Case No: B2 2000 3713/3713A/3713/B
Neutral Citation Number [2002] EWCA Civ 555 
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM Swansea County Court
(HHJ HICKINBOTTOM)
Royal Courts of Justice
Strand, London, WC2A 2LL

Thursday 2nd May 2002
Before :

LORD JUSTICE PETER GIBSON
LORD JUSTICE KAY
and 
LORD JUSTICE JONATHAN PARKER

- - - - - - - - - - - - - - - - - - - - -
Between :

	UCB CORPORATE SERVICES LIMITED	Claimant/
Respondent	
	- and -		
	
CHRISTINE ANN WILLIAMS	
Defendant/Appellant	

- - - - - - - - - - - - - - - - - - - - -
(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040,  Fax No:  020 7831 8838
Official Shorthand Writers to the Court)
- - - - - - - - - - - - - - - - - - - - -

Mr James Barker (instructed by Messrs Speechly Bircham) for the Claimant/Respondent
Mr Geraint Jones QC (instructed by Messrs David W. Harris & Co) for the Defendant/Appellant

- - - - - - - - - - - - - - - - - - - - -
Judgment
As Approved by the Court

Crown Copyright ©

Lord Justice Jonathan Parker:

INTRODUCTION
1.	This is an appeal by the sixth defendant in the action,  Mrs Christine Williams (“Mrs Williams”),  against an order made by HHJ Hickinbottom in the Swansea County Court on 4 December 2000 in a mortgagee’s possession action brought by UCB Corporate Services Ltd (“UCB”) relating to a residential property known as Ty ar y Bryn,  Hirwaun,  in Aberdare (“the Property”). At the date of the judge’s order,  the Property was in the occupation of Mrs Williams and her daughter. 
2.	The appeal first came before this court in May 2001 but was stood out of the list to await the decision of the House of Lords in Royal Bank of Scotland v Etridge (No2) and seven other conjoined cases (“Etridge”). The decision of the House of Lords in Etridge is now reported at [2001] 3 WLR 1021.
3.	In the action,  UCB claims, as mortgagee under a Legal Charge dated 2 August 1991 (the “UCB Charge”), payment of sums due to it jointly and severally by the six defendants in the action (all of whom are members of the Williams family including,  as the third defendant,  Mrs Williams’ husband Mr Peter Williams) and possession of the Property.
4.	By his order,  the judge ordered the first five defendants (none of whom had defended the action) to give possession of the Property forthwith; he ordered Mrs Williams to give possession of the Property by 26 January 2001; and he entered judgment against all six defendants in the sum of  £1,175,803.92p.
5.	The judge refused Mrs Williams permission to appeal, but permission was granted by Lord Justice Mantell on 8 January 2001, coupled with a stay of execution of the order pending the hearing of the appeal. 
THE FACTS
6.	The factual background to the action is clearly and fully set out in the judge’s careful judgment.  In summary, it is as follows.
7.	Mrs Williams and her husband Mr Peter Williams (“Mr Williams”) bought the Property in 1981 and occupied it as their matrimonial home until late 1994 when they separated and Mr Williams left the Property.  Mrs Williams subsequently commenced divorce proceedings.  
8.	The Property was purchased with the aid of a loan from Charterhouse Japhet,  secured by a first charge.  In July 1985 Mr and Mrs Williams re-mortgaged the Property to NatWest Home Loans,  which lent them £45,000 secured by a first charge.  The Charterhouse Japhet  charge was redeemed.
9.	Mrs Williams’ parents-in-law,  Mr and Mrs Jack Williams, carried on a garage business in partnership together in Llwydcoed,  near Aberdare,  called Llwydcoed Holdings.  The business had the benefit of a franchise from Toyota.  By 1983 Mr and Mrs Jack Williams’ three children,  that is to say Mr Williams,  Maureen Davies and John Philip Williams, were also involved in the garage business,  albeit not as yet as partners in it.
10.	The partnership banked at the Aberdare Branch of  NatWest.  By 1983 it was overdrawn to the tune of  some £350,000, and NatWest was becoming increasingly concerned  about the level of security it held.
11.	On 27 September 1985,  Mr and Mrs Williams executed a second charge over the Property in favour of NatWest to secure their liabilities to NatWest both present and future.  The Charge makes no specific reference to the liabilities of the partnership.  In 1987 Mr and Mrs Jack Williams took their three children formally into partnership in the garage business.  
12.	On 3 December 1987 Mr and Mrs Williams granted a further Charge over the Property to NatWest to secure all liabilities of the partnership to  NatWest from time to time, actual or contingent, present or future.  The signatures of  Mr and Mrs Williams to the NatWest charges were witnessed by a Mr Colin Howells,  a solicitor and partner in the firm of Marchant Harries & Co.
13.	In 1991 Toyota threatened to withdraw its franchise  from the garage business unless the showrooms were substantially extended.  The extension works were  expected to cost some £500,000.  
14.	NatWest was asked to advance the necessary funds to finance the extension to the showroom, but declined to do so since it was not satisfied that the project represented a good commercial proposition.  Mr Jack Williams,  however,  who (it appears) is on his own admission something of a strong character, was enthusiastic about it and he persuaded his partners of his view.  He accordingly looked around for other possible lenders,  and approached UCB.  
15.	By a facility letter dated  4 June 1991 UCB offered to advance £700,000 to the partnership,  on condition (among other things) that the outstanding indebtedness to NatWest was paid off out of the loan.  It was also a condition of the loan that it be secured not only on three business properties owned by the partnership but also on the homes of the partners, including the Property.  UCB’s charge on the Property (i.e. the charge which I defined earlier as “the UCB charge”) was a second  charge,  subject to the subsisting first charge in favour of  NatWest Home Loans.  It was dated 2 August 1991, and was expressed to secure all liabilities of Mr and Mrs Williams to UCB, whether present or future and whether joint or several. 
16.	Mr and Mrs Williams signed the UCB Charge at a meeting which took place at the garage on 31 July 1991 and which was attended by all the partners.   Their signatures were witnessed, once again, by Mr Howells.   Also present at the meeting was Mrs Meinir Williams (the wife of John Philip Williams).   The judge found that Mrs Williams and Mrs Meinir Williams had played no part in the running of the partnership business, and that Mrs Williams’ attendance at the meeting to execute the UCB Charge was the first occasion on which she had been in any way involved in the affairs of the partnership.  The judge further found that Mr Howells had not spoken to Mrs Williams about the UCB Charge prior to this meeting, but that in the course of the meeting he gave her some brief general advice as to its effect.   At p.14 of the transcript of his judgment, the judge said this:
“I find that, at the meeting, as with the earlier charges, he [that is, Mr Howells] gave his usual advice with regard to the risk of the chargors (including Mrs Williams) losing their homes if repayments were not kept up: but he gave no more detailed advice upon the transaction (e. g. that the charges were in respect of all moneys owed to [UCB] by any of the partners, or that the total borrowings by the firm were being increased to £700,000), and, in particular, he gave no advice to those (like Mrs Williams) who were not borrowers themselves but were acting as sureties that they should obtain independent legal advice.”

