England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice The Rolls Building Fetter Lane EC4A 1NL
		27/07/2012

MR JUSTICE NORRIS :

1. On 15 June 2001 Christine Mary Davies ("the Claimant") signed the acceptance of a facility letter relating to a loan of £1,350,000 to be advanced by the Allied Irish Bank ("AIB") to herself and her husband ("Barry Davies") jointly ("the Personal Loan"). The Personal Loan was for the period of 15 years from first drawdown but subject to periodic review at the discretion of AIB. Barry Davies died on 20 September 2005. In proceedings commenced on 5 January 2010 the Claimant says that she accepted the facility of the Personal Loan because of the undue influence of her late husband. By amendment permitted during the trial she argues in the alternative that for technical reasons she incurred no obligation in respect of the Personal Loan.
2. The Claim Form alleged and alleges:- "The Claimant's relationship with her husband was such that she feared abusive treatment if she disagreed with him concerning their financial affairs, which he controlled. Therefore, she did not enter into the Loan Agreements of her own free will, and her consent to them was vitiated by [Barry Davies'] undue influence. The [AIB] did not take reasonable steps to satisfy itself that the Claimant's agreement to the Loan Agreements had been properly obtained and that the Claimant had brought home to her, in a meaningful way, their practical implications and the risks involved."
3. In her original Particulars of Claim the Claimant simply alleged:"[Barry Davies] was liable to be violent if the Claimant did anything to antagonise him. The Claimant feared that he would turn violent if she disagreed with him about financial matters. Consequently the Claimant invariably would sign documentation that [Barry Davies] asked her to sign without raising questions, without applying her own mind to the matter and without exercising her own free will."
4. Barry Davies was a dealer in Oriental antiques who eventually incorporated his business as Barry Davies Oriental Antiques Ltd ("BDOAL" or "the Company"). In her Re-Amended Particulars of Claim (served immediately before the commencement of the trial) the Claimant enlarged upon this case in the following way (shorn of unnecessary detail):

"[Barry Davies] was liable to be violent if the Claimant did anything to antagonise him. The Claimant feared that he would turn violent if she disagreed with him about financial matters. Further, the Claimant placed trust and confidence in [Barry Davies], who was a chartered accountant, in respect of the management of the family finances. [Barry Davies] did not keep the Claimant fully informed about the family finances. Consequently the Claimant sometimes would sign documentation that [Barry Davies] asked her to sign without raising, and receiving proper answers to, all questions necessary to obtain a proper understanding of what she was signing, without fully applying her own mind to the matter and without fully exercising her own free will. Such was the case with all documents confirming her agreement to the Personal Loan Agreements … At all material times the Claimant's understanding was that the Personal Loan Agreements and the loan advanced thereunder concerned lending by [the AIB] for the purposes of BDOAL, and that it was in respect of that lending that she was subject to liability under the Guarantee… of ….up to £1.45 million … The Claimant did not appreciate at any material time that (1) in addition to the sum of £1.35 million advanced jointly to [Barry Davies] and her under the Personal Loan Agreement for the purposes of restructuring BDOAL's finances [AIB] also lent or would be lending £1.38 million to BDOAL under the BDOAL Loan Agreement (2) the amount of the liabilities that she undertook to [AIB] by entering into the Guarantee and the Personal Loan Agreement was not, as she thought, £1.45 million (the amount of the Claimant's liability under the Guarantee) but £2.8 million (the amount of the liability under the Guarantee plus the amount of the liability under the Personal Loan Agreement)……"

5. The claim that the Personal Loan is vitiated by the undue influence of Barry Davis is clearly carefully thought out. The Claimant does not say that the facility letter that she signed was radically different in nature from the document that she thought it was: she advances no case of non est factum. The Claimant does not say that she was given misleading or inaccurate information about the contents of the facility letter: she advances no case of misrepresentation. The Claimant does not say that she was subject to some specific act of improper pressure or coercion: she advances no case of duress in equity. She says that she did not fully apply her own mind to the matter of the Personal Loan and that she was afraid to ask questions about the document for fear of abusive violence. She says she signed the Personal Loan in ignorance of the fact that the Guarantee which she also signed related to separate and concurrent lending to BDOAL.
6. A case of this sort was first advanced in solicitors' correspondence in June 2006, when the Claimant's then solicitors wrote "She had previously only believed her liability as far as borrowing was used for the Company was concerned, was limited to her personal guarantee of the Company's borrowings. Our client does not recall two separate borrowings that appear to have taken place in June 2001, in relation to which … there appears to have been no logical explanation. We are therefore concerned as to whether our client was deliberately misled by her late husband into believing there was only one borrowing in relation to the finances of the Company".
7. The question is whether that case (described in opening as "a deeply held conviction") has been made out and, if made out, whether it entitles her to have the Personal Loan set aside and her apparent liability to AIB (in the sum of £940,000 already paid and in respect of the unpaid outstanding balance of £100,340) set aside.
8. Much of the evidence and argument in this case was concerned with the Claimant's understanding of the family's financial obligations to AIB, and with the steps which AIB took to ensure that the Claimant entered into the Personal Loan freely and in knowledge of the true facts. But that is not the true focus of an application to set aside a transaction upon the ground of undue influence. As it was put by Lord Eldon in Hugenin v Baseley (1807) 14 Ves 273 at 300

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

People are perfectly entitled to enter into financial transactions without fully understanding them if that is their free choice. The doctrine does not protect against folly, but against victimisation. Likewise, any shortcomings in the processes and procedures of AIB may well create the opportunity for undue influence to be exercised and to go undiscovered. But it is not sufficient for the opportunity to be established. It must be proved that the opportunity was taken. As it was put in Daniel v Drew [2005] EWCA Civ 507 at [36] per Ward LJ:-

"… in all cases of undue influence the critical question is whether or not the persuasion or the advice, in other words the influence, has invaded the free volition of the donor to accept or reject the persuasion or advice or to withstand the influence. The donor may be led but she must not be driven and her will must be the offspring of her own volition, not a record of somebody else's. There is no undue influence unless the donor if she were free and informed could say "This is not my wish but I must do it…."

9. In the instant case the Claimant accepts that the burden lies upon her to prove undue influence without the benefit of any presumption. The provision of the Guarantee (and of security to support it) has not been the subject of any challenge. As to the Personal Loan, it is accepted by Mr Coleman QC (as he became during the course of the trial) that the entry of a joint loan obligation is the sort of transaction which husbands and wives frequently enter into, and that there are good and sufficient reasons why wives are willing to do so, despite the risks involved for themselves and their families: see Royal Bank of Scotland v Etridge [2002] 2 AC 773 [28] – [30].
10. What is it that the Claimant must establish? The answer is: some legal or equitable wrong committed by Barry Davies which caused the Claimant to enter the Personal Loan. The identification of the legal or equitable wrong must, of course, take into account the context of the relationship of trust and confidence which commonly subsists between a married couple. The high degree of trust and confidence and emotional interdependence which normally characterises the marriage relationship does provide scope for abuse: and the law recognises this reality. But it also acknowledges that "undue influence" has a connotation of impropriety. Statements or conduct by a husband which do not pass beyond the bounds of what may be expected of a reasonable husband in the circumstances should not, without more, be castigated as undue influence. See generally Etridge (supra) at [32] and [36]. As was said by David Richards J ( Vice Chancellor) in Royal Bank Of Scotland v Chandra (cited on appeal at [2011] EWCA Civ 192 at [39]) :- "Misstating the position or misleading the wife is different from an inadvertent failure to disclose … Likewise, a deliberate suppression of information because the husband knows that, if disclosed, it will deter the wife from giving the guarantee will involve abuse by him of her confidence. It would be unconscionable and rightly categorised as unacceptable means"
11. One example of a case in this last category drawn to my attention by Mr Coleman QC was Hewett v First Plus Financial [2010] EWCA Civ 312. A husband persuaded his wife to join with him in a charge over the matrimonial home as security for his separate debts. The question was whether his failure to disclose that he was at the time having an affair with another woman was sufficiently material to the decision facing the wife that its non-disclosure or deliberate concealment amounted to an abuse by the husband of the trust and confidence reposed in him by his wife. The Court of Appeal held that a husband, in whom a wife has reposed trust and confidence for the management of their financial affairs, who prefers his interests to those of the wife, and makes the choice for both of them on that footing, abuses the influence he has: he fails to discharge the obligation of candour and fairness which he owes to a wife looking to him to make the major financial decisions.
12. The exercise of undue influence is a fact. By what evidence is that fact to be established? It may be established by direct evidence of the exercise of improper influence. More commonly it has to be established by producing evidence about the personality of the parties, their relationship, the nature and the circumstances of the transaction and the extent to which the transaction might be accounted for by the ordinary motives of ordinary parties to a marriage, and other relevant circumstances which justify the inference that the ascendant party has behaved improperly.
13. If it is proved that undue influence has been exercised, then the Personal Loan can only be set aside if AIB had actual or constructive notice that Barry Davies had so exercised that undue influence. There is no suggestion that AIB had any actual knowledge as to the circumstances in which the facility letter relating to the Personal Loan was signed. As to constructive notice, the first question is whether AIB was put upon enquiry: and the second question is what steps it should have taken upon being put on enquiry.
14. Mr Coleman QC and Mr Cousins QC were agreed that the circumstances in which the AIB was put upon enquiry were considered by Lord Nicholls in Etridge at paragraph 48 following:-

"[48] As to the type of transactions where a bank is put on inquiry, the case where a wife becomes surety for her husband's debts is, in this context, a straightforward case. The bank is put on inquiry. On the other side of the line is the case where money is being advanced, or has been advanced, to husband and wife jointly.

[49] Less clear-cut is the case where the wife becomes surety for the debts of a company whose shares are held by her and her husband … In my view the bank is put on enquiry in such cases, even when the wife is a director or secretary of the

company …"

They differed, however, as to which branch of the principle applied to the facts of this case.

15. Once put upon enquiry, it was common ground between the parties that what was to be expected of AIB (pre-Etridge) maybe stated thus:-

"[54] The furthest a bank can be expected to go is to take reasonable steps to satisfy itself that the wife has brought home to her, in a meaningful way, the practical implications of the proposed transaction…

[80] …the bank will ordinarily be regarded as having discharged its obligations if a solicitor who was acting for the wife in the transaction gave the bank confirmation to the effect that he had brought home to the wife the risks she was running by standing as surety"

(See Etridge (supra) at paragraphs [54] and [80] ).

