don't sign documents you don't understand
There have been a number of stories in the
press recently about people being forced to sign documents they did
not really understand. This is a common problem in cases where
typically wives have been sent to see a solicitor to get
"independent legal advice" because the husband has got into
financial difficulties and wants the wife to agree to enter into a
second mortgage on the family home and the wife just signs a
document without really understanding what it means for her.
The wife is usually in a vulnerable position
placing trust and confidence in her husband in relation to their
financial affairs or the relationship is strained and she may feel
she has no option but to do what he wants. In short she is acting
without free will and under the influence of her husband. Undue
influence can take different forms. Examples are bullying,
emotional blackmail, threats to withhold support or assistance or
frightening someone with misrepresentation of the facts and
implications of not doing something.
The case of Padden v Bevan Ashford,
heard at the end of last year, is a timely reminder that solicitors
are often at the sharp end of this. In that case Mrs Padden
was told by her husband he was in trouble. He had stolen £200,000
from a client and her husband's solicitor said the only way he
could avoid prosecution was to sell the family home and repay the
money. She was told to go and see a solicitor, to sign
various documents and to get independent legal advice. She walked
into Bevan Ashford's offices and asked to see a solicitor urgently.
She very briefly saw a newly qualified solicitor and explained that
she needed to sign some documents. She was advised not to sign, but
she said she was going to anyway. She was not charged for the
meeting. Mr and Mrs Padden then saw a different solicitor a few
days later and signed, amongst other things, a second mortgage over
the family home. The solicitor asked whether Mrs Padden wanted
independent legal advice and was told she had had it already.
It is clear in this case that Mrs Padden was
under the clear influence of her husband and did not really
understand what she was doing, as she had not had the consequence
of her actions explained. In addition, her husband had not advised
her fully of the seriousness of his position. In fact, her husband
had stolen £2 million from various clients for which he would go to
prison. The clients enforced Mrs Padden's rights as mortgagee and
the family home was sold in addition to investments and
pensions.
Mrs Padden sued Bevan Ashford for negligence.
Although the meeting with the solicitor was very short and free,
the court found the solicitors were negligent. They owed Mrs
Padden a duty of care to make sure she fully understood the nature,
effect and potential consequence of the documents she was signing.
In addition, they should have made sure that she was free of any
undue influence or misrepresentation. They did not do this and just
telling Mrs Padden not to sign was not sufficient.
Unfortunately, the recession means that we are
likely to see these sorts of cases more and more. If you have been
asked by someone with undue influence over you to sign something
and get independent advice, make sure that the person you see fully
explains the consequences to you of what you are doing and make
time for this. If they do not, and you suffer financial losses, you
may be able to bring a claim against the adviser for
negligence.
