UNCONSCIONABLE CONDUCT

The recognition of undue influence as a ground of restitution has sometimes been justified on the ground that it involves unconscionable conduct on the part of the defendant.[1] Whilst unconscionable conduct may be presumed where a relationship of trust and confidence has been abused, it is incorrect to assume that restitution is justified for this reason where the claimant relies on undue influence. This is because undue influence is principally, but not completely, a claimant-oriented ground of restitution, in the sense that restitution is justified because the effect of the undue influence is that the claimant was unable to exercise a free choice as to whether or not to transact with the defendant, and there is no need specifically to prove that the defendant had acted unconscionably. There is, however, evidence of another equitable ground of restitution which, whilst founded on the principle of exploitation, is primarily defendant-oriented, in the sense that it will only be established where the defendant is considered to have been at fault.[2] This is the ground of unconscionable conduct. There is a further difference between this ground of restitution and undue influence in that unconscionable conduct does not depend on the identification of an existing relationship of influence or dependency between the claimant and the defendant.[3]

The essential features of unconscionable conduct was identified by Lord Hardwicke in Earl of Chesterfield v Janssen[4] as involving:

fraud presumed or inferred from the circumstances or conditions of the parties contracting: weakness on one side, usury on the other, or extortion or advantage taken of that weakness. There has always been the appearance of fraud from the nature of the bargain.

So a transaction[5] will be voidable in Equity for reasons of unconscionable conduct, or a benefit transferred can be recovered, where the defendant has unconscionably exploited his or her superior bargaining position to the detriment of the claimant who is in a much weaker position.

  • [1] See N Bamforth, ‘Unconscionability as a Vitiating Factor’ [1995] LMCLQ 538; D Capper, ‘Unconscionable Bargains’ (2010) LQR 403.
  • [2] See Commercial Bank of Australia Ltd vAmadio (1983) 151 CLR 447,474 (Deane J). See also Morrison vCoast Finance Ltd (1965) 55 DLR (2d) 710, 713 (Davey JA).
  • [3] Capper has argued that undue influence should be subsumed within the broader ground of unconscionability: D Capper, ‘Undue Influence and Unconscionability: A Rationalisation’ (1998) 114 LQR 479, but thiswould only result in a loss of certainty in the definition and application of the law.
  • [4] (1751) 2 Ves Sen 125, 157; 28 ER 82, 10.
  • [5] Which might be a bargain or a gift: Evans v Lloyd [2013] EWHC 1725 (Ch).
 
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