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Burns, Fiona --- "Undue Influence Inter Vivos And The Elderly" [2002] MelbULawRw 27; (2002) 26(3) Melbourne University Law Review 499

[*] BA (Hons), LLB (Hons), LLM (Syd), LLM (Cantab), PhD (ANU); Senior Lecturer, Faculty of Law, University of Sydney. I would like to thank Professor Patrick Parkinson and the two anonymous referees for their comments on earlier drafts of this article. My thanks also to Professor Terry Carney for his encouragement and Ms Myra Chen for her research assistance under the University of Sydney Faculty of Law Legal Scholarship Support Fund 2001–02. A preliminary and shorter version of this paper was presented to the XXVIIth International Congress on Law and Mental Health, Amsterdam, 8–12 July 2002.

[1] See Peter Laslett, ‘The Demographic Scene — An Overview’ in John Eekelaar and David Pearl (eds), An Aging World: Dilemmas and Challenges for Law and Social Policy (1989) 1. The demographic scene in relation to Australia is quite remarkable. The Australian Bureau of Statistics (‘ABS’) found that in 2001, 12.4 per cent of the Australian population was aged 65 years or older and that 3 per cent were 80 years or older: ABS, Australian Social Trends 2002, ABS Catalogue No 4102.0 (2002) 2. However, this is set to change radically by the middle of the 21st century and it is projected that by 2051, 26.1 per cent of the population will be 65 years or older and 9.4 per cent of the population will be 80 years or older. The trend of longevity is projected to continue to 2101 when 27 per cent of the adult population will be 65 years or older whilst 10.1 per cent of the population will be 80 years or older: ABS, Australian Social Trends 2002, ABS Catalogue No 4102.0 (2002) 2. It is important to observe that women clearly outstrip men in terms of longevity. This is particularly evident in the 85 years and older age group, where in the 12 months to June 2001 there were more than twice as many women (180 400) than men (82 200): ABS, Population by Age and Sex: Australian States and Territories, ABS Catalogue No 3201.0 (2001) 7. Therefore, ageing also has a gender dimension and it has been argued that it is necessary to integrate age and gender in order to understand the implications of ageing for men and women: Jay Ginn and Sara Arber, ‘“Only Connect”: Gender Relations and Ageing’ in Sara Arber and Jay Ginn (eds), Connecting Gender and Ageing: A Sociological Approach (1995) 1, 13. Moreover, it has been argued that gender needs to be a category used in analysis rather than simply a variable when considering elder abuse: Terri Whittaker, ‘Gender and Elder Abuse’ in Sara Arber and Jay Ginn (eds), Connecting Gender and Ageing: A Sociological Approach (1995) 144.

Generally, the age of 65 years has been used as a benchmark for defining elders because this has been the age of retirement and at which people are able to apply for the aged pension: see Juliet Cummins, Guaranteeing Someone Else’s Debts: Submission by the Centre for Elder Law, University of Western Sydney (2001) 1 fn 1, submission to the New South Wales Law Reform Commission, Guaranteeing Someone Else’s Debts, Issues Paper No 17 (2000). Generally, for the purpose of this discussion ‘elder’ will indicate a person over 65 years of age. However, it would be artificial to neglect the discussion of cases where the individual involved had not reached that age, particularly older parents who have retired (but who are not 65 years of age) or who are nearing retirement and have entered into guarantees to secure the liabilities of adult children. In the case of married couples, sometimes one parent has reached 65 years or over, whilst the other is a number of years younger. Indeed, some reforms have contemplated that a lower age is appropriate to define a dependent elder: see below Part IV(C). It also appears that the transition from employment to retirement commences much earlier than the age of 65 years. According to the ABS, in the year 2001, 72.4 per cent of men in the 55–9 years age bracket were in employment whilst only 46.9 per cent in the 60–4 age group were employed. In relation to women, the contrast between the two age groups for the same period is equally stark: 48.1 per cent of women in the 55–9 age bracket were employed and this dropped to 21.5 per cent for women between the ages 60–4 years: ABS, Australian Social Trends 2002, ABS Catalogue No 4102.0 (2002) 125. This may indicate that the older age bracket was more affluent. However, it may also indicate that older people who may not have reached 65 years are less likely to be employed. Therefore, they may not be able to bear the substantial losses suffered as a result of undue influence inter vivos without erosion of their living standards.

[2] See, eg, David Cripps et al, ‘Abuse of Older People: Issues for Lawyers’ [2002] ElderLawRw 8; (2002) 1 Elder Law Review 14 <http://www.uws.edu.au/law/elderlaw/cripps.pdf> at 16 October 2002.

[3] In a significant recent study, this was defined as ‘the illegal or improper use of an elder’s funds, property or assets’: National Center on Elder Abuse at the American Public Human Services Association, The National Elder Abuse Incidence Study: Final Report September 1998 (1998) pt 3.1 <http://www.aoa.gov/abuse/report/default.htm> at 16 October 2002. See also Carolyn Dessin, ‘Financial Abuse of the Elderly’ (2000) 36 Idaho Law Review 203, 206; Cheryl Tilse et al, ‘Legal Practitioners and Older Clients: Challenges and Opportunities for Effective Practice’ [2002] ElderLawRw 11; (2002) 1 Elder Law Review 34, 34 <http://www.uws.edu.au/law/elderlaw/setterlund.pdf> at 16 October 2002. There is also a diversity of conduct which may constitute elder financial abuse including theft, capital investment fraud, telemarketing scams and negligent handling of an elder’s assets: Russell Smith, ‘Fraud and Financial Abuse of Older Persons’ (2000) 11 Current Issues in Criminal Justice 273, 278–83; Office of the Public Advocate (WA), Safeguarding the Financial Interests of Vulnerable Seniors (1999).

[4] Dessin, above n 3, 207–8.

[5] See, eg, Terry Carney and David Tait, ‘Guardianship Dilemmas in the Care of the Aged’ [1991] SydLawRw 5; (1991) 13 Sydney Law Review 61; Terry Carney and David Tait, The Adult Guardianship Experiment: Tribunals and Popular Justice (1997); Terry Carney, ‘Abuse of Enduring Powers of Attorney — Lessons from the Australian Tribunal Experiment?’ (1999) 18 New Zealand Universities Law Review 481; Peter Bartlett, ‘The Consequences of Incapacity’ (1997) 4 Web Journal of Current Legal Issues <http://webjcli.ncl.ac.uk/1997/issue4/bartle4.html> at 16 October 2002; W Rossiter, ‘No Protection of the Elderly: The Inadequacy of the Capacity Doctrine in Avoiding Unfair Contracts Involving Seniors’ (1999) 78 Oregon Law Review 807.

[6] This has been particularly the case in the United States: Ann Penners Wrosch, ‘Undue Influence, Involuntary Servitude and Brainwashing: A More Consistent, Interests-Based Approach’ (1992) 25 Loyola of Los Angeles Law Review 499; Mary Joy Quinn, ‘Undue Influence: An Emotional Con Game’ (November–December 1998) Aging Today <http://www.asaging.org/at/at-196/

quinn.html> at 16 October 2002; Mary Joy Quinn, ‘Undoing Undue Influence’ (2000) 24(2) Generations 65; Lori Stiegel, ‘The Changing Role of the Courts in Elder-Abuse Cases’ (2000) 24(2) Generations 59; J Edward Spar, ‘Attorney’s Guide to Competency and Undue Influence’ (2000) 13(3) NAELA Quarterly 7. For an English perspective, see Jill Martin, ‘Elderly Relatives, Estoppel and Undue Influence’ (1994) 144 New Law Journal 264.

[7] Quinn, ‘Undoing Undue Influence’, above n 6, 65. Tilse et al, above n 3, 38, have pointed out that ‘[p]ractitioners reported considerable difficulty in negotiating complex family dynamics and raised issues of undue influence’.

