England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION
Mr. Peter Leaver Q.C.

		Royal Courts of Justice Strand, London, WC2A 2LL
		16 November 1999

Tuesday, 16 November 1999

LORD JUSTICE MANCE:

1. This is an appeal against the judgment of Mr Peter Leaver Q.C. sitting as a deputy High Court judge, whereby he dismissed a claim made by Mrs Jessica Kenyon-Brown against her former solicitor, Desmond Banks & Co. On 12^th January 1993, Mrs Kenyon-Brown executed a second mortgage in favour of National Westminster Bank plc over a holiday house, Rock Cottage, Melplash, Bridport, which she owned jointly with her then husband. Her claim against Desmond Banks & Co., whose sole principal was Mr Banks, was for negligence and/or breach of contract consisting of alleged failure to give her any or adequate advice on that occasion.
2. Mrs Kenyon-Brown met her future husband in 1969, when she went to work for his company, K.B. Insurance Brokers (London) Ltd. ("K.B."). She married him in 1972, when she was about 24, and she commenced divorce proceedings in July 1996. He is 14 years older than she is. After their marriage, she continued to work within K.B., becoming a director in K.B. and in its subsidiary or associated company, P.M. Insurance Services Ltd. ("P.M."). At some point she also became a shareholder in K.B, holding an equal number (525) of "B" shares to her husband. On 7^th April 1986 the two of them purchased Rock Cottage in joint names for about £50,000 with the assistance of a £30,000 mortgage from Nationwide Building Society. In December 1987, a controlling interest in K.B. and P.M. was sold to a South African company, Crusader Life Assurance Corporation Ltd. ("Crusader"). This sale was with Mrs Kenyon-Brown's full agreement, since, although she envisaged continuing to work for K.B. and P.M., she hoped that in three or so years she and her husband would be able to retire. In early May 1988 they sold their then home in London and acquired 53 Dene Road, Northwood with the help of a £30,000 mortgage from National Westminster Bank plc. The defendant acted for both of them on that purchase. He acted over the years on many occasions for K.B. and P.M. on Mr Kenyon-Brown's instructions. Much less frequently he also acted for Mrs Kenyon-Brown.
3. K.B. and P.M. did not prove profitable acquisitions for Crusader, and in the latter part of 1989 Mr Kenyon-Brown negotiated to repurchase the shares which had been sold. Mrs Kenyon-Brown was very much against doing this, but was, in the judge's words, "overborne by her husband and very reluctantly agreed to the repurchase". To fund the repurchase, Mr Kenyon-Brown borrowed monies from the National Westminster Bank plc Bude branch, where he (but not Mrs Kenyon-Brown) had an account. These monies were secured by a second mortgage effected by Mr and Mrs Kenyon-Brown over their matrimonial home, 53 Dene Road. Before the execution of this mortgage, the bank required to be assured that Mrs Kenyon-Brown had received legal advice. Advice was given her by Mr Banks, who arranged for a limit of £150,000 to be included in the mortgage and drew attention to the fact that the second mortgage would cover any sums lent to Mr Kenyon-Brown, but would not cover or enable any lending to Mrs Kenyon-Brown. At a meeting with Mrs Kenyon-Brown alone on 15^th November 1989, Mr Banks asked her why it was that, if she and her husband were buying K.B. back, the money should be lent to Mr Kenyon-Brown alone. Mrs Kenyon-Brown did not know, so Mr Kenyon-Brown joined the meeting. Mr Banks' attendance note records then that

"We discussed the pros and cons of the matter at some length. Eventually Mrs Kenyon-Brown decided that, as she trusted her husband and had no account at the Bude branch, she would proceed. I drafted a letter for Mr Kenyon-Brown to sign in which he said that the money would be used in buying back K-B jointly between them. I explained that this was only an agreement to agree, as it did not lay down the proportions in which they would be buying the company. No decision had been made on that. It depended on accountants' advice. Mr Kenyon-Brown would not have to pay Capital Gains Tax if he sold his shares on retirement at the age of 60, so might take a larger proportion.

I witnessed the signatures of both of them to the deed and gave each of them a copy. I told Mrs Kenyon-Brown that she should telephone me if she should change her mind about wanting to go ahead, although I was satisfied that she was content and had understood what I had said."

4. Mr Banks does not therefore appear to have been aware or elicited that Mrs Kenyon-Brown had been overborne when agreeing to the proposed repurchase from Crusader. But he was aware that she was ready to act and commit her own assets on the basis of trust in her husband. The shares were re-transferred on 1^st July 1990, with Mr Kenyon-Brown in fact receiving the lion's share (1825) and Mrs Kenyon-Brown receiving the balance (125). It does not appear that K.B. prospered any more thereafter than it had under Crusader's control. On 29^th September 1992 the bank's Bude branch wrote to Mr Kenyon-Brown regarding a company development loan of over £7000 and a private loan account of over £180,000, in addition to which the letter suggests that use was also being made of a company overdraft facility of £10,000 and a private overdraft facility of £10,000. The letter went on:

"The Bank requires within this further short period the following:-

1. An execution of a Second Mortgage over the Bridport property (I have previously asked for information from you on this point in order to complete our Mortgage form) and now await your further advices.

2. Tangible progress towards a re-mortgage over your private residence (i.e. a letter of intent or offer received).

The Bank is becoming increasingly concerned at the unsatisfactory position developing here and is not prepared to allow continued interest roll-up in the absence of tangible progress towards repayment/reduction and in the absence of any progress being made on the both points forementioned it would seem that a sale of your private property may well be the only realistic way forward.

By the end of this further term the Bank would also welcome a breakdown of your income and expenditure along with an update and details of your net asset position and in any event your written proposals/Action Plan to deal with the private loan are required as foreshadowed."

5. This led in due course to the second mortgage of Rock Cottage. On 15^th December 1992 the bank wrote to Mr Banks saying that

"We have been instructed by Mr Kenyon-Brown to forward the Bank's Legal Mortgage document to yourselves in order that Independent Legal Advice can be given to Mrs Kenyon-Brown before signing the document. Kindly ensure that both parties sign to acknowledge receipt of a completed copy of the form and that they also sign where the limitation clause has been deleted.

We shall be grateful if you will confirm that Legal Advice was given to Mrs Kenyon-Brown when the charge form is returned.

Thanking you in anticipation."

6. On 12^th January 1993 Mr Banks saw both Mr and Mrs Kenyon-Brown in his offices. He saw them both together on a matter relating, it seems, to legal costs and K.B.'s lease of its Queensway offices. The attendance note for that matter commences "Mr and Mrs K-B here". A further 15 minutes were occupied on the second mortgage of Rock Cottage. Mr Banks' attendance note records this matter as follows:

"Both clients here

Advised on mortgage

-Jessica is happy to go along with it – doesn't want me to go into it in detail – even if money is borrowed by N alone to buy shares in KB in his name. Dene Road already mortgage.

Copy mortgage to JKB

Mrs KB appeared to understand it fully and despite the terms of my warning to be totally unconcerned that the mortgage of property jointly owned by her would benefit her husband alone and be without limit."

7. Mr Banks then witnessed the signatures of both Mr and Mrs Kenyon-Brown, and, when sending the bank the executed document, wrote:

"We confirm that we gave legal advice to Mrs Kenyon-Brown before she executed it."

