He said Namayega was not a client of his firm and she was thus ‘not owed any duty of care’ since his firm only acted for Nanfuka as her ‘transactional lawyer’. The firm ‘at no point’ gave advice to Namayega about the land transaction. According to Etot, she should have taken advice from her own firm of lawyers.

Given her negligence she had no standing to bring the action, and in any case, the suit against the firm was ‘frivolous, vexatious and an abuse of court process’, and intended only to ‘annoy’ the firm.

'Negligence'

Namayega was not put off, however. She complained of gross professional negligence, fraud and breach of statutory duty, particularly since the alleged seller was ‘well known to them’.

Was Namayega a ‘client’ of Etot’s firm, asked the judge. The basic facts were not denied by the firm, although it argued that Namayega ought to have been properly advised by her own legal firm, and it was that firm and Namayega herself who had been negligent.

‘I totally disagree with this proposition,’ said the judge. Etot had drawn up the contractual document ‘within the environment of [his firm’s] premises.’

'Hobbled along'

Not only had he witnessed the document, but he ‘hobbled along with the parties and even witnessed the receipt of the purchase price’.

‘These facts alone would … convince … that there existed a duty of care, as they fit and show an advocate-client relationship … and thus establish the ingredients of the duty of care.’

Judge Adonyo said he overruled the preliminary objection and found that Namayega had standing to bring the case. Further, her suit was not ‘frivolous, vexatious and an abuse of court process’. On the contrary, there were ‘serious triable issues’ raised, that should be investigated by the court. In particular, he mentioned that Nanfuka was ‘well known’ to Etot’s firm, not just in their own chambers, where the agreement had been signed, but also outside, in the ‘environment’ where the funds were handed over.