KENYON-BROWN v DESMOND BANKS & CO

A solicitor asked to provide independent legal advice to a spouse giving security for the other spouse’s borrowing must investigate whether the transaction is one into which the client could sensibly be advised to enter free from undue influence. Understanding the document and expressing willingness to proceed do not establish a free choice. Where the circumstances indicate trust and confidence, possible undue influence, and a transaction apparently benefiting the other spouse alone, the solicitor must obtain sufficient background information to assess the client’s interests and, where appropriate, advise against proceeding or refuse further involvement. A confirmation to the bank is justified only if the required advice has been given.

The appellant executed a second mortgage over jointly owned property to secure her husband’s indebtedness to National Westminster Bank plc. She alleged that her former solicitors had negligently failed to provide adequate independent advice, investigate the circumstances, or advise her to obtain separate representation.

The deputy High Court judge dismissed the claim, finding that advice and a warning had been given and that the appellant understood and wished to proceed. On appeal, the central issues were the scope of the solicitor’s duty where undue influence was possible, whether a conflict of interest required referral to another solicitor, and whether causation should be remitted for determination.

1. Appeal allowed. Lord Justice Mance, delivering the principal judgment, and Lord Justice Peter Gibson held that the solicitor had acted in breach of duty. Mr Justice Wilson dissented.
2. A solicitor instructed to advise a spouse in a transaction involving possible undue influence must satisfy himself that the client is free from improper influence and that the transaction is one into which the client could sensibly be advised to enter. The solicitor must investigate the circumstances sufficiently to make that assessment. The guidance in Royal Bank of Scotland v Etridge (No. 2) [1998] 4 All ER 705 was accepted and applied.
3. The appellant’s understanding of the mortgage and expressed wish to proceed did not answer the separate question whether her decision was freely induced. Actual undue influence had been established, and the circumstances also indicated a relationship of trust and confidence giving rise to possible presumed undue influence.
4. The husband’s long-standing relationship with the solicitor did not create an automatic conflict of interest. In relation to the mortgage itself, the husband’s role was essentially ministerial. However, the solicitor had insufficient information to conclude that the parties’ interests coincided. The apparently unlimited security benefiting the husband alone, the earlier mortgage, and the appellant’s unquestioning attitude required further investigation.
5. The solicitor should have investigated the amount and origin of the indebtedness, the reasons for the additional security, the prospects of repayment, and the appellant’s reasons for granting it. Having failed to do so, he was not entitled to confirm to the bank that appropriate legal advice had been given.
6. The case was remitted to the trial judge to determine causation, including what would have happened had the solicitor investigated further and advised the appellant properly. The parties were permitted to make further submissions, and costs were reserved.

• Court of Appeal (Civil Division): The appeal from the High Court judgment dismissing the claim was allowed. The causation issues were to be remitted to the trial judge.