A lady comes to the office clutching a mortgage and says it needs witnessing by a solicitor. She explains she is raising money to pay off the victims of her husband’s fraud. The solicitor advises her not to sign it and she goes off. The solicitor is later sued (probably successfully) for negligence.

A recent Court of Appeal case considers a solicitor’s duty when certifying a mortgage. A financial consultant persuaded his wife to sell the family home to repay money he had defrauded from his clients. She wished to avoid her children seeing their father sent to prison and she was advised to get independent legal advice but told to ignore any advice not to give up her rights in the family home. The lady went to another solicitors’ firm and was advised not to proceed with the transaction. This advice was given free of charge. A few weeks later she visited another branch of the same firm and a solicitor witnessed a document certifying that the wife understood her obligations. The husband later was sent to prison, owing considerably more than first believed. They divorced and she sued the solicitors for negligent failure to give proper advice.

The case was unsuccessful at first but the Court of Appeal ruled the there was a case to answer. The solicitor ought to enquire what was behind the wife’s intentions. The duty was the same irrespective of whether there was a charge for the work. Interestingly the advice not to sign was insufficient to discharge their duty. The solicitors should have investigated the true extent of the man’s fraud and advised that the wife’s actions would be insufficient to save him from prison.

We should not witness any financial document such as loan agreement, mortgage, deeds, etc. If we witness such a document it is implied that we have advised the client on the terms of the agreement and the implications of the agreement i.e. you could lose a house if you do not make payments.

To do the job properly would take an hour or two’s advice which we would have to charge for.

David Pickup is a partner in Aylesbury based Pickup & Scott