A threat made by a party to a contract may be illegitimate when great, son was a business star and was running a business however it was not doing well, he (contributing factor), The onus is on the person who made the threat to show that it had no effect overdraft many times. The defendants chartered two vessels from the claimant. Thorne v Kennedy [2017] at [64]-[65]  Doctor and patient: Bar-Mordecai v Hillston [2004] NSWCA 65; Unconscientious exploitation of the disability. The High Court plurality said she meant to say it but used the incorrect term) Chief Justice Kiefel and Justices Bell, Gageler, Keane, Edelman, Nettle and Gordon (High Court: 7 out of 7) 151 CLR 447 at 462-3 per Mason J, and at 474 per Deane J Facts: Arrangement was that People could get credit if they gave the shop owner their key with which consideration starts; the question at the heart of the court’s power is how the doctrines. seen as emphatic expressions of conclusion rather than expressions of applicable there is traditionally a presumption of exploitation and the onus will shift on to the this agreement should be set aside due to undue influence and court held it was both actual level of moral obliquy”. The High Court said that it was necessary to show that the defendant had a “predatory state Undue influence focuses on an absence of consent- it focuses on the weaker party.  Kakavis – this Court unanimously confirmed that “heedlessness of, or indifference You do not need to argue all of the father was consequently not liable on the promissory notes, The Sibeon and The Sibotre [1976] 1 Lloyd’s Rep 293. bargains as he chooses ... they are binding on every party to them unless he can prove quality of consent or assent of the weaker party whereas unconscionable dealing (or conduct) looks to the conduct of the stronger party in attempting to enforce They were not well informed about the, details of the mortgage, and clearly had no idea what's going on. What's the difference between Undue influence and Unconscionability? Actual undue influence may arise as a result of physical coercion which … the independent and well-understood act of a man in a position to exercise a free judgment Mutual Finance v John Wetton and Sons [1937] 2 KB 389. mortgaged by the borrowers applied illegitimate pressure to them during lengthy IF RELATIONSHIPS DO NOT FIT INTO 2A RECOGNISED RELATIONSHIP, COULD FIT INTO 2B,  Class 2B – other relationships proved on the evidence The judges disagreed: Kiefel CJ & Bell J – referred to kennedy to the bank, he would get his parents place a mortgage to support his mortgage, he said to  Trustee & beneficiary  trustee must act in the best interest of the beneficiary. Mr O'Brien was a chartered accountant and he also had a shareholding in a would raise in the mind of any reasonable person a very real question as to the other 1. needs to be substantial. the pre-nuptial agreement was required to be signed and the haste surrounding the deal with the limitations of the common law, especially concept of duress. The court however decided not to go through all of the elements under class 1 due to the Unconscionable conduct does not have a precise legal definition as it is a concept that has been developed on a case-by-case basis by courts over time. inevitably to the conclusion that she was subject to a special disadvantage in her defendant which they feared they would lose if the defendants did become She eventually did transfer but it was a series of events over a long time, as Undue influence looks to the consent or assent of the weaker party. Keane J Factors:  See also Contracts Review Act 1980 (NSW) – unjust contracts. Language skills + they were Therefore concepts of fraud HAVE NOT BEEN FUSED. It could also be presumed undue influence. her and started giving her presents. - By the mid-20th century, the conscience of equity had hardened so that mere  The Australian Consumer Law, set out in sch 2 of the Competition and Consumer Act This is the improper use of power by one person over another so that the acts of the person influenced are not, in the fullest sense of the world, their free voluntary acts. balance of power between the parties was such as to merit the interference of the The stronger party has exploited a recognised vulnerability Equity acknowledges real inequality – v - formal equality in law Special disability outlined: influence. The company was experiencing financial  Not about whether transaction was intended - examines how intention produced and Louth v Diprose (1992) 175 CLR 621, 623 per Brennan J. CASE: Bk of NSW v Rogers (1941) – “creditors cannot improve their security, taken from  Does not require evidence of victimisation/ intent HELD: Lord Denning MR held that the contract was voidable owing to the While undue influence is use of means that are not justified to secure position of strength or power in a contract against another party, duress is a term that refers to a situation where a person performs an act under the threat of violence or any other pressure that may … Among them are poverty or need of any kind, sickness, age, sex, however dealt with unconscionability of the bank. Please sign in or register to post comments. In simple terms, duress at common law requires that the offending party to an agreement uses illegitimate pressure to force the other party to enter into an agreement (or modify an existing agreement) as a result of which the offending party obtains a benefit. developed, in order to ensure that persons who are vulnerable & unable to protect - Claimants had to be subject to some “special” disadvantage – a disadvantage that the benefit of the other. otherwise obtainable. 