Undue Influence & Unconscionable/improvident Transactions

Front 1

National Westminster Bank v Morgan

Back 1

Lord Scarman stated that there was "no precisely defined law setting limits" - unconscionability depends upon the particular facts of the case. Transaction should be "manifestly disadvantageous"

Front 2

Darby v Shanley

Back 2

Solicitor liable in negligence for failing to carry through a transaction of gift so as to protect the recipient from an undue influence action

Front 3

Bourke v O'Donnell

Back 3

Bank was made jointly liable on the basis of a breach of a contractual duty not to carry through a transaction when it knows of, or has reasonable grounds to suspect, a lack of capacity

Front 4

Mutual Finance Ltd v John Wetton & Sons Ltd

Back 4

Brother pressurised into giving a guarantee to avoid prosecution of his brother and disclosure of the matter to their ill father

Front 5

Ó'Siodhachain v O'Mahony

Back 5

Couple "infiltrated" lives of another couple and persuaded them to sign an unfavourable contract - instilled fear in them of consequences of refusal, advised against legal advice, misrepresented legal force - actual undue influence

Front 6

Bank of Montreal v Stuart

Back 6

Presumption of undue influence does not arise automatically in husband/wife situation

Front 7

Prendergast v Joyce

Back 7

De facto relationship of influence based on particular facts: nephew and aunt. Aunt was suffering dementia and in a state of shock following husband's death.

Age, state of health and shocked state after husband's funeral meant that transaction was improvident. No independent advice. No requirement of "moral turpitude" on part of stronger party

Front 8

Re Brocklehurst

Back 8

Spontaneous and independent act on the part of an eccentric baronet to gift extensive shooting rights to a friend was not a result of undue influence

Front 9

Carroll v Carroll

Back 9

Although solicitor advised father of transfer, this was not adequate because it was not fully independent or fully informed of circumstances of case. Need to show "substantial benefit obtained." Not a question of wrongdoing or impropriety - must simply be assiduous not to take advantage of position

Transaction was improvident because father would have been left at mercy of daughter–in–law

Front 10

Royal Bank of Scotland v Etridge (No.2)

Back 10

Effect of independent advice depends on circumstances of each case. Was transaction explicable only on the basis of undue influence? Broader principle that lender would be put on notice with all non-commercial guarantees. Lenders could rely on certificate of a solicitor.

Front 11

CIBC v Pitt

Back 11

Unnecessary to show manifest disadvantage in relation to actual undue influence

Front 12

Hammond v Osborn

Back 12

Neighbour refused gift from old man but eventually agreed - because it represented 90% of his assets and he would not have been able to meet tax liability, gift had to be set aside despite no wrongful behaviour on her part

Front 13

Allcard v Skinner

Back 13

Woman made gift to nuns without access to legal advice - gift could have been set aside but delay was too long

Front 14

Cheese v Thomas

Back 14

Blameworthiness may be relevant in respect of remedies - presumption of undue influence between old man and nephew - loss divided between both parties

Front 15

Bridgman v Greene

Back 15

Footman obtained benefits for his friends from his master - all transactions were tainted with undue influence

Front 16

Gregg v Kidd

Back 16

Sister induced brother to make a transfer benefiting her son

Front 17

Barclays Bank v O'Brien

Back 17

On the basis of misrepresentation, wife guaranteed husband's business debts - transaction set aside by Lord Browne-Wilkinson for actual/constructive notice. Creditor was put on inquiry where there was

i) no financial advantage for wife

ii) substantial risk

and failed to take reasonable steps - independent advice and private meeting

Front 18

Ulster Bank v Fitzgerald

Back 18

O'Donovan J ruled that even if there was undue influence, this did not effect bank because it did not have actual or constructive notice - written warning was sufficient

Front 19

Danske Bank AS v Walsh

Back 19

Unless there are special circumstances, a bank is not usually put on inquiry in relation to commercial transactions between business people. Written warning satisfactory.

Front 20

Ulster Bank of Ireland v Roche

Back 20

Unmarried partner in an abusive relationship guaranteed partner's debts. Clarke J approved of general principles in Etridge - bank placed on inquiry where aware of non-commercial element (ie. no direct interest in company, position as co-habitant). Did not accept full reasonable steps in Etridge, but no steps at all had been taken in the case.

Front 21

Tynan v County Registrar for Kilkenny

Back 21

Daughter gave mortgage over house, mother agreed to postpone her right of residence. Mother alleged she had not received sufficient independent legal advice but court ruled bank was entitled to rely of solicitor's certificate

Front 22

Garcia v National Australian Bank

Back 22

Australian court recognised "special equity" in favour of married sureties where wife did not understand transaction and it was not explained

Front 23

Bank of Ireland v Smyth

Back 23

Approval of the "special equity" approach in the High Court in relation to a Family Home Protection Act action

Front 24

Fry v Lane

Back 24

Purchase made to "poor and ignorant" man at a "considerable undervalue" with "no independent advice"

Front 25

Grealish v Murphy

Back 25

"Mentally deficient" farmer entered into an unfavourable contract – independent advice was not adequate or fully informed. Gavan Duffy J identified particular disadvantages entailing protection

Front 26

Alec Lobb (Garages) v Total Oil Great Britain

Back 26

English cases require culpability on the defendant's side – weakness must have been exploited in a "morally culpable" manner – "shocks the conscience" of the court