• In the case of First National Bank Plc v Achampong 2003 EWCA Civ 487, it was held that where a marriage is effectively over (despite of a divorce) and children have reached adulthood, the interest of creditors outweighs the family interests.

Facts of the Case

  • F, a bank that had registered a legal charge against A’s house as part security for a loan, appealed against the dismissal of its claim for possession of property.
  • A, a married couple who were the joint proprietors of the property, were co-guarantors for the loan, which had been advanced to family members who were also resident in the property.
  • The court had ordered that the legal charge be set aside, and the charges register of the property be rectified accordingly on the ground that the charge had been procured by the undue influence exerted by Mr A over Mrs A.
  • In its appeal, F submitted that  it was unaffected by notice of any undue influence because A had had the benefit of professional legal advice and, in the absence of any suggestion to the contrary, it was entitled to assume that Mrs A had been properly advised in her own right, and alternatively by virtue of the legal charge and in accordance with the Law of Property Act 1925 , it had an equitable charge over Mr A’s beneficial interest in the trust of land affecting the property

Issues in First National Bank Plc v Achampong 2003 EWCA Civ 487

  • Can the bank enforce a sale of the property?

Held by Court of Appeal

  • Appeal allowed in part.


  • Here, F had to take reasonable steps to satisfy itself that Mrs A’s consent to the transaction had been properly obtained. Whether F had done so was a question of fact. The mere knowledge that the wife had a solicitor acting for her would not normally be sufficient to constitute the taking of reasonable steps by a bank to ensure that the nature of the risks arising out of the transaction had been explained to her.
  • If the bank knew that the wife’s solicitor had been instructed to advise her independently, that would generally suffice. In the instant case the judge had been entitled to find that F had not done sufficient to avoid having constructive notice of any undue influence, and (2) s.63(1) of the Act applied as much to a legal charge as to a conveyance or transfer, with the result that it created an equitable charge in F’s favour over Mr A’s beneficial half share of the property.
  • “I regard it as plain that an order for sale should be made. Prominent among the considerations which lead to that conclusion is that, unless an order for sale is made, the bank will be kept waiting indefinitely for any payment out of what is, for all practical purposes, its own share of the property. While it is relevant to consider the interests of the infant grandchildren in occupation of the property, it is difficult to attach much if any weight to their position in the absence of any evidence as to how their welfare may be adversely affected if an order for sale is now made. It is for the person who resists an order for sale in reliance on section 15 (1) (c)  to adduce the relevant evidence. Insofar as the Achampongs’ intention in creating the trust of the property was to provide themselves with a matrimonial home, and insofar as that was the purpose for which the property was held on trust, that consideration is now spent. Given the many years’ absence of contact between Mr and Mrs Achampong, the fact that there has not yet been a divorce cannot disguise the reality that theirs is a marriage which has effectively come to an end. The possibility, therefore, that the property may yet serve again as the matrimonial home can be ignored. Insofar as the purpose of the trust — and the intention of the Achampongs in creating it — was to provide a family home and insofar as that is a purpose which goes wider than simply the provision of a matrimonial home, I am unpersuaded that it is a consideration to which much if any weight should be attached. The children of the marriage have long since reached adulthood. One of them is no longer in occupation. It is true that the elder daughter, Rosemary, is a person under mental disability and remains in occupation but to what extent that fact is material to her continued occupation of the property and therefore to the exercise of any discretion under section 14   is not apparent.” [65]