(1) It seems to me that the law on rescission of mortgages for undue influence after Etridge is completely backwards. Post-Etridge, the law says that if a wife is acting under the undue influence of her husband in agreeing to a mortgage of the family home, then the bank granting the mortgage is put on notice that the wife is acting under undue influence if the deal under which the mortgage is granted is really good for the husband and really bad for the wife. The bank can then reassure itself that the wife is not acting under undue influence by ensuring that she obtains independent legal advice, and the solicitor giving the advice certifies that she has been advised as to the effect of the transaction on her interests. If the wife then goes ahead, then the bank can breathe easy and assume that the wife has decided for herself that this is what she wants to do. (Though note that there is an exception to this – as shown by the Credit Lyonnais v Burch case – where a deal is SO bad that the willingness of the mortgagor to go ahead with it after having had independent legal advice is evidence that there is something REALLY funny going on.) If things subsequently go wrong, and the bank attempts to enforce the mortgage, the wife won’t be able to rescind the mortgage and the best she will be able to do is sue the solicitor who advised her about the effect of the transaction she was entering into for negligent advice. This seems to me to be completely wrong. The wife – who, we are assuming (otherwise there would be no issue), was induced by her husband’s undue influence to mortgage the family home – is made homeless, and is then told that that’s okay because she might be able to sue the solicitor who advised her about the mortgage for negligent advice. But, being homeless, suing someone will be the last thing she will be in a position to do. It would seem far more sensible for the law to say that if the wife turned out to have mortgaged her house under undue influence, she should be able to rescind the mortgage (whatever the bank’s degree of notice about the undue influence); and it will then be up to the bank to try to recover its money by suing the solicitor who advised the wife for negligent advice. This way, the wife will not be made homeless and the burden of litigation will be placed on the person best able to conduct it: the bank. The one problem with this is that the bank could only sue the solicitor for negligent advice if the solicitor was working for the bank in advising the wife as to the wisdom of the transaction she was entering into. This may be a problem as the courts might say that he was acting for the wife in advising her. But this problem is not insurmountable: so long as the bank gets the solicitor to report back to it as to his/her impression of the wife’s state of mind, then it shouldn’t be too difficult for the bank to sue the solicitor if he is negligent in reporting that the wife is acting of her own free will when she isn’t.
(2) We should also note a real oddity in the law on the rescission of mortgages for undue influence created by the decision of the House of Lords in Barclays Bank v O’Brien. It is well-established that the courts will not presume that a wife was acting under undue influence in agreeing to the mortgage of her house just because the deal under which the mortgage was granted was good for the husband and bad for the wife. That is because the courts make the assumption that as a matter of social fact, wives don’t generally act under the influence of their husbands. (It’s different for people who are engaged to each other – they are so loved up, it is quite easy for engaged person to influence his/her fiancée/fiancé into acting in a particular way. It is different once two people get married: then disillusionment sets in and it’s very hard for a wife to get her husband to do anything, and vice versa.) So they aren’t prepared to presume as between a wife and her husband that there existed a relationship of influence between them. So for a wife to establish that she was acting under her husband’s undue influence in agreeing to a mortgage she first has to prove that there actually existed a relationship of influence between them where she would do whatever her husband wanted her to do; if she can do that, then she can raise a presumption that her husband used his influence over her to get her to agree to the mortgage by showing that the deal under which she agreed to the mortgage was really bad for her and really good for her husband. This is all well and good. But if the wife can establish that she agreed to the mortgage because of her husband’s undue influence, that won’t be enough to allow her to rescind the mortgage. She will also have to show that the bank is affected by her husband’s undue influence: either because the husband was acting as the bank’s agent in getting her to enter into the mortgage, or because the bank had notice of the undue influence. And this is where the oddity comes in. O’Brien says that the mere fact that the deal under which the wife agreed to the mortgage was really good for the husband and really bad for the wife is enough to put the bank on notice that the wife is acting under the undue influence of her husband. But we’ve already seen that the mere fact that a deal was really good for the husband and really bad for the wife won’t be enough to make the courts think that the wife entered into that deal under her husband’s undue influence – so why should it be enough for the banks? It seems as though that when the courts approach a transaction with a view to determining whether the wife entered into it under the husband’s undue influence, they do so assuming that married women are bold, free spirits who decide for themselves what they are going to do; but the courts at the same time instruct banks who are contemplating entering into a transaction with a married couple to assume that married women are quivering, timorous creatures who vulnerable to being pushed around by their husbands into doing whatever their husbands want. As I say, it’s very odd.