Governor and Company of Bank of Scotland v Bennett and Another: ChD 1997

Mrs Bennett defended the bank’s claim for possession of the matrimonial home charged to the bank to secure her husband’s borrowings. She said that her signature, both to the guarantee and to the legal charge, had been procured by her husband’s undue influence and that, in the circumstances, the bank must be taken to have had constructive notice of that impropriety.
Held: The court found in Mrs Bennett’s favour on the undue influence issue: ‘In my judgment the pressure and influence which, as I have found, Mr Bennett exerted on his wife both to procure her signature to the guarantee and to procure her signature to the charge was undue. This is a case in which, in my judgment, there was moral blackmail amounting to coercion and victimisation. Mrs Bennett was not, it seems to me, acting as a free and voluntary agent’. Both the guarantee and the legal charge were manifestly disadvantageous to Mrs Bennett and that the relationship between her and her husband was one of sufficient trust and confidence to raise a presumption of undue influence in relation to both transactions. The presumption had not been rebutted. On the facts of the case, the bank had been put on enquiry as to the circumstances in which Mrs Bennett had agreed to sign the guarantee and the legal charge and had failed to take reasonable steps ‘to satisfy itself that Mrs Bennett’s agreement . . . was properly obtained.’ As to the bank’s position having instructed solicitors: ‘A bank is in no worse position merely because, to its knowledge, the solicitor is acting both for the prospective surety and for the debtor.’ and ‘Unless a bank is put on notice by other matters within its knowledge that the solicitors have not performed their duty to give independent advice to the surety it is as much entitled [where the solicitor is acting also for the creditor] as in any other case to assume that the solicitors have been acting properly.’


Munby QC


[1997] 1 FLR 801


England and Wales


ConsideredMassey v Midland Bank Plc CA 1995
Where a woman executes a mortgage charging her property in favour of the bank to secure her partner’s debts, the bank is fixed with notice of the possibility of undue influence. It was not necessary that the couple should be married or cohabit. . .
ConsideredMidland Bank Plc v Serter and Another CA 8-Mar-1995
Mr S wanted to borrow money, and the bank sought security over the jointly owned house. Mr S signed the charge, and flew to the Netherlands to see Mrs W. After consuming a fair amount of alcohol, Mrs S also executed the charge and a certificate that . .
CitedBarclays Bank Plc v Thompson CA 7-Nov-1996
Knowledge acquired by solicitors whilst tendering independent advice to a signatory did not come to them as agents for the lenders because at that time their professional duty was owed to the signatory alone. Simon Brown LJ said: ‘The starting point . .
CitedBanco Exterior Internacional v Mann and Others CA 19-Dec-1994
A charge to secure a husband’s borrowings was enforceable where the wife’s signature had been taken before a solicitor who had explained it. Hobhouse LJ (dissenting) ‘It must be remembered that the starting point of this exercise is that the wife’s . .

Cited by:

Appeal fromGovernor and Company of Bank of Scotland v Bennett and Another CA 21-Dec-1998
The bank appealed an order setting aside a deed of guarantee and mortgage and denying the possession order sought. The guarantee had been given to support borrowings of the defendant’s company. The defendant was the wife of the director and had been . .
ApprovedRoyal Bank of Scotland v Etridge (No 2); Barclays Bank plc v Harris; Midland Bank plc v Wallace, etc HL 11-Oct-2001
Wives had charged the family homes to secure their husband’s business borrowings, and now resisted possession orders, claiming undue influence.
Held: Undue influence is an equitable protection created to undo the effect of excess influence of . .
Lists of cited by and citing cases may be incomplete.


Updated: 27 June 2022; Ref: scu.224828