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Defrauded

Posted on April 1, 2000 | Posted in Lawyers' Issues

“Sometimes a faxed document is not what it seems to be and the consequences can be unfortunate.” This is the lead sentence of the 1999 unreported decision of Panet J. in McIlroy v. Stanton.

Why Unfortunate?

Purchasers retained a solicitor to help the purchasers avoid completing a real estate transaction. The agreement was conditional on the vendor obtaining approval for a septic system by June 22. The vendor did not have the approval on June 22 but did obtain it on June 24. The vendor altered the date on the certificate to June 22 and faxed the approval to his real estate broker, who re-faxed the copy to the solicitor.

The solicitor, being no fool, had requisitioned the original certificate. He found nothing in the copy to allow the purchasers to avoid the transaction and attended at the Registry Office prepared to complete the transaction. On closing, he received all closing documents, including the original certificate.

You must have anticipated what happened. The solicitor had checked to ensure that it was an original certificate and that it had been executed but he did not notice that the certificate was dated June 24, different from the date on the doctored version he had received. After closing, the solicitor delivered all closing documents to the purchasers. Of course, the purchasers noticed that the date on the original certificate was June 24.

The purchasers never wanted the property. They listed it for sale and sold it at a loss. They then sued the vendor and the solicitor for all of their losses.

Standards

The judge held that when the retainer is to attempt to avoid the closing of a transaction, a solicitor is bound to review the originals of all documents to verify that all important aspects of the documents are the same as the copies already received. Since the solicitor failed to do so, the solicitor was liable. Of course, the vendor was also liable but we doubt that there would be any recovery from him.

Damages

The solicitor argued that the purchasers had incurred no damages. They bought a property for its fair market value. The judge would have agreed were it not for the fact that the purchasers had never wanted the property. The judge awarded the purchasers all of their losses.

Warning

In this case, the solicitor closed the transaction personally. Normally someone else does it, whether it be an employed conveyancer or a freelancer. In these cases, it is even easier for fraud to go unnoticed – so be careful out there.

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