Banco Exterior Internacional v Mann (1955) 27 HLR 329
When creditors have constructive notice of undue influence.
Facts:
The defendants, Mr and Mrs Mann, lived in a property registered in the husband’s sole name. Mr Mann applied for a loan from the claimant bank secured against his home. The bank asked his wife to sign a declaration in the presence of the husband’s solicitor waiving any rights of occupation. The solicitor explained the document to her. She signed it but told the solicitor she had little choice in the matter. After the husband’s company went into liquidation the bank sought possession of the house. The wife claimed rights of occupation under the Matrimonial Homes Act 1993. The trial judge held that a presumption of undue influence had arisen and that the bank had constructive notice of this.
Issues:
In Barclays Bank v O’Brien [1993] 4 All ER 417 the House of Lords held that where a creditor advances a mortgage to a husband and wife, the creditor must take reasonable steps to ensure the transaction was entered into freely and with full knowledge by advising the wife to take independent legal advice. The claimant argued they had taken sufficient steps to avoid having constructive notice of undue influence.
Decision/Outcome
The Court of Appeal held the creditor had taken reasonable steps. Barclays Bank v O’Brien had not laid down the only way a creditor could avoid having notice. It was up to the solicitor to decide if he was independent. Therefore, the bank was entitled to rely on the declaration. However, Hobhouse LJ dissented, saying that the bank should have ensured the solicitor was impartial.
Updated 19 March 2026
This case note is broadly accurate but contains one clear error: the article refers to the Matrimonial Homes Act 1993, which does not exist. The relevant legislation at the time was the Matrimonial Homes Act 1983. That Act has since been repealed and replaced by the Family Law Act 1996, Part IV, which now governs home rights (formerly called rights of occupation) for spouses and civil partners.
More significantly, the legal principles discussed in this case have been substantially developed and in important respects superseded by the House of Lords decision in Royal Bank of Scotland v Etridge (No 2) [2001] UKHL 44. In Etridge, the House of Lords revisited and refined the approach in Barclays Bank v O’Brien, setting out detailed and more prescriptive guidance on the steps a lender must take to avoid being fixed with constructive notice of undue influence. The Etridge guidelines now represent the leading authority in this area and largely displace the earlier, less structured approach reflected in Banco Exterior v Mann. Students should treat this case note as useful background to the development of the law, but must study Etridge as the current governing authority.