8. On 22^nd June 1993 he rendered a fee note to Mr Kenyon-Brown for £30 plus VAT

"... in connection with our advising Mrs Kenyon-Brown at these offices advising her concerning the proposed mortgage in favour of National Westminster Bank Plc and witnessing both of your signatures; writing to the bank and perusing their reply."

9. The first complaint about Mr Banks' conduct was made by Mrs Kenyon-Brown in May 1996 through the solicitors who have acted for her in this action. The action was begun in August 1997, and was tried in May 1998. Judgment was given on 5^th June 1998. At an early stage during opening speeches, the judge confined the trial to liability. The background was a submission by Miss Smith that, for the purposes of the tort claim, the execution of the second mortgage of Rock Cottage would constitute the suffering of loss, but that the evaluation of the precise loss (for the purposes of both the contract and the tort claims) could only take place after a sale of Rock Cottage, which had unexpectedly fallen through.
10. At the trial, the judge heard only one witness, Mrs Kenyon-Brown herself. The defendant neither called nor gave any evidence, although his attendance notes were, by the end of the trial, accepted as evidence of their contents. Mrs Kenyon- Brown proved to have a very limited recollection of matters of detail. She gave general evidence that she was overborne by her husband throughout the marriage, and that she played no real part in the running of K.B and P.M.. The judge was disposed to accept, firstly, that Mr Kenyon-Brown did not allow her to play much of an active role, although not that she played no part at all in their running, and, secondly, that she did not know until recently that he had taken into his own account the proceeds of sale of K.B. and P.M. in 1987, and had repurchased (almost all) the shares in his own name. With regard to the meetings which took place between Mrs Kenyon-Brown and Mr Banks on 15^th November 1989 and on 12^th January 1993, the judge said this about her evidence:

"Mrs Kenyon-Brown says that she was told by her husband on each of these occasions that if she did not agree to a second mortgage she would be made bankrupt. It was with that fear that she went to see the Defendant, although she did not tell him of her fear on either occasion. Nor did she tell him she was embarrassed to talk to him.

These background events were told to me by Mrs Kenyon-Brown with some consistency, but with little clear recollection of detail. However, as I heard no contrary evidence, I accept the broad thrust of her evidence. It is when Mrs Kenyon-Brown was asked detailed questions about important events that her recollection was at its weakest. Even allowing for the passage of time, and for the sympathy that one feels for a witness in the adversarial system when confronted with sustained cross-examination from a firm but fair opponent, I did not find her evidence about the events of the 15^th November 1989 or 12^th January 1993 persuasive. Perhaps this was because Mrs Kenyon-Brown had little recollection of the events of either of those days. Ultimately, I came to the conclusion that her evidence could not be relied upon."

11. A little later the judge said:

"However, Mrs Kenyon-Brown did say that she could not contradict the Defendants' Attendance Note of that meeting [that on 12^th January 1993]. That Attendance Note makes a number of points. First, it records that Mrs Kenyon-Brown did not want the Defendant to go into the mortgage "in detail". Secondly, it seems clear that Mrs Kenyon-Brown knew that the funds were to be used by Mr Kenyon-Brown "alone to buy shares in KB in his name". Thirdly, the Attendance Note records that Mrs Kenyon-Brown appeared to understand the mortgage fully and despite the terms of the Defendant's warning "to be totally unconcerned that the mortgage of property jointly owned by her would benefit her husband alone and be without limit".

12. I have no evidence as to the terms of the "warning", or what Mrs Kenyon-Brown was warned about, as Mrs Kenyon-Brown did not remember being given a warning at all. But, as I have said, Mrs Kenyon-Brown told me that she could not contradict the contents of the Attendance Note and Miss Smith relied upon it, albeit for other purposes to which I shall shortly refer....
13. Perhaps most importantly, Mrs Kenyon-Brown accepted that the Defendant gave her "some advice about the mortgage", and that there was nothing to suggest that the advice was not comprehensive."
14. After dealing with various submissions of law, the judge concluded, with respect to the allegations of negligence, that the evidence "came nowhere near proving that the Defendant was negligent in the manner of which Mrs Kenyon-Brown complains"; in particular she had failed to satisfy him that Mr Banks gave no advice and the attendance note made clear the contrary, and, with respect to the allegation that Mr Banks should have told her to go to another solicitor, the law did not require this on the particular facts; further, the judge said that he could not accept Mrs Kenyon-Brown's evidence that she would if advised have gone to another solicitor – in his view "she was quite clear as to what she was doing by entering into the second mortgage, and wanted to do so notwithstanding the Defendant's 'warning'".
15. Mrs Kenyon-Brown's notice of appeal challenges the judgment on both law and fact. It contends that there was a conflict of interest between Mr and Mrs Kenyon-Brown which made it negligent of Mr Banks to accept instructions, when Mr Kenyon-Brown was also (and had been on many past transactions) his client. It contends that, having accepted instructions, he was negligent not to advise Mrs Kenyon-Brown that she must, ought or could go to other solicitors, in the light of what he knew from the time of the 1989 mortgage and of his belief that the 1993 mortgage was to enable Mr Kenyon-Brown to buy the same shares in his own name. It contends that, in view of the asserted conflict of interest, it was for Mr Banks to prove that Mrs Kenyon-Brown had given him her informed consent to his acting and that he had given her adequate advice. Finally, it contends that the judge's finding that Mrs Kenyon-Brown was "clear as to what she was doing by entering into the second mortgage and wanted to do so" was against the weight of the evidence and inconsistent with his acceptance of his evidence that she only entered into the mortgage because Mr Kenyon-Brown misrepresented to her that she would otherwise be made bankrupt and with the way in which she sought to set aside the second mortgage of 53 Dene Road in 1996 after going to her present solicitors.
16. Before us, Miss Smith relied strongly in support of these contentions upon a judgment of this court delivered only after the judgment in this action, that is the decision in Royal Bank of Scotland plc v. Etridge (No. 2) [1998] 4 AER 705. She referred us to the passage on independent legal advice at paragraphs 19-26 of that judgment:

"Independent legal advice

19. A solicitor who is instructed to advise a person who may be subject to the undue influence of another must bear in mind that is not sufficient that she understands the nature and effect of the transaction if she is so affected by the influence of the other that she cannot make an independent decision of her own. It is not sufficient to explain the documentation and ensure that she understands the nature of the transaction and wishes to carry it out: see Powell v Powell [1900] 1Ch 243 at 247, approved in Wright v Carter. His duty is to satisfy himself that the client is free from improper influence, and the first step must be to ascertain whether it is one into which she could sensibly be advised to enter if free from such influence. If he is not so satisfied it is his duty to advise her not to enter into it, and to refuse to act further for her in the implementation of the transaction if she persists. In this event, while the contents of his advice must remain confidential, he should inform the other parties (including the bank) that he has seen his client and given her certain advice, and that as a result he has declined to act for her any further. He must in any event advise her that she is under no obligation to enter into the transaction at all and, if she still wishes to do so, that she is not bound to accept the terms of any document which has been put before her: see Credit Lyonnais Bank Nederland NV v Burch [1997] 1 All ER 144.

