Graham v Hall

[2006] NSWCA 208

Reported Decision: 67 NSWLR 135
(2006) Aust Torts Reports 81-857

Court of Appeal

CITATION:	Graham v Hall & 1 Or [2006] NSWCA 208
HEARING DATE(S):	02/08/06
JUDGMENT DATE:	13 September 2006
JUDGMENT OF:	Giles JA at 1; Ipp JA at 2; McColl JA at 117
DECISION:	(1) Appeal by Mr Graham is dismissed. (2) Mr Graham to pay Mr Gelin's costs of the appeal. (3) Both cross-appeals are dismissed with no order as to costs.
CATCHWORDS:	NEGLIGENCE - respondent was a joint owner of a home - respondent's signature forged on a registered mortgage - liability of witness who attested the forged signature - witness was a justice of the peace - whether witness owed a duty of care to the respondent - Hill v Van Erp (1997) 188 CLR 159 applied - whether duty of care was breached - causation under s 5D of the Civil Liability Act 2002 (NSW) - whether witness immune from action under s 135 of the Justices Act 1902 (NSW) - whether attesting the forged signature was an act done "maliciously and without reasonable and probable cause" within the meaning of s 135 - apportionment of liability. D
LEGISLATION CITED:	Civil Liability Act 2002 (NSW), s 5D Justices Act 1902 (NSW), s 135 Justices of the Peace Act 2002 (NSW), s 8 Legal Profession Act 1987 (NSW) Oaths Act 1900 (NSW), ss 18, 26(1) Real Property Act 1900 (NSW), ss 36(1D), 42(1)
CASES CITED:	Grgic v Australian and New Zealand Banking Group Ltd (1994) 33 NSWLR 202 Hawkins v Clayton (1988) 164 CLR 539 Hill v Van Erp (1997) 188 CLR 159 Jones v Dunkel (1959) 101 CLR 298 Manly Council v Byrne & Anor [2004] NSWCA 123 Modbury Triangle Shopping Centre Pty Limited v Anzil (2000) 205 CLR 254 Perre v Apand Pty Limited (1999) 198 CLR 180 Port Stephens Shire Council v Tellamist Pty Limited [2004] NSWCA 353 San Sebastian Pty Limited v The Minister (1986) 162 CLR 341 Spautz v Butterworth (1996) 41 NSWLR 1 Sullivan v Moody (2001) 207 CLR 562 Westpac Banking Corporation v Samson (1994) 6 BPR 13,790 Wickham v Marquis of Bath (1865) LR 1 Eq 17
PARTIES:	David Graham (Appellant) Kaylene Joyce Hall (First Respondent) Ben Ami Gelin (Second Respondent)
FILE NUMBER(S):	CA 40418/05
COUNSEL:	D L Davies SC/S W Davis (Appellant) Submitting Appearance (First Respondent) J R J Lockhart (Second Respondent)
SOLICITORS:	I V Knight, Crown Solicitor (Appellant) McIntosh, McPhillamy & Co (First Respondent) Ebsworth & Ebsworth (Second Respondent)
LOWER COURT JURISDICTION:	District Court
LOWER COURT FILE NUMBER(S):	DC 7/04
LOWER COURT JUDICIAL OFFICER:	Williams DCJ
LOWER COURT DATE OF DECISION:	29/04/05, 22/06/05

CA 40418/05
DC 7/04

GILES JA
IPP JA
McCOLL JA

Wednesday 13 September 2006

DAVID GRAHAM v KAYLENE JOYCE HALL & ANOR

FACTS

Mr and Mrs Hall lived near Bathurst and were joint owners of the family home. In early 2001, Mr Hall found himself in financial trouble. In order to pay off his debts, he decided to mortgage the family home. However, he did not wish Mrs Hall to know of the state of his finances.

On 3 April 2001, Mr Hall instructed Mr Gelin, a solicitor, to act for both him and Mrs Hall in effecting and registering a mortgage over the family home. Mr Hall told Mr Gelin that Mrs Hall was dying of cancer and therefore Mr Gelin could not see her or visit her. Mr Hall said that he would take the papers to Mrs Hall and arrange for her to sign them.

Mr Gelin knew that, after payment of the existing mortgage and some business debts, the rest of the money from the new mortgage was to be paid to Mr Hall alone. Nonetheless, Mr Gelin did not investigate why a woman dying of cancer would want to enter into a new mortgage.

In fact, Mrs Hall did not have cancer and was not aware of Mr Hall’s visit to Mr Gelin or of the financial difficulty her husband was in.

On 20 April 2001, Mr Graham, a justice of the peace, attested a statutory declaration headed “Declaration by Borrower” that purported to be signed by Mrs Hall. In fact, the signature of Mrs Hall had been forged by Mr Hall. Mr Graham further attested Mrs Hall’s signature on a mortgage document headed “Real Property Mortgage” on which Mrs Hall was listed as the co-mortgagor with Mr Hall. He did this by signing his name under an attestation clause that recorded that the mortgage was “signed in my presence by the Mortgagor who is personally know to me.” In fact, Mrs Hall had not been in Mr Graham’s presence and was not personally known to him. They had never met.

On 7 May 2001, the existing mortgage over the Hall family home was discharged and a new mortgage registered.

On 27 April 2003, Mr Hall died and Mrs Hall discovered the existence of the new mortgage.

The trial judge, Williams DCJ, held that both Mr Gelin and Mr Graham were negligent and were liable for Mrs Hall’s damages, which his Honour assessed to be $136,479.66. His Honour found that the primary responsibility for these damages lay with Mr Gelin and apportioned liability 60% against Mr Gelin and 40% against Mr Graham.

Mr Graham appealed against his Honour’s findings on duty of care, breach, causation, apportionment and that he was not entitled to immunity under s 135 of the Justice Act 1902 (NSW). Mr Gelin appealed against the finding that he was 60% responsible for Mrs Hall’s damages.

Held: per Ipp JA (Giles and McColl JJA agreeing)

i. In a case involving economic loss it is appropriate to first identify the interests for which the plaintiff seeks protection. Mrs Hall’s interest was as joint owner of the family home. Her interest must have been obvious to Mr Graham when he attested her purported signature as mortgagor on the mortgage document.

