Posted on 27.8.13 by Mark Deverell
I was made to do it………with the topic of criminal coercion and undue influence being used to make a person do something that they don’t want to, it shouldn’t be forgotten that this can often apply in the Civil Courts as a defence to some claims.
Perhaps the most common case where this is argued arises where a bank or creditor tries to enforce its security over a joint family asset where in order to have continued to give financial support to one of the parties, for example, the Husband.
In this scenario, the wife pledged her interest in the asset at the same time to secure the funding to her Husband’s business and/or for his debts. In such a case it was historically presumed that for the wife to have signed her interest the undue influence or coercion would have naturally arisen between husband and wife. This, in those circumstances, would mean that the wife’s interest in the asset could be excused from the security that had been granted over it.
It was not until the 2002 case of The Royal Bank of Scotland –v- Etridge (No. 2) that the House of Lords noted that this presumption of influence by a husband on a wife was not irrefutable. The Lords also set out some guidelines that if followed would make the ability of the wife to make such a claim far harder.
Whilst it remained that if a spouse could still show that she had placed trust and confidence in her husband and that the transaction could not be explained in an ordinary way then she could rely upon that presumption to force the Bank or the person trying to enforce that contract to show that she should be bound by it.
This has led the Banks since that case to require, where a spouse is to give security over a jointly owned asset, to make sure that appropriate legal advice is provided. The banks in requiring some advice to be given (normally by a Solicitor) is trying to make sure that at no stage could an argument of undue influence be used against them in preventing it from enforcing its security and in those circumstances it becomes far more difficult after the event for a spouse to try to avoid that liability.
However if it can be shown that cohesion or undue influence was used in the first place, and, there is no certificate by a Solicitor endorsing that appropriate advice was given before the signing of the security, then in those circumstances, a successful ‘Defence a Bank’s claim can be raised and is often successful.
So the principle of undue influence in the case still remains but now if a person is given the correct advice and the bank can rely upon that it makes it far harder for a person to use that defence when the bank tries to enforce its claim.
The twist in the tail for this however is to make sure that the advice from the Solicitor is correct! If that can’t be shown or was poor then a defence can still be raised because of this.