Cheshire Mortgage Corporation Limited v Morna Grandison (judicial factor of Longmuir & Co.) Blemain Finance Limited v Balfour & Manson LLP

These recent Scottish appeal court decisions provide a clear statement of the law relating to solicitors’ warranty of authority and confirm that there is no material difference between the law of Scotland and that of England and Wales on this issue. They will come as a relief to the Scottish legal profession.


Cheshire Mortgage Corporation Limited (CMC) and Blemain Finance Limited (Blemain) were both victims of separate mortgage frauds. In each case, two individuals stole the identities of innocent property owners and falsely represented that they were the owners of the property over which loans were sought.  The bank in each case agreed to lend to the fraudsters and appointed their own solicitors.  The fraudsters instructed the defender solicitors to draw up the loan and security documentation. Both defender firms acted in good faith, having carried out identity checks on their clients in accordance with normal practice. The lenders sued the solicitors who acted on behalf of the fraudsters for breach of warranty of authority. 

The solicitors, whilst recognising the existence of an implied warranty of authority, argued that the doctrine did not extend to warranting the identity of the person for whom a solicitor acts.  They also argued that the doctrine did not include any warranty as to whether a solicitor’s client was the owner or occupier of the property in question. The solicitors argued that they warranted only that they had authority to act on behalf of individuals who were already known to the banks and with whom the banks themselves were dealing. 

At first instance Lord Glennie rejected the banks’ arguments and found in favour of the solicitors.


The banks appealed and, in considering the scope of warranty of authority, the Court noted that in the English case of SEB Trygg [1], the Court of Appeal had held that “the warranty given by a solicitor, when conducting proceedings, was that he had a client who had instructed him to assert or deny the claims made against the opposing party.  The warranty did not extend to warranting that the client had title to sue, was solvent, had a good cause of action or defence or had any other attribute asserted on his behalf.”

In considering the Excel [2] case to be similar in facts and circumstances to the cases before them, Lord Clarke endorsed the view given by Judge Hegarty QC and stated that their Lordships were of the view that, “there are no reasons in principle or practice, for extending the somewhat limited scope and nature of the implied warranty of agents in the way in which the reclaimers’ (appellants) submissions in the present cases contended for,” and subsequently dismissed the banks’ appeals. 

Lord Clarke concluded that, in the present circumstances, “all that the agent is warranting is that he has a client and that client has given him authority to act.  It would be quite unreasonable and inappropriate to extend this to an implied warranty that his client has a certain attribute or attributes”.

As a secondary issue, the bank in the CMC case had also sought to rely on a letter of obligation which had been provided by the solicitors.  Their Lordships upheld the decision of Lord Glennie and held that it could not be enforced if the principal transaction was void and, in any event, the bank could show no loss flowing from the reliance.


The decision is significant as it is the first time that a Scottish appeal court has considered the scope of a solicitor’s warranty of authority as applied to identity fraud. It confirms that a solicitor who acts on behalf of an individual, who subsequently transpires to be a fraudster, does not guarantee the identity of their client; only that they have a client who has given them authority to act on their behalf. The decision will be welcomed by Scottish solicitors and their PI insurers.