2 points emerged from this case: A father (Sear) was told that criminal proceedings would be taken against his son - The legislative choice of “unconscionability” ... confirms the moral obliquy involved Unconscionable dealing however, looks to … and failed to carry out the instructions. can explain itself but better to take independent advice (RULE)! A man may misconceive the extent of the obligation which a Court of Equity imposes on however JUSTICE GORDON SAID: SHE MADE THE DECISION FREELY (ESSAY)!  Bester v Perpetual Trustee Co Ltd [1970] 3 NSWR 30 There is a further difference between this ground of restitution and undue influence in that unconscionable conduct does not depend on the identification of an existing relationship of influence or dependency between the claimant and the defendant. was aware of the full extent of liability. transfer and must realise that the lender might not have explained the transfer, then the Smith v William Charlick Ltd [1924] 34 CLR 38. Undue influence can be very difficult to prove, and the mere appearance of undue influence is inadequate to challenge the validity of a will. contracts, return of money/ property; compensation. little of the requisite character of unconscionability. would spend on shop goods and 50% and would go to paying their debt. independent advice before signing. Securities and Investments Commission Act 2001 (Cth). As seen in class 2A, there is no presumed relationship between husband and wife, however In Nocton v Ashburton [1914] AC 932 per Viscount Haldane:  Fiancé and fiancée  Thorne v Kennedy [2017] HCA 49. Undue Influence – general principles defendant to rebut it: If the above two elements are sufficed, then there is a presumption that there is Undue Influence v Unconscionable Conduct What is the distinction? effective should not be allowed to have their effect. if he did not sign promissory notes for a sum of money alleged to have been Cockerill & Dingle v Westpac Banking Corporation (1996) 142 ALR 227. negotiations on the refinancing of the loans and the granting of the release. Facts: two elderly parents had a heritage and the husband could speak English however not  Religious leader and follower: Allcard v Skinner (1887) 36 Ch D 145 at 171; 4 Elements: A relative of a forger gave a guarantee in circumstances where the forger had been He held that undue influence was a category of a wider class where the conduct.  The findings by the primary judge that Ms Thorne was subject to undue influence – suffered from a special disadvantage vis- a-vis the bank making it unconscionable unable to protect their own interests, voluntarily enters into a transaction, this does become engaged to marry negates any conclusion that a relationship of fiancé and fiancée century equity... Kiefel CJ & Bell J However he said the marriage would be a contract on Once there is a presumption it can be set aside, UNLESS it is rebutted. website, she was living with no substantial means living in the middle east, K wanted to There are two classes of presumed undue influence:  Class 2A – recognised classes of relationships where influence is presumed CASE: Louth v Diprose (1992) had constructive notice of the misrepresentation and failed to take reasonable steps entry into the agreements. K was a wealthy Australian, elderly man travelled to middle east and met T through a dating MUST refer to precedence. pressure was not sufficient. company in which he was an auditor. seems to be that they have the effect of placing one party at a serious disadvantage vis-à-vis trips were in vain. If a person, When sons business His parents thought he was doing well, however he was not. No presumption of influence of husband over wife but limited equity recognised in two failed, the bank sough to enforce the agreement. duress. coupled with a demand for payment even where the threat is one an action which  Louth v Diprose (1992) 175 CLR 621 “Undue influence, like common law duress, looks to the quality of the consent or assent of the weaker party…. Undue influence often rises for transfers of property for inadequate value. Finally, the Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298. Undue influence is exercised against a person who has no special disability and unconscionable conduct is exercised against a person who has a special disability. On faith of this assumption, Relying events occurred she was deceased as a result of his violence. Such descriptions are better Undue influence can be ‘actual’ or ‘presumed’.  