The Court of Appeal unanimously dismissed the Appeal and upheld the decision of HHJ Mitchell in Bournemouth & Pool County Court (as also upheld on 1st Appeal by Johnson J in the High Court), that the Respondent bank was not on constructive notice of the undue influence exerted on the Appellant by her former partner Mr Bishop (1st Defendant to the claim).
The issue for the Court of Appeal to determine was whether and when, in situations of “hybrid” lending (part joint borrowing and part borrowing to pay the debts of one borrower alone) the lender is put on constructive notice of the risk of undue influence by one borrower on the other. The leading judgment of the Master of the Rolls states, “In my judgment, however, we must apply Etridge to the facts as found by the trial judge. Etridge does not demand that, in a hybrid case, a lender is put on inquiry unless the element of the transaction that is for the sole benefit of one of the borrowers is trivial. Instead, it requires the court to look at a non-commercial hybrid transaction as a whole and to decide, as a matter of fact and degree, whether the loan was being made for the purposes of the borrower with the debts, as distinct from their joint purposes. In this case, the judges below decided, and I would agree (though there is no appeal on the point), that the loan was, looked at as a whole and from the point of view of what the bank knew, a joint borrowing made for their joint purposes.”
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Antonia Halker
John Ditchburn