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Client/Case Screening

Beware the imposter!
Before agreeing to act for someone, take the very elementary precaution of confirming that person’s identity. Failure to do so has led to substantial judgments against several solicitors.

An Ontario solicitor acting for a mortgage lender neglected to request identification for a “borrower” who executed the mortgage document in his office. Unfortunately, the “borrower” was an impostor, and the solicitor was held responsible for the lender’s loss. (Yamada v. Mock, (1996) 2 R.P.R. (3d) 162 (Ont.Ct.Gen.Div.))

An English solicitor, who understood that he was acting for a husband and wife in a mortgage transaction, allowed the husband to take the mortgage out of the office for execution by the wife. The husband forged his wife’s signature. The solicitor was held liable for the lender’s loss on the basis of breach of warranty of authority. Because his correspondence with the lender’s solicitor stated that he acted for husband and wife, he was held to have “warranted” this to the lender. (Penn v. Bristol & West Building Society, [1997] 3 All E.R. 470 (C.A.))

Acting for family and friends is risky business
Be wary when acting for family or friends. A solicitor’s duty to a client is not relaxed because he enjoys a personal relationship with that client. A solicitor sold a half interest in a restaurant business to his friends. They later successfully sued him for a sum in excess of $170,000 because he failed to make full disclosure concerning a chattel mortgage, and failed to recommend independent legal advice. (Cassey v. Morrison (1989) 67 O.R. (2d) 65 (Ont.H.C.); (1993) 15 O.R. (3d) 223 (Ont.C.A.))

Beware of the “phantom client”
“Phantoms” appear in a solicitor’s office, often with a “real” client. “Phantoms” may say nothing whatsoever to the solicitor, but later allege that they considered that the solicitor was their solicitor, and expected the solicitor protect their interests. In a very recent case, a lender attended with the borrower at the office of the borrower’s solicitor. The lender had been lead to believe by the borrower that the solicitor also represented the lender’s interests. This expectation was not communicated to the solicitor, and for this reason the action against him was dismissed. However, the entire lawsuit could have been avoided had the “phantom” client been told that she was not a “real” client. (Lobelio v. Pichini, (Unreported, Ont.Ct.Gen.Div. (Brampton), June 5, 1998, Dunn, J.)

Solicitors should be especially wary of “phantom client” issues in personal injury matters. Consultations take place about whether an injured person should or should not bring an action. No decision is made at the consultation. No follow up takes place. Nothing is said about any limitation period. The limitation period passes. The “client” then alleges that the solicitor was to protect his or her interests. There is a real possibility in such cases that the “client's” position will prevail. See Prior v. McNab (1976) 16 O.R. (2d) 380 (Ont.H.C.)

 

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