Perre v Apand Pty Limited (1999) 198 CLR 180, Hawkins v Clayton (1988) 164 CLR 539

ii. The risk of harm to Mrs Hall’s interests in the property, resulting from the signature in question not being hers, arose from the likelihood that the falsely attested mortgage was likely to be registered. This risk was not only foreseeable but self-evident.

iii. Having established that the risk was clearly foreseeable, it is helpful to have regard to cases that are, at least to a degree, analogous and in which a duty has been recognised: Sullivan v Moody (2001) 207 CLR 562. There are significant similarities between the duty recognised in Hill v Van Erp (1997) 188 CLR 159 (owed by a solicitor to a disappointed beneficiary) and the duty for which Mrs Hall contends.

iv. The recognition of a duty of care would facilitate the operation of those elements of the law of property which enable the transmission of ownership, assist in preventing owners of property and mortgagees being defrauded, and promote appropriate conduct on the part of those who attest commercial documents such as mortgages.

Hill v Van Erp (1997) 188 CLR 159, Westpac Banking Corporation v Samson (1994) 6 BPR 13,790

v. The vulnerability of a person in the position of a plaintiff is a matter of considerable significance in determining whether a duty of care should be recognised. Here, Mrs Hall was in a position that was vulnerable to a serious degree.

Perre v Apand Pty Limited (1999) 198 CLR 180

vi. The system of transmission of property interests recognises the vulnerability of owners of property to fraud. To refrain from imposing a duty of care on a witness who falsely attests a dealing, would impair the reliability of the system of registration of real property under the Real Property Act 1900 (NSW).

vii. Mr Graham owed Mrs Hall a duty of care in attesting the signature on the mortgage, and in representing that the signature purporting to be that of Mrs Hall was placed on the mortgage in his presence and that Mrs Hall was personally known to him. The duty arose irrespective of whether Mr Graham acted as a justice of the peace or as an ordinary witness.

viii. The trial judge was justified in concluding that Mr Hall wrote Mrs Hall’s signature on the mortgage and presented it to Mr Graham to attest.

ix. Accordingly, Mr Graham breached the duty of care he owed Mrs Hall.

x. No policy considerations militated against the finding that Mr Graham caused Mrs Hall’s loss.

xi. There was no statutory or other need for Mr Graham to sign the mortgage as a justice of the peace. He did so gratuitously, entirely of his own volition. This means that that act was not within his jurisdiction as a justice of the peace.

Spautz v Butterworth (1996) 41 NSWLR 1

xii. The “act” for which the action was brought against Mr Graham (within the meaning of s 135 of the Justices Act) was an act “done maliciously and without reasonable and probable cause” (within the meaning of s 135(2)). The meaning of the term “maliciously” must encompass dishonesty and, in particular, dishonesty in the execution of the justice’s duties.

xiii. Mr Graham represented that the person who, as Mrs Hall, appended her signature to the mortgage, did so in his presence. This representation was untrue to Mr Graham’s knowledge. It was therefore dishonest.

xiv. Mr Graham represented that Mrs Hall was personally known to him, whereas she was not. There was no other evidence that bore on this issue. In the absence of such other evidence, it must be inferred that Mr Graham acted dishonestly in so attesting.

xv. Whether conduct of a justice in attesting a document amounts to “less than meticulous practice”, as referred to by Powell JA in Grgic v Australian and New Zealand Banking Group Ltd (1994) 33 NSWLR 202, must be assessed by reference to r 45 of the Solicitors’ Rules made under the Legal Profession Act 1987 (NSW).

xvi. Justices of the peace, who sign attestation clauses that declarants have made and subscribed the declaration before them when that is not true, commit an act that is the antithesis of their function. Such an act strikes at the heart of the system they are charged to protect. It constitutes a dishonest misrepresentation and is an act done “maliciously” within the meaning of the word is s 135(2).

xvii. Even if Mr Graham were held to be immune from liability for his action in attesting the statutory declaration, that would make no significant difference to the degree of his negligence and its causal potency. The most important document he attested was the mortgage; the mortgage being the document that was registered and the document by which Mrs Hall’s interest in the property was encumbered.

xviii. The trial judge considered that the prime responsibility was that of Mr Gelin as he expressly took upon himself the duty of taking reasonable steps to protect Mrs Hall’s interests. His Honour regarded it as appropriate that Mr Graham bear a significant (although lesser) proportion of the responsibility for Mrs Hall’s damages, as he was morally blameworthy. His Honour did not err in his discretion in apportioning liability on the basis that he did.

ORDERS

(a) The appeal by Mr Graham is dismissed.

(b) Mr Graham to pay Mr Gelin’s costs of the appeal.

(c) Both cross-appeals are dismissed with no orders as to costs.

CA 40418/05
DC 7/04

GILES JA
IPP JA
McCOLL JA

Wednesday 13 September 2006

DAVID GRAHAM v KAYLENE JOYCE HALL & ANOR

Judgment

1 GILES JA: I agree with Ipp JA.

2 IPP JA:

Mrs Hall’s negligence claim

3 The law is familiar with cases where a person has forged the signature of a property owner on a mortgage, induced some other individual to attest the forged signature as genuine, and used the mortgage as security to borrow money. Often the forger has been the husband of an unsuspecting wife. In these cases the remedy that the owner has ordinarily sought, upon discovering the existence of the mortgage, is an injunction against its enforcement, or the setting aside of the mortgage on the grounds of statutory fraud.

4 The property owner in this case (Mrs Hall), however, has sought an unusual, if not unique, remedy. She has claimed damages for negligence from the witness who attested the forged signature (Mr Graham), and from the solicitor (Mr Gelin) who her husband, Mr Hall, retained to represent her in giving the mortgage. She also pleaded fraud but did not press this allegation at trial.

5 There were two reasons why Mrs Hall did not seek the conventional relief. Firstly, the mortgagee, Ms Denise Abela, had no knowledge of, and was entirely innocent of, Mr Hall’s forgery; moreover, neither Mr Gelin nor Mr Graham was Ms Abela’s agent. Secondly, Mrs Hall first learned of the mortgage after her husband died, and this occurred some two years after the mortgage had been registered.

6 The trial judge, Williams DCJ, upheld Mrs Hall’s claims against Mr Graham and Mr Gelin and awarded her damages based on the cost to her of discharging the mortgage that had been registered.

The circumstances under which the fraud was perpetrated

7 Mr and Mrs Hall lived near Bathurst and Mr Hall conducted a business, in the town, of manufacturing water tanks. He was a bad businessman and a bad manager of his affairs.

8 In the early part of 2001 Mr Hall told his friend, Mr Fulwood, that he was in financial trouble. He said that he had a lot of debts to pay, but knew how he could get money. Despite a difficulty that stood in his way, he was going to mortgage the family home. He explained that the difficulty was his wife. He told Mr Fulwood that, if he told Mrs Hall about the state of his business, his marriage would end. Mr Hall said that he would get over this difficulty by forging Mrs Hall’s signature and not telling her about the mortgage. Mr Fulwood told Mr Hall not to do this and warned him that he would go to gaol if he did. Mr Hall laughed off the matter.

