The Gazette 1994

212 / 432

GAZETTE JULY 1994
stated that where it is proved that
undue influence has been exercised,
the injured party may always set aside
the transaction.
In Bank of Nova Scotia v Hogan, the
wife did not claim that the bank had
actually unduly influenced her to
create an equitable mortgage, but that
the bank's failure to recommend
independent legal advice was
sufficient to bar it from recovering.
Keane J found that the bank had
recommended independent legal
advice and that Mrs Hogan had acted
freely. Further the Judge disbelieved
her evidence and showed a certain
impatience with her legal arguments;
therefore one should be cautious about
looking for statements of law in the
judgement. The Judge, however, did
state that in "normal banking
transactions" there is no inequality
between the parties which requires the
giving of independent legal advice. He
relied for this statement on Morgan,
but we have seen that in Pitt the House
of Lords made it clear that where
undue influence is proved, it makes no
difference whether or not a "normal
banking transaction" is involved.
The law is therefore:-
1) there is no presumption that a
banker unduly influences a
customer or a surety, although in a
particular case a relationship may
exist between two such individuals
from which undue influence may
be inferred;
2) in general a person who alleges
undue influence by a banker must
prove it;
3) where undue influence is proved, it
is not necessary for the injured
party to prove loss;
4) it may be desirable that the banker
recommends the other party to
seek independent legal advice, but
absence of independent legal
advice is not in itself proof of
undue influence.
Undue Influence by a Husband
The question of whether a husband is
presumed to unduly influence his wife
188
has caused much difficulty. As the
House of Lords noted in Barclays
Bank v O 'Brien the law has had to
adapt to changing social conditions.
On the one hand:
"Society's recognition of the
equality of the sexes has lead to a
rejection of the concept that the
wife is subservient to the
husband".
At the same time:
"In practice many wives are still
subjected to, and yield to, undue
influence by their husbands. Such
wives can reasonably look to the
law for some protection".6
At one time certain judges believed
that a husband as a matter of law was
always presumed to unduly influence
his wife. In Hogan the wife attempted
to rely on these decisions. Keane J
however referred to Howes v Bishop1
which decided that there is no such
presumption. Unfortunately
Geoghegan J in Smyth took a rather
different view.
In Barclays Bank v O 'Brien the House
of Lords repeated that there is no
presumption of law that a husband
unduly influences his wife. However,
it pointed out that in any individual
case there may be a relationship
between two people which is such that
it may readily be presumed that one
unduly influences the other. The Law
Lords noted that in many cases
husbands and wives will be in such a
relationship; but even where they are
not, the House accepted that there is a
greater than normal risk that a wife
will succumb to undue influence by
her husband. However, the House of
Lords, unlike the Court of Appeal in
the same case, did not feel that wives
are a category deserving special
protection. In Bank of Ireland v
Smyth, on the other hand, Geoghegan
J agreed with the Court of Appeal in
O'Brien that wives are a "specially
protected class".
In the UK therefore the law is:-
1) there is no presumption of law that
a husband unduly influences his
wife;
2) in any particular marriage, the
relationship may be such that it
can be presumed that the husband
unduly influences his wife;
3) further, the law accepts that there
is greater than normal risk that a
wife will succumb to undue
influence by her husband.
Irish law cannot be stated with
certainty.
Undue Influence by Husband
Affecting the Bank
The fact that a transaction was
procured by the undue influence of a
husband over his wife need not affect
the bank if the bank is in no way
responsible for the undue influence
and is unaware of it. If the law
presumed that a husband always
unduly influences his wife, then it
would seem arguable that the bank
should always be deemed to be aware
of the undue influence: since there is
no such presumption, where then will
the bank be affected by undue
influence?
The wife may claim that her husband
should be deemed to be the bank's
agent. It is always a question of fact
whether or not the husband was so
acting. In O'Brien however, the House
of Lords criticised the notion of
agency as "artificial" since a bank
which requires its customer to find
security rarely takes any further steps
itself and may not even specify that it
should be the wife who acts as
security.
Two grounds for involving the bank
have been suggested:-
1) that wives are a class deserving
special protection,
2) that the bank will be deemed to
have notice of the undue influence
if the circumstances would cause a
reasonable bank to enquire
whether or not the wife was the
victim of undue influence.
The first theory was accepted by the
j Court of Appeal in O'Brien and by
Geoghegan J in Smyth. However it
was rejected by the House of Lords in