17.	The judge also accepted Mrs Williams’ evidence that her marriage had for some years been an unhappy one, and that by this time she and Mr Williams were staying together merely for the sake of their two children, Richard (who was born in 1978) and Victoria (who was born in 1983).
18.	On 2 August 1991,  following the execution of the various charges which it had required as a condition of providing finance to the partnership (including the UCB Charge), UCB advanced £640,000 to the partnership. The balance of the facility of £700,000 was not advanced,  since the facility letter had by that time lapsed.  On completion, the entirety of the advance was paid into the partnership’s account with NatWest, but the evidence before the judge did not reveal the precise extent of the partnership’s then indebtedness to NatWest.
19.	On 25 March 1992  UCB offered a further loan of  £30,000 to the partnership, which was advanced on 16 April 1992.  Both loans were secured under the terms of the UCB Charge (if valid).  
20.	Subsequently the partnership encountered serious financial problems,  as a result of which UCB called in its loans.  As at 31 August 2000,  even after bringing into account the realisation proceeds of six other properties over which UCB had charges,  there remained an outstanding indebtedness of some £1.1m.  At that date,  the equity in the Property (taking account of the subsisting first charge in favour of  NatWest Home Loans) was thought to be worth some £125,000.  
21.	In 1995 the partnership was formally dissolved and all the partners were subsequently made bankrupt.
THE ACTION
22.	In November 1995 UCB commenced the present action.  As noted earlier,  only Mrs Williams put in a Defence.  By her Amended Defence,  she alleges:
(1) that she was induced to execute the UCB Charge by misrepresentations made to her by her husband to the effect that the purpose of the UCB Charge was simply to enable the partnership to change its bankers from NatWest to UCB;

(2) that the consequences of her executing the UCB Charge were never explained to her;

(3) that she executed the UCB Charge not of her own free will but by reason of her husband’s undue influence over her;

(4) that in consequence she has an equity as against her husband to set aside the transaction; and,

(5) that UCB is fixed with constructive notice of the existence of that equity in that it knew that she was not a partner in the firm and that she was being put forward as a surety for her husband’s indebtedness in a transaction which was manifestly not to her financial advantage,  and which carried a substantial risk of such undue influence.
23.	In the premises,  Mrs Williams alleges that UCB was put on enquiry as to her state of knowledge and/or her ability to arrive at a free and informed decision as to whether or not she should execute the UCB Charge.  Mrs Williams further alleges that UCB failed to take reasonable steps to satisfy itself that Mrs Williams was entering into the UCB Charge of her own free will and being fully informed as to the consequences of her doing so.  
24.	Accordingly,  Mrs Williams alleges that the UCB Charge is void and unenforceable against her.  
25.	By its Reply UCB joins issue on Mrs Williams’ allegations and further contends that since the existing indebtedness of the partnership to NatWest was paid off out of the UCB advance, even if the UCB Charge is void as alleged UCB is nevertheless entitled to be subrogated to the rights of  NatWest under its two charges to the extent that the UCB advance was applied in paying off the partnership’s indebtedness to NatWest.
26.	I can now turn to the judge’s judgment.  References in his judgment to Etridge are of course references to the decision of the Court of Appeal in that case ([1998] 4 All ER 705), since the case had not yet reached the House of Lords.  
THE JUDGMENT
27.	At page 19 of the transcript of his judgment, under the heading “Actual Undue Influence”, the judge said this: 
“ In this case, on the facts as I have already found them, I am satisfied that Mr Williams not only had the ability to influence Mrs Williams, but did influence her, by failing to disclose matters without knowledge of which Mrs Williams could not make an informed decision as to whether to sign the charge or not.  In the circumstances, Mr Geraint Jones submitted that such influence must have been improper, and “undue”.  I agree.  Mrs Williams has satisfied me that her husband influenced her to such an extent that her independence of decision was substantially undermined.  She executed it in ignorance of important matters relating to the transaction, and not because, in full knowledge of all such matters, she was persuaded that it was the right thing to do.  I am satisfied that, in this case, actual undue influence was exerted by Mr Williams on his wife.”

28.	The judge then went on, under the heading  “Misrepresentation”, to say this: 
“Mrs Williams has not satisfied me that Mr Williams ever made an express representation with regard to the document she was signing on 31 July 1991.  Nevertheless, I am satisfied that he led her to believe that, although she was executing a charge in favour of the firm’s new bank (UCB), this represented no more than a change of bank, and did not represent any increase in risk to Mrs Williams.  Miss Baker [for UCB] accepted – properly, in my view – that a misrepresentation could equally be by way of express statement or by way of omission.  I find that Mr Williams was guilty of misrepresenting the nature of the document to his wife, by failing to tell her that the new document represented a significant increase in risk for her.”

29.	Then at page 20, under the heading “Conclusion”, the judge said this: 
“Therefore, I am satisfied that Mr Williams did commit an equitable fraud on his wife, in terms of both undue influence, and misrepresentation.”
30.	There follows a section of the judgment headed “Causation”,  on which much of the argument on this appeal has centred.  It reads as follows: 
“ However,  it is insufficient for Mrs Williams to succeed merely to show that her husband exerted undue influence over her,  or  misrepresented important matters to her.  Those wrongs must have influenced Mrs Williams’ actions.  In Bank of Credit and Commerce International SA v Aboody....,  the Court of Appeal said (at page 971):

“We think that,  at least in ordinary circumstances,  it would not be appropriate for the Court to exercise this jurisdiction [to set aside a contract] in a case where the evidence establishes that on balance of probabilities the complainant would have entered into the transaction in any event.  In the present case there is the additional factor that the transactions under attack are relied on not by Mr Aboody himself but by the bank,  which was not personally responsible for exerting the undue influence.  Even if Mrs Aboody had succeeded on all other issues in this case,  we are therefore disposed to think that it would not have been right to grant her equitable relief as against the bank,  our decision being based not merely on narrow considerations of causation.”

Had Mrs Williams known all the relevant matters concerning the transaction and the charge (including the fact that the security was for all monies,  the loan secured was substantially more that the NatWest secured loan it was in part replacing,  and NatWest’s view that the expansion scheme and additional borrowings was not commercially sound),  would she have still signed the charge?”

31.	The judge then considered the evidence and concluded, on the balance of    probabilities,  that:
“.... had she known all relevant facts and risks and been allowed to exercise her own will she would still have signed the UCB Charge.”

32.	The judge continued (at page 21 of the judgment):
“ In coming to that finding,  I have taken into account all of the evidence I heard,  but particularly the following:

(i) Mrs Williams said in her evidence that she would not have signed the charge,  if she had known that her house would have been at risk,  particularly in the light of the strain their marriage was under.  The stability or otherwise of the marriage is clearly one matter which Mrs Williams would have had very much in mind in exercising her mind with regard to the charge,  had she known the full facts.  However,  despite these marital strains,  I have found that Mrs Williams had implicit trust and confidence in her husband with regard to financial matters,  both domestic and business.  In particular,  she had faith in him that he would not do anything to jeopardise her financial position,  specifically with regard to the house.  Had the full facts been set before her,  I consider that that faith would have been maintained,  despite their difficulties.

