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The Tale of Jack & Jill

The Facts 

Once upon a time, Jack went up the hill to look for Jill.  Now, Jack was a rogue and had forged a Power of Attorney ("PA") in his favour, allegedly from the true owner of a piece of land.  The truth however was that the little old lady who owned the land had never given Jack a PA.  At all times, the little old lady had in her possession the issue document of title ("IDT") to the land safely tucked under her pillow. 
 
Jill, on the other hand, was a solicitor. 
 
Jack retained Jill to act for Jack in a sale & purchase agreement ("SPA").  Under this SPA, Jack (as the attorney of the registered proprietor, ie the little old lady) sold the land to a 3rd party.  The SPA was duly signed and both Jack (who had Jill) and the purchaser had lawyers on record to act for them. 
 
Midway through the SPA, Jack tells Jill that the IDT has been misplaced thus necessitating an application to the land office for a new title.  Jill squeaks that a supplemental SPA ought to be signed so as to cater for the delay that will be caused by the application.  Jack refuses this advice.  As a result, Jill discharges herself.  But before her discharge, Jill had put in an application on Jack's behalf to the Land Office for a new title.  Subsequently, Jack appoints the lawyer for the purchaser to also act for him. 
 
Matters run their course - the new IDT is issued and the land is transferred from Jack to the purchaser.  Soon thereafter, the purchaser sells the land on to a subsequent purchaser (triggering the deferred indefeasibility protection). 
 
Some two years later, the little old lady goes to the land office to pay her quit rent.  Lo and behold, the land office excuses her from paying the quit rent as she is no longer the registered owner.  She then finds out that demons and goblins (with the help of Jack) have stripped her of her title. 
 
She brings a suit naming Jill as the 2nd defendant. She pleads that Jill has been negligent - the gist of the particulars of negligence relate to the forged PA and Jill's failure to verify the same with her. 
 
Jill proffers a claim to the Scheme.  It happened to be Christmas time and all the Panel Solicitors were away in the South of France enjoying their caviar, foie gras, Cheval Blanc, Gwai Lo toy boys, cigars et al.  The only solicitor left (who could not afford such luxuries) was a partner in Messrs Sue and Grabbit (better known by its acronym ATFW).  To Jill's horror, Mr Grabbit was appointed by the Scheme to represent her. 
 
At the High Court and after a marathon of a trial, Jill was found liable.  The appeal that was subsequently proffered to the Court of Appeal was allowed.  The grounds make interesting reading. 

The Decision 

The Court of Appeal ordered the old lady to be compensated by damages on the basis that the subsequent purchaser was "bona fide" and "for value".  The parties found liable were the 3rd party "1st" purchaser (whose bona fides were found as a fact to be lacking) and the Land Office. 
 
In discharging Jill of liability, the Court of Appeal made two statements of law which are important / novel. 
 
First and in relation to a PA, a solicitor discharges her duty by checking that the formalities of the PA have been complied with.  There is no necessity to go behind the PA and make further investigations, eg checking with the donor.  In short, it is the formalities of the PA that are of concern.  Once these formalities have been verified, a solicitor has fulfilled her duty of care.  The following passage encapsulates this: 
 
Citing David Wong Dak Wah J (now JCA) in Chee Kiang v Johnson Tan Teck Seng & Anor [2011] 9 CLJ 498: 
 
“It would be too onerous a duty to require a solicitor to investigate a power of attorney which on the face of it is proper.  
As stated earlier it would be impractical and slow down the process of doing business in the state...  Accordingly it is my view that a properly executed power of attorney should be accepted unless cogent reasons show otherwise.” 
 
Secondly and more importantly, the Court held that Jill owes a duty only to her client Jack.  This is how Raus PCA puts it: 
 
“As can be gleaned from the above cited case and at the risk of repeating ourselves we must reiterate here that DW5’s (Jill) duty of care is confined to the forger alone and not the plaintiff.” 
 
There is no duty owed to the true owner. This is a significant development and takes our local jurisprudence away from the English position. 
 
The Grounds of Judgment can be read by referring to Yap Ham Seow v Fatimawati Ismail & Ors and Anor Appeal [2013] 9 CLJ page 577-622.