[8] Testamentary undue influence has already been reviewed from the perspective of the elderly and there has been some important work re-examining the impact of testamentary undue influence in the context of elder parent and adult children relationships: see Lawrence Frolik, ‘The Biological Roots of the Undue Influence Doctrine: What’s Love Got to Do with It?’ (1996) 57 University of Pittsburgh Law Review 841; Lawrence Frolik, ‘The Strange Interplay of Testamentary Capacity and the Doctrine of Undue Influence: Are We Protecting Older Testators or Overriding Individual Preferences?’ (2001) 24 International Journal of Law and Psychiatry 253.

[9] In relation to Australia, see Spong v Spong [1914] HCA 52; (1914) 18 CLR 544; Watkins v Combes [1922] HCA 3; (1922) 30 CLR 180; Johnson v Buttress [1936] HCA 41; (1936) 56 CLR 113; Union Fidelity Trustee Co of Australia Ltd v Gibson [1971] VicRp 69; [1971] VR 573; Bank of New South Wales v Rogers [1941] HCA 9; (1941) 65 CLR 42. In relation to the United Kingdom, see Williams v Bayley [1866] UKLawRpHL 11; (1866) LR 1 HL 200; Noriah v Bin Omar [1929] AC 127; Lloyds Bank Ltd v Bundy [1974] EWCA Civ 8; [1975] 1 QB 326; Avon Finance Co Ltd v Bridger [1985] 2 All ER 281; Goldsworthy v Brickell [1987] 1 Ch 378; Re the Estate of Brocklehurst [1978] 1 Ch 14; Cheese v Thomas [1994] 1 All ER 35. In relation to New Zealand, see Brusewitz v Brown [1923] NZGazLawRp 219; [1923] NZLR 1106.

[10] There have been a few exceptions where aged adults have been touched upon: see, eg, Peter Birks and Chin Nyuk Yin, ‘On the Nature of Undue Influence’ in Jack Beatson and Daniel Friedman (eds), Good Faith and Fault in Contract Law (1995) 57, 91; Megan Richardson, ‘Protecting Women Who Provide Security for a Husband’s, Partner’s or Child’s Debts: The Value and Limits of an Economic Perspective’ (1996) 16 Legal Studies 368; Michael Trebilcock and Steven Elliott, ‘The Scope and Limits of Legal Paternalism: Altruism and Coercion in Family Financial Arrangements’ in Peter Benson (ed), The Theory of Contract Law: New Essays (2001) 45; G E Dal Pont and D R C Chalmers, Equity and Trusts in Australia and New Zealand (2nd ed, 2000) 201–2; Juliet Cummins, ‘Relationship Debt and the Aged: Welfare vs Commerce in the Law of Guarantees’ (2002) 27 Alternative Law Journal 63.

[11] In particular, unconscionable dealing has been pleaded by elders who have argued that due to their age they suffered a special disadvantage from which other persons have obtained a benefit. However, it cannot be assumed that courts have automatically decided that an older age was sufficient evidence of disadvantage, that the transaction was improvident or that the mere knowledge that a person was elderly was adequate for setting aside a contract or gift as unconscionable: see, eg, Commonwealth Bank of Australia v McGlynn [1995] ANZ ConvR 81; Younan v Beneficial Finance Corporation Ltd [1995] ANZ ConvR 213; Tarzia v National Australia Bank [1996] ANZ ConvR 380; Bruinsma v Menczer (Unreported, Supreme Court of NSW, Santow J, 16 November 1995); Bayne v Karaliamis [2001] ANZ ConvR 181.

[12] See, eg, Contracts Review Act 1980 (NSW) s 9; Credit Act 1984 (Vic) s 147(2).

[13] Although there is an overlap between undue influence inter vivos and unconscionable dealing in Australia, they are still separate doctrines which are based on different justifications: see, eg, Bridgewater v Leahy [1998] HCA 66; (1998) 194 CLR 457, 477–8 (Gaudron, Gummow and Kirby JJ). See also Michael Bryan, ‘Undue Influence’ (Seminar paper in Update on Amadio: When the Guarantee Is Not Enough, Leo Cussen Institute, 1997) 2.18.

[14] Johnson v Buttress [1936] HCA 41; (1936) 56 CLR 113, 134–6 (Dixon J). See also Spong v Spong [1914] HCA 52; (1914) 18 CLR 544; Bank of New South Wales v Rogers [1941] HCA 9; (1941) 65 CLR 42; Whereat v Duff [1972] 2 NSWLR 147; aff’d (1973) 1 ALR 363; Goldsworthy v Brickell [1987] 1 Ch 378, 400 (Nourse LJ); Bank of Credit & Commerce International SA v Aboody [1990] 1 QB 923, 953 (Slade J); Barclays Bank plc v O’Brien [1993] UKHL 6; [1994] 1 AC 180, 189–90 (Lord Browne-Wilkinson); Royal Bank of Scotland plc v Etridge [No 2] [2001] UKHL 44; [2001] 3 WLR 1021, 1029–30 (Lord Nicholls), cf Lord Clyde (at 1050) who questioned the wisdom of classifying cases of undue influence; Jill Martin, Hanbury and Martin: Modern Equity (15th ed, 1997) 829–30; R P Meagher, W M C Gummow and J R F Lehane, Equity: Doctrines and Remedies (3rd ed, 1992) [1521]; M Cope, Duress, Undue Influence and Unconscientious Bargains (1985) [137]–[140]; Tony Duggan, ‘Undue Influence’ in Patrick Parkinson (ed), The Principles of Equity (1996) 379, [1101]; Dal Pont and Chalmers, above n 10, 186–90.

[15] [1936] HCA 41; (1936) 56 CLR 113.

[16] Ibid 134. In Bank of Credit & Commerce International SA v Aboody [1990] 1 QB 923, 967, Slade J set out the relevant elements as follows: ‘(a) the other party to the transaction (or someone who induced the transaction for his own benefit) had the capacity to influence the complainant; (b) the influence was exercised; (c) its exercise was undue; (d) its exercise brought about the transaction.’ See also Farmers’ Co-operative Executors & Trustees Ltd v Perks [1989] SASC 1932; (1989) 52 SASR 399, 404 (Duggan J); ASB Bank Ltd v Harlick [1996] 1 NZLR 655, 659 (Gault J); Carey v Norton [1997] NZCA 312; [1998] 1 NZLR 661, 673 (Keith and Williams JJ).

[17] Cope, above n 14, [139].

[18] Williams v Bayley [1866] UKLawRpHL 11; (1866) LR 1 HL 200; Sercombe v Sanders [1865] EngR 258; (1865) 34 Beav 382; 55 ER 682; Davies v London and Provincial Marine Insurance Co [1878] UKLawRpCh 92; (1878) 8 Ch D 469; Ormes v Beadel [1860] EngR 646; (1860) 2 Giff 166; 66 ER 70; Cope, above n 14, [139], [146]–[155]; Duggan, above n 14, [1109]; Dal Pont and Chalmers, above n 10, 189–90.

[19] Bank of Credit & Commerce International SA v Aboody [1990] 1 QB 923.

[20] Barton v Alexander [1976] AC 104, 118 (Lord Cross). See also Ford v Oldon [1867] UKLawRpEq 13; (1867) LR 3 Eq 461; Clegg v Wilson [1932] NSWStRp 6; (1932) 32 SR (NSW) 109; Public Service Employees Credit Union Co-operative Ltd v Campion (1984) 56 ACTR 39; Meagher, Gummow and Lehane, above n 14, [1214].

[21] Mutual Finance Ltd v John Wetton & Sons Ltd [1937] 2 KB 389, 394–5 (Porter J).

[22] L A Sheridan, Fraud in Equity: A Study in English and Irish Law (1957) 84–6.

[23] Lloyds Bank Ltd v Bundy [1974] EWCA Civ 8; [1975] 1 QB 326. Lord Denning’s classification of actual undue influence appears to define it as both the strong gaining an advantage from the weak by some fraud and deliberate act and, alternatively, undue pressure.

[24] Bank of Credit & Commerce International SA v Aboody [1990] 1 QB 923.