16. In its Defence AIB argued that even if Barry Davies was guilty of exercising undue influence and even if AIB had notice of that fact yet the Claimant was not entitled to be relieved of entire liability under the Personal Loan because of an estoppel by convention constituted by her continued signing of facility letters accepting offers of loans which included the sum advanced as the Personal Loan (along with extended facilities for property purchases). The bank relied on some obiter observations in AIB v Gold (Jacob J., unreported March 1999). In the alternative AIB submitted that by signing an acceptance of the enlarged facilities the Claimant implicitly represented that she accepted the level of debt as recorded and was accordingly estopped from resiling from that representation. In the further alternative AIB submitted that because its advance was used to discharge existing bank lending for which the Claimant was liable or was used to pay the deposits on properties the Claimant is not entitled to rescission without giving counter-restitution in respect of all those benefits: reliance is placed on Dunbar Bank v Nadeem [1998] 3 All ER 876 (particularly at 885F-G, 887G – 888A and 888E –F). All these legal arguments depend upon particular findings of fact: and to the facts I now turn.
17. The central character in the narrative is obviously the Claimant herself. I can take as accurate the Claimant's self-description (written in 2003). After leaving university in 1975 she became a BBC graduate trainee, eventually becoming a producer of significant television and film documentaries (and having notable successes with programmes about the Duke of Windsor and about Wallis Simpson). She also coproduced programs for ITV, Granada and Channel 4 with Royal themes. By 2003 she described herself as a freelance TV producer with special access to Royal stories. She also had a portfolio of business interests. She was a director IBC Executive Travel Ltd (an internet-based specialist travel service provider). She was the owner of the Philippa Benson beauty salon in Fulham Road. She owned a bloodstock agency (and at that time had 10 horses in training and two brood mares). In mid-2003 she founded a web-site to provide mutual support and comfort to women all over the world seeking a female companion to travel (or escape) with. Finally, she was able to describe herself in 2003 as a property developer and interior designer with a sizeable portfolio.
18. A brief summary of the portfolio (down to the date of the self description) is as follows. The earliest acquisition was Hatchford End Corner in Cobham (two properties, the first of which had been bought in joint names in 1979 and the second in the name of Barry Davies in 1991, and which had been merged to form a six bedroomed house with a then current value of £1.1 million): it was used as a weekend property for the family. Then 20 Randolph Road London W9, a Grade 2 listed house, had been acquired derelict in 1990 for £560,000 and refurbished over the years at a cost of £300,000. It had been the family home until 2000, when the Claimant decided to let it to Merrill Lynch at annual rent of £250,000; and it was eventually sold in September 2003 for £3.75 million. There were Flats 9 and 11 Hatchford Park (also in Cobham) deposits on which were funded by the Company in 1999 and which were then subject to a long drawn-out acquisition and conversion process (with an ultimate value of approximately £1.3 million). Then in January 2000 came 5 Pembroke Mews London W8 bought for £740,000, refurbished at a cost of £100,000, and sold in June 2003 for £1.065 million. Finally there was flat at Benham House, Kings Road, Chelsea: this had been agreed to be bought in the name of the Company in July 2000, and when completed in 2003 was held for rental purposes (let at £3000 per month) and then valued at about £950,000. In the course of the events with which I am concerned came 31 Edwardes Square London W8: another Grade 2 listed Georgian house bought in January 2003 for £2.7 million and which the Claimant was seeking to modernise and remodel and hoped to sell on for £3.75 million. This portfolio had been selected and refurbished using the Claimant's undoubted skill and taste, and in large part the money of the business.
19. I have no reason to doubt broad truth of anything that the Claimant said about herself. Everything I saw of the Claimant and learned of her background and achievement reinforced my view that she was an extremely able, astute and perceptive woman (though that does not exclude the possibility that she had "blind spots" or vulnerabilities). But I have reminded myself (for the purposes of assessing where the truth lay) of the possibility that the woman I saw in the witness box in 2012 was not necessarily in all respects the same woman who signed documents in 2001 whilst living with Barry Davies.
20. The Claimant gave her evidence (for the most part) in a confident and assured way, as a well-prepared and articulate witness. I have no doubt as to her integrity or her conviction that she was telling the truth as she recollected it. It was, however, plain that the past events were viewed through a lens of suspicion. Nonetheless, it should be clearly said that she did not "put on an act" for my benefit. In particular I am satisfied that the full extent of the overall family borrowings from AIB only sank in after the death of Barry Davies and as she began to administer his affairs. She is absolutely sincere in her belief that something shady must have happened for her to have saddled herself with such a liability to AIB. She was accusing her dead husband of something fairly dreadful: he was not there to answer for himself, and he had never had the chance to answer in his lifetime. But she did not exploit this, and passed up several opportunities to embroider her evidence with some telling detail that could not be gainsaid by AIB. What she did say thereby gained credibility. It is also to her credit that she regarded parts of the statements of case prepared for her as overstating the position: for example, in her last witness statement she said that the assertion that she would "invariably" sign documents at the direction of Barry Davies went too far. Her evidence did, however, suffer from very late preparation (she made statements on 8 December 2011, 31 January 2012 and 14 February 2012 and a short fourth statement at the start of the trial), with clear legal input into the February 2012 statement that tended to deprive it of that air of spontaneity and authenticity that leaves the judge of fact with the clear impression that he has been told the story as it is actually recollected by the witness to have happened, and in her own words.
21. Of the late Barry Davies it is difficult to draw a fair portrait. He was four years older than the Claimant. His marriage to her (in 1978) was his second marriage and the daughter of his first marriage seems to have found this difficult. One such difficulty arose when Barry Davies spent money (out of an account held jointly with the Claimant) on his elder daughter's wedding, at a time when the Randolph Road property had just been sold but the Claimant had not been told what had become of the sale proceeds. It prompted the Claimant to send a fax in these terms:"I feel at the moment that you do not give me the respect due to an equal partner. I do not think that you should make decisions about how our money is spent without consulting me. To make decisions on your own about what is owned jointly, is a form of domestic abuse. I think that you should consult me before many of the decisions that you make alone, which result in both of us having to live with the consequences…… There are many other instances where I feel you have been high-handed with what is legally at least 50% mine and I think you should reconsider your attitude. Finally, I am not happy that you will never show me the respect of discussing disagreements rationally, but instead you adopt a bullying attitude and try to shout me down and then storm off, so that disputes are never resolved….."
22. It would be wrong to treat that fragment taken from September 2003 as amounting to a comprehensive portrayal of the relationship between the Claimant and Barry Davies (particularly as it was in 2001) : but it provides a clear insight into the Claimant's perception of some themes of the relationship. There is no recorded answer from Barry Davies himself, certainly no written vehement denial: I think there is more than a grain of truth in the Claimant's outburst, but that it is not a full (and thus fair) account.
23. It would be equally wrong to treat the notes made (by someone who was not called as a witness) in October 2000 as part of a psychiatric assessment on the occasion of Barry Davies' admission for treatment of alcohol dependency as amounting to a fair picture of his character. But Barry Davies is recorded as describing himself as a "depressed, resentful, lucky and caring person with a lot of love for his children and wife": I am prepared to give weight to that self-description (but reminding myself that we do not see ourselves as others see us). The assessor described him as:

"Mildly agitated when confronted…. He was confabulating and will derail topics to ignore the real issues and his alcohol problem. He will switch from topic to topic every five minutes without giving a straight and direct answer to questions. He denied any delusions although some grandiose content was apparent".

The notes from which that report was compiled contain references also to "controlling behaviour", "manipulative" and "slippery conversation". I can place little weight on those comments partly because they did not find their way into the formal report and partly because the author is not there to explain what he or she meant by the remarks or how they would apply in ordinary discourse: nor is Barry Davies now here to comment on them.

