Dunbar Bank v Nadeem
| Jurisdiction | England & Wales |
| Judgment Date | 07 November 1996 |
| Date | 07 November 1996 |
| Court | Chancery Division |
Chancery Division
Before Mr Robert Englehart, QC
Matrimonial law - bank loan used to purchase property in joint names of husband and wife - undue influence by husband - wife must repay half the sum used to purchase property
Where a husband used a bank loan to purchase a property in the joint names of himself and his wife and the property was also charged to secure his personal borrowings from the bank, the wife could only succeed in having the bank's charge set aside for undue influence on the part of her husband of which the bank had constructive notice if she repaid to the bank half of the sum used to purchase the property.
Mr Robert Englehart, QC, sitting as a deputy High Court judge so held in a reserved judgment in the Chancery Division on an action for possession of a leasehold property brought by Dunbar Bank plc against Maurice Nadeem and his wife Zubaida Nadeem.
Mr John Cherryman, QC and Mr John Horan for the bank; Mr Leolin Price, QC and Mr Bernard Devlin for Mrs Nadeem; Mr Nadeem did not appear and was not represented.
HIS LORDSHIP said that this was another in the succession of cases sinceBarclays Bank v O'BrienELR ([1994] 1 AC 180) and CIBC Mortgages plc v PittELR([1994] 1 AC 200). Such cases typically involved a wife seeking to resist a bank's claim to enforce its charge over a domestic property by asserting that her apparent assent was vitiated by the transaction having been procured by undue influence or misrepresentation on the part of her husband.
Where it differed was that the transaction could not be neatly categorised as a pure surety case such as O'Brien or as an ordinary case of joint borrowing for joint purposes as in Pitt.
On the facts of the case there was one obvious feature which was plainly disadvantageous to Mrs Nadeem and solely in the interests of Mr Nadeem. Of the joint loan facility of £260,000, although £210,000 was used to acquire the leasehold property, the sum of £50,000 was to be applied by the bank solely to meet Mr Nadeem's existing personal liability to the bank and all outstanding liabilities would be repayable forthwith on demand.
To the extent of £50,000 it was not even a case of Mrs Nadeem guaranteeing a debt of her husband in the event of his default. It was a straightforward substitution of a joint debt for one in respect of which he was solely liable.
On the other hand Mrs Nadeem was able to acquire a joint interest in a...
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