20. Even the task of ensuring that she understands the full implications of the transaction may not be easy. As many of the cases before us demonstrate, where a wife is asked to stand surety or provide collateral security for her husband's indebtedness, there is an ever present danger that he may have misrepresented the position to her. Even without any actual misrepresentation by him, she is likely to misunderstand the full extent of the risk to which she is exposing herself. Her husband may truthfully have explained that he has asked the bank to make a relatively small advance or to increase his overdraft by a relatively modest amount, that the bank has demanded a guarantee or charge in return, and that he expects to repay the advance or reduce the overdraft to within its previous limits within a short time. He may well satisfy his wife that the additional liability, and therefore her exposure, is both manageable and temporary. Where the bank is asking for a continuing all moneys unlimited guarantee or charge, the solicitor does not discharge his duty to the wife by telling her that the liability is "unlimited". That will not dispel the effect of what she has been told. He must bring home to her that she is being asked to undertake liability for the existing indebtedness (even though this was previously unsecured by her) as well as for future indebtedness to an unlimited extent, and not merely liability for the amount of the contemplated advance or increase in the overdraft. He should warn her that she will have no control over the extent of the liability which she is being asked to undertake, since the bank will be in a position to advance further credit at any time on the security of her guarantee or charge without reference to her. He should inform her of the alternatives which are open to her, which include giving a limited guarantee or charge, and if necessary he should offer to negotiate with the bank on her behalf. He should not assume that the bank's request is on a "take it or leave it" basis, or that it has an impregnable negotiating position. In fact its position vis-à-vis the wife is relatively weak, since (i) she is not obliged to give security, (ii) any security is better that none and (iii) the bank cannot afford the risk of taking a security which it knows the wife's solicitor has advised her she should not give.

21. These problems should be greatly eased for the future by the adoption by banks and building societies of the voluntary Code of Banking Practice published by the British Bankers' Association, the Building Societies Association and the Association for Payment Clearing Service. The current version of the code, which took effect from 1 July 1997, provides that an individual asked to give a guarantee or collateral security will be advised of the limit of his or her liability, and that an unlimited guarantee or security will not be taken. This is a very welcome step.

22. A solicitor who is asked to advise a client who may be subject to the undue influence of another "takes upon himself no light nor easy task": see Wright v Carter [1903] 1 Ch 27 at 57, [1900-3] All ER Rep 706 at 717 per Stirling LJ. How far he should go in probing the matter in order to satisfy himself that his client is able to make a free and informed decision and is not merely agreeing to do what the wrongdoer wants is a matter of professional judgment: see Massey v Midland Bank plc [1995] 1 All ER 929 at 934 per Steyn LJ. It must depend on all the circumstances of the case. Independent advice may be desirable but it is not always necessary. It depends on the nature of the proposed transaction and the relationship between the parties. Where there is a real conflict of interest, and certainly where there is a possibility that he may be called on to advise the wife not to enter into the proposed transaction, a solicitor should decline to act if he is also acting (otherwise than in a purely ministerial capacity ) for another party to the transaction.

23. Where, however, a wife is asked to give a guarantee or collateral charge over the matrimonial home to support her husband's indebtedness, the transaction is not one which is necessarily to the wife's disadvantage or one into which she could not properly be advised to enter. If the marriage is secure and the indebtedness has been incurred by the business which provides the husband's livelihood and on which the prosperity of his wife and family depends, there may be no real conflict between the interests of the husband and the wife. In such a case it may not matter whether the business is carried on by the husband personally or through the medium of a small family company; or whether the wife holds 50% or indeed any of the shares in the company. It may be a very difficult question in any particular case whether it is worth putting the roof over their heads at risk in order to continue to carry on the business. But if it is, then the transaction may be as much in the interest of the wife as of the husband; and if it is not, it may be as much against his interest as against hers.

24. It is obviously unwise for the solicitor who is acting for the bank to advise the wife, unless the solicitor is instructed to act for the bank only in a ministerial capacity at completion; for the bank's interests are necessarily in conflict with those of both husband and wife. But for the reasons we have mentioned there may be no conflict between the interests of the husband and those of the wife. A solicitor is therefore not necessarily disqualified from acting for the wife merely because he is also acting for the husband. In such a case it is a matter for his professional judgment whether he, or another solicitor in the same firm, can properly advise the wife, or whether he should advise her to go to another solicitor.

25. It is also a matter for the solicitor's professional judgment whether he should himself advise the wife on the wisdom of the transaction, or invite her to obtain other advice, for example from the accountant to the business. In order to enable him to exercise his judgment, however, it will usually be necessary for the solicitor to inform himself of the circumstances of the proposed transaction, the amount of the existing indebtedness and of the new advance, and of the reasons for the new advance or the bank's request for additional security. He may also need to probe the stability of the marriage. This would need to be done with sensitivity; but the wife should at least be warned that by entering into the transaction she could be putting at risk the one substantial asset on which she could rely should the marriage come to grief.

26. Even though the transaction may be one into which the wife can properly be advised to enter, and in which there is no real conflict of interest between her and her husband, the task of advising the wife carries a heavy responsibility. She is being asked to put at risk her largest, probably her only substantial asset."

17. Before us both sides treated this passage as obiter. Whether or not this is the correct analysis, I think that the passage should be taken as an accurate statement of solicitors' duties in this court. The subject has already been revisited once in this court Etridge v. Pritchard Englefield (28^th April 1999), where the court considered and rejected a submission that its statement of solicitor's duties in Etridge (No.2) went beyond what had previously been the law and could not reasonably have been anticipated by a legal adviser. Nevertheless, Mr Hubble on behalf of Mr Banks repeated a similar submission before us, adding a suggestion that the passage could be disregarded as per incuriam in the light of Lord Jauncey's speech in Clark Boyce v. Mouat [1994] 1 A.C. 428 (P.C.), 437 where he said:

"When a client in full command of his faculties and apparently aware of what he is doing seeks the assistance of a solicitor in the carrying out of a particular transaction, the solicitor is under no duty whether before or after accepting instructions to go beyond those instructions by proffering unsought advice on the wisdom of the transaction."

For my part, I consider that this court should now accept and apply the passage in Etridge (No. 2). Further, it appears to me to be a significant distinction that Lord Jauncey in his general observation in Clark Boyce was not concerned with the situation where there exists a risk of undue influence.

18. Miss Smith's first contention is that a conflict of interest existed axiomatically, because Mr Kenyon-Brown had been a long-standing client of Mr Banks, and was a client in relation to the execution of the mortgage itself. It can be accepted that Mr Kenyon-Brown had regularly instructed Mr Banks in relation to company and business matters, and that no distinction should in this context be drawn between him and his companies. I also proceed on the basis that Mrs Kenyon-Brown had, so far as she had been involved with Mr Banks at all, been involved in a much less significant role and much less frequently. Further, it was Mr Kenyon-Brown who (no doubt because the bank required to be assured that Mrs Kenyon-Brown had received independent legal advice) instructed the bank to contact Mr Banks. Finally, Mr Banks on 12^th January 1993 revealed his own attitude by noting "both clients here". That note leaves open, incidentally, the question whether Mr Kenyon-Brown was or remained present throughout the short period when Mr Banks spoke to Mrs Kenyon-Brown about the proposed mortgage. The judge recounted fluctuating evidence from Mrs Kenyon-Brown on this question, and, as I read his judgment, made no finding one way or the other. Having considered her evidence and the relevant attendance note, that is where I also think that the answer must rest. Mrs Kenyon-Brown has therefore failed to establish that Mr Kenyon-Brown was present throughout on 12^th January 1993. The question remains whether Mr Banks should have refused to see Mrs Kenyon-Brown at all, because Mr Kenyon-Brown had been and was a client. The extent to which Mr Kenyon-Brown was a client in respect of the mortgage was, on the evidence, very limited. Mr Banks received the instructions to advise Mrs Kenyon-Brown from him and looked to him to underwrite the fees. Beyond that, Mr Banks simply witnessed his signature and gave him a copy. Thus far, it seems to me that Mr Banks can be regarded as acting in an essentially ministerial capacity (see Etridge (No. 2) at p.716e.
19. The previous long-standing connection does not mean that there was necessarily a real conflict of interest. The court said in Etridge (No. 2), paragraphs 23-24 that:

"23. Where, however, a wife is asked to give a guarantee or collateral charge over the matrimonial home to support her husband's indebtedness, the transaction is not one which is necessarily to the wife's disadvantage or one into which she could not properly be advised to enter. If the marriage is secure and the indebtedness has been incurred by the business which provides the husband's livelihood and on which the prosperity of his wife and family depends, there may be no real conflict between the interests of the husband and the wife. ...

