O was a shareholder in a business and negotiated an overdraft for which he would be liable, the result being that O and W’s (his wife) home would be subject to a charge, but the bank never told W of this. When the company went bust the bank sough to enforce this. W protested on the grounds that O had put undue influence on her to agree to the arrangement. HL held that there was undue influence and therefore the charge on the matrimonial home was set aside.
Lord Browne-Wilkinson: There are 2 classes of undue influence: (1) “Actual undue influence”, where the claimant has to prove that the wrongdoer exerted undue influence on her to enter the transaction; (2) “Presumed undue influence”, where, once the claimant shows that there was “a relationship of trust and confidence of such a nature that it is fair to presume that the wrongdoer abused that relationship in procuring the complainant to enter into the impugned transaction”. Once this has happened the burden is on D to show otherwise [class 2B]. Certain relationships e.g. solicitor and client, doctor and patient etc (i.e. fiduciary relationships) automatically raise the presumption of undue influence, while others can still be shown by the complainant outside these categories [class 2A].