Undue influence — Independent advice — Judge finding appellant liable under charge to bank — Appellant claiming charge unenforceable because of husband’s undue influence — Whether bank discharging duty to appellant by obtaining confirmation from solicitor that independent advice given — Whether necessary for bank specifically to instruct solicitor to ensure such advice given — Appeal dismissed
The appellant and her husband, H, from whom she was separated, made a joint application to the respondent bank for a mortgage to be secured by a charge over the matrimonial home. H required the money to purchase additional premises for his garage business. On the application form, the purpose of the loan was described as being to discharge an existing mortgage and to purchase the garage premises.
The appellant and H instructed a solicitor, C, to act for both of them on the transaction, and the bank retained the same solicitor to provide a report on title. The report, which was on a standard form, confirmed, in para 9, that, where necessary, all joint borrowers or owners of the property to be charged had received independent advice.
The loan fell into arrears, and the bank brought possession proceedings against the appellant and H to enforce the charge. The appellant, by a defence and counterclaim, contended that the charge was not enforceable against her, since: (i) she had been induced to enter into it by undue influence on the part of H; (ii) the bank had been put on notice of that fact; and (iii) it had failed to take adequate steps to ensure that she was independently advised on the transaction. The bank made an application for summary judgment, contending that even if it had been put on notice, it had clearly discharged its duty to the appellant. The application was dismissed at first instance. It was then allowed on appeal, and a suspended possession order was made.
The appellant appealed, contending that: (i) there was no evidence that the bank had specifically instructed C to ensure that she received independent advice; and (ii) in the absence of such evidence, para 9 was not sufficient to amount to confirmation that C had brought home to her the risk she was running.
Held: The appeal was dismissed.
There was no doubt that C had been instructed to act, and had acted, for the appellant, and the bank was entitled to rely upon the confirmation in para 9 of the report as indicating that he had brought home to her the risk that she was running by entering into the transaction. Although the standard form was not well worded, it was sufficient, since the bank and C were both well aware of the problem to which it was addressed. It had not been necessary for the bank to give specific instructions to C to ensure that the appellant received independent advice, or to tell him what to advise her. A confirmation was a confirmation, whether or not the bank had specifically requested it: Royal Bank of Scotland v Etridge (No 2) [1998] 4 All ER 705 (CA) and [2001] UKHL 44; [2001] 4 All ER 449 (HL) considered.
John de Waal (instructed by Tyndallwoods, of Birmingham) appeared for the appellant; William Bojczuk (instructed by Eversheds, of Cardiff) appeared for the respondents.
Sally Dobson, barrister