(ii) The driving force behind the whole transaction for the transaction of the business (of which the UCB charge over the Property was but one part) was not Mr Williams,  but his father,  Jack.  In his evidence,  Jack Williams said that he considered NatWest’s pessimism about the new venture was unfounded,  and he clearly thought that the expansion would be commercially worthwhile.  Indeed,  he said that,  for several years after the loan was made,  the business did prosper - or,  at least,  it did not run into financial problems.  That evidence,  I accept.  Jack Williams was determined that the project should go forward.  He convinced his four partners that it should.  He also convinced two spouses,  who were to charge their homes,  that it should.  In my judgment,  even had Mrs Williams known the full and true facts about the transaction and charge,  exercising her own free will,  she would have been persuaded that “it was the right thing to do” (see Etridge (No 2), at paragraph 10,  page 713c).

In coming to my view,  I have very much in mind the evidence of Mrs Meinir Williams.  She is the wife of John Philip Williams, Mr Williams’ brother and one of the firm’s partners.  Like Mrs Williams,  she was asked to sign a charge over at her home,  Brodawel,  as security for the new loan.  Indeed,  as she said she did not know that her house was already charged in respect of the NatWest firm loan of several hundred thousand pounds,  when she was considering whether or not to sign the UCB charge,  she was under the impression that this was a new charge for £700,000 (rather than a mere increase in the amount secured).

Meinir Williams said that she had grave reservations about signing,  and,  “to put it mildly”,  she had full,  frank and at times heated discussions with her husband as to whether she should sign.  She said,  “against her better judgment”,  she eventually agreed to sign out of a feeling of loyalty to her husband and because she did not wish to let down him,  his family and,  in particular,  his father - if  John Philip’s part of the family had caused the deal to breakdown.  “It will also be appreciated”,  she said,  “that the business was my husband’s livelihood and thus there was great pressure upon me not to “upset the apple cart’”.

Mrs Williams’ position was not the same.  She did not have a happy or stable relationship with her husband.  However,  some of the factors referred to or by Meinir Williams would have borne upon Mrs Williams too: the part played by Jack Williams,  and the fact that the business was her husband’s livelihood too.  Whatever happened to their marriage,  Mrs Williams considered Mr Williams would financially look after her and their children,  and the business was regarded as the source of that money.  That would have been a very important factor that Mrs Williams would have in mind.

Therefore,  although not an easy question,  I have come to the firm view that,  had Mrs Williams known all the relevant facts concerning the UCB charge and absent undue influence from her husband - in other words,  had she been allowed to exercise her own free will - she would still have signed it”.

33.	The judge then turned to consider UCB’s position, saying this (at the foot of page 22):

“ However,  in any event, UCB’s security can only be affected by the wrongdoings of Mr Williams if Mr Williams was acting as their agent (and Mrs Williams accepts that he was not),  or if UCB had actual or constructive knowledge of the wrongdoings.  Mr Geraint Jones for Mrs Williams did not seek to persuade me that UCB had actual knowledge in this case: but he relied upon UCB having constructive knowledge,  by being put on due enquiry and failing to take reasonable steps to ensure that they did not have constructive notice.”
34.	The judge then quoted a well-known passage from the judgment of Lord Browne-Wilkinson in Barclays Bank PLC v. O’Brien & Anr [1994] 1 AC 180,  196D to 197B, dealing with the steps which a creditor may need to take when put on enquiry as to the possible existence of an equity to set aside a transaction in order to avoid being fixed with constructive notice of the existence of such an equity.  The judge went on to refer to the judgment of this court in Etridge,  delivered by Stuart-Smith LJ,  and in particular to a passage in the judgment at paragraph 36 (page 719e-g) where Stuart-Smith LJ summarised the effect of the decision of the House of Lords in O’Brien.
35.	The judge noted that UCB accepted that at the material time it was aware that Mr and Mrs Williams were living together in the Property and that Mrs Williams placed implicit trust and confidence in her husband in relation to their financial affairs;  and went on to consider what steps (if any) UCB should have taken to avoid being “tainted” (as he put it) with constructive notice.  
36.	In this connection,  the judge said (at page 25 of the judgment) :
“In this case,  UCB did not see Mrs Williams alone,  nor did they give her separate advice themselves.  Indeed,  they took no active steps.

However,  Mr Beech (then a partner in Edwards Geldard,  acting for UCB in relation to the loan and security) said Mr Howells represented himself as acting for Mrs Williams in the transaction and,  as a senior partner in a well-known and well-respected firm,  he assumed that Mr Howells would give full and proper advice to Mrs Williams as to the nature and effects of the transaction.  He assumed that he need not take any further steps.  Were these assumptions properly made?  In my view,  they were.

I was referred to a number of cases on this point.  Most considered that,  where the victim of the wrongdoing was represented by her own solicitor,  then the creditor bank was entitled to assume that she would be properly advised,  as was the solicitor’s duty.  Where the solicitor acts for more than one party to a transaction (as in this case,  in which Mr Howells acted for both borrowers - the partners - and Mrs Williams as a non-borrowing surety),  that duty is owed to each client separately and independently.  That duty encompasses a duty to advise the possible victim of the wrongdoing of the importance of separate legal advice,  in appropriate circumstances.

From these cases,  the most succinct and pertinent judgment is perhaps that of Hoffmann LJ (as he then was) in Bank of Baroda v Rayarel [1995] 2 FLR 376 at page 386.  The substantive judgment is entirely devoted to this issue,  Hoffmann LJ agreeing with Hirst LJ with regard to other issues.  Hoffmann LJ said:

“If a prospective surety deals with a bank through a solicitor,  the bank is entitled to assume that the solicitor has given her appropriate advice.  If there is a possibility of a conflict of interest between the surety and the other parties whom the solicitor is also advising,  the bank is entitled to assume that the solicitor will have told her that she was entitled to take independent advice.  The bank’s legal department is not obliged to commit the professional discourtesy of communicating direct with the solicitor’s client and tendering such advice itself.  Nor is it obliged to inform the solicitor of its professional duties.  That will be a fortiori the case when the documents submitted by the bank to the surety’s solicitors contain a certificate that she has been advised of the effect of the document and her right to have independent legal advice.  The bank was therefore not in the circumstances fixed with constructive notice of the undue influence which the Judge found to have been exerted by the husband.  I do not think that one needs to say that this is because the bank has taken reasonable steps to ensure that the wife was separately advised.  It is true that the bank has taken the step of including the certificate in its draft document,  but I would not regard that as essential.

For my part,  I would be inclined to say,  as the Recorder did in his admirable judgment,  that in a case in which the bank is dealing with a surety through her solicitor,  it is not ordinarily required to take any special steps at all.”

Glidewell LJ agreed with the judgment of Hoffmann LJ.  Many other cases have either followed that judgment,  or alternatively expressed a similar view.  The leading authorities in what the Court of Appeal described as “a consistent line of authority” are set out in [Etridge] (at paragraph 43, page 720j).  The one authority which appeared possibly to have taken a different view (Royal Bank of Scotland v Etridge (No1) [1997] 3 All ER 628) was doubted and not followed in [Etridge].”

