In a judgment delivered on 4th June 2025, the Supreme Court gave lenders a stark reminder: just because two people borrow together, it does not mean they are borrowing equally, especially when only one of them is cleaning up their tangled finances.
By Wai Ling Chin
Background
The case, Waller-Edwards v One Savings Bank Plc, began like many modern lending tales: a couple, a remortgage, and a suspiciously one-sided financial benefit. Ms Waller-Edwards and her then-partner, Mr Bishop, re-mortgaged her home to get £384,000, of which £25,000 would be used to pay off his car and £14,500, his credit card. The remaining money was supposed to allow the couple to make a joint purchase of a buy-to-let. However, Mr Bishop used the loan to make divorce payments to his ex-wife and to pay off the first charge on a property he was building.
When the romance ended, so did the repayment harmony. Ms Waller-Edwards was left living in a heavily mortgaged property, and when they fell into arrears, the bank commenced possession proceedings.
Ms Waller-Edwards argued that she had entered into the re-mortgage under Mr Bishop’s undue influence, and that the bank should have spotted the red flags. After all, it could hardly be considered joint benefit if one party walked away debt-free and the other got stuck with the tab. The question before the court was whether this type of part-borrowing, part-bailout loan required the bank to take extra care.
Decision
The Supreme Court said yes – loudly and clearly. Lady Simler gave the only judgment, declaring that where there is a more than de minimis element of borrowing serving to clear one party’s personal debts, the bank is ‘put on inquiry’. This means that the bank must take extra steps (known as the ‘Etridge protocol’) to make the risk clear to the vulnerable party by having them seek independent legal advice, thus preventing them from being pressured, tricked or guilt-tripped into signing.
The court also rejected the fuzzy ‘fact and degree’ test previously used for such cases. Instead, it adopted a ‘bright line’ test: if the loan benefits one party more than trivially, it is a surety transaction and the bank must act accordingly. There is no room for assumptions – or romantic optimism.
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