9 Mr Hall knew Mr Gelin as the latter had acted against him on behalf of a creditor who had sued him for non-payment of debts. On 3 April 2001 Mr Hall consulted Mr Gelin at his offices in Bathurst. Mr Hall told Mr Gelin that he had arranged through a broker to obtain a loan from Ms Abela and needed Mr Gelin’s professional services to complete the necessary formalities. The transaction involved the registration of a new mortgage in favour of Ms Abela to secure the loan. Mr Hall instructed Mr Gelin to act for him and Mrs Hall in effecting the mortgage and supervising its registration. Mr Hall told Mr Gelin that he would be borrowing $105,000 from Ms Abela so as to refinance the existing mortgage over the family home, plus $5,000 for expenses.

10 Mr Hall told Mr Gelin that Mrs Hall was dying of cancer and he, Mr Gelin, could not see her, nor could Mr Hall bring Mrs Hall to Mr Gelin’s offices. Mr Gelin pointed out that both Mr and Mrs Hall would need to sign papers for the loan and the mortgage. Mr Hall replied that he would take the papers to Mrs Hall and would arrange for her signature. Mr Gelin said that he would want to talk to Mrs Hall. Mr Hall replied that his wife would not speak to Mr Gelin because of the way he had behaved when previously acting for the creditor against Mr Hall. Mr Hall said that his wife “still has a bitter feeling or a bitter taste for what you did to us”. Mr Gelin accepted the truth of these statements.

11 In fact, Mrs Hall did not have cancer and was entirely ignorant of Mr Hall’s visit to Mr Gelin. She was employed as a school assistant in Bathurst and did not participate in any way in Mr Hall’s business affairs. She did not know that he was in financial difficulties and knew nothing of the loan from Ms Abela.

12 Mr Graham was the operator of a furniture business in Bathurst. He was also a justice of the peace. Mr Gelin had known Mr Graham for some ten years.

13 On 20 April 2001 Mr Graham attested a statutory declaration headed “Declaration by Borrower” that purported to have been signed by Mrs Hall. This document commenced by recording that Mrs Hall was the “co-borrower named in certain loan and security documents” in favour of Ms Abela relating to the Hall family home. It proceeded as follows:

“2. I have received independent legal advice regarding the loan and security documents referred to in paragraph 1.
3. After receiving that advice I have freely and voluntarily signed the following documents:
(specify the documents produced for signature)
[sic]
((c) Business Purposes Declaration.
(d) Real Property Mortgage.
(e) Authority to Pay.
(f) Undertaking & Authority.
(g) Statutory Declaration as to Rates & Notices.
AND I MAKE THIS SOLEMN DECLARATION conscientiously believing the contents to be true and by virtue of the Oaths Act 1900.
MADE AND SUBSCRIBED by )
KAYLENE JOYCE HALL )
At Bathurst the Twentieth )
Day of April 2001 Before me: ) Kaylene Hall
(Signed) David Graham
David Graham JP
………………………………
A Justice of the Peace/Solicitor”

14 In fact Mrs Hall did not sign the statutory declaration and her signature on it (to the right of Mr Graham’s attestation) was a forgery.

15 Page two of the mortgage (the document listed in para (d) of the statutory declaration) purported to be signed by Mrs Hall as co-mortgagor with Mr Hall. Mr Graham attested Mrs Hall’s signature on that page. He did so by signing his name (and appending the letters “JP” next to it) under an attestation clause that recorded that the mortgage was “signed in my presence by the Mortgagor who is personally known to me”. On the right hand side of these words was the signature purporting to be that of Mrs Hall. The remaining two pages of the mortgage were signed by Mr Graham next to a signature purporting to be that of Mrs Hall.

16 The signature of Mrs Hall, wherever it appeared on the mortgage, was forged. Despite his attestation, she did not sign the mortgage in the presence of Mr Graham. In fact she did not sign it at all. She had not been in Mr Graham’s presence and she was not personally known to him. She had never met him.

17 Although the statutory declaration was signed on 20 April 2001, the mortgage purported to be signed on 17 April 2001. On that date Mr Hall, apparently, signed page two and the other pages of the mortgage in the presence of Mr Gelin, who witnessed his signature wherever it appeared.

18 The business purposes declaration, authority to pay, and undertaking and authority listed in paragraphs (c), (e) and (f) of the statutory declaration were signed by Mr Hall and purported to be signed by Mrs Hall. In fact, as was the case with the mortgage, Mrs Hall did not sign these documents and her signature on each of them was a forgery. The statutory declaration as to rates and notices listed in paragraph (g) of the statutory declaration, was not in evidence.

19 On 7 May 2001 the existing mortgage on the Hall family home was discharged and the new mortgage by Mr and Mrs Hall in favour of Ms Abela was registered.

20 On 27 April 2003 Mr Hall died. Thereafter, Mrs Hall discovered the existence of the mortgage.

The judge’s reasons

21 Williams DCJ pointed out that in cross-examination Mr Gelin had conceded that, when acting for Mrs Hall in regard to the mortgage transaction, he heard “alarm bells”. This was because he knew that Mr Hall had a propensity for bad management of his business and had had difficulty in the past in paying his debts. Moreover, Mr Gelin had been told that Mrs Hall was dying of cancer but, nevertheless was about to enter into a refinancing of the mortgage as a consequence of Mr Hall’s business debts. Another cause for concern was that, after payment of the existing mortgage and some business debts of $9,000, the rest of the money advanced was to be paid to Mr Hall alone.

22 Mr Gelin realised that there was considerable risk that the family property could be sold if Mr Hall defaulted in the debt. The judge said that it was of concern that Mr Gelin “did not take steps in these circumstances to ensure that an apparently dying woman was able and willing to agree to a significant increase on the mortgage on the family home”.

23 Mr Gelin had testified that he observed Mr Graham’s signature on the document, he knew Mr Graham and thought “this is a fair dinkum execution”. The judge said that Mr Gelin could have telephoned Mr Graham and asked him about Mrs Hall, or could have personally visited Mrs Hall, or arranged for another person from his office to do so, or could have telephoned Mrs Hall. The judge held that Mr Gelin was negligent in not taking one of these precautions. Accordingly, his Honour held that Mr Gelin was liable to Mrs Hall.

24 Mr Graham did not testify and called no evidence.

25 Williams DCJ found that Mr Graham witnessed the alleged signature of Mrs Hall on the mortgage document when Mrs Hall was not present. Further, Mr Graham had falsely attested that the mortgage had been signed by Mrs Hall in his presence and that Mrs Hall was personally known to him.

