Armstrong v Commonwealth Bank of Australia

In Armstrong v Commonwealth Bank of Australia, the plaintiff sought to have a guarantee set aside on the basis that it was obtained by actual undue influence. The dispute centred on a guarantee provided by the plaintiff's wife, who signed a guarantee in favour of the defendant bank. The plaintiff argued that the guarantee was obtained by the husband's undue influence over the wife, rendering it void against the bank. The defendant bank contended that the guarantee was valid and enforceable against the wife and by extension, against the plaintiff.

The primary legal issue before the court was whether the guarantee was procured by actual undue influence. The court needed to determine if the bank was bound by the wife's guarantee, which was influenced by the husband's undue influence. Another key issue was the burden of proof, specifically whether the plaintiff's evidence, which was found to be untrue, would assist the defendant in proving their case. The court had to assess whether the evidence provided by the plaintiff, if false, could support the bank's position.

The court held that the guarantee was indeed obtained by the husband's actual undue influence over the wife. It was determined that the bank was bound by the undue influence, rendering the guarantee void against them. The court further held that the plaintiff's false evidence did not assist the bank. The unreliability of the plaintiff's evidence did not shift the burden of proof onto the plaintiff but instead reinforced the finding that the guarantee was procured by undue influence. The court's reasoning was grounded in established principles of equity and the protection of parties who are victims of undue influence.

The court set aside the guarantee, holding that it was unenforceable against the wife and, by extension, against the plaintiff. The guarantee was deemed void against the bank due to the undue influence exerted by the husband. The court did not impose any orders regarding the burden of proof or the sufficiency of the evidence, as the primary issue of undue influence was resolved in the plaintiff's favour.