(A) THE IDENTIFICATION OF FIDUCIARY RELATIONSHIPS OF CONFIDENCE

The terms ‘fiduciary relationship’ and ‘relationships of confidence’ have been used indiscriminately in some cases which should properly have been treated as involving undue influence,^[1] whereas in other cases the courts have relied on undue influence when the doctrine of abuse of fiduciary relationships of confidence was more appropriate. Although the line between undue influence and abuse of a fiduciary relationship of confidence is a fine one, essentially a distinction needs to be drawn between those relationships where the defendant can influence the claimant and those where the claimant is totally dependent on the defendant. The doctrine of abuse of fiduciary relationships of confidence will only apply as regards the latter group of relationships.

(B) THE RELATIONSHIP BETWEEN UNDUE INFLUENCE AND ABUSE OF FIDUCIARY RELATIONSHIPS OF CONFIDENCE

The boundary between the doctrine of abuse of fiduciary relationships of confidence and undue influence is uncertain,^[2] particularly because where there is a relationship of confidence there will also be the potential for undue influence. So, typically both may be pleaded on the same set of facts. But although the two principles overlap, they do not coincide.^[3] The doctrine of abuse of fiduciary relationships of confidence has two important advantages over undue influence. First, it is not necessary to show that the claimant was, or might be, under the influence of the defendant. Thus, in Moody v Cox and Hatt^[4] a transaction between a solicitor and his client was set aside by reason of the solicitor’s non-disclosure of material details about the transaction, and it was irrelevant that the claimant was an independent man of business who would not have looked to the defendant for advice. All that needed to be established was that there was a fiduciary relationship between the parties and that the fiduciary had breached his duties by nondisclosure. The second advantage which the doctrine of abuse of a fiduciary relationship of confidence has, at least where the claimant seeks to rely on the presumption of undue influence, is that there is no need to show that the transaction requires explanation. Once the relationship of confidence has been identified, the need for an explanation is assumed and the burden is on the fiduciary to show that the transaction was not unfair to the claimant. The heavy burden of proving that the transaction is fair is shifted where there is a relationship of confidence simply because of the potential for abuse of such relationships by the fiduciary.^[5]

The different roles of undue influence and breach of a fiduciary relationship of confidence is illustrated by an example which was suggested by the Court of Appeal in BCCI v Aboody,^[6] involving an ‘old lady who was induced by her solicitor under strong pressure to sell him a large and inconvenient family home at full market value’. Although it might be possible to establish that the old lady had actually been unduly influenced by the solicitor to sell him her house, it would be much easier for her to base her claim on abuse of a fiduciary relationship of confidence, since then she would only need to establish that the solicitor owed her fiduciary duties, which is obvious, which he had breached by transacting with her. There would be no need to show that she was unduly influenced by her solicitor. The burden is then on the solicitor to establish that the transaction was perfectly fair and that he or she had made full disclosure to the old lady.

• [1] indiscriminate use of these terms see Lloyds Bank Ltd v Bundy [1975] QB 326, 341 (Sir Eric Sachs) and Roche vSherrington [1982] 1 WLR 599.
• [2] CICB Mortgages plc v Pitt [1994] 1 AC 200, 209 (Lord Browne-Wilkinson).
• [3] BCCI v Aboody [1990] QB 923, 962. In Moody v Cox and Hatt [1917] 2 Ch 71, 79 Lord Cozens-Hardy
• [4] MR specifically held that equitable relief was awarded by reason of a breach of a relationship of confidence andnot for undue influence. 162 [1917] 2 Ch 71.
• [5] Ibid, p 963. See also CIBC Mortgages plc v Pitt [1994] 1 AC 200, 209 (Lord Browne-Wilkinson).
• [6] [1990] QB 923,962. 3 See p 502, below. 166 See Mahoney v Purnell [1996] 3 All ER 61.