Eid v Al-Kazemi & Anor

Affirmation or election following undue influence is a matter of fact and degree. A party does not lose the right to set aside a transaction merely because, after the influence has ceased, the party does something arguably consistent with performance. The court must assess the whole circumstances.

Affirmation may nevertheless be established where the party acts freely, knowingly leads the other party to believe that the agreement is being performed, accepts a substantial benefit which completes the other party’s obligations, and then seeks to deny the corresponding obligation. Equitable unconscionability is relevant to that assessment.

Mrs Al-Kazemi sought permission to appeal against a judgment of Mr John Martin QC, sitting as a deputy judge of the Chancery Division, which ordered specific performance of an agreement requiring her to transfer shares in Ramelle Investments Corporation to Mr Eid.

The first-instance judge found that there was an agreement, rejected undue influence, and held alternatively that Mrs Al-Kazemi’s conduct had affirmed the agreement or created an estoppel. Permission to appeal was initially granted on undue influence and affirmation or estoppel. On reconsideration, the central issue was whether there was a real prospect of appellate interference with the finding on affirmation.

1. Permission to appeal revoked. The judge below had been entitled to conclude that Mrs Al-Kazemi’s conduct prevented her from setting aside the agreement. The question of costs was adjourned.
2. Affirmation or election after undue influence is not governed by an inflexible rule. It is a matter of fact and degree. Post-influence conduct which may amount to performance does not automatically bar relief, particularly where the benefit received is relatively small and an account or restoration could adequately be made.
3. The relevant conduct occurred after any undue influence had ceased. Mrs Al-Kazemi was free of the alleged influence, was consulting solicitors and family members, and knowingly accepted substantial payments and a benefit for her son. She intended Mr Eid to believe that the payments completed his obligations under the final variation, while withholding the transfer of the shares.
4. The payments represented the sole remaining benefit due to Mrs Al-Kazemi under the final variation and, on Mr Eid’s understanding, completed his obligations. In those circumstances, it was not open to her to rely on the loan as explaining the payments, since that case had not been pleaded or argued below and the first-instance judge had not determined the identity of the borrower or the repayment obligation.
5. The deceitful and unconscionable character of the conduct was relevant because the original challenge itself rested on equitable unconscionability. The combination of freedom from influence, substantial benefit, completion of the other party’s obligations and the induced belief that the shares would be transferred made this a clear case for finding affirmation.

• Court of Appeal (Civil Division): Permission to appeal from the first-instance judgment was initially granted, but was subsequently revoked. The order for specific performance therefore remained in place.
• Chancery Division: Mr John Martin QC, sitting as a deputy judge, enforced the agreement for the transfer of Ramelle shares, finding no undue influence and holding alternatively that the agreement had been affirmed or could not be challenged by estoppel.