[2025] EWHC 1972 (Comm)

Fecha: 30-Jul-2025

The test

The test

55.

This is not a case where Mrs Bandak alleges actual undue influence. To succeed in her claimed defence of presumed undue influence, Mrs Bandak must prove:

(1)

First, (the burden of proof being on her), that:

(a)

immediately prior to the Guarantee, there was a relationship of influence of Mr Emmett (her former husband) over her, her case being that she placed trust and confidence in him in relation to the management of their financial affairs. It is not sufficient to assert that the transaction itself evidences a “relationship of undue influence”: see Perwaz v Perwaz [2018] UKUT 325 (TCC) at [41], [43], [71], and [75] per Judge Elizabeth Cooke; and

(b)

the Guarantee is one that calls for explanation on the basis that it was “immoderate or irrational” or cannot “be reasonably accounted for on grounds of friendship, relationship, charity, or other motives on which ordinary men act”: see Etridge at [21] to [30] per Lord Nicholls (i.e., the transaction is not readily explicable by the relationship of the parties). In this regard, it must be remembered that undue influence will not be presumed by finding a relationship of trust and confidence in the transaction itself.

(2)

Second, that CPF One had actual or constructive notice of the presumed undue influence; i.e. CPF One must have had notice of the circumstances from which the presumption of undue influence is alleged to arise.

Where the burden of proof is discharged, this results in a rebuttable evidential presumption which allows the court to infer that the transaction can only have been procured by undue influence. It is then for the CPF One to produce evidence to the contrary to show that the transaction was not procured by undue influence.

56.

It is important to note that:

(a)

the specific steps set out in Etridge do not provide the only route to establishing the absence of procurement by undue influence: see Snell’s Equity at paragraphs 8-034 and 8-035; and

(b)

the two limbs must not be conflated. For example, in Syndicate Bank v Dansingani [2019] EWHC 3439 (Ch), His Honour Judge Dight CBE (sitting as a Judge of the High Court) was concerned separately with whether (i) the transaction was to the manifest disadvantage of the surety (at [60]), and (ii) the bank was put on inquiry (at [27]). The latter is concerned with the facts “known” to the lender and, the former to whether there is to be presumed undue influence.

57.

To establish a relationship that could give rise to presumed undue influence, Mrs Bandak must show that there is:

“Proof that the complainant placed trust and confidence in the other party in relation to the management of the complainant's financial affairs ...”;

see Etridge, at [14] per Lord Nicholls. There must be a relationship of trust and confidence that goes to the management of the affairs of the party complaining. There must be a degree of trust and confidence such that:

“the party in who it is reposed, either because he is or has become an adviser of the other or because he has become entrusted with the management of his affairs or everyday needs or for some other reason, is in a position to influence him into effecting the transaction of which complaint is later made”;

see Goldsworthy v Brickell [1987] Ch 378 at 401D. The same test can be applied to the alleged perceived threat.

58.

The relationship must involve control giving rise to a potential for abuse: see Etridge, at [161] per Lord Scott:

“The presumption in Class 2B cases [e.g., where the husband and wife are living together in apparent amity, which fall within the general classification of cases giving rise to the doctrine of undue influence], however, is doing no more than recognising that evidence of the relationship between the dominant and subservient parties, coupled with whatever other evidence is for the time being available, may be sufficient to justify a finding of undue influence on the balance of probabilities.”