24. .... A solicitor is not therefore necessarily disqualified from acting for the wife merely because he is also acting for the husband. In such a case it is a matter for his professional judgment whether he, or another solicitor in his firm, can properly advise the wife, or whether he should advise her to go to another solicitor."

20. These passages were said in the context of the matrimonial home. Here, we are concerned with a second home, although the bank's letter dated 29^th September 1992 indicates that it was at the same time the bank's intention to obtain a further mortgage affecting the residual value of the matrimonial home. The passages quoted also relate to indebtedness incurred by a business on which the husband's livelihood and his wife's and family's prosperity depends. Here, we are concerned with a transaction, in relation to which the attendance note records that Mrs Kenyon-Brown did not want Mr Banks to go in detail "even if the money is borrowed by [her husband] to buy shares in KB in his name". The judge seems to have interpreted this as meaning that Mr Banks thought that the shares were still to be bought, with fresh money to be advanced by the bank. That was not the actual situation, and nothing in Mrs Kenyon-Brown's evidence suggests that she was under a misapprehension in that respect. Although Mr Banks did not give evidence, it seems to me that his attendance note may without great difficulty be read consistently with the actual factual situation, that is borrowing (past and potentially future) to cover a prior share purchase. That Mrs Kenyon-Brown played a part in the business was known to Mr Banks, who had just given advice about the company lease in the presence of both Mr and Mrs Kenyon-Brown and was, as Mrs Kenyon-Brown said in evidence, himself a client of K.B. But, whatever else Mr Banks understood or should have understood about the purpose of the borrowing to be secured by the second mortgage, his attendance note indicates that he viewed it as borrowing for the sole benefit of Mr Kenyon-Brown. Mr Hubble suggested before us that the borrowing could be justified objectively, on the ground that Mrs Kenyon-Brown had not only a stake in K.B., as a working director as well as a director, but a marital and family relationship with Mr Kenyon-Brown which meant that it would be to her benefit to assist him. It is clear that such factors may in some cases explain entry in what would otherwise be a disadvantageous transaction (cf Credit Lyonnais Bank Nederland N.V. v. Burch [1997] 1 AER 144, 155a-d per Millett L.J.). But in this case there was no evidence that they played any part in Mrs Kenyon-Brown's actual thinking, and no suggestion in Mr Banks' attendance note, which is all we have from him, that he thought they did. Mr Banks did not in my view go into the facts in sufficient detail to enable him to conclude that the husband's and wife's interests co-coincided in the manner suggested in paragraph 23 in Etridge (No.2).
21. The reason why he did not do so was no doubt Mrs Kenyon-Brown's attitude at the meeting on 12th January 1993. She indicated at the outset that she was happy to go along with the transaction, and did not want Mr Banks to go into it in detail. The only information mentioned thereafter, by whom it is unclear, was that Dene Road was already on mortgage. Thereafter Mr Banks seems simply to have confined himself to giving his warning. The attendance note suggests that this was to the effect that the mortgage of Rock Cottage would benefit her husband alone and be without limit. It records that Mrs Kenyon-Brown appeared to remain totally unconcerned. Although Mr Banks had not gone into the facts sufficiently to enable him to conclude that Mr and Mrs Kenyon-Brown's interests co-coincided, it seems to me that, up to this point and if he was entitled to leave matters as they then rested, there was no actual or potential conflict of interest requiring his attention.
22. The critical question is whether he was entitled to leave matters as they then rested, and on that basis to witness the signatures and send the bank the signed mortgage with the confirmation it required to enable the transaction to proceed. This depends upon whether he fulfilled whatever duty he undertook towards Mrs Kenyon-Brown with regard to the possibility of undue influence. The judgment, as I read it, finds that Mrs Kenyon-Brown was at the time when she entered into the second mortgage on 12^th January 1993 subject to her husband's actual undue influence, in circumstances falling within Class 1 identified in Barclays Bank plc v. O'Brien [1994] 1 AC 180, 189D. Her husband overbore her, and threatened her incorrectly with bankruptcy, so that in fear and embarrassment she went along with the second mortgage, which her husband wanted, when she met Mr Banks. None of this was however disclosed by her to Mr Banks on 12^th January 1993. The judge's finding that she was "clear as to what she was doing by entering into the second mortgage and wanted to do so" was made in the context of the question of causation - that is, whether she would have accepted advice to go to another solicitor. It relates to her understanding of and wish to enter into the second mortgage, not to the issue whether that wish was freely induced or was the result of undue influence. The distinction is clearly drawn by Hobhouse L.J. in Banco Exterior Internacional v. Mann [1995] 1 AER 936, 947d-e:

"An understanding of the document may be the first step in the exercise of a free choice whether or not to sign it, but it is not the point at which the law of undue influence is directed. A person may be fully informed as to the content of the document and its legal effect and yet be acting under the undue influence of another when she signs it. The two considerations are distinct.... [I]t is the undue influence not the lack of comprehension that gives the wife the defence."

23. In the same sense, the court in Etridge (No.2) quoted Lord Eldon L.C's dictum in Huguenin v. Baseley (1807) 14 Ves. 273, 300:

"The Question is not, whether she knew, what she was doing, had done, or proposed to do, but how the intention was produced ..."

24. There is, therefore, no inconsistency between the judge's finding she was "clear as to what she was doing by entering into the second mortgage and wanted to do so" and a conclusion that there was in fact undue influence. The challenge to the judge's finding in the notice of appeal based on subsequent events (particularly Mrs Kenyon-Brown's conduct in seeking to set aside the second mortgage of 53 Dene Road in 1996 after going to her present solicitors) does not therefore arise.
25. The question which follows is whether Mr Banks was entitled to act, without more, on the basis of Mrs Kenyon-Brown's expressed desire that he should not go into the matter further and her evident understanding of the general nature of the transaction and wish to execute it. Should he have recognised and investigated a risk of undue influence and declined to act further or have advised her to take alternative advice? Mr Banks had no specific knowledge of the undue influence which Mr Kenyon-Brown had actually exerted on his wife. But Mr Banks had, when the second mortgage of Dene Road was executed in 1989, experienced the complete trust being placed by Mrs Kenyon-Brown in her husband. This, as Mr Hubble accepted, clearly suggested a relationship where trust and confidence was generally reposed, within Class 2(B) in Barclays Bank plc v. O'Brien, at page 189G-H. Whether or not Mr Banks specifically recalled either this or the terms of his 1989 attendance note in January 1993, one would have expected him in January 1993 at least to have elicited the same explanation from Mrs Kenyon-Brown for having entered into the Dene Road mortgage in 1989, if he had gone into the background to the 1993 transaction in any detail at all. The two transactions were in reality closely linked, even if Mr Banks did not actually go into the matter sufficiently to appreciate this or to consider the implications of re-mortgaging Rock Cottage. The mortgage of Rock Cottage in 1993 was only being demanded by the bank because the lending extended in 1989 had gone unrepaid and the 1989 mortgage was now insufficient security. Further and without going into this background, Mr Banks in January 1993 had similar indications of trust and dependence by Mrs Kenyon-Brown upon her husband. The mortgage was perceived to be entirely in her husband's interests and without limit. Mrs Kenyon-Brown appeared "totally unconcerned" about these aspects. Her attitude was that she was happy to "go along with" the transaction proposed by her husband and did not want to go into it in detail.
26. In these circumstances Mr Banks was, in my view, on notice on 12^th January 1993 that a relationship of trust and confidence existed between Mr and Mrs Kenyon-Brown and that there might be undue influence. The reason why he was instructed as an independent solicitor was to advise Mrs Kenyon-Brown in the context of possible undue influence, with a view to confirming to the bank (by implication) that she was acting of her own free will and free of any undue influence. It is worth restating at this point the view taken by this court in Etridge (No.2) of the duty of a solicitor instructed to advise a wife in such circumstances:

