{"id":5908,"date":"2018-03-07T09:27:01","date_gmt":"2018-03-07T09:27:01","guid":{"rendered":""},"modified":"2021-09-07T09:10:27","modified_gmt":"2021-09-07T09:10:27","slug":"undue-influence-cases","status":"publish","type":"post","link":"https:\/\/www.lawteacher.net\/cases\/undue-influence-cases.php","title":{"rendered":"Undue Influence Case Summaries"},"content":{"rendered":"<h3>CLASS 1: ACTUAL UNDUE INFLUENCE<\/h3>\n<h4>Williams v Bailey (1866) LR 1 HL 200<\/h4>\n<p>A son forged his father\u2019s signature on promissory notes and gave them to their bankers. At a meeting of all the parties at the bank, one of the bankers\u00a0said to the father: \u201cIf the bills are yours we are all right; if they are\u00a0not, we have only one course to pursue; we cannot be parties to compounding a\u00a0felony.\u201d The bank\u2019s solicitor said it was a serious matter and the father\u2019s\u00a0own solicitor added, \u201ca case of transportation for life.\u201d After\u00a0further discussion as to the son\u2019s financial liability the bank\u2019s solicitor said\u00a0that they could only look to the father. The father then agreed to make an\u00a0equitable mortgage to the bank in consideration of the return of the promissory\u00a0notes. The father succeeded in an action for cancellation of the agreement.<\/p>\n<p>It was held by Lord Westbury that the security given for the debt of the son\u00a0by the father under such circumstances, was not the security of a man who acted\u00a0with that freedom and power of deliberation that must be considered as necessary\u00a0to validate a contract to give security for the debt of another.<\/p>\n<h3>CLASS 2: PRESUMED UNDUE INFLUENCE<\/h3>\n<h4>CLASS 2A<\/h4>\n<h4>Allcard v Skinner (1887) 36 Ch D 145<\/h4>\n<p>In 1867 an unmarried woman aged 27 sought a clergyman as a confessor. The\u00a0following year she became an associate of the sisterhood of which he was\u00a0spiritual director and in 1871 she was admitted a full member, taking vows of\u00a0poverty, chastity and obedience. Without independent advice, she made gifts of\u00a0money and stock to the mother superior on behalf of the sisterhood. She left the\u00a0sisterhood in 1879 and in 1884 claimed the return of the stock. Proceedings to\u00a0recover the stock were commenced in 1885.<\/p>\n<p>It was held by the Court of Appeal that although the plaintiff\u2019s gifts were\u00a0voidable because of undue influence brought to bear upon the plaintiff through\u00a0the training she had received, she was disentitled to recover because of her\u00a0conduct and the delay.<\/p>\n<h4>CLASS 2B<\/h4>\n<h4>Lloyd\u2019s Bank v Bundy [1975] QB 326<\/h4>\n<p>A guarantee was given to the bank by an elderly farmer, a customer of the\u00a0bank, for his son\u2019s debts. The guarantee was secured by a mortgage of Bundy\u2019s\u00a0house in favour of the bank. An assistant manager of the bank, with the son,\u00a0later told the father that they would only continue to support the son\u2019s company\u00a0if he increased the guarantee and charge. The father did so, the assistant\u00a0manager appreciating that the father relied on him implicitly to advise him\u00a0about the transaction. The Court of Appeal set aside the guarantee and charge.<\/p>\n<p>Lord Denning held that the relationship between the bank and the father was\u00a0one of trust and confidence. The bank knew that the father relied on them\u00a0implicitly to advise him about the transaction. The father trusted the bank.<\/p>\n<p>This gave the bank much influence on the father. Yet the bank failed in that\u00a0trust. They allowed the father to charge the house to his ruin. There was also a\u00a0conflict of interest between the bank and the father, yet the bank did not\u00a0realise it, nor did they suggest that the father should get independent advice.<\/p>\n<p>If the father had gone to his solicitor or any man of business there is no doubt\u00a0that they would have advised him not to enter the transaction as the house was\u00a0his sole asset and the son\u2019s company was in a dangerous state.<\/p>\n<p>Sir Eric Sachs made it clear that, in ordinary circumstances, a bank does not\u00a0incur the duty consequent upon a special relationship where it obtains a\u00a0guarantee from a customer. But once it is possible for a bank to be under that\u00a0duty, it is, as in the present case, simply a question for \u201cmeticulous\u00a0examination\u201d of the particular facts to see whether that duty has arisen.<\/p>\n<p>On the special facts here it did arise and had been broken.<\/p>\n<h4>MANIFEST DISADVANTAGE<\/h4>\n<h4><strong>National Westminster Bank v Morgan [1985]<\/strong><\/h4>\n<p>See point 1 above. Lord Scarman stated:<\/p>\n<blockquote>\n<p>\u201cA meticulous examination of the facts of the present case reveals that\u00a0[the bank] never \u2018crossed the line\u2019. Nor was the transaction unfair\u00a0to the wife.