The underlying principles regarding circumstances in which a lender is put on notice of undue influence in secured loans to joint borrowers were recently explored by the Court of Appeal.

Established Etridge principles

The 2001 House of Lords case of Royal Bank of Scotland v Etridge established that there are two categories of joint borrower. The first one is the 'surety case' where either one borrower guarantees the debts and obligations of another, or multiple borrowers acquire debt on a jointly owned property as security to discharge the debt of only one of them. The lender in this situation is put on notice for undue influence.

The second category is the 'joint borrower' scenario, whereby multiple borrowers acquire debt against jointly-owned property for non-commercial purposes. Here, the lender is not put on such notice.

One Savings Bank plc v Waller-Edwards (2024)

In this recent case, the Court of Appeal was asked to consider a third 'hybrid' category whereby joint borrowers acquired debt to repay a previous joint mortgage, bought another property jointly with 90% of the debt, and used the remaining 10% of the loan to pay off the debts of one of the borrower's partner.

The appellant argued that:

  • The amount used to repay the debts of the partner was 'non-trivial'
  • A third 'hybrid' category should be created to cover differing circumstances
  • The lender should have been put on notice of undue influence in this instance.

The Court of Appeal disagreed with these arguments. It held that a holistic view should be taken of the circumstances, on a case-by-case basis, as to whether a transaction was a borrowing for joint purposes. Such a hybrid category would have been loosely defined and consequently too onerous for lenders, opening them up to a great deal of uncertainty and policy implementation challenges.

Etridge status quo maintained

Lenders can be comforted that there appears to be no appetite within the courts at present to expand the scope of undue influence in joint borrowing. Lenders should, however, continue to be mindful of circumstances which give rise to notice of undue influence and have appropriate procedures in place to identify them.


This article was written by Margaret Dunning, Solicitor at Womble Bond Dickinson.

This article is for general information only and reflects the position at the date of publication. It does not constitute legal advice.