"19. .... His duty is to satisfy himself that his client is free from improper influence, and the first step must be to ascertain whether it is one into which she could sensibly be advised to enter if free from such influence. If he is not so satisfied, it is his duty to advise her not to enter into it, and to refuse to act further for her in the implementation of the transaction if she persists. In this event, while the contents of his advice must remain confidential, he should inform the other parties (including the bank) that he has seen his client and given her certain advice, and that as a result he had declined to act for her any further. He must in any event advise her that she is under no obligation to enter into the transaction at all and, if she still wishes to do so, that she is not bound to accept the terms of any document which has been put before her."

27. In the present case, the judge said, and was clearly right to conclude, that it was not shown that Mr Banks gave no advice to Mrs Kenyon-Brown. The attendance note makes plain, as the judge pointed out, that Mr Banks did give advice in the form of his warning. Earlier in his judgment, however, the judge also said this:

".... Mrs Kenyon-Brown accepted that the Defendant gave her 'some advice about the mortgage', and that there was nothing to suggest that the advice was not comprehensive".

28. In view of her general lack of recollection, I doubt whether any weight at all can be given to Mrs Kenyon-Brown's affirmative answer to counsel's proposition that there was nothing to suggest that the advice was not comprehensive. Such acceptance must in any event be considered in the light of the evidence and probabilities as a whole. The only direct evidence on the point consists in Mr Banks' attendance note. Far from suggesting that comprehensive advice was given, in my judgment it demonstrates the opposite. It indicates that Mrs Kenyon-Brown was not interested in comprehensive advice; she appeared to understand the mortgage and remained "totally unconcerned" in the face of Mr Banks' warning her that it was on its face solely in her husband's interests and involved an unlimited commitment in relation to his indebtedness. There the matter rested.
29. There is no suggestion, or likelihood in the light of Mr Banks' attendance note, that Mr Banks ascertained the amount outstanding (well in excess of the limit of liability in the second mortgage of 53 Dene Road), its origin and the circumstances in which it came to be outstanding, let alone the prospects of its repayment or of the additional security over Rock Cottage being called upon. Nor did he ask why Mrs Kenyon-Brown was willing to grant such additional security. Still less, therefore, did he know that her husband had told her that she would be bankrupted if she did not enter into the mortgage. Nor did he elicit the fact (about which she gave evidence) that she did not consider the marriage to have any long term future but wished, on the other hand, to avoid bringing it to an end until her son (aged 14 at the beginning of 1983) was older and to maintain a tolerable atmosphere at home in the meantime while she was living with Mr Kenyon-Brown. These are considerations which would have been central to an evaluation whether it made sense for the wife to enter into the mortgage and to a balanced decision whether to do so, made free of any undue influence by Mr Kenyon-Brown. Mr Banks did not know of them. Nor, therefore, could he either discuss them with Mrs Kenyon-Brown or, if he concluded in their light that a conflict of interest existed, suggest that she discuss them with another solicitor.
30. The fact that Mrs Kenyon-Brown did not want comprehensive advice and appeared totally unconcerned about the warnings which Mr Banks gave might, on one view and as Mr Hubble advocated, be viewed as the end of the matter. That is not a view which can be accepted in the light of the reasoning in Etridge (No.2), especially paragraph 19, which I have set out above. The judge rejected Miss Smith's submission that guidance as to the duties of a solicitor in Mr Banks' position could be obtained by considering the steps required of a creditor in order to avoid having constructive notice of a wife's rights. He therefore treated as irrelevant "the reasonable steps" which Lord Browne-Wilkinson identified in Barclays Bank plc v. O'Brien [1994] 1 AC 180, 196F-197B. In the judge's view, a solicitor's duty was to perform his retainer with reasonable care. That is so, but the question remains: what is the retainer, and what does it involve? The context in which and purpose for which independent advice is sought shape a retainer. I agree with Miss Smith that, unless a solicitor in Mr Banks' position owes the duties indicated in paragraph 19 of the judgment in Etridge (No.2), there is a gap in the protection against undue influence available to a wife in Mrs Kenyon-Brown's position: the bank would be entitled to assume that the solicitor has considered and, where appropriate, negatived any risk of undue influence; but the solicitor would be entitled to accept his client's instructions not to go into the matter in any detail, and yet to confirm to the bank that he had given appropriate legal advice. It may be suggested that, in this situation, the solicitor's fault lies in confirming to the bank the giving of appropriate legal advice, rather than in the performance or non-performance of any duty owed to his client. Even if there were attraction in such an analysis, a solicitor giving such a confirmation to a bank does so in his capacity as solicitor for his client, the wife. The fee note rendered in this case itself confirms this. In the present case, Mr Banks assumed the obligation to advise Mrs Kenyon-Brown. He knew that her receipt of (independent) legal advice was to be a pre-condition to her and the bank's execution of the mortgage, and that he would have to confirm that it had been given to the bank (as he did) when sending the mortgage signed by her and her husband. He therefore owed to Mrs Kenyon-Brown duties as indicated in paragraph 19 of Etridge (No.2). Although Mrs Kenyon-Brown expressed disinterest in going into the matter in any detail, and total lack of concern about such warning as Mr Banks did give, neither her evidence nor Mr Banks' attendance note shows in my view that she positively refused or would, if it had been offered, have refused advice in the full width indicated as appropriate in Etridge (No.2).
31. The reality in my view is that the present case falls within the class identified by this court at paragraph 3 in its judgment in Etridge (No.2):

"3. Unfortunately, as the number of cases which have come before the courts since O'Brien's case demonstrates, the protection which ought to be afforded to the wife by the provision of independent legal advice has in many cases proved illusory. The advice which the wife has received has often been perfunctory, limited to an explanation of the documents and yet inadequate to dispel her misunderstanding of the real extent of the liability which she was undertaking, and not directed to ensure that she was entering into the transaction of her own free will rather than as the result of illegitimate pressure from her husband or blind trust in him."

