Duties of lending bank – Duties of advising solicitor
Librarians who have assiduously archived the countless decisions that followed in the wake of Barclays Bank plc v O’Brien [1994] 1 AC 180 can now recover, by disk or otherwise, a copious amount of storage space. For the time being, legal researchers in this area of law will seldom, if ever, need to go further back than the comprehensive restatement undertaken by the House of Lords in Royal Bank of Scotland v Etridge (No 2) [2001] UKHL 44; [2001] 43 EG 184 (CS).
Those of us who have not just emerged from a stretch in solitary will be aware that an O’Brien situation can arise where typically (although not invariably) a lending bank seeks to enforce a charge over a jointly owned matrimonial home, and does so in order to recover business loans made to the husband. Critically, the loans would not have been made if the charge had not been created or extended accordingly. O’Brien comes into the picture in the many cases where the wife contends that: (a) she would not put her signature to the charge but for undue influence (or a misrepresentation) on the part of her husband; (b) the bank was, or should have been, aware of the risk of such undue influence; and (c) the bank failed to ensure that she was made to understand the true nature of the transaction she was entering into.
A not uncommon sequel to an unsuccessful O’Brien defence is a claim by the wife against her advising solicitor that he had made a bad job of explaining the transaction to her.
In very broad terms, we can say that the banks have chalked up significant wins on issues (a) and (c), while suffering a minor reverse on issue (b). Solicitors will be greatly relieved to learn that, contrary to what was stated in the Court of Appeal, their advisory duties will not normally extend to making inquiries into the state of the marriage, or detailed inquiries into the financial health of the husband’s business.
That said, it would be foolhardy for a bank or solicitor to conduct an interview with the wife without first preparing a checklist based upon the various matters emphasised in the leading speeches in Etridge.
Related item:
Duties of lending bank – Duties of advising solicitor
Librarians who have assiduously archived the countless decisions that followed in the wake of Barclays Bank plc v O’Brien [1994] 1 AC 180 can now recover, by disk or otherwise, a copious amount of storage space. For the time being, legal researchers in this area of law will seldom, if ever, need to go further back than the comprehensive restatement undertaken by the House of Lords in Royal Bank of Scotland v Etridge (No 2) [2001] UKHL 44; [2001] 43 EG 184 (CS).
Those of us who have not just emerged from a stretch in solitary will be aware that an O’Brien situation can arise where typically (although not invariably) a lending bank seeks to enforce a charge over a jointly owned matrimonial home, and does so in order to recover business loans made to the husband. Critically, the loans would not have been made if the charge had not been created or extended accordingly. O’Brien comes into the picture in the many cases where the wife contends that: (a) she would not put her signature to the charge but for undue influence (or a misrepresentation) on the part of her husband; (b) the bank was, or should have been, aware of the risk of such undue influence; and (c) the bank failed to ensure that she was made to understand the true nature of the transaction she was entering into.
A not uncommon sequel to an unsuccessful O’Brien defence is a claim by the wife against her advising solicitor that he had made a bad job of explaining the transaction to her.
In very broad terms, we can say that the banks have chalked up significant wins on issues (a) and (c), while suffering a minor reverse on issue (b). Solicitors will be greatly relieved to learn that, contrary to what was stated in the Court of Appeal, their advisory duties will not normally extend to making inquiries into the state of the marriage, or detailed inquiries into the financial health of the husband’s business.
That said, it would be foolhardy for a bank or solicitor to conduct an interview with the wife without first preparing a checklist based upon the various matters emphasised in the leading speeches in Etridge.
Related item: PP 2002/114
