ABSTRACT
The law of undue influence may be called in aid by a mortgagor seeking to avoid the consequences of a mortgagee’s exercise of one of its remedies. Often, it is pleaded as a defence to a possession action and, if successful, may prevent the mortgagee realising their security (but contrast Alliance & Leicester v Slayford). Obviously, the defence of undue influence may be raised in a variety of circumstances, although two particular situations are relevant here. First, a mortgagor may claim that the mortgagee (such as a bank) has exercised undue influence over them directly, with the effect that the mortgage is set aside. Such cases are now relatively rare given the regularised lending practices of most institutional mortgagees and the industry’s codes of conduct. Secondly, a mortgagor (often a husband or male partner) may have sought a mortgage from an institutional lender over property that is jointly owned with another person (for example, a wife or sexual partner). Should this be the case, the other joint owner must consent to the mortgage if the lender is to have adequate security (see William & Glyn’s Bank v Boland for the consequences of failing to secure consent). Of course, it lies in the power of the joint owner to refuse such consent, but their emotional ties to the person seeking the mortgage might well persuade them to agree, especially if it is to secure finance for their partner’s business. If, then, at a later date, difficulties arise such as to give the mortgagee cause to seek possession or sale of the property, the consenting owner may well claim that her consent to the mortgage was procured by the undue influence of her partner. In other words, that there was no real consent to the mortgage at all and that it should be set aside either in its entirety or insofar as it binds them (TSB v Camfield (1995)). In reality then, undue influence is a plea that the mortgage should be set aside because of either the action of the mortgagee directly or more likely because of the action of the other mortgagor that in some way affects the mortgagee. It is this second aspect that has caused much controversy and which is examined below.