<\/p>\n<p>The bank was, therefore, under no duty to ensure that she had\u00a0independent\u00a0advice. It was an ordinary banking transaction whereby the wife sought to save\u00a0her home; and she obtained an honest and truthful explanation of the bank\u2019s\u00a0intention which, notwithstanding the terms of the mortgage deed which in the\u00a0circumstances the trial judge was right to dismiss as \u2018essentially theoretical\u2019,\u00a0was correct; for no one had suggested that\u2026 the bank sought to make the wife\u00a0liable, or to make her home the security, for any debt of her husband other than\u00a0the loan and interest necessary to save the house from being taken away from\u00a0them in discharge of their indebtedness to the building society.\u201d<\/p>\n<\/blockquote>\n<h4><a id=\"bcci\" name=\"bcci\"><\/a><strong>BCCI v Aboody [1989] 2 WLR 759<\/strong><\/h4>\n<p>A husband and wife owned a family company and the company\u2019s liabilities to\u00a0its bank were secured, among other things, by charges of the wife\u2019s house. The\u00a0bank sought to enforce the securities and the wife pleaded actual undue\u00a0influence by the husband. Although the judge found that such influence had been\u00a0established, he refused to set aside the charges as it had not been proved that\u00a0they were manifestly disadvantageous to the wife (a point since overruled by the\u00a0\u00a0House of Lords in <i> CIBC Mortgages v Pitt<\/i> [1993]).<\/p>\n<p>It was held by the Court of Appeal that manifest disadvantage for the\u00a0purposes of the doctrine of undue influence had to be a disadvantage which was\u00a0obvious as such to any independent and reasonable person who considered the\u00a0transaction at the time with knowledge of all the relevant facts. The fact that\u00a0the complaining party had been deprived of the power of choice (e.g. because his\u00a0will had been overborne through the failure to draw his attention to the risks\u00a0involved) was not of itself a manifest disadvantage rendering the transaction\u00a0unconscionable. Furthermore, since the giving of a guarantee or charge always\u00a0involved the risk that the guarantee might be called in or the charge enforced,\u00a0the question whether the assumption of such a risk was manifestly\u00a0disadvantageous to the giver of the guarantee or charge depended on balancing\u00a0the seriousness of the risk of enforcement to the giver, in practical terms,\u00a0against the benefits gained by the giver in accepting the risk.<\/p>\n<p>There were no grounds for disagreeing with the judge\u2019s conclusion that on\u00a0balance a manifest disadvantage had not been shown by the wife in respect of any\u00a0of the six transactions, since although there were substantial potential\u00a0liabilities and the family home was at risk as a result of the transactions,\u00a0that was counterbalanced by the fact that the loans gave the company a\u00a0reasonably good chance of surviving, in which case the potential benefits to the\u00a0wife would have been substantial. Moreover, the evidence established that on\u00a0balance the wife would have entered into the transactions in any event and\u00a0accordingly it would not be right to grant her equitable relief as against the\u00a0bank. The wife\u2019s appeal was therefore dismissed.<\/p>\n<h4><strong>Barclays Bank v Coleman (2000) The Times, January 5<\/strong><\/h4>\n<p>The Court of Appeal held that manifest disadvantage, in the sense of clear\u00a0and obvious disadvantage, remained a necessary ingredient of a wife\u2019s challenge\u00a0on the ground of presumed undue influence of her husband to the validity of a\u00a0bank\u2019s charge over the matrimonial home. But the House of Lords had signalled\u00a0that it might not continue to be an essential ingredient indefinitely.<\/p>\n<h4><strong>Re Craig (deceased) [1971] Ch 95<\/strong><\/h4>\n<p>C, an old man of 84 years whose wife had died, employed Mrs M as\u00a0secretary\/companion. From the beginning she occupied a position of trust, and in\u00a0addition to running the house she took a confidential part in running C\u2019s\u00a0affairs. From the time of Mrs M\u2019s employment and C\u2019s death (January 1959 \u2013\u00a0August 1964) he gave her gifts worth \u00a328,000 from his total assets of \u00a340,000.<\/p>\n<p>It was held by the Chancery Division that (1) All the gifts complained of\u00a0were such as to satisfy the requirements to raise the presumption of undue\u00a0influence, namely, that they could not be accounted for on the ground of the\u00a0ordinary motives on which ordinary men act, and secondly, that the relationship\u00a0between C and Mrs M involved such confidence by C in Mrs M as to place her in a\u00a0position to exercise undue influence over him. (2) Mrs M failed to discharge the\u00a0onus on her of establishing that the gifts were only made after \u2018full, free and\u00a0informed discussion\u2019 so as to rebut the presumption of undue influence. The\u00a0gifts would, therefore, be set aside.