[25] Matthew Conaglen, ‘Duress, Undue Influence and Unconscionable Bargains — The Theoretical Mesh’ (1999) 18 New Zealand Universities Law Review 509, 515: ‘The heart of the inquiry, and the justification for relief, is always the impropriety of the ascendant party’s conduct.’

[26] Barclays Bank plc v O’Brien [1993] UKHL 6; [1994] 1 AC 180 is representative of this attitude. Lord Browne-Wilkinson insisted that the general test for actual undue influence required that the claimant prove that ‘the wrongdoer exerted undue influence on the complainant to enter into the particular transaction which is impugned’: at 189. The definition did not specifically refer to the transaction being impugned because the plaintiff had not been able to exercise independent judgment, although in the case itself this was clearly an important consideration.

[27] Common law duress traditionally dealt with actual or threatened violence to the person, or their parent, spouse or child, which induced fear that paralysed the will so that, but for the threat, the plaintiff would have acted otherwise: see Meagher, Gummow and Lehane, above n 14, [1215], [1510]; Dal Pont and Chalmers, above n 10, 224–5; Royal Bank of Scotland plc v Etridge [No 2] [2001] UKHL 44; [2001] 3 WLR 1021, 1029 (Lord Nicholls).

[28] Cope, above n 14, [158].

[29] Birks and Chin, above n 10, 63–7. See also I J Hardingham, ‘Unconscionable Dealing’ in

P D Finn (ed), Essays in Equity (1985) 1, 19–24.

[30] Birks and Chin, above n 10, 62.

[31] Barclays Bank plc v O’Brien [1993] UKHL 6; [1994] 1 AC 180, 189 (Lord Browne-Wilkinson).

[32] Johnson v Buttress [1936] HCA 41; (1936) 56 CLR 113, 134–5 (Dixon J); Barclays Bank plc v O’Brien [1993] UKHL 6; [1994] 1 AC 180, 189–90 (Lord Browne-Wilkinson); Whereat v Duff [1972] 2 NSWLR 147, 167 (Asprey J); Martin, above n 14, 829–30; Duggan, above n 14, [1101]; Cope, above n 14, [140], [161].

[33] Allcard v Skinner [1887] UKLawRpCh 151; (1887) 36 Ch D 145, 171 (Cotton LJ); Lloyds Bank Ltd v Bundy [1974] EWCA Civ 8; [1975] 1 QB 326, 341–2 (Sachs LJ).

[34] Johnson v Buttress [1936] HCA 41; (1936) 56 CLR 113, 134 (Dixon J); Barclays Bank plc v O’Brien [1993] UKHL 6; [1994] 1 AC 180, 189–90 (Lord Browne-Wilkinson); Meagher, Gummow and Lehane, above n 14, [1525]; Duggan, above n 14, [1117]; Cope, above n 14, [201].

[35] See Bester v Perpetual Trustee Co Ltd [1970] 3 NSWLR 30; Duggan, above n 14, [1118]; Cope, above n 14, [204]–[206].

[36] Meagher, Gummow and Lehane, above n 14, [1529]; Duggan, above n 14, [1119], [1121]; Cope, above n 14, [207]–[220]; Dal Pont and Chalmers, above n 10, 191–4.

[37] Linderstam v Barnett [1915] HCA 5; (1915) 19 CLR 528; Haskew v Equity Trustees Executors & Agency Co Ltd [1919] HCA 53; (1919) 27 CLR 231; Watkins v Combes [1922] HCA 3; (1922) 30 CLR 180, 195–6 (Isaacs J); Union Fidelity Trustee Co of Australia Ltd v Gibson [1971] VicRp 69; [1971] VR 573, 577–8 (Gillard J); Meagher, Gummow and Lehane, above n 14, [1528]; Dal Pont and Chalmers, above n 10, 191.

[38] Watkins v Combes [1922] HCA 3; (1922) 30 CLR 180, 194 (Isaacs J); Wright v Carter [1902] UKLawRpCh 180; [1903] 1 Ch 27, 50 (Vaughan Williams LJ); Harris v Jenkins [1922] HCA 54; (1922) 31 CLR 341, 367–8 (Starke J); National Westminster Bank plc v Morgan [1985] UKHL 2; [1985] AC 686, 704 (Lord Scarman); James v Australia & New Zealand Banking Group Ltd [1986] FCA 41; (1986) 64 ALR 347; Farmers’ Co-operative Executors & Trustees Ltd v Perks [1989] SASC 1932; (1989) 52 SASR 399; Budget Nominees Pty Ltd v Registrar of Titles [1988] V ConvR 54-311. In Royal Bank of Scotland plc v Etridge [No 2] [2001] UKHL 44; [2001] 3 WLR 1021, 1032–3, Lord Nicholls re-emphasised the importance of manifest disadvantage as an element of undue influence inter vivos.

[39] See Johnson v Buttress [1936] HCA 41; (1936) 56 CLR 113, 135–6 where Dixon J stated that adequacy of consideration was not a factor in raising the presumption but may be important in determining whether sufficient evidence has been adduced to rebut the presumption. See also Meagher, Gummow and Lehane, above n 14, [1524]; P D Finn, Fiduciary Obligations (1977) [179]; Cope, above n 14, [197], [221]; Duggan, above n 14, [1116]. However, it will be suggested in below Part III(C)(2)(c) that this is not necessarily the case in undue influence litigation involving elders.

[40] Barclays Bank plc v O’Brien [1993] UKHL 6; [1994] 1 AC 180, 189–90 (Lord Browne-Wilkinson); Johnson v Buttress [1936] HCA 41; (1936) 56 CLR 113, 134–6 (Dixon J); Meagher, Gummow and Lehane, above n 14, [1512]; Duggan, above n 14, [1111].

[41] See generally Meagher, Gummow and Lehane, above n 14, [1511]; Finn, above n 39, [176];

Dal Pont and Chalmers, above n 10, 187.

[42] See, eg, Hatch v Hatch [1804] EngR 105; (1804) 9 Ves Jr 292; 32 ER 615; Archer v Hudson [1844] EngR 759; (1844) 7 Beav 551; 49 ER 1180; Allfrey v Allfrey [1847] EngR 545; (1847) 10 Beav 353; 50 ER 618; Wright v Vanderplank (1855) 2

Kay & J 1; [1856] EngR 331; 69 ER 669; Bainbrigge v Browne [1881] UKLawRpCh 148; (1881) 18 Ch D 188; Kerr v West Australian Trustee Executor & Agency Co Ltd [1937] WALawRp 6; (1937) 39 WALR 34; Lamotte v Lamotte [1942] NSWStRp 11; (1942) 42 SR (NSW) 99; West v Public Trustee [1942] SAStRp 34; [1942] SASR 109; Phillips v Hutchinson [1946] VicLawRp 5; [1946] VLR 270; Cope, above n 14, [169]–[174].

[43] See, eg, Hatch v Hatch [1804] EngR 105; (1804) 9 Ves Jr 292; 32 ER 615; Taylor v Johnston [1882] UKLawRpCh 64; (1882) 19 Ch D 603; Cope, above n 14, [175].

[44] See, eg, Huguenin v Baseley (1807) 14 Ves Jr 273; 33 ER 526; Nottidge v Prince [1860] EngR 1048; (1860) 2 Giff 246; 66 ER 103; Allcard v Skinner [1887] UKLawRpCh 151; (1887) 36 Ch D 145; Morley v Loughnan [1893] UKLawRpCh 15; [1893] 1 Ch 736; Cope, above n 14, [176]–[178].

[45] See, eg, Gibson v Jeyes [1801] EngR 379; (1801) 6 Ves Jr 266; 31 ER 1044; Wood v Downes [1811] EngR 429; (1811) 18 Ves Jr 120; 34 ER 263; Rhodes v Bate [1866] UKLawRpCh 9; (1865) LR 1 Ch App 252; Wright v Carter [1902] UKLawRpCh 180; [1903] 1 Ch 27; Dowsett v Reid [1912] HCA 75; (1912) 15 CLR 695, 707 (Barton J); Haywood v Roadknight [1927] ArgusLawRp 41; [1927] VLR 512, 520 (Lowe J); Cope, above n 14, [179]–[180].

