Shephard v Midland Bank Plc
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE NEILL,LORD JUSTICE BALCOMBE |
| Judgment Date | 28 January 1987 |
| Judgment citation (vLex) | [1987] EWCA Civ J0128-4 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | 87/0052 |
| Date | 28 January 1987 |
[1987] EWCA Civ J0128-4
Lord Justice Neill
and
Lord Justice Balcombe
87/0052
IN THE SUPREME COURT OF APPEAL
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(Mr. Justice Jupp)
Royal Courts of Justice
MR. CHRISTOPHER GIBSON (instructed by Messrs Nabarro Nathanson) appeared on behalf of the Respondents/Plaintiffs.
MR. VICTOR LEVENE (instructed by Messrs Halsey Lightly & Hemsley) appeared on behalf of the Appellant/Defendant.
This is an appeal by the defendant, Mrs. Sherry Lou Shephard, against the order of Jupp J., dated 18th July 1986 in Order 14 proceedings, whereby he affirmed the order of Master Bickford-Smith dated 5th August 1985 giving judgment to the plaintiffs ("the Bank") in the sum of £12,706.82 with costs.
The Bank' s claim in the action is for a sum alleged to be due from the defendant on a joint account which was opened at the Pall Mall branch of the bank in 1982. The account holders were the defendant and her husband, Mr. Shephard. At the time when the account was opened both the defendant and Mr. Shephard signed a joint account mandate dated 20th September 1982. The mandate included the following words:
"….. any loan or overdraft which may from time to time be created on any such account being our joint and several responsibility and in the absence of any express written agreement by you to the contrary being due and payable to you on demand."
On 15th February 1985 the joint account was overdrawn in the sum of £11,475.39. By a letter dated 15th February 1985 the bank demanded payment of the said sum. It is common ground that since the date of that letter neither the defendant nor Mr. Shephard, who is now bankrupt, has paid any part of the said sum. It is also common ground that, subject to the matters raised by the defendant in support of the defence of undue influence, the sum for which judgment was given (which includes interest on the said sum of £11,475.39) would be due from the defendant to the bank. It is asserted, however, on behalf of the defendant that the bank cannot enforce against her the obligation contained in the joint account mandate because she was induced to sign the mandate by the undue influence of Mr. Shephard, who was acting for the purpose of obtaining her signature as the agent of the bank.
The joint account was opened in the following circumstances. In about May 1982 Mr. Shephard opened an account in his own name at the Pall Mall branch of the bank. By September 1982, if not earlier, the account had become overdrawn. This led to some correspondence between the bank and Mr. Shephard and to a proposal that a new account, which would be a joint account, should be opened. None of the correspondence before the joint account was opened has been exhibited, but there is before the court a note written by Mr. Thomas, the assistant manager, on 14th September 1982 in these terms:
"Mr. Shephard has written in response to my recent letters and has indicated that he fully anticipates being able to restore the account to credit at the end of the month—in accordance with our original agreement. He has decided to use his account here as his main 'checking' account and that he would like to transfer the account into a joint account with his wife. I have therefore forwarded the necessary documentation for completion. In addition, Mr. Shephard has requested that we issue cheque cards to himself and his wife and I have therefore forwarded the necessary application forms."
Further evidence about the opening of the account is contained in the affidavits sworn in the Order 14 proceedings, First, I should read paragraph 3 of the defendant's affidavit sworn on 8th July 1985:
"The joint account in the names of my husband and myself was originally opened in or about September 1982 for the purpose of paying household expenses. I was made a party to the account in order to pay these expenses when my husband was away abroad on business."
Next, I should read paragraphs 2 and 3 from the affidavit of Mr. Shephard dated 3rd December 1985:
"2. I opened an account with the Pall Mall branch of the Midland Bank in or about May 1982. In September 1982 this account was converted into a joint account with my wife. Although we had married in 1967 this was the first account we had held together and it was opened purely because my wife had no independent income and, as I was frequently away from home, she needed to sign cheques in my absence for domestic purposes. My secretary, Mrs. Ann Pennington-Leigh also had signing powers on the account so she could pay domestic bills whilst my wife and I were abroad.
3. I have had several meetings with Mr. Thomas in the year I opened my account with the Plaintiff. I do remember clearly having one meeting with Mr. Thomas in or about September 1982 when we discussed opening this joint account, and I informed him at the time that my wife and I required it for domestic purposes only so that she could sign cheques in my absence."
I then come to the affidavit of Mr. Thomas sworn on 24th January 1986. Having referred to the affidavit sworn by Mr. Shephard, to which I have already drawn attention, he continued:
"(a) In paragraph 2 of that Affidavit Mr. Shephard says that the joint account was opened purely because the Defendant had no independent income and she needed to sign cheques in his absence for domestic purposes. At no time during the operation of the joint account, nor when the joint account was opened, was I ever told that it was to be for domestic purposes. I was led to believe by Mr. Shephard that the Defendant did have independent income from the United States and this seems to be borne out by the fact that the Defendant on several occasions paid sums of money (which sums were in U.S. dollars) into the account.
(b) It is true that Mrs. Anne Pennington-Leigh did have signing power on the account for a period of less than one month though I would point out that this signing power did not involve any liability on Mrs. Pennington-Leigh's part and is consequently not relevant to these proceedings."
Then he went on to deal with the question whether the account was for domestic purposes only.
Then I come to the third affidavit which the defendant swore on 16th July 1986 at the time when the matter was before the judge. In paragraph 1 the defendant says this:
"Further to the previous Affidavits sworn by me herein I wish to confirm that I had no conversations or communications with any representative of the plaintiffs in connection with the opening of the said joint account or the grant of any overdraft facility. My only information in relation to these matters came from my husband and at no time was I told that I was or would be incurring any personal liability in relation to any overdraft facility which the Plaintiffs had granted or were granting to him.
During the operation of the said joint account I myself only ever made payments therefrom in respect of domestic outgoings."
Finally I should read paragraph 1 of Mr. Shephard's affidavit sworn on the same day, 16th July 1986:
"At the meeting with….. Mr. Thomas to which I refer in paragraph 3 of the Affidavit sworn by me herein on the 3rd December 1985 I discussed with him the need for my wife and myself to have a joint account purely for our domestic expenditure. [Mr.] Thomas thereupon recommended that my existing personal account be converted into a joint account and allayed my expressed concern that my said personal account was then overdrawn. My wife signed the mandate for the joint account in the following circumstances: I brought home the mandate from the Bank and informed my wife that the Bank required her signature so that she could use the account."
I shall have to consider the effect of this evidence a little later. First I should trace quite shortly the subsequent events.
The joint account was opened on or about 20th September 1982. The mandate was signed by both Mr. Shephard and the defendant. Unknown to the defendant, however, the joint account started life with a debit balance of about £6,500 as the overdraft from Mr. Shephard's own account was transferred to it. Nevertheless it seems clear that this overdraft was cleared very quickly and thereafter the account was operated in credit for many months. Copies of the bank statements between 27th May 1983 and 26th August 1983 have been exhibited. These show that the account was in credit during that period, save that on 26th August there was a small debit balance of £9.27. In about October 1983, however, Mr. Shephard applied to the bank for a loan in connection with his business. The money was required for a project...
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