National Westminster Bank Plc v Amin
House of Lords
Citations:  UKHL 9;  1 FLR 735.
Mr & Mrs Amin were first-generation immigrants from Uganda. They did not speak any English. In 1980, they jointly purchased a house for £18,000. In 1988, their son sought to raise money for his business. He convinced his parents to allow him to use their house as security for the loan. The bank put the couple in touch with a firm of solicitors to explain the transaction. That solicitor confirmed to the bank that he had explained the terms of the loan to them.
The son was not able to pay back the loan, and the bank sought to enforce their security in the house. By then, Mr Armin had died.
Mrs Armin argued that the contract was voidable for undue influence, by either her son or her husband. The bank sought to rely on the solicitor’s statement that the transaction was explained to Mrs Armin. This, they argued, freed them of any association with the undue influence.
Mrs Armin countered that the solicitor had spoken to them in English, which they did not understand. Additionally, the explanation had been given in the presence of her son. She argued that the solicitor’s knowledge in this regard should be attributed to the bank as they were acting as the bank’s agent.
The bank sought to have Mrs Armin’s arguments struck out as having no reasonable prospect of success.
The House of Lords allows the claim of undue influence to proceed. Mrs Armin had an arguable case that she was unduly influenced. The bank needed to show that it took reasonable steps to ensure she understood the transaction. If it did not, they would remain fixed with constructive notice of the undue influence.
The bank was correct to argue that certification by a solicitor that the couple understood the transaction could constitute reasonable steps. However, if Mrs Armin proved that the solicitor was acting as the agent for the bank, and had failed to properly advise her, the certification would be insufficient. This was a matter to be determined at trial.
This Case is Authority For…
If a bank is aware of circumstances which indicate that a person has not been properly advised by their solicitor or does not understand the transaction, they remain fixed with constructive notice of undue influence.
Lord Scott also commented that in exceptional cases, a bank might need to do more than merely receive certification from a solicitor to avoid having constructive notice of undue influence.
This might be such a case: if Mrs Armin could show that the bank was aware she did not speak English and that her cultural background made her especially vulnerable to undue influence.
In such a case, Lord Scott indicated that the bank would need to take steps to ensure that the solicitor was aware of the unusual factors involved and the need to take special care in giving advice.