#7290 - Duress Undue Influence And Unconscionable Dealing - Contracts 2

Universal Tankships of Manrovia v International Transport Workers Federation [1983] 1 AC 366

Relevant Facts: The ITF (trade union) ‘blacked’ UTMs ship, ensuring that it doesn’t get serviced. In order to secure the lifting of the blacking and avoid disastrous financial consequences from being stranded in port they acceded to various demands by ITF – including the payment of $6480 to ITF’s welfare fund. They later claimed the return of the money having paid it under ‘economic duress. At the House of Lords ITF conceded it was guilty of economic duress but claimed immunity through the Trade Unions Act that provide protection in respect of ‘trade disputes. The majority said the Act didn’t provide immunity in the circumstances of the case – allowing the appeal

Ratio (Lord Scarman):

• The two elements of duress are pressure amounting to compulsion of the victim’s will and the illegitimacy of the pressure exerted. The class case is generally not the lack of will but the lack of practical choices open.

• The absence of choice can be proven by protest, the absence of independent advice, or a declaration of intention to go to law to recover money paid or property transferred – but none are determinative

  • In this case the trial judge’s verdict on this matter was uncontested – it was a matter of “urgent commercial necessity” that they be able to use their ships and they were advised that the chance of obtaining an injunction was slim

• The real issue is therefore the second limb (legitimacy). Two matters may be considered

  • The nature of the pressure – this need not be unlawful, in most cases it will be lawful pressure (e.g. threat to report to the authorities for blackmail)

  • The pressure of the demand which the pressure is applied to support

    • In this case the nature of the demand determines whether the pressure threatened (blacking) was lawful or unlawful – its conceded that if it was unlawful that the owner can recover but not if it was lawful

    • The lawfulness depends on whether the act done was in contemplation of a trade dispute – if it was it wouldn’t be actionable in tort and therefore it is unlikely that, being protected by statute from suit, it could amount to distress. This would be inconsistent with legislative policy

Barton v Armstrong [1976] AC 104

Relevant Facts: The plaintiff alleged that the defendant coerced him into executing a deed relating to the sale of companies by threatening to have him murdered. Street J found that the many death threats justified Barton taking them seriously but also that there were compelling business reasons for executing the deeds and thus the threats didn’t coerce him. The Court of Appeal adopted this chiefly but held the plaintiff couldn’t succeed unless he established that but for the threats he wouldn’t have executed the deed and he failed to do so. Barton appealed to the Privy Council.

Ratio (Majority, Lord Cross of Chelsea):

• Saw an analogy between duress and undue influence and setting aside contracts for fraud where the