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An important decision on presumed undue influence has today been handed down by the High Court of Australia. The name of the case is Garcia v National Australia Bank Ltd [1998] HCA 48 and, pending the full report, the full text of the judgment is available at http://www.lawnet.com.au/ courts/hct/garcia.htm

The 6-judge bench of the High Court unanimously allowed the plaintiff's appeal against the decision of the Court of Appeal of New South Wales (leading judgment by Sheller JA) which had in turn reversed the decision of the primary judge (Young J) declaring void and unenforceable certain guarantees executed by the plaintiff in favour of the defendant (in summary: the wife won). Gaudron, McHugh, Gummow and Hayne JJ delivered the leading judgment; Callinan J concurred in the result and the reasons in a separate judgment; Kirby J concurred in the result but for different reasons.

The majority reaffirmed the continued existence of a special Yerkey v Jones principle for wives and rejected the Bank's argument that any such principle had been subsumed in the broader principle of unconscionable conduct from Commercial Bank of Australia Ltd v Amadio. In doing so, the majority rejected Barclays Bank v O'Brien and any role for the equitable doctrine of notice in these cases beyond the threshold requirement that the creditor have notice that the woman is married to the man.

Kirby J quite convincingly rejects as a matter of precedent and policy the continued existence of any special principle for wives and instead allowed the appeal on an application of a modified Barclays Bank v O'Brien approach.