Last week the Court of Appeal decided that a husband’s failure to disclose his extra-marital affair to his wife when they re-mortgaged the family home was a material fact ‘calling for disclosure’. The Court ruled that concealing the affair amounted to the exercise of undue influence against her, allowing them to nullify the re-mortgage. The Court said it was evident that the wife’s decision to agree to the re-mortgage was based on her assumption that he was as committed as she was to the marriage. The Court also said its ability to set aside the re-mortgage did not depend on whether the wife’s decision to re-mortgage would have been different if she had known about the affair.
Stevens & Bolton LLP family associate Elen Humphreys commented:
“The judgment from Court of Appeal explores the relationship of trust and confidence in financial matters between a husband and wife, the ‘fairness and candour’ owed to the trusting party and the thorny issue of undue influence. It is a case that will serve as a stark warning to lenders, who in this instance were aware that the further borrowing was to pay the husband’s debts rather than to benefit the husband and wife jointly. As a result the lender was found to be aware of the increased risk of pressure being put on the wife to agree.”