Cornish v Midland Bank plc

Cornish v Midland Bank plc [1985] 3 All ER

DUTY OF CARE

Facts

The plaintiff’s husband made an application for a loan from the defendant bank, which the plaintiff consented to guarantee by signing a second mortgage on her property. The clerk employed by the defendant informed the plaintiff of the implications of doing so, but failed to explain adequately that the agreement meant she accepted liability for all her husband’s future borrowings in addition to the loan which he took out at the time.

Shortly afterwards the marriage broke down. The defendant was made aware of this, but continued to make loan payments to the husband. The husband defaulted on the repayments, causing the bank to redeem the mortgage. The plaintiff was left with very little money from the sale of the house, and brought a claim in negligence against the bank.

Issues

The issue was whether the bank owed any duty of care to the plaintiff in respect of: advising her of her liability for her husband’s future borrowings; ceasing loan payments to the husband once it became aware of the breakdown of the marriage.

Decision/Outcome

It was held that as the clerk had taken it upon himself to advise the plaintiff as to the implications of signing the agreement, a duty of care had been created to perform this task without negligence. The omission to mention the liability for future borrowing was negligent, and in breach of this duty. Moreover, it was foreseeable that the plaintiff would act in reliance on the advice given by the clerk.