## Facts

- Elizabeth and Peter Tate borrowed money from Lloyds Bank.
- The loan was secured by a legal mortgage over property owned by Miss Lightfoot, whose title deeds were held by the bank as security.
- Norman Owen was not a party to the loan, had not arranged the borrowing, and received no benefit from it.
- Miss Lightfoot later asked Owen for help in clearing the title to her land and obtaining the deeds back from the bank.
- Acting solely to assist Miss Lightfoot, Owen went to the bank without discussing the matter with, seeking consent from, or even notifying the Tates.
- Owen deposited the amount outstanding (about £350) with Lloyds Bank and signed a guarantee in the bank’s favour for the Tates’ indebtedness up to that amount.
- In the following year, Lloyds called on the guarantee and applied Owen’s deposit to discharge the Tates’ debt.
- Owen then demanded reimbursement from the Tates. They refused, and Owen sued them for an indemnity (or repayment) of the sum applied by the bank.

## Issues

1. Whether a person who, without any request or prior arrangement with the debtors, voluntarily guarantees the debt and then pays (or has funds applied) under the guarantee has a right to be indemnified or repaid by the debtors.
2. Whether the fact that the guarantor became legally liable to the creditor under the guarantee (and was therefore “compelled by law” to pay) is sufficient, by itself, to create a reimbursement obligation owed by the debtors to the guarantor.

## Decision

- The Court of Appeal dismissed Owen’s appeal and left in place the order rejecting his claim.
- Owen’s assumption of the guarantee was voluntary as between him and the Tates: there was no antecedent request, no agreed arrangement, and no consensual basis on which the Tates undertook to reimburse him.
- The court treated the case as one where Owen acted “behind the back” of the Tates and for Miss Lightfoot’s benefit, rather than to confer a bargained-for benefit on the Tates.
- Although Owen’s liability to the bank was legally enforceable once he executed the guarantee, that “compulsion” arose from his own voluntary undertaking and did not, without more, generate a right of indemnity against the Tates.
- The court indicated that exceptional cases might exist where intervention is necessary and repayment would be just and reasonable, but those conditions were not present on these facts.

## Legal Principles

- A person who, without the debtor’s request or other legally recognized basis, voluntarily assumes a surety’s obligation for another’s debt is a volunteer as against the debtor.
- A volunteer surety who discharges the debtor’s liability cannot generally obtain indemnity or restitution from the debtor merely because the payment benefited the debtor.
- “Compulsion” to pay the creditor (because the creditor can enforce the guarantee) is not, by itself, enough to impose a reimbursement duty on the debtor where the suretyship was undertaken without the debtor’s assent or arrangement.
- Any recovery by an unrequested payer for another’s debt requires some additional ground beyond unilateral intervention (for example, circumstances of necessity such that repayment would be just and reasonable).

## Conclusion

Owen v. Tate holds that a person who, without the debtors’ request or agreement, guarantees and satisfies their bank debt in order to help a third party is a volunteer and has no right to be indemnified by the debtors, even though the creditor could legally enforce the guarantee; only an exceptional case (such as necessity making repayment just and reasonable) might justify recovery, and that was not shown here.


Owen v. Tate, [1976] Q.B. 402 (1974)