Klement v Pencoal Ltd & Ors [2000] QCA 152

CONVEYANCING - LAND TITLES UNDER THE TORRENS SYSTEM - INDEFEASIBILITY OF TITLE: CERTIFICATE AS EVIDENCE - EXCEPTIONS - FRAUD OR FORGERY - appellant's signature forged to effect transfer of property - claims that eventual transferee held one-half of its proprietary interest on trust for the appellant, for rectification of the register, for damages for conversion and for an account dismissed at trial - whether trial judge wrongly concluded the circumstances of the forgery did not prevent transfer of title

CONVEYANCING - RELATIONSHIP OF VENDOR AND PURCHASER - MATTERS ARISING BETWEEN CONTRACT AND CONVEYANCE - TITLE - PROOF OF TITLE BY VENDOR - PROOF GENERALLY - whether first respondent's solicitor's default led to acquisition of title to the appellant's detriment - whether solicitors should have enquired expressly into the validity of the appellant's signatures and the fifth defendant's entitlement to all moneys payable

CONTRACTS - PARTICULAR PARTIES - PRINCIPAL AND AGENT - RELATIONS BETWEEN PRINCIPAL AND THIRD PERSONS - RIGHTS AND LIABILITIES OF PRINCIPAL IN RESPECT OF CONTRACTS OF AGENT - IN GENERAL - whether trial judge wrongly found fifth defendant had appellant's ostensible authority to tender documents at settlement, and to tender forged documents as authentic - whether misconstruction of finding - whether aggregation of circumstances sufficiently proved existence of authority to present settlement documents as authentic - validity of a number of findings in relation to relationship between appellant and fifth defendant - whether trial judge wrongly held that appellant's deliberate silence, despite knowledge of forgery, amounted to ratification - whether trial judge wrongly found the appellant duty bound to warn the first and second respondents of the forgery - whether trial judge wrongly found the appellant estopped from denying the effectiveness of the transfers because of his failure to inform the first and second respondents of the forgery and of the termination of the power of attorney

Fung Kai Sun v Chan Fui Hing [1951] UKPC 17; [1951] AC 489, applied

McLaughlin v City Bank of Sydney [1912] HCA 16; (1912) 14 CLR 684, referred to

Northside Developments Pty Ltd v Registrar-General [1990] HCA 32; (1990) 170 CLR 146, referred to

Spiro v Lintern [1973] 1 WLR 1002, considered

West v Commercial Bank of Australia [1935] HCA 14; (1935) 55 CLR 315, applied

West v Dillicar [1919] NZGazLawRp 96; [1920] NZLR 139; [1921] NZLR 617, considered

HB Fraser QC, with PE Hack for the second respondent

Crown Solicitor for the third and fourth respondents

[1] THE COURT: The appellant and the fifth defendant, Theodore Paul Lindner, were registered lessees, as tenants in common, of a mining lease and an associated special lease, and of some personal property. For a fee of $10,000 they granted Pennant Pty Ltd (and another company) an option to purchase the property for $1m. The grantees' interest was assigned to the first respondent Pencoal Limited (then called South Blackwater Mines Ltd). Pencoal exercised the option and purchased the property, paying the $1m to Lindner. To effect the transfers to Pencoal, Lindner forged the appellant's signature. Pencoal later transferred the property to the second respondent South Blackwater Coal Limited.

[2] The appellant brought proceedings claiming that South Blackwater Coal, the eventual transferee, held one-half of its interest in the property on trust for the appellant. This was based on a contention that because of the forgery, there had been no effective transfer of the appellant's interest either to Pencoal or, subsequently, to South Blackwater Coal. The appellant sought rectification of the relevant registers, the third and fourth respondents being those who controlled those registers. (Those respondents took no active part at the hearing of the appeal.) The appellant also sought damages for conversion, and an account. The learned trial judge dismissed the appellant's claims against Pencoal, South Blackwater Coal and the other respondents.

