UNDUE RETICENCE ON UNDUE INFLUENCE?

Abstract

VITIATING factors in contract law raise difficult and interesting questions. Lawful act duress has been subject to detailed scrutiny in Times Travel (UK) Ltd. v Pakistan International Airline Corp [2021] UKSC 40, [2021] 3 W.L.R. 727, albeit the decision has been subject to criticism (see Morgan [2022] C.L.J. 16). The decision of the Supreme Court of Canada in Heller v Uber Technologies 2020 S.C.C. 16 shone some light on unconscionable bargains (see Hunt [2021] C.L.J. 25). Now it was the turn of undue influence in Nature Resorts Ltd. v First Citizens Bank Ltd. [2022] UKPC 10, [2022] 1 W.L.R. 2788. Unfortunately, the Privy Council’s approach arguably raises almost as many questions as it answers. The Privy Council’s primary decision is that there was no basis for departing from the Court of Appeal’s decision that any presumption of undue influence would, on the facts, have been rebutted. Much more interesting, however, are the brief observations made regarding the presumptions which may be engaged in the doctrine of undue influence. The decision of the majority was given by Lord Briggs and Lord Burrows J.J.S.C.; Lady Arden J.S.C. dissented on a point concerning companies legislation, not discussed further in this note. The appeal concerned the sale of shares in the appellant company, Nature Resorts Ltd. (“NRL”), which owned the Culloden Estate in Tobago. The purchasers agreed to buy 75 per cent of the shares in NRL from the sole shareholder, Mr. Dankou. To facilitate this purchase, they obtained a loan from the Respondent bank. The terms included that the bank would have the security of a mortgage over the Culloden Estate. The bank instructed a lawyer, Richard Wheeler, to prepare the documents relating to the mortgage and the charge over the shares. The purchasers defaulted on their loan, and the bank decided to exercise its power of sale under the mortgage. NRL sought to set aside the deed of mortgage on the basis of undue influence exercised by Wheeler over Dankou, one of the issues being whether it should be presumed that Wheeler abused the professional relationship between himself and Dankou (and NRL), procuring the transaction under challenge. This claim failed before the High Court of Justice of Trinidad and Tobago, and likewise before the Court of Appeal of Trinidad and Tobago. The High Court had held that there was no presumption of undue influence; the Court of Appeal held that there was such a presumption, but it had been rebutted. The Privy Council dismissed NRL’s appeal, holding that the Court of Appeal was justified in finding that any presumption of undue influence had been rebutted; the Privy Council further held that the High Court had been right in the first place that there was no presumption which needed rebutting. Cambridge Law Journal, 82(1), March 2023, pp. 21–24 © The Author(s), 2023. Published by Cambridge University Press on behalf of The Faculty of Law, University of Cambridge. doi:10.1017/S0008197323000132