A Tale Of Two Judgments: Third? Party Undue Influence And The Path To Reform In Ireland

AuthorNoel McGrath
PositionBCL (UCD), currently a candidate for the degree of LLM (Research) at the School of Law, University College Dublin. The author would like to thank the Irish Research Council for the Humanities and Social Sciences for their ongoing financial assistance
Cork Online Law R eview 2006 10
McGrath, A Tale o f Two Judgments: Third–
Party Undue Influ ence and the Path to
Reform in Ireland
Noel McGrath*
In this article the author undertakes a detailed and critical analysis of
two major cases in the area of Undue Influence and examines their effect.
Furthermore, the predicted implications of these decisions in the Irish context
are considered and reasoned recommendations with regards to possible
judicial approaches are forwarded. Including a concise synopsis of relevant
academic commentary this piece is up to date and invaluable to students of
equity grappling with the issue of undue influence.
In its decisions in Barclays Bank v O’Brien1 and Royal Bank of
Scotland v Etridge (No.2)2 the House of Lords attempted to balance the
competing interests of lending institutions and non–commercial persons
offering to stand surety for the debts of another. This paper will attempt to
assess the protections created for the surety by these decisions, and will
consider whether the approach in O’Brien and Etridge should be followed by
the Irish courts.
The typical situation which falls to be dealt with may be summarised as
follows. One party to a close personal relationship3 approaches a financial
institution4 seeking an advance often for the business purposes. The creditor
seeks additional security, usually in the form of a charge over the family home
which requires the other party to the relationship5 to agree to stand surety for
the debts of the debtor. When the bank seeks to enforce the security, the
surety will claim that it cannot be enforced against her since her consent was
procured as a result of undue influence, misrepresentation or some other
equitable or legal wrong.
1 Policy Considerations
Such situations give rise to a clear conflict of rights. On the one hand it
has been stated that:
* BCL (UCD), curre ntly a candidate for the degree of LLM (Research) at the School of L aw,
University College Dublin. The author would like to thank the Irish Research Council for the
Humanities and S ocial Sciences for their ongoing fin ancial assistance.
1 [1994] 1 AC 180, h ereinafter O’Brien.
2 [2001] UKHL 44, hereinafter Etridge.
3 The relationship i n question is almost invariably m arriage. However for the sake of
convenience this p arty will be referred to throughou t this paper as “the debtor” unles s the
context requires o therwise. It should be noted howe ver that the case law in this area d oes
cover relationship s other than marriage e.g. parent and child as in Commercial Bank of
Australia v Amad io (1983) 151 CLR 447.
4 Hereinafter “the c reditor” unless the context requir es otherwise.
5 Hereinafter “the surety” unless the context require s otherwise.

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