UCB v Williams [2002] EWCA Civ 555  Court of Appeal

The Williams family (Mr & Mrs Jack Williams and their three grown up children) ran a garage business as a partnership with the benefit of a franchise from Toyota. Toyota threatened to withdraw the franchise unless the showrooms were extended and improved. The cost for this was £500,000. The Williams approached the bank for a loan which asked for security by way of a charge on the three showrooms in addition to a charge on each of the partners' homes.

The defendant, Mrs Williams, was the wife of one of the sons. She had signed the charge without having been told the full extent of the liability. The signature was executed in the presence of all the other partners and witnessed by Mr.Howells, the solicitor of the partnership. The charge secured all debts present and future of the partnership and provided for joint and several liability of all the partners. The business was unable to repay the loan and became bankrupt. UCB sought to enforce the charge and Mrs Williams raised undue influence and misrepresentation in her defence. The trial judge, HHJ Hickinbottom, held that undue influence and misrepresentation were established. However, he held that Mrs Williams would have signed the charge in any event had she known the full facts and also that UCB were not fixed with constructive notice as a solicitor had witnessed the signature therefore they could assume Mrs Williams had been advised accordingly. Mrs Williams appealed to the Court of Appeal.

Held:

Mrs Williams was successful on both grounds.

For both undue influence and misrepresentation there is no requirement to establish that a person would not have entered the contract but for the influence or misrepresentation. It was sufficient for undue influence, that an equitable wrong has been committed. For misrepresentation it is sufficient to demonstrate the party relied on the false statement.

UCB were fixed with constructive notice. The fact that the signature was witnessed by a solicitor does not necessarily mean that they would have advised her. The role of a solicitor will depend upon what they had been instructed to do. If there were no instructions to advise Mrs Williams they would not be expected to do so and it was wrong of UCB to assume this had taken place. They were under a duty to check if she had in fact been advised.

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