24. The Claimant herself described Barry Davies (in her main witness statement, one week before trial) as domineering, with a dislike of being challenged, and with a propensity to erupt and lose his temper if questioned on financial matters, for which he assumed responsibility within the family. She said at trial that he was adept with figures, whereas she was pedestrian: that he would be at "Step 10" when she was still at "Step 1", but that if she asked questions he would get cross. However, she did not think he would deliberately exploit her. In her late evidence there is a marked rowing-back from the emphasis in the statements of case upon his violence. Any domestic violence is unacceptable: but the Claimant confirmed that such as there was had ceased in 1995 (though the fact that it had once occurred no doubt lingered). In cross-examination she said that by March 2001 Barry Davies seemed pre-occupied and "not the person she had known".
25. Mr Morgan Hurley, who was effectively the relationship manager at AIB and had extensive dealings with Barry Davies, described him as having a strong personality, demanding but not overbearing, knowing what he wanted and forthright in putting it across, not unreasonable in discussion, but capable of becoming frustrated and occasionally economical with the truth. These traits are evident in the correspondence, and I accept Mr Hurley's summary (though recognising that it is not addressing a domestic context).
26. I have keenly felt the absence of Barry Davies to respond to the accusations levelled against him after his death: and to display what sort of man he was. Even though the Claimant has not exploited the undoubted advantage that this confers, there is an inevitable imbalance. I have therefore placed considerable weight on the contemporaneous documents and the inferences that I can properly draw from them. In part these do show a larger than life character, confident in his own financial and business abilities and experience, and impatient with those who could not share his view. They show someone who had suffered from alcoholism. But they also show a man who (before 2003) would not place his own interests automatically above those of his wife, but who would lend his support (and that of the Company) to her property development ambitions, for she undoubtedly had the direction and control of that part of the family's activities. They show a man capable of extravagant gesture, whose self-assessment that he was caring and loved his wife is probably accurate. These, I think disclose a more balanced picture.
27. Barry Davies had been a chartered accountant, but his interests led him to become a renowned dealer in Oriental antiques, with a gallery in Davies Street in Mayfair. He was ranked in the top five dealers in the world for netsuke. He originally traded as a sole proprietor but in 1994 incorporated the Company in which he owned all of the shares and was the sole active director (the Claimant not being involved in the day-today business, but signing off the accounts, for she too was a director). He was assisted in the business by Mr Colin Murray, who ran the accountancy and administration, thus leaving him free to run the enterprise. He did so by sometimes buying to order, but frequently by purchasing or assembling collections that he would seek to sell to world-famous collectors of Japanese art. This business model (which largely reflected confidence in his own judgment) led to high stocking levels (in early 2001 stock stood at £11 million on an orderly sale basis) and peaks and troughs in cash flow, making the business heavily dependent upon the bank.
28. The Oriental antiques business was originally funded by borrowing from Barclays Bank arranged in 1993. Some of the borrowing was in the sole name of Barry Davies. That sole borrowing was supported by mortgages over Randolph Road and Hatchford End Cottages (which stood in the joint names of Barry Davies and the Claimant). In connection with the grant of those mortgages the Claimant received independent legal advice and expressed concern over two of the detailed provisions of the intended transaction (in that respect demonstrating an independence of mind and an ability not simply to do what Barry Davies asked even though this was at time when she says he was capable of violence) . These concerns were addressed in a side letter from Barclays Bank. One concern related to the date on which the liability of Barry Davies or his estate to Barclays would crystallise. The other concern related to the extent of the Claimant's liability to pay under the mortgage: Did it extend to the full amount of the debt due from Barry Davies or was it limited to the value of the properties? The bank at that time confirmed that the responsibility of the Claimant was limited to the two charged properties in so far as borrowings by Barry Davies alone were concerned.
29. When BDOAL was incorporated in February 1994 the Barclays borrowing was rearranged. The Claimant was informed by letter that the borrowing by the Company consisted of a £1 million loan facility and a £1.6 million overdraft (producing total borrowings of £2.6 million). She was provided with a copy of a personal guarantee by Barry Davies of BDOAL's debts in that sum. A new batch of mortgage documents was executed by her with the benefit of legal advice about the securities. On this occasion the bank's side letter did not limit the responsibility of the Claimant to the value of the charged properties (additional properties having been added). Instead the bank promised that on the death of Barry Davies it would give the Claimant 21 days to consider her position and to make proposals to Barclays concerning the repayment of the monies due before it exercised any rights under the Mortgages. The Claimant was undoubtedly content to make her personal property interests available to support this bank lending of £2.6 million.
30. For AIB Mr Cousins QC contends that under the revised Barclays arrangement the Claimant was potentially personally liable for the whole of the £2.6 million plus interest (under clause 1(B) of the standard Barclays' Charge and consistently with the approach taken in AIB v Martin [2002] 1 WLR 94). For the Claimant Mr Coleman QC contends that to construe the covenant for payment in that way would be bad banking practice: so it should be read as limiting liability to the value of the Claimant's interest in the charged properties. I consider that Mr Cousins QC is probably right in his reading. But for present purposes what matters is not the true legal analysis but the known extent of the borrowing of the Company and the apparent exposure of the Claimant to demands for repayment of that sum. The Claimant undoubtedly knew in 1994 that the Company needed to borrow £2.6 million from the bank in order to trade, and that all the bank was prepared to do was to give her 21 days "to consider proposals to the Bank concerning the repayment of monies due to the Bank". But she nonetheless concurred in the banking arrangements. She told me that she entered into the arrangements to support her husband, that she knew what she was doing, and that if things went wrong she would have to pay £2.6 million. But she took the view at that stage that if Barry Davies died he was insured for £300,000 (and there was the gallery stock): and if he did not die then he would get himself out of any mess. I accept that evidence.
31. The business was a profitable one. It generally made a profit of between £250,000 and £500,000 per annum. Some of the accumulated profit was used partly to fund the Claimant's property development business, and the Company's connection with the bank was used to borrow the balance of funding required. The Company's cashflow was used to pay the interest on that borrowing. So in December 1999 the Company paid the deposit on 5 Pembroke Mews and borrowed £450,000 to fund the purchase. Likewise it was the Company that originally contracted to purchase the flat at Benham House. In consequence the Company's accounts for the year ending 31 March 2000 (which were signed off by the Claimant shortly after their preparation in April 2001) showed bank loans and overdrafts due within a year of £2.09 million and bank loans due after one year at £415,000 (a total of £2.505 million). That figure was comparable with the 1998 and 1999 borrowings figures shown in accounts which the Claimant had also signed. Directors do not usually sign off company accounts without glancing at the key figures: that would not be lawful conduct. I do not think that the law should assume that the wives of active directors behave unlawfully, or readily accept assertions that that those who sign accounts are ignorant of their contents. I find that in April 2001 the Claimant must have known that the borrowing of the Company had in March 2000 been over £2.5 million, and that that was not unusual. I find that in September 2002 when the Claimant signed the accounts for the next financial year she must have known that the indebtedness of the Company to Barclays was £2.15 million at 31 March 2001 (shortly before she accepted the Personal Loan).
32. In the period from March to May 2001 Barry Davies undertook a significant reorganisation of his affairs. First, the decision appears to have been taken to begin disentangling the antiques trading and property development businesses. To that end the directors of the Company (at a meeting on 6 March 2001 the minute of which records the Claimant's attendance) resolved to transfer 5 Pembroke Mews to the Claimant at market value. The benefit of the contract to purchase the flat at Benham House was also to be assigned to her.
33. This intended separation was put into effect. An agreement was entered into on 30 March 2001 whereby BDOAL agreed to sell Pembroke Mews to the Claimant for £800,000 with completion postponed (for stamp duty reasons) until 30 March 2021 (or any earlier date proposed by the Claimant). £800,000 was the historic value of the property against its then current value of about £1 million. The Claimant's signature appears on the document. On the same day a Deed of Assignment was entered into between the Company and the Claimant whereby the Company assigned the flat at Benham House to the Claimant. A solicitor's letter says that the Deed of Assignment was properly executed by the Claimant. I find that the Claimant undoubtedly knew that both those assets of the property business (paid for with money borrowed by the Company) were to be taken out of the name of the Company and put into her name. Over the years the Claimant has through solicitors asserted that she was indeed the true owner of Pembroke Mews.
34. Second Barry Davies had received from some tax planning advice which had suggested the establishment of the Barry Davies Life Interest Trust for his own benefit ("the Life Interest Trust") and of an Accumulation and Maintenance Trust for the benefit of his children ("the A & M Trust"). The A & M Trust was eventually established on 22 May 2001 with Barry Davies and the Claimant (together with Mr Williams, a solicitor from Morgan Cole, who advised Barry Davies) as the trustees. The initial trust fund was stated (immediately above the Claimant's signature) to be £10. The tax-planning advice had implications for the funding of the business. The original plan was that Barry Davies would transfer his one half share in Randolph Road to the Life Interest Trust (the trustee of which would be the AIB so that it could control the asset in the event that the transactions were left uncompleted for stamp duty reasons): and the trustee of the Life Interest Trust would then sell that interest to the trustees of the A & M Trust for about £1.4 million. The trustees of the A & M Trust would borrow from AIB to fund that purchase (using the half share in Randolph Road as security), and the A & M Trust's share of the Merrill Lynch rental income stream from Randolph Road (£125,000 gross) would cover those financing costs. The trustee of the Life Interest Trust having received the proceeds of the sale of that half share of Randolph Road would then lend that sum to the Company or allocate it to Barry Davies to enable him to do so. The practical effect of this arrangement would be that part of the money that the Company needed to fund its operations would have been borrowed from AIB by the Trustees of the A & M Trust i.e. the Claimant would (jointly with the other trustees) have borrowed £1.35 million secured on a half share in Randolph Road. (This proposal was later modified). The reason why only one half share in Randolph Road was to be put into the trust was because the Claimant was not prepared to divest herself of ownership of her half share: an independence of view which Barry Davies respected.
35. Third, Barry Davies had been introduced to AIB as prospective bankers to the Company and the family. The AIB correctly described the banking proposition put to it as "Restructure of existing borrowings in the name of [BDOAL]". The restructure seems to have been only partly about an increase in the banking facilities to be made available to the Company (though Barclays had undoubtedly imposed restrictions and reductions on the facilities they were prepared to extend) and partly about a separation and reallocation of the borrowing between antiques business and the property business (utilising the intended trusts). Evidence submitted (by agreement) after the conclusion of the hearing (consisting of the file of Barry Davies' personal solicitor) makes it clear that Barry Davies was contemplating the possibility of early retirement (perhaps within three years): a separation of the businesses would then be necessary. The banking case seems to have been fairly straightforward: and AIB observed that it was "only the complexity of the proposed restructure that cause[d] any significant misgivings". The Company was to borrow £1.25 million and have additional facilities of a further £200,000 (giving direct Company liabilities of £1.45 million). The other borrowing was to be by one or other of the Trusts which advance would be directly or indirectly on-lent to the Company to replace "the stocking loan" and to reimburse the Company for the monies it had paid to acquire various properties.
36. A complicated security package was proposed to support this borrowing. The Company (in whose name 5 Pembroke Mews then stood) was to provide a first legal mortgage over that property to secure the Company borrowing: the Claimant was to charge her equitable interest. Barry Davies and the Claimant would additionally provide a joint guarantee in the sum of £1.45 million to secure that same borrowing supported by a legal mortgage over Hatchford End Cottages (which stood in their joint names). The borrowing in the names of the trustees would be supported by a legal mortgage over Randolph Road together with a letter of guarantee from Barry Davies and the Claimant. Because of the complexity of this lending and security package the AIB branch proposed that panel solicitors should vet all the documentation to confirm that the structure was legally valid: and the AIB regional office imposed a condition that Barry Davies and the Claimant must obtain independent legal advice (an internal monitor specifically raising the question of whether the branch was happy that the Claimant agreed with what was being proposed). These arrangements were subject to several minor revisions.
37. The detail of all these arrangements does not matter. I have summarised them to show just how complex and interlinked the intended arrangements were, and how they were subject to modification (and amendment to correct misunderstandings). I have no doubt that this restructuring plan was driven by Barry Davies and his advisers and that the role of the Claimant was entirely reactive. But I have no doubt that she understood that certain assets were intended to be transferred into her name (and that Mr John Downing of Davenport Lyons, the conveyancing solicitor who oversaw the execution of the Deed of Assignment relating to Benham House, satisfied himself that she had the requisite level of understanding of that transaction); and that she understood that there was a wholesale reorganisation of the bank funding that underpinned the operation of the Company and her own property development activities. She also understood that there would be some Company borrowing but that there would also be some non-Company borrowing as part of the overall arrangements, in particular borrowing by the trustees of the A & M Trust. I do not consider that she was provided with the intricate detail of the proposals or that she was involved in discussions with AIB.
38. As I have indicated, the intricate detail of the transaction changed. The sum to be borrowed by the trustees of the A & M Trust increased to £1.35 million, bringing the total borrowing up to £2.8 million. In due course on 9 May 2005 a facility letter was issued by AIB to the trustees of the A & M Trust for the purpose of acquiring a 50% interest in Randolph Road. This was of course personal borrowing (as the rubric in the signature box made clear). The A & M Trust was not in itself a legal entity capable of borrowing: it was the trustees (including the Claimant) who were borrowing. The facility letter made clear that (in addition to a charge over the settled half share) the borrowing was to be secured over the entirety of Randolph Road (so that whilst the Claimant was not transferring her 50% interest into the A & M Trust she was exposing it to liability for the borrowing). It was a specific condition of the facility that the Claimant had to obtain independent legal advice in relation to that mortgage. The Claimant signed the acceptance of the facility on 11 May 2001: and she re-verified her signature on 22 May 2001. (Although the re-dating of the document was not explained at trial it seems to me that the A & M Trust was only constituted on 22 May 2001 with £10, and it was obviously thought prudent to re-date the acceptance of the facility). At that stage (11 May 2001) no mortgage documentation had been prepared: I find that at that point the Claimant had not received independent legal advice about her borrowing as a trustee of the A & M Trust. But she does not say that the acceptance on 11 and 22 May 2001 of the facility offered to the trustees of the A & M Trust was procured by undue influence.
39. Also on 9 May 2001 AIB extended a total facility of £1.45 million to the Company, which was accepted (also on 11 May 2001) by Barry Davies and Colin Murray on behalf of BDOAL. This offer was not seen by the Claimant. The facility was dependent upon the grant of the joint and several guarantee in AIB standard form by Barry Davies and the Claimant in the sum of £1.45 million and (amongst other securities) a first legal mortgage over Hatchford End Cottages (which was in the name of Barry Davies and the Claimant). So although the Claimant was not involved in the acceptance of the separate AIB offer of a £1.45 million loan to the Company, it was (in the ordinary course of events) inevitable that she would come to learn of its existence because of the supporting security that she was being asked to grant. It was a specific condition of this loan that Barry Davies and the Claimant had to obtain independent legal advice in respect of the letter of guarantee.
40. In the regional banking centre "sanction" of these facilities the credit committee had stipulated that the Claimant was "to receive independent legal advice on all aspects of the facilities and the security to be given by her". The specific conditions imposed by the branch in the facility letters in respect of the advice to be given to the Claimant were more narrowly drawn (in requiring advice as to the security rather than the facility). In my judgement this was not a deliberate tactic by the branch to conceal the overall funding package from the Claimant. Whilst the Barry Davies connection was undoubtedly an attractive one for the branch to capture, the branch officials had no interest whatsoever in jeopardising the security arrangements in what they had explicitly recognised was a complex restructuring.
41. If at this point one takes a high-level view of the restructuring what was happening was that the old Barclays facility to the Company ( which had extended to £2.6 million and was supported by mortgages on the Claimant's property interests) was being replaced by an enlarged facility of £2.8 million, of which £1.45 million was being advanced to the Company (supported by the personal guarantee of Barry Davies and the Claimant and secured by mortgages over the Claimant's property interests in Pembroke Mews and Hatchford End); and £1.35 million was being advanced as personal borrowing to the trustees of the A & M Trust (supported by a mortgage over the legal estate in Randolph Road and supported by a personal guarantee from Barry Davies and the Claimant). At the same time property which had been held in the name of the Company was being transferred at market value or below to the Claimant. Mr Coleman QC highlighted one further difference between the Barclay's package and the AIB package: this was that he had been a condition of the Barclay's lending to the Company that Barry Davies should maintain a "key man" life policy in the sum of £300,000, whereas there was no life-insurance element in the AIB package. That is true but to my mind immaterial to the issues I have to decide.
42. To transfer the banking from Barclays to AIB new accounts needed to be opened. On 11 May 2001 a Joint Account Mandate (in the bank's standard form for two or more persons who were not a firm) was signed by Barry Davies and by the Claimant. This authorised AIB "To open… an account or accounts ("the account") in our names with you". It also authorised AIB