37.	The judge then referred to a further passage from the judgment of this court in Etridge and continued (at page 27 of the judgment) :
“Therefore,  where the wife is represented by a solicitor,  the law is clear: to avoid being put on constructive notice,  the bank is not required to take any steps at all,  unless the bank is on particular notice that the solicitor may not comply with his ordinary professional obligations.  Where there is no such particular notice,  so long as the wife is legally represented,  the bank is not put on enquiry.

In this case, Mr Geraint Jones submitted that Mr Howells did not in fact represent Mrs Williams in respect of the charge:  and UCB (or,  rather,  their solicitors,  Edwards Geldard) knew or ought to have known this.  That,  he submits,  was sufficient to put them on enquiry,  so that they ought to have taken some steps.  They ought at least to have written to Mr Howells,  asking him to confirm that he was indeed acting for Mrs Williams.  That would have raised the issue in Mr Howells’ mind,  and he would have asked Mrs Williams to confirm that he was indeed representing her and may even have led to him advising her to obtain independent legal advice.

If I were required to decide the issue,  I would hold that Mr Howells did indeed represent Mrs Williams on this transaction.  It is true that he did not contact Mrs Williams prior to the 31 July 1991 meeting - he used Mr Williams as his usual contact point,  as he had in the past.  He did not open a file in Mrs Williams’ name.  There is no bill now available addressed to her in relation to this transaction:  no one knows to whom the bill was addressed.  However,  it would not be unusual for the business to bear the costs of a person’s giving security for a loan to the business,  and the person to whom the bill was addressed would not therefore be determinative,  in any event.

Certainly,  Mr Howells considered that he was acting for Mrs Williams.  That was his evidence before me.  He thought that the limited advice he gave to the proposed sureties at the 31 July meeting was addressed to Mrs Williams (as well as to the other two relevant spouses).  He wrote to NatWest Home Loans in relation to the relevant UCB charge,  and referred to “Mr and Mrs P Williams, Ty ar y Bryn” as people for whom he acted.  With some consistency,  when writing to Edwards Geldard,  he referred to “our clients” or “the borrowers” in the plural,  the natural meaning of which was “Mr and Mrs Williams”.  For example,  he referred to “the borrowers” throughout his responses to UCB’s enquiries and requisitions.  Mr Howells gave evidence that he believed he did represent to Edwards Geldard that he did act for Mrs Williams:  and Mr Beech of that firm said that he understood from the correspondence that Mr Howells .... was acting for Mrs Williams.  Certainly,  in my judgment,  there was nothing in the correspondence,  or other documents,  or elsewhere to put Mr Beech on notice that Mr Howell might not be representing Mrs [Williams]:  or that might have caused him reasonably to raise the matter with Mr Howells,  or to take any steps to confirm that Mr Howells was acting for Mrs [Williams].  The representations from Mr Howells that he was acting for Mrs Williams,  were in my judgment,  unequivocal.  Bearing in mind that Mr Howells considered he was representing her,  that is no surprise.

It is not a clear cut issue but,  had Mrs Williams been asked at the time whether Mr Howells was representing her in this transaction,  I consider she would have answered affirmatively.”

38.	The judge then went on to say that he did not consider that the question whether Mr Howells was in fact acting for Mrs Williams in the matter of the UCB Charge was the determinative question.  He continued (at page 28 of the judgment):
“When considering the issue of constructive notice,  the reality of the transaction is not relevant:  the transaction has to be viewed through the eyes of the bank:

‘[The issue] is whether,  in the light of the facts known to the bank,  including the availability of legal advice,  any risk of the wife having an equity reasonably appeared to have been dispelled ...[That] depends on how the transaction appeared to the bank.”  ([Etridge] at paragraph 41,  page 720 e-g).’

Therefore,  where a solicitor represents that he is instructed by a wife,  the bank (and,  of course,  any lawyers acting for the bank) are entitled to assume that the solicitor will act honestly and give proper advice to the wife:  and the bank may take on trust that the solicitor is in fact authorised by the wife.  The bank is entitled to treat the return of the charge as confirmation that the solicitor was indeed acting for the wife (as Mr Beech said he specifically did in this case).  Where, to all appearances,  the wife is being represented by a respectable firm of solicitors in a transaction which,  to the bank,  is of a routine nature,  neither the bank’s lawyers nor the bank itself need to take any further steps,  even where the solicitor is not in fact acting for the wife.  The bank’s lawyers do not have to commit the professional discourtesy of asking the solicitor to confirm that he is acting for the wife:  or to confirm that he has properly advised the wife in relation to the transaction,  including advising upon the wisdom of obtaining independent legal advice (where the solicitor is acting for more than one party).”

39.	After making further reference to authority,  the judge expressed his conclusion on the issue of constructive notice as follows (at page 30 of the judgment):
“Therefore,  as Mr Howells represented to UCB’s solicitors that he acted [on] Mrs Williams’ behalf in relation to the UCB charge,  UCB were not put on enquiry of Mrs Williams’ equity as against her husband,  and were not required to take any steps to avoid having constructive notice of Mr Williams’ wrongdoing or Mrs Williams’ equity”.
40.	The judge accordingly rejected Mrs Williams’ Defence and ordered her to give possession of the Property.  In these circumstances,  the judge did not find it necessary to address the issue of subrogation, and he made no findings of fact on that issue.
THE ISSUES
41.	By her Amended Notice of Appeal, Mrs Williams challenges firstly the judge’s treatment of the issue of causation.   She contends that, on a true reading of the sections in his judgment headed respectively “Actual undue influence” and “Misrepresentation”, the judge found (in effect) that her execution of the UCB Charge was procured by Mr Williams’ wrongdoing, and that that finding is sufficient to found her right, as against Mr Williams, to have the UCB Charge set aside.   She accordingly contends that it was irrelevant to the existence of that right whether, absent Mr Williams’ wrongdoing, she would have acted in the same way.   In any event, she submits that the judge’s finding that, absent the wrongdoing, she would have acted in the same way is not a finding which was open to him on the evidence before him. 
42.	Mrs Williams also challenges the judge’s conclusion that UCB was not fixed with constructive notice of her right to have the UCB Charge set aside.   She contends, relying on Etridge in the House of Lords, that the mere existence of a reasonable belief on the part of UCB that she was represented in the transaction by a solicitor does not prevent UCB being fixed with constructive notice of that right.   She contends that Etridge in the House of Lords establishes that in order to avoid being fixed with constructive notice UCB was required to take reasonable steps to satisfy itself that her agreement to participate in the transaction was properly obtained, e.g. by satisfying itself that she had been advised as to its nature and effect.   It is common ground that UCB in fact took no such steps.
43.	In the alternative, Mrs Williams contends that the judge’s finding that UCB believed that Mrs Williams was represented in the transaction by Mr Howells is not a finding which could reasonably be made on the evidence.
44.	UCB contends that on a true reading of the sections in his judgment headed respectively “Actual undue influence”, “Misrepresentation” and “Causation” the judge found (in effect) that Mr Williams’ wrongdoing did not procure Mrs Williams to execute the UCB Charge: that finding being derived from and consequential upon his finding (which, UCB contends, he was entitled to make) that, absent the wrongdoing, Mrs Williams would have acted in the same way.    In the alternative, should it be the case that on a true reading of the judgment the judge found that Mrs Williams’ execution of the UCB Charge was procured by Mr Williams’ wrongdoing, UCB contends that that finding is not sufficient in itself to found a right for Mrs Williams, as against her husband, to have the UCB Charge set aside, in that it was necessary for Mrs Williams to go further and establish that, absent the wrongdoing, she would not have acted in the same way.    It follows, UCB contends, that the judge’s finding that she would have acted in the same way negatives the existence of the alleged right.   
45.	On the issue of constructive notice, UCB concedes that in the light of Etridge in the House of Lords it was in the circumstances incumbent on UCB to take reasonable steps to satisfy itself that Mr Howells had advised Mrs Williams as to the nature and effect of the transaction, and that it did not in fact take any steps so to satisfy itself.   However, UCB contends that on the judge’s findings Mr Howell did in fact advise Mrs Williams as to the nature and effect of the transaction, and that that suffices to prevent UCB being fixed with constructive notice. 
46.	By an Amended Respondent’s Notice, UCB further contends firstly that in any event Mr Williams’ conduct, as found by the judge, was not capable in law of amounting to undue influence.  Secondly, it contends (so far as it may be necessary for it to do so) that it is entitled to be subrogated to the 1987 NatWest charge, on the footing that the advance of £640,000 made to the partnership on 2 August 1991, and expressed to be secured by the UCB Charge, was intended to be applied in discharging the indebtedness of the partnership to NatWest and was in fact so applied.
47.	Thus, the following issues arise on this appeal:
(1) On a true reading of the judgment, did the judge find that Mrs Williams’ execution of the UCB Charge was procured by Mr Williams’ wrongdoing?

