Fay Chang Rhule v Angella Smith and another (Jamaica)

Formal compliance of a foreign power of attorney does not end an attorney’s professional responsibility where circumstances raise suspicion that it is forged and may facilitate fraud. The attorney must make reasonable further enquiries, even where the person at risk is not the attorney’s client and no private-law duty of care is owed to that person. This duty is owed to the attorney herself, the profession and the public. Failure to comply may breach Canon I(b), whether or not the fraud is completed or loss results. A disciplinary complaint under that Canon does not depend on the complainant having a civil cause of action against the attorney.

The appellant acted in a Jamaican conveyancing transaction on the apparent authority of powers of attorney, including one purportedly executed by the respondent, a co-owner of the property. The power was regular on its face but was in fact forged. The Disciplinary Committee acquitted the appellant of professional misconduct and negligence. The Court of Appeal upheld the negligence acquittal, finding no duty of care to the respondent, but found a breach of Canon I(b) because red flags required further enquiries and remitted the question of sanction.

The appeal concerned whether that professional obligation could arise despite the absence of a private-law duty of care to the complainant.

The Board dismissed the appeal and advised His Majesty accordingly.

1. The Board proceeded on the assumption, dubitante, that the appellant owed the complainant no duty of care. The question whether such a duty existed was not argued and was not decided.
2. Red flags concerning a power of attorney may arise in two broad situations. Where they indicate an invalidity unknown to the donee, an attorney acting for the donee may owe a duty to investigate further. Where they indicate that the power may be forged and that the donee is using it as an instrument of fraud, the attorney owes a duty to herself, the profession and the public not to facilitate or participate in fraud.
3. In the latter situation, reasonable additional checks are required before the transaction proceeds. The extent of the checks depends on the circumstances. Ignoring red flags indicating possible fraud falls within the conduct prohibited by Canon I(b), even if the fraud is not completed and no loss results.
4. A breach of Canon I(b) does not require a pre-existing private-law duty to the complainant. Section 12 of the Legal Profession Act permits an allegedly aggrieved person to complain, but does not make civil liability or consequential loss a condition of standing. Disciplinary sanctions, including restitution or payment of a fine to a complainant, do not convert the proceedings into a civil claim.
5. The Court of Appeal’s finding that the identified red flags required further enquiry was not open to challenge on this appeal. The Board therefore dismissed the appeal against the finding of professional misconduct. The sanction was outside the scope of the appeal.

• Privy Council: Dismissed the appeal against the finding of a breach of Canon I(b) and advised His Majesty accordingly.
• Court of Appeal of Jamaica: Acquitted the appellant of professional negligence but reversed the acquittal on Canon I(b), finding that red flags required further enquiry, and remitted sanction to the Disciplinary Committee.
• Disciplinary Committee: Acquitted the appellant of both charges; it later imposed a fine and costs following the Court of Appeal’s remittal.