Catherine Waller-Edwards v One Savings Bank PLC
[2023] EWHC 2386 (Ch)
One Savings Bank PLC v Catherine Waller-Edwards
28 March 2024
[2024] EWCA Civ 302
Court of Appeal
A woman remortgaged her house, partly to pay off her partner's debts. He had unduly influenced her. The bank knew about some of his debts but wasn't sure if they should have checked further. The court decided the whole deal looked like a joint loan, not just one person using the other, so the bank didn't have to check more.
Key Facts
- •Ms Waller-Edwards remortgaged a jointly owned property to One Savings Bank PLC.
- •The remortgage was partially to pay off existing debts and partially for the benefit of her partner, Mr. Bishop.
- •Mr. Bishop exerted undue influence over Ms Waller-Edwards.
- •The bank was aware that part of the loan (£40,000) was for Mr. Bishop's sole benefit (car and credit card debts).
- •The question was whether the bank was put on inquiry due to the possibility of undue influence.
Legal Principles
In surety cases (non-commercial situations where one borrower guarantees the debts of another or secured borrowing is used to pay off one borrower's debts), the lender is normally put on inquiry and must follow the Etridge protocol.
Barclays Bank plc v. O’Brien [1994] 1 AC 180, C.I.B.C. Mortgages plc v. Pitt [1994] 1 AC 200, Royal Bank of Scotland v. Etridge (No 2) [2002] 2 AC 773
In joint borrowing cases (loans for joint non-commercial purposes), the lender is not normally put on inquiry.
C.I.B.C. Mortgages plc v. Pitt [1994] 1 AC 200
A creditor is put on inquiry when a wife (or party in a relationship) offers to stand surety for her husband's (or partner's) debts. The bank is not required to make inquiries but must take steps to minimise the risk of undue influence.
Royal Bank of Scotland v. Etridge (No 2) [2002] 2 AC 773
In hybrid cases (loans partly for joint purposes and partly for one borrower's sole benefit), the court must look at the transaction as a whole to determine whether it is essentially a surety case or a joint borrowing case. This is a question of fact and degree.
This case's judgment
Outcomes
The appeal was dismissed.
The court held that the transaction, viewed holistically from the bank's perspective, was a joint borrowing for joint purposes. The fact that a portion was used to pay Mr. Bishop's debts did not, as a matter of fact and degree, transform it into a surety case.