Facts
- 8 conjoined appeals concerning undue influence and, more specifically, suretyship transactions
Issue
- How could undue influence claims concerning mortgages succeed?
Decision
- See reasoning; in Etridge itself there was no undue influence
Reasoning
- Actual undue influence and presumed influence amount to the same thing, differing only in how they are proven
- Actual undue influence is proved by the conduct of the ‘stronger’ party
- Presumed undue influence is proved by showing firstly that there is a relationship of trust and confidence between debtor and surety (usually husband and wife) and that the transaction which took place calls for an explanation. This creates a rebuttable evidential burden of proof on the defendant (the legal burden remains on the claimant to prove undue influence)
- Manifest disadvantage is not relevant to undue influence
- In a suretyship transaction, a bank is put on notice in any non-commercial surety-debtor transaction
- Once on notice, a bank must take reasonable steps to satisfy itself that the risks associated with the transaction have been bought home to the surety
- Reasonable steps include a private (without husband) meeting with a solicitor, who must certify that the nature of the documents, risks, and other options have been discusses, as well as the surety having been given a choice whether or not to proceed. The bank is not liable for deficient advice unless it has reason to believe that advice was so.
