Thou shalt not bear false witness

In due course, as lawyers say, Ms Abela's mortgage was registered. Only after her husband died, did Mrs Hall discover this unexpected encumbrance over her home. Worse, she soon learned that her late husband had been in default and that Ms Abela was about to exercise her power of sale.

Mrs Hall, not only grieving but also outraged and worried, promptly went to Bathurst lawyers, McIntosh McPhillamy & Co, where solicitor Chris Nicholls set about halting Ms Abela's default action and suing the solicitor and the JP.

The trial judge found Messrs Gelin and Graham both negligent and liable for Mrs Hall's damages which were what it cost her to pay out Ms Abela. The prime liability fell on the solicitor whose professional duty required him to act reasonably and protectively. He had to pay 60 per cent of Mrs Hall’s damages while 40 per cent fell to Mr Graham because of his failings.

Mr Graham appealed against this decision. Because economic loss was involved, the Court of Appeal first identified the interest for which Mrs Hall sought protection - joint ownership of her home. This interest must have been obvious to Mr Graham, the court remarked, when he purported to witness her signature as mortgagor. The risk of harm to Mrs Hall's interest arose from the fact that the falsely-attested mortgage was likely to be registered on the title. This risk was not only foreseeable but also self-evident.

Having established the foreseeability of this risk, the court then held that Mr Graham owed a duty of care to Mrs Hall - not unlike that owed by solicitors to beneficiaries when preparing wills. In this regard the court relied upon a recent High Court ruling that a solicitor, when ensuring the proper execution of a client's will, owed a duty of care to any intended beneficiaries under that will. (The solicitor in that case was liable in negligence to a beneficiary who missed out because the will in question was not validly executed.)

Mrs Hall's vulnerability was also significant in determining the care expected of a witness in these circumstances. The court acknowledged that, because the system of transmission of property interests accepts the reality of property owners' vulnerability to fraud, critical documents must be properly and honestly witnessed. To refrain from imposing a clear duty of care on a falsely attesting witness would, in the court's view, impair the reliability of the real property registration system.

Justices of the Peace and others (such as Commissioners for Oaths/Affidavits, solicitors and licensed conveyancers), who attest that they witnessed signatures being made before them when that is not true, commit an act which the court described as the very “antithesis” of their protective function. Such dishonest misrepresentation, the court explained, strikes at the heart of the system which witnessing officers are charged to protect.

Although Mr Graham did not testify in the lower court and called no evidence, it would seem that Mr Hall may have forged his wife's signature himself, and did not have someone impersonate her while signing in front of Mr Graham.

Whatever really took place, the JP was found derelict in his responsibilities, particularly having regard to his Oath of Office. This dereliction and breach of duty clearly caused Mrs Hall's loss.

While Mr Graham's conduct had, in the words of the court, “material causal potency” and was “morally blameworthy”, the solicitor was simply professionally negligent. That said, no matter how morally blameworthy the JP's conduct had been, the solicitor could have obviated this with inexpensive basic investigations regarding Mrs Hall's agreeableness to taking out a mortgage loan. Hence greater liability was attributed to him.

(Mr Graham also appealed on the basis of claimed immunity under Section 135 of the NSW Justices Act 1902. This immunity claim was largely rejected because his attestation was voluntary and not an exercise of his “duty as a justice”.)

The imposition of the above duty of care on witnesses of property documents is hardly onerous. Judge Ipp suggested that the standard of care required that a witness be honest and not only ensure a signature is made in his presence, but also identify the signatory as the person in the document - by simple reference to a passport or driving licence.