Lloyd's Maritime and Commercial Law Quarterly
TAKING THE “UNDUE” OUT OF PRESUMED UNDUE INFLUENCE?
Hammond
v. Osborn
“The doctrine of presumed undue influence is now very well settled and ought to be well understood.”1
Unfortunately, despite this confident assertion by Sir Martin Nourse in the recent Court of Appeal decision in Hammond
v. Osborn,
it is apparent that neither declaration is correct. Hammond
concerned the application of undue influence within the very traditional context of a generous gift between persons bound by a relationship of trust and confidence. The central issue in this case was how, having raised a presumption of undue influence, it may be rebutted. The answer to this question, which was not directly
addresed by the seminal House of Lords’ decision in Etridge (No. 2),
2
in effect defines the essence of presumed undue influence and delineates its parameters within the wider matrix of equitable protection of the vulnerable. Regrettably, the consequent conceptualization of presumed undue influence which resulted from the reasoning of the Court of Appeal in Hammond
differs significantly from that which was articulated by the House of Lords in Etridge (No. 2)
. In many ways, this discrepancy illustrates that the original debate as to whether presumed undue influence is claimant (impaired consent) focused or defendant (unconscionable conduct) focused has yet to be resolved.3
Responsibility for this uncertainty lies in part with the House of Lords’ decision in Etridge (No. 2)
. Whilst clearly favouring a defendant (unconscionable conduct) basis for presumed undue influence,4
the House of Lords failed to address directly a long line of claimant (impaired consent) based
1. Hammond
v. Osborn
[2002] EWCA Civ. 885; [2002] The Times,
18 July; para. [24], per
Sir Martin Nourse.
2. Royal Bank of Scotland
v. Etridge (No. 2)
[2001] 3 W.L.R. 1021. For comments on this judgment see R.Bigwood, “Undue Influence in the House of Lords: Principles and Proof’ (2002) 65 M.L.R. 435; D.O’Sullivan, “Developing O’Brien” (2002) 118 L.Q.R. 337; A. Phang and H.Tjio, “The Uncertain Boundaries of Undue Influence” [2002] LMCLQ 231; K.N. Scott, “Evolving Equity and the Presumption of Undue Influence” (2002) 18 J.C.L. 236.
3. See P.Birks and Chin Nyuk Yin, “On the Nature of Undue Influence”, ch. 3 of J.Beatson and D.Friedmann (eds), Good Faith and Fault in Contract Law
(Oxford: Clarendon Press), (1995) 57; R.Bigwood, “Undue Influence: Impaired Consent or Wicked Exploitation?” (1996) 16 O.J.L.S. 503.
4. [2001] 3 W.L.R. 1021, 1029–1035. In particular Lord Nicholls notes (at 1029): “[e]quity identified broadly two forms of unacceptable conduct. The first [actual undue influence] comprises overt acts of improper pressure or coercion such as unlawful threats…. The second form [presumed undue influence] arises out of a relationship between two persons where one has acquired over another a measure of influence, or ascendancy, of which the ascendant person then takes unfair advantage
” (emphasis added).
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