"to give effect to any order, direction, request or instruction given by us to you from time to time relating to drawings on or withdrawals or transfers from the account, or for the purpose of activating any facility established by you for us at debit of the account, originated by cheque … debit … request, instruction, or receipt as may be appropriate to the particular type of account and expressed to have been drawn, made, accepted or given by any of us….. and it is hereby agreed and declared that we shall be jointly and severally liable for any monies advanced by you on the account and for any overdraft or indebtedness arising on foot of any facility granted on that account …"

The Mandate concluded with a declaration that it would continue in full force and effect until notice in writing countermanding the authority (unless terminated by death, incapacity or operation of law). The Claimant authorised AIB not to supply her with a separate periodic statement of account.

43. By 11 May 2001 the Claimant had signed

a) an agreement to purchase 5 Pembroke Mews from the Company;

b) a Deed whereby the Company assigned the Benham House contract to herself (executed before a solicitor);

c) accounts for the Company showing borrowings at the March 2000 year-end of £2.5 million;

d) the Joint Account Mandate;

e) the acceptance of the bank's offer of lending £1.35 million to the trustees of the A & M Trust.

44. By 22 May 2001 the Claimant had signed

a) the acceptance of the £1.35 million facility to the trustees of the A & M Trust (again):

b) the Deed constituting the A & M Trust with its initial fund of £10.

None of the security documents, so essential to the Company's borrowing of £1.45 million and the trustees of the A & M Trusts borrowing a £1.35 million, had been signed. It was a requirement of the AIB not only that the Claimant should be separately advised in relation to the documents that the funding package required should be signed by her, but also that her signature on the documents should be witnessed by the solicitor who had given that advice to her. The solicitor identified to fulfil that role was Mr John Downing of Davenport Lyons. The Claimant chose him, but said (and I accept) that he was the natural candidate, since he had undertaken the conveyancing in relation to the intended transfer to her of the flat at Benham House and 5 Pembroke Mews. At trial she thought she could have done with better advice, from a financial expert: I think that was unfair on Mr Downing.

45. The target date for the completion of the security documents was 30 May 2001. The Claimant was available that day, but Mr Downing was not. This caused Barry Davies to write an exasperated letter of complaint to the bank about the inconvenience of the bank's "standard procedure". This letter (dated 29 May 2001) was at trial described by Mr Coleman QC as "aggressive and unreasonable" and relied on as an indication both that Barry Davies was a bully and that he wished to separate the Claimant from her legal advisers. I do not consider in the light of the evidence as a whole that that is a fair interpretation. Barry Davies was anxious (probably desperate) to complete these complex transactions which had been in negotiation for three months, and regarded AIB's solicitors as raising "items of minutiae" and of "needlessly caus[ing] huge delays in settling matters". He was deeply concerned that an inability to compete arrangements on 30 May 2001 would lead to an "unacceptable delay in completing formalities" during which he anticipated that his financial position would change radically. Barclays were evidently anxious that the transfer be completed and appear to have contemplated charging additional fees because of the delays. Barry Davies' proposal that the Claimant's signature could be witnessed by another solicitor whom she knew was born of a desire to avoid that delay not of a desire to place the Claimant at a disadvantage.
46. The reason for the delay was the Claimant's intended departure on a holiday that would end in mid-June. When AIB stood firm upon its requirement as to the witnessing of the Claimant's signature Barry Davies wrote to his own solicitor (in a letter dated 31 May 2001):

"As you know, I have put things on hold for a few weeks, awaiting Christine's return from holiday…… This pause in proceedings will also give me time to assess things at a slower and more sensible pace, instead of frenetic as at present, and finally, give John Downing more than a few hours to read through the important information that he must, before giving Christine independent advice."

I regard that expression of view about the importance of the advice that the Claimant would receive as entirely genuine.

47. Before the Claimant left for her holiday three events occurred. First, on 20 May 2001 (the Claimant's birthday) Barry Davies gave her a brand new red sports car tied with a bow. That might appear an act of spontaneous (if unwelcome) generosity. But the Claimant now says that Barry Davies must have thought that he may have to ask her to agree to a personal loan from AIB (instead of the loan she had already accepted as trustee) and that he was preparing the ground. This strikes me as a revisionist view, imposing on the historical event an interpretation born of subsequent happenings. There is no hint in the documents that (as at 20 May 2001) any change in the then-current arrangements might occur. Indeed the facility letter offering a loan to the trustees of the A & M Trust (of whom the Claimant was one) was re-signed on 22 May 2001 confirming (not changing) the then-current arrangements.
48. Second, the Claimant knew that some letters of Edward VIII (her special area of interest) were due to be auctioned at Bonhams. She left instructions with a friend to bid for one photograph. But Barry Davies successfully bid £40,000 for the whole lot, and told her (whilst on holiday) that he had done so saying "Now you can write that book". She said in examination in chief that it was only as the present case unfolded that she understood why he had bought the letters (implying that it was not the (possibly over-generous) spontaneous act of a husband seeking to please his wife, but rather the calculated act of someone preparing to exert undue influence on his wife and to procure her signature on a document she would not willingly sign). It seems to me that that analysis is again wholly mistaken. The change in the identity of the personal borrowers (from the Claimant, Barry Davies and the other trustee of the A & M Trust to the Claimant and Barry Davies alone) seems to have been a late and hurried change to accommodate a pressing timescale, not something that was planned and for which the ground was deviously prepared.
49. Third, it is probable (on the face of the bill that he later delivered) that the Claimant had received some advice from her solicitor Mr Downing before she left on holiday: but the quality of the evidence does not permit me to make any properly grounded finding as to the scope or nature of that advice. What can be said is that there is no evidence of any attempt by Barry Davies to keep the Claimant from her legal adviser.
50. On 25 May 2001 Mr Downing was sent (by AIB's solicitors) formal instructions to tender advice to the Claimant in relation to the security that she was to provide in support of the Company's borrowing, his instructions being in this form:

"Please advise [the Claimant] on the content and implications of giving the Guarantee which should then be signed in your presence. Please ensure that the acknowledgement section of the Guarantee is signed where indicated and that [the Claimant] is provided with a copy of the Guarantee. Inter alia the Guarantee will be supported by a legal charge over [the Claimant's] beneficial interest in 5 Pembroke Mews and a legal mortgage over [Hatchford End]……Please ensure that you advise the Claimant on the effect of the Guarantee on the charge over the beneficial interest [and] legal mortgage…. Please advise [the Claimant] on the content and implication of giving these documents which again should be signed in your presence…"

There was a separate letter of instruction to Mr Downing on the same day requesting him to give advice to the Claimant as to the content and implications of giving an intended Third Party Legal Mortgage over Randolph Road to be granted by the Claimant to support the obligations of the trustees of the A & M Trust. Mr Downing was accordingly aware at that point that there were two intended advances: one to the Company secured by the Guarantee and one to the trustees of the A & M Trust secured by the Randolph Road mortgage. But it will be seen that AIB made no request to Mr Downing that the Claimant should be advised as to the effect of the then intended £1.35 million loan to the trustees of the A & M Trust itself.

51. Mr Hurley of AIB said in evidence that the reason for that (notwithstanding the regional banking centre's recommendation that the Claimant should receive advice in relation to "all facilities") was that the £1.35 million was personal borrowing and that under the bank's standard procedures independent advice on joint personal borrowing was not a requirement. This was a misjudgement on his part and he was mistaken as to the bank's standard procedures. If the joint borrowing was to be used for business purposes and the bank was not fully satisfied that the wife was fully involved in the business then the bank's procedures required independent advice to be given.
52. Mr Downing was however, in my judgment, a conscientious man. He declined to tender advice in a vacuum. When notified that he would have to tender such independent advice he contacted Barry Davies' solicitor (on 18 May 2001) seeking written confirmation of the circumstances surrounding the matter upon which he was advising the Claimant. The information he received ( a copy of a letter of preliminary advice on the overall restructuring dated 13 February 2001) would have enabled him to see that what he was advising upon was but part of a much wider scheme: but it would not have enabled him to see what the intended financial arrangements were in detail. I find that he had received this information by the time he received his formal instructions from AIB on about 25 May 2001.
53. By 13 June 2001 the arrangements had been further modified. On that date Mr Hurley notified the regional banking centre :-

"…Barry Davies has decided not to avail of the proposed trust structure (in relation to the residential investment property at Randolph Road) at this stage. Instead the present owners of the property Barry [Davies] and [the Claimant] will borrow the money is personally in joint names. There are various reasons behind the decision but effectively it will allow for the immediate drawdown of the facilities. In the future there is a possibility that the applicants may revert to the … A & M Trust structure…… From our perspective, the revised structure is more satisfactory and will allow us to capture the full rental income of £250,000 and also allows us to rely on the full equity in the property for the [BDOAL] facilities…….."