(2) If so, is that finding sufficient to found a right for Mrs Williams, as against Mr Williams, to have the UCB Charge set aside; or is it necessary for Mrs Williams also to establish that, absent the wrongdoing, she would not have executed the UCB Charge?

(3) If so, was the judge’s finding to the opposite effect one which was open to him on the evidence?

I will refer to issues (1), (2) and (3) as “the causation issues”.

(4)   Whether the judge’s findings as to the advice which Mr Howells gave Mrs Williams are such as to prevent UCB being fixed with constructive notice of any right of Mrs Williams as against Mr Williams to have the UCB Charge set aside.   I will refer to this issue as “the constructive notice issue”.

(5)   Whether, should Mrs Williams’ appeal succeed on the causation issues and on the constructive notice issue, UCB is nevertheless entitled to be subrogated to the NatWest charges to the extent to which the UCB advance was used to pay off the partnership’s debt to NatWest.   I will refer to this issue as “the subrogation issue”.
THE ARGUMENTS
The causation issues

48.	The primary submission of Mr Jones QC (as he now is) is that in the section of the judgment headed “Actual undue influence” there is a clear finding to the effect that Mrs Williams’ execution of the UCB Charge was procured by Mr Williams’ undue influence.    That, he submits, is enough to entitle Mrs Williams, as against Mr Williams, to have the UCB Charge set aside as of right.  In support of this submission he relies on a passage from the speech of Lord Browne-Wilkinson in CIBC Mortgages v. Pitt [1994] 1 AC 200 at 209B-C, where Lord Browne-Wilkinson said:
“Actual undue influence is a species of fraud.   Like any other victim of fraud, a person who has been induced by undue influence to carry out a transaction which he did not freely and knowingly enter into is entitled to have that transaction set aside as of right.”

49.	The same applies, Mr Jones submits, to the judge’s findings contained in the section of his judgment headed “Misrepresentation”.  Mr Jones submits that, in that section, the judge finds that Mrs Williams was induced to execute the UCB Charge by Mr Williams’ fraudulent misrepresentation as to the true nature of the transaction.   He submits that, having made that finding, the judge erred in addressing the further question whether, absent the fraudulent misrepresentation, she would still have executed it.   
50.	In support of this last submission, Mr Jones relies on Downs v. Chappell [1997] 1 WLR 426 CA.   In that case the plaintiffs bought a bookshop in reliance on a misrepresentation by the vendor as to its profitability.   The plaintiff sued both the vendor and the vendor’s accountants, who had verified the vendor’s figures.   The judge at first instance, having found that the plaintiffs were induced by the misrepresentations to enter into the contract, went on to address the issue whether they would nevertheless have gone ahead with their purchase had they been given the true figures.   On that issue, he found that the plaintiffs had failed to establish that in that event they would not have gone ahead with the purchase.  Basing himself on that finding, the judge concluded that the plaintiffs had failed to establish causation for their financial loss and dismissed their claims.   The Court of Appeal allowed the plaintiffs’ appeal.   Hobhouse LJ, with whom Butler-Sloss and Roch LJJ agreed, concluded that the finding that the plaintiffs were induced by the misrepresentations to enter into the contract was sufficient to establish liability, subject only to the assessment of damages, and that in relation to liability the judge should simply have asked the question whether the plaintiffs had entered into the contract in reliance on the solicitors’ representation that the figures were correct.    In the course of his judgment Hobhouse LJ said this (at p.433B-F):
“I will take the tort of deceit first.   For a plaintiff to succeed in the tort of deceit it is necessary for him to prove that (1) the representation was fraudulent, (2) it was material and (3) it induced the plaintiff to act (to his detriment).   ....    As regards inducement, this is a question of fact.   The judge has found that the representations made did induce the plaintiffs to enter into the relevant transaction ...   The plaintiffs were induced to act to their detriment.   The word “reliance” used by the judge has a similar meaning but is not the correct criterion.

The plaintiffs have proved what they need to prove by way of the commission of the tort of deceit and causation.   They have proved that they were induced to enter into the contract with Mr Chappell by his fraudulent representations.   The judge was wrong to ask how they would have acted had they been told the truth.   They were never told the truth.   They were told lies in order to induce them to enter into the contract.   The lies were material and successful; they induced the plaintiffs to act to their detriment and contract with Mr Chappell.   The judge should have concluded that the plaintiffs had proved their case on causation and that the only remaining question was what loss the plaintiffs had suffered as a result of entering into the contract with Mr Chappell to buy his business and shop.”

51.	In Smith New Court Ltd v. Scrimgeour Vickers [1997] AC 254, the House of Lords overruled Downs v. Chappell on what Mr Jones submits is an entirely different point relating to the assessment of damages.   Mr Jones submits that there is nothing in Smith New Court which throws doubt on the aspect of the decision in Downs v. Chappell on which he relies, or which provides any support for the suggestion that in a case where fraud is proved it is necessary for the court to ask itself the further question what would have happened had there been no fraud.   In this connection, Mr Jones prays in aid a passage from the speech of Lord Steyn in Smith New Court (at 279F-280C), in which Lord Steyn justifies the established policy of the law of tort in imposing a more extensive civil liability on an intentional wrongdoer than on a wrongdoer who is merely negligent.    
52.	As to the passage from the judgment of this court in BCCI v. Aboody [1990] 1 QB 923 on which the judge relied in the passage in his judgment headed “Causation” (quoted earlier), Mr Jones points out that in CIBC v. Pitt the House of Lords specifically overruled that part of the decision in Aboody which held that even where it was proved that a transaction had been entered into as a result of undue influence the transaction would not be set aside unless it was also established that the transaction was to the manifest disadvantage of the victim of the undue influence.   Mr Jones submits that the House of Lords’ disapproval of Aboody in CIBC v. Pitt must be taken to extend to the passage relied on by the judge, which can no longer be regarded as good law.   Further or alternatively, Mr Jones submits that the passage in question is inconsistent with the decision of the House of Lords in Etridge.
53.	On the other hand, Mr Jones prays in aid the passage in Aboody at p.967E-F where the Court of Appeal said this:
“Leaving aside proof of manifest disadvantage, we think that a person relying on a plea of undue influence must show that (a) the other party to the transaction .... had the capacity to influence the complainant; (b) the influence was exercised; (c) its exercise was undue; (d) its exercise brought about the transaction.”

