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(B) IDENTIFYING UNCONSCIONABLE CONDUCT

The application of this ground of restitution is illustrated by Hart v O’Connor204 itself, where it was held that unconscionable conduct had not been established on the facts because the defendant, who had bought land from the claimant, was not aware of the claimant’s dementia and there was nothing to put him on notice of this, since it appeared

NZLR 226, 236 (Somers J). Cf Louth v Diprose (1992) 175 CLR 621 and Kakavas v Crown Melbourne Ltd [2013] HCA 25 where the High Court of Australia adopted a subjective test of fault. On the general question of whether a subjective or an objective test of fault should be adopted see Bamforth, ‘Unconscionability as a Vitiating Factor’, 550, who argues that a subjective test of fault should be adopted since this ground of restitution is defendant-oriented and so should depend on clear proof of fault: ibid, 557. An objective test of unconscionability, albeit assessed with reference to the defendant’s knowledge, is consistent with the usual interpretation of unconscionability in Equity. See GJ Virgo, ‘Whose Conscience? Unconscionability in the Common Law of Obligations’ in A Robertson and M Tilbury (eds), The Common Law of Obligations: Divergence and Unity (Oxford: Hart Publishing, 2015) (forthcoming).

  • 196 Alec Lobb (Garages) Ltd v Total Oil GB Ltd [1983] 1 WLR 87, 95 (Peter Millett QC); Credit Lyonnais Bank Nederland NV v Burch [1997] 1 All ER 144; Portman Building Society v Dusangh [2000] 2 All ER 221; Mitchell v James [2001] 1 All ER 116; Jones v Morgan [2001] EWCA Civ 995; Singlar v Bashir [2002] EWHC 883 (Ch); Strydom v Vendside Ltd [2009] EWHC 2130 (QB), [39] (Blair J).
  • 197 Irvani v Irvani [2000] 1 Lloyd’s Rep 412, 425.
  • 198 Multiservice Bookbinding Ltd v Marden [1979] Ch 84, 110 (Browne-Wilkinson J).
  • 199 Strydom v Vendside Ltd [2009] EWHC 2130 (QB), [39] (Blair J).
  • 200 Earl ofAylesford v Morris (1873) LR 8 Ch App 484,491 (Lord Selborne LC); Portman Building Society v Dusangh [2000] EWCA Civ 142, [2000] 2 All ER (Comm) 221.
  • 201 Fry v Lane (1888) 40 Ch D 312. 202 (1993) 69 P and CR 298.
  • 203 For a similar approach to the role of independent advice for the purposes of establishing undue influence, see p 269, above. 204 [1985] AC 1000.

that the vendor was acting in accordance with the most full and careful legal advice. Neither was there any evidence of objective unfairness since the terms of the bargain had been proposed by the claimant’s solicitor and the land had been independently valued. As Lord Brightman concluded: ‘There was no equitable fraud, no victimization, no taking advantage, no overreaching or other description of unconscionable doings which might have justified the intervention of equity... ’[1]

The decision in Hart v O’Connor may usefully be contrasted with the later decision of the New Zealand Court of Appeal in Nichols v Jessup,[2] where the claimant had agreed to grant the defendant a right of way over her land, the effect of which would be to increase the value of the defendant’s land by $45,000 and to decrease the value of the claimant’s land by $3,000. The trial judge found that the consideration which the claimant had received for the transaction had been grossly inadequate, that she had not received legal advice, and that she was unintelligent and muddle-headed. The Court of Appeal held that, where the defendant knew or should have known that the claimant was at a significant disadvantage in appreciating the relative consequences of the transaction, the marked imbalance of benefit arising from it was evidence that the defendant had acted unconscionably. When the case was returned to the trial judge for reconsideration he concluded that the defendant had indeed acted unconscionably, because:

although [the transaction was] not originally extorted by an unconscientious exercise of power [it] should be set aside in exercise of the Court’s equitable jurisdiction on the ground that in all the circumstances it is not consistent with equity and good conscience that the [defendant] should enforce or retain the benefit of the transaction.[3]

The trial judge’s decision is open to two main criticisms. First, it was based on the fact that the transaction was ‘on any objective view... so manifestly one-sided’, even though he had actually found that there was no moral fraud on the part of the defendant.[4] This is surely contrary to the decision of the Privy Council in Hart v OConnor, where emphasis was specifically placed on the need to establish that the defendant had been at fault. Secondly, the question of unconscionable conduct should be judged at the time when the defendant entered into the transaction with the claimant.[5] The judge’s conclusion that the agreement had not been extorted by unconscientious use of power should have meant that the transaction would not be set aside.

  • [1] Ibid, 1024. 2 [1986] 1 NZLR 226.
  • [2] 207 Nichols v Jessup (No 2) [1986] 1 NZLR 237, 240 (Prichard J). 4 Ibid, 239.
  • [3] 209 As is the case where the claimant relies on undue influence. See Allcard v Skinner (1887) 36 Ch D 145,
  • [4] 191 (Bowen LJ).
  • [5] 210 See Yorkshire Bank plc v Tinsley [2004] EWCA Civ 816, [2004] 1 WLR 2380.
 
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