Kemp Strang recently acted for the Lender in the matter of
Permanent Custodians Limited v Geagea and Ors  NSWSC
562 and (no.3)  NSWSC 1489 in which the Lender was successful
against a solicitor in its claims of misleading and deceptive
conduct and breach of warranty of authority. The decision is
significant as the Court not only found in favour of the Lender,
the Court found that damages awarded for a breach of warranty of
authority are not apportionable under the Civil Liability Act
The Lender commenced proceedings against three brothers who were
borrowers under a loan agreement and had provided the Lender with a
mortgage over a residential property as security for the loan.
Before commencement of the proceedings all parties accepted that
the signatures of one of the brothers on the loan agreement and
mortgage were forgeries as at the time of signing he was in jail in
Lebanon. Another brother also denied signing the loan agreement and
mortgage and the third brother admitted that he forged the
signature of the other two brothers.
Due to the forgery issues the Lender joined to the proceedings
the solicitor who purported to have witnessed the signatures of two
of the Borrowers and had attended to the settlement of the loan,
providing cheque directions to the Lender and obtaining the cheques
at settlement for the total amount borrowed.
Prior to the hearing the Lender settled with the Borrowers and
proceeded only against the solicitor for negligence, misleading and
deceptive conduct and for a breach of warranty of authority.
The Lender was ultimately successful in the proceedings against
the solicitor. The judge found that solicitor misrepresented to the
Lender that he was acting for all three borrowers when in fact he
only acted for one of them. The Court also found that the solicitor
had breached his warranty of authority by representing that he
acted for all three borrowers at settlement.
The solicitor claimed that any liability he may have should be
reduced as result of the operation of section 35 of the Civil
Liability Act 2002. That section provides that a where a
party's loss has been caused by more than one wrongdoer each
wrongdoer should be liable for only that portion of the loss that
the Court considers reflects the wrongdoer's contribution to
the loss. In this case the solicitor claimed that the burden of the
damages should fall upon broker that prepared and submitted the
The Court found that a claim for breach of warranty of authority
is not an apportionable claim. The Court also found that where, as
in this case, a party is liable under two separate causes of action
one of which is an apportionable claim and the other not, the
proportionate liability provisions do not apply.
The solicitor has applied to re-open the proceedings to further
argue that a breach of warranty of authority claim is an
apportionable claim which it claims was not addressed in
The motion is listed for hearing on 16 July 2015. We will
provide a further update once the motion has been determined.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
Kemp Strang has received acknowledgements for the quality of
our work in the most recent editions of Chambers & Partners,
Best Lawyers and IFLR1000.
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