Sample Essay on Undue Influence under the Principle of Equity and Trusts 2

Undue Influence under the Principle of Equity and Trusts 2


The focus on the principle of equity and trust is specific to the context of home and commerce. The contextual advancement approach is significant to two areas with equal doctrines that can be trusted. Equity and trust in Hong Kong commercial activities is to be evaluated in terms of the customs through which unrestricted equitable policies are being eluded. According to Chung shukWahJesica v Wong Kang Hung Dawincase, “Different legal norms that exist in the homes and are united in the home treatment has to be put into consideration in the form of trust implied by the law, human rights law, family law, equitable estoppel and laws on housing.”1

The principle of equity in law liberates undue influence in a situation where an agreement is achieved through indecorous criteria with no violence-taking place. Individuals that have agreed in engaging in a transaction by the undue influence of the offender are mandated to setting aside the transaction contrary to the offender.

Equity and trust considers the application of the principle on trust law to commercial, non-commercial and the intellectual issues that are bound to trust law and equity. The major and important issues to be discussed in the principles of equity and trusts is the position of equity that exist in the legal theory, the context of the home as reflected by equity, family laws, legal theory, trust laws and the development of unfair fortifications.For instance, Chwee Kin Keong v Digilandmall Ltd, the ethical idea show equity being more superior to justice, “but equity is more just and not just legally because it is a rectification of the legal justice. In this case, it is vibrant that the equity will deliver a perfect form of justice corporate law by providing precise judgment to the present cases.”2The principle of equity can be observed in a different society in various perspectives.[1]

According to judgment of Lord Dudley v Lady Dudley, equity is not considered as part of the law but as a moral virtue that moderate and reforms the hardness and power of the law and also as a general truth.“Equity does assist the law where it is flawed in the constitution by defending the law from delusions and unspontaneous practices to deceive the common law.”3 “The purpose of trusts law is to ensure equitable mandate on the subject and the one with the rightful ownership of a property that requires acting in a good will while handling the assets in favor of the beneficiary having the gain identified in the equity in the ,”4

Hayton and Arthurunderhill (2006), in the law of trust and trustees give the definition of trusts as follows. “Trust is an equitable responsibility, binding a trustee to contract with the possessions owned for the value of persons (beneficiaries).”5([2]


According to Hudson, trusts can be categorically be classified as implied trusts, resulting trusts express trusts and constructive trusts. Implied trusts may result from the court actions that involve the interpretation of trust not known to the person as trust. Trust can exist in the form of automatic trusts in a case where the court is trying to resolve some disputes regarding the ownership of assets, where an attempt to apply express trust have not succeeded.

The framework in which trust operate was sought out by Westdeutsche L. v. Islingtoncase to determine the appropriate principles of trusts laws. “In order to establish trusts, there is need for identifiable properties that have to exist, and upon the establishment of the trusts from the initial day the beneficiary has, there must be equity in the proprietary gain in the trust assets.”6 The primary goods with equitable benefit by the subsequent holder have to be traced instead of displaying acquisition charge of the interest lacking notice. Trust “exists in the legal requirement by the owners to escalate the main purpose for the vestment of the property. The nature of the beneficiary privileges in the trust funds.” 7 Saunders v Vautier.[3]Law can be acknowledged both in terms of certainty and predictability and has to be flexible and fair enough for it to be influential.

Equity and trusts in privity (undue influence and third party)

The principle of equity and trust may involve a third party contracts and privity that put into consideration the obligation and the benefits of the agreement that can be addressed to a third party. A third party in this case is not a direct party to the contract and this kind of situation can make the enforcement of law to be challenging in terms of privity, which refers to being part of the contract.Chitty.18-02, give the meaning of common law doctrine as “contrast and a general rule that confer rights or imposed obligation that result from third parties, but not the parties attached to the challenge.”8

The general rule in third party privacy and contact is that a party can sue or be suedon a contract to which the complainant is does not play a role. A good example that best describe the scenario is the case of Alan v Bod. Alan was Bob’s deter and Calvin enters into a valid contract with Bob but it turns out that Calvin fail to pay Bob. The application of privity contract is that Bob cannot sue Calvin, but Bob can sue Alan, who will in turn sue Calvin. The derivative of this case is that “the doctrine of the universal law of privity implies that a person is not able to acquire rights, or be liable under a contract he or she is not a party to.”9 ([4])