[46] See, eg, Dent v Bennett [1839] EngR 434; (1839) 4 My & Cr 269; 41 ER 105; Gibson v Russell (1842) 2 Y C Ch 104; [1843] EngR 353; 63 ER 46; Cope, above n 14, [186].

[47] Meagher, Gummow and Lehane, above n 14, [1521]; Cope, above n 14, [188].

[48] Barclays Bank plc v O’Brien [1993] UKHL 6; [1994] 1 AC 180, 189–90 (Lord Browne-Wilkinson); Johnson v Buttress [1936] HCA 41; (1936) 56 CLR 113, 134–5 (Dixon J). Important decisions under this class of undue influence include: Spong v Spong [1914] HCA 52; (1914) 18 CLR 544; Johnson v Buttress [1936] HCA 41; (1936) 56 CLR 113; Bank of New South Wales v Rogers [1941] HCA 9; (1941) 65 CLR 42; Bester v Perpetual Trustee Co Ltd [1970] 3 NSWLR 30; Union Fidelity Trustee Co of Australia Ltd v Gibson [1971] VicRp 69; [1971] VR 573; Lloyds Bank Ltd v Bundy [1974] EWCA Civ 8; [1975] QB 326.

[49] Birks and Chin, above n 10.

[50] Ibid 67–74.

[51] For discussions of unconscionable dealing in Australia, see Tony Duggan, ‘Unconscientious Dealing’ in Patrick Parkinson (ed), The Principles of Equity (1996) 121; Dal Pont and Chalmers, above n 10, ch 9.

[52] [1983] HCA 14; (1983) 151 CLR 447.

[53] Ibid 474. In the same case, Mason J noted that undue influence responded to situations where there was no exercise of an independent and free will because the innocent party was overborne, whereas in unconscionable dealings the innocent party may act independently, but unconscientious advantage is taken of their position: at 461. Writing extra-curially some years later, Sir Anthony Mason again emphasised the difference between the doctrines and apparently approved the interpretation of Birks and Chin that undue influence is based on impairment of consent when he stated:

My understanding of undue influence ... is that it denotes an ascendancy by the stronger party over the weaker party such that the relevant transaction is not the free, voluntary and independent act of the weaker party. In other words, it is the actual or presumed impairment of the judgment of the weaker party that is the critical element in the grant of the relief on the ground of undue influence ... Unconscionable conduct as the term suggests, focuses more on the unconscientious conduct of the defendant.

Sir Anthony Mason, ‘The Impact of Equitable Doctrine on the Law of Contract’ (1998) 27 Anglo-American Law Review 1, 6–7 (citations omitted).

[54] [1998] HCA 66; (1998) 194 CLR 457, 478 (Gaudron, Gummow and Kirby JJ).

[55] Note in this regard the comments of Bryan, above n 13, 2.1, 2.18–2.19. Cf Hardingham, above n 29, 17–19.

[56] Birks and Chin, above n 10, 58–9, 61–2.

[57] For example, in Barclays Bank plc v O’Brien [1993] UKHL 6; [1994] 1 AC 180, 189, Lord Browne-Wilkinson stated that

the complainant only has to show ... that there was a relationship of trust and confidence between the complainant and the wrongdoer of such a nature that it is fair to presume that the wrongdoer abused the relationship in procuring the complainant to enter into the impugned transaction.

The importance of this statement is that relational undue influence rests on a presumption of wrongdoing rather than the impaired consent of the plaintiff. Indeed, there is no mention of the important fact that the transaction is impugned because it is assumed that the plaintiff has been unable to act freely and voluntarily. In several subsequent cases, courts have confirmed the significance of wrongdoing and highlighted the improper and exploitative nature of transactions (Credit Lyonnais Bank Nederland NV v Burch [1996] EWCA Civ 1292; [1997] 1 All ER 144) and, in the case of third parties, ‘constructive notice of some alleged impropriety’ (Banco Exterior Internacional SA v Thomas [1997] 1 All ER 46, 55 (Scott V-C)). In Royal Bank of Scotland plc v Etridge [No 2] [1998] 4 All ER 705, 712, the Court of Appeal stated that undue influence was not limited to relationships of trust and confidence, but also extended to protecting ‘the vulnerable from exploitation’ in relationships of ‘ascendancy and dependency’.

[58] Rick Bigwood, ‘Undue Influence: “Impaired Consent” or “Wicked Exploitation”?’ (1996) 16 Oxford Journal of Legal Studies 503. See also Conaglen, above n 25, 518–19.

[59] Bigwood, above n 58, 512, has commented:

The real complaint in any given instance of relational undue influence is twofold: first, that the fiduciary-like expectation held by or ascribed to the dependent party has been breached; and second, that on account of such a breach, the transaction entered into lacked the quality of ‘independence’ on the part of the beneficiary — that independence being considered the hallmark of genuine personal consent — which has been eroded by the fiduciary’s influence.

[60] [2001] UKHL 44; [2001] 3 WLR 1021.

[61] Lord Nicholls focused on an inclusive definition when he stated (ibid 1030):

The principle is not confined to cases of abuse of trust and confidence. It also includes, for instance, cases where a vulnerable person has been exploited. Indeed, there is no single touchstone for determining whether the principle is applicable. Several expressions have been used in an endeavour to encapsulate the essence: trust and confidence, reliance, dependence or vulnerability on the one hand and ascendancy, domination or control on the other. None of these descriptions is perfect. None is all embracing. Each has its proper place.

Lord Hobhouse (at 1055) criticised the description of a party accused of Class 2(B) undue influence as a ‘wrongdoer’: ‘It describes the other party as a “wrongdoer” without saying why when it is expressly postulated that no wrongdoing may have occurred.’ (Class 2(B) undue influence has referred to situations where the plaintiff establishes, as a matter of fact, that there is a relationship of trust and confidence upon which a presumption of undue influence may be based: see Barclays Bank plc v O’Brien [1993] UKHL 6; [1994] 1 AC 180, 189–90.) Lord Scott stated that ‘[t]he transaction will not be “wrongful” unless it was procured by undue influence. Its “wrongful” character is a conclusion, not a tool by which to detect the presence of undue influence’: Royal Bank of Scotland plc v Etridge [No 2] [2001] UKHL 44; [2001] 3 WLR 1021, 1075.

[62] For a discussion of the lack of a special legal status for the elderly, see L Bonfield, ‘Was There a “Third Age” in the Preindustrial English Past? Some Evidence from the Law’ in John Eekelaar and David Pearl (eds), An Aging World: Dilemmas and Challenges for Law and Social Policy (1989) 37; Linda Whitton, ‘Ageism: Paternalism and Prejudice’ (1997) 46 DePaul Law Review 453, 458–9.

[63] Lewis v Pead [1789] EngR 2420; (1789) 1 Ves Jr 19; 30 ER 210. See also Grahn v Litwin (1911) 4 Sask LR 270, 279 where Wetmore CJ held that a transaction will not be set aside on the basis that the transferor was advanced in years. However, there have been several cases in relation to raising a presumption of undue influence where age was considered as part of all the circumstances of the case: Cooke v Lamotte [1851] EngR 905; (1851) 15 Beav 234; 51 ER 527; Elgie v Campbell (1865) 12 Gr 132; Symons v Williams (1875) 1 VLR 199, 215 (Barry J).

[64] Yerkey v Jones [1939] HCA 3; (1940) 63 CLR 649, 675 (Dixon J). Cope, above n 14, [185]; Sheridan, above n 22, 96; Meagher, Gummow and Lehane, above n 14, [1517]. For a modern expostulation of this approach see Royal Bank of Scotland plc v Etridge [No 2] [2001] UKHL 44; [2001] 3 WLR 1021, 1034 (Lord Nicholls).