[3] The appellant separately claimed against Lindner judgment for an amount equal to one-half of the moneys Lindner was paid upon the exercise of the option, together with other moneys. The learned judge substantially upheld those claims, giving judgment in the appellant's favour against Lindner for $586,891.50. (Lindner claimed at the trial to have dissipated the moneys he received, through other unsuccessful business ventures, and the judge expressed the view that the appellant's half was "now probably irrecoverable".) That judgment is not the subject of any appeal.

[4] The reasons why the learned judge dismissed the appellant's claims against the respondents were essentially these. The appellant held out Lindner as his agent "to conduct the entire transaction on his behalf". The appellant's own part was to be confined to signing transfers. But the authority with which the appellant clothed Lindner "was to include production of relevant documents purporting to have been executed by the vendors in performance of their obligations". The appellant was therefore bound to the transfers despite the forgery. By force of the option, Lindner was entitled to receive the purchase moneys on behalf of himself and the appellant, so that Pencoal's payment to Lindner discharged Pencoal from further liability. Apart from the matter of agency, the appellant was, His Honour found, estopped from denying the validity of his signature on the transfers; and further, the appellant's deliberate failure to disavow the forgery for more than three years, despite knowledge of it, amounted to ratification of its effectiveness. The judge observed that the relationship between the appellant and Lindner was marked by "fluid informality", and that aspects were "strange", even "bizarre". As to why the appellant was apparently not inclined properly to protect his own position, the judge inferred that "while he may not have authorised Lindner's forgery of his signature to the transfer, the (appellant) was content to condone it as part of Lindner's efficient conduct of the transaction with such splendid results and in the expectation that his friend would ultimately account to him fully".

[5] The appellant relies on the following grounds of appeal, stated in abbreviated form:

(1) The learned judge should not have held that the appellant lost his title: the transfers were a consequence of Pencoal's solicitors' failure to ensure that the transfers were properly executed and the purchase money paid to the persons entitled to receive it.

(2) The judge wrongly held that because Lindner "had the appellant's authority to tender documents at settlement", the circumstance of the forgery did not prevent transfer of title.

(a) Lindner had the appellant's authority to tender documents at settlement, and

(b) Lindner had the appellant's authority to tender forged documents as being valid documents,

were wrong, and based on nine other findings (set out in the notice of appeal) which should not have been made.

(4) The judge wrongly held that the appellant was estopped from denying the effectiveness of the forged transfer to pass title.

(5) The judge wrongly held that the appellant ratified the forgery of his signature.

(6) The judge wrongly held that the appellant was duty bound to warn Pencoal (and South Blackwater Coal) of the forgery, or the possibility of forgery.

[6] Some greater elucidation at this stage of the facts of the matter will facilitate consideration of those grounds.

[7] The appellant signed an instrument dated 15 November 1987 in which he said:

"I hereby issue Theodore Paul Lindner with Power of Attorney to negotiate any business pertaining to our interests in the various leases, equipment etc of the Coal Mining Area known as Sirius Creek Pty Ltd."

The appellant claimed at the trial that his signature to that document had been forged. The learned judge found however that it was a genuine document. It was, though, of limited significance, because it was not at any stage shown to Pencoal. (Neither was a subsequent deed of revocation.) But it was to an extent significant as confirming the wide authority the appellant accorded Lindner, from an early stage, to act on his behalf in these matters.

[8] In late 1987 a representative of Pennant ascertained from a search of a title to the leases that Lindner's address was recorded as the address of the lessees. In 1988 Lindner negotiated with Pennant (through a merchant banker acting for it) in relation to acquisition of the leases. That culminated in Pennant's offer on 21 March 1988 to take an option. Lindner signed the option in his own capacity, and noted upon the document a reference to the power of attorney of 15 November 1987 - adjacent to the space for the appellant's signature. At the request of Pennant's solicitors, the appellant personally signed the option subsequently on 25 May 1988, and provided it to Lindner for delivery to Pennant.

The option fee is $10,000 and is non refundable unless the conditions in section 6 are not fulfilled.

The period of the Option will be 90 days from and including the day that PHL accepts this offer of the Option.

