Equity allows contracts procured through undue influence to be set aside.
Courts intervene to prevent enforcement where free will is overcome.
The doctrine protects against being forced, tricked, or misled.
Nature of the Doctrine
Lowry LCJ in R (Proctor) v Hutton (1978) stated undue influence requires demonstrating an unfair advantage gained through unconscientious use of power.
Claimant must demonstrate actual or presumed undue influence.
Defendant can rebut by proving claimant received adequate and impartial legal advice.
Actual vs. Presumed Undue Influence
Actual Undue Influence (Class One): Requires proof of positive exercise of undue influence.
Presumed Undue Influence (Class Two): Arises from a relationship of trust and confidence.
Costello J in O’Flanagan v Ray-Ger Ltd recognized this division.
Actual Undue Influence
Rare; requires proof of direct pressure.
Example: Bank of Scotland v Bennett (1999) - wife guaranteed husband's debts under threat.
Presumed Undue Influence
Subdivision in England (Barclay’s Bank v O’Brien (1994)) into Class 2A (automatic presumption) and Class 2B (proof of trust needed).
Etridge (2002) reassessed this, questioning Class 2B.
In this jurisdiction and England, Class 2B is still recognized, especially in husband-wife cases.
Claimant must show relationship of trust/confidence and substantial benefit obtained.
Onus shifts to prove transaction resulted from free will (Gregg v Kidd [1956] IR 183).
Relationships Giving Rise to Presumed Undue Influence (Class 2A)
Law protects relationships where one party is vulnerable/dependent (Bank of Scotland v Etridge (No 2) (2002)).
Budd J in Gregg v Kidd (1956) urged courts not to limit categories.
Examples: parent/child, guardian/ward, trustee/beneficiary, solicitor/client, medical advisor/patient (Bank of Scotland v Etridge (No 2) (2002)).
Carroll v Carroll (2000): parent and child relationship creates presumption.
Allcard v Skinner (1887): spiritual advisor/individual relationship.
Proving a Relationship of Trust and Confidence
Often arises in husband-wife cases; no automatic presumption.
Onus on claimant to prove trust/confidence (Ulster Bank Ltd v Fitzgerald (2001)).
Inche Noriah v Shaik Allie Bin Omar (1929): aunt/nephew where aunt was dependent.
Gregg v Kidd (1956): siblings where one was dependent due to stroke.
Illness/dependency can create presumption (Simpson v Simpson (1992)).
Substantial Benefit / Transaction Calling for Explanation
Complainant must show transaction calls for explanation.
Mere proof of relationship insufficient (Allcard v Skinner (1887)).
Must show substantial benefit to stronger party.
Examples: Allcard v Skinner (money to Mother Superior), Gregg v Kidd (farm devised).
Carroll v Carroll (2000): Denham J found “substantial benefit” in the form of a pub.
Irish courts focus on substantial benefit to stronger party (Prendergast v Joyce (2009)).
Rebutting the Presumption
Onus shifts to prove:
Independent legal advice was obtained.
Decision was a “spontaneous and independent act” (Ffrench-O’Carroll v Ffrench-O’Carroll [2006] IEHC 220).
Independent legal advice is crucial (Leonard v Leonard (1988)).
Carroll v Carroll (2000) deals with independent legal advice extensively.
Solicitor acting for both parties should advise weaker party to get separate counsel (McCrystal v McKane (1986)).
Independent advice need not be legal; can be by qualified person (Inche Noriah v Shaik Allie Bin Omar (1929)).
Elliot v Stamp (2006): legal executive's advice sufficient.
McCormack v Bennett (1973): act of free will, despite advice, can rebut presumption.