[65] Frolik, ‘The Biological Roots of the Undue Influence Doctrine’, above n 8; Frolik, ‘Testamentary Capacity and the Doctrine of Undue Influence’, above n 8, 261. A striking example of the assumption of parental beneficence being elevated to the status of a legal rule has been the presumption of advancement. Where a person pays the price for the purchase of property it is assumed that the person intended to obtain the beneficial interest in that property. Accordingly, a resulting trust operates in favour of the person unless the recipient of the property is a spouse or the child of the donor, where a rebuttable presumption of advancement arises: see R P Meagher and W M C Gummow, Jacobs’ Law of Trusts in Australia (6th ed, 1997) [1212]; H A J Ford and W A Lee (eds), Principles of the Law of Trusts (3rd ed, 1996) [21 170]. It has been held that the advancement in favour of a child may be made by a mother as well as a father (Nelson v Nelson [1995] HCA 25; (1995) 184 CLR 538, 601 (McHugh J)) and may include an adult child: Nelson v Nelson (1994) 33 NSWLR 740. However, the usefulness of the presumptions of resulting trust and of advancement in modern society has also been questioned: Nelson v Nelson [1995] HCA 25; (1995) 184 CLR 538, 602 (McHugh J).

[66] [1852] EngR 446; (1852) 15 Beav 278; 51 ER 545.

[67] Ibid 288; 549.

[68] In extreme cases of undue influence, elderly persons or their representative were able to set aside improvident contracts (Filmer v Gott [1774] EngR 40; (1774) 4 Bro Parl Cas 230; 2 ER 156), gifts (Bridgeman v Green (1755) Wilmot 58; [1757] EngR 92; 97 ER 22; Taylor v Obee (1816) 3 Price 83; 146 ER 198; Griffiths v Robins [1818] EngR 331; (1818) 3 Madd 191; 56 ER 480; Cooke v Lamotte [1851] EngR 905; (1851) 15 Beav 234; 51 ER 527; Symons v Williams (1875) 1 VLR 199) and securities (Williams v Bayley [1866] UKLawRpHL 11; (1866) LR 1 HL 200).

[69] Cope, above n 14, [169].

[70] See, eg, Archer v Hudson [1844] EngR 759; (1844) 7 Beav 551, 559; [1844] EngR 759; 49 ER 1180, 1183 (Lord Langdale); Savery v King [1856] EngR 534; (1856) 5 HL Cas 627, 654; [1856] EngR 534; 10 ER 1046, 1058; Chambers v Crabbe [1865] EngR 261; (1865) 34 Beav 457; 55 ER 712; Sheridan, above n 22, 93–4 fn 7.

[71] For a helpful explanation, see Yerkey v Jones [1939] HCA 3; (1940) 63 CLR 649, 675 (Dixon J); Finn, above n 39, [176]; Cope, above n 14, [168].

[72] Sheridan, above n 22, 94.

[73] Federov v Yakimov (Unreported, Supreme Court of NSW, Needham J, 5 December 199l); Michaletos v Stivactas [1992] ANZ ConvR 90; Stivactas v Michaletos [No 2] [1993] Aust Contract Reports 90-031; Nattrass v Nattrass [1999] WASC 77 (Unreported, Commissioner Buss, 25 June 1999).

[74] See, eg, Australian Guarantee Corporation v McClelland [1993] ASC 56-230; Sinclair v Galluzzo (Unreported, Supreme Court of NSW, Spender AJ, 9 November 1994); Jacobs v Shugg (Unreported, Supreme Court of Victoria, O’Bryan J, 24 May 1996); IOOF Australia Trustees Ltd v Oxenham [1997] SADC 3740 (Unreported, Judge Allan, 19 December 1997); Micarone v Perpetual Trustees Australia Ltd [1999] SASC 265; (1999) 75 SASR 1; Wilby v St George Bank Ltd [2001] SASC 138 (Unreported, Lander J, 2 May 2001); (2001) 80 SASR 404; Couper Holdings Pty Ltd (in liq) v Bell [1999] WASC 232 (Unreported, Owen J, 24 November 1999).

[75] Ryan v Tooth (Unreported, Supreme Court of NSW, Bryson J, 24 September 1993); Urane v Whipper [2001] NSWSC 796; [2002] NSW ConvR 55-992; Mitchell v 700 Young Street Pty Ltd [2001] VSC 116 (Unreported, Cummins J, 23 April 2001).

[76] Chapman v Trajan [1987] ANZ ConvR 264; Briggs v Scott (1990) 14 Fam LR 31; Scott v Briggs (1991) 14 Fam LR 661; Le Boursicot v Coulthard [1997] Aust Contract Reports 90-082.

[77] For example the long saga of the Archer litigation: Archer v Archer [1999] NSWCA 24 (Unreported, Priestley, Meagher and Powell JJA, 23 February 1999); Archer v Archer [1999] NSWCA 286 (Unreported, Mason P, 20 July 1999); Archer v Archer [No 2] [1999] NSWSC 500 (Unreported, Windeyer J, 27 May 1999); Archer v Archer [2000] NSWCA 314 (Unreported, Handley, Beazley and Fitzgerald JJA, 7 November 2000); Archer v Archer [No 2] [2000] NSWCA 315 (Unreported, Windeyer J, 9 November 2000).

[78] Mitchell v 700 Young Street Pty Ltd [2001] VSC 116 (Unreported, Cummins J, 23 April 2001) [26]. His Honour did acknowledge (at [26]) that ‘[e]xperience also teaches us to be astute to children or relatives who are opportunistic or vulture-like.’

[79] See, eg, Sinclair v Galluzzo (Unreported, Supreme Court of NSW, Spender AJ, 9 November 1994) [14]; Mitchell v 700 Young Street Pty Ltd [2001] VSC 116 (Unreported, Cummins J, 23 April 2001).

[80] (Unreported, Supreme Court of NSW, Bryson J, 24 September 1993).

[81] Ibid [45]. See also Tessmann v Costello [1987] 1 Qd R 283, 293, where Williams J pointed out in the context of a claim based on both undue influence and unconscionable dealing that

the fact that parents are motivated to guarantee a son’s financial transactions by high hopes of the latter’s business expectations does not mean that a bargain so entered into is ‘unconscionable’. All too frequently the aspirations of parents are not fulfilled by the achievements of their children. The familial bond will frequently lead parents into transactions involving obligations which they would not ordinarily undertake. Not surprisingly the law does not put such transactions into any special category; contracts so entered into are binding on the parents unless the facts of a particular case call into play the principles discussed ...

[82] See above Part II(A)(2).

[83] See, eg, Quek v Beggs (1990) 5 BPR 11 761, 11 764 (McLelland J); Stivactas v Michaletos [No 2] [1993] Aust Contract Reports 90-031, 89 662 (Kirby P), 89 676 (Sheller JA); Smith v Smith (Unreported, Supreme Court of NSW, Bryson J, 12 July 1996) 25–6; Mollross v Post (Unreported, Supreme Court of Tasmania, Zeeman J, 23 December 1992) 18–19; Baburin v Baburin [1990] 2 Qd R 101, 109 (Kelly SPJ); Nattrass v Nattrass [1999] WASC 77 (Unreported, Commissioner Buss, 25 June 1999) [99]. In contrast, in Micarone v Perpetual Trustees Australia Ltd [1999] SASC 265; (1999) 75 SASR 1, 52 Olsson J suggested obiter that parent and adult child relationships fell within the automatic presumption of undue influence. In Couper Holdings Pty Ltd (in liq) v Bell [1999] WASC 232 (Unreported, Owen J, 24 November 1999) Owen J noted that although a special relationship will often be presumed where the parties are parent and child, it is less likely when both parties are adults: at [114].

[84] See below Part IV(B).

[85] See generally Cummins, Guaranteeing Someone Else’s Debts, above n 1, 6–7.

[86] See, eg, Lawrence Whalley, The Aging Brain (2001) ch 4, who considers the issue of the slowing of mental speed, particularly after the age of 70, which can affect memory and language; Ian Stuart-Hamilton, ‘Intellectual Changes in Late Life’ in Robert Woods (ed), Handbook of the Clinical Psychology of Ageing (1996) 23.