32. Here, Mr Banks' advice was very limited in time and scope, and did not begin to address considerations central to the appropriateness of a second mortgage of Rock Cottage and to the question whether it was in Mrs Kenyon-Brown's best interests, in their widest sense (including the family considerations involving herself and her son, to which I have referred). I do not therefore consider that Mr Banks fulfilled the duty which he owed to Mrs Kenyon-Brown when he undertook to act and to advise her in the role and context of the proposed mortgage. I do not consider that he should have written to the bank confirming that he had given legal advice in the terms which he did; although he did not realise this, he had not given the legal advice which the bank was entitled to assume from his letter that he had given; he should either have disclosed this or not written at all.
33. The notice of appeal focuses on the issue of conflict of interest. Although Miss Smith, when opening the appeal, identified conflict of interest and the risk of undue influence as two separate grounds of appeal, she related each ground initially to her basic submission that Mr Banks should have insisted or advised or raised the possibility that Mrs Kenyon-Brown should go to another solicitor. In the course of her submissions, however, she developed alternative propositions that, even if there was no conflict of interest requiring Mr Banks to cease to act forthwith, Mr Banks was negligent (a) in failing to ascertain whether the transaction was one into which Mrs Kenyon-Brown could sensibly be advised to enter free from undue influence and/or (b) in continuing to act in its implementation without satisfying himself that it was free from such influence or was one into which she could sensibly be advised to enter. Mr Hubble for Mr Banks submits that these alternative propositions were not raised at trial and should not now be admitted, since they would potentially have involved further enquiries, and consideration as to what advice should have been given and to what response it would have had. We reserved out decision whether to give permission to this judgment. It requires us to review the scope and course of the trial. In addition to allegations regarding conflict of interest, the statement of claim asserts at paragraph 7(iv) and (v) that Mr Banks should have advised that the mortgage would confer no benefit on Mrs Kenyon-Brown and as to its "nature and effect". It goes on to assert that she would not have entered into the mortgage had she been so advised. Although paragraph 7(iv) and (v) are vague and might on one view have been given a narrow interpretation which would have been satisfied by the advice and warning recorded in the attendance note, the transcript indicates that Miss Smith put the complaint about the advice given more widely throughout the trial. Thus, in opening the case at page 7D-E, she said this:

"[Mr Banks] took no steps to ascertain whether or not Mrs Kenyon-Brown understood what was going on, he did not ask where the money which was received from the original sale of the shares had gone and why that money was not available to buy those shares back, he did not ask what had happened since 1989 to delay the buy-back of the shares, he did not ask what further advice had been received to make Mr Kenyon-Brown want to buy those shares back in his sole name as opposed to in joint names with his wife. ... [I]n those circumstances these were facts which made the presence of undue influence not only possible but probable. In my submission, in those circumstances the solicitor was under a duty .... to insist that Mrs Kenyon-Brown should seek independent advice."

34. The last sentence identified a case on causation linking undue influence with conflict of interest. At page 11C-F, Miss Smith repeated that if the facts were not sufficient to make clear to Mr Banks that there was a conflict of interest, he should on authority have enquired into the degree of Mrs Kenyon-Brown's involvement in K.B. and the financial circumstances. She did not at that point return to causation. The evidence adduced from Mrs Kenyon-Brown - for what it was worth, especially on a hypothetical point - was directed to the question what she would have done, had she been told or advised by Mr Banks, without further investigation into the background or her motivation, to seek separate legal advice from another solicitor. In closing submissions, Miss Smith also pursued the case that, even if there was not from the outset a conflict of interest, Mr Banks should have investigated further the background to the proposed mortgage, why Mrs Kenyon-Brown was proposing to grant it and whether any undue influence was being exerted (see pages 146A-B, 146G-147A, 165D-167A and 169C-F). She did so once again in the context of her submission that, even if Mr Banks was originally justified in accepting instructions, such an investigation should have led Mr Banks to insist or advise that Mrs Kenyon-Brown seek alternative advice or draw attention to the possibility of doing so.
35. For such a submission to assist Mrs Kenyon-Brown, a court would have to conclude that, if Mr Banks had acted in this way, then Mrs Kenyon-Brown would, on a balance of probability, have gone to another solicitor and would have received from that other solicitor independent assistance and/or advice in the light of which she would not have executed the second mortgage on Rock Cottage: see Allied Maples Group Ltd. v. Simmons & Simmons [1995] 1 WLR 1602 (C.A.); see Bristol and West B.S. v. Mothew [1998] Ch 1, (C.A.) per Millett L.J. at p.11B-D. This was in issue. Not only was it denied that there was any conflict of interest, paragraph 8 of the defence denied that Mrs Kenyon-Brown "would have acted any differently in the event that she had consulted another independent solicitor". At the start of her opening at the trial, Miss Smith referred to the fact that it was the defendant's case that the second mortgage was in Mrs Kenyon-Brown's interest, bearing in mind the source of the family's and her income and her involvement in K.B. and P.M. But before this court Miss Smith submitted that, once the judge restricted the scope of the trial to liability (as he did later during opening speeches), the issue was not one which could have required resolution before him. I do not accept that submission. The judge's ruling was made in a context where a sale of Rock Cottage, which it was envisaged would crystallise the quantum of any damages, had just fallen through. The claims against Mr Banks were in contract and tort, and Miss Smith's case in tort was that the cause of action was completed upon execution of the mortgage. To make good that case, the court had to conclude that Mrs Kenyon-Brown would not have executed the mortgage, had Mr Banks advised and acted as he should have done. Further, it would have been unsatisfactory, even in contract, not to have determined basic issues of causation, such as whether Mr Banks' fault caused the execution of the mortgage, at the trial which took place in May 1998. The present case is a further illustration of the importance, stressed in the Allied Maples case, of addressing and clarifying the precise implications, whenever a split trial is in contemplation.
36. For whatever reason, the whole aspect of causation appears to have received little attention throughout the trial. In her evidence, Mrs Kenyon-Brown was asked to and did identify the considerations which motivated her. The judge, as I have pointed out, accepted her general evidence about Mr Kenyon-Brown's overbearing conduct, and his misrepresentation of a threat of bankruptcy. But neither Mrs Kenyon-Brown nor counsel in their submissions appear to have addressed in any depth the issues about what might have happened her on various hypotheses which now appear important. The judgment addressed the basic question whether Mrs Kenyon-Brown would have gone to another solicitor if advised at the outset and on the basis of the limited information which Mr Banks actually acquired to go to another solicitor. But the relevant assumption, as matters now stand, is that fuller investigation into the background and motivation behind the proposed second mortgage would have led Mr Banks to withdraw or advise regarding consultation with another solicitor. The case raised at trial necessarily implied that Mrs Kenyon-Brown would then have gone to another solicitor, that she would have been informed that she faced no risk of personal bankruptcy and/or that a frank discussion of the advantages and disadvantages from her viewpoint of entering into the second mortgage would have led to a decision by her not to do so. But the judgment does not make findings about what would have happened if Mrs Kenyon-Brown had then gone to another solicitor. Nor does it make findings about whether she would have gone to another solicitor if Mr Banks had, after fuller investigation eliciting more of the background and motivation behind the proposed mortgage, identified a conflict of interest making this necessary or desirable.
37. Mr Hubble submits that the proposed amendment to the notice of appeal should not be permitted, since it would involve the further and different case that, irrespective of conflict of interest, Mr Banks was at fault in not himself investigating the background to and motivation for the proposed second mortgage. However, this proposed amended case involves propositions which parallel those involved in the case which was run at trial. The case was run at trial necessarily implied that (a) fuller investigation and advice by another solicitor would have led to Mrs Kenyon-Brown being informed that she faced no risk of personal bankruptcy and/or (b) a frank discussion of the advantages and disadvantages from her viewpoint of entering into the second mortgage would have led to a decision by her not to do so. If Mr Banks could have gone into and given independent advice in these areas himself (whether because there was no potential conflict of interest at all or because he would have obtained her full and informed consent to acting, notwithstanding any such conflict), one can only assume that the result would have been the same as if Mrs Kenyon-Brown had been sent or had gone to another solicitor for independent advice. Miss Smith's proposed amended case simply covers the possibilities (a) that Mr Hubble is right in submitting that, however much the transaction was investigated, Mr Banks faced no relevant potential conflict of interest and (b) that, if Mr Banks had identified any potential conflict of interest, Mrs Kenyon-Brown would still have wanted (and received) his, rather than another solicitor's, independent advice on the proposed mortgage. I do not therefore consider that Miss Smith's proposed amendments to the notice of appeal carry her client's case outside the essential scope of matters in issue at trial, or would involve injustice to Mr Banks. I would permit them to be made.
38. For the reasons I have given, I would hold that Mr Banks was at fault in failing further to investigate the background and motivation behind Mrs Kenyon-Brown's wish to execute the proposed mortgage. Having decided the case on other points, the judge did not make any findings as to how matters would have proceeded if Mr Banks had performed his duty in the respect in which I consider that he failed. That question now however becomes critical. Various possibilities may be tentatively identified. If (which may be unlikely) Mrs Kenyon-Brown had adamantly refused to go into the matter further at all either with him or with any other solicitor, then it would probably have been Mr Banks' duty to refuse to act further. His letter to the bank could not have been written, and the second mortgage may well never have been entered into. If Mr Banks had elicited the full background, including Mr Kenyon-Brown's overbearing conduct and misrepresentation(s) regarding bankruptcy, it may be difficult to believe that he could or would then still have continued to act for Mrs Kenyon-Brown, in view of his long-standing association with Mr Kenyon-Brown. It would then have been his duty to advise Mrs Kenyon-Brown accordingly. It may be in this situation that Mrs Kenyon-Brown would have gone to another solicitor. In any event, and even if there had been a full investigation of the background and matters motivating Mrs Kenyon-Brown together with independent advice (whether by Mr Banks or by another solicitor), the question would arise whether, even then, Mrs Kenyon-Brown would still have entered into a second mortgage of Rock Cottage to secure her husband's growing indebtedness, although it involved her only free asset. Rather than refuse to do so and perhaps bring matters to a head with her husband, might she (whatever her long-term intentions) have preferred in January 1993 to maintain her lot with her husband for a further few years for the sake of peace and her son and/or because of her own financial interest working for K.M and P.M? On this point, any assistance (if any) which might otherwise attach to Mrs Kenyon-Brown's conduct in seeking to set aside the second mortgage of 53 Dene Road may be limited, since that conduct took place only in 1996.

