Undue influence and a joint loan to spouses: when the lender is put on inquiry (CIBC v Pitt)

In CIBC Mortgages plc v Pitt the House of Lords held that a wife who proves actual undue influence by her husband need not show that the transaction was manifestly disadvantageous to her; as against him she is entitled to have it set aside. But the lender is affected only if the husband acted as its agent or it had actual or constructive notice. Lord Browne-Wilkinson held that a joint advance to husband and wife, apparently for their joint benefit, does not put the lender on inquiry, unlike a wife standing surety for her husband's debts, which on its face is not to her financial benefit. Here the loan was joint, stated to be for family purposes and paid into the joint account. The bank knew nothing of Martin's conduct and he was not its agent. It was not put on inquiry, so it can enforce the charge against Aisha.

Why B is wrong: Proving undue influence by Martin is not enough against a third party lender, which is affected only through agency or notice.

Why C is wrong: Pitt rejects any rule that every joint loan to spouses requires the lender to insist on separate advice for the wife.

Why D is wrong: Pitt held that manifest disadvantage is not required where actual undue influence is proved; the charge stands for a different reason.

Why E is wrong: The facts state that the bank did not use Martin as its agent, so agency cannot fix it with his wrongdoing.