Acceptance of this offer will take place on the later of:

(i) the day that the option fee has been deposited at a trading bank account nominated in writing by Lindner; or

(ii) the day that a copy of this letter is signed by a director on behalf of PHL and facsimiled to Lindner on facsimile number (089) 411-016.

The exercise price will be $1,000,000. $100,000 will be due and payable on the date of exercising the Option and $900,000 will be due and payable 60 days after the date of exercise of the Option.

At least five business days before the date of exercising the Option, PHL will notify Lindner of its intention to exercise the Option.

The Option is subject to all payments in relation to the Option being cleared by the trading bank processing the payments received by Lindner."

[10] It will be noted that the option fee of $10,000 was to be paid into a bank account nominated by Lindner, and that "all payments" - that is, including the $100,000 and the $900,000, were to be cleared "by the trading bank processing the payments received by Lindner".

[11] It was plainly intended that Lindner receive the payments, through deposit into the bank account selected by him. In fact Lindner nominated a particular bank account, styled "TP and RC Lindner". The option fee was paid into that account on 26 May 1988.

[12] The appellant shortly thereafter conferred with his solicitor Mr Abbott. Mr Abbott advised the appellant to terminate Lindner's authority to act for him. Mr Abbott wrote to the appellant on 31 May 1988 in these terms:

"I enclose herewith a deed revoking the power of attorney or any agency which you have given Lindner ... you must make it very clear to Lindner that his authority to act on your behalf is immediately determined ... [t]he ending of Lindner's authority will depend in the final analysis on how tough a line you take with him. It is most important that you take a tough line."

[13] The appellant executed the deed of revocation of the power of attorney and agency on 1 June 1988. It included this provision:

"I HEREBY REVOKE the said power of attorney and the said agency and every power or authority thereby conferred PROVIDED HOWEVER that nothing herein contained shall affect the validity of any act or thing done by the said Theodore Paul Lindner by virtue of the powers conferred on him by the said power of attorney and the said agency before he shall receive notice of this revocation."

Accountants acting for the appellant sent a copy of the deed of revocation to Lindner on 7 June 1988.

[14] On 6 June 1998 the appellant had signed a transfer of other property he held together with Lindner in favour of persons named Black. That the appellant did so personally was of course consistent with the revocation of the power of attorney and agency five days earlier. The appellant's solicitor asked the solicitors for the Blacks to account to the appellant for the appellant's one-half share of the proceeds of sale. When the time came for that payment, Lindner objected, as appears from Mr Abbott's following letter, of 5 August 1988, to the appellant:

"You will recall that when I returned the transfer of lease to Messrs. Swanwick Murray & Roche the solicitors in Rockhampton I requested them to forward to me your ½ share of the proceeds of the transfer of the lease. This would amount to $3,250. The solicitors have now informed me that Mr. Lindner has instructed them not to do so and that he would discuss the matter with you. The solicitors are now holding the money in their trust account and will not pay the money out until they receive the same instructions from Mr. Lindner and from you.

Although the amount involved in this transaction is relatively small. [sic] I believe that this transaction will be a precedent which will be followed in relation to the larger transaction (if the sale of the other lease should occur). Consequently I consider that you should maintain your demand for half the proceeds of sale, and if necessary be prepared to take proceedings so that your entitlement to one-half of the proceeds of the sale of the other lease can be protected."

[15] Yet the appellant still failed, contrary to the solicitor's advice, to notify Pennant of the revocation of Lindner's agency for him, and of the power of attorney. On 12 August 1988 Pennant assigned its interest in the option to South Blackwater Mines, now called Pencoal. On 15 August 1988 Pencoal gave notice of exercise of the option, by notification to Lindner's facsimile number. Lindner did not inform the appellant of that. Pencoal paid Lindner the first instalment of $100,000 on 22 August 1988. On 21 October, prior to settling the sale, Pencoal's solicitor searched the title and confirmed that there was no caveat. The sale was settled on 21 October 1988. Lindner was then paid the second instalment of $900,000 by Pencoal, and he provided transfer documents on which he had forged the signatures of the appellant and the witnesses.