26 His Honour accepted a submission by counsel for Mrs Hall that there were three possible scenarios:

“1. The documents were presented to [Mr Graham] already signed and he just witnesses them.
2. [Mr Hall] signed his wife’s signature on the documents in [Mr Graham’s] presence.
3. A person purporting to be Mr Hall’s wife signed the documents in [Mr Graham’s] presence.”

27 His Honour said:

“Given [Mr Graham’s] failure to give evidence and given the evidence of [Mr Fulwood], it is a reasonable inference that [Mr Graham] was told by [Mr Hall] why the documents were being presented to him for signature in that fashion.”

His Honour was referring to Mr Fulwood’s evidence to the effect that Mr Hall had told him that he intended to forge Mrs Hall’s signature.

28 The judge referred to the evidence of Mr Anderson, a handwriting expert, who said that there were similarities between some letters in Mr Hall’s signature and the forged signature of Mrs Hall. His Honour said that this evidence would not have been sufficient of itself to establish, on a balance of probabilities, that Mr Hall forged Mrs Hall’s signature.

29 Nevertheless, the judge found:

“[Mr Graham] was derelict in his responsibilities both as an individual and as a Justice of the Peace, having regard to his oath of office, and breached the duty of care he had to ensure that it was [Mrs Hall] as George Hall’s wife who signed the documents in question.”

30 In regard to causation, the judge said that had Mr Graham “complied with his oath of office and been otherwise truthful as a witness, the situation [Mrs Hall] currently faces would not have arisen”.

31 The judge found that the damages to which Mrs Hall was entitled amounted to $136,479.66. There is no challenge to this.

32 Mr Gelin and Mr Graham each instituted a cross-claim against the other. Each asserted that the other was principally to blame for the loss. The judge found that the prime responsibility lay with Mr Gelin. His Honour found that Mr Graham’s conduct was “morally blameworthy” whereas Mr Gelin’s conduct was not. He said, however, that no matter how morally blameworthy Mr Graham’s conduct was, “Mr Gelin could have obviated it by carrying out some basic, inexpensive, investigations as to the agreeableness of [Mrs Hall] to enter into this mortgage”.

33 His Honour apportioned liability 60% against Mr Gelin and 40% against Mr Graham.

The arguments on appeal

34 Mrs Hall filed a submitting appearance in the appeal and was not represented in argument. Mr Gelin did not contest the finding that he was negligent.

35 Mr Graham, in his appeal, argued that his Honour erred:

(a) By finding that, as a witness to Mrs Hall’s purported signature, he owed her a duty of care.
(b) By finding that he breached any duty of care he might have owed Mrs Hall.

(c) By finding that he caused Mrs Hall’s loss.

(d) In failing to find that he was entitled to immunity from action under s 135 of the Justices Act 1902 (NSW).
(e) By finding that he was responsible to the extent of 40% for Mrs Hall’s loss.

36 Mr Graham also complained of various findings made by the judge that he had committed fraud. He submitted that the trial was not conducted on the basis that he had been fraudulent.

37 Mr Graham sought leave to appeal against the finding that he was 40% responsible for Mrs Hall’s damages. Mr Gelin sought leave to appeal from the finding that he was 60% responsible for Mrs Hall’s damages. At the hearing of the appeal leave to appeal in both instances was granted in so far as that might be necessary.

The findings of fraud against Mr Graham

38 As I have mentioned, Mrs Hall pleaded fraud and, in the alternative, negligence against Mr Graham, but a case of fraud was not run at trial. Nevertheless, in several parts of his Honour’s judgment, he found that Mr Graham’s conduct was fraudulent. For example he said that Mr Graham’s behaviour was “undoubtedly fraudulent as regards the requirements of the Real Property Act” and said, “I am satisfied that [Mr Graham] acted fraudulently in a common law sense.”

39 The findings and observations his Honour made in this respect must be regarded as erroneous. Fraud (and statutory fraud) as a cause of action was not canvassed during the hearing of the trial. Findings of fraud are serious matters and should only be made if fraud is clearly put in issue and properly argued by all interested parties. This did not occur.

40 It is necessary, however, to point out that the moral blameworthiness of Mr Graham’s conduct was very much an issue in the case. This was a question that bore on the apportionment of damages.

41 Moreover, the reliance by Mr Graham on the immunity conferred by s 135 of the Justices Act raised the question whether Mr Graham’s act in attesting the false signature of Mrs Hall was “done maliciously” within the meaning of s 135(2). This, too, raised the moral blameworthiness of Mr Graham’s conduct.

42 Mr Davies SC, who together with Mr Davis appeared for Mr Graham, accepted that “maliciously” in s 135(2) incorporated the notion of dishonest intent. Whether Mr Graham had a dishonest intent was therefore a legitimate issue in the trial.

Mr Graham’s duty of care

43 The negligence alleged against Mr Graham does not fall within the established categories of negligence recognised by our law. In Sullivan v Moody (2001) 207 CLR 562 it was stated at 579 to 580, [50]:

“Different classes of case give rise to different problems in determining the existence and nature or scope, of a duty of care. Sometimes the problems may be bound up with the harm suffered by the plaintiff, as, for example, where its direct cause is the criminal conduct of some third party. Sometimes they may arise because the defendant is the repository of a statutory power or discretion. Sometimes they may reflect the difficulty of confining the class of persons to whom a duty may be owed within reasonable limits. Sometimes they may concern the need to preserve the coherence of other legal principles, or of a statutory scheme which governs certain conduct or relationships. The relevant problem will then become the focus of attention in a judicial evaluation of the factors which tend for or against a conclusion, to be arrived at as a matter of principle.”

44 It is therefore necessary, in this case, to evaluate the factors which tend for or against the recognition of a duty of care, as contended for by Mrs Hall, to be arrived at as a matter of principle.

45 In Hawkins v Clayton (1988) 164 CLR 539 Gaudron J at 594 observed:

“[W]here the act or omission complained of amounts to an interference with or impairment of an existing right which is known or ought to be known to the person whose acts or omissions are called into question then the issue of proximity may be open to determination by reference to factors somewhat different from those applicable where economic loss is occasioned without infringement or impairment of an otherwise recognised right.”

Her Honour added at 601:

“In actions in negligence for economic loss it will almost always be necessary to identify the interest said to have been infringed to determine whether the risk of loss or injury to that interest was reasonably foreseeable and whether a sufficient relationship of proximity referable to that interest was present so as to establish a duty of care.”

