Read the full judgment text of CACV 000386/2006 on BabelCite. This Court of Appeal judgment was delivered on 23 January 2008 before Rogers VP, Le Pichon JA and Wright J.
Civil law – undue influence – mortgage – all-monies charge – appeal – whether presumption of undue influence arises between husband and wife – whether creditor bank took reasonable steps to bring home to wife practical implications of the transaction – Royal Bank of Scotland PLC v Etridge (No. 2) – constructive notice – joint ownership of matrimonial home – Order 88 of the Rules of High Court – the wife, of limited Chinese education and submissive role in a traditional Chinese marriage, signed an all-monies charge over the jointly-owned matrimonial home as security for her husband's mortgage and other debts to the bank – the husband defaulted and the bank sought to enforce the charge against the wife – Recorder held that presumption of undue influence arose, that the bank had constructive notice, and that the bank had failed to take reasonable steps – whether the transaction could be regarded as one outside the 'ordinary' case contemplated by Lord Nicholls and Lord Scott in Etridge – whether explanation by the bank's solicitors' conveyancing clerk was sufficient to discharge the bank's duty – the court held that the case fell outside the 'ordinary' by reason of the wife's traditional, submissive upbringing, limited education, and the husband's non-disclosure that the all-monies charge would secure future debts beyond the mortgage loan – the explanation given was woefully inadequate, particularly in failing to explain the wife's potential exposure to liabilities beyond the mortgage loan – sufficiency of an explanation must be gauged in the context of the particular audience – appeal dismissed with costs to the wife, the wife's costs to be taxed in accordance with the legal aid regulations.
Legal issues: Whether presumption of undue influence arose between husband and wife · Whether bank took reasonable steps to bring home to wife the implications of the charge
Outcome: Appeal dismissed. The all-monies mortgage against the wife was set aside and the bank's claim against the wife was dismissed.
Cited by 1 case