[87] Dementia and Alzheimer’s disease are strongly associated with mental impairment and the ageing of the brain: see, eg, Whalley, above n 86, ch 8; Robert Woods, ‘Mental Health Problems in Late Life’ in Robert Woods (ed), Handbook of the Clinical Psychology of Ageing (1996) 197.

[88] Australia & New Zealand Banking Group Ltd v Dzienciol [2001] WASC 305 (Unreported, McLure J, 9 November 2001).

[89] See, eg, Adenan v Buise [1984] WAR 61.

[90] See, eg, Mitchell v 700 Young Street Pty Ltd [2001] VSC 116 (Unreported, Cummins J, 23 April 2001).

[91] See, eg, Nattrass v Nattrass [1999] WASC 77 (Unreported, Commissioner Buss, 25 June 1999); Australia & New Zealand Banking Group Ltd v Dzienciol [2001] WASC 305 (Unreported, McLure J, 9 November 2001).

[92] See, eg, Tessmann v Costello [1987] 1 Qd R 283; Mollross v Post (Unreported, Supreme Court of Tasmania, Zeeman J, 23 December 1992).

[93] There are several cases in which undue influence has been raised where courts appeared to be satisfied that the elder had exercised a free and independent will, notwithstanding proof of these conditions: Mitchell v 700 Young Street Pty Ltd [2001] VSC 116 (Unreported, Cummins J, 23 April 2001); Australia & New Zealand Banking Group Ltd v Dzienciol [2001] WASC 305 (Unreported, McLure J, 9 November 2001); Tessmann v Costello [1987] 1 Qd R 283; Mollross v Post (Unreported, Supreme Court of Tasmania, Zeeman J, 23 December 1992). In relation to the tension between individual autonomy and the protection of vulnerable persons, see Cummins, Guaranteeing Someone Else’s Debts, above n 1, 7–9.

[94] See above Part II(A)(1).

[95] (1984) 56 ACTR 39.

[96] Ibid 46–7 (Kelly J).

[97] See, eg, Heming v Heming [2000] NSWSC 250 (Unreported, Hodgson CJ, 16 March 2000); Baburin v Baburin [1990] 2 Qd R 101; Baburin v Baburin [No 2] [1991] 2 Qd R 240; Micarone v Perpetual Trustees Australia Ltd [1999] SASC 265; (1999) 75 SASR 1.

[98] Couper Holdings Pty Ltd (in liq) v Bell [1999] WASC 232 (Unreported, Owen J, 24 November 1999).

[99] [1999] SASC 265; (1999) 75 SASR 1.

[100] Ibid 135 (Debelle and Wicks JJ; Olsson J dissenting).

[101] Archer v Archer [2000] NSWCA 314 (Unreported, Handley, Beazley and Fitzgerald JJA, 7 November 2000); Micarone v Perpetual Trustees Australia Ltd [1999] SASC 265; (1999) 75 SASR 1.

[102] Urane v Whipper [2001] NSWSC 796; [2002] NSW ConvR 55-992.

[103] Ibid [16] (Windeyer J). For a discussion of the kinds of problems which inherently arise in relation to family agreements, see Rosslyn Monro, ‘Family Agreements: All with the Best of Intentions’ (2002) 27 Alternative Law Journal 68; Brian Herd, ‘The Family Agreement: Legal Good Sense or Social Bad Taste for the Aged?’ (2002) 27 Alternative Law Journal 72.

[104] Urane v Whipper [2001] NSWSC 796; [2002] NSW ConvR 55-992, [24] (Windeyer J).

[105] Ibid.

[106] However, Windeyer J found that the bargain between the parties was an unconscionable dealing because the plaintiff, in a state of weakness, had little choice: ibid [27].

[107] For a discussion of the general principle that a court will not enforce a guarantee where the financier entrusts a debtor to obtain execution of the guarantee, see below Part III(C)(2)(b).

[108] [1990] 1 QB 923 (‘Aboody’).

[109] [1999] SASC 265; (1999) 75 SASR 1, 51.

[110] [1999] WASC 232 (Unreported, Owen J, 24 November 1999).

[111] Ibid [120]. See also the decision in IOOF Australia Trustees Ltd v Oxenham [1997] SADC 3740 (Unreported, Judge Allan, 19 December 1997).

[112] [1998] 1 NZLR 674.

[113] Ibid 693–4 (Blanchard J).

[114] CIBC Mortgages plc v Pitt [1993] UKHL 7; [1994] 1 AC 200, 207–9 (Lord Browne-Wilkinson).

[115] Meagher, Gummow and Lehane, above n 14, [1524]; Duggan, above n 14, [1110]. Cope, above n 14, [146]–[158] does not state that this is a requirement.

[116] See, eg, Urane v Whipper [2001] NSWSC 796; [2002] NSW ConvR 55-992; Archer v Archer [2000] NSWCA 314 (Unreported, Handley, Beazley and Fitzgerald JJA, 7 November 2000); IOOF Australia Trustees Ltd v Oxenham [1997] SADC 3740 (Unreported, Judge Allan, 19 December 1997); Wil-

by v St George Bank Ltd [2001] SASC 138 (Unreported, Lander J, 2 May 2001); Wil-

by v St George Bank (2001) 80 SASR 404.

[117] [1999] WASC 232 (Unreported, Owen J, 24 November 1999).

[118] Ibid [119].

[119] See, eg, Burke v State Bank of New South Wales (1994) 37 NSWLR 53, 77 (Santow J); ASB Bank Ltd v Harlick [1996] 1 NZLR 655, 662 (Gault J); Wilby v St George Bank (2001) 80 SASR 404, 414 (Full Court of the Supreme Court of South Australia affirming the view of the trial judge, Lander J).

[120] [1936] HCA 41; (1936) 56 CLR 113, 134.

[121] For example, in Briggs v Scott (1990) 14 Fam LR 31, Bryson J held that a widow aged 59 who had suffered brain damage and consequent short-term memory loss was dependent on her de facto partner. In Le Boursicot v Coulthard [1997] Aust Contract Reports 90-082, an elderly man suffered significant mental impairment and was unable to care for himself. He was befriended by a young woman upon whom he became reliant. In Grineff v Chusov [1999] NSWSC 652 (Unreported, Davies AJ, 16 June 1999), an elderly woman suffered from severe dementia and was reliant upon her deceased brother’s wife.

[122] (Unreported, Supreme Court of NSW, Needham J, 5 December 199l).

[123] Ibid 2.

[124] [1993] Aust Contract Reports 90-031.

[125] Ibid 89 662 (Kirby P), 89 667–8 (Mahoney JA), 89 677–8 (Sheller JA). A similar level of dependency arose in Nattrass v Nattrass [1999] WASC 77 (Unreported, Commissioner Buss, 25 June 1999) [134], where the Court held that the elder, who was suffering dementia, was significantly dependent on her daughter-in-law for ordinary day-to-day personal and domestic needs and for the management of her financial affairs.

[126] [1996] 1 NZLR 655.

[127] Ibid 662.

[128] Australian Guarantee Corporation v McClelland [1993] ASC 56-230; Sinclair v Galluzzo (Unreported, Supreme Court of NSW, Spender AJ, 9 November 1994); Ryan v Tooth (Unreported, Supreme Court of NSW, Bryson J, 24 September 1993).

[129] (Unreported, Supreme Court of NSW, Spender AJ, 9 November 1994).

[130] [2001] VSC 116 (Unreported, Cummins J, 23 April 2001).

[131] Ibid [7], [15]. In relation to indirect benefits to the elder, see also Micarone v Perpetual Trustees Australia Ltd [1999] SASC 265; (1999) 75 SASR 1.

[132] Mitchell v 700 Young Street Pty Ltd [2001] VSC 116 (Unreported, Cummins J, 23 April 2001) [34]. Consistent with this decision, courts have held that refinancing arrangements under which an earlier mortgage or guarantee to a financial institution supporting an adult child is released and replaced by another mortgage or guarantee in favour of another financial institution are advantageous to an elder, particularly when the transaction postpones possible action against the elder’s property: see, eg, Australian Guarantee Corporation Ltd v McClelland [1993] ASC 56-230; Jacobs v Shugg (Unreported, Supreme Court of Victoria, O’Bryan J, 24 May 1996).