What was meant by this was that if Barry Davies was not putting his one half share in the equity in Randolph Road into the Life Interest Trust and eventually into the A & M Trust then the entirety of the equity in Randolph Road would be directly available to support lending to the Company: that was why AIB amended its offer of a £1.45 million facility to the Company to require as additional security a first legal mortgage over Randolph Road by its registered proprietors (whereas the original offer had proposed the security of a guarantee from Barry Davies and the Claimant in the sum of £1.45 million and thus only indirect access to the equity in Randolph Road).

54. AIB also amended the terms of the offer of the £1.35 million loan on 13 June 2001. This was now addressed to Barry Davies and the Claimant instead of to "The Trustees of the A & M Trust". Its stated purpose was now "Restructure of company finances" instead of to acquire a 50% interest in Randolph Road. By this it is evident from the bank's internal records that AIB understood the advance to be applied (a) as to £800,000 in the purchase of Pembroke Mews (the bank's internal record refers to "Randolph Road", but that is an obvious error) by the Claimant from the Company; (b) £420,000 to be advanced by the borrowers to the Company to enable it to repay a stocking loan from Barclays; and (c) £130,000 to repay the Company for the deposits it had paid on Benham House and Hatchford Park. I infer from the bank's records that the bank accepted that the £800,000 may not be applied for the purchase of Pembroke Road immediately because it understood that the sale contract provided for an extended completion date. Theer continued to be a mortgage over Randlopn Road, and the security package was in general brought into line with that supporting the Guarantee.
55. The decision not to use the trust structure is recorded as being made by Barry Davies alone: and I am sure that it is right. The £10 that was in the A & M Trust fund was not available to repay the borrowing. But the bank continued to look to the personal covenant of the borrowers (now Barry Davies and the Claimant instead of Barry Davies, the Claimant and the solicitor-trustee) and to the entirety of Randolph Road as security.
56. It was the standard practice of the bank (which I have no reason to doubt was followed in the case of the offer of 13 June 2001 and each earlier offer) to attach a copy of its General Conditions to each Offer Letter. The Claimant did not contend otherwise. Acceptance of the facility is signified (according to Condition 12) in the case of personal borrowers by "..the return of a copy of the Facility Letter signed by the Borrowers as acceptance of personal liability…..for the Facility and of the terms of the Facility Letter, and authorising the Bank to accept instructions from the agreed parties"
57. I find that at this stage (13 June 2001) there was urgency to complete the refinancing. Barry Davies had complained of delay and had indicated to the bank that in the period of delay there may be a significant alteration in the Company's financial position: and I note both that elimination of delay is one of the reasons given for the alteration of the proposal by abandoning borrowing via a trust, and that the approval of the regional banking centre was obtained on the same day as the branch report on the changed proposal (enabling the loan offers to be issued that same day).
58. The Claimant was not, however, available to sign any documents. She was on holiday. The AIB facility letter could not be signed until her return (which the documents suggest would have been Friday 15 June 2001). The Claimant herself cannot say when she signed the Facility Letter. She has no recollection.
59. If the Claimant has no recollection of signing the facility letter, what can she say of the circumstances of its signature or of her understanding? In her witness statement dated 8 December 2011 (by which her case was to be proved) the Claimant did not address the signature of the facility letter for the Personal Loan at all. In her witness statement of 31 January 2012 the Claimant says that Barry Davies did not mention to her that there was a personal loan as well as the Company borrowing (sic) (compare the way the case is put in the Amended Particulars of Claim quoted at paragraph 4 above, where the allegation is that she did not appreciate that there was company borrowing as well as the personal loan), that she does not remember what she was told prior to the signing of the Personal Loan facility, that "it was not made a big deal of", that she did not register that it was something new, that she was completely in the dark about there being two loans, and thought "one trust backing one loan". In her witness statement of 12 February 2012 the Claimant said that she could not recall the details of what Barry Davies told her of the revised loan arrangements, but she is sure that he did not explain that the loan to the trust was not proceeding or that the Personal Loan was in addition to the guarantee of the Company facility. This she repeated days later in her evidence in chief at trial, adding that she understood the Company borrowing would be "through the trust". She nowhere addresses the fact that this would be the third occasion on which she would have signed an acceptance of essentially the same £1.35 million loan facility.
60. On 15 June 2001 revised instructions were faxed directly to Mr Downing by the AIB. Amongst other things these asked him to advise upon the legal charge over 20 Randolph Road that it was now intended to be granted by Barry Davies and the Claimant in support of a £1.45 million advance to the Company. The letter of instruction bears signs of hurried preparation.
61. Also on 15 June 2001 Mr Downing was sent (and I consider that day received) documents and information from Mr Colin Murray of the Company. Mr Colin Murray said (and I accept, as did the Claimant) that it is highly improbable that he would have communicated with the Claimant's solicitor in this way without having received instructions from Barry Davies that he should do so. I find that Barry Davies requested that the information be sent to Mr Downing with the express object of ensuring that Mr Downing had everything he could conceivably want before tendering advice to the Claimant, probably because Barry Davies was anxious that there could be no grounds for delay in completing the transaction.
62. Mr Colin Murray sent both of the June facility letters to Mr Downing. In relation to the £1.45 million facility being offered to the Company he drew attention to the fact that the Claimant was being asked to sign (a) a joint and several guarantee of the Company's borrowing; (b) a legal mortgage on 20 Randolph Road; (c) a legal mortgage on Hatchford End Cottages, and (d) a Third-party legal mortgage of 5 Pembroke Mews. In relation to the £1.35 million facility being offered to Barry Davies and the Claimant he drew attention to the fact that the Claimant was being asked to sign (a) legal mortgage over 20 Randolph Road; and (b) a legal mortgage over Hatchford End Cottages. Mr Downing therefore knew with what liabilities each property was charged. In particular he knew that security was being offered in respect of direct personal obligations of the Claimant as borrower.
63. In her evidence the Claimant confirmed that it was not her case that Barry Davies had deliberately suppressed documents: but she said that when she looked at the whole lending it seemed to her that he had deliberately failed to explain certain things to her. When then confronted with the fact that Barry Davies had caused Mr Downing to be put in possession of both facility letters each clearly marked with the security to be offered by the Claimant, and then asked whether she still said that Barry Davies was concealing things from her she said it was "a very fair question", and that really it was "down to the solicitor". But she still said that her reading of it all these years later was that Barry Davies knew she found these things difficult and knew that was to his advantage: she said that he could have explained that "the trust would not work".
64. I infer from the documents that Mr Downing saw the Claimant on 15 June 2001. I find that this was not the only occasion on which the Claimant met with Mr Downing. In his bill dated 17 August 2001 Mr Downing (after identifying the documents) included as part of his narrative

"to reviewing these prior to advising you, to meeting with you on various occasions in order to advise you prior to your execution of these documents".

I regard this narrative as probably accurate. The bill is addressed to Barry Davies and the Claimant: but it is clear that Barry Davies was being advised by his own solicitors, so advice about the security documentation would not have been given by Mr Downing to him.

65. The only documentary record of the advice given by Mr Downing is a letter which he wrote to the AIB's solicitors on 21 June 2001 which said:

"We confirm that we gave [the Claimant] independent legal advice with regard to the following documents:

1. The Joint and Several Guarantee

2. The Legal Mortgage on 20 Randolph Road

3. The Legal Mortgage on[ Hatchford End Cottages]

4. The Third Party Legal Mortgage on 5 Pembroke Mews

5. The Legal Mortgage on the equitable interest of [the Claimant] [in] 5 Pembroke Mews.

All the documents that were brought to us were retained by [the Claimant] who advised us that she was handing them to her husband to deal with…….As we have already stated in this letter, we confirm that we provided independent legal advice to the Claimant upon the documents referred to earlier.."

66. The letter thus records that Mr Downing gave independent legal advice about the security documents: but it does not record that he gave independent legal advice about the £1.35 million facility letter itself. Included within the security documents was the Joint and Several Guarantee. On its face this discloses that the Company is the borrower: and the Claimant has placed her initials alongside the amount of the Guarantee (£1.45 million). The Claimant does not say that she was unduly influenced to enter this document, and she has always accepted liability. She says that Mr Downing went through the document and explained that it made her liable for the debts of the Company up to £1.45 million. She does not seek to explain how she thought the Company could be liable to AIB in that sum if it did not borrow that sum from AIB. But in cross-examination she confirmed an understanding that a guarantee (such as that which she signed for £1.45 million) must relate to somebody else's debt, and could not relate to your own borrowing.
67. In her witness statement of 8 December 2011 the Claimant focuses upon what she believes the AIB had told Mr Downing about the security package, and records a recollection that Mr Downing told her that all the properties were part of the security, because there was only one guarantee for £1.45 million: and that she thought "it was all part of the same thing". In her witness statement of 14 February 2012 the Claimant confirms that she cannot recall the advice she was given by Mr Downing, but says that she is sure that he did not explain that there were liabilities in the sum of £1.45 million under the guarantee of the Company facility and an additional £1.35 million under the Personal Loan. She acknowledges that she cannot explain how the Guarantee of £1.45 million relates to the letter offering a facility of £1.35 million if they are both "about the same thing".
68. At the conclusion of the interview with Mr Downing the Claimant took the security documents away with her: and they shortly thereafter made their way to the AIB. On 2 July 2001 the Barclays borrowing was settled by a transfer from the AIB of £2.665 million: of this, £1.35 million had been debited to the loan account of Barry Davies and the Claimant and then credited to the account of the Company for onward transfer to Barclays. The undated security documents were dated with the date of drawdown. The instructions for drawdown were given by Barry Davies. Although the entire proceeds of the Personal Loan were received by the Company, the Company did acknowledge in writing that it had disposed of Pembroke Mews (to the Claimant).
69. Mr Coleman QC argued that since the Claimant had not given instructions to debit the joint loan account she could not be liable to the AIB for the moneys advanced. I will address that argument later.
70. In April 2002 the Claimant decided that the Edwardes Square property should be purchased. The AIB provided facilities for the deposit. The bank's Offer Letter dated 18 April 2002 quite clearly offers Barry Davies and the Claimant an advance of £1.35 million for the purpose of the restructuring of the Company finances and £277k by way of bridging loan account to provide 10% exchange monies in respect of 31 Edwardes Square. The Claimant's signature (the authenticity of which she did not challenge) appears on the letter. Anyone reading the letter would readily understand that Barry Davies and the Claimant were accepting liability for £1.64 million, and that part of their borrowing was for Company purposes. Anyone who understood that there continued to be a Guarantee for £1.45 million and that a guarantee cannot relate to something you had borrowed yourself would understand that the new £1.64 million facility (partly for Company purposes) must relate to something other than the £1.45 million liability covered by the Guarantee. If AIB had understood that any part of the amount originally advanced under the Personal Loan was to be the subject of challenge I regard it as highly improbable that it would have extended additional facilities to enable the purchase of Edwardes Square.
71. The Company could not operate within the limits of the facilities extended by AIB and there were constant requests by Barry Davies for temporary increases. It was also necessary to obtain borrowing to complete the purchase of Edwardes Square. On 27 August 2002 there was a meeting at AIB attended by the Claimant and Barry Davies. Barry Davies had prepared an Agenda for that meeting, setting out the requirement for bridging finance for the acquisition of Edwardes Square and the prospective need for bridging finance for the completion of the acquisition of the flat at Benham House. But the Agenda also makes specific reference to the need for a £2 million facility on "the Main Business Account" i.e that of the Company. The Claimant says (and I have no reason to doubt, because it accords with the inherent probabilities) that she did not see this Agenda. But she was present at the meeting itself. Although there is no contemporaneous note of the meeting the branch immediately thereafter prepared a submission to the bank's credit sanction committee for an advance: and that application reflects what AIB was told at the meeting. It records a request on behalf of the Company for an increased facility of £2 million with a reduction to £1.2 million within 4 months (partly utilising £350,000 from the proceeds of sale of Pembroke Mews). Under the heading "Barry and Christine Davies" it records

