ESSAY QUESTION
What is ‘the fusion fallacy’ and is it really a fallacy? Should Equity be ‘fused’ with the common law?
You should support your analysis by detailed reference to at least THREE (3) cases.

Objective/Criteria

Comprehension and description of the equitable doctrine of undue influence (as it exists in Australia today).

Answers the question: Is it really a fallacy? Understanding of the law and the pertinent legal. Quality of analysis.

Answers the question: Should Equity be ‘fused’ with the common law?
Understanding of the law and the pertinent legal. Quality of analysis.

Research, referencing, bibliography.

Sound analysis and structure.

Cogently written. Spelling, grammar, punctuation, adherence to conventions of legal writing, compliance with AGLC4.

Class Lesson
Equity and the Common law
1. Before the Judicature System: the Need for Reform
a. Dissatisfaction with Chancery and with the dual court system
Bleak House
b. Why reform was needed.
• Coroneo v Australian Provincial Assurance Asn Ltd (1935) 35 SR (NSW) 391.
• Castlereagh Motels v Davies-Roe [1966] 2 NSWLR 79.

2. The Judicature System
a. Implemented by the Judicature Acts of 1873 and 1875
b. Unified the administration of Equity and the Common Law
c. Chief features of the Judicature System

3. The Implementation of the Judicature System in Australia
a. The Export of Equity to Australia
• States other than NSW
• WA – Supreme Court Act 1935 (WA)
 s16(1)
 s24 and
 s25
• NSW – Supreme Court Act 1970 (NSW) and Law Reform
• (Law and Equity) Act 1972 (NSW)

b. Consequences: the gradual implementation in this country of the Judicature System and, in particular, the survival in NSW until the late 20th century of the old ‘dual’ / ‘divided’ system helps to explain why Australia has the most active and robust equitable jurisdiction in the common law world.

1. Equity and the Common Law today
a. A ‘gloss’ on the law.
b. The ‘fusion fallacy’
Although the Judicature Acts supposedly fused only the administration of Law and Equity and not the jurisdictions themselves, from time to time ‘the waters of the confluent streams of law and equity’ have appeared to ‘mingle’ – if only in the minds of certain (often eminent) members of the judiciary. See United Scientific Holdings Limited v Burnley Borough Council [1978] AC 904.
Illustrations of the fallacy in action:
Walsh v Lonsdale (1882) 21 Ch D 9
Seager v Copydex Ltd [1967] 2 All ER 415
Commonwealth v Verwayen (1990) 170 CLR 394
Digital Pulse Pty Ltd v Harris (2002) 40 ACSR 487
Cf Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298

2. Distinctive Features of Equity
a. Principles not rules
Equitable decrees are no longer ad hoc reactions to a given application, but are decided on the basis of established principles collected together to form ‘doctrines’. These principles retain a degree of flexibility that distinguishes them from common law ‘rules’.
b. The maxims of Equity
The equitable maxim is an important and distinctive feature of Equity. It has no equivalent at common law. The maxim is a makes a generalised statement about an equitable principle or encapsulates equity’s stance / attitude on certain matters.
However, these summary statements are not merely descriptive. They serve as guideposts indicating the way that Equity generally ought to operate.
Some Examples of Equitable Maxims:
• Equity follows the law
• He who seeks equity must do equity
• He who comes into Equity must come with clean hands
• Equity assists the diligent, not the tardy
• Equity acts in personam
• Equity looks to the intent, rather than the form
• Equity will not assist a volunteer
• Equity considers to be done that which ought to be done
• Equity does not allow a statute to be made the instrument of fraud.
3. Categories of Equitable jurisdiction
o Exclusive
o Concurrent; and
o Auxilliary.
Suggested Reading:
Bryan and Vann, Equity and Trusts in Australia, Chapter 1.
Young, Croft and Smith, On Equity Chapter 1, pp 49 – 71; Chapter 2, pp 83 – 111; and Chapter 3.
Heydon and Loughlan, Cases and Materials on Equity and Trusts, Chapter 1.
Dal Pont and Chalmers, Equity and Trusts in Australia and New Zealand, pp 8–16.
Dal Pont and Chalmers, Equity and Trusts: Cases and Materials, pp 14–28