[133] (Unreported, Supreme Court of Tasmania, Zeeman J, 23 December 1992).

[134] This appears to have been a problem in several cases concerning elders seeking to have transactions set aside: see Cummins, Guaranteeing Someone Else’s Debts, above n 1, 5.

[135] The cases concerning elders appear to contemplate that not only actual notice of the undue influence perpetrated, but also constructive notice, will be sufficient: Australian Guarantee Corporation Ltd v McClelland [1993] ASC 56-230; Sinclair v Galluzzo (Unreported, Supreme Court of NSW, Spender AJ, 9 November 1994). Cf Jacobs v Shugg (Unreported, Supreme Court of Victoria, O’Bryan J, 24 May 1996) 17–19 where O’Bryan J appears to apply the actual knowledge standard only, although he refers to constructive notice. According to Duggan, above n 14, [1120], the decision in Barclays Bank plc v O’Brien [1993] UKHL 6; [1994] 1 AC 180 indicated that constructive as well as actual notice by a third party would generally be sufficient to set aside guarantees for undue influence. Although the use of the term ‘constructive notice’ has been criticised by the House of Lords in Royal Bank of Scotland plc v Etridge [No 2] [2001] UKHL 44; [2001] 3 WLR 1021, 1036 (Lord Nicholls), 1057 (Lord Hobhouse), 1072 (Lord Scott), it remains clear that third parties will be bound by notice of undue influence when the circumstances of the relationship of the debtor and guarantor put them on inquiry.

[136] See, eg, Australian Guarantee Corporation Ltd v McClelland [1993] ASC 56-230; Sinclair v Galluzzo (Unreported, Supreme Court of NSW, Spender AJ, 9 November 1994); Micarone v Perpetual Trustees Australia Ltd [1999] SASC 265; (1999) 75 SASR 1; Wilby v St George Bank (2001) 80 SASR 404.

[137] See, eg, Jacobs v Shugg (Unreported, Supreme Court of Victoria, O’Bryan J, 24 May 1996).

[138] Australian Guarantee Corporation Ltd v McClelland [1993] ASC 56-230.

[139] Sinclair v Galluzzo (Unreported, Supreme Court of NSW, Spender AJ, 9 November 1994).

[140] See above Part III(C)(2)(a).

[141] Harlick v ASB Bank Ltd (Unreported, High Court of New Zealand, Robertson J, 1 February 1995) 4–5.

[142] Ibid 7.

[143] Ibid 8.

[144] Ibid 8–10.

[145] (1994) 37 NSWLR 53.

[146] In this case, the debtor is in effect considered to act as the financier’s agent for the purpose of obtaining the execution and delivery of the guarantee: see, eg, the earlier decisions in Avon Finance Co Ltd v Bridger [1985] 2 All ER 281; Challenge Bank Ltd v Pandya [1993] SASC 3803; (1993) 60 SASR 330.

[147] Burke v State Bank of New South Wales (1994) 37 NSWLR 53, 60.

[148] Ibid 77.

[149] Ibid.

[150] See also Couper Holdings Pty Ltd (in liq) v Bell [1999] WASC 232 (Unreported, Owen J, 24 November 1999).

[151] [1992] 2 NZLR 157.

[152] Ibid 171–2 (Richardson J), 175–6 (Gault J), 183 (McKay J). In Micarone v Perpetual Trustees Australia Ltd [1999] SASC 265; (1999) 75 SASR 1, a majority of the Full Court of the Supreme Court of South Australia acknowledged the general principle that a court will not enforce a guarantee where a creditor entrusts procurement of the execution of the guarantee to a debtor able to influence the guarantor: at 133–4 (Debelle and Wicks JJ). However, the majority indicated that it was not an absolute principle and the facts of the case before it did not support its application. The fact that a person directly interested in having the guarantee executed had simply collected the documents and delivered them to the potential guarantor was insufficient to impute the alleged undue influence to the third party. In Mitchell v 700 Young Street Pty Ltd [2001] VSC 116 (Unreported, Cummins J, 23 April 2001) [19], the Court found that the son was provided with the documentation for execution by the mother. The Court held that the mother fully understood what she was executing and that the son presented himself as an honest and reliable witness. Therefore, the fact that the son explained the documents to the mother and procured the execution of them was not a basis upon which the guarantees could be set aside.

[153] [1985] UKHL 2; [1985] AC 686.

[154] Ibid 704. See also Royal Bank of Scotland plc v Etridge [No 2] [2001] UKHL 44; [2001] 3 WLR 1021, 1032–3 (Lord Nicholls).

[155] See, eg, the facts of National Westminster Bank plc v Morgan [1985] UKHL 2; [1985] AC 686.

[156] Meagher, Gummow and Lehane, above n 14, [1524]; Duggan, above n 14, [1116].

[157] Meagher, Gummow and Lehane, above n 14, [1524]; Duggan, above n 14, [1116]; Dal Pont and Chalmers, above n 10, 195–7.

[158] [1990] 2 Qd R 101, 109.

[159] See also Duggan, above n 14, [1116]. Therefore, in Baburin v Baburin, the adequacy or inadequacy of consideration paid for shares did not determine whether or not a presumption arose in favour of the elder. Rather, the issue was whether the will of the plaintiff had been overborne: [1990] 2 Qd R 101, 110.

[160] See Johnson v Buttress [1936] HCA 41; (1936) 56 CLR 113, 135–6 (Dixon J). See also McKeering v Rattle (Unreported, Supreme Court of Queensland, White J, 5 May 1995) 24.

[161] See, eg, Burke v State Bank of New South Wales (1994) 37 NSWLR 53; Sinclair v Galluzzo (Unreported, Supreme Court of NSW, Spender AJ, 9 November 1994); Wilby v St George Bank Ltd [2001] SASC 138 (Unreported, Lander J, 2 May 2001); Wilby v St George Bank (2001) 80 SASR 404.

[162] Sinclair v Galluzzo (Unreported, Supreme Court of NSW, Spender AJ, 9 November 1994).

[163] Burke v State Bank of New South Wales (1994) 37 NSWLR 53.

[164] See, eg, Australian Guarantee Corporation Ltd v McClelland [1993] ASC 56-230; Jacobs v Shugg (Unreported, Supreme Court of Victoria, O’Bryan J, 24 May 1996).

[165] [2001] VSC 116 (Unreported, Cummins J, 23 April 2001).

[166] (Unreported, Supreme Court of Tasmania, Zeeman J, 23 December 1992).

[167] Ibid 20.

[168] Ryan v Tooth (Unreported, Supreme Court of NSW, Bryson J, 24 September 1993) 5, 49; Le Boursicot v Coulthard [1997] Aust Contract Reports 90-082, 90 608, in which the Court of Appeal of the Supreme Court of NSW upheld the approach of McLelland CJ at first instance in Coulthard v Le Boursicot (Unreported, Supreme Court of NSW, McLelland CJ, 18 October 1996).

[169] Nattrass v Nattrass [1999] WASC 77 (Unreported, Commissioner Buss, 25 June 1999).

[170] (1990) 5 BPR 11 761.

[171] Ibid 11 764.

[172] [1999] WASC 77 (Unreported, Commissioner Buss, 25 June 1999).

[173] Ibid [100].

[174] Ibid [109].

[175] Ibid [112].

[176] See, eg, Spong v Spong [1914] HCA 52; (1914) 18 CLR 544, 550 (Isaacs J); Bank of Victoria Ltd v Mueller [1925] VLR 642, 648–50 (Cussen J).

[177] Barclays Bank plc v O’Brien [1993] UKHL 6; [1994] 1 AC 180, 193 (Lord Browne-Wilkinson).

[178] Bryan, above n 13, 2.6.