46 In Perre v Apand Pty Limited (1999) 198 CLR 180 Gummow J referred to the abovementioned observations of Gaudron J and said at 251, [192] that one begins the determination of the issues arising in a case involving economic loss by looking to identify the interests for which the plaintiffs seek protection.

47 Here the interest of Mrs Hall for which she seeks protection is her interest as joint owner of the family home. The act of which she complains amounts to an interference with or an infringement of that interest. Her interest must have been obvious to Mr Graham when he attested Mrs Hall’s purported signature, as mortgagor, on the mortgage document.

48 The risk of harm to Mrs Hall’s interest in the property, resulting from the signature in question not being hers, arose from the likelihood that the falsely attested mortgage was likely to be registered. This risk was not only foreseeable but self-evident.

49 Having established that the risk was clearly foreseeable, it is helpful to have regard to cases that are, at least to a degree, analogous and in which a duty of care has been recognised (see Sullivan v Moody at 578, [48]).

50 In my opinion, Hill v Van Erp (1997) 188 CLR 159 is such a case. There it was held that a solicitor, charged with advising on the proper execution of a will, owed a duty of care to an intended beneficiary under that will. The solicitor was held liable to the disappointed beneficiary when, through his negligence, the will was not validly executed.

51 Both cases involve claims for pure economic loss. In Hill vVan Erp compensation was sought for the loss of property which, but for the negligence of the solicitor, the intended beneficiary would have taken. The compensation being sought by Mrs Hall is for the loss of the interest in property that, but for Mr Graham’s negligence, she would not have lost.

52 Just as the solicitor was not known to the intended beneficiary and had no dealing with her, Mrs Hall had no knowledge of the existence of Mr Graham, having had no dealings with him. Just as the intended beneficiary was ignorant of the actions of the solicitor at the time the will was executed, so was Mrs Hall ignorant of the actions of Mr Graham until the death of Mr Hall.

53 In Hill v Van Erp Brennan CJ took into account the fact that the duty of care owed by the solicitor to the disappointed beneficiary was in the performance of the work in which he owed a corresponding duty to the testator (see at 171).

That needs to be compared with the present case. Subject to establishing the requisite elements, negligent misstatement is a recognised category of the tort of negligence: San Sebastian Pty Limited v The Minister (1986) 162 CLR 341. A mortgagee may have a claim for negligent misstatement against a person who, in the course of attesting a mortgage, falsely represents that the person who signed the mortgage as mortgagor did so in the presence of the attestor and was personally known to him or her. The conduct of the attestor which gives rise to that duty is the same conduct said to give rise to a duty owed by the attestor to the true owner of the property, the subject of the mortgage.

54 In Hill v Van Erp the fact that imposition of liability would not give rise to indeterminate liability was regarded as significant. Only the disappointed beneficiary was a possible plaintiff. In the present case, also, there is no question of indeterminate liability. The only possible plaintiffs could be the mortgagee, the true owner of the property and, perhaps, the Registrar-General.

55 In Hill v Van Erp, as in the present case, there is no question of a duty of care affecting any competitive advantage in the commercial sphere (see Dawson J at 180).

56 In Hill v Van Erp the recognition of a duty of care did not supplant or supplement remedies available in other areas and did not disturb any general body of rules constituting a coherent body of law (see Dawson J at 180 to 181). The same would apply in the present case.

57 In Hill v Van Erp Gaudron J at 195 observed that the recognition of a duty of care to an intended beneficiary “not only promotes the proper transmission of property but also promotes the proper performance by solicitors of their professional duty to those who employ them to give effect to their testamentary intentions”. Gummow J at 223 to 224 was of a similar view. His Honour said:

“One of the important functions of an effective law of personal obligations is to facilitate the operation of those elements of the law of property which enable the transmission of ownership …”

His Honour took into account the public interest in the promotion of professional competence and the avoidance of disappointment of the wishes and expectations of testators and beneficiaries by negligent actions of solicitors (at 234).

58 Similar considerations apply to a person who witnesses a signature to a commercial document such as a mortgage. As Rolfe J pointed out in Westpac Banking Corporation v Samson (1994) 6 BPR 13,790 at 13,796:

“The purpose of the requirements that a registrable document should be signed by a person in the presence of another to whom he/she is personally known is, inter-alia to avoid the registration of forged documents.”

59 In Rodrick, Forgeries, False Attestations and Imposters: Torrens System, Mortgages and the Fraud Exception to Indefeasibility, 2002 Deakin L Rev 5 the learned author says at 13:

“[A] false attestation constitutes a violation of the registrar’s right to take the mortgage document at its word when it states that the mortgagor signed in the presence of an attesting witness, and to proceed on the assumption that the mortgage document was properly executed and can be safely registered. A false attestation is therefore an attack on the integrity and reliability of the registration system; the false witness has not acted to quell potential scams by properly employing the protections that have been built into the system.”

60 These observations emphasise that the recognition of the duty of care contended for by Mrs Hall would facilitate the operation of those elements of the law of property which enable the transmission of ownership (to paraphrase the remarks of Gummow J in Hill v Van Erp), would assist in preventing owners of property and mortgagees being defrauded, and would promote appropriate conduct on the part of those who attest commercial documents such as mortgages.

61 In my view, there are significant similarities between the duty recognised in Hill v Van Erp and the duty for which Mrs Hall contends. In my view these similarities and the other matters to which I have drawn attention are powerful factors tending to support the recognition of a duty of care owed by Mr Graham to Mrs Hall. But there are other matters that go in the same direction.

62 It is clear from Perre v Apand Pty Limited (1999) 198 CLR 180 that the vulnerability of a person in the position of the plaintiff is a matter of considerable significance in determining whether a duty of care should be recognised. Here, Mrs Hall was in a position that was vulnerable to a serious degree. She was ignorant of what was taking place and could not have learned of the fraud her husband intended to perpetrate on her.

63 The system of a transmission of property interests recognises the vulnerability of owners of property to fraud. One of its protective features is the requirement that the Registrar-General may refuse to accept a “dealing” (generally, an instrument other than a grant or caveat which is registrable or capable of being made registrable under the Real Property Act 1900 (NSW)) or caveat presented for lodgement (unless the regulations otherwise provide) “that is not attested by a witness who is not a party to the dealing or caveat” (s 36(1D) of the Real Property Act). To refrain from imposing a duty of care on a witness who falsely attests a dealing (with the result that the Registrar-General might be misled into believing that the dealing has been duly executed) would significantly detract from the force of s 36(1D) and impair the reliability of our system of registration of real property.