In other accounts, the contract is expected to have some formality that bind the parties involved. The agreement must be in a written form and follow a formal format in order to be considered valid. Written contracts do provide valid and reliable evidence that can be used in law as terms of reference and understanding. The most important written agreement is that involving land cases in Hong Kong and Australia, including sale, purchase or mortgage. This kind of case can be seen in the one that existed between Chan Sik Cheung v Director of lands. “TheAttorney Generals power will be a prerequisite in certain statuses where there is a written document is available, and valid documents are availed by the witnesses. The Attorney general Ordinance (Cap31) and the Apprenticeship ordinance (cap 47) of Hong Kong demand a contract of apprenticeship to be put down in writing following a formal format.”10

Principle of equity and trust in offer

An offer can be described as the promise refrains or to take responsibility in the performance of certain tasks. An offer also implies that the party is willing to get into contact under laid down terms and conditions that are understood and acceptable by the parties. The terms are the considered equal and trusts exist in the agreement that make one accept the contract. “The person is giving the offer also refers to the terms of the promises stated by the conduct or law. It is important for the offer to be communicated to the offeree and in return, feedback on the acceptance is providing to the offerer.”11([5])

Proper agreement is important in ensuring the principle of equity and trusts and the offer can be terminated. Offeree may decide to reject the offer and in case of death or incapacitation of either of the parties involved. Once the offeree rejects the offer, there cannot be a bid to reclaim the offer. In Hong Kong, Ngai yee Chai v Lee Siu Fong Mary is an example of a case that upheld the principle of offer. In the case, Lee gave Ngai a loan that was not paid in full amount. Ngai put a defense by stating that Lee took a long time to take a court action and that the plaintiff is time barred from proceeding with the suing. On the other side, “Lee argues that Ngai offered to repay the loan in order to prevent the defendant from putting a claim.”12

Theoffer is similar to the case of consideration that was seen in Australian doctrine of taking consideration that has observed to be contributing to injustices. The case of Equity-trust Ltd v Franks, put the essence of promise in which a promiser is prevented from going back to the promises despite the promises not being supported by the consideration in the promise. “The choice of promissory is not bound in a contract or an assurance but is an orthodox way of becoming together in equity and to prevent the promiser from enforcing legal obligations.”13The case of Blackthorn v Pty Limited, Meagher state that promises operate as a negative justifiable control.

Undue influence in bank transactions

According to Bank of China Ltd (Hong Kong), v leung Ngai Hang case, two business partners; Miss L and Miss C came together for an investment. They paid for the investment as a joint tenancy after seeking financial support from the bank that was secured by a legitimate charge. By the end of the business partnership, the property was remortgaged by the bank of china to replace the secure tenure loan. As a result of failing to repay the loan, the bank chose to sell the asset leaving the bank with an outstanding balance. In defense, Miss C took consideration of undue influence and falsification. [6]

The approach did not work as planned since there was nothing to implicate the bank for an offence. “There being no relationship between miss L and Miss C by the time the case was presented and hence no proof for the risk involved in the procurement. The case lacked evidence that the transaction expressed was disadvantageous to Miss C.”14

Properties security and undue influence

Guarantee can be defined as the contract existing between the guarantor and the financier under a mutual understanding. “The guarantor is vulnerable to the contract due to the existing assumption of liability in debtors owing the lender. The lender must adequately inform the financer on the kind of transaction and the commitment involved.”15 With reference to Royal Bank of Scotland v Etridge case, proof in the provision of undue influence is a subject to the type of relationship and the accountability of the transaction by the conventional party.

According to resulting or constructive trusts, dispute of equity and trusts may rise between afather and son in the ownership of properties. [7]Considering the case of Lee K. Wan v Sherman N. Wing Lee. [8] There is a dispute in the ownership of properties between a father and son. “The title of the property was written under the son’s ownership but the father raised a complain that the title was held under constructive trusts.”16The court finding was that the father had made payment for the assets and the son, and the brother was given the responsibility of owning the trust on behalf of the parents. According to the judge, the case was rather a constructive and not resulting trust.[9]

This case can be compared to the recent case in Australia involving Vernell Holdings v Tillett, which highlight the existing relationship between parents and children, and the existing

level of influence. “Some specialists have it that children do become emancipated soon after reaching majority,”17(Lamotte v Lamotte. The level of control by the parent to the child and the current affiliation between the two will determine the time taken by the child to emancipate.

