Hope for wives whose homes prop up loans: Lords to rule on level of liability in securing debt for a spouse. Report by Sue Fieldman

A VERDICT is due in the next four weeks on a landmark case that will decide whether a bank owes a special duty of care to the wives of businessmen.

After years of uncertainty, the House of Lords will decide just how far the law protects a wife who has allowed the matrimonial home to be put up as security for her husband's business borrowing.

Banks, customers, wives, and their lawyers, are all awaiting the result anxiously - though no one more so than Bridget O'Brien. For Mrs O'Brien, the decision will be the final episode in her long legal battle to prevent Barclays Bank repossessing her home.

Mr and Mrs O'Brien are joint owners of their home in Slough, Berkshire. In July 1987, Barclays agreed with Mr O'Brien that his company could have an overdraft facility of pounds 135,000, which would be reduced to pounds 120,000 after three weeks.

The overdraft was guaranteed by Mr O'Brien. His liability was to be secured by a second charge on the jointly owned matrimonial home. The legal charge had to be signed by both Mr and Mrs O'Brien.

The bank manager gave instructions to a sub-branch: Mrs O'Brien should be advised about the nature of the overdraft and was to be told to take independent advice.

When Mrs O'Brien went to sign, she allegedly received no explanation and no-one told her to take advice. She said she signed the charge without reading all of it.

Events subsequently went horribly wrong. Mrs O'Brien believed wrongly that the security was limited to pounds 60,000 and would last only three weeks.

The company's debt grew. By October it was pounds 154,000 and the bank tried to enforce its charge.

Mrs O'Brien tried to stop the bank repossessing her home. She lost her case in the High Court, but then won it in the Court of Appeal.

Her solicitor, Simon Robinson of Stops and Burton in Daventry, said: 'Mrs O'Brien accepted, in effect, that the charge forms she signed limited her liability to pounds 60,000. That money has already been paid to Barclays. However, Barclays is looking for the whole amount, and the only way they can get it is to repossess the property.'

Barclays has appealed to the House of Lords. Mr Robinson has already been contacted by about 40 firms of solicitors that have clients anxiously awaiting the decision.

Since the original publicity surrounding the O'Brien case, the big banks have made an attempt to ensure that wives know what is going on.

Pauline Walker, a matrimonial solicitor with Manches, a London firm, this week received documentation from Barclays for a wife who is also acting as surety for her husband's borrowing. Mrs Walker said: 'The letter of instructions from Barclays, of what has to be explained to her, is very detailed indeed.'

This new-found zeal is admirable, but for many wives it is much too late.

Over the years, they will have signed bank documents without fully realising that the original amount borrowed can escalate without their knowing anything about it.

They have given an open-ended cheque for their husband's business for which they too are liable.

'Women do not want to appear not to trust their husbands, so they sign. There is no age or intellectual difference. Professional women, just like any others, could be sitting on a time bomb,' said Mrs Walker.

Debbie Wheeler realised too late that she was sitting on a financial time bomb. She has been battling for nearly three years with AIB (formerly Allied Irish Bank) over a personal guarantee and mortgage she had signed for her husband's business borrowings.

Paula Barry, of London solicitors Harbottle & Lewis, acts for Mrs Wheeler. Ms Barry said: 'The potential liability of our client was in excess of pounds 200,000, plus legal costs. On the first day of the trial, AIB's solicitors approached us and a sensible compromise was immediately reached.

'It is a great pity that face- to-face talks could not have been held earlier, as they may well have saved a great deal of time and money.'

Meanwhile, Mrs Wheeler and, no doubt, AIB have incurred thousands of pounds worth of legal costs.

She said: 'The tragedy is that it has taken all this time, money and aggravation for them to talk to me. If they had talked two years ago, everyone would have come out better off, including the bank.'

AIB had no comment.

(Photograph omitted)