64 In written submissions filed on behalf of Mr Graham it was argued that in Modbury Triangle Shopping Centre Pty Limited v Anzil (2000) 205 CLR 254 “the High Court rejected the existence of a common law duty to prevent harm caused by criminal activities of third parties”. This, however, overstates the position. Gleeson CJ, with whom Gaudron J agreed, said at 265, [26] that while the general rule was that there was no duty to prevent a third party from harming another, “there are circumstances where the relationship between two parties may mean that one has a duty to take reasonable care to protect the other from the criminal behaviour of third parties …”. Hayne J accepted that there could be a duty to control criminal conduct of others “in very restricted circumstances” (at 293, [117]). Gaudron J said at 270, [43] that there were situations “in which there is a duty of care to warn or take other positive steps to protect another against harm from third parties”. Her Honour remarked:

“Usually, a duty of care of that kind arises because of special vulnerability, on the one hand, and on the other, special knowledge, the assumption of a responsibility or a combination of both.”

Callinan J said at 302, [147] that a duty could be imposed to take precautions to prevent or reduce the chances of criminally inflicted injury or loss by third party. But for such a duty to arise, “there must be something special in the circumstances, or the nature of the relationship between the plaintiff and the defendant”.

65 The following points may be made concerning Modbury. Firstly, the High Court was there concerned with omissions on the part of a defendant. Secondly, the Court recognised that factors such as vulnerability, assumption of responsibility and control could give rise to a duty to take reasonable steps to prevent harm to strangers.

66 The present is not a case of omission. Mrs Hall was vulnerable in the respects I have stated. Mr Graham, by attesting the signature, implicitly assumed responsibility to those who could be affected by negligence on his part in carrying out that task. Mr Graham had complete control over his act of which complaint is made. It was in his sole discretion whether or not to attest the mortgage.

67 In any event, this is not a Modbury case. The duty of care asserted by Mrs Hall, properly understood, is not directed to the prevention of harm caused by third parties. It involves acting reasonably in representing, by the attestation of a commercial document, that the signatory was present at the time of attestation and was known to the attestor.

68 In my opinion Mr Graham owed Mrs Hall a duty of care in attesting the signature on the mortgage, and in representing that the signature purporting to be that of Mrs Hall was placed on the mortgage in his presence and that Mrs Hall was personally known to him. The fact that, in attesting the mortgage, Mr Graham purported to do so as a justice of the peace does not bear on the recognition of the duty. The duty arises irrespective of whether Mr Graham acted as a justice of the peace or as an ordinary witness.

The breach of the duty of care

69 It was submitted on Mr Graham’s behalf that Mrs Hall had not proved that he had not been tricked into attesting the purported signature of Mrs Hall on the mortgage. This submission was based on the three possible scenarios postulated by counsel for Mrs Hall at the trial. I shall repeat these for the sake of convenience. They were:

(a) The documents were presented, already signed, to Mr Graham and he witnessed them then.

(b) Mr Hall wrote Mrs Hall’s signature on the documents in Mr Graham’s presence.

(c) A person purporting to be Mrs Hall signed the documents in Mr Graham’s presence.

It was submitted that the evidence did not establish which of these possibilities was more likely.

70 Mr Lockhart, who appeared for Mr Gelin, submitted that the judge had rightly found that the documents were presented to Mr Graham with Mrs Hall’s forged signature already on them, and Mr Graham thereupon signed the documents as a witness.

71 The evidence of Mr Fulwood supported his Honour’s finding. The conversation between Mr Fulwood and Mr Hall, in which Mr Hall said that he intended to forge Mrs Hall’s signature, took place “in the early months of 2001”. By 3 April 2001 Mr Hall had already arranged the refinancing loan and mortgage. Mr Graham attested the false signature on the mortgage on 17 or 20 April 2001. Mr Hall told Mr Fulwood that he intended “to write her signature himself”. This expression of intention therefore occurred a matter of weeks before Mr Graham’s attesting of the forged signature. This evidence tends to establish that Mr Hall wrote Mrs Hall’s signature himself and did not arrange for someone else to impersonate her and sign the mortgage before Mr Graham.

72 Mr Anderson’s testimony that there were similarities between Mr Hall’s writing and the forged signature also supports the inference that Mr Hall forged the signature. True it is that the judge found that this evidence was not enough to establish on a balance of probabilities that Mr Hall wrote the signature, but – when taken together with Mr Fulwood’s testimony – it amounts to a reasonable prima facie indication that this occurred.

73 I would add that the scenario of a woman impersonating Mrs Hall is less likely than Mr Hall presenting the documents to Mr Graham with the forged signature of Mrs Hall already on them. The impersonation of Mrs Hall would involve a conspiracy and serious dishonesty on the part of two persons. That, inherently, is less probable than dishonesty on the part of Mr Hall alone. It is true, as Mr Davies pointed out, that the first scenario assumes misconduct on the part of Mr Graham whereas the impersonation scenario does not. Nevertheless, the impersonation involves gross dishonesty, is inconsistent with Mr Fulwood’s evidence, and remains mere speculation. No foundation was laid in the evidence for the proposition that there was an impersonation. The evidence of Mr Fulwood and Mr Anderson, in my view, justified the judge in deciding that the first scenario was the most likely.

74 Mr Davies submitted that the judge wrongly applied the rule in Jones vDunkel (1959) 101 CLR 298 in preferring the first scenario. I do not think that is so. It seems to me, from his Honour’s reasons, that his Honour relied on the probabilities stemming from the positive evidence in drawing the inferences and making the findings that he did. I have expressed the view that he was justified in the conclusion to which he came.

75 Even if (contrary to the rule in Jones v Dunkel) his Honour did more than infer that the evidence of Mr Graham would not have helped his case, I would not disturb his Honour’s finding. That is because, on my view of the evidence, Mrs Hall established, on the balance of probabilities, that Mr Hall acted in accordance with his intention expressed to Mr Fulwood, wrote Mrs Hall’s signature on the mortgage, and presented it to Mr Graham for him to attest. Mr Graham’s failure to give evidence enables me to draw with greater confidence an inference, unfavourable to him, that the first scenario is the correct one: Manly Council v Byrne & Anor [2004] NSWCA 123 at [51] per Campbell J, (with whom Beazley JA and Pearlman AJA agreed).

76 Accordingly, I would hold that Mr Graham breached the duty of care he owed Mrs Hall.

Causation

77 Mr Davies submitted that the judge failed to apply s 5D of the Civil LiabilityAct 2002 (NSW) (which applied to Mrs Hall’s claim). This section provides:

“(1) A determination that negligence caused particular harm comprises the following elements:
(a) that the negligence was a necessary condition of the occurrence of the harm ( factual causation ), and
(b) that it is appropriate for the scope of the negligent person’s liability to extend to the harm so caused (scope of liability).”

