Joint owner wants to set aside a sale

In very limited circumstances, it may be possible for the joint owner who has not consented to the sale to get the transaction set aside on the grounds that it was affected by the 'undue influence' of one party upon the other or by misrepresentation.

Where a transaction can be shown to have been procured by the 'undue influence' of one party on the other, or by 'material misrepresentation', it may be possible to get the transaction rescinded (set aside).

To establish undue influence it is necessary to show that one person has abused a relationship of trust and confidence (by exercising some form of pressure or domination) and exploited the emotional involvement and trust of another.

To establish misrepresentation it is necessary to show that one person misrepresented information to the other by making a false statement, for example about the amount of a loan or the purpose for which the loan was required.

In both cases, it is also necessary to show that, as a result, the second person has entered into a transaction. If a third party is involved in the transaction, it will also be necessary to show that the third party was, or ought to have been, aware of the likelihood of undue influence or misrepresentation.[1]

Some success has been seen in cases involving banks, for example, where a loan is being taken out solely for one partner's benefit, such as for a business.[2] If the lender is aware of the possibility of undue influence or misrepresentation to a spouse or civil partner then, in order to make sure that any charge or mortgage on the property is enforceable, it would need to take reasonable steps to protect the spouse or civil partner to avoid being fixed with notice of the wrong, for example by making sure that the person who may be affected has independent advice.

Similarly, in cases involving one partner taking charge over the other partner’s financial affairs and exercising a position of power to induce her/him to enter into unfair transactions.[3] For example, if one partner lacks mental capacity and transfers her/his own property into the joint names of both partners for no (or inadequate) consideration, then a presumption of undue influence will arise, which is for the partner presumed to have exercised undue influence to rebut. In order to rebut this presumption, s/he will have to show that her/his partner entered into the transaction of her/his own will after taking independent advice on the nature of the transaction. If the presumption is not successfully rebutted, then the court can order that the transfer is set aside.

However, the area of undue influence is complex and subject to developing case law. It should be noted that the courts are often very reluctant to make a finding of undue influence.