Royal Bank of Scotland plc v Etridge (No 2)

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RBS plc v Etridge (No 2)
RBS Fleet Street.jpg
CourtHouse of Lords
Full case nameRoyal Bank of Scotland Plc v Etridge (No.2), Barclays Bank Plc v Coleman, Barclays Bank Plc v Harris, Midland Bank Plc v Wallace, National Westminster Bank Plc v Gill, UCB Home Loans Corp Ltd v Moore, Bank of Scotland v Bennett, Kenyon-Brown v Desmond Banks & Co (Undue Influence) (No.2)
Decided11 October 2001
Citation(s)[2001] UKHL 44
[2002] 2 AC 773
[2001] 43 EGCS 184
[2001] 4 All ER 449
[2002] HLR 4
[2001] 3 WLR 1021
[2001] 2 FLR 1364
[2001] 2 All ER (Comm) 1061
[2001] 3 FCR 481
[2002] 1 LLR 343
[2002] 1 Lloyd's Rep 343
[2002] 1 P & CR DG14
[2001] Fam Law 880
[2001] NPC 147
Case history
Prior action(s)Immediate prior actions: Three appeals from pre-trial stage striking them out, five from High Court trial decision or Court of Appeal decision.
Subsequent action(s)Wallace and Harris interlocutory; arguable cases made out; ordered: wife could go to trial hearings as to the substantial evidence; Morris interlocutory; appeal wholly allowed (as no joint retainer etc.) no need for trial.
Case opinions
Held: (introductory summary of the panel's detailed judgments by Lord Bingham):
It is important that a wife (or anyone in a like position) should not charge her interest in the matrimonial home to secure the borrowing of her husband (or anyone in a like position) without fully understanding the nature and effect of the proposed transaction and that the decision is hers, to agree or not to agree. It is important that lenders should feel able to advance money, in run-of-the-mill cases with no abnormal features, on the security of the wife's interest in the matrimonial home in reasonable confidence that, if appropriate procedures have been followed in obtaining the security, it will be enforceable if the need for enforcement arises.

The law must afford both parties a measure of protection. It cannot prescribe a code which will be proof against error, misunderstanding or mishap. But it can indicate minimum requirements which, if met, will reduce the risk of error, misunderstanding or mishap to an acceptable level. The paramount need in this important field is that these minimum requirements should be clear, simple and practically operable...these minimum requirements are clearly identified in the opinions of...friends Lord Nicholls of Birkenhead and Lord Scott of Foscote. If these requirements are met the risk that a wife has been misled by her husband as to the facts of a proposed transaction should be eliminated or virtually so. The risk that a wife has been overborne or coerced by her husband will not be eliminated but will be reduced to a level which makes it proper for the lender to proceed.
Case opinions
Decision byLord Bingham of Cornhil
Lord Nicholls of Birkenhead
Lord Clyde
Lord Hobhouse of Woodborough
Lord Scott of Foscote
Undue influence, matrimonial home

Royal Bank of Scotland plc v Etridge (No 2) [2001] UKHL 44 (11 October 2001) is a leading case relevant for English land law and English contract law on the circumstances under which actual and presumed undue influence can be argued to vitiate consent to a contract.


In eight joined appeals, homeowners had mortgaged their property to a bank. In all cases, the mortgage was securing a loan that was used by a husband for his business, while his wife had not directly benefited. The businesses had failed, and the wife had alleged that she had been under undue influence to sign the security agreement. Therefore, it was contended that the security should be void over her share of the home's equity and that because of this the house could not be repossessed.[1] In the eighth appeal the core of the action was between the wife and her solicitor (Mr Banks); the bank was not joined as a party.

Reports of the final judgment[edit]

Outcomes differed among the eight fact patterns (cases) and three on very particular scenarios. As such the final appeals are reported together in law reports headed Etridge (or similar) but three reports detail endorsed dissents (with criteria/tests set) in the court below or go into further detail, as endorsed by the House of Lords:

  • Barclays Bank plc v Coleman & Anor (2000) 3 WLR 405
  • Bank of Scotland v Bennett (1999) 1 FLR 1115
  • Kenyon-Brown v Desmond Banks & Co (2000) PNLR 266 on solicitor's advice where acting jointly - including Wilson J imposing Conditions lettered a) to i) in the Court of Appeal, accepted as correct in law in the House of Lords.

Summary of outcomes at final appeal[edit]

Appeals allowed
  • Mrs Wallace
  • Mrs Bennett
  • Mrs Harris
  • Mrs Moore
  • Desmond Banks & Co (i.e. that solicitors' firm succeeded against the borrower)
Appeals dismissed
  • Mrs Etridge
  • Mrs Gill
  • Mrs Coleman


The House of Lords held that for banks to have a valid security they must ensure that their customers have independent legal advice if they are in a couple where the loan will, based on constructive or actual knowledge (either suffices), be used solely for the benefit of one person. A bank (or its solicitor) is "put on inquiry" (fixed with constructive knowledge) that there may be the risk of undue influence or misrepresentation, if they transact for security over a domestic home, but the loan will only benefit one person and not the other. The solicitor who would give independent advice, however, could also be acting as a solicitor for the bank, or both a husband and wife (or either partner). The solicitor would certify that he or she was satisfied that both borrowers had given their fully informed and true consent, although if this ultimately turned out to be wrong, the bank's security would not be affected. Instead, the possibility of an action in professional negligence against the solicitor would arise. This would be a personal action, and so it would not help the family stay in their home. Lord Bingham gave the first judgment, remarking that the principles set down in the opinion of Lord Nicholls commanded "the unqualified support of all members of the House."

Lord Nicholls held that if the banks ensured that the wife had had independent advice, they could not be responsible for that advice being defective. The presumption is rebutted if there is ‘expression of… free will’.[2] The idea of manifest disadvantage for presumed undue influence was rejected but replaced (like the milder tone in Allcard v Skinner) with a transaction that ‘calls for explanation’,[3] or one which ‘is not readily explicable by the relationship between the parties.’[4] In the ordinary case it is not ‘to be regarded as a transaction which, failing proof to the contrary, is explicable only on the basis that it has been procured by the exercise of undue influence.’[5] That is because it is nothing out of the ordinary. You are put on inquiry whenever a wife offers to stand as surety for her husband’s, or a company’s debts, where the loan is only going to be for the husband’s purposes. Once on inquiry, the bank must ensure that the spouse has independent advice and a certification that they have formed a truly independent judgment.[6]

Lord Clyde gave a short judgment, followed by Lord Hobhouse who cast doubt on the utility of class 2B,[7] identified in O'Brien. Lord Hobhouse summarised the outcomes of each claim.

Lord Scott gave a judgment dealing extensively with the particular facts of each claim.

See also[edit]


  1. ^ [2002] 2 AC 773
  2. ^ [2001] UKHL 44, at [7]
  3. ^ [2001] UKHL 44, at [14]
  4. ^ [2001] UKHL 44, at [21]
  5. ^ [2001] UKHL 44, at [30]
  6. ^ [2001] UKHL 44, at [79-80]
  7. ^ [2001] UKHL 44, at [107] and see also Lord Scott at [161]


External links[edit]