The recent judgment in Manolete Partners plc v Nag highlights the potential consequences for non-director spouses executing documents that they have not read or understood.

A director of the company was being pursued by the Liquidators for misfeasance as a result of diverting a significant part of the proceeds of sale following a business sale transaction entered into by the company shortly prior to a winding up petition being issued and at a time when the company was in serious financial difficulty. The Liquidators also pursued the director’s wife for dishonest assistance.

The director’s wife had only been involved to the extent that she had been required to authorise the transaction and execute certain documents in connection with it. She claimed she had not read any of the relevant documents because she trusted her husband and so felt that she did not need to.

Whilst the judgment and findings for misfeasance against the director are highly fact specific, the judgment in respect of the wife’s conduct is far wider in scope - namely that anyone defending a claim on the grounds that they trusted the person asking them to sign the documents is not a good defence to claims in dishonest assistance or knowing receipt.

Notably, the judge presiding over the matter did not find that the wife was a dishonest witness. However, he did find that her actions amounted to wilful blindness. The wife therefore had to account for the proceeds on grounds of dishonest assistance. It was held that whilst it is understandable a person might place great trust in their spouse, there is a difference between having a high level of trust and simply doing whatever your spouse asks you to do regardless of whether it is right or wrong. The judge found the wife chose to allow her husband to be the arbiter of whether it was right or wrong and this amounts to wilful blindness, which is not the way an ordinary decent person would have behaved in the circumstances.

In particular, the wife had failed to read or have someone explain the documents to her despite having had every opportunity to obtain legal advice or to query the transaction. In these circumstances, it was no defence for her to say that she trusted her husband and that she was not involved in the business. It remained the case that she was set to substantially benefit from what was plainly a dubious transaction.

As lawyers, we balk at the idea of clients (and friends alike) blindly signing documents they have not understood or read. This case serves as a reminder that reliance on a “trusted” partner or colleague will simply not hold up as a good defence to dishonest assistance through wilful blindness.