National Westminster Bank plc v Beaton

Solicitor acting in purchase of property – Existing second charge on matrimonial home to secure husband’s office premises – Solicitor inquiring whether bank requiring new charge – Bank requesting solicitor to act on its behalf and to advise wife – Debts unpaid – Possession order against husband and wife – Wife appealing and contending solicitor acting as agent of bank – Appeal dismissed In 1984 a loan of £20,000 was made to the appellant’s husband for the acquisition of office premises and was charged by way of a second charge on the then matrimonial home, a property in the sole name of the husband, but in which the wife had a joint beneficial interest. The charge was limited to £20,000. In 1986 the property was to be sold and another property purchased in the joint names of the husband and wife. W, the solicitor acting in this purchase, wrote to the bank to ask if it required a new charge over the new property. W asked for the charge forms to be sent with the bank’s instructions “to act on your behalf in the matter”. The bank replied, indicating that it was willing to have the second charge over the new property, confirming that it wished W to act on its behalf and concluding with a postscript requesting W to explain the purport of the document to the wife “as security is being taken to support the sole liabilities of [the husband]”. The charge in fact secured all the husband’s debts to the bank. The debts were not repaid and the bank obtained possession. The wife claimed that W had not given her any advice and that she had executed the charge believing it to be the same as the previous charge, ie limited to £20,000. The possession order was upheld on appeal by the judge who held that the bank was not affected with the knowledge of W. The wife appealed contending that the judge had taken too narrow a view of the scope of W’s retainer from the bank and had failed to distinguish between the extent of W’s retainer and that of the solicitor in Midland Bank plc v Serter [1995] EGCS 38. Held The appeal was dismissed. 1. By adding the postscript to its letter asking W to give advice to the wife, the bank was neither making W its agent nor constituting itself vicariously liable. The mere fact that W had been asked to give that advice to the wife did not constitute him an agent for the bank. When discharging that aspect of his retainer, W was acting exclusively for the signatory, not for the bank. It was clear from the cases that there was no room in such a situation for the concept of agency. The court would not be astute to infer agency when the relationship was explicable on another basis, and the case was indistinguishable from Midland Bank plc v Serter [1995] EGCS 38 and Barclays Bank plc v Thomson unreported November 7 1996. 2. The advice was given by W in his capacity as solicitor for the wife and not in his capacity as solicitor to the bank, and therefore section 199(1)(ii)(b) of the Law of Property Act 1925 had no application. Moreover, per Henry LJ, any knowledge acquired by W had not come to him in his capacity as the wife’s solicitor but in another capacity, and therefore section 199 had no application. Simon Buckhaven (instructed by Fischer & Co) for the appellant; Marc Dight (instructed by Isadore Goldamn) appeared for the respondent.