<\/p>\n<h4><strong>Re Brocklehurst (deceased) [1978] Ch 14<\/strong><\/h4>\n<p>Brocklehurst was a strong-minded, autocratic and eccentric old man who was\u00a0used to commanding others and had served in the army in positions of command. He\u00a0was impulsively generous. When he was in his eighties he lived alone and became\u00a0friendly with the owner of a local garage. They had a common interest in\u00a0shooting and B permitted the defendant to shoot rabbits on the estate. B wrote\u00a0to the defendant saying that he wished to give him the shooting rights over his\u00a0estate and pressed the defendant to instruct a solicitor to draw up a lease. B\u00a0executed the lease. After B died, his executors brought an action against the\u00a0defendant to have the lease set aside on the ground of undue influence. The\u00a0Court of Appeal upheld the lease.<\/p>\n<p>The Court of Appeal held that the nature of the relationship between the\u00a0deceased and the defendant was not one of confidence and trust such as would\u00a0give rise to a presumption of undue influence on the part of the defendant, for\u00a0the evidence established that the relationship was one of friendship and did not\u00a0indicate that it was such that the defendant had been under a duty to advise the\u00a0deceased or had been in a position of dominance over him; on the contrary, it\u00a0was the deceased who had tended to dominate the defendant.<\/p>\n<p>But even if the relationship had been one that gave rise to a presumption of\u00a0undue influence, the defendant had rebutted the presumption for in the\u00a0circumstances the presumption was rebuttable not only by proof that the deceased\u00a0had been independently advised about the leases but also by proof that the gift\u00a0of the leases had been the spontaneous and independent act of the deceased.<\/p>\n<h4><strong>O\u2019Sullivan v Management Agency &#038; Music Ltd [1985] QB 428<\/strong><\/h4>\n<p>The plaintiff sought to set aside for undue influence a number of management,\u00a0sole agency, recording and publishing agreements and transfers of copyright. The\u00a0defendant argued that the appropriate remedy, namely restitutio in integrum, was\u00a0inapplicable in the circumstances because the agreements had all been performed\u00a0and the parties had irrevocably altered their positions, and that therefore the\u00a0plaintiff was limited to obtaining damages instead of reconveyance of the\u00a0copyrights and delivery up of the master tapes.<\/p>\n<p>The Court of Appeal held that the plaintiff was not barred from having the\u00a0contracts set aside by the fact that restitutio in integrum was impossible\u00a0because the contracts had been performed. A contract entered into by a person in\u00a0breach of a fiduciary relationship could be set aside in equity even though it\u00a0was impossible to place the parties in the precise position in which they had\u00a0been before, provided the court could achieve what was practically just between\u00a0the parties by obliging the wrongdoer to give up his profits and advantages,\u00a0while at the same time compensating him for any work he had actually performed\u00a0under the contract.<\/p>\n<h4><strong>Barclays Bank v Caplan (1997) The Times, December 12<\/strong><\/h4>\n<p>It was held in the Chancery Division that at common law, where an instrument\u00a0contained legally objectionable features which were unenforceable against one\u00a0party, they might be severed from the rest of the instrument if (1) the\u00a0unenforceable feature was capable of being removed by the excision of words,\u00a0without the necessity of adding to or modifying the wording of what remained,\u00a0and (2) its removal did not alter the character of the instrument or the balance\u00a0of rights and obligations contained in it.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Cases on Undue Influence. Class 1 &#8211; Actual undue influence. Class 2 (2A and 2B)- Presumed undue influence.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[85],"class_list":["post-5908","post","type-post","status-publish","format-standard","hentry","category-cases","tag-uk-law"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.6 (Yoast SEO v26.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Undue Influence Case Summaries | LawTeacher.net<\/title>\n<meta name=\"description\" content=\"Cases on Undue Influence. Class 1 - Actual undue influence. 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Class 1 - Actual undue influence. 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