Legally Ranting

Unconscionable Dealing, or Undue Influence?

Posted in Equity, Law School by legalrants on April 14, 2011

The equitable doctrines of Undue Influence and Unconscionable Dealing have often been confused and inappropriately administered. Even within the doctrine of Undue Influence itself, it is not entirely clear as to which is the correct approach.

Let me cite an example. When addressing an action in Undue Influence, does it matter whether the defendant acted with some impropriety (exploitation) towards the plaintiff? According to some UK cases (see National Westminster Bank v Morgan; RBS v Etridge), the answer is yes. In Australia, the approach focuses on the quality of the plaintiff’s consent. This was clearly stated in the case of CBA v Amadio, albeit in an obiter.

Now the problem with the ‘exploitation’ approach is that it gets easily confused with the doctrine of Unconscionable Dealing. This latter doctrine focuses entirely on the defendant acting unconscionably in taking advantage of the plaintiff’s special disability.  Certainly, there are strong overlaps between the notion of ‘exploitation’ and ‘unconscionability’. The blurring of the two doctrines is further compounded if the scope of the ‘special disability’ in Unconscionable Dealing is not set out correctly.

In the High Court of Australia case of Bridgewater v Leahy, the special disability was an affection and fondness of the defendant. Now, when you consider that in cases of Undue Influence, a presumption that there was undue influence can be made out if there is a relationship of trust and confidence between the plaintiff and the defendant, you can see the problems arising — another case of strong overlap, this time between ‘trust and confidence’ and ‘affection and fondness’.

Taken to the extreme, it can be said that there is no discernable difference between the doctrines of Unconscionable Dealing and Undue Influence. In retrospect, this may be to the advantage of the plaintiff, for he may be able to argue two different causes of action on the same set of facts. Nevertheless, the blurring of the two doctrines does no favours to the jurisprudence of Equity.