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Wife not liable for re-mortgage signed during Husband's Affair

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You may have read today of the case of Jayne Hewett who, it has been ordered, does not have to repay a joint mortgage obtained at the instigation of her husband during a time he was having an affair.

Ordinarily, we advise our clients that the Court is only concerned with the financial aspects to the marriage and the emotional wear and tear of the breakdown or the reasons that a marriage falls apart is irrelevant.  Certainly, traditionally, it has not been the case that even where one party has had an affair, however much this hurts and is the catalyst for the breakdown of the marriage, this is not usually brought within the realms of the financial proceedings. 

However, the decision yesterday in the Court of Appeal puts a slightly different slant upon this.

Mr and Mrs Hewett were married in 1991 and have 2 children.  Mr Hewett incurred a significant amount of debt, largely as a result of spending on credit cards and, in 1999, the couple, together with Mrs Hewett's mother bought a property for the family in the sum of £51,000.00.  In 2002 the property was re-mortgage to cover the cost of an extension and pay more debts run up by the husband.

By the end of the following year, the husband's credit cards had been run up again and he had started an affair.  However, Mrs Hewett believed that she was in a "happy, stable relationship" in 2004 when Mr Hewett encouraged her to sign a re-mortgage on the property.  Mrs Hewett initially refused to sign the mortgage deal but had been told by Mr Hewett that the only way to assist the family in their difficult financial position and reduce the interest burden to a level that was payable within the family's means was to secure the borrowing against the property.  She described having to make a "horrible choice" between securing further borrowing on the mortgage or face losing the family home.  The husband had also been convicted of forging the name of the mother-in-law on the mortgage.  In May of 2004 Mrs Hewett discovered her husband's affair and in January 2005 Mr Hewett moved out of the property and they were divorced in 2006.  He was subsequently made bankrupt and Mrs Hewett bought his share in the family property for £1.00 but found it extremely difficult to maintain the instalments to the loan provider, First Plus and they started possession proceedings.

The Court at the first instance granted the mortgage company repossession of the property and found that although Mrs Hewett had struggled to sign up to the re-mortgage she had made her own mind up and this was done without bullying or threats from the husband. 

However, the Court of Appeal held that Mrs Hewett's decision to agree to the re-mortgage was based upon her assumption that they were in a happy and committed relationship and that they were both doing what they could to preserve their home life into the future.  However, the truth was of course that Mr Hewett had been having an affair which somewhat undermined that impression.  The Court found that as a result of the husband's affair there was a significant risk that "it would lead in due course to Mr Hewett's departure from the family and withdrawal of both emotional and financial support, as eventually occurred". 

The Court held that the mortgage was set aside thereby relieving Mrs Hewett from having to make the repayment and that Mr Hewett had used undue influence upon his wife

This case has ramifications, in particular at this difficult economic where families are having to rely on borrowing and securing borrowing against their property.  In light of Mr Hewett's failure to disclose that he was having an affair, a fact which, had he done so, would very likely have led to a breakdown of the marriage at that time and certainly a refusal by Mrs Hewett to sign the re-mortgage documentation. 

The decision could have a significant impact upon similar cases in the future.  The lender can still pursue repossession, because Mr Hewett remains responsible for the joint mortgage.  However, should this occur, Mrs Hewett should still be able to retain 50% of the value of the property.  It is understood that Mrs Hewett's representatives are liaising with the mortgage provider to try to resolve this issue. 

It is certainly a word of warning to those who, whilst perhaps embarking on an affair or subsequently it transpires that they were of the view that the marriage had irretrievably broken down persuade their other halves to sign up to further borrowing secured on the family home on the premise that their relationship was secure and committed into the future.

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