[16] In November 1988 the appellant met by chance with Lindner. In the course of a heated exchange, Lindner boasted "that he could use the (appellant's) signature at any time". As the learned judge found, this should have put the appellant "on his guard": the appellant was "in effect told by Lindner that the sale had been or would be completed by forgery of his signature". At another meeting the following month there was a conversation between the appellant and Lindner which proceeded on the assumption that settlement of the transfers had taken place. The appellant complained about having received nothing from the proceeds of sale. An attempt to negotiate a settlement failed. Yet the appellant still failed to take any step to protect his interests, even though advised by his solicitor on 11 January 1989 as to the desirability of caveating. The learned judge found that the appellant "deliberately refrained from lodging a caveat".

[17] The transfer of the property to Pencoal was not approved by the Minister until 24 May 1989, with the transfer to South Blackwater Coal occurring on 31 July 1990. The appellant learnt of the transfer out of his name in May 1992, although he had known since about December 1988 that this transfer would occur, and had been counselled as to the advisability of taking steps to protect his own interest - such as by notifying Pennant Holdings of the revocation of Lindner's authority and the revocation of the power of attorney, and lodging a caveat against the title. He did neither of those things. The appellant issued his writ in October 1992.

[18] The learned judge held that if the appellant had taken appropriate steps to protect his own interests, he would not have suffered loss, as emerges from this passage in the judgment:

" ... he was guilty of serious delay in pursuing his interests when he knew that the transaction was settled. Had he taken prompt action, he or Pencoal would probably have recovered his share of the purchase money from Lindner and the sale could have proceeded properly. As it turned out, his laches saw Lindner dissipate all his assets so that that sum is now probably irrecoverable, and this, if he were to succeed, would prejudice Pencoal."

[19] The focus of the case was Lindner's forging of the appellant's signatures on the transfers. The learned judge found essentially that the appellant was estopped from denying the efficacy of those signatures for the purpose of effecting transfers. He also held that by his conduct, the appellant had clothed Lindner with authority to present those signatures as if they were valid. The appellant was in any event to be taken to have ratified them.

[20] On the findings of fact made by the learned judge, which found ample support in the evidence, the case was capable of comparatively simple resolution. On 1 June 1988 the appellant signed the instrument of revocation of Lindner's agency and authority. Lindner was informed of that on 7 June. The appellant learned of the settlement of the transfers, and of Lindner's boast to be able to sign for the appellant without authority. He must have known Lindner forged his signature on the transfers. Yet the appellant took no step, notwithstanding strong advice, to raise his concerns with Pencoal or otherwise protect his position.

[21] On learning of the forgery, the appellant became obliged to inform Pencoal, if the appellant wished subsequently to be allowed to rely himself on that circumstance. As put by Lord Reid for the Judicial Committee of the Privy Council in Fung Kai Sun v Chan Fui Hing [1951] UKPC 17; [1951] AC 489, 503:

"In their Lordships' judgment it must be held that the respondents were not entitled to withhold from the appellant information that the appellant's mortgages were forgeries, and that when they chose to do so they took the risk that they would later be estopped from asserting that these deeds were forged if by reason of their keeping silent the appellant suffered detriment."

[22] As to the termination of Lindner's authority, the appellant was likewise obliged to notify another who he knew was proceeding as if the authority were intact, at peril otherwise of being estopped from denying the authority should that other entity act to its detriment. In West v Commercial Bank of Australia Ltd [1935] HCA 14; (1935) 55 CLR 315, 322 the High Court said this:

"Departure from an assumption upon which another person has acted to his detriment is not permitted to a party who, knowing or believing the other labours under a mistake in adopting it, has refrained from correcting him when it was his duty to do so ... In the present case, the conduct of the appellant goes much further. He stood by deliberately."

The learned judge's findings in this case put this appellant into that same position.

