BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | ||
England and Wales High Court (Chancery Division) Decisions |
||
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> HSBC Bank Plc v Brown [2015] EWHC 359 (Ch) (17 February 2015) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2015/359.html Cite as: [2015] EWHC 359 (Ch) |
[New search] [Context] [View without highlighting] [Printable RTF version] [Help]
CHANCERY DIVISION
BIRMINGHAM DISTRICT REGISTRY
B e f o r e :
____________________
HSBC BANK PLC | Claimant | |
- and - | ||
CATHERINE MARY BROWN | Defendant |
____________________
Miss Kate Rogers instructed by Eversheds LLP for the Claimant
Mr Michael F Barrow instructed by Allington Hughes Law for the Defendant
Hearing dates 27 January 2015 and 17 February 2015
____________________
Crown Copyright ©
HHJ SIMON BARKER QC :
Introduction
The Proceedings and the Trial
The Evidence
"[u]pon Mrs Brown informing [HSBC] that she would be seeking legal advice from Harrisons, [HSBC] sent its letter of instruction [with enclosures] to Harrisons on 30 August 2002".
How Mr Warburton is able to give this factual evidence is unclear from his statement. He says that "[s]ave as otherwise stated, the facts set out … are within my own knowledge", but he does not say that he had any contemporaneous involvement in retaining Harrisons or in obtaining the 2002 Charge and no document is produced to indicate when or how Mrs Brown informed HSBC that she nominated Harrisons as her legal advisers.
"- although the house and land were still legally mine I hadn't considered it to be mine for many years and I thought of it as being my son Allen's to do with as he wanted and just took what he said as what was going to happen. Other than a couple of conversations we never really talked about [HSBC's] requirements and I just took it as a matter between him and the bank as it was him who was borrowing the money, not me, and I had never met or had any dealings with his bank or the managers who he had been dealing with. It was always my understanding that this was going to be a short term borrowing to enable Allen to put the house and surroundings in to [sic] good order to go on the market to enable Allen to build a bungalow adapted for his needs from the sale proceeds".
Royal Bank of Scotland v Etridge (No.2)
1 before acting, the solicitor should consider whether there is any conflict of duty or interest and what is in the best interests of the surety;2 the solicitor is to confirm the identity of the surety and explain to the surety the reason for his involvement (namely, to counter any later allegation of undue influence or failure to understand the transaction and its implications);
3 the solicitor is to confirm the surety's agreement to his so acting for and advising the surety;
4 the solicitor's explanation and the advice given should be at a face-to-face meeting, in the absence of the borrower, and in suitably non-technical language. Before giving advice, the solicitor should obtain from the bank any information needed (if missing from the bank's instructions);
5 the solicitor need not act only for the surety, as cost and the pre-existence of a solicitor/client relationship are important factors. However, the solicitor's legal and professional duties, assumed when accepting instructions to advise the surety, are owed to him/her alone; and,
6 the core minimum advice to be given and involvement of the solicitor is :
(a) to explain the nature of the documents and the practical consequences for the surety if (s)he signs them (loss of the property provided as security and/or, if providing a guarantee, being made bankrupt);(b) to explain the seriousness of the risk involved (which involves (i) an explanation of the purpose, amount and principle terms of the new facility, (ii) an explanation that the bank may increase the facility or change its terms or grant a new facility without reference to the surety, (iii) an explanation of the liability under any guarantee, (iv) discussion of the surety's means, the value of any property being charged, and whether (s)he or the borrower have other assets with which to make repayment if the transaction fails);(c) to explain that the surety has a choice and that the choice is the surety's alone (which involves discussion of the borrower's and the surety's present financial circumstances, including present indebtedness and facilities);(d) to ascertain whether the surety wishes to negotiate with the bank (eg as to the order of call upon securities and/or a specific lower limit for exposure) and, if so, whether (s)he wishes to do so directly or through the solicitor; and(e) to check whether the surety wishes to proceed and, if so, to obtain the surety's authority to write to the bank confirm the explanation given.
Issues and findings of fact
"… [HSBC] required Mrs Brown to obtain independent legal advice prior to entering into the [2002 Charge].[HSBC] asks the proposed security provider for details of their nominated firm of solicitors".
"(a) That I attended [Mrs Brown] and explained the terms of, and gave independent advice on, [the 2002 Charge], enclosed with your instructions.(b) That I witnessed the signature of [Mrs Brown].
(c) That I am a Solicitor, Legal executive or Licensed Conveyancer authorised to sign on behalf of the firm detailed below".
I set out the terms of the 2002 certificate of execution because (a) and (b) require a solicitor, in this case Mr Jones, to confirm by signature that independent advice complying with HSBC's instructions, which included the I&GN, had been given at a meeting with Mrs Brown and that Mrs Brown's execution of the 2002 Charge was personally observed by Mr Jones.
Conclusion