Equity

Card Set Information

Author:
Neevie
ID:
188458
Filename:
Equity
Updated:
2012-12-10 11:57:16
Tags:
Rescission
Folders:

Description:
Undue Influence
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  1. If ordered the impugned transaction will be treated as void ab initio i.e.
    -all future transactions are cancelled
    -all benefits transferred under the transaction are restored
    The object of rescission is to restore the parties to the positions that they held before they entered into the impugned transaction
  2. Actual Undue Influence
    Allcard v Skinner [1887]- Upon entering the convent and when she received significant inheritance she transferred her property to her Mother Superior. Rules of the sisterhood stated that no sister could seek external advise regarding transfer of property. Six years after leaving the convent she made no claim in respect of the transferred property claiming rescission on the grounds of undue influence. The delay proved fatal to her claim "Delay defeats Equity"
  3. A transaction may be recsinded if "the court is satisfied that the gift was the result of influence expressly used by the donee for the purpose" "no one shall be allowed to retain benefit arising from his own fraud or wrongful act"
    The court intervenes in cases of presumed undue influence "not on the ground that any wrongful act has in fact been committed by the donee, but on the ground of public policy, and to prevent the relations which existed between the parties and the influence arising therefrom being abused"
  4. Cases involving actual undue influence are rare
    Bank of Scotland v Bennett [1999]
    D guaranteed her husbands business debts by a mortgage on the family home which was registered in her sole name. If she did not sign the necessary documentation her husband threatened that the family would be broken up, the family home lost and the children would have nowhere to live. She recieved no legal advice. The court found her husband had exercised actual undue influence.
    • Presumed Undue Influence 2(a)
    • - only if the transaction is manifestly to the disadvantage of the transferor or confers a substantial benefit to the transferee
    • The transfer of property by-
    • 1 a child to his/her parent
    • 2 A ward to his guardian
    • 3 pupil to religious advisor
    • 4 patient to his doctor
    • 5 beneficiary to his trustee
  5. It is well established that the transfer of property by one spouse to another does not give rise to the class 2(A) presumption
    Class 2B presumption of UNDUE INFLUENCE arises in respect of transfer of property but only if
    1 the transferor reposes trust and confidence in the transferee and
    2 the transaction is manifestly to the disadvantage of the transferor
    Gregg v Kidd [1956] - Mr Gregg was entirely dependant on his sister following a stroke. He was afraid that his sister would stop caring for him. The court found his sister to be a forceful and determined character and that a relationship of trust and confidence existed between them
  6. Prendergast & Anor v Joyce & Ors [2009]
    - transfer of property by a woman now dec'd to her nephew-in-law. He brought her to two banks and transferred her accounts into joint names of her and the defendant. 3 weeks later she was in a respite home for people suffering from Alzeimers. She had not received adequate independent advice nor did she understand the nature of the effect of the transaction into which she was entering
    It is well established that the transfer of property from one spouse to another does not give rise to a class 2A presumption however it may give rise to a class 2B presumption
  7. Barclays Bank v O'Brien [1994]
    Husband and wife agreed to take out a 2nd mortgage as security for an overdraft to a company that husband had an interest in but wife did not. He had misrepresented the effect of the transaction to her. The bank sought possession of the house when the company fell into arrears. It  was found that the wife had placed trust and confidence in her husband with regard to her financial affairs which raises a presumption of undue influence
    • As well as emotional or sexual ties affecting the individuals will in husband/wife relationships, it is easier the repose of trust ands confidence by one party to another
    • this was criticised in Royal Bank of Scotland v Etridge as being easy to establish a class 2B
  8. REBUTTING A PRESUMPTION OF UNDUE INFLUENCE
    • Carroll & Anor v Carroll [1998]
    • Plaintiffs were sisters
    • Defendant was sister-in-law whose husband had convinced his father to transfer his pub to him. Father took legal advice from the solicitor who was also acting for the son at the same time. He transferred the pub to him. After his death the son married the defedant, soon after the son died in a car acident. The sisters found they no longer had any interest in the pub and fell out with the plaintiff. They instituted proceedings claiming rescission on the grounds of undue influence or improvidence. Undue influence was accepted .
    • To rebut the presumption the defendant would need to prove that the father had
    • 1 received independent legal advice
    • 2 the decision to make the transfer was 'a spontaneous and independent act' or
    • that the donor 'had acted on his own free will'
  9. It should be noted that the independent advice need not be legal advice but be competant and honest lay advice
    • Approach in Ireland
    • Family Home Protection Act 1976 only applies to the conveyance of the family home and where only one spouse is the owner
    • Bank of Ireland v Smyth [1993]
    • Wife was not fully informed as to what she was consenting to. She thought that the family home could not be lost if repayments were not made AND
    • the bank did not suggest that she seek independent legal advice
    • Consent under this Act must be fully informed
  10. Ulster Bank Ireland Ltd v Fitzgerald & Anor
    - suggests that a bank only needs to put in an inquiry if it is aware of additional information about the parties relationaship which would increase the liklihood of undue influence.
    - it does not clarify whether if Bank had been on inquiry W's meeting with the bank manager and his advice that she should obtain independant legal advice would have been enough for B to absolve itself of notice
    • IMPROVIDENCE
    • Rescission may be ordered on the grounds of unconscionable conduct if the parties have not met on equal terms
  11. Grealish v Murphy [1946]
    Mentally deficient farmer executed a deed having consulted his solicitor

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