54.	Mr Jones submits that in the instant case on the findings of the judge Mr Williams’ wrongdoing “brought about” the transaction.
55.	Mr Jones further submits that a distinction falls to be drawn in this context between actual undue influence and presumed undue influence.   He submits that whereas in a case of actual undue influence the victim is entitled to have the transaction set aside as of right (see CIBC v. Pitt), where there is presumed undue influence there is merely an equity to have the transaction set aside, and that whereas in the latter case it may be relevant to consider what the victim would have done, absent the undue influence, in the former case it is not.
56.	In any event, Mr Jones submits that the judge’s finding (which he describes as a secondary finding) that, absent the wrongdoing, Mrs Williams would still have executed the UCB Charge is not based, as it should have been, on the hypothesis that she was exercising her own free will, free from any importunity or pressure.
57.	Mr Jones points out that the judge based his finding on causation on the premise that, in deciding whether to execute the UCB Charge, Mrs Williams would have maintained her faith in Mr Williams.   Mr Jones submits that this is a false premise, since once Mrs Williams was apprised of the true nature of the transaction, it would be apparent to her that Mr Williams had lied to her about it.   Further, Mr Jones submits that the judge’s hypothesis that she would have been persuaded to execute the UCB Charge by Mr Jack Williams takes no account of the possibility (or, as Mr Jones suggests, probability) of Mr Jack Williams exerting undue influence over her.   Mr Jones further submits that there was no, or no satisfactory, evidence before the court as to the family income, and that had Mrs Williams been competently advised it is virtually inevitable that she would not, of her own free will, have agreed to execute the UCB Charge.
58.	I turn next to the submissions of Mr James Barker, who appears for UCB before us, on the causation issues.   Mr Barker did not appear below.
59.	Mr Barker submits that the sections of the judge’s judgment headed respectively “Actual undue influence” and “Misrepresentation”, both of which precede the section headed “Causation”, contain no finding that the undue influence exerted by Mr Williams “brought about” the transaction, or that Mrs Williams was induced to enter into the transaction by Mr Williams’ fraudulent misrepresentation.   He submits that these issues are addressed in the later section of the judgment headed, appropriately, “Causation”.    In that context it was, Mr Barker submits, both legitimate and relevant for the judge to address the hypothetical question as to what Mrs Williams would have done had there been no undue influence or misrepresentation; and that the judge’s conclusion that on the balance of probabilities Mrs Williams would still have executed the UCB Charge is, in substance, a finding that the transaction was not “brought about” by Mr Williams’ wrongdoing, and as such is fatal to Mrs Williams’ claim to be entitled as against Mr Williams to have the UCB Charge set aside.
60.	Mr Barker submits that it is inconceivable that the judge would have addressed the issue of causation in the way he did had he already found that the transaction was “brought about” by the wrongdoing.
61.	In the alternative, Mr Barker cites the passage from Aboody relied on by the judge and quoted by him in the section of his judgment headed “Causation” as authority for the proposition that it is not enough to found a right for Mrs Williams, as against Mr Williams, to set aside the UCB Charge that her execution of it was procured by Mr Williams’ wrongdoing, and that it is necessary for her to go further and establish that, absent his wrongdoing, she would not have executed it.
62.	Mr Barker submits that the House of Lords’ overruling of Aboody in CIBC v. Pitt is limited to the question whether it is necessary, where actual undue influence has been proved, to establish in addition that the transaction was manifestly to the complainant’s disadvantage (the House of Lords deciding in CIBC v. Pitt that it is not necessary so to do).   Accordingly, Mr Barker submits that the passage from the judgment in Aboody on which he relies remains good law.
63.	As to Downs v. Chappell, Mr Barker points out that at p.433H, in addressing the issue of damages, Hobhouse LJ said:
“The factual starting point for the assessment of damages is that the plaintiffs purchased Mr Chappell’s shop and business.   If Mr Chappell had not been fraudulent, and the second defendants had not been negligent, the plaintiffs would not have entered into the transaction.   This is therefore, factually, a “no-transaction” case.”

64.	This demonstrates, submits Mr Barker, that it was relevant in the instant case to inquire whether, absent Mr Williams’ wrongdoing, Mrs Williams would still have executed the UCB Charge.   He submits that a misrepresentation will not vitiate a contract if the representee would have entered into the contract had he or she known the true facts.   In support of this submission he relies on Doyle v. Olby (Ironmongers) [1969] 2 QB 158.    In that case, Lord Denning MR said (at p.167B):
“In contract, the damages are limited to what may reasonably be supposed to have been in the contemplation of the parties.  In fraud, they are not so limited.   The defendant is bound to make reparation for all the damages directly flowing from the fraudulent inducement.   The person who has been defrauded is entitled to say: ‘I would not have entered into this bargain at all but for your representation’.”

65.	Mr Barker submits that, after Etridge in the House of Lords, there is no useful distinction to be drawn for present purposes between “actual undue influence” and “presumed undue influence”.   He further submits that, if and in so far as it is relevant to categorise the wrongdoing in the instant case, it is properly to be categorised as misrepresentation rather than undue influence.
66.	As to Mr Jones’ attack on the judge’s finding that, absent the wrongdoing, Mrs Williams would still have executed the UCB Charge, Mr Barker submits that there was ample evidence before the judge on which he could make that finding, and that there are no grounds on which the Court of Appeal could or should interfere with it.

The constructive notice issue
67.	As already noted, Mr Barker concedes that the judge’s finding (at p.25 of the transcript) that UCB was entitled to assume that Mr Howells would have given “full and proper advice to Mrs Williams as to the nature of the transaction” cannot, after Etridge in the House of Lords, in itself support an argument that UCB was not put on inquiry, or that UCB took “reasonable steps” to avoid being fixed with constructive notice of Mr Williams’ wrongdoing (which would include obtaining confirmation that Mr Howells had in fact advised Mrs Williams as to the nature and effect of the transaction).    
68.	However, he submits that if Mrs Williams was in fact advised as to the nature and effect of the transaction, UCB will not be fixed with constructive notice; and that on the evidence Mr Howells did so advise her.
69.	In response to that submission, Mr Jones submits that on the judge’s findings (which, he submits, are not susceptible to challenge in this court) Mr Howell’s advice was plainly deficient.   In any event, he submits, UCB cannot avoid being fixed with constructive notice by relying on a fact about which it ought to have inquired but failed to do so.