[23] The following passage from Spiro v Lintern [1973] 1 WLR 1002, 1010 is to similar effect:

"Where a man is under a duty - that is, a legal duty - to disclose some fact to another and he does not do so, the other is entitled to assume the non-existence of the fact. In such circumstances the conduct of the first man amounts to a representation by conduct to the second that the fact does not exist. In Bell v Marsh [1903] 1 Ch 528,541, Sir Richard Henn Collins MR put the point in this way:

`He (the plaintiff) is entitled to say that the representation was made, not merely by language used, but by conduct, and conduct may include negligence. A man may act so negligently that he must be deemed to have made a representation, which in fact he did not make, but because he has acted negligently he is deemed to have made it.'

If A having some right or title adverse to B, sees B in ignorance of that right or title acting in a manner inconsistent with it, which would be to B's disadvantage if the right or title were asserted against him thereafter, A is under a duty to B to disclose the existence of his right or title. If he stands by and allows B to continue in his course of action, A will not, if the other conditions of estoppel are satisfied, be allowed to assert his right or title against B: see Halsbury's Laws of England, 3rd ed, vol 14 (1956), paras. 1178-1180."

[24] A further useful authority is West v Dillicar [1919] NZGazLawRp 96; [1920] NZLR 139, 146 (and on appeal [1921] NZGazLawRp 62; [1921] NZLR 617):

"By his silence he permitted and encouraged them to go on assuming that the agreement was binding, and it was on the face of this agreement that the plaintiffs kept on paying the rent and rates and afterwards resold the property. Whether the result is stated in the form that the defendant is estopped, or stood by, or acquiesced, or that he ratified or confirmed the agreement, the fundamental principle is the same. ´If a man, either by words or by conduct, has intimated that he consents to an act which has been done, and that he will offer no opposition to it, although it could not have been lawfully done without his consent, and he thereby induces others to do that from which they might otherwise have abstained he cannot question the legality of the act he had so sanctioned to the prejudice of those who have so given faith to his words or to the fair inference to be drawn from his conduct': Cairncross v Lorimer 3 Macq 827 829. See also De Bussche v Alt 8 ChD 286."

[25] The representation implied here by the appellant's silence and inaction was that Lindner could be relied upon to produce valid transfers in performance of the appellant's obligations, and that Lindner was in that regard the appellant's agent. Consistently with West v Commercial Bank of Australia Ltd, that - as the judge found - the appellant stood by deliberately, rendered his inaction the more significant. Again as the judge found, the appellant thereby engendered in Pencoal a belief that Lindner had that level of authority to act on the appellant's behalf. Pencoal thereafter relied on Lindner's having that authority. After the appellant's signature had been produced by Lindner, Pencoal's solicitors dealt in relation to settlement only with Lindner, even on problematical aspects. The evidence of Pencoal's representatives was that Pencoal would not have paid Lindner, or otherwise relied upon him, if Pencoal had been notified by the appellant that it should not do so.

[26] It is necessary now specifically to address the grounds of appeal.

[27] This ground asserts that it was actually default on the part of Pencoal's solicitors which led to Pencoal's apparently acquiring title, to the detriment of the appellant, by virtue of the forged transfer. This ground, which incidentally departs from the pleaded case at the trial and was not reflected through any cross-examination, was developed by reference to the duty owed by a solicitor acting for a client in a land transaction, to that client. The submission ran that Pencoal's solicitors should have enquired expressly into the validity of the appellant's signature upon the transfers, and as to Lindner's entitlement to receive all moneys payable.

[28] As to the latter point, the terms of the option required that the money be paid as Lindner directed.

[29] The former contention misses the point, and does so by diverting attention from the appellant. It was the appellant's silence and inaction, in circumstances where he knew Lindner was acting without authority, which led to the conclusions of agency, estoppel and ratification to which the learned judge came. It is not to the point that had Pencoal's solicitors enquired actively into the validity of the appellant's signature they may have discovered it was a forgery.

