The case of Barclays Bank

Traditionally, society has regarded women as the inferior of the two sexes. It was believed that women should be 'kept' by their husbands, who being the chief bread maker should look after his wife and their finances. Up until recently women were not afforded special rights in equity that are available to them today. The case of Barclays Bank and O'Brien 1994 has been significant in establishing rights for wives who have been unduly influenced by their husbands into risking their property for the debts of their husbands.

Lord Browne-Wilkinson's judgement has been subject to much criticism regarding the extent to which wives and near-wives should be protected by the law from their husbands influence. Two schools of thought have emerged from the case; one follows that, no special protection should be afforded to marry women, the second, called the 'special equity theory', considers that special rights should be available to those where the relationship between the debtor (husband), and surety (wife), is such that the surety relies upon the debtor.

The debtor's influence over the surety is a natural feature of the relationship. Lord Browne-Wilkinson recognised that even in the modern day women still depends upon their husbands to deal with financial matters. The leading authority on special rights, which should be given to women prior to O'Brien, was Turnbull and Duval 1902. His lordship criticised the judgement in this case and described the basis on which the case was decided as 'obscure'. Scott LJ supported this as he described the judgement as 'somewhat elusive'.

The case of Duval dates back to 1902 when people took the traditional view that women should depend entirely upon their husbands. Attitudes have changed considerably since then. In recent years their have been a large number of cases similar to O'Brien which reflect the changes in societies attitudes towards protecting wives and more recently, 'lovers' or 'near wives'. Lord Browne-Wilkinson states that, 'society's recognition of the equality of the sexes has led to a rejection of the concept that the wife is subservient to the husband'.

This implies that he has recognised that women are becoming independent of their husbands, however, there are difficulties when discussing women's rights, as he then goes on to state that, 'practice does not yet coincide with the ideal'. In many marriages today it is still the husband who deals with the financial aspects and the wife normally without questioning, willingly follows his advice. This is significant, as it shows that a wife should have no need to question her husbands decisions, as a marriage should be based upon trust and confidence.

In cases where husbands have abused the trust and confidence invested upon them, his lordship suggested that, wives can 'reasonably look to the law for some protection'. Lord Browne-Wilkinson's judgment conveyed the need for reform of the current law, in order to reflect the evolving of societies attitudes towards women. His judgement in effect proposed that women should not be treated as 'victims', as in the modern day women are as independent as men. He recognised however, that as not all women bring their independence into financial arrangements, they should be given protection from their fraudulent husbands.

In his conclusion, Lord Browne-Wilkinson, suggested that the special equity theory should be rejected as he felt there was no need to afford special protection to a 'limited class in relation to one type of transaction only'. This is significant as he believed in order to keep up with shifts in opinions over the years, the rights awarded through 'special equity', should be available in equity itself. There should not be a special class distinguishing married women. He also recognised that creditors should assume in any transaction that the 'husband has not accurately stated to the wife, the nature of the liability she is undertaking'.

Therefore, the creditor should take measure to satisfy himself, that the surety has been 'properly obtained'. If the creditor fails to do so he has constructive notice of the wife's rights, and so in equity, the wife can set aside the transaction and her obligations will be un-enforceable. Lord Browne-Wilkinson stated that in order to avoid having constructive notice of the wife's rights, the creditor should advise her to seek independent legal advice. It should also be ensured that the wife understands the risks involved by attending a 'private meeting (in the absence of the husband)'.

This suggestion was disputed by Mr Jarvis for the bank, as he stated that it would impose 'too heavy a burden' upon lendors. However this was rejected by his lordship as he held that wives still rely implicitly upon their husbands and recognised that written warnings are 'often not read' and may be intercepted by husbands. Creditors should therefore take measures to ensure that the wife is aware of the potential liability. He regarded this as 'good practice' and not too heavy a burden upon financial institutions.

Lord Browne-Wilkinson's judgement also established the need to extend protection to cases where there is an 'emotional relationship between cohabitees'. Protection should not simply be allowed for married wives, as in the modern day unmarital cohabitation exists in both homosexual and heterosexual couples. Significantly he stated that wives aren't the only group who are 'exposed to the emotional pressure of cohabitation'. This was supported by the case of Avon Finance Co LTD and Bridger 1985.

For this reason his Lordship recommended that the same principles, which apply to husband and wife, should apply to cohabitees of any kind. His Lordship concluded that banks should be put on inquiry as to the circumstances under which wives agree to stand as surety. Women's financial and legal independence has been established and yet there are still difficulties in balancing the need for rights and offending them. Although some married women chose to become 'house wives' and leave financial arrangements to their husbands, they should still be protected from the wrong doings of their husbands.

However it is important to avoid patronising and insulting the intelligence of the modern woman by affording them too many rights, as feminists have for years fought for the equality of women and their exemption from 'special rights'. Feminists argue that women are equal to men and should therefore have the same right applied to them. A major flaw of affording too much protection to women is that financial institutions will refrain from allowing homes to be used as security for loans.

There is an element of risk here, as women in order to protect their husbands, would seek to procure undue influence in order to set aside the transaction and so keep their matrimonial home. In contrast to this, there is a problem when the law is developed in an attempt to mitigate the 'structural inequalities' by failing to afford women rights which protect them from their husbands' undue influence into using property as security. A woman's lack of knowledge regarding the financial affairs of her marriage may be taken advantage of by her partner or financial institutions.

Lord Browne-Wilkinson's' judgement aimed to bring clarity to the area of law concerning women and equity's role in protecting the 'weak' as the preceding case Duval, failed to do so. He recognised that changes in attitudes of society and distribution of wealth required reform in the law and also, due to the increasing independence of women. Quite importantly, his Lordship established that protection should not just be afforded to wives, but should be extended to any type of cohabitee, be they male, female, lovers or parents.

A study reported by Mark Palowski has shown that 'only a relatively small percentage' of creditors follow the rule established in O'Brien by carrying out private meetings with the applicants wife. However most creditors do require independent legal advice and confirmation that this has been received via a letter and that the wife understands the extent of her liability. Although through various studies it is apparent that lending practice is far from the duty imposed in O'Brien to hold personal interviews, most lendors do ensure that a wife enters into a transaction with 'real consent'.

To some extent, creditors have adhered to the principles in O'Brien however problems arise where Lord Browne-Wilkinson has failed to define 'reasonable steps'. This leads it open to judgement and causes uncertainty, as there is no specific guideline, and can therefore be disputed in a court of law. Another major failing of His Lordships judgement was recognised by Maggie Conway in her text 'Equity's Darling'. In a survey she discovered that even with 'knowledge of the risks' involved and legal advice partners would find it 'refusal' to 'act as security to their spouse or partner' impossible.

The Law unfortunately does not account for emotional black mail which women may be subjected to by their husbands or partners. In retrospect, the case of Barclays Bank and O'Brien and Lord Browne-Wilkinson's' judgement has excelled women's rights significantly compared with those which were available to them prior to the hearing of the case. Although there are various discrepancies between the ideals suggested by His Lordship and actual practice, there has been much appraisal for it in developing women's collective legal rights.