A good part of my practice until a mediator did the impossible and settled the case recently was taken up with two related multi-party disputes in the Supreme Court about a commercial property in Sydney Road. Two lenders sued my client and in one case his brother for possession and for repayment of a loan. They pleaded non est factum, and that was their defence. The brother was allegedly bound to the transaction by the execution of his attorney. Only problem was, his signature on the power was forged and his nephew had been induced to accept the power by fraud.
One of the foremost indicia that everything was not as it should be was that the solicitor, whom the brother joined as a third party, had stated in a solicitor’s certificate that he had interviewed the brother, sighted various identification, explained the mortgage, and was satisfied that he understood it. This was most unlikely since the brother spoke little English and the solicitor little Arabic, and the brother had been and would be in Lebanon at the time of and for a substantial number of months on either side of the alleged interview. ‘Details, details’, the solicitor said, confronted by these facts, continuing ‘I interviewed the brother’s attorney and forgot to mention that fact in the certificate.’ He and his insurer denied negligence. One of the lenders joined him as a defendant for good measure.
Now, after it’s all over of course, I have found a case about lenders who rely on solicitors’ certificates in respect of borrowers’ attorneys rather than borrowers. It’s not a good idea, according to Young JA in Spina v Permanent Custodians Limited  NSWCA 206. His Honour held by reference to NSW’s Contracts Review Act, 1980 that where the red warning lights were on (an 86 year old lady in a nursing home borrowing a large amount of money against her home through the agency of her son who was going to take a considerable benefit himself under the loan) but the lender satisfied itself with a certificate in relation to the son who was the borrower’s attorney, it did so at its peril. And in this case, the peril came home. Here is a note by Deacons’s Roy Siciliano.