[30] The fact is that the established ostensible agency of Lindner excused Pencoal's solicitors from the need to take those steps (cf Northside Developments Pty Ltd v Registrar-General [1990] HCA 32; (1990) 170 CLR 146). Further, by the appellant's own approach to the matter, he is in the position of being estopped from denying the validity of his signature. The appellant is not in the position of being able to benefit from any laxity in Pencoal's solicitor's performance, even were that otherwise established. The appellant's own approach, in short, excused Pencoal from any need for further enquiry.

[31] That is enough to dispose of this first ground of appeal.

[32] This ground contends that the judge wrongly concluded that because Lindner had the appellant's authority to tender documents at settlement, the circumstance of the forgery did not prevent transfer of title. The appellant submitted that a forged transfer was ipso facto "a pure nullity" which could not give rise to an effective transfer.

[33] This misconstrues the learned judge's findings. The judge found that the appellant did not authorise Lindner to sign the appellant's own name on the transfers. But otherwise, "Lindner was plainly held out by the (appellant) as his agent to conduct the entire transaction on his behalf". The appellant intended that "Lindner conduct all the necessary dealings with the purchaser ... this was to include production of relevant documents purporting to have been executed by the vendors in performance of their obligations". Lindner had (ostensible) "authority to represent that the documents which he presented at the settlement were valid as to their signature".

[34] Pencoal was entitled to rely on that ostensible authority. It did so in the respects covered earlier - dealing exclusively with Lindner, with whom it would not have dealt if alerted by the appellant to the problem. Hence the judge's conclusion as to authority, estoppel and ratification did rightly render the circumstance of the forgery, taken alone, of no abiding consequence in the resolution of the issues.

[35] This ground challenged the learned judge's findings that Lindner had the appellant's authority to tender documents at settlement, in particular forged documents, as if they were authentic. The ground again misconstrues the judge's finding, in the respects covered above with relation to ground 2.

[36] There was ample evidence to support the judge's conclusion as to Lindner's ostensible authority, extending to the presentation of documents at settlement as being authentic. The following aggregation of circumstances, by no means exhaustive of relevant matters, provides a sufficient basis for the finding:

(a) The appellant gave evidence that he executed acceptances of transfers to him and Lindner of the mining lease and the special lease which gave as their single address Lindner's business premises at 37 William Street, Cavan, South Australia.

(b) When Lindner moved to the Northern Territory, Lindner's address changed to a Darwin Post Office box. As the appellant knew, Lindner thereafter gave that as the address for communications from purchasers to both the appellant and Lindner.

(c) In this way, Lindner's address became the address on the public registers and the contact address for the relevant departments.

(d) The only contact points given in the option (also acquiesced in by the appellant) were:

(i) indirectly, by reference to the appellant's and Lindner's being the holders of the mining lease, Lindner's address shown in the public register as the address for both,

(ii) Lindner's facsimile number in cl 4(ii), he being the person to whom notice of exercise was to be given under cl 6.1.

(e) The appellant also acquiesced in Pennant's using Lindner (via that facsimile number) as the agent through whom the appellant's execution of the option was procured.

(f) The appellant always anticipated that persons dealing with the partnership in relation to the leases would deal only with Lindner. The appellant knew that Lindner was, in the appellant's terms, "in front, he was doing the deal. It wasn't necessary for both of us to be jumping in and out ..."; and that Lindner attended to the affairs relating to the mine. As to the receipt of money in particular, the appellant "let him be and let do the work and he was banking the money" for the joint venture. As the appellant said, "I left everything to him."

[37] In light of this evidence, as an example, the judge's conclusion that the appellant "plainly intended that (Pennant) should regard Lindner as (the appellant's) agent to conduct the entire transaction on his behalf", was unsurprising.

[38] As part of this ground, the appellant specifically challenges a number of particular conclusions drawn by the judge.

1. That Lindner was the appellant's agent in respect of all matters relating to the property, prior to the sale to Pencoal;

(The matter summarised above provides sufficient basis for this finding.)

2. That the appellant intended Lindner to act as his agent for the entire transaction, including the presentation of transfer documents, at settlement;

(This accorded with the appellant's own evidence, some relevant extracts from which appear above.)