Section 5D(4) is relevant to an understanding of s 5D(1)(b). Section 5D(4) provides:
“For the purpose of determining the scope of liability, the Court is to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party.”

78 Many of the provisions of the Civil Liability Act are modelled on the Recommendations of the Final Report by the Panel appointed by the Commonwealth and State Governments to review the law of negligence (Second Reading Speech, Hansard, 23 October 2002 at 5765). Section 5D(1) is based on Recommendation 29(B) and s 5D(4) is based on Recommendation 29(H). The rationale for these Recommendations appears in paragraph 7.41 to paragraph 7.51 of the Final Report. It is sufficient to state that amongst the points made in these paragraphs is that a finding that the negligent conduct was a necessary condition of the harm does not, itself, justify a conclusion that the defendant ought to be held liable for the consequences of the negligence. Hence the second element, set out in s 5D(1)(b), needs to be addressed. The second element, namely, the scope of liability for consequences, involves normative issues that may be applicable in determining whether negligent conduct caused harm. It is in this context that the statement that causation is a matter of commonsense is most often made.

79 Mr Davies submitted that, because of normative considerations, Mr Graham should not be held to be liable to Mrs Hall for the breach of his duty of care.

80 Firstly, Mr Davies submitted that had Mr Graham not attested the mortgage, the fraud would still have occurred. He submitted that Mr Hall would not have been deterred by Mr Graham’s refusal to witness the mortgage. He argued that Mr Hall could have obtained some other person to attest the forgery.

81 I do not accept this submission. There is a line of cases involving negligence that hold that if inquiry ought to be made, and no inquiry is made, it is to be assumed that a true answer would be given. See Port Stephens Shire Council v Tellamist Pty Limited [2004] NSWCA 353 at [490] and cases cited there. The theory underlying this principle is that, unless the evidence is to different effect, the Court should assume that individuals will behave honestly.

82 Mr Davies submitted that general policy considerations should prevent liability attaching to Mr Graham. He submitted that, in view of the heavy potential liability that could arise, it would be undesirable for a duty of care to be imposed on witnesses to documents. I do not accept this submission. For the reasons I have already explained, the policy arguments go in the opposite direction. I do not regard the imposition of a duty of care on a witness as being onerous. The principal task that would be required of a witness, in order to discharge the duty of care, would merely be to be honest.

The immunity under s 135 of the Justices Act in regard to the mortgage

83 Section 135 provides:

“(1) Every action brought against a Justice for an act done by the Justice in the execution of his or her duty as a Justice with respect to a matter within his or her jurisdiction as a Justice shall be an action as for a tort.
(2) An action shall not lie against a Justice for any such act referred to in subsection (1) unless the act was done maliciously and without reasonable and probable cause.”

84 The immunity under s 135(2) applies only in regard to acts done by a justice “in the execution of his or her duty as a justice with respect to a matter within his or her jurisdiction as a justice”. There was no statutory or other need for Mr Graham to sign the mortgage as a justice of the peace. He did so gratuitously, entirely of his own volition. This means, in my view, that that act was not within his jurisdiction as a justice: cfSpautz v Butterworth (1996) 41 NSWLR 1 at 24 per Clarke JA, with whom Priestley JA and Beazley JA agreed.

85 In any event, I consider that Mr Graham’s “act” (within the meaning of s 135) in attesting the mortgage was an act “done maliciously and without reasonable and probable cause” (within the meaning of s 135(2)).

86 Whatever “maliciously” means, in the context of s 135(2), it must encompass dishonesty and, in particular, dishonesty in the execution of the justice’s duties.

87 In determining whether Mr Graham’s act in attesting the mortgage was “done maliciously”, the inquiry has to focus on the meaning of these words in the Justices Act. For that reason, the cases dealing with the meaning of “fraud” in s 42(1) of the Real Property Act and like legislation are not of assistance.

88 In attesting the mortgage, Mr Graham made two representations. Firstly, he represented that the person who as Mrs Hall appended her signature to the mortgage did so in his presence. Secondly, he represented that Mrs Hall was personally known to him.

89 The first representation was untrue and was untrue to Mr Graham’s knowledge. It was therefore dishonest.

90 As regards the second representation, in Grgic v Australian and NewZealand Banking Group Ltd (1994) 33 NSWLR 202 Powell JA (with whom Meagher JA and Handley JA agreed) said at 222:

“In the circumstances, it being well-established that a person who presents for registration a document which is forged or has been fraudulently or improperly obtained, is not guilty of ‘fraud’ if he honestly believes it to be a genuine document which can be properly acted upon … and that a less than meticulous practice as to the identification of persons purporting to deal with land registered under the provisions of the Act does not constitute a course of conduct so reckless as to be tantamount to fraud.”

91 In Grgic, Mr Sercombe, a bank employee, certified that the man posing as Mr Grgic was “personally known to him”. The two men, however, had never met before. Mr Grgic’s son and daughter-in-law, who were established customers of the bank, had introduced Mr Sercombe to a person impersonating Mr Grgic. The impersonator was able to produce the duplicate certificate of title to the property and other documents that contained the signature of the real Mr Grgic and this enabled the bank officers to compare the signatures.

92 There was no evidence of this kind in the present case. There was, in fact, no evidence as to the basis on which Mr Graham attested that Mrs Hall was personally known to him. As I have pointed out, she had never met him. Accordingly, the evidentiary position was simply that Mr Graham had attested that Mrs Hall was personally known to him whereas she was not. In my opinion, without other evidence, it must be inferred that Mr Graham acted dishonestly in so attesting.

93 I would add that the “less than meticulous practice” referred to by Powell JA must now, it seems to me, be assessed by reference to r 45 of the Solicitors’ Rules made under the Legal Profession Act 1987 (NSW). Rule 45 states the approved practice to be followed by solicitors when engaged to advise a proposed signatory on loan or security documents. Rule 45.5.1 provides:

“The solicitor must identify the proposed signatory as the person described by reference to one of the following documents means [sic]:
(a) Passport.
(b) Driving licence.
(c) Medicare card.
(d) Credit card.
(e) Rate notice.
(f) Other.”

94 Whatever “less than meticulous practice” means, I would have thought that it could hardly be less than what is required by r 45. After all, one cannot obtain an electronic airplane ticket without providing similar identification. Should the identification of a person signing a document transferring interests in property be any less? I cannot think why the answer should be in the negative.