The subrogation issue

70.	Mr Barker submits firstly that although the judge made no finding as to the amount of the partnership’s indebtedness to NatWest as at 2 August 1991, and hence no finding as to how much of the advance was applied in paying off that indebtedness, the precise amount of the indebtedness as at that date can readily be established.   In any event, he submits, the evidence establishes that the amount of the indebtedness greatly exceeded the value of the equity in the Property after taking into account the first charge in favour of NatWest Home Loans.  In support of this last submission Mr Barker referred us to a passage in the cross-examination of Mr Jack Williams in which the witness indicated that although he could not remember the precise figures, the indebtedness at the relevant time might have exceeded £500,000.
71.	Mr Barker further submits that the burden is on Mrs Williams to establish that the NatWest charges were invalid, and that she has not discharged that burden.    On their face, the NatWest charges were valid charges.  In the circumstances, he submits, it was for Mrs Williams to establish that they are unenforceable, and she has missed her opportunity to do so.
72.	Mr Jones submits that it was for UCB to adduce evidence as to the amount in respect of which it claims to be subrogated to the NatWest charges, and that it has only itself to blame for the absence of evidence on this issue.  He submits that Mr Jack Williams’ oral evidence, given some nine years after the event, is equivocal and cannot support a finding as to the amount of the relevant indebtedness.
73.	As to the burden of proof on the issue as to the enforceability or otherwise of the NatWest charges, Mr Jones submits that the entire burden of proof on the issue of subrogation (which includes the issue as to the enforceability of the NatWest charges) lies on UCB.
74.	Finally, so far as subrogation is concerned, Mr Jones submits that in the absence of any evidence as to how UCB has apportioned or allocated realisations from other securities which it held for the partnership’s indebtedness, the fact that, on the evidence, the total realisations received by UCB exceeded the value of the equity in the Property leads to the conclusion that the entirety of those realisations must have been allocated to the Property, with the consequence that there is no outstanding indebtedness secured on the Property and that any subrogated rights of UCB have been exhausted.
75.	In answer to this last submission by Mr Jones, Mr Barker submits that the fact that UCB’s realisations from other securities may have exceeded the value of the equity in the Property is irrelevant, and that UCB’s subrogated rights remain unaffected.
CONCLUSIONS
76.	Unless otherwise indicated, references hereafter to Etridge are references to Etridge in the House of Lords.
The causation issues
77.	I turn first to issue (1) above: On a true reading of the judgment, did the judge find that Mrs Williams’ execution of the UCB Charge was procured by Mr Williams’ wrongdoing?
78.	In the section of his judgment headed “Actual undue influence” the judge said (on p.19 of the judgment):
“I am satisfied that Mr Williams not only had the ability to influence Mrs Williams, but did influence her, by failing to disclose matters without the knowledge of which Mrs could not make an informed decision as to whether to sign the charge or not.”

79.	The judge went on to agree with Mr Jones’ submission that Mr Williams’ influence was improper and “undue”.   He continued:
“Mrs Williams has satisfied me that her husband influenced her to such an extent that her independence of decision was substantially undermined.   She executed it in ignorance of important matters relating to the transaction, and not because, in full knowledge of all such matters, she was persuaded that it was the right thing to do.   I am satisfied that, in this case, actual undue influence was exerted by Mr Williams on his wife.”

80.	In my judgment the effect of those carefully expressed findings could hardly be clearer: Mrs Williams’ execution of the UCB Charge was procured by the undue influence of Mr Williams.
81.	In terms of misrepresentation, the judge made a similar finding.   In the section of his judgment headed “Misrepresentation” the judge expresses himself as satisfied that Mr Williams:
 “.... led [Mrs Williams] to believe that, although she was executing a charge in favour of ... UCB, this represented no more than a change of bank, and did not represent any increase in risk to Mrs Williams.”

82.	This finding echoes the earlier finding that Mrs Williams executed the UCB Charge in ignorance of important matters relating to the transaction, and not because she was persuaded that it was the right thing to do.
83.	Finally, in the paragraph headed “Conclusion”, the judge expresses himself as satisfied that Mr Williams committed an equitable fraud on Mrs Williams, in terms both of undue influence and misrepresentation.
84.	In the light of those findings, the instant case must in my judgment be characterised as one in which Mrs Williams’ execution of the UCB Charge was procured by the equitable fraud on the part of Mr Williams to which the judge refers. 
85.	On that basis, I turn to issue (2): Is that fact sufficient to found a right for Mrs Williams, as against Mr Williams, to have the UCB Charge set aside; or is it necessary for her also to establish that, absent the equitable fraud, she would not have executed the UCB Charge?
86.	Undue influence is exerted when improper means of persuasion are used to procure the complainant’s consent to participate in a transaction, such that “the consent thus procured ought not fairly to be treated as the expression of [the complainant’s] free will” (see Etridge at para 7 per Lord Nicholls).   In such a case, equity proceeds on the basis that the complainant did not consent to the transaction.    Is that enough to give rise to an equity in the complainant to set aside the transaction as against the wrongdoer?  In my judgment, it is.  That conclusion seems to me to follow clearly from what Lord Browne-Wilkinson said in CIBC v. Pitt, in the passage from his speech on which Mr Jones relies (quoted earlier in this judgment, at para 48).    As Lord Browne-Wilkinson said in CIBC v. Pitt (at p.209B): “Actual undue influence is a species of fraud.”   That being so, I cannot see any reason in principle why (for example) a husband who has fraudulently procured the consent of his wife to participate in a transaction should be able, in effect, to escape the consequences of his wrongdoing by establishing that had he not acted fraudulently, and had his wife had the opportunity to make a free and informed choice, she would have acted in the same way.   The fact is that the husband’s fraud deprived the wife of the opportunity to make such a choice, and, as I see it, it is that fact which founds the wife’s equity (as against her husband) to set aside the transaction. 
87.	Moreover, undue influence may include fraudulent misrepresentation.  The instant case is such a case.   I agree with the judge when he said (at p.16 of his judgment) that on the facts of the instant case there is a “significant overlap” between undue influence and fraudulent misrepresentation.    Both constitute improper and unacceptable methods of persuasion.   As Lord Nicholls says in paras 32 and 33 in Etridge:
“32.   ....   Undue influence has a connotation of impropriety.   In the eye of the law, undue influence means that influence has been misused.   Statements or conduct by a husband which do not pass beyond the bounds of what may be expected of a reasonable husband in the circumstances should not, without more, be castigated as undue influence.   Similarly, when a husband is forecasting the future of his business, and expressing his hopes or fears, a degree of hyperbole may be only natural.   Courts should not too readily treat such exaggerations as misstatements.
33.    Inaccurate explanations of a proposed transaction are a different matter.   So are cases where a husband, in whom a wife has reposed trust and confidence for the management of their financial affairs, prefers his interests to hers and makes a choice for both of them on that footing.   Such a husband abuses the influence he has.   He fails to discharge the obligation of candour and fairness he owes a wife who is looking to him to make the major financial decisions.”

