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Undue influence - Summary Contract Law

Contract Law (Multimedia University)

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Barclays Bank plc v O'Brien

Lord Browne-Wilkinson noted that although there was no Class 2A presumption of undue
influence in cases involving the husband and wife relationship, the courts were more ready to
find that a husband had exercised undue influence over his wife than in other cases
First, many cases may well fall into the class 2B category of undue influence because the wife
demonstrate that she placed trust and confidence in her husband in relation to her financial
affairs and therefore raises a presumption of undue influence.
Second, the sexual and emotional ties between the parties provide a ready weapon for undue
influence: a wife's true wishes can easily be overborne because of her fear of destroying or
damaging the wider relationship between her and her husband if she opposes his wishes.”

Royal Bank of Scotland v Etridge

the court should not be too ready to find undue influence in every case where a wife stands as
surety for her husband's business debts
If the husband's business is the source of the family income, the wife has a lively interest in doing
what she can to support the business.

Not mere influence but undue: s 16(1)

Poosathurai v Kannappa Chettiar & 0rs)

where the Privy Council held that it is not sufficient to have mere influence, the influence must
be "undue" in that the dominant person has used his position to obtain an unfair advantage.
In this case, the appellant alleged that his maternal uncles influenced him to execute a deed of
sale and he sought to cancel the deed. On the facts, the Privy Council held that it was not proved
that the sale was unconscionable or constituted an advantage unfair to the plaintiff, that is, it was
not a sale for undervalue.

Saw Gaik Beow v Cheong Yew Weng & Ors

where the High Court emphasised the requirement that an unfair advantage was obtained and in
this case, referred to it as "manifest advantage".

a party relying on the plea of undue influence would have to show that (a) the other party had
the capacity to influence him, (b) the influence was exercised, (c) its exercise was undue and (d)
that its exercise brought about the transaction

Ibrahim bin Musa v Bahari bin Nciyan (Sued as Administrator of the estate of Chin @ Husin bin
Derwnbang, deceased
which also involved a sale and purchase of property, the High Court held that there was no unfair
advantage obtained.
There was no gift by Tok Chin to the plaintiff of Tok Chin's shares in the 3 pieces of land. There
was a sale of those shares and the price was $3,000.00 and no evidence was adduced to show
that the $3,000.00 was an under valuation of the shares in the said pieces of land.

Deemed to be in position to dominate: s 16(2)

Saiwath Haneem v Hadjee Abdullah
the parties involved were family members. The plaintiff was the sister in law of the two

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defendants, Abdullah and Daud, who were the younger brothers of Arshad, the plaintiff's
husband.
the Court held that there was a confidential relationship between the plaintiff and the defendants
the Plaintiff, Saiwath, the other wife, Zainab, and the children must have looked upon Abdullah
as the representative of their husband and father, as the head of the family from whom they
could expect advice and protection. Under such circumstances, his influence over them must
have been necessarily great...”

Rosli bin Darus v Mansor @ Harun bin Hj Saad & Anor

In this case, the defendants who were the uncles of the plaintiff failed to rebut the presumption
that undue influence was exercised in the conveyance of the plaintiff's land to them.
The Court-applied the law to the present facts and held that a relationship of dominion of the
uncle towards the plaintiff could be presumed and the defendants had not rebutted this
presumption
the plaintiff was unemployed and without parents and was totally dependent on the first
defendant for his daily subsistence. ... it is fair to presume that there was a relationship in
which the first defendant was in a position to exert undue influence or 'dominion' over the
plaintiff

Tong Seng Din Bon & Anor v Ban Chap Ah Seng

the Court set aside the transfer of property from the first and second plaintiffs to the defendant on
grounds of undue influence.

The evidence showed that the defendant had fully won over the love and trust of both the
plaintiffs, who were an elderly childless couple, to such as extent that the defendant was treated
like their son. The defendant who was in a position of active confidence of the plaintiffs had
subtly exerted undue influence over them.

Father and Son

Khaw Cheng Bok & Ors v Khaw Cheng Poon & Ors
. Cheng Poon and his family took substantial benefits and unusual amounts from the deceased
and the burden of proving good faith of the transactions was upon him and his family, the party
in a position of active confidence.
The gifts were so large and so improvident as not to be reasonably accounted for on the ground
of the relationship between the deceased and Cheng Poon and his family

Solicitor and client

Tara Rajaratnam v Datuk Jagindar Singh & Ors
once a person acts as a solicitor then the presumption of undue influence arises, and unless they
can rebut it the property they acquired from their client cannot be allowed to remain in their
hands. Acting as a solicitor intrinsically creates a fiduciary relationship between a solicitor and
his client which the solicitor cannot take advantage of since it imposes an obligation on its part
to act with strict-fairness and openness towards them

Seah Siang Mong v Ong Ban Chai & Another Case

the High Court held that the solicitor-client relationship came within a fiduciary relationship

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under s 16(2)(a) of the Contracts Act. The Court held that the defendant (OBC) who was an
advocate and solicitor had failed to discharge the burden of showing that no undue influence had
been exercised by him.

Husband and wive

Public Finance Bhd v Lee Bee Rubber Factory Sdn Bhd & Ors
the High Court held that no presumption of undue influence arose by reason of the husband and
wife relationship alone.
the approach of the courts is that there is nothing unusual in a wife showing her affection for her
husband in a tangible way, as for example, by guaranteeing repayment of his debts.

Mayban Finance Bhd v Liew Ek Chiu & Ors

the onus of proof generally lies on the party alleging undue influence. There are however certain
relationships which can give rise to a presumption of undue influence but the case authorities
appear to establish that the relationship of husband and wife is not one of them

Rebutting the presumed undue influence

Inche Noriah v Shaik Allie bin Omar
The Privy Council upheld the trial judge's finding that the relations between the appellant and the
respondent were such as to give rise to a presumption of undue influence. The respondent
brought evidence that the appellant had received independent legal advice from a solicitor.
However, this fact was not sufficient to rebut the presumption.

Undue Influence by third party

Malaysian French Bank Bhd v Abdullah bin Mohd Yusof & Ors
The High Court, while holding that a person not a party to the contract can commit undue
influence, found on the facts that the mere allegations of the third and fourth defendants were not
sufficient to raise the issue of undue influence.
A plea of undue influence can only be raised by a party to the contract and not by a third party.

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