Undue influence Flashcards
(15 cards)
What is actual undue influence?
Arises where one party has applied direct pressure on the other to enter a contract, and are relatively rare.
E.g. O’Flanagan v Ray-Ger
What are the two categories of presumed undue influence?
- Presumption raised by the relationship of the parties
- Presumption raised by the facts.
Carroll v. Carroll
Shanley J stated that:
[Actual undue influence] arises where no relationship gives rise to any presumption of undue influence, but the parties so alleging undue influence adduce evidence which satisfies the court, on the balance of probabilities, that the transaction was not the result of the free exercise of the will of the donor.
Contractors Bonding Ltd v. Snee [1992]
Richardson J gave several factors which had to be proved by the party alleging actual undue influence, the fifth being that “the transaction was to the manifest disadvantage of the complainant.”
CIBC Mortgages v. Pitt
The requirement of showing manifest disadvantage is not without controversy.
Here held that “[A]ctual undue influence is a species of fraud….A man guilty of fraud is no more entitled to argue that the transaction was beneficial to the person defrauded than is a man who has procured the transaction by misrepresentation…[i]t must be set aside in equity as a matter of justice.”
McDermott thinks this is the better view: ia person who has exerted actual undue influence is committing fraud and so the contract is voidable regardless of any benefit it might provide.
O’Flanagan v Ray-Ger
Rare example of actual undue influence.
The innocent party was close to his death due to cancer and was an impressionable individual. Pope knew of O’Flanagan’s ill health and brought him to a pub (away from the usual business premises) where the two men agreed that, on the death of either of them, the survivor would take full control of the business, notwithstanding any claims by the estate of the deceased shareholder.
Costello J also found that there was a considerable disparity in business acumen between the two parties, and the agreement had taken place away from business premises.
“exercised considerable influence amounting to domination.”
The defendant also gave evidence with a lack of candour.
Relationships giving rise to the presumption of undue influence
(i) religious association/devotee:
(ii) trustee/cestui que trust:
(iii) doctor/patient:
(iv) solicitor/client:
(v) parent/child:
(vi) guardian/ward.
Whyte v Meade
The plaintiff was just 18 years old when she entered Ranelagh Convent as a lodger.
Two years after becoming a nun, she assigned her property to the convent without advice. Later that year, when the plaintiff was very ill, she transferred real property to the convent.
The convent failed to rebut the presumption that the close relationship gave rise to undue influence.
McMackin v. Hibernian Bank
- A guarantee by the plaintiff child of her mother’s debts was signed by the plaintiff just after she came of age, and while she was still living with her widowed mother.
- The effect of the guarantee was explained to the plaintiff but she had no opportunity to get independent advice.
- The bank sought to enforce the guarantee against her, but it was held that a presumption of undue influence arose which had not been rebutted.
Barton J: “Such independent advice must be a reality, not a sham; it must be a shield for the young person, not a mere cloak to cover up the transaction.”
Carroll v Carroll
- The plaintiffs were two sisters who attempted to set aside on the basis of undue influence the conveyance of a pub (and attached house) in Tipperary made by their father to their brother.
- The father was 79, depressed and arthritic and dependent on his son for his day-to-day needs, although there was no allegation of bullying (so the plaintiffs couldn’t argue actual undue influence or duress).
- The father had not received independent legal advice or consulted his daughters. He had consulted a solicitor who acted for both father and son.
The transaction was set aside and again on appeal: Denham J pointed to the fact that the father was disposing of practically his only asset and was frail at the time. He had not retained any right of maintenance or support and the legal advice given to him was inadequate.
- To rebut the presumption of presumed undue influence, the party seeking to uphold the transaction must show that consent was freely given. This can be done by advising that independent legal advise be sought.
McGonigle v Black
- The presumption was found to arise between an elderly alcoholic bachelor farmer and his neighbour.
- The elderly farmer lived alone in Donegal after the death of his relatives and in dire conditions, and had been barred from local pubs due to the fact that, when he was drunk, he would insist on buying everyone drinks because he was lonely and wanted to make friends.
- The farmer had already transferred much of his land to the neighbour at a fraction of its true value when he decided to give him the rest of his land as a gift in return for the neighbour paying his £2,500 bank debt and giving him £1,000.
- Was a land conveyance obtained by the defendant from the plaintiff’s uncle, who suffered from alcoholism and was vulnerable, procured by undue influence?
- Barr J had little hesitation in setting aside the contract. He was satisfied that the neighbour had dominated the farmer after the death of his aunt.
- Had independent legal advice but the solicitor did not have adequate information.
Carroll v Carroll on delay
Delay will not always disentitle a plaintiff to relief: the delay must be such as to have given rise to an inference that the plaintiff had acquiesced in the infringements of the rights he now asserts, and the delay must also be of such a nature as to have caused some detriment to the defendant
Allcard v Skinner
Lindley LJ: must be a reasonable time.
In furtherance of her vows to the “Sisters of the Poor”, the plaintiff gave property to the sisterhood to be used for charitable purposes.
Under the rules of the sisterhood, obedience to the defendant was a central tenet. After 8 years, she left the sisterhood and 6 years after that she sought her unspent property back.
“of all influences religious influence is the most dangerous and the most powerful”.
Lindley LJ held that she was unduly influenced but barred by laches from getting restitution.
AIB v Byrne
Undue influence is an all-or-nothing doctrine. It sets the transaction aside in its entirety.
- The wife was given the impression by her husband that she had to provide security up to the sum of £35,000.
- In fact, her security was not so limited and her husband racked up debts amounting to £200,000.
- The wife was entitled to have the transaction set aside on the ground of undue influence and the bank argued that it should at least be entitled to enforce the transaction to the extent to which the wife had been willing to provide security (£35,000).
- Ferris J held that setting aside a transaction was an all-or-nothing process and that the courts should not become involved in reconstituting the transaction so as to tally with the misrepresentation.
Can only strike it down, cannot rewrite it.
Barclays Bank v. O’Brien
First distinguished between presumed and actual undue influence. Binary approach still followed in Ireland.
As in the case of siblings, there is no presumption of undue influence as between husband and wife (in either direction). But the facts may often bring equity into play.