"Clients have requested that we extend the interest only period on the £1.35m loan account account for a further year. It is expected that a reduction of £490k will be made upon the sale of Pembroke Mews with the remaining balance to be cleared upon completion of the sale of Randolph Road (£3.75 m) in August 2003……The Clients have requested a bridging facility of £2,880,800……in respect of their purchase at Edwardes Square…."

The Claimant acknowledged that she would have contributed to that discussion.

72. Given that the Claimant was present at a meeting at which a request for a £2 million facility for the Company was requested and a separate request made in relation to personal borrowing of £1.35 million (plus an additional bridge of £2.88 million) it might seem beyond doubt that the Claimant must have appreciated that there were two separate advances by AIB. But the Claimant says that the fact these discussions took place in her presence "does not mean that [she] was grasping it all", that she "had not twigged", and that she was not listening out for "sums beyond what [she] knew", describing herself as having "tunnel vision". I consider she probably did "grasp" the essential point about separate facilities at the time, but may not have dwelt on it or worked through the implications because of a focus upon getting 100% funding for the Edwardes Square acquisition. But the key point for present purposes is that Barry Davies made no effort to hide from her the existence of two facilities and talked openly of both in her presence.
73. By 30 September 2002 AIB was offering (in an offer letter in its customary form) facilities of £4.246 million to Barry Davies and the Claimant. Of this £1.35 million was clearly stated to be by way of loan account for the restructure of the Company's finances, whilst £2.881 million was a bridging loan to fund the purchase of Edwardes Square. The Claimant signed this facility letter on 7 November 2002: and there is no challenge to the authenticity of her signature. Anyone reading the letter would understand the extent of the personal borrowing, and that only £2.881 million related to the Claimant's property development activities. The purchase of Edwardes Square (in the sole name of the Claimant despite the borrowing being in the joint names of herself an Barry Davies) meant that there was additional security available to the bank. On or around 9 and 10 January 2003 the Claimant signed two Declarations relating to that mortgage before Mr Downing. She verified her signature to the second of those two documents at trial: the signature on the first is not materially different.
74. AIB had agreed the enlarged facility on the footing that Pembroke Mews was to be sold. The sale of Pembroke Mews occurred in April 2003 at £1.065 million (with completion due in June 2003). Barry Davies persuaded AIB to advance a further £350k pending completion. The advance was to be by way of increasing the personal loan of himself and the Claimant (from £1.35 million to £1.7 million). The trial bundle contains a letter dated 9 April 2003 from the Claimant to the bank thanking it for the advance against the sale of Pembroke Mews and saying:-

"Please could you transfer £350,000 from my joint account with Barry, into the business account for Barry Davies Oriental Art?"

Such a payment was in fact made on 9 April 2003 and had the effect of reducing the excess on the Company's overdraft (which Barry Davies had since February 2003 been under great pressure to do).