[179] Cope, above n 14, [196]–[197]. In Royal Bank of Scotland plc v Etridge [No 2] [2001] UKHL 44; [2001] 3 WLR 1021, Lord Nicholls also appeared to overlap manifest disadvantage and the concept of substantial benefit. Under the heading ‘Manifest disadvantage’ he referred to a second requirement that the ‘transaction is not readily explicable by the relationship of the parties’: at 1032. This would be the case where a gift or an undervalued sale was so large that it would not be explicable by the relationship and would constitute a disadvantage to the vulnerable person.

[180] See above Part II(A)(1).

[181] Birks and Chin, above n 10, 67–74.

[182] (Unreported, Supreme Court of NSW, Needham J, 5 December 199l).

[183] [1993] Aust Contract Reports 90-031.

[184] It is questionable whether the parties who received the gifts in these cases could have been accused of taking advantage of the old age of the women donors. Therefore it is debatable whether the doctrine of unconscionable dealing would have been available to set aside the gifts.

[185] [1997] NZCA 312; [1998] 1 NZLR 661.

[186] Ibid 670 (Keith and Williams JJ) quoting the trial judge, Elias J. The case has been cited as support for plaintiff-sided conduct: Dal Pont and Chalmers, above n 10, 185.

[187] See above Part III(C)(2)(b).

[188] See above Part II(A)(2).

[189] Cope, above n 14, [168].

[190] Ibid [185].

[191] Yerkey v Jones [1939] HCA 3; (1940) 63 CLR 649, 671 (Dixon J). For a full description of the invalidating tendency see: at 675–6 (Dixon J).

[192] [1998] HCA 48; (1998) 194 CLR 395 (‘Garcia’).

[193] Ibid 408–9 (Gaudron, McHugh, Gummow and Hayne JJ), 440–3 (Callinan J). Kirby J also held that the guarantee could be set aside, but was critical of the Yerkey v Jones principle and did not apply it: at 421–9.

[194] There have been a few cases where courts have taken the view that elders should be treated in the same way as wives. In Salerno v Saunders (1993) 173 LSJS 362, Judge Burley considered that parents guaranteeing a son’s debts ought, like wives, to be able to argue that they were entitled to the protection of independent advice as there was the likelihood of influence and reliance on the son: at 365–6. In Alderton v Prudential Assurance Co Ltd [1993] FCA 127; (1993) 41 FCR 435, Heerey J suggested that parents may be a protected class when they are elderly and poorly educated compared with their adult child: at 448.

[195] [1993] ASC 56-230.

[196] As Cummins, Guaranteeing Someone Else’s Debts, above n 1, 25 points out in relation to Garcia: ‘It is at once an over-inclusive and under-inclusive category, as it includes partners who have no special vulnerability and excludes other emotional relationships which do involve special vulnerability.’

[197] [1999] SASC 265; (1999) 75 SASR 1.

[198] Ibid 135 (Debelle and Wicks JJ).

[199] Cited in ibid 38 (Olsson J). See also Cummins, Guaranteeing Someone Else’s Debts, above n 1, 12.

[200] In this regard, recent developments in the United Kingdom appear to have surpassed Garcia. In Royal Bank of Scotland plc v Etridge [No 2] [2001] UKHL 44; [2001] 3 WLR 1021, the House of Lords set out a framework that banks and financial institutions must follow in order for guarantees to be enforceable against wives providing security for a husband’s debts. However, the Court made it clear that a bank would be put on inquiry whenever a person offers to act as surety for debts of another where the relationship of those parties was ‘non-commercial’: at 1048 (Lord Nicholls). It is likely that the relationship between an adult child and his or her elderly parent would come within this category. For considerations of this case, see Dominic O’Sullivan, ‘Developing O’Brien(2002) 118 Law Quarterly Review 337; Mika Oldham, ‘If at First ... Undue Influence and the House of Lords’ (2002) 61 Cambridge Law Journal 29.

[201] Duggan, above n 14, [1119].

[202] See, eg, Stivactas v Michaletos [No 2] [1993] Aust Contract Reports 90-031.

[203] See, eg, Australian Guarantee Corporation v McClelland [1993] ASC 56-230; Sinclair v Galluzzo (Unreported, Supreme Court of NSW, Spender AJ, 9 November 1994); Urane v Whipper [2001] NSWSC 796; [2002] NSW ConvR 55-992; Mitchell v 700 Young Street Pty Ltd [2001] VSC 116 (Unreported, Cummins J, 23 April 2001). See also Wilkinson v ASB Bank Ltd [1998] 1 NZLR 674 where there was no imputation of actual undue influence to a bank and the guarantor had not obtained independent advice, relying on the advice of the family solicitor instead.

[204] [2001] NSWSC 796; [2002] NSW ConvR 55-992.

[205] [2001] VSC 116 (Unreported, Cummins J, 23 April 2001).

[206] See, eg, Burke v State Bank of New South Wales (1994) 37 NSWLR 53; ASB Bank Ltd v Harlick [1996] 1 NZLR 655.

[207] See, eg, Bridgewater v Leahy [1998] HCA 66; (1998) 194 CLR 457; Urane v Whipper [2001] NSWSC 796; [2002] NSW ConvR 55-992.

[208] See, eg, Australian Guarantee Corporation v McClelland [1993] ASC 56-230; Mollross v Post (Unreported, Supreme Court of Tasmania, Zeeman J, 23 December 1992); Wilby v St George Bank (2001) SASR 404.

[209] See the comments of Kirby P in Stivactas v Michaletos [No 2] [1993] Aust Contract Reports 90-031, 89 661–2.

[210] Garcia [1998] HCA 48; (1998) 194 CLR 395, 404 (Gaudron, McHugh, Gummow and Hayne JJ).

[211] (1994) 37 NSWR 53.

[212] Trebilcock and Elliott, above n 10.

[213] See the decisions of the House of Lords concerning the giving of guarantees by wives in Barclays Bank plc v O’Brien [1993] UKHL 6; [1994] 1 AC 180; Royal Bank of Scotland plc v Etridge [No 2] [2001] UKHL 44; [2001] 3 WLR 1021.

[214] Trebilcock and Elliott, above n 10, 82.

[215] Ibid 79–81. See also Cummins, Guaranteeing Someone Else’s Debts, above n 1, 23, who suggests a ‘cooling-off period’ after an elder has signed a personal guarantee.

[216] See, eg, Cummins, Guaranteeing Someone Else’s Debts, above n 1, 29–33; Cummins, ‘Relationship Debt and the Aged’, above n 10, 66–7.

[217] This approach has been taken by overseas jurisdictions setting up ‘homestead legislation’: see Cummins, Guaranteeing Someone Else’s Debts, above n 1, 31.

[218] 33 ME REV STAT ANN (West) § 1022(1) (2001). A ‘major transfer of personal property’ is defined under § 1021(5) as ‘a transfer of money or items of personal property which represent 10% or more of the elderly dependent person’s estate.’

[219] Under 33 ME REV STAT ANN (West) § 1021(4) (2001) ‘less than full consideration’ means that ‘the transferee pays less than fair market value for the property or the transfer is supported by past consideration.’

[220] 33 ME REV STAT ANN (West) § 1023(2) (2001).

[221] 33 ME REV STAT ANN (West) §§ 1021(3), 1022(1) (2001).

[222] 33 ME REV STAT ANN (West) § 1021(2) (2001).

[223] 33 ME REV STAT ANN (West) § 1022(2) (2001).

[224] 33 ME REV STAT ANN (West) § 1021(1) (2001). The legislation also sets out the causes of dependency. An elderly person will be dependent when he or she is dependent for care and support because he or she:

  1. Suffers from a significant limitation in mobility, vision, hearing, emotional or mental functioning or the ability to read or write; or
  2. Is suffering or recovering from a major illness or is facing or recovering from major surgery.

[225] Under 33 ME REV STAT ANN (West) § 1022(1) (2001), the presumption arises where there is a transfer ‘by an elderly person who is dependent on others to a person with whom the elderly dependent person has a confidential or fiduciary relationship’.

[226] [2001] NSWSC 796; [2002] NSW ConvR 55-992.

[227] (Unreported, Supreme Court of Tasmania, Zeeman J, 23 December 1992).