Lloyds Bank Ltd v Bundy [1974] EWCA Civ 8 (30 July 1974)

Lloyds Bank Ltd v Bundy [1974] EWCA Civ 8 (30 July 1974)

The guarantee and charge executed by Mr. Bundy were set aside because the bank, in a position of trust and confidence, failed to ensure that Mr. Bundy received independent advice before entering into a transaction manifestly disadvantageous to him, thereby breaching its fiduciary duty and exercising undue influence within the second class of Allcard v. Skinner.

Citation
[1974] EWCA Civ 8
Parties
Plaintiff/respondent: Lloyds Bank Limited; Defendant/appellant: Herbert James Bundy
Jurisdiction
England and Wales
Judgment Date
30 July 1974
Procedural Posture
Civil Appeal / Appeal From County Court to Court of Appeal
Outcome
Appeal allowed; judgment below set aside; judgment for defendant on claim and counterclaim.
Legal Topics
Undue Influence, Inequality of Bargaining Power, Fiduciary Duty, Guarantees and Charges, Independent Advice, Bank Customer Relationship
Contract Law Equity Banking Law Undue Influence Inequality of Bargaining Power Fiduciary Duty Guarantees and Charges Independent Advice +1 more

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 3 Authorities cited 19 Party arguments 2 Amounts and remedies 9
Sign in to unlock

Parties

Lloyds Bank Limited

Plaintiff/respondent

Herbert James Bundy

Defendant/appellant

Procedural Posture

Civil Appeal / Appeal From County Court to Court of Appeal

Legal Issues

  1. 1 Whether the guarantee and charge executed by Mr. Bundy in favour of Lloyds Bank should be set aside on grounds of undue influence or inequality of bargaining power.
  2. 2 Whether a special relationship existed between Mr. Bundy and the bank giving rise to a fiduciary duty requiring independent advice.

Ratio Decidendi

The guarantee and charge executed by Mr. Bundy were set aside because the bank, in a position of trust and confidence, failed to ensure that Mr. Bundy received independent advice before entering into a transaction manifestly disadvantageous to him, thereby breaching its fiduciary duty and exercising undue influence within the second class of Allcard v. Skinner.

Court Disposition

Appeal allowed; judgment below set aside; judgment for defendant on claim and counterclaim.

Orders

  • Legal charge and guarantee dated 17th December 1969 set aside and to be delivered up for cancellation.
  • Defendant awarded costs in the Court of Appeal and four-fifths of costs in the County Court on the highest scale.