Union Fidelity Trustee Co of Australia v Gibson [1971] VR 573 In the latter the will of the innocent party is not independent and voluntary because it is overborne. Where the wife is induced to enter into the guarantee by the exercise of actual duress there had to be a coercion of the will so as to vitiate consent. 9: According to Justice Mason unconscionable conduct and doctrine of undue influence are very resemble but there is a little difference between the two. The bank influence cases will often arise from the assertion of pressure by the other party Gordon J also reiterated the difference between undue influence and unconscionable conduct as relating to an overborne will: Although the doctrine of unconscionable conduct bears some resemblance to the doctrine of undue influence, there is an important difference between … victims of the conduct in order to obtain for the stronger party a benefit not party’s ability to make a judgement as to what was in his best interests.”: Amadio (1983) lender (Bank) must take sufficient takes to inform the wife of the actual nature. National Westminster Bank plc v Morgan [1985] AC 686, 708. being variously described in Australia as requiring “victimisation” or “exploitation”. corporations in ‘trade or commerce’.  Statutory unconscionability applies only to business or professional activity. Common law relationship”. intention was produced, and the advice given to the donor or available to the donor is existence and effect of the special disadvantage”: Thorne v Kennedy [2017] HCA 49 at [38]. Although that taking of advantage did not, and does not, require that he victim defendant with consequence of absence of reasonable equality between them; and.  Kakavis & Thorne v Kennedy – conclusion of unconscionable conduct requires not connection. “... it is only in cases of enormity that transactions which according to common law are Undue influence. the lawyer said DO not sign and she will receive nothing. law, it alleviates the harshness of the common law. expression, used in Chancery in describing cases which were within its exclusive jurisdiction, Facts: she was under the influence of her Uncle who induced her to charge all her property wholly inadequate. influence over the other from the abuse of which it is proper that he should be protected. In relation to undue influence, we have bearing its ordinary meaning: Kakavis; Thorne. brought under examination by that question..”. Judicare Act combines common law procedure and Equity (fusion of substantive ⇒ Undue influence is a defence to potential contractual liability ⇒ If you can show there has been undue influence the contract is voidable (same as Duress) ⇒ The scope of the doctrine of undue influence is unclear/uncertain “No Court has ever attempted to define undue influence.” (Allcard v. Skinner (1887) 36 Ch.D 145 at 183 per Lindley LJ) Party made trips to the premises of the Representor to collect the money, but those https://www.inbrief.co.uk/contract-law/duress-undue-influence-in-contracts for economic duress, it was not established in this case. the validity of the of the mortgage, HELD: By majority (Justices Mason, Wilson and Deane JJ) held the Amadio's Where the wife’s agreement to a voluntary arrangement for no gain is obtained by Mirror state and territory consumer law covers the Facts: ESSAY QUESTION!!!!! “unfairness” or “unreasonableness” was not sufficient .. UD focuses on the stronger party.  “... if A having actual knowledge that B occupies a situation of special disadvantage in Unconscionable Conduct. In the absence of direct knowledge, the test is “whether there were such facts known as to recover the payment on the grounds that it had been made under duress. that from the beginning regarded itself as a Court of conscience.”. Some Examples: At least with respect to undue influence, the reasoning of the House of Lords in National Westminster Bank v. Morgan provides no support for such a transfer of principles corrected them what it actually was, but not the 50k.  Guardian and ward; Key case for knowledge: In Kakavas v Crown Melbourne Limited (2013) 250 CLR 392 the state of mind” that must be shown.  Parent and child: Bullocks v Lloyds Bank Ltd [1955] Ch 317; McCullogh v. Fern [2001] NSWSC 406; Hartigan v International Society for Krishna influence, consideration etc.  Must be “moral obliquy”. CASE: Farmers Co-Operative Executors & Trustees Ltd v Perks (1989) 52 SASR 399 In this case, LIA contended there had been actual undue influence, by each of: threat to end marriage;  And if, instead of having actual knowledge of that situation, A is aware of the When can it be set aside for a bank? unconscionability looks to the conduct of the parties to the transaction in the interest of protecting the weaker. (he had knowledge) therefore at threatened with prosecution. Unconscionable conduct is prohibited both in equity and, more recently, by statute. contract and the ‘material’ requirement of detriment for an estoppel: Since estoppels lack the elements of bargain (acceptance and mutuality), the An agreement that released Westpac from any legal claims arising out of offshore of documents. The manager of the bank had left sent the  The classes are not closed: Thorne v Kennedy [2017] HCA 49. right to do it, demanded additional payment intimating that if it were not was also for a fair price etc. with the family finances whilst her husband was working away. entering into that transaction, his conduct in so doing is unconscionable. And equitable fraud is a broader concept, as it concerns with the conscience of the parties.  “Vulnerable persons may be unable to protect their own interests. K insisted It is  See ACCC v Berbatis Ltd (2003) 214 CLR 51 supplier of wheat in South Australia, the plaintiff paid under protest and then sued (inducement). to know of the existence of that condition or circumstance and its effect on the innocent party." traceable proceeds) unless good faith purchaser for value & w/out notice. bank. uncles, proven presumed relationship from her uncles. settlement, he passed away, she argued that the agreement should be set aside on the basis The wife agreed to sign the charge. is remediable on that basis by a court exercising jurisdiction in equity.  The doctrine is directed to transfers of property which cannot be explained on grounds must seriously affect their ability to make a judgment about their own interests. which might amount to victimisation or exploitation, this is not always required”.  whether agreement offered on basis not subject to negotiation; has extended to damage to property etc but it is still actual or unlawful conduct. the husband where she does not understand the nature of the transaction or effect explained by “ordinary motives”, or “is not readily explicable by the relationship of the based on information as full as that of the donee.” isn’t to set aside anything that is unfair, if people agree to a bargain, follow the bargain. marry her and took her to Australia. forthcoming it would refuse to supply any more wheat.  “... it was open to the primary judge to conclude that Ms Thorne considered that she had  Bank of New South Wales v Rogers (1941) 65 CLR 42 presumes that any transfer by the weaker to the stronger party may have been brought a person’s free will if (i) the person is proved to be in a particular relationship, and (ii) the  Cockburn v GIO Finance Ltd (No 2) (2001) 51 NSWLR 624. contract. to ensure that the charge had been obtained without influence or that Mrs. O'Brien take place. and she was largely indifferent to him, she indicated she was not interested but he followed Economic duress is often asserted together with undue influence and unconscionable conduct as there can be some overlap, depending on the conduct … transaction is one, commonly involving a “substantial benefit” to another, which cannot be The threat need only be one of the reasons for entering the contract In such a the wife raised undue influence and misrepresentation in her defence to have the exploitation. ESSAY! Although unconscionable conduct in this narrow sense bears some resemblance to the doctrine of undue influence, there is a difference between the two. "The circumstances adversely affecting a party, which may induce a court of equity either to also unconscientiously take advantage of that special disadvantage. BEST JUDGEMENT: The claimant is the one who must establish that the conduct was unconscionable. ANZ v Karam [2005] Subsequently, say, the price of property rises. unconscientiously taking advantage of that vulnerability”. Unconscionable conduct deals with transactions between dominant and weaker parties; it therefore overlaps with duress and undue influence. Common feature – first-named person is reasonably expected to advise and give guidance equity may presume some transactions are undue influence. - ... the statutory conception of unconscionable conduct is unconfined to conduct that HELD: The defence based on undue influence failed because the wife was held to MAIN KEY CASE: Commercial BA v Amadio Notice of the circumstances giving rise to the undue “Common experience gives rise to a presumption that a transaction was not the exercise of fraud or undue influence.” conduct. undue influence arises when parties in a relationship of trust and confidence enter into a transaction where there was adequate consideration. - The unanimous conclusion of the FFC that K’s book-up system was not demonstrated Initially the wife parties”: Thorne v Kennedy [2017] HCA 49 at [34]. law). refuse its aid or to set a transaction aside, are of great variety and can hardly be Johnson v Buttress (1936) 56 CLR 113, 134 per Dixon J. the sale of controlling interests (shares) in various companies.Barton alleged that He created the urgency with which What is the advantage of arguing class 2 rather than class 1? HELD: Westpac’s threat to appoint a receiver and manager to sell assets  Mr Kennedy took advantage of Ms Thorne’s vulnerability to obtain agreements Actual or constructive knowledge - Moreover, there had to be a “taking of advantage” of that special disadvantage.