Undue Influence

Question 1

AUI

Answer 1

• AUI is overt pressure = Williams v Bayley – threat of son being prosecuted
• Bank of Credit and Commerce International SA v Aboody = overt pressure in personal relationships
• CIBC Mortgages v Pitt = you don’t have to show that the gift was too much, so AUI does not require showing disadvantage

Question 2

Types of PUI

Answer 2

• There are two types of PUI = classes of relationships which always have influence, and those where you have to raise a presumption of influence
• Presumed undue influence is based on a relationship of trust = Allard v Skinner: this case concerned a gift to a religious sisterhood and due to the nature of the relationship, the court inferred pressure, despite declaring that there was no wrongdoing

Question 3

Inferred trust

Answer 3

Inferred trust in Credit Lyonnais v Burch
= so that there was a relationship, as it was so strange that it called for an explanation that an employee would guarantee her employer’s debts with her house

Question 4

Presumption

Answer 4

• In most cases, there is a ‘rebuttable evidential presumption of undue influence’ [Etridge]
• However, there are some cases where the presumption is irrebuttable, that one party had influence over the other

Question 5

Etridge

Answer 5

• Before Etridge, manifest disadvantage was used [National Westminster Bank plc v Morgan]
• But Etridge said that the transaction must ‘call for an explanation’
• The best way to show that the party’s decision was made freely is to seek legal advice prior to the decision
• However, this does not rid them of their situation, it only makes them aware of their circumstances = Bank of Scotland v Bennett: the wife in this case said that she was ‘bound to defer to him’, being her husband, whilst another wife in this case said that independent advice would have helped her resist the pressure
• In these three-party cases, the bank must take reasonable steps to inquire as to whether there is undue influence – the current guidance to lenders was set out in Etridge: there is an obligation on the bank to disclose documents to the wife’s solicitor