(3) under the Trade Practices Act or Fair Trading Act.
28 However, during argument Mr Newlinds made it clear that if he could not succeed under the statutes then he would not be able to succeed under the other counts. Accordingly, I do not have to consider how far a solicitor is liable to a person other than his or her client with respect to statements made which might be construed as a warranty; cf Gran Gelato Ltd v Richcliff (Group) Ltd [1992] Ch 560 and Bebonis v Angelos (2003) 56 NSWLR 127, 134-5 and Promosso Holdings Ltd v Alpers [2004] 3 NZLR 521.
29 So far as the Trade Practices Act/Fair Trading Act is concerned, one normally looks to see whether the conduct was in trade and commerce. It is often difficult to find that a solicitor in a transaction involving domestic conveyancing is so involved, though it is possible. Mr Newlinds says that it is of no moment going into this territory because Mr Murphy used the mails with respect to his false and misleading statements and in any event, the Fair Trading Act would catch whatever the Trade Practices Act did not. This seems to be a fair enough approach.
30 Mr Newlinds says that there are two aspects of Mr Murphy's conduct which fall foul of the relevant provisions of the legislation. First, Mr Murphy's conduct in putting forward to Heidtman & Co that the documents which he was sending them had been signed by the plaintiffs in his presence, conduct which induced the defendant to lend money which Mr Yatne misappropriated, and secondly, by representing in and about his conduct with the St George letter that he acted for the plaintiffs and so obtaining the certificate of title.
31 Mr Newlinds pointed out that he did not need to establish that the conduct of Mr Murphy was the sole cause of the loss; see Hanave Pty Ltd v LFOT Pty Ltd (1999) 43 IPR 545, 555-6 [45] and Gould v Vaggelas (1985) 157 CLR 215, 236.
32 The question of the intent of the person accused of misrepresentation is irrelevant in these sort of matters; see eg Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 89, 92.
33 There have been cases where it has been held that a solicitor proffering a form of documentation may have been guilty of false and misleading conduct such as the situation where a town planning certificate is only partially enclosed in a contract so that the contract gives a misleading impression as to the proper zoning: Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112, 133.
34 The question as to whether a representation was false or misleading within s 52 of the Trade Practices Act is a question of fact to be viewed in all the circumstances.
35 As to the proffering of the mortgage documents, I must confess I have more than once weighed the relevant factors in my mind to see whether I could be satisfied that Mr Murphy had (even innocently) been guilty of making a false and misleading representation.
36 The most relevant factors seem to me to be first, that the documents were sent out by Heidtman & Co in such a way that there was no obvious way of completing them where they were to be signed by an attorney under power. However, Heidtman & Co expected that the documents would be executed without alteration, and indeed, Ms Turner's check list had been prepared to ensure that this was so.
37 Secondly, Mr Murphy knew that he was returning documents to a solicitor. He might well have considered that a person with some legal expertise would consider them. Thirdly, as he said in evidence, Mr Murphy made it plain by the signature on the mortgage document itself, that Mr Yatne was signing as attorney for the mortgagors and he or she who runs may read and would see quite clearly the similarity of the signatures on all the documents.
38 As against that, the documents literally contained false statements. The most serious of these were the statutory declarations in the names of each of the plaintiffs, which on the face of them, were declared before Mr Murphy in his role of a Commissioner for Affidavits or the equivalent, and there was nothing on the document to show that the person who made and subscribed the document was not the person named in the statutory declaration, but rather the attorney. Even if (as I do), I accept that Mr Murphy was innocently ignorant as to the law on making statutory declarations, the document in itself was a misrepresentation.
39 Furthermore, the documents which had been sent to Mr Murphy were for a personal borrowing by the Yaktines. The documents as returned by Mr Murphy appeared to comply with the documents which were sent to him, but had they been read by anyone experienced in the law or indeed in the world of finance, it could have been divined that what was really taking place was a third party mortgage in which Mr Yatne was getting money on the mortgage of his parents' property and the parents were getting no benefit whatsoever. This would have sent red lights flashing had any qualified person actually examined the documents on behalf of the mortgagee. I do not press this matter too highly because it is not completely clear to me whether it is within the charges made in the final version of the relevant cross claim.
40 Looking at the matter as a whole, it seems to me that the factors pointing to a misrepresentation outweigh the other factors.
41 There is no doubt in my mind that there was reliance on the representation in Heidtman & Co on behalf of the mortgagee and that the representations partially induced the lending.
42 However, whatever one may say about the proffered documents, the case is completely clear with respect to the St George letter.
