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Signing and registering instrument without authority

17 May 2017

A former lawyer who signed, certified and registered a mortgage priority instrument on behalf of a trust without the authority of one of the trustees, has been censured by a lawyers standards committee.

The committee found that the lawyer, E, was guilty of unsatisfactory conduct.

E acted for Mr F, who was one trustee of the F Family Trust. The other trustee was a trustee company of a legal firm, company C. Mr G was a director of company C and a partner of the legal firm.

E signed, certified and registered the mortgage priority instrument on the Land Titles Register on behalf of the trust, granting a bank first priority over an existing mortgage to the F Family Trust. This was part of a refinancing transaction.

E wrote to Mr G advising him that he had received instructions from Mr F in relation to refinancing. Accompanying that letter was an A & I form for the discharge for completion and return by Mr G’s firm. The letter did not mention that E had already registered the priority instrument.

Mr G complained to the Lawyers Complaints Service that E did not have authority from company C to sign and certify the mortgage priority instrument and, as such, had acted unlawfully.

E told the committee that he believed he was able to give the required certificate. He said his client “gave strict instructions on his own behalf and on behalf of his family trust to proceed to complete all formalities required to comply with the bank’s instructions as refinancing mortgagee…”

E also stated: “Mr [F]’s instructions on behalf of the trust were clear, ie no communication with the corporate trustee. In any event, as Mr [F] was settlor, co-trustee and beneficiary of the trust, and also its substantial creditor, it was reasonable to assume that if the matter had been raised with [company C], authority would have been received. In these circumstances it was taken that Mr [F] was authorising me on behalf of the trust.”

The committee said it accepted the complainant’s submission that Mr F, as only one of the two trustees, had “no power to make a decision on behalf of both trustees, and as such had no power to authorise E on behalf of all trustees in relation to the Land Transfer dealing”.

The integrity of the electronic system of registration “is potentially undermined by such action,” the committee noted.

In considering the orders it should make, the committee said it took into account E’s advice that the Registrar-General of Lands had cancelled his e-dealing licence and that E had surrendered his practising certificate and sold his legal practice.

As well as censuring E, the committee ordered E to pay $1,000 costs.

Last updated on the 30th June 2017