Consideration in equity and trusts  

Consideration refers to the right, profit, interest or the benefit accruing to one party. The decision is given in the case of Currie v Misa, and further put a clarification of consideration as being a detriment; loss or responsibility awarded to a person, which is incurred by the opposite party.In the case of Selfridge & Co. v Tyre Co also give a definition of consideration as “where one party can restraint the promise price for others in which they can buy the value that is applicable. Consideration brings in the principle of trusts since there is an acceptance in return for a promise, either in the form of money.”18 ([10])

The principle of equity and trust also occur in the case of damage that result to harm or a loss of property. A party may demand compensation from the tortfeasor and may involve an actual amount of loss on the monetary value of the plaintiff. In Hong Kong and Australia, the laws are only able to compensate for medically established shock of the nerve those results to mental or physical illness. The case of Spartan Steel & alloy Ltd v martin &Coltd gives an illustration of consequential and pure economic loss. “The defendant intentional damage power cable that cut off electricity supply to the plaintiff factory. The plaintiff incurred much damage of property and profit loss during the electricity interruptions.”19


The analysis of the principle of Equity and trusts in Hong Kong is closely related to the existing laws in Australia and other continents. The cases presented in the courts both have actual undue influence as a common characteristic. Lindley gives a description of undue influence in the case of Allcard v Skinner as “improper and unfair conduct that is coarse from externalities and a form of cheating not for personal gained advantage.”20 The case file of Nina Wang v joseph Lo Kin Ching addresses the issue on a homemade will that was established under a charitable trust. “The will of Wang was trusted a foundation with their estate when they pass away.”21[11]

Finally, frameworks that are involved in balancing the commercial uncertainty are influenced by the concept of undue influence in equity and trusts. In Hong Kong and Australia, there are cases where the parties have no legal relationships. In such a case, the plaintiff institutes the defendant to dominate the power for opportunistic achievement. An example of such a case is that of Williams v Bayley (1866) LR 1 HL 200.         


BRYAN, M., & VANN, V. J. (2012). Equity and trusts in Australia. Cambridge, UK, Cambridge University Press.

CHESHIRE, G. C., FIFOOT, C., FURMSTON, M., & SIMPSON, A. (2012). Cheshire, Fifoot and Furmston’s Law of contract. Oxford [etc.], Oxford University Press.

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YAAKUB, N. I., & MCGEE, A. (2005). Undue influence in three-party bank-lending transactions in Malaysia: areas for reform. Manchester, University of Manchester.


[1]Chung shukWahJesica v Wong kang Hung Dawin (2010) 3 hkc 143”……legal ethicks…”

2Chwee Kin Keong v Digilandmall ltd (2005) 1 SLR 502 “equityis more just and not just legally because it is a rectification…”

3Lord Dudley v Lady Dudley (2009) 1 HKC at 420

4 Hudson and Thomas, the law of trusts; section 2.1-2.2 “The trustee is said to “hold the Property on trust” for the beneficiary

52010Underhill and Hayton Law of Trusts and Trustees”

6WestdeutscheLandesbank v. Islington [1996] 2 All E.R. 961, 988. [1996] AC 669 *

7 Saunders v Vautier(1841) –“privitivity and the rights of the beneficiary”


8Bob v. Alan M. Cass and Associates (2014) “CIVIL RIGHTS-Other,”14-1804

9 Ibid.

10 Chan Sik Cheung v Director of lands (1995) 3 HKC 199.

11 Virgo, g. (2012). The principles of equity & trusts. Oxford, Oxford University Press.

12 Ngai yee Chai v Lee Siu Fong Mary (2006)1Hkc157

13 Equity-trust Ltd v Franks (2009) 269 ALR 387

14 Bank of China Ltd (Hong Kong) v leung Ngai Hang (2006) HKCU 78

15 Royal Bank of Scotland v Etridge (No 2) [2002] 2 AC 773 (Etridge)

16Lee Koon Wan v Sherman Ngai Wing Lee ([2012] HKEC 1046, CFI)

17Lamotte v Lamotte (1942) 42 SR (NSW) 99

18 Selfridge & Co. v Tyre Co (1915) Ac 847. “Consideration can be classified as executory & executed”. As explained in the Greenwood and Fisher, supra note, (89)

19 Spartan Steel & alloy Ltd v martin &Coltd (1973)1Qb 27

20 Nina Wang v joseph Lo Kin Ching (2012-2013)CACV (44)

21 Alastair Hudson (2005): Equity and Trusts (4th ed.: Cavendish Publishing ).