Appellant wife induced to sign charge over property — Respondent bank commencing possession proceedings — Possession order suspended pending outcome of House of Lords’ decision in Etridge — Wife found to have no defence — Whether judge failing to properly apply decision in Etridge
In order to secure the business liabilities of her husband, the appellant signed a charge over their jointly owned matrimonial home. The respondent bank subsequently sought possession of the property. The appellant claimed that she had been induced to sign the charge through misrepresentation on the part of her husband, and that although she had signed the charge in the presence of a solicitor, that solicitor had been instructed only by her husband and had failed to advise her in the matter.
In September 2000, judgment was given for the bank on the ground that the appellant had no defence. A warrant for possession was issued, but was stayed pending the House of Lords’ decision in Royal Bank of Scotland plc v Etridge (No 2) [2001] UKHL 44; [2001] 3 WLR 1021. The case was eventually heard in March 2002.The judge heard the application on its merits and again found in favour of the respondent bank, refuting the appellant’s assertion that, following the decision in Etridge, she now possessed a defence.
The appellant appealed that decision on the ground that the judge had failed to understand fully the effects of Etridge.
Held: The appeal was allowed.
Following Etridge, in order to avoid being fixed with constructive notice of the wife’s interest, the bank had to satisfy itself that the practical implications of the proposed financial transaction had been properly explained to her. This duty was more onerous than merely noting that a solicitor had witnessed the wife’s signature on documents, and fell higher than proving the bank’s “honest belief” that the wife had been properly advised.
In light of the change in the law following Etridge, the appellant had, at least, an arguable defence. Therefore the possession order was to be set aside and the matter was to go to trial.
Kenneth Rogers (instructed by Martin Nossel & Co, of Basildon) appeared for the appellant; David Wolfson (instructed by Wragge & Co, of Birmingham) appeared for the respondent.
Vivienne Lane, barrister