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Undue Influence - Coggle Diagram

- - - - Solicitor and client, doctor and patient, and parent and child—although not adult child and elderly parents, in which case a relationship of trust and confidence must be established on the facts: Avon Finance Co. Ltd v Bridger [1985] 2 All ER 281
      - Relations between husband and wife are said not to give rise to a special relationship, and so do not automatically raise any presumption of influence: Midland Bank plc v Shephard [1988] 3 All ER 17.
      - The relationship of banker and customer is also outside this class of protected relationships (previously known as Class 2A): National Westminster Bank Ltd v Morgan [1985] AC 686
    - - However, it will still be necessary to establish that the influence was undue, and evidence of this may include the nature of the transaction in the context of the relationship in question, i.e. the principle in Allcard v Skinner (1887) LR 36 Ch D 145.
        
        Allcard was a novice nun and lady superior was Skinner. 3 days after Allcard enters convent decides to change her will and leave all her property Skinner. Also has a number of railway stocks – valuable commercial commodity – passed to Skinner. Time goes by and Allcard decides she does not want to stay in the convent, and she wants back the valuable stocks she gave to Skinner. Is this a special relationship and do we have undue influence? Held there was undue influence and recognising that it was not a balanced relationship at all. She was barred from restitution – restitutionary response. Point also made that if successful she would have only been able to claim back the money that was left from the stocks.
  - - - However, the other party can seek to rebut the presumption of influence by evidence that no such trust and confidence existed.
    - - Bundy had entered into an agreement to be a guarantor to a business debt – his sons business debt
      - Not as worldly or knowledgeable as the bank
      - He is doing something for reasons other than a sensible commercial reason
      - Held that question of unequal bargaining power was important and notion that he had not sought advice
      - Held to be voidable on the facts
    - - Of course, where the relationship between bank and customer is the ordinary commercial one, and not a special relationship of confidence, it must be remembered that the bank may still owe an ordinary duty of care to give accurate advice, which may be the basis of liability towards a customer: see Cornish v Midland Bank Ltd [1985] 3 All ER 513
      - Royal Bank of Scotland v Etridge (No 2) [2001]
        
        Joint appeal of 8 cases – not a 1 off scenario
        
        Joint appeals of homeowners in relation to mortgaging property
        
        In each of these appeals – similarity of the facts – husbands had sought to mortgage property to the bank for their business purpose, wives in the property and part ownership of the property were not directly benefited. Then the business fails and money owed to bank. Question is whether or not there was undue influence in relation to the wives being pressured to sign the documents to allow those mortgages to take place.
        
        Lord Nicholls – “overt acts of improper pressure or coercion”
        
        Effect = undue influence – effect being undue influence, did individual have their free will impacted upon
        
        Voidable – outcome off success
        
        Possible need restitution
        
        Affirmation remains a risk
- - - - In cases within this category, the allegation is that actual influence was in fact exercised to take advantage of the claimant and that it induced the complainant to enter into the transaction.
        
        CIBC Mortgages plc v Pitt [1994] 1 AC 200
        
        The House of Lords held that, in a (Class 1) case of actual undue influence, the transaction need not be one that is disadvantageous to the party affected—overruling Bank of Credit and Commerce International SA v Aboody [1990] 1 QB 923 on this point.
        
        UCB Corporate Services Ltd v Williams [2002] EWCA Civ 555, [2003] 1 P & CR 12
        
        The wife was found to have been the victim of fraudulent misrepresentation and actual undue influence by her husband. The judge at first instance had rejected her claim to set aside the charge in favour of the claimant lender on the basis that she would have signed the charge even if she had known the full facts and the risks involved. The Court of Appeal allowed the wife’s appeal, since it was not relevant to ask whether the wife would have entered into the transaction in any event. It was sufficient that the actual undue influence was a factor inducing her to execute the charge.