Guarantor Solicitor’s Certificates document legal advice to a guarantor. The case of Australia Ltd v Amadio outlines caution to Australian Lawyers on this task.

Solicitors in Australia hold a crucial role in facilitating legal transactions, ensuring compliance with the law, and upholding the integrity of the legal profession. Among their responsibilities, issuing solicitor’s certificates stands out as a significant duty that requires diligence, honesty, and a thorough understanding of legal principles. Additionally, any such advice must comply with rule 11 of the Legal Profession Uniform Legal Practice (Solicitors) Rules 2015 (NSW) [Yes, Victoria uses the NSW rules]. This article examines the obligations of solicitors in Victoria concerning solicitor’s certificates, with particular reference to the landmark case of Commercial Bank of Australia Ltd. v. Amadio (1983) [1983] HCA 14 / 151 CLR 447 (‘Amadio ‘).

Solicitors in Victoria owe a duty of care to their clients and third parties affected by their actions. This duty encompasses providing competent legal advice, exercising reasonable skill and diligence, and acting in the best interests of their clients. When issuing solicitor’s certificates, solicitors must ensure the accuracy of the information provided and the validity of the transactions they certify.

Amadio serves as a seminal precedent highlighting the importance of solicitor’s duties in certifying transactions and providing advice to client’s on loans. In this case, the Amadio family, inexperienced in business matters, entered into a loan transaction with the Commercial Bank of Australia Ltd. The bank was aware of the family’s lack of understanding and relied on a solicitor’s certificate obtained from the family’s solicitor, which falsely stated that the son had received independent legal advice.

The High Court of Australia held that the bank had unconscionably taken advantage of the Amadio family’s vulnerability and declared the transaction voidable. Moreover, the Court emphasized the responsibility of solicitors in ensuring that their clients understand the nature and consequences of transactions, particularly when vulnerable parties are involved. Solicitors have a duty to ensure that their clients provide informed consent, free from any undue influence or deception.

In Victoria, solicitor’s certificates are commonly used in various transactions, including property transfers, financial agreements, and contractual arrangements. When issuing these certificates, solicitors must adhere to strict standards of professional conduct and ethical behaviour. They must exercise independent professional judgment, verify the authenticity of the information provided, and ensure that their clients fully comprehend the implications of the transaction.

Furthermore, solicitors must act with honesty and integrity, refraining from misleading or deceptive conduct that could compromise the validity of the certificate. Failure to meet these standards may result in professional misconduct proceedings and legal liability.

Rule 11 applies when acting for a borrower, guarantor, security provider and grantor of a security interest. In addition to the use of the Law Society of NSW forms, the rules refer to four LIV forms (Law Institute of Victoria).

There is a separate LIV certificate where the client is a borrower and another for guarantors. There is also an LIV certificate when using an interpreter or translator. The fourth form is an acknowledgement which needs to be signed by the client.

The forms are available to be downloaded from eLawforms here.

In addition to using these forms rule 11 prescribes:

  • certain documents should be retained on file including a copy of the client acknowledgment and loan documents
  • the necessity to use the verification process under the model participation rules when identifying a borrower, guarantor, security provider and grantor of a security interest.

Cogent Legal is happy to assist with your Solicitor’s Certificate of Advice, however, we will require 100 points of ID, all of your documents ahead of time and we do record a video of the advice for the file.