We do not have the benefit of any findings on these matters. Nor were they addressed in any detail in the submissions made before us by counsel on this appeal, due largely to the late stage at which the proposed amendments to the notice of appeal were introduced. We have only the judge's judgment, Mrs Kenyon-Brown's evidence in transcript and very limited documentation. As at present advised, it seems to me appropriate that the specific matters which we have identified should be remitted to the trial judge and that, to enable their resolution after so long a time in circumstances where causation received such sparse attention at trial, either party should be at liberty to adduce further evidence before the judge on that specific point. But, before reaching any decision on the correct course, I consider that each party should have liberty to address further submissions to us. Counsel should accordingly be prepared, when this judgment is handed down, to present any further arguments which they may wish to advance on this aspect.

MR JUSTICE WILSON:

39. The degree of diffidence with which I venture dissent will readily be understood. It would be futile to do more than summarise my views, which are as follows:
40. It is far from clear that it was not in the interests of the appellant to enter into the second mortgage of the holiday home. When analysed with appropriate width, the economic interests of married people living together even in unhappy circumstances will often, perhaps usually, be identical. In its letter of 29 September 1992 the Bank had postulated a sale of the principal home, already charged to it, in the absence of the proposed mortgage of the holiday home.

(2) (a) But the above is academic because the deputy judge proceeded on the basis - indeed he observed in argument that it appeared to be common ground - that it was plainly to the disadvantage of the wife to enter into the mortgage. This was not a matter stood over until the second part of the trial.

(b) The judge's approach, favourable to the appellant, was clearly founded on the fact that on 12 January 1993 Mr Banks had himself proceeded on the basis that it was not in her interests to enter into the mortgage - and had told her so. In his attendance note, ultimately accepted at trial as a true record of what occurred during their meeting, he said:

"Mrs KB appeared ... to be totally unconcerned that the mortgage ( would benefit her husband alone (".

(3) (a) The judge was right to hold that there was no such conflict of interest for Mr Banks as required him to advise the appellant to seek legal advice elsewhere. In relation to the transaction Mr Banks acted for her husband only in a ministerial capacity, namely in witnessing his signature and sending the Deed to the Bank. So the proposition in the last sentence of paragraph 22 of the judgment of this court in Royal Bank of Scotland v Etridge (No 2) [1998] 4 All ER 705 at 715 is not engaged. That the husband had been a long-standing client of Mr Banks in regard to other matters did not in 1993 preclude (just as it had not in 1989 precluded) the proper performance of his professional duty to give advice to the appellant, uncoloured by that connection; see generally Barclays Bank plc v Thomson [1997] 4 All ER 816 per Simon Brown LJ at 826 a-c and e.

(b) Furthermore the judge did not accept the appellant's evidence that, had she been advised to go to another solicitor, she would have gone. There are no grounds for this court to reverse his conclusion upon the credibility of that evidence.

41. The judge found that the appellant was threatened by her husband that, if she did not join in the mortgage of the holiday home, she would be made bankrupt. I agree that the effect of the finding is that the appellant thereby establishes that she was induced to enter into the mortgage by his actual undue influence, i.e. Class 1 of the categories of undue influence set out by Lord Browne-Wilkinson in Barclays Bank PLC v O'Brien [1994] 1 AC 180 at 189D. It is common ground that the appellant said nothing to alert Mr Banks to the existence of that threat. I also agree that, even in the absence of the threat, the law draws a rebuttable presumption of the husband's undue influence from the trust and confidence established on the evidence to have been generally reposed in him by the appellant, i.e. Class 2(B) of the same categories. I further agree that, quite apart from what he may have gleaned in 1989, Mr Banks was put on notice by the circumstances apparent to him on 12 January 1993 that there was such a relationship of trust and confidence and that there might be undue influence.
42. At the heart of this appeal lies the extent of the duty of a solicitor who has such notice but where the circumstances are as follows:-

(a) the intelligence of the appellant was at a level which enabled her to work for and to some extent to administer insurance businesses;

(b) the judge's own verdict upon the appellant, as a witness, was that she evinced "quiet determination";

(c) some three years previously Mr Banks had given the appellant advice upon virtually the same subject, namely the charging of joint property to secure the husband's borrowing, at that time prospective, referable to his repurchase of the businesses; on that first occasion Mr Banks had discussed the matter at some length with the appellant and she had resolved to proceed;

(d) on this second occasion the appellant made clear that she did not want Mr Banks to go into the matter again in detail with her; as she said in evidence, "I wanted to get it over with";

(e) as the appellant accepted in evidence, there was nothing to indicate to Mr Banks that she was embarrassed to talk to him or reluctant to enter into the transaction;

(f) the appellant appeared to Mr Banks to understand the mortgage fully;

(g) notwithstanding her stance, Mr Banks delivered a warning to the appellant that the proposed further mortgage related to borrowings by her husband referable to his repurchase of the shares so would benefit him alone;

(h) the appellant's reaction to the warning was one of total lack of concern; and

(i) the appellant was, according to the judge's finding, quite clear as to what she was doing by entering into the mortgage.

