A Judgement by the Court of Appeal, expected in the next month, will throw new light on the liability of solicitors who police fraudulent activity when handling mortgage transactions.
The High Court dismissed the claim of Midland Bank made two years ago in which it had accused Midlands practice Cox McQueen of breaches of contract, retainer and warranty.
The case centred on a mortgage transaction in which Cox McQueen acted for the bank and in which a wife's signature was forged.
The bank sued Cox McQueen unsuccessfully for losses it incurred.
Now it has appealed in a test case with wide ramifications for all lawyers who handle mortgage transactions.
In the appeal, judgment on which has now been reserved, Nicholas Stewart QC for Midlands argued that Judge Perrett should have ruled that the solicitors had failed to carry out instructions to obtain the wife's genuine signature and was therefore liable.
However, Alastair Norris QC, for Cox McQueen, argued that the firm's retainer was a professional retainer and not an insurance contract, whereby the firm was being invited to undertake a risk of fraud.
He said that in those circumstances the bank was only obliged to exercise reasonable care and skill, which it had done.