43 It is really difficult indeed to know how any solicitor could have put himself in a position in which he issued that letter. He tells the Court that he was genuinely of the belief that the Yaktines were overseas and could not be contacted at the time when the St George letter was drawn. He asked the Court to accept that when he had the letter typed with a space for Mr Yaktine and Mrs Yaktine to sign, he genuinely considered that Mr Yatne would write in the words "signed under power of attorney by M A Yatne". This is hard to accept for three reasons: (a) the small amount of space left in the letter for the signatures; (b) the fact that Mr Murphy already knew that the Bank would not release the documents to the attorney; and (c) that it is extremely hard to understand why the words executed under power of attorney were not typed on the document and why Mr Murphy would think that they had to be handwritten by Mr Yatne. As Mr Murphy believed that the parents were overseas it could not be that he expected the parents to sign the letter themselves.
44 The St George letter also, of course, contained the assertion that Mr Murphy acted for the plaintiffs, which he may have thought he did, but we now know was false in that he had been tricked by Mr Yatne. Mr Murphy knew that the letter would have the effect of having the certificate of title released which, if it were not released, would mean that the loan could not go through.
45 I must confess I was not at all impressed with Mr Murphy's evidence, in particular, his statement in para 13 of his affidavit was just wrong, and he knew it was wrong. His wishful thinking and assumptions were just baseless, yet he proffered and had his counsel read, para 13 of his affidavit which he knew was in error.
46 Accordingly, I find that the St George letter was also a misrepresentation which was false and misleading and which induced the loan.
47 Accordingly, there must be a verdict for the defendant against Mr Murphy.
48 Because of the finding I have just made, it is necessary to consider whether Mr Murphy's insurer should indemnify him.
49 I have already set out the relevant provisions of the policy.
50 Mr Davies SC for the insurer, points to a series of cases in which solicitors who have behaved recklessly have been held to act dishonestly within the meaning of the sort of provision that is under review in the instant case.
51 As I have said, I have seen Mr Murphy in the witness box and the impression I gained was of a man of limited understanding of the law and ethics involved in the present sort of transaction, and a person who would not knowingly do what he considered to be dishonest, but yet a person who made statements, particularly in connection with the St George letter, which a reasonable person in his position would have considered were misleading.
52 Indeed, it may go further than this in that I was concerned that after the bubble burst, so to speak, Mr Murphy attempted to negotiate a return of the deposit on Mr Yatne's proposed new purchase without any reference as to what were acceptable outcomes to the Yaktines or their solicitor, and indeed, on the basis that he would be reimbursed his $700 fee which was still owing because Mr Yatne's cheque in payment of that fee had bounced. This does not quite marry up with a naïve person who is acting honestly but does have a taint of subjective dishonesty. However, it is not necessary to make a determination because the cases clearly show that for purposes of a clause in insurance policies such as the one that I have set out earlier, a person may be dishonest even though he or she had no such intention. I should briefly refer to some of these authorities.
53 In Comino v Manettas (1993) 7 ANZ Insurance Cases 61-162, a solicitor made a claim against Law Cover. There was a general exclusion in the policy in respect of any liability brought about by the dishonest or fraudulent act or omission of the assured. The solicitor had signed a false certificate that he had explained the terms of the relevant loan agreement to the borrower. He had not done so but his view was the borrower already understood the terms of the agreement. Mahoney JA, with whom Sheller and Cripps JJA agreed, said at p 77,869 that the solicitor's representation in that case to the GIO of things which he knew to be untrue fell within the term "dishonest". He added, however, "In so far as an intention to deceive is involved in 'dishonest' it was his purpose and intention to deceive the GIO in this regard." However, the solicitor was able to succeed because the Court considered that the liability was not "brought about" by that dishonest act.
54 Fraser v Council of the Law Society of NSW is a decision of the Court of Appeal, Kirby P, Handley JA and Cripps JA handed down on 7 August 1992. That was again a case of a solicitor issuing a false certificate to his knowledge. The case involved disciplinary proceedings and the solicitor's problem was exacerbated by the fact that he had failed candidly to acknowledge the certificate's falsity to a mortgagee's solicitor who had twice enquired about it. The Court held that the conduct of the solicitor was fraudulent but extended mercy in setting aside the order of the disciplinary tribunal removing him from the Rolls and substituting a fine.
55 Underwriters at Lloyds v Ellis was a decision of the Court of Appeal consisting of Meagher, Handley and Powell JJA handed down on 25 February 1998. It was again an insurance case where a solicitor had been refused indemnity because it was alleged by the insurer that the matter fell within the exception "any liability … brought about by the dishonest or fraudulent act or omission of the assured". Powell JA, who gave the leading judgment, said at p 31 of BC 9800334 that he followed the decision in Comino v Manettas that the conduct, although not fraudulent, was to be regarded as having been dishonest. Again, the solicitor succeeded because of the phrase "brought about by" did not cover the facts.
56 Finally, in Victoria in Harle v Legal Practitioners Liability Committee [2003] VSCA 133, the Victorian Court of Appeal consisting of Callaway, Buchanan and Chernov JJA dealt with a false certificate. The leading judgment was given by Chernov JA, with whom the others agreed. At [29] Chernov JA said:
"Whether particular conduct amounts to dishonesty involves the consideration of the mental state - the knowledge, belief or intention - of the person whose conduct is impugned."