43. At the outset of the hearing before the judge counsel for the appellant conceded that, if, after a solicitor who was not disabled by a conflict of interest had explained or offered to explain to her that the mortgage was not in her best interests, the appellant overrode such concerns and insisted on executing the Deed, there would be no negligence. Was that concession wrongly made? The appellant relies heavily on paragraph 19 of the judgment in Etridge (No 2) above, decided two months later. But paragraph 19 did not extend the law: see Etridge v Pritchard Englefield, Court of Appeal, 28 April 1999.
44. Paragraph 19 explains the solicitor's duty to satisfy himself that a client who may be subject to undue influence is free from it. But the propositions in paragraph 19 are supplemented in an important respect in paragraph 22 as follows:

"How far [the solicitor] should go in probing the matter in order to satisfy himself that his client is able to make a free and informed decision and is not merely agreeing to do what the wrongdoer wants is a matter of professional judgment: see Massey v Midland Bank plc [1995] 1 All ER 929 at 934 per Steyn LJ. It must depend on all the circumstances of the case."

45. The crucial circumstances of the present case are that on this second occasion the appellant did not want Mr Banks to go into the matter again in detail; gave him no reason to believe that she would have wanted any other solicitor to do so; appeared to understand the mortgage fully; listened to his warning; and nevertheless still wished to proceed.
46. In the above circumstances Mr Banks exercised his professional judgment and decided that he could and should accept the appellant's instructions to proceed to execution.
47. In my view Mr Banks did all that he reasonably could in order to satisfy himself – and was entitled to be satisfied – that the appellant was free from improper influence and could instruct him to proceed. Our knowledge of the actual undue influence upon the appellant must not distort our judgment of him then. Nor, with great respect, should the boundaries of professional negligence be stretched by reference to a perceived need for a wife subject to undue influence to have a remedy not only against her husband but also against either the mortgagee or her solicitor.
48. In Midland Bank Trust Co Ltd v Hett, Stubbs and Kemp [1979] 1 Ch 384 Oliver J, as he then was, said at 403A-B:

"I think that the court must beware of imposing upon solicitors ... duties which go beyond the scope of what they are requested and undertake to do. It may be that a particularly meticulous and conscientious practitioner would, in his client's general interests, take it upon himself to pursue a line of inquiry beyond the strict limits comprehended by his instructions. But that is not the test. The test is what the reasonably competent practitioner would do having regard to the standards normally adopted in his profession (".

49. The standards which the law sets for solicitors in the situation of Mr Banks, and which they normally adopt, are appropriately high. My own view, however, is that, judged by reference to them, Mr Banks was not in breach of any duty to the appellant. The reasonably competent practitioner would have exercised his professional judgment in the way in which he did. Even more firmly am I of the view that the appellant has failed to establish the contrary.

So I would have dismissed the appeal.

LORD JUSTICE PETER GIBSON :

50. I have some sympathy with the Defendant solicitor in this case. At the time when he was called on by the bank to advise the Plaintiff wife, as intending co-mortgagor with her husband the onerous duties laid by the law on the solicitor instructed by an intending mortgagee for that purpose had not been set out with the fullness and clarity which now appear in Royal Bank of Scotland v Etridge (No. 2) [1998] 4 All E.R. 705. Further, the wife's attitude manifested to the solicitor did little to assist him in the performance of those duties. She made it clear that she was happy to go along with the mortgage, did not want the solicitor to go into the transaction in detail, appeared to understand the mortgage fully, was totally unconcerned that the mortgage of the property which she owned jointly with her husband would benefit the husband alone and without limit, and gave no indication whatever to the solicitor of the factors which she subsequently established to the judge's satisfaction were influencing her (such as the false threat by the husband of her bankruptcy).
51. But while the solicitor did not know of the actual misrepresentation by and undue influence of the husband, he did know (1) that the wife was living with her husband, (2) that she had in 1989 reposed trust and confidence in the husband in relation to a somewhat similar transaction on which the solicitor had advised her and (3) that the transaction appeared to be to her disadvantage. In Barclays Bank plc v Boulter, [1999] 1 WLR 1919 at p. 1925, Lord Hoffmann said that factors (1) and (3) were all that a wife needed to show to establish the presumption of undue influence. The solicitor should have appreciated that there was a presumption of undue influence within class 2B of the categorisation of undue influence cases first suggested by this court in BCCI v Aboody [1990]1 Q.B. 923 at p. 953. That there was a real risk of such influence ought to have been apparent to the solicitor from the facts within his knowledge. He knew that he had been asked by the bank to advise the wife on the transaction so that if she went ahead with the transaction it was with her full knowledge and consent and without undue influence which could vitiate the transaction for the bank.
52. What a solicitor must do in such circumstances is spelt out in paragraphs 19 and 20 of the judgment in Etridge (No. 2). Mr Hubble for the solicitor argued that the duty was expressed there too widely. But I do not think that this court should depart from the guidance so recently given by another decision of the court in the 8 conjoined appeals to which that judgment related. I fear that judged by the high standards there indicated, the solicitor did not perform that duty. He was not in a position to be satisfied that there was no undue influence which was affecting her decision even though she may have been fully informed of the contents of the mortgage which she was to execute. I doubt if the advice she received was comprehensive, given her reluctance to receive detailed advice from the solicitor.
53. Can it be right that neither the bank, to whom the solicitor confirms that he has advised the wife as requested, nor the solicitor, is liable in such circumstances of undue influence which the solicitor has not discovered? If the solicitor has done everything he could reasonably do to discover or to counter such undue influence, then that may be the just result. But I regret that I do not think that that is this case. For these as well as the reasons given by Mance L.J. I respectfully disagree with the judge's conclusion that there was no breach of duty.
54. What then follows? If the solicitor had sought to perform his duties as indicated in Etridge (No. 2) and had not been allowed to do so by the wife, in my opinion he could not properly have told the bank that he had complied with its instructions. It may well be that he would have had to refuse to act further. The judge, who did not have the benefit of Etridge (No. 2) and who was faced with an argument, based predominantly on an alleged conflict of interest, that the solicitor should have advised the wife to seek separate legal advice from another solicitor, rejected both the submission of law that this was necessary and the wife's evidence that if the solicitor so advised, she would have gone to another solicitor. For the reasons given by Mance L.J. I do not think that this is a case of conflict of interest, but one of undue influence. The possibility or probability of undue influence was argued before the judge but only as a secondary argument.
55. With some hesitation I agree with Mance L.J. for the reasons he gives that Miss Smith for the wife should be allowed to amend the Notice of Appeal to state specifically that the judge should have found the solicitor negligent in failing to take steps to ascertain whether the transaction was one which the wife could sensibly have been advised to enter if free from improper influence or in acting for her in the implementation of the transaction when he was not satisfied that the transaction was one which she could have sensibly have been advised to enter. I also reluctantly agree that unless counsel wish to argue to the contrary this case will have to be remitted to the judge to determine the consequences of the finding by the majority of this court that there has been a breach of duty by the solicitor.

Order: Appeal allowed. Costs to be decided at a later date.