Royal Bank of Scotland v Etridge
I am reading a case called Royal Bank of Scotland v Etridge (2001). It's quite a well-known case, and a fairly interesting one. It goes like this. Say you are married, or civil-partnered, and you live with your partner in a house that you both own. Say you then decide to start a business, and need a loan for the purpose. The bank wants security for the loan, so you offer up the only thing you have - your house. The bank agrees, Land Registry enters the restriction on your title to your property, you get the money.
Then the inevitable happens. The business fails and you default on the loan. In order to get back the money, the bank exercises its power of sale. And you're thrown out of your home - but so is your partner, through no fault of theirs, and they may not even have known that all this was going on, considering all that was required from them was one signature, possibly years before.
The House of Lords was keen to stop this happening, and in this case it set out guidelines for what a lender must do when making a loan of this type. Nothing dramatic - it must satisfy itself that practical implications of the transaction have been set out in a "meaningful way" to the other partner before it proceeds with the loan.
So far, so hoopy. In some ways this is just the sort of common law that appeals to me; there's a problem, the court takes a simple logical action, it fixes it. Very neat, very sensible.
But here's the issue. The wording of the judgement is as follows:
"It is important that a wife (or anyone in a like position) should not charge her interest in the matrimonial home to secure the borrowing of her husband (or anyone in a like position) without fully understanding the nature and effect of the proposed transaction and that the decision is hers, to agree or not to agree."
And later:
"It is important that lenders should feel able to advance money... on the security of the wife's interest in the matrimonial home..."
The textbook, published in 2009, I should add, writes:
"The lender is entitled to proceed on the basis that the solicitor advising the wife has done so properly."
And:
"[If going ahead with the transaction] the solicitor should explain to the wife the purpose for which he (the solicitor) has become involved..."
There's layers and layers of issues below this - at one level it's about undue influence, which suggests it's a tool to stop women being taken advantage of, and at another level it's about introducing transparency.
But the judgement is on the most obvious level, about husbands and wives. It's about how a husband takes out a loan, and doesn't tell his wife; it's about how a wife must have it explained. There's a clear, clear assumption that it will be a man who takes out a business loan, not a woman, and that it will be the wife who needs the situation explaining. The judgement was made in 2001, note: it wasn't Lord Denning in the 1970s getting paternalistic on us, it was made less than ten years ago. It's not a profound point that I'm leading up to here, but nevertheless I want to make it: the sheer and obvious sexism in it is what gets me down. It's not that you have to analyse it carefully to see that it's there, it's just there, waving a little patriarchy flag and wearing a shiny hat.
It was made before the Civil Partnership Act, of course - but that is retroactively implied into it, so there's one blessing, but hmph. Hmph.
Then the inevitable happens. The business fails and you default on the loan. In order to get back the money, the bank exercises its power of sale. And you're thrown out of your home - but so is your partner, through no fault of theirs, and they may not even have known that all this was going on, considering all that was required from them was one signature, possibly years before.
The House of Lords was keen to stop this happening, and in this case it set out guidelines for what a lender must do when making a loan of this type. Nothing dramatic - it must satisfy itself that practical implications of the transaction have been set out in a "meaningful way" to the other partner before it proceeds with the loan.
So far, so hoopy. In some ways this is just the sort of common law that appeals to me; there's a problem, the court takes a simple logical action, it fixes it. Very neat, very sensible.
But here's the issue. The wording of the judgement is as follows:
"It is important that a wife (or anyone in a like position) should not charge her interest in the matrimonial home to secure the borrowing of her husband (or anyone in a like position) without fully understanding the nature and effect of the proposed transaction and that the decision is hers, to agree or not to agree."
And later:
"It is important that lenders should feel able to advance money... on the security of the wife's interest in the matrimonial home..."
The textbook, published in 2009, I should add, writes:
"The lender is entitled to proceed on the basis that the solicitor advising the wife has done so properly."
And:
"[If going ahead with the transaction] the solicitor should explain to the wife the purpose for which he (the solicitor) has become involved..."
There's layers and layers of issues below this - at one level it's about undue influence, which suggests it's a tool to stop women being taken advantage of, and at another level it's about introducing transparency.
But the judgement is on the most obvious level, about husbands and wives. It's about how a husband takes out a loan, and doesn't tell his wife; it's about how a wife must have it explained. There's a clear, clear assumption that it will be a man who takes out a business loan, not a woman, and that it will be the wife who needs the situation explaining. The judgement was made in 2001, note: it wasn't Lord Denning in the 1970s getting paternalistic on us, it was made less than ten years ago. It's not a profound point that I'm leading up to here, but nevertheless I want to make it: the sheer and obvious sexism in it is what gets me down. It's not that you have to analyse it carefully to see that it's there, it's just there, waving a little patriarchy flag and wearing a shiny hat.
It was made before the Civil Partnership Act, of course - but that is retroactively implied into it, so there's one blessing, but hmph. Hmph.