Husband remortgaging matrimonial home to finance business – Husband and wife’s interests in property charged – Business in voluntary liquidation – Bank obtaining order for possession – Wife seeking to set aside charge as against her share of property – Whether husband having misrepresented effect of charge – Whether wife executing charge under undue influence – Claim dismissed
The plaintiff’s husband, T, ran a steel fabrication business which had an account at the Swindon branch of the defendant bank. The business traded well until June 1991 when it ran into a serious cash flow problem resulting in its overdraft exceeding its limit of £100,000. The defendant agreed to T’s request to extend the overdraft limit to £150,000 on the provision of a first charge over the business premises and a second charge on the plaintiff and T’s matrimonial home. A request form was sent to T and the bank, which had the first charge over the matrimonial home. The plaintiff and T signed the charge at the bank. At the top of the final page of the charge were the words, ‘Warning. This [mortgage] covers the liabilities of somebody else. If they do not repay, the bank might sell the charged asset. You are STRONGLY recommended to seek independent advice before signing.’ At a subsequent meeting the plaintiff signed a standard form document in which she purported to ‘confirm and acknowledge’ that she had been strongly recommended to obtain legal advice before signing the charge and had declined to accept the recommendations (‘the acknowledgement’). The charge was executed. The financial position of the business did not improve and in 1993 it went into voluntary liquidation.
The plaintiff issued proceedings and claimed that the charge as against her share of the property should be set aside on the basis that she had executed the charge pursuant to misrepresentations or under T’s undue influence. The bank counterclaimed for possession of the house and obtained summary judgment against T.
