One Savings Bank PLC v Catherine Waller-Edwards
[2024] EWCA Civ 302
Catherine Waller-Edwards v One Savings Bank PLC
27 September 2023
[2023] EWHC 2386 (Ch)
High Court
A woman's ex-partner tricked her into a mortgage. She sued the bank, claiming they should have known. The court said the bank didn't have enough warning signs, even though some money went to her ex-partner without her knowledge.
Key Facts
- •Catherine Waller-Edwards (Appellant) appeals an order for possession of Spectrum, 32B Beaucroft Lane, Wimborne, Dorset, and adjoining land.
- •One Savings Bank plc (Respondent) sought possession based on a legal charge securing a loan.
- •The Appellant claims her consent to the charge was procured by undue influence from her then-partner, Nicholas Bishop.
- •The Judge found undue influence but ruled the Respondent wasn't put on inquiry.
- •The Appellant challenges the Judge's finding on inquiry and the rejection of her Section 199 Law of Property Act 1925 argument.
- •The Respondent's understanding was that the loan was for joint purposes, partly to repay existing mortgage and partly for purchasing another property.
- •A significant portion of the loan (£142,000) went to Bishop's ex-wife, unknown to the Respondent.
- •The solicitor, Mr. Clake, acted for all parties and allegedly failed to report information that might affect the Bank’s decision to lend.
Legal Principles
Undue influence renders a contract voidable.
Barclays Bank v O'Brien [1994] 1 AC 180
A creditor is put on inquiry when a wife offers to stand surety for her husband's debts; combination of transaction not financially advantageous and substantial risk of legal wrong.
Barclays Bank v O'Brien [1994] 1 AC 180, 196E
A bank is put on inquiry whenever a wife offers to stand surety for her husband's debts.
Royal Bank of Scotland plc v Etridge (No. 2) [2001] UKHL 44 [2002] 2 AC 773, [44]
In joint advances, a bank is not put on inquiry unless aware the loan is for one party's purposes, not joint.
CIBC Mortgages plc v Pitt [1994] AC 200
Section 199(1) Law of Property Act 1925 protects purchasers from prejudicial notice unless the notice is within their knowledge or that of their solicitor, acting as such, in the same transaction.
Law of Property Act 1925, Section 199(1)
A solicitor's knowledge is imputed to their client only if acquired while acting for that client in the same transaction.
Halifax Mortgage Services Limited v Stepsky [1996] Ch. 207; Barclays Bank v Thomson [1997] 4 All ER 816
Outcomes
Appeal dismissed.
The Judge correctly found the Respondent was not put on inquiry and Section 199 protected the Respondent from imputed knowledge of the Divorce Payment.