Manifest Disadvantage CASES

In English law, manifest disadvantage was a principle used in undue influence cases, requiring claimants to show that a transaction was clearly detrimental to them. It arose particularly in the context of presumed undue influence but has since been refined by later case law.

Definition and Principles

The concept was developed to help courts distinguish between legitimate influence and unconscionable pressure. It asked whether the transaction placed the influenced party at a clear and unjustifiable disadvantage.

Requirements for Establishing

  • Clear detriment: The transaction must have been obviously harmful to the weaker party.
  • Presumption of influence: Typically applied where relationships of trust existed, such as between solicitor and client.
  • Judicial development: Early cases emphasised manifest disadvantage, but its role has since diminished.

Practical Applications

Historically applied in cases of undue influence, such as Allcard v Skinner (1887). Later, in CIBC Mortgages v Pitt (1994), the House of Lords clarified that manifest disadvantage is not always required, especially in actual undue influence claims.

Importance

Though less central today, manifest disadvantage remains important for understanding the evolution of undue influence and the courts’ protection of vulnerable parties in equity.

CIBC Mortgages plc v Pitt [1993] UKHL 7 (21 October 1993)

Mrs Pitt was induced by her husband's actual undue influence to charge their jointly-owned home to secure a loan ostensibly for a holiday home, but actually used by Mr Pitt for share speculation. The House of Lords held that manifest disadvantage need not be proved in cases of actual undue influence, but dismissed the appeal as the lender had no notice of the husband's wrongdoing.

Credit Lyonnais Bank Nederland NV v Burch [1996] EWCA Civ 1292 (20 June 1996)

A junior employee was persuaded by her employer to mortgage her flat as unlimited security for the company's overdraft of up to £270,000. The Court of Appeal set aside the mortgage, finding the bank had constructive notice of the employer's undue influence over the employee and the transaction was manifestly disadvantageous.

National Westminster Bank Plc v Morgan [1985] UKHL 2 (07 March 1985)

Mrs Morgan signed a legal charge over the family home to secure a bridging loan from the bank to pay off a building society mortgage. She claimed the charge was procured by undue influence. The House of Lords held that no undue influence existed as the transaction was not manifestly disadvantageous to her and the bank manager had not crossed the line into a relationship of dominating influence.