WHAT IS ‘MANIFEST DISADVANTAGE’ TO A WIFE?

Barclays Bank Plc v Coleman and Another (CA TLR 5 January)

For a wife to challenge a mortgage on the grounds that it had been procured by the husband’s presumed undue influence over her, of which the mortgagee had notice, she must demonstrate that the charge was manifestly disadvantageous to her. The authorities, on the meaning of manifest disadvantage, were in a very unsatisfactory state and the concept was elusive and often difficult to apply to the facts of the individual cases. There was a serious question mark over the future of the requirement of manifest disadvantage and the House of Lords had signalled that it might not continue to be a necessary ingredient indefinitely. In the meantime the correct meaning was: ‘clear and obvious’. That did not mean it had to be large or even medium-sized. Provided the disadvantage was clear and obvious and more than de minimis, it might be small. In the present case the form of legal charge had enabled the husband, without resort to the wife, to subject the house to much greater financial risks than she could ever have known. That was a clear and obvious disadvantage to the wife. The judge had been wrong in concluding that it was not a disadvantage. However, the judge had also been wrong in holding that a lender who relied on a certificate of independent advice by a legal executive had not taken reasonable steps to avoid being fixed with constructive notice of a wife’s right as against her husband to have the mortgage set aside. That did not allow for the realities of solicitors’ practice in current conditions, when the responsibility for dealing with such matters was frequently and properly delegated to legal executives. What was required was independent legal advice by which was meant advice independent of the lender. Advice given by a legal executive was legal advice and provided that it was independent and given with the authority of his principal, there was no sound reason for holding it to be inadequate.