75. The Claimant says (and I accept) that this letter had been prepared for her by Barry Davies. She says in her witness statement of 31 January 2012 (8 years after the relevant event) that she understood that the £350,000 would be a loan on her joint current account with Barry Davies to which the sale proceeds of Pembroke Mews would eventually be credited (and that she "did not know about the Personal Loan account for which [she] was jointly liable"). I am inclined to view this "recollection" as a well-intended reconstruction of what she might have thought, occasioned by being confronted with a document which she had otherwise forgotten. What is inescapable even on that version is that the Claimant (knowing that the Company itself had borrowed money which she had guaranteed) appreciated that in addition she personally was borrowing money which was to be transferred to the Company for its use. But (as will appear) I think this "recollection" is false, and that at the time the Claimant must have understood there was separate personal borrowing for which this £350,000 was an extension.
76. Randolph Road was also sold in September 2003 for £3.75 million. Barry Davies used this to reduce both the Company and the personal borrowings. He did so without the consent of the Claimant and his action formed part of the background to the Claimant's fax to which I referred in paragraph 21.
77. The use of the Randolph Road proceeds meant that when the personal borrowing came up for review by the AIB in September 2003 the Facility Letter offered a reduced facility of £1.55 million. The core borrowing whose purpose had been restructuring of the Company finances was now described as "renewal of existing facility" in the sum of £900k: and there was added a loan of £630k to assist in the purchase of Benham House. The Claimant signed the acceptance of this offer (twice) on 25 September 2003 and at trial verified her signature. The offer was shortly thereafter increased to cover the cost of stamp duty. Although the loan is now described as "renewal of existing facility" I do not consider that the Claimant can have been in any real doubt that the loan was a personal loan (which she accepted): nor do I think she can have forgotten that all previous facilities had referred to the restructuring of Company finances.
78. I have recounted in detail the course of events so far as is necessary to ground my decision in this case. But I should in fairness refer to five subsequent events so that my assessment of those facts takes account of the inferences that might properly be drawn from these later events.
79. First, the frequent re-acceptance of the Personal Loan. The personal loan facility was modified, extended or confirmed on numerous occasions in terms that repeat the key parts of the original offer; on 7 September 2001, 18 April 2002 (extended to include Edwardes Square), 30 September 2002 (further extended to include Edwardes Square), 19 September 2003 (extended to include Benham House), and 18 October 2004 (extended to include Hatchford Park). The Claimant accepts that she bound herself to repay those parts of those facilities that relate to personal overdrafts or property funding: but she says that her consent to another part of each facility is vitiated by the undue influence practised on 15 June 2001 and (in essence) that she did not understand that she was assuming personal liability for that part of the whole.
80. Second, the occurrence of forgery and the unaccepted Bank of Butterfield loan. It continued to be a feature of the Company's business that it needed more working capital than was available under its AIB facility. BDOAL was constantly in excess of its limits and forever seeking adjustments or temporary accommodations as trade worsened following the 9/11 catastrophe. There is clear evidence that by mid-2003 Barry Davies was borrowing from clients and contacts. The Claimant's brother was a banker. Barry Davies exploited this connection in early 2003 to seek to raise funds from the Bank of Butterfield to refinance the AIB facilities and to raise extra money to refurbish Edwardes Square. Discussions about the existing finance arrangements and as to the loans requested took place from June 2003 between Barry Davies and Mr Paul Gilbertson of Butterfield Bank in the presence of the Claimant. It is virtually certain (having regard to the terms of the eventual offer) that the Claimant's existing liability to AIB and AIB's separate lending to the Company must have been discussed in the presence of the Claimant: and Mr Gilbertson, who attended the trial under compulsion from AIB, said (and I accept) that she was indeed party to such discussions.
81. Out of these discussions arose a loan application dated 18 September 2003 and bearing the signature of "Christine Davies". The Claimant asserts that this signature is forged. The Claimant made a late application to adduce expert evidence as to handwriting: but this was refused by the Master. I have accordingly to decide forgery questions using my own experience and making my own comparisons of photocopy signatures upon the challenged documents with other signatures (some of which the Claimant specifically verified and others of which - like that on a letter of 27 November 2007 - are obviously authentic since they post-date the death of Barry Davies).
82. The starting point must be CPR 32.19. There was no challenge to authenticity of any document produced by the AIB on disclosure. In the Claimant's disclosure (second list) seven documents were then described as bearing a "forged" signature of the Claimant. One of these was the Bank of Butterfield loan application. (The only other alleged forgery predating the acceptance of the Personal Loan was said to be on a request dated 23 December 1999 addressed to the trustees of the Company's pension fund to make a small loan to the Company). The authenticity of all other documents was thereby admitted by the Claimant. Mr Coleman QC submits (in a post-hearing Note submitted at my request) that the issue of forgery of an AIB - related document was first raised in paragraph 47 of the Claimant's witness statement of 9 December 2011 (where a single document, a facility renewal letter dated 12 December 2003, is identified); and was enlarged to identify seven further documents in the Claimant's second witness statement dated 31 January 2012 with additional material provided in the Claimant's third witness statement made days before the hearing.
83. AIB has thus only had the full case on forgery deployed a short time before the hearing, and had only a very short time in which to respond to it. I am nonetheless satisfied that I can fairly decide the forgery issue (having regard to the number of verified signatures).
84. I accept that the signature on the Bank of Butterfield loan application dated 18 September 2003 is forged and that some of the representations made in the application are false. (The oddity is that the Claimant thereafter accepted the offer produced by that application). I also find that by December 2003 Barry Davies was prepared to embark upon plain wrongdoing in order to raise money for the Company, even if this involved disregarding what might be the Claimant's wishes in the matter. I find that the Claimant's signature on the AIB facility renewal letter 12 December 2003 and on an AIB standard form Mortgage Declaration dated 16 January 2004 were also forged, probably at the instance of Barry Davies. I am not prepared to draw from these instances late 2003/early 2004 any inference that in 2001 he would have been prepared to embark upon wrongdoing of the sort alleged in relation to the Personal Loan or to disregard the Claimant's wishes (by exercising undue influence): or an inference that in 2001 he had in fact done so and was driven to subsequent forgery in order to conceal past wrongdoing. After a period of genuine doubt (having regard to other unchallenged or verified signatures, such as that on the facility acceptances dated 14 April 2002 and 19 September 2003) whether the signatures on letters to AIB dated 14 and 18 October 2004 are forged, I have with considerable hesitation concluded that they probably are. But again these forgeries in the autumn of 2004 (at a time of severe financial pressure) do not assist in deciding whether Barry Davies exercised undue influence on or about 15 June 2001.
85. I should record that out of the forged loan application arose a loan offer. A reader of the Bank of Butterfield's offer letter could be in no doubt that the Claimant was being offered the chance personally to borrow money to repay her existing borrowing, and that there was some separate lending to the Company. It is plain from its terms that there had been a request for an advance to the Claimant of £2.15 million of which £1.55 million was to redeem "your existing loan facility" with AIB: and that in addition there would be a cross-default clause with separate lending to the Company and a combined loan-to-value ratio. The Claimant accepted that offer (although the transaction never completed). It is not suggested that her signature on the acceptance was forged: and in any event to my eye (and having only photocopies from which to work) it bears remarkable similarity to what must be a genuine signature of the Claimant on the letter of 27 November 2007.
86. Third, from the death of Barry Davies the Claimant had consistently and with commitment asserted that there is something wrong with the Personal Loan agreement. In her witness statement of 8 December 2011 the Claimant went so far as to say that the first she knew about the Personal Loan "was some days after [Barry Davies'] death". She explained that after his death she went through his liabilities and that "the money owed to the bank was what [she] expected – a company overdraft of £2 million"; but that then she was told of the Personal Loan (then standing at £900,000) and that she remembers her head hitting the desk. I accept that that is what occurred and I am sure that that was not an act. But a constant assertion of ignorance and a deep conviction of something shady having happened in the past does not mean that that is how things actually were in 2001.
87. Fourth, it is a fact that following the death of Barry Davies the Claimant paid £2,094,000 to discharge the Guarantee (it having been increased subsequent to the events on which I must focus). She does not complain of the Guarantee: as her first witness statement acknowledges, a huge Company overdraft did not come as a surprise. She has also paid approximately £940,000 of the Personal Loan liability. The inference I draw from the acceptance of liability under the Guarantee is that the Claimant acknowledges that this was properly explained to her. I do not draw the same inference from the fact of payment under the Personal Loan. I accept the Claimant's evidence to the effect that she intended to pay everything that she properly owed, but did not raise the issue over the Personal Loan (even though it emerged on the death of Barry Davies) whilst AIB held the deeds to property which the Claimant needed to sell in order to arrange affairs following Barry Davies' death, taking the view that "AIB were not going to control her life". She felt that she needed all of the paperwork before she could mount a challenge: and that is what she did. I do however note that in March 2006 (when paying some £2.9 million to AIB in respect of the Guarantee and the Personal Loan) the challenge the Claimant was minded to make focussed on the assertion that she may not have received any legal advice regarding the content or in effect of the mortgages (not the facility extended by the Personal Loan) and had signed a form believing it to be something entirely different: That,of course, was not the challenge eventually mounted.
88. Fifth, AIB has not distinguished itself in the provision of that paperwork. It has provided the sort of excuses for an inability to find the paperwork and the sort of speculative justifications for the form which the paperwork takes which are frequently encountered were the department dealing with the customer is not the department which had actually been involved in the transaction. This has understandably excited the suspicions of the Claimant. But I regard this as evidence of incompetence rather than evidence of a conspiracy or cover-up and I do not infer from this conduct that there is on the part of AIB a desire to conceal known wrongdoing.
89. I must now apply the law I have summarised to the facts I have found.
90. The first question is whether the Claimant could be bound by the advance made pursuant to the Personal Loan. I will focus on the argument as finally made in closing (rather broader arguments having been suggested whilst the evidence was taken). The Claimant now acknowledges that the acceptance form which she signed and which was dated the 15 June 2001 had annexed to it a copy of the facility letter; and that as a matter of law she is bound by the terms of the joint facility. But Mr Coleman QC argues that she incurred no obligation under Personal Loan because she was not involved in the instruction to draw funds, and nothing in the facility letter itself permitted AIB to act on the instructions of Barry Davies alone. He submits that The Banking Code of 2001 requires that all products and services provided by AIB should meet the requirements of the Code, and that accordingly the banking contract must be interpreted in accordance with the requirement that a subscribing bank must act fairly and reasonably and that its written terms and conditions must be fair. He argues that it is not fair or reasonable that a joint loan account should enable one party to give instructions binding on the other, because that exposes each party to a risk of abuse by the other, and AIB did not act fairly and reasonably in accepting drawdown instructions from one joint account-holder.
91. I do not accept this analysis. On 11 May 2001 the Claimant had (in connection with establishing banking arrangements with AIB) signed a mandate which authorised AIB to act on any "request [or] instruction…..as may be appropriate to the particular account and expressed to have been ..made …or given by any of us…" (including in particular "for the purpose of activating any facility established by [AIB] for [Barry Davies and the Claimant] at debit of the account") and in which she acknowledged that she would be "jointly and severally liable for any monies advanced by [AIB] on the account" or "arising on foot of any facility granted on that account". This in clear terms covers an instruction to draw down the Personal Loan. AIB was only concerned to see whether Barry Davies had authority to give drawdown instructions. He plainly did.
92. Mr Coleman QC says that the Personal Loan was not then in contemplation so the mandate cannot apply to it. I agree that the Personal Loan facility was not arranged until after the mandate was signed. But that does not matter. The mandate was "to open an account or accounts ("the account") in our names". So although the body of the mandate refers to "the account", it is not referring simply to an account then in contemplation but to any account which Barry Davies and the Claimant authorised and requested AIB to open. The mandate so conferred was to "continue in full force and effect until notice in writing signed by [either of them] countermanding [AIB's] authority" (subject to revocation by death, incapacity or operation of law). In my judgment there is no doubt that the mandate applied to the Personal Loan, that the Claimant had authorised AIB to accept the instruction of Barry Davies to activate the facility established by the Personal Loan at debit of the account, and had confirmed that she would be jointly liable for the debt so arising. All this was clearly set out. Subject to rescission of the loan contract for undue influence the Claimant is clearly liable in contract for the drawdown.
93. I therefore turn to the issue of undue influence. Does a balanced consideration of the evidence, taken as a whole, justify the inference that Barry Davies abused the influence that he had over the Claimant and procured the entry into the Personal Loan?
94. I will begin with a consideration of the Claimant's understanding and intention in entering the Personal Loan (although I do not think this the true focus of the enquiry). By the end of the trial it was difficult to know precisely what was the Claimant's complaint: whether it was that she simply did not know the Personal Loan imposed a liability upon her of £1.35 million at all, or whether it was that she did not know that in addition to the £1.35 million liability (which she understood) the Company was separately borrowing £1.45 million for which she would be liable under the Guarantee. But her understanding (or lack of it) is on any view surprising.
95. First, it is deeply puzzling that the Claimant should have thought that the business banking facilities required in May 2001 were only £1.45 million or £1.35 million. She undoubtedly knew that the Barclays' borrowing had been £2.6 million. She must have seen that the Company's accounts (which she had signed off the preceding month) disclosed borrowings of over £2.5 million: and been reminded of that in September 2002 when she next signed accounts for the Company. She cannot have thought that borrowing at that level had been miraculously reduced to £1.35 million (or £1.45 million). Her explanation that perhaps Barry Davies had sold something was to my mind wholly unconvincing.
96. Nor was her insistence that she cannot have understood that the borrowing was greater than £1.35 or £1.45 million (because she would not have assumed direct or indirect liability for anything like £2.8 million) any more persuasive. She plainly understood that the Barclays borrowing stood at £2.6 million and had willingly offered her property interests as security for such borrowing. Borrowing far in excess of £1.35 or £1.45 million was discussed in her presence at meetings at AIB and at Butterfield Bank without that apparently causing concern: and she accepted from Butterfield Bank a personal facility of over £2 million linked to a separate Company facility (although in the event these were not taken up). I really cannot see that the Claimant thought the borrowings from AIB were only £1.35 (or £1.45) million.
97. Second, the Claimant herself volunteered in evidence that it was "astonishing" that she did not "twig" that AIB was making two facilities available: and so it is. She acknowledged that she had signed a guarantee; and that a guarantee cannot relate to your own debt. The actual Guarantee she signed (and initialled alongside the identification of the principal debt) plainly related to borrowing by the Company of £1.45 million. Yet she signed (on no less than three separate occasions) acceptance of a facility for £1.35 million (different from the sum in the Guarantee), a facility that was plainly not being extended to the Company (but to the Trustees of the A & M Trust, of whom she was one, or to herself and Barry Davies). She continued to sign acceptance of renewals of this facility. The Claimant never offered any explanation to me as to how it was that she could sign an acceptance of a facility but yet assume no liability to repay it.
98. Moreover, total business related borrowings of over £2 million were discussed openly in her presence with AIB on 27 August 2002 and with the Bank of Butterfield in November 2003; and in February 2004 she accepted the Bank of Butterfield offer of personal loan facilities of £2.15 million, expressly made partly to redeem the existing loan facility with AIB in the sum of £1.55 (and which made explicit reference to a parallel facility agreement with the Company and a maximum loan-to-value ration for "both facilities"). This is impossible to square with an asserted belief that the only liability to AIB was in the sum of £1.45 million lent to the Company "through the trust". (Mr Coleman QC submits that it is to be inferred from the forgery of the Claimant's signature on the Bank of Butterfield that the true borrowing was being concealed from the Claimant. But the forgery is easily explained by the false statements made in the loan application, which nobody would have thought the Claimant could be unduly influenced to sign. Nor is the suggested inference consistent with open discussion and an open loan offer signed by the Claimant).
99. Third, the Claimant had the benefit of her own solicitor's advice before she went through with the transaction: and I consider that such advice brought home to her the existence of two facilities and in particular her own liability under the Personal Loan. I deal further with this below.
100. The inherent probabilities suggest (and I find) that the Claimant did at the time of accepting the Personal Loan and its various extensions grasp the gist of the arrangements (that there was Company borrowing and some other borrowing for which she was signing) even if she did not wrestle with the detail or work through the consequences. She must then have lost that grasp until confronted with reality on her husband's death. I cannot otherwise reconcile her admitted understanding of a guarantee, the fact of her acceptance on multiple separate occasions of a non-company loan offer in a different sum, the fact that subsequently the existence of two facilities was openly discussed in her presence without her protesting that that was not her understanding, and her evident and genuine upset upon realising the full extent of the family indebtedness to AIB. (I recognise that this may be seen as a somewhat benevolent analysis and that I have not dealt with some very telling points made by Mr Cousins QC about a letter that the Claimant wrote to AIB on 10 November 2004 and about the Claimant's conduct at meetings with Miss Gass of AIB in May and October 2005: but I am convinced of the Claimant's integrity, the genuineness of her conviction that something shady happened, and that she was not playing a cynical charade. So I will not wrestle with issues not necessary to a disposal of the case).
101. However, for me the important question is not what her intention was in relation to the Personal Loan, but how that intention had been brought about. Was her acceptance of the Personal Loan offer with a basic but real grasp (as I think) or complete ignorance (as the Claimant asserts) of the true situation brought about by some wrongdoing by Barry Davies?
102. In my judgment it was not.
103. There are severe limitations in seeking to draw conclusions from an assessment of the personalities involved, given that Barry Davies had died before a challenge to the arrangements was raised, given that there has been six years of intense reflection upon the relevant events which must inevitably colour the Claimant's recollection, and given the relative paucity of evidence. I must give the greatest weight to the contemporary documents and the realistic inferences I can properly draw from them and from the surrounding circumstances.
104. First, in broad terms the replacement of one set of banking arrangements with Barclays in the sum of £2.6 million with another from AIB in the sum of £2.8 million is the very sort of transaction that might be accounted for by the ordinary motives of ordinary parties to a marriage. The family's assets were "on the line" throughout.
105. Second, the context in which the AIB facilities were being taken does not really suggest that Barry Davies was conning the Claimant into taking on liabilities to benefit the Company. A key part of the transactions as recorded was the transferring of property then held by the Company into the name of the Claimant, property for which the Company had paid but upon which the Claimant had practised her skills and in which the family lived or from which the family drew an income. Pembroke Mews and Benham House were both put into the sole name of the Claimant. (So in due course were Edwardes Square and Hatchford Park). This looks as though Barry Davies was trying to confer an advantage upon the Claimant, not take advantage of her.
106. Third, I consider that Barry Davies did have a genuine desire to see that the Claimant had proper advice. When he wrote to his own solicitor on 31st May 2001 saying that the delay in completion would give Mr Downing more than a few hours to read through the important information before giving the Claimant independent advice I consider he was expressing a genuine view. The letter is not in any sense a "plant" designed to mislead a subsequent enquirer as to his genuine attitude; in writing to his own solicitor Barry Davies cannot have thought that the letter would be shown to anyone else. He really wanted to see that the Claimant had full advice.
107. Fourth, I consider the provision of both facility letters to Mr Downing was an entirely genuine attempt by Barry Davies personally to ensure that Mr Downing had the fullest and clearest understanding of the transactions and of the securities to be offered in relation to each facility in order to give whatever advice he thought fit to the Claimant. Mr Coleman QC submitted that the provision of the letters to Mr Downing had nothing to do with Barry Davies and simply arose out of a telephone conversation between Mr Downing and Colin Murray. But I am satisfied on the evidence that Colin Murray would have cleared with Barry Davies any response to any enquiry from Mr Downing. The provision of this material is the exact opposite of the desire to conceal or mislead. The commentary upon the material that was provided to Mr Downing makes the existence of two separate individually secured facilities as plain as can be.
108. Fifth, I am entirely unpersuaded that Barry Davies sought to distract the Claimant by making extravagant gifts to her. On 11 May 2001 the Claimant had signed an acceptance of the loan facility of £1.35 million extended to the trustees of the A & M Trust. Barry Davies had no need to persuade the Claimant to do so by making a gift of a sports car (which he afterwards did): and there is no basis in the documents for thinking that he then anticipated that the facility might have to be a re-addressed to himself and the Claimant personally. On 22 May 2001 the Claimant had re-signed the acceptance of the loan facility: Barry Davies had no need to persuade her to do so by making a gift of historic letters (which he afterwards did). There is no basis in the documents for thinking that when he bought and gave the letters he then anticipated that the facility might have to be re-addressed. The eventual revision of the facility was evidently a last-minute alteration, not something that had been anticipated.
109. Sixth, Barry Davies never (after June 2001) sought to conceal the fact that there were two separate facilities (one guaranteed by the Claimant and one undertaken directly by the Claimant). Those facilities were openly canvassed in the presence of the Claimant in discussions with the AIB and in the negotiation of the Bank of Butterfield facility.
110. Seventh, I do not think Barry Davies is to be criticised for leaving it to Mr Downing to provide explanations rather than undertaking them himself (particularly given the risk that he would be at "Step 10" whilst the Claimant was still at Step 1": and the risk, if the Claimant is right, that he would lose patience if questioned).
111. In Etridge (supra) the House gave guidance as to the duty of a solicitor advising a client in the position of the Claimant in these terms:

