![]() ![]() This might produce an anomaly under s 2(2) of the Misrepresentation Act 1967 in some cases, though not in the present one where the bank could not invoke the provision directly. In those circumstances, the wife's right to have the mortgage set aside in toto against her husband was also enforceable against the bank. On the facts in the present case the wife would not have executed a legal charge if a limit in excess of £15,000 had been proposed. The charge could not be setĪside on terms. Held – allowing the appeal: Where a party had the right in equity to set a charge aside, that was a right to have the charge set aside in its entirety. There was no suggestion that the bank was, at the material time, aware of the failure of the solicitors to advise the wives separately and no point was taken in the Court of Appeal on Massey v Midland Bank plc 1 FCR 380 – a Court of Appeal decision reached since the hearing in the court below, to the effect that it ought to be a sufficient compliance with the O'Brien test if apparently independent legal advice was taken, the mortgagee not generally being concerned with the nature and extent of the advice given. The bank, effectively adopting the view of the Judge, submitted that she was only entitled to have it set aside on terms that she acknowledged that it was a valid security for £15,000. She submitted that she was entitled to have the mortgage set aside in toto. The present dispute was as to the extent of the wife's remedy. It was not in issue that the legal charge was prima facie liable to be set aside by the wife. He therefore gave judgment for the bank against the wife for £15,000 plus interest. The Judge held that the case fell within Barclays Bank v O'Brien 1 FCR 357 (1994) Tr LR 165 so that the legal charge was prima facie liable to be set aside by the wife on terms that she acknowledged that it was a valid security for £15,000. Further, when, following default in payment, the bank sought to enforce the charge, the Judge found that the husband had innocently misrepresented to the wife that his and her joint commitment was limited to £15,000, that the wife was prepared to risk £15,000, that the bank had failed to take reasonable steps to ensure that the wife understood her liability, and therefore that the bank had constructive notice of the husband's misrepresentation. In fact each couple was advised by a separate person in the same solicitors' firm, but neither wife received advice separately from her husband. The bank manager stipulated that the wife (and the partner's wife) should be given independent advice. The bank agreed, subject to taking a mortgage over each of the partners' houses. The husband and his partner applied to the plaintiff bank for an overdraft of £30,000. The husband carried on business in partnership with another. The defendants, who were husband and wife, owned a house. Property – joint second mortgage by husband and wife for debt of husband and business partner – innocent misrepresentation by husband to wife – wife's right to set aside – question of extent of her liability.īank – extent of bank's duty to third party – good banking practice. ![]()
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