3. That the judge wrongly found that Lindner's authority survived the deed of revocation of the power of attorney and other agencies;

(Significantly, the appellant did not inform Pencoal of that revocation, and otherwise acted so as to clothe Lindner with ostensible authority to act on his behalf. That process of reasoning led to the judge's conclusion which was amply open.)

4. That the appellant had given Lindner "extensive authority";

(There was obviously ample evidence to support that.)

5. That the appellant's conduct justified Pencoal's belief that Lindner had the appellant's authority;

(Again, the matters briefly summarised in paragraphs (a) to (f) above provide sufficient foundation for this conclusion.)

6. That the appellant's execution of the option confirmed to Pencoal's solicitors the authority of Lindner to act on the appellant's behalf;

(The full context of the relevant finding is to be gathered from this part of the judgment:

"As the signature on the option was not a forgery then by arming [the fifth defendant] with it for presentation to Pennant and, more particularly, to present a document bearing his signature as valid evidence of its authenticity, he confirmed to Pennant [the fifth defendant]'s continuing authority to conduct the entire transaction on his behalf: Breskvar v Wall (1971) 126 CLR 376 [semble at 413, per Gibbs J]. Further, as the agreement provided that all notices should go to [the fifth defendant] and that the option fee of $10,000 be paid into a bank account to be nominated by [the fifth defendant], as the plaintiff must have known when he signed it, this further indicated [the fifth defendant]'s very wide authority, and must have confirmed to Pennant that same message that his wide written authority and general absence of involvement had already conveyed."

That approach was open. But that aspect is in any case to be added to an aggregation of other circumstances, some of which are summarised above: the bulk of circumstances constituted a very substantial foundation for the finding of ostensible authority in this case.)

7. That the appellant, before 1992, knew of Lindner's forgery, and was content to condone it;

(The appellant was effectively told of the possibility of forgery by Lindner at the meeting in November 1988, and that must be taken to have crystallised into actual knowledge with the confirmation in December that settlement had taken place. The appellant thereafter "condoned" the matter in failing to draw it to the attention of Pencoal.)

8. That the appellant knew that the payments he received from Lindner after December 1988 were part satisfaction of his share of the proceeds of sale, and knew that the sale had been completed;

(This finding was open in view of the evidence that, at the meeting in December 1988, the appellant knew that settlement of the transfers had taken place.)

9. That the appellant allowed Lindner to retain title documents, based on a false assumption that title documents had issued and were held by Lindner.

(It is not clear what was involved in this finding by his Honour. If he was referring in a loose and broad sense to the option and the transfer documents, then his finding is supportable and significant. If however he intended to refer to title documents in the strict sense, then the base assumption would appear to have been unjustified. In that event however the finding would be without significance, because there is no parallel finding that Pennant or Pencoal were made aware of this. The judge in other words has apparently not relied on the point as part of the foundation for the finding of ostensible authority, which in any event found ample support elsewhere in the evidence.)

[39] These grounds concern the judge's conclusions as to estoppel, ratification and the appellant's obligation to warn Pencoal of the forgery. The justification for his Honour's approach to those matters, save ratification, is sufficiently covered in paras 20 to 25 above.

[40] As to ratification, the judge held that because the appellant came to know of the forgery at a relatively early stage, and at a time when Pencoal could have rectified the problem if alerted to it, yet did not for more than three years disavow the forgery, by which time the problem had become irremediable, the appellant's deliberate silence amounted to ratification (cf. McLaughlin v City Bank of Sydney [1912] HCA 16; (1912) 14 CLR 684, 691). Also significantly, the appellant intended that the transaction stand as fully performed because the appellant hoped to share in its benefit. The appellant's silence amounted to "an implied communication" to Pencoal of his acquiescence in the forgery, as his Honour found.

[41] This was a sufficient foundation for the finding of ratification. The point is in any case largely academic because of the plainly supportable finding in relation to estoppel.

[42] The appeal must be dismissed, with an order that the appellant pay the respondents' costs including any reserved costs to be assessed.