UNDUE INFLUENCE.

Wife charging interest in matrimonial home to secure husband's partnership business debts to bank - bank's instructions to solicitors stating 'advance to be made' whereas intended security covering existing and future advances - no manifest disadvantage to wife - bank not fixed with constructive noticeNational Westminster Bank Plc v Leggatt and another: CA (Kennedy, Waller and Jonathan Parker LJJ): 19 October 2000

In 1972 the defendants, husband and wife, executed a charge over their matrimonial home to secure their joint and several unlimited liabilities to the bank.

In 1976 the wife signed a surety to cover the husband's partnership business debts to the bank.

In 1990 the bank agreed to increase the advance to the husband's partnership business and sent, on the husband's request, instructions to solicitors with a charge form stating, by mistake, that the security was to cover an 'advance to be made' and requesting them to have the charge explained to the wife and executed by the defendants.

The husband and wife later attended the solicitors' office where a solicitor explained the charge to the wife in the husband's presence, had the charge form executed by both, and certified his explanation to the wife.

The bank brought proceedings for possession of the charged property.

The wife's defence of undue influence by her husband, manifest disadvantage to her and misrepresentation as to the words 'advance to be made' was rejected by the judge, who made a possession order against both defendants.

The wife appealed.

Roland Higgs (instructed by Georgiou Nicholas) for the wife.

David Wolfson (instructed by Wilde Sapte) for the bank.

The husband did not appear and was not represented

Held, dismissing the appeal, that, since the partnership was going to collapse unless the 1990 charge was signed and the bank could have enforced the 1976 surety against the wife for her unlimited liabilities to the bank, it was to the wife's advantage to sign the 1990 charge; the innocent mistake in the bank's letter was an immaterial inaccuracy and did not fix the bank with constructive notice so as to disable it from relying on the solicitor's independent advice given to the wife.