"[168] …the duty of a solicitor towards his client is, in every case, dependent on the instructions, express or implied, that he has received from his client. A solicitor acting for a client in connection with a proposed transaction under which the client is to become a surety or give security for the debts of another will not necessarily have instructions to advise the client about the nature and effect of the transaction. In most cases such instructions, if not express, would, I think, be implied; but it is at least possible that the circumstances of the solicitor's retainer would not require him to give such advice. So, in my opinion, knowledge by a bank that a solicitor is acting for a surety wife does not, without more, justify the bank in assuming that the solicitor's instructions extend to advertising her about the nature and effect of the transaction.

[169] normally, however, a solicitor, instructed to act for a surety wife in connection with a surety ship transaction would owe a duty to the wife to explain to her the nature and effect of the document or documents she was to sign. Exactly what the explanation should consist of would obviously depend in each case on the facts of that case and on any particular concerns that the wife might have communicated to this is about. In general, however, the solicitor should, in my opinion: (i) explain to the wife, on a worst case footing, the steps the bank might take to enforce its security; (ii) make sure the wife understands the extent of the liabilities that may come to be secured under the security; (iii) explained the likely duration of the security; (iv) ascertain whether the wife is aware of any existing indebtedness that will, if she grants the security, be secured under it; (v) explained to the wife that he may need to give to the bank a written confirmation that he has advised her about the nature and effect of the proposed transaction and obtain her consent to his doing so.

[170] I think the solicitor showed, probably, begin by trying to discover from the wife understanding of the proposed transaction. Key, the solicitor, may then be in a position to remedy any misapprehensions and cure any misrepresentations".

112. It is not to be supposed that Mr Downing followed that full guidance (of which he would not have been aware). But he was a conscientious man: the evidence demonstrates that he took care to put himself in a position to give effective advice. Even if he took the scope of his instructions from AIB (not Barry Davies) I am confident that he would have made sure that the Claimant understood (or appeared to understand) the extent of the liabilities that might come to be secured under the Guarantee and the mortgages. He knew (because Barry Davies had provided both facility letters suitably marked up) exactly what liability was secured by each security. In doing so he was bound to draw attention to the existence of two facilities in different sums. He was bound to say that the Guarantee secured Company borrowing of up to £1.45 million. He was bound to say that the mortgage of Randolph Road and of Hatch End secured both the liability under the Guarantee and the Personal Loan. I have no reason to doubt that in fact he did his job; and I am unpersuaded by Mr Coleman QC's submission that the absence of an attendance note strongly suggests that he did not or that the terms in which he confirmed to AIB the advice given demonstrate that he had not. The Claimant has no recollection of the advice given: and her view that Mr Downing did not advise that there were two facilities seems to me not to be a reliable negative recollection, but rather the innocent product of the deeply held conviction that something must have gone wrong.
113. But the important point is not whether Mr Downing competently and successfully did his job (although I think he probably did on both counts). It is whether in procuring the Claimant's consent in this way Barry Davies committed some legal or equitable wrong. I do not think that a husband who by full disclosure of the entire transaction and all of the relevant documents puts his wife's solicitor in the position to tender full and informed advice to her can be fairly criticised as lacking candour, or properly accused of suppression of material information.
114. For these reasons I am not persuaded to find that, on the balance of probabilities, Barry Davies unduly influenced the Claimant.
115. Mr Cousins QC also argued that Mr Downing undoubtedly knew that two separate facilities existed and his knowledge as the Claimant's solicitor suffices to establish that the Claimant also in law knew that fact. He relies upon the decision in AIB v Martin and Gold (15 March 1999, Jacob J unreported). In broad outline, Alan signed a renewal facility letter in the total sum of £1.71 million assuming that the facility was supported by certain securities. He did not know that simultaneously another facility was being offered on the same securities: and that under the terms of the securities he would become liable for this as well. Jacob J held:-

"…the fact is that his solicitors and agents did know the £1.71 million figure. I do not think Alan is entitled in law to discount that knowledge. It has long been settled that, subject to any statutory variation … a solicitor's knowledge is treated as that of the client. In Borsot v Savage [1866] 2 LR Eq Cas 143 Sir Richard Kindersley V-C said at p. 142

"I confess my own impression is, that the principle upon which the doctrine rests is this: that my solicitor is my alter ego; he is myself; I stand in precisely the same position as he does in the transaction, and therefore his knowledge is my knowledge; and it would be a monstrous injustice that I should have the advantage of what he knows without the disadvantage. But whatever be the principle upon which the doctrine rests, the doctrine itself is unquestionable"

That really has to be the rule. If it were not so then the parties who were not advised or misadvised by their solicitors would be able to repudiate transactions apparently entered into with full knowledge and consent"

116. I have not relied on this argument to reach my conclusion. Whilst I agree with its applicability to general commercial transactions I think some caution may be required in the context of undue influence arguments. A principle of attributing the knowledge of the agent to the principal does not really assist in identifying how an intention to enter a transaction was produced - freely or under undue influence.
117. I should very briefly express my conclusions on other points argued. If I had considered that Barry Davies had procured the Claimant's assent to the Personal Loan by undue influence I would have held that AIB had constructive notice of that influence. I would first have held that AIB was "put upon inquiry" because it was aware the loan is being made (as regards as significant part, namely the replacement of the Barclays' stocking facility in the sum of £420,000) for the purposes of Barry Davies' company, as distinct from their joint purposes: CIBC Mortgagees plc v Pitt [1994] 1 AC 200. I would have adhered to that view of the equities as between the Claimant and AIB even though the AIB advance was applied to discharge a Company facility secured by the Claimant.
118. I would then have held that AIB, being put on inquiry, had not discharged its obligations because its internal monitors had taken the view that the package as a whole was sufficiently complex to require that general advice as to the facilities should be given, but AIB had instructed Mr Downing only to advise as to the securities. AIB did not do what Barry Davies ensured was done, namely, that both facility letters (fully marked up with all securities) were together provided to Mr Downing.
119. I would then have held that the Claimant was estopped from denying liability under the Personal Loan because of her acceptance of renewed, and especially extended, facilities (themselves untainted by any undue influence). I would have found that AIB would not have renewed the facilities or granted additional facilities for profitable property transactions if the Claimant had indicated that she reserved the right to challenge her liability under the Personal Loan (the gist of which I think she understood). I would have applied the principles in Springwell Navigation v JP Morgan Chase [2010] EWCA Civ 1221 at paras 141-173. I would not have regarded Yorkshire Bank v Tinsley [2004] 1 WLR 2380 (which concerned direct substitution of securities originally obtained by undue influence) as standing in the way of that. I would not have permitted the Claimant in the circumstances to rescind part only of a loan contract.
120. I accordingly dismiss the Claim. My rejection of the Claimant's case means that I would give judgment for AIB on its counterclaim for the unpaid balance of the last extension of the Personal Loan.
121. I express my appreciation of the excellent argument on both sides. My preferred course would be to deal with any applications arising out of this judgment by written submission in accordance with a timetable agreed between Counsel.