Wives are Told: Don't Blame the Bank, Sue Your Solicitor: Royal Bank of Scotland v. Etridge (No. 2) and other appeals [1998] 4 All E.R. 705

Abstract

This case note considers the Court of Appeal decision in Royal Bank of Scotland v. Etridge (No. 2) and other appeals [1998] 4 All E.R. 705. It concerns the familiar scenario of a wife jointly mortgaging (or providing a guarantee for a mortgage of) the family home in order to secure financial support for a business run by her husband. The House of Lords decision in Barclays Bank v O'Brien [1994] A.C. 180 has given rise to a range of litigation in this area, and the spotlight has now moved from the banks to an examination of the quality of advice given by solicitors. The banks have heeded the warnings in O'Brien and now insist that wives are told to obtain independent legal advice. It will be seen that, following Etridge, if the bank tells the solicitor to give the wife legal advice upon undertaking the transaction, that will be sufficient to protect the bank, notwithstanding that the advice was either inadequate or even not actually given. The onus to ensure that proper advice is given is shifted squarely on to the solicitor. The note concludes that the decision is indicative of the shift of judicial opinion against wives seeking to avoid charges over matrimonial homes and in favour of banks.