Undue Influence
Suggested Reading:
Texts:
Bryan and Vann, Equity and Trusts in Australia, Chapter 7, pp 105-110.
Young, Croft and Smith, On Equity Chapter 5, pp 311 – 323.
Heydon and Leeming, Cases and Materials on Equity and Trusts, Chapter 14, pp371 – 380
Evans 213 – 224
Parkinson 379-419
MGL 501-524
Cases:
Allcard v Skinner (1887) 36 Ch D 145
BCCI v Aboody [1989] 1QB 923
Johnson v Buttress (1936) 56 CLR 113
Bank of NSW v Rogers (1941) 65 CLR 42

1. Introduction
a. The approach of the common law in common law and property
b. The role of the equitable doctrine of undue influence
c. Beginnings: common law duress, illegitimate pressure and undue influence
• Duress
Barton v Armstrong [1976] AC 104
• Illegitimate Pressure
Williams v Bayley (1866) LR 1 HL 200; and
Mutual Finance Ltd v John Wetton & Sons [1937] 2 KB 389.
R v AG (2002) PC
• Undue Influence

2. What is undue influence? When is influence undue?
a. Definition
b. Burden of Proof
c. Two types of undue influence: actual undue influence and presumed undue influence.

3. Taxonomy
2 sub-categories:
Presumed Undue Influence
(2A) cases where the relationship between the parties is one which is deemed to raise a presumption of UI; and

(2B) cases in which the claimant affirmatively proves that proves that a relationship of trust and confidence did in fact exist.
BCCI v Aboody [1989] 1QB 923.
Actual Undue Influence

4. Actual Undue Influence
BCCI v Aboody [1989] 1QB 923.
The claimant must prove 4 things:
1. the capacity of the stronger party to influence the weaker party;
2. that the stronger party did exert influence;
3. that the exercise of that influence was undue; and
4. that this undue influence brought about the transaction in question.
5. Presumed Undue Influence
a. Class 2A cases – relationships automatically raising the presumption of law
– solicitor and client,
– doctor and patient,
– parent and child,
– guardian and ward, and
– religious leader and follower.
– Fiancé and fiancée ???

Examples: Allcard v Skinner (1887) 36 Ch D 145;
Khan v Khan [2004] 62 NSWLR 229

b. Class 2B – De facto relations of influence
What must be proven?
Union Fidelity Trustee Co of Aust Ltd v Gibson [1971] VR 573, 577 Gillard J
Anderson v McPherson [No 2] [2012] WASC 19

c. How much dependence is excessive?
Simpson v Simpson [1992] 1 FLR 601
Tufton v Sperni [1952] 2 TLR 516

d. Rebutting the presumption
Johnson v Buttress (1936) 56 CLR 113
Inche Noriah v Shaik Allie Bin Omar [1929] AC 127
Westmelton (Vic) Pty Ltd v Archer and Schulman [1982] VR 305
5. Manifest disadvantage
Nat West Bank v Morgan [1985] AC 686
BCCI v Aboody [1989] 1QB 923
CIBC Mortgages v Pitt [1993] 4 All ER 433
Royal Bank of Scotland v Etridge [2002] 2 AC 773
6. Remedies
7. Third Party Liability
Bank of NSW v Rogers (1941) 65 CLR 42
Khan v Khan [2004] 62 NSWLR 229
8. A new Approach – Thorne v Kennedy [2017] HCA 49:
a. Abandons the old presumed undue influence /actual undue influence;
b. A new touchstone – ‘free agency’.
c. Undue influence as impaired autonomy.
9. The Rationale for Undue influence – impaired consent or wicked exploitation?
National Westminster Bank v Morgan [1985] AC 686