In the case of Yaktine v Perpetual Trustees Victoria
Ltd  NSWSC 1078, the NSW Supreme Court considered the
duties of solicitors when dealing with powers of attorney.
Receiving instructions from a client who is an attorney for another
is a common practice, so it is important for the prudent solicitor
to consider Yaktine and take from it the professional
expectations the judgment holds them to.
The court considered the question, when should a solicitor make
further enquiries to establish the validity of an attorney's
instructions? Chief Justice Young analogised the answer to this
question is when red lights flash. As an example of when red lights
should flash, the facts in Yaktine can provide insight.
The facts of the case involved a solicitor acting on a large
mortgage to be granted by Mr and Mrs Yaktine under instructions
from their son as power of attorney. The son produced what later
was proved to be a forged power of attorney, claiming his parents
were overseas but that he was acting under their instruction. In
carrying out these instructions the solicitor witnessed the
execution of mortgage documents and statutory declarations signed
by the son as power of attorney.
Additionally and notably, the solicitor provided a letter to the
son which was addressed to the mortgagee. It was a request for the
certificate of title to be handed over to the son as attorney. The
letter was signed off by the solicitor and under the parent's
name, leaving an area for them to sign. The son later forged his
parent's signature, relying on the letter to obtain the
certificate of title. By providing this letter, the certificate of
title was released to the son which in effect induced the loan.
The purpose of these transactions was to fund the son's
purchase of a property, which the solicitor was also acting on.
This purpose provides the answer to the question considered by the
The reasoning of the Court reveals that the solicitor should
have investigated the true nature of instructions given by son. It
was clear he would receive a substantial benefit from the effect of
the instructions, yet his parents would not receive any benefit.
Professional standards require that if these situations present
themselves, red lights should flash for the solicitor so to prompt
them to act in order to confirm the validity of an attorney's
The court also discussed the requirement for solicitors to take
considerable care when putting their signature and professional
reputation to documents - care which was not exercised in this
In their findings the Court held the solicitor was guilty of
making false and misleading representations to the lender's
solicitor by submitting the mortgage documentation and, was liable
to compensate the mortgagee for its loss without indemnity from his
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
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