TSB Bank v Camfield - 1995

TSB Bank plc v Camfield [1995] 1 WLR 430

Equity – Banking – Legal charge – Misrepresentation

Facts

C stood as security for a loan from a bank for her husband’s business. C’s husband had made an innocent misrepresentation that the liability of the business was limited to £15,000 when in reality, the liability was not limited. The bank advanced £30,000 to the couple on this representation as well as further advances, with a total sum of over £47,000. The business failed and the bank claimed for the marital home and for the couple to repay the money that was owed. The trial judge ordered the husband repay the full sum that was owed to the bank and that the wife pay £15,000 in damages as well as giving possession of the house to the bank. The wife appealed this decision.

Issue

The most prominent issue for the court was to decide whether the guarantee provided by the wife, to the bank, was void as a result of the innocent misrepresentation of the husband, or whether the bank could claim possession of the house and demand the repayment of the sums of money from the husband and the wife.

Held

The court found in favour of the wife and allowed her appeal of the decision from the initial trial. They held that as a result of the husband’s misrepresentation, the liability to the bank would be limited to £15,000 and this would allow the wife to rescind the transaction with the bank. The court also held that the wife was entitled to have the charge against the house set aside completely.