Appellant entering two charges on matrimonial home – Appellant entering initial charge by husband’s undue influence – Mortgagee seeking to enforce charge – Judge making order for possession of property – Whether mortgagee taking reasonable steps to satisfy itself wife’s agreement properly obtained for second charge – Appeal dismissed
In 1984 the appellant (W) and her husband (H) charged their property (the 1984 charge), in favour of the respondent bank, to secure the debts of H. In 1989 the respondent entered into a new charge (the 1989 charge) with H and W to cover both a business loan and the property, and to avoid the need for a deed of priority. The relevant documents were sent to H and W’s solicitors and were signed by H and W. In January 1994 the respondent made a formal demand on H for the money owed on the business account and subsequently commenced proceedings. On 3 June 1998 the judge found that the 1984 charge had been obtained by H’s undue influence and was to W’s disadvantage. However, by the time of the 1989 charge, “she was very alive to the financial situation” and had obtained legal advice. An order for possession of the property was made. W appealed the order on the ground that the respondent had failed to take reasonable steps to ensure her agreement had been properly obtained, having regard to the history of the case. W relied upon Barclays Bank plc v O’Brien [1994] 1 AC 180 and submitted that: (1) the respondent was on notice that the 1984 charge had been obtained by undue influence and was liable to be set aside; and (2) the respondent should have drawn the solicitors’ attention to the fact that W had not been advised when entering the 1984 charge.
Held The appeal was dismissed.
The respondent was entitled to assume that a solicitor would carry out its duties competently. Accordingly, the solicitor was under a duty to advise W, and, particularly, to take into account whether she had been unduly influenced by her husband. It must have been apparent to the solicitor, in view of the disadvantage to W of the initial transaction, that she needed advice. A competent solicitor would have found out whether advice had been given in 1984. The respondent was entitled to rely upon the fact that W had been given legal advice. It was not for the respondent to tender such advice itself, nor to instruct a solicitor how to perform its duties. Therefore, the respondent had taken all reasonable steps to ensure W’s agreement had been properly obtained: Bank of Baroda v Rayarel [1995] 2 FCR 631.
James Counsell (instructed by Jacobs & Reeves, of Bournemouth) appeared for the appellant; Thomas Putnam (instructed by Lester Aldridge, of Bournemouth) appeared for the respondent.
Sarah Addenbrooke, barrister