88.	The observations of Hobhouse LJ in Downs v. Chappell (quoted earlier) seem to me to be directly in point in the instant case.   In the instant case, as in Downs v. Chappell, Mrs Williams was never told the truth; she was told lies in order to induce her to execute the UCB Charge.  The lies were “material and successful” in that they induced Mrs Williams to act to her detriment in executing the UCB Charge.
89.	Moreover, Downs v. Chappell affords, in my judgment, a useful illustration of the need, in the context of a claim for damages for misrepresentation, to distinguish between two separate questions: (1) whether the claimant was induced by the misrepresentation to act to his detriment; and (2) if so, what loss he suffered in consequence.  As Downs v. Chappell shows, the fact that the claimant might have acted differently had he not been induced by the misrepresentation is not relevant to question (1), but it is relevant to question (2) (as, indeed, Mr Barker pointed out in the course of his submissions).   For present purposes, however, it is the analogy with question (1) which is of importance.   Expressed purely in terms of misrepresentation, the issue in the instant case is whether Mrs Williams was induced by the misrepresentation to execute the UCB Charge.   In that context it matters not, in my judgment, whether, had she not been so induced,  she would nevertheless have done so.
90.	Nor, in my judgment, is this conclusion in any way inconsistent with Doyle v. Olby (Ironmongers), which (like Downs v. Chappell) was a claim for damages for misrepresentation.
91.	 So far as Aboody is concerned, it seems to me that the passage cited by the judge, on which Mr Barker relies, cannot be reconciled with CIBC v. Pitt (and in particular with the observations of Lord Browne-Wilkinson, quoted in paragraph 48 above).   The proposition stated in Aboody, that “at least in ordinary circumstances” it would not be appropriate to set aside a transaction which which has been procured by the undue influence of the other party if it be established that the complainant would have entered into the transaction in any event, seems to me to be flatly inconsistent with Lord Browne-Wilkinson’s statement of principle in CIBC v. Pitt that a victim of undue influence is entitled to have the transaction set aside “as of right”.    The words “as of right” in this context seem to me to admit of only one meaning; viz. regardless of other considerations.
92.	The above conclusions make it strictly unnecessary to address issue (3), viz.: Was the judge’s finding that, absent the wrongdoing, Mrs Williams would have executed the UCB Charge a finding which was open to him on the evidence?    However, for completeness I address the issue briefly.
93.	Despite Mr Jones’ valiant efforts, I remain wholly unpersuaded that the judge’s finding to that effect is susceptible of challenge in this court.   The issue (assuming for this purpose that it was a relevant issue) was one for the judge.   He considered the evidence and made his finding.   I can see no basis for reversing that finding.
94.	However, for reasons given earlier, I conclude that Mrs Williams has at all material times been entitled in equity, as against Mr Williams, to have the UCB Charge set aside.
The constructive notice issue
95.	I should, perhaps, begin this section of the judgment by saying that in my judgment Mr Barker’s concession (to the effect that UCB cannot avoid being fixed with constructive notice of Mrs Williams’ equity by relying merely on an honest belief that Mrs Williams was represented in the transaction by a solicitor) was rightly made.   As Lord Scott, in particular, makes clear in Etridge, an honest belief to that effect is not enough, since it cannot be assumed that the solicitor’s retainer extends to explaining to his client the nature and effect of the transaction.  Thus, in paragraph 168 of the judgment in Etridge Lord Scott says:
“... the duty of a solicitor towards his client is, in every case, dependent on the instructions, express or implied, that he has received from his client.   A solicitor acting for a client in a proposed transaction under which the client is to become surety or give security for the debts of another will not necessarily have instructions to advise the client about the nature and effect of the transaction.   In most cases such instructions, if not express, would, I think, be implied; but it is at least possible that the circumstances of the solicitor’s retainer would not require him to give such advice.   So, in my opinion, knowledge by a bank that a solicitor is acting for a surety wife does not, without more, justify the bank in assuming that the solicitor’s instructions extend to advising her about the nature and effect of the transaction.”    (Emphasis supplied.)

96.	See also, to the same effect, Lord Hobhouse at paragraph 115.
97.	Accordingly in the light of Mr Barker’s concession (rightly made) the only issue which arises in relation to constructive notice is issue (4): Are the judge’s findings as to the advice which Mr Howells gave Mrs Williams such as to prevent UCB being fixed with constructive notice of her right, as against Mr Williams, to have the UCB Charge set aside?
98.	I can deal with this issue shortly.  The answer is No, for two reasons.   Firstly, having been put on inquiry, UCB cannot avoid being fixed with constructive notice by relying on a fact which was not known to them at the time and about which they failed to make any inquiry.   Secondly, on the judge’s findings, Mr Howells’ advice to Mrs Williams at the meeting on 31 July 1991 was palpably deficient, and it is common ground that he had not spoken to Mrs Williams about the transaction prior to that meeting.   As the judge says (at the foot of p.14):
“I find that, at that meeting [i.e. the meeting on 31 July 1991], as with the earlier charges, he gave his usual advice with regard to the risk of the chargors (including Mrs Williams) losing their homes [if] repayments were not kept up: but he gave no more detailed advice upon the transaction (e.g. that the charges were in respect of all monies owed to the bank by any of the partners, or that the total borrowings by the firm were being increased to £700,000), and, in particular, he gave no advice to those (like Mrs Williams) who were not borrowers themselves but were acting as sureties that they should obtain independent legal advice.”

99.	In other words, Mr Howells did not adequately explain to Mrs Williams the nature and effect of the transaction into which she was being persuaded to enter.
100.	If follows that in my judgment UCB is fixed with constructive notice of Mrs Williams’ right, as against Mr Williams, to have the UCB Charge set aside.

The subrogation issue
101.	In the light of the conclusions reached earlier, the subrogation issue becomes a live issue since, absent subrogation, UCB’s claim against Mrs Williams must in my judgment fail.
102.	The difficulty, however, is that the judge made no findings of fact at all on this issue.   It seems to me that, absent any findings of fact, this court is not in a position to adjudicate on the issue.   In particular, I reject the submission that it is somehow possible for this court to infer the relevant facts.
103.	So, unsatisfactory though it is, the appropriate course, in my judgment, is to remit the case to the judge to address the subrogation issue, and in so doing to make such relevant findings of fact as he is able to make on the evidence before him.   I would emphasise, however, that I do not envisage anything in the nature of a fresh hearing, involving the taking of any further evidence.    The subrogation issue must, as it seems to me, be determined by reference only to such evidence as was adduced at the trial.   Whether that evidence is sufficient to establish a claim to subrogation on the part of UCB remains to be seen – and that is a matter for the judge.    I would merely comment that the impression I have gained from the evidence to which we have been referred is that it is by no means clear that a claim to subrogation can be established.
RESULT
104.	For the reasons I have given, I would allow the appeal on the causation issues and the constructive notice issue and remit the case to the judge to determine the subrogation issue on the evidence adduced at the trial.
Lord Justice Kay
105.	I agree.
Lord Justice Peter Gibson
106.	Although we are differing from the judge, whose careful judgment might well have been upheld but for the subsequent decision of the House of Lords in Etridge on a point relevant to the constructive notice issue, there is nothing which I would wish to add to the judgment of Jonathan Parker L.J. with which I am in full agreement. 
Order: As drafted.
(Order does not form part of the approved judgment)