Guarantee — Legal charge over matrimonial home — Wife acting surety — Bank seeking possession of property — Assumption of presumed undue influence by husband — Whether bank took sufficient steps to avoid construction notice of assumed undue influence — High Court holding bank took reasonable steps and was entitled to order for possession — Court of Appeal dismissing appeal — Judgment for bank
The defendants were married when they purchased the leasehold interest of 36 Litchfield Way, London NW11, but later separated. In 1987 the husband, who was up until then a sponsored member of Lloyds had to make his own arrangements to continue his Lloyds membership. To that end he arranged with the plaintiff a bank guarantee, which was to be supported by a charge on the property. C was the solicitor acting on behalf of both defendants and the plaintiff in connection with registering the legal charge. He witnessed the husband’s signature, but as the wife was abroad until after the deadline he telephoned her to explain the nature of the arrangement. The husband then secured the wife’s signature on the charge.
The husband defaulted in payments under the guarantee and when both husband and wife failed to comply with the plaintiff’s demands the plaintiff sought to enforce its security. It applied for final judgment under Ord 88 of the Rules of the Supreme Court for possession of the property. The master refused that application, but the plaintiff appealed to the High Court. The wife resisted the order on the ground that the bank had failed to comply with its duty to explain the legal charge to her. The bank’s appeal was allowed and the wife was ordered to give up possession of the property: see [1994] EGCS 45. The wife appealed.
