National Westminster Bank plc v Morgan
| Natwest plc v Morgan | |
|---|---|
 |
|
| Court | House of Lords |
| Full case name | National Westminster Bank plc v A.P. Morgan |
| Decided | 7 March 1985 |
| Citation(s) | [1985] UKHL 2 [1985] AC 686 [1985] 1 All ER 821 |
| Case opinions | |
| Lord Scarman | |
| Court membership | |
| Judge(s) sitting |
Lord Scarman Lord Keith of Kinkel Lord Roskill Lord Bridge of Harwich Lord Brandon of Oakbrook |
| Keywords | |
| Undue influence, bank | |
National Westminster Bank plc v Morgan [1985] UKHL 2 is a judicial decision of the House of Lords relating to English contract law and the doctrine of undue influence. The case is most well known for the comments of Lord Scarman about the supposed requirement of "manifest disadvantage" to set aside a contract for undue influence.
A bank manager who worked for National Westminster Bank came to Mrs Morgan’s house to get her to sign a charge, which was going to provide security for the refinance of the family home. She received no independent advice. Mr Morgan died, and the bank later sought to enforce the charge. Mrs Morgan resisted enforcement on the grounds that she had entered into the documents acting under the undue influence of the bank.
Mr Barrow went to the Morgan's to arrange signature of the legal charge. The conduct of the visit is described in some detail in the final judgment:
but at extremely short notice the bridging finance necessary to secure their home. He rejected the suggestion that Mrs. Morgan had any misgivings on the basis that she would prefer the house to be sold. He accepted that it was never the intention of Mr. Barrow that the charge should be used to secure any other liability of Mr. Morgan.
The atmosphere in the home during Mr. Barrow's visit was plainly tense. Mr. Morgan was in and out of the room, "hovering around." Mrs. Morgan made it clear to Mr. Barrow that she did not want him there. Mr. Barrow did manage to discuss the more delicate matters when he was out of the room.
Such was the interview in which it is said that Mr. Barrow crossed the line which divides a normal business relationship from one of undue influence. I am bound to say that the facts appear to me to be a far cry from a relationship of undue influence or from a transaction in which an unfair advantage was obtained by one party over the other.
Dunn LJ held that manifest disadvantage was not a necessary ingredient of presumed undue influence, giving the example of a solicitor buying a client’s house. But there were no cases in which there was not a manifest disadvantage. Mrs Morgan did not fully consent to the charge.
The House of Lords held that ‘evidence that the transaction itself was wrongful in that it constituted an advantage taken of the person subjected to the influence’ was necessary. Moreover, there was no confidential relationship between the wife and the manager and it never went ‘beyond the normal business relationship of banker and customer’ so no presumption could arise.
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