Creswell v Potter [1978] 1 WLR 255

• Plaintiff allowed her ex-husband, Defendant, to have the home, provided she was released from liability on the mortgage.

• Defendant then sold the house for a very large amount, and Plaintiff sued to set aside the release.

• Megarry J allowed her claim. 

 Megarry J

• Following Kay J’s judgment, there are 3 requirements for equity to be invoked and the presumption of fraud to be invoked:

  1. Plaintiff is “poor and ignorant”;

  2. The sale was at a “considerable undervalue”; and

  3. Plaintiff had no “independent advise”.

• There are other circumstances that could operate instead of, say, requirement (1) - e.g. oppression or abuse. However here, these three apply.

• In a modern context, “poor and ignorant” really means a low-income earner and “less highly educated”.

• In this case Plaintiff is a telephonist and satisfies the criteria. She got no advice and her interest in the property was of a considerably higher value than merely her liability for the mortgage.

• It doesn’t matter whether Plaintiff “could have” got legal advice, but whether in fact she did get any.