UNDUE INFLUENCE

Question	Answer
ATTORNEY AS FIDUCIARY What is it?	A fiduciary is someone who undertakes to act on behalf of another in circumstances which give rise to a relationship of trust and confidence.
What Obligations arises from a fiduciary relationship?	Special obligations arise from the relationship e.g. • to exercise good faith in dealing with the client, • confidentiality and • full disclosure of interest.
IS ATTY/CLIENT RELATIONSHIP a type of Fiduciary ?	YES YES YES
Demerara Bauxite Company Limited v. Hubbard:	An attorney purchased property from his client.
What did Demerara Bauxite Hold?	An attorney must disclose all the information in his possession without reservation and ensure that the transaction was fair in all circumstances. Especially where the client did not seek independent advice before selling property to his attorney
Distinction between actual undue influence and presumed undue influence is made in which case?	National Westminster Bank plc v Morgan - [1985] 1 All ER 821
what is the distinction between actual and presumed undue influence?	Actual undue influence: It must be shown that the transaction is disadvantageous to the person who is the subject of the dominating influence in order for the transaction to be set aside under undue influence. Presumed undue influence: A presumption of undue influence would not necessarily arise merely from the fact that a confidential relationship existed between the parties. It must be shown that one person has acquired over another a measure of influence and then gets an unfair advantage.
What is undue influence	This is a ground of relief developed by the court of equity. It is to ensure that the influence of one person over another is not abused. There is a distinction between actual and presumed undue influence.
What are the three cases to note under Presumed undue influence?	1. Longstaff v. Birtles 2. Mason’s Hall Tavern Co v. Nokes 3. Royal Bank of Scotland plc v. Etridge (No 2)
What does this case state -Longstaff v. Birtles?	The relationship of attorney-at-law and client gives rise to a presumption of undue influence. This presumption can be rebutted.
What does this case state-Mason’s Hall Tavern Co v. Nokes?	For the presumption of undue influence to arise the fiduciary relationship must have existed at the time of the transaction. If it comes into existence afterwards, and there was no fraud and all parties were aware of relevant facts, the transaction will not be set aside.
What does this case state-Royal Bank of Scotland plc. v. Etridge (No 2) ?	In order to raise the presumption of undue influence Client B must establish 1. Client B placed trust and confidence in A in relation to the management of the client’s financial affairs, and 2. That the transaction entered into is one which 'calls for explanation’.
Evidential Burden shifts to the Attorney to disapprove the presumption. What case provides how this may be shown?	Demerara Bauxite Company Limited v. Hubbard
what does Demerara Bauxite Company Limited v. Hubbard say that the attorney must do to disapprove the presumption of undue influence?	Attorney must show that he: 1. Acted with complete faithfulness and fairness 2. Disclosed all information at his disposal to his client 3. He afforded the client an opportunity to get independent advice 4. The client paid a fair price ( Where the transaction is a sale)
Are there specific instances of undue influence?	YES YES
What are the specific instances of undue influence?	Purchases by Atty from Client Sales by Atty to Client Loans by Atty to Client Loans by Client to Atty Gifts to Atty by Client Atty as Agent on Sale Atty as Agent on Purchase Atty purchases subject matter of litigation Bequests and Devises to Atty
Purchases by Atty from Client Knowles v Francis	An attorney who becomes the buyer of his client's property, does so at his peril. He must be prepared to show 1. that he has acted with the most complete faithfulness and fairness; 2. that his advice had been free from self-interest; 3. that the client was clearly and adequately advised 4. that he has not misrepresented anything, or concealed anything; 5. that he has given an adequate price; 6. The attorney must advise the client as he would a third party
Sales by Atty to Client Regier v. Campbell-Stuart	It is a rule of equity that where an attorney is employed as agent for a sale, he cannot acquire any profit or benefit such as the purchase of property for himself or make a gain beyond his proper remuneration unless he can prove that he furnished the client with all the knowledge he possessed and disclosed the nature of his interest. Attorney must not make a profit at the expense of the client.
Loans by Atty to Client & Loans by Client to Atty Re Eastmond (Harold)	Independent advice should be obtained by another attorney before an attorney gives a loan to a client or a client gives a loan to an attorney. It is wise to have another attorney intervene. Held that E had failed to ensure that his client had received independent professional advice before making the loan. Where there is no independent advice, the attorney must ensure that the terms of the loan are not more favourable to himself than usual.
Gifts to Atty by Client Wright v. Carter Liles v Terry Rhodes v Bate Ramcoomarsingh v.AG Goddard v Carlisle Wright v Carter	NOTE WHAT EACH CASE STATES
Gifts to Atty by Client Wright v. Carter	Gifts and gratuitous benefits are prohibited unless there are exceptional circumstances. Gifts to an attorney by his client raises the presumption that it was unduly influenced by the fiduciary relation subsisting between them. The burden of proof lays with the attorney to prove that the gift was uninfluenced by that relation.
Gifts to Atty by Client Liles v Terry	Until such time the atty/client relationship ceases to exists, the atty will have a difficult time in keeping the gift if the transaction of gift is called in question
Gifts to Atty by Client Rhodes v Bate	Trifling gifts are not within the rule, unless bad faith can be proved .
Gifts to Atty by Client Ramcoomarsingh v.AG	The court must ensure that where an attorney gets a gift under a will or deed, it must be shown that the testator knew and understood what he was doing and that the will/deed has given effect to his intentions.
Gifts to Atty by Client Goddard v Carlisle	Gifts or benefits to the solicitor's son , or to his wife , even though she may be a near relative, for example a niece of the client , will equally be set aside .
Gifts to Atty by Client Wright v Carter	When a gift to a solicitor is valid. To entitle an attorney to retain a gift he must show: 1. Atty/client relationship has ceased and as such the influence as well 2. Or if it was made while the relationship subsisted, must show that the the gift was a reasonable one and that the client had competent independent advice from another attorney who was fully informed of all the circumstances and that the attorney was not in collusion with him.
Atty as Agent on Sale McPherson v Watt	Where a solicitor purchases property for himself from his client but fails to disclose such information to the client then the purchase will not be enforced where if it had been disclosed it may have been enforced. An attorney’s interest and duty must not conflict.
Atty as Agent on Purchase	If an attorney makes a profit then client can seek relief from the court.
Atty purchases subject matter of litigation Knowles v Francis	An attorney should not purchase the subject matter of litigation which he is conducting for his client.
Bequests and Devises to Atty Ramcoomarsingh v.AG	An attorney is allowed to take a benefit under the will of his client however where he takes a large benefit, the court must be satisfied that the testator knew and understood what he was doing and that the will has given effect to his intentions. Any issue of suspicious circumstances must be dispelled.
Bequests and Devises to Atty Re A Solicitor	An independent attorney should be consulted to prepare the will in cases where the client insists on leaving a gift for his attorney.

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	Created by Kirby Joseph almost 9 years ago