Watt Or Forsyth (AP) v Royal Bank Of Scotland Plc [1999] ScotCS 181 (26 July 1999)

Watt Or Forsyth (AP) v Royal Bank Of Scotland Plc [1999] ScotCS 181 (26 July 1999)

Where a lender reasonably believes that a solicitor is acting for the cautioner (wife) in a transaction granting security over jointly owned property for the husband's debt, the lender is entitled to assume the solicitor will fulfil professional duties to advise the cautioner on the nature and consequences of the transaction and on the desirability of independent advice. Good faith does not require the lender to take further steps to warn or advise the cautioner directly unless the lender is aware of circumstances indicating the solicitor has not or will not fulfil those duties.

Citation
[1999] ScotCS 181
Parties
Pursuer: Elizabeth Watt or Forsyth (AP); Defender: The Royal Bank of Scotland plc
Jurisdiction
Scotland
Judgment Date
26 July 1999
Procedural Posture
Civil Action for Reduction of Standard Security / Debate on Relevancy of Pleadings (preliminary Pleas)
Outcome
Pursuer's averments on the duty issue held irrelevant; defenders' preliminary plea on relevancy sustained on this issue.
Legal Topics
Cautionary Obligations, Undue Influence, Misrepresentation, Constructive Notice, Good Faith in Creditor Transactions, Solicitor's Duties in Conflict of Interest, Reduction of Security Deeds
Banking Law Contract Law Family Law Property Law Cautionary Obligations Undue Influence Misrepresentation Constructive Notice +3 more

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Parties

Elizabeth Watt or Forsyth (AP)

Pursuer

The Royal Bank of Scotland plc

Defender

Procedural Posture

Civil Action for Reduction of Standard Security / Debate on Relevancy of Pleadings (preliminary Pleas)

Legal Issues

  1. 1 Whether the defenders (bank) owed a duty to the pursuer (wife) to warn her of the consequences of granting a standard security and to advise her to seek independent legal advice, given the circumstances of the transaction and the involvement of solicitors who appeared to act for all parties.
  2. 2 Whether the defenders were entitled to rely on the solicitors' apparent fulfilment of their professional duties to the pursuer, or whether good faith required the defenders to take further steps.

Ratio Decidendi

Where a lender reasonably believes that a solicitor is acting for the cautioner (wife) in a transaction granting security over jointly owned property for the husband's debt, the lender is entitled to assume the solicitor will fulfil professional duties to advise the cautioner on the nature and consequences of the transaction and on the desirability of independent advice. Good faith does not require the lender to take further steps to warn or advise the cautioner directly unless the lender is aware of circumstances indicating the solicitor has not or will not fulfil those duties.

Court Disposition

Pursuer's averments on the duty issue held irrelevant; defenders' preliminary plea on relevancy sustained on this issue.

Orders

  • The pursuer's case, insofar as based on the defenders' alleged failure of duty to warn or advise, is dismissed as irrelevant.