Bank Of Scotland v Hill & Anor

Where a bank is on inquiry about possible undue influence in a mortgage transaction, it may ordinarily rely on written confirmation from a solicitor acting for the wife that appropriate independent legal advice has been given. The confirmation is not ineffective merely because the bank did not separately instruct the solicitor to ensure that advice was provided. The court construes the confirmation in its commercial context and avoids unrealistically fine distinctions in standard conveyancing documents. Where the confirmation sufficiently addresses the risk, the bank is entitled to treat its duty as discharged and the wife’s defence based on undue influence may have no reasonable prospect of success.

The bank brought possession proceedings concerning Hillfields Farm, which had been mortgaged by Linda Tudor and her husband. Ms Tudor alleged that her husband had procured the remortgage through undue influence and duress, and that the bank had failed to take adequate steps after being put on inquiry.

The Redditch County Court struck out her defence and counterclaim and made a suspended possession order. The appeal concerned the meaning and effect of paragraph 9 of the solicitors’ report on title, which confirmed that joint borrowers and joint owners had received independent legal advice. The central question was whether that confirmation was sufficient despite the absence of evidence that the bank had specifically instructed the solicitors to provide such advice.

1. Appeal dismissed. The defence and counterclaim could not possibly succeed, so it was appropriate to strike them out without a trial.
2. The bank was conceded to have been on inquiry as to the validity of the transaction. Under Royal Bank of Scotland v Etridge (No 2) [2001] 3 WLR 1021, the bank could ordinarily rely on confirmation from a solicitor acting for the wife that the risks and practical implications of the transaction had been brought home to her in a meaningful way.
3. Paragraph 9 of the report on title expressly referred to all joint borrowers and joint owners having received independent legal advice. Although the bank’s standard instructions were imperfectly matched to the report, it was unrealistic to suppose that the solicitors or the bank understood the confirmation as excluding a joint owner who was the wife.
4. The confirmation was not negated by the absence of evidence that the bank had instructed the solicitors to ensure that independent legal advice was provided. The bank could not dictate the advice, but it was entitled to rely on the solicitor’s confirmation that the advice had been given.
5. Lord Justice Pill agreed, emphasising that written confirmation by a solicitor acting for the wife supplied the reassurance contemplated by Etridge. Sir Martin Nourse also agreed. The possession order was suspended until Friday 11 October 2002. There was no order for costs on the appeal.

• Court of Appeal (Civil Division): The appeal from the order of His Honour Judge Geddes was dismissed. The judge had struck out the defence and counterclaim and made a suspended possession order.
• Redditch County Court: Deputy District Judge Sheldrake had dismissed the bank’s application for strike-out or summary judgment. His Honour Judge Geddes subsequently allowed the bank’s appeal and struck out Ms Tudor’s defence and counterclaim.