95 In my opinion, the second representation was untrue, was untrue to Mr Graham’s knowledge and was therefore dishonest.

Immunity in regard to the statutory declaration

96 Mr Davies then submitted that, at least, Mr Graham should be immune from liability for attesting the statutory declaration purportedly signed by Mrs Hall and attested by Mr Graham on 20 April 2001. As I mentioned, that statutory declaration records that the deponent had “freely and voluntarily” signed a number of documents, including the mortgage.

97 It is not clear to what extent Mrs Hall relied on the attesting of the statutory declaration (as opposed to the mortgage) and to what extent Williams DCJ took the attesting of the statutory declaration into account when determining the apportionment of liability. In her statement of claim, Mrs Hall appears to have relied on both the attesting of the statutory declaration and the attesting of the mortgage. The judge, in commencing his reasons, refers to the fact that Mr Graham witnessed Mrs Hall’s signature “on a number of documents relating to the mortgage”. When discussing the liability of Mr Graham, however, (under the heading “Second Defendant”) his Honour focuses on the mortgage - although he does refer to all the documents that Mr Graham witnessed.

98 Mr Davies submitted that the attesting of the mortgage was inextricably linked to the attesting of the statutory declaration (which was an act that Mr Graham performed within his jurisdiction as a justice).

99 In my view there are three bases on which this submission should be rejected.

100 Firstly, the attesting of the mortgage was an act by Mr Graham that was entirely separate from and independent of the signing of the statutory declaration. Mr Graham may have signed the statutory declaration immediately after signing the mortgage (or even before), but this does not mean that the documents are inextricably linked or, even, that the one is ancillary to the other. For a document to be “inextricably linked” to another, there has to be more than what occurred in this case.

101 Secondly, I consider that that Mr Graham’s “act” in attesting the statutory declaration was also an act “done maliciously and without reasonable and probable cause” (within the meaning of s 135(2)).

102 By s 26(1) of the Oaths Act 1900 (NSW) any oath, declaration or affidavit required for the purpose of the registration of any instrument in the State of New South Wales may be taken before any justice of the peace for the State. Section 18 of that Act, in effect, empowers and requires justices of the peace to administer declarations by taking oaths or taking affidavits. Section 8 of the Justices of the Peace Act 2002 (NSW) provides that a justice of the peace may exercise any function conferred or imposed on a justice of the peace by or under the Oaths Act.

103 Assuming that s 135 applies to the acts done by a justice in attesting declarations (a matter that was not argued), the word “maliciously” has to be construed by reference to the nature and purpose of that function. There can be no doubt that a function of a justice of the peace in attesting a signature on a declaration is to ensure that the declaration is signed in the justice’s presence.

104 Williams DCJ stated that the responsibilities of a justice of the peace are set out in part in “The Justice of the Peace Handbook” which was an exhibit at the trial and that finding was not challenged. Of particular relevance is the following passage:

“In no case should a justice of the peace purport to take an affidavit, declaration or affirmation, or witness a signature unless he has been personally confronted with the deponent, declarant or signatory , and has satisfied himself by interrogation or observation that the signature is the signature of such person, and in the case of an affidavit, he has personally put the deponent on oath.”

105 In Wickham v Marquis of Bath (1865) LR 1 Eq 17 at 24 Romilly MR said:

“What is meant by attesting a will or a deed? It means, as I understand it, that one or more persons are present at the time of the execution for that purpose, and that as evidence thereof they sign the attestation clause, stating such execution.”

106 The point of having a declaration made or an affidavit sworn before a justice of the peace is that the justice of the peace serves as a reliable witness to the making of the declaration or the affidavit on which others may rely.

107 Justices of the peace who sign attestation clauses stating that declarants have made and subscribed the declaration before them when that is not true commit an act that is the antithesis of their function. Such an act strikes at the heart of the system that they are charged to protect. It constitutes a dishonest misrepresentation and, in my view, is an act done “maliciously” within the meaning of that word in s 135(2).

108 Mr Davies did not contend that Mr Graham had attested the declaration with reasonable and probable cause and nor could he have.

109 Thirdly, even if Mr Graham were held to be immune from liability for his action in attesting the statutory declaration that would make no significant difference to the degree of his negligence and its causal potency. The most important document he attested was the mortgage; the mortgage being the document that was registered and the document by which Mrs Hall’s interest in the property was encumbered. On this ground alone I would not uphold Mr Davies’ submission on this issue.

110 In the circumstances Mr Graham was not entitled to immunity under s 135 and the judge made no error in this respect.

Apportionment of damages

111 In submitting that Williams DCJ erred in the exercise of his discretion on apportionment, it was argued on Mr Graham’s behalf:

(a) Mr Gelin had the capacity to prevent the fraud had he discharged his duty of care and his duty was to protect Mrs Hall’s interests.

(b) Mr Gelin ought to have discussed the risk of a mortgagee sale with Mrs Hall and did not do so.

(c) Mr Gelin should not have assumed that it was Mr Hall’s signature and he should have asked Mrs Hall about the signature.

(d) Mr Gelin should have communicated with Mrs Hall to ascertain whether in fact she was giving him instructions.

(e) Mr Gelin himself accepted that “alarm bells” did go off, but he did nothing about them.

(f) Mr Graham, in contrast, was merely “an unpaid honorary”.

112 On Mr Gelin’s behalf it was submitted that:

(a) Mr Gelin was reassured by the fact that Mr Graham had witnessed the mortgage and the declaration.

(b) There was no dishonesty on the part of Mr Gelin but there was a deliberate act of dishonesty on the party of Mr Graham.

(c) As the judge found, while Mr Gelin’s conduct was negligent, it was not morally blameworthy; in contrast, Mr Graham’s conduct was morally blameworthy.

113 The parties’ respective arguments have merit. They have to be weighed in the balance.

114 The judge came to the conclusion that Mr Gelin should bear the preponderance of responsibility for Mrs Hall’s damages, but that Mr Graham should be responsible for 40%. His Honour considered that the prime responsibility was that of Mr Gelin as he expressly took upon himself the duty of taking reasonable steps to protect her interests. In my view, his Honour’s approach in this regard was correct. His Honour nevertheless, regarded it appropriate that Mr Graham should bear a significant (although lesser) proportion of the responsibility for Mrs Hall’s damages as he was morally blameworthy. Again, I consider that his Honour was correct in this regard. I would add that Mr Graham’s conduct had material causal potency.

115 In all the circumstances I am not persuaded that his Honour erred in his discretion in apportioning liability on the basis that he did.

Conclusion

116 I would dismiss the appeal by Mr Graham and order him to pay Mr Gelin’s costs of the appeal. I would dismiss both cross-appeals and would make no orders as to costs in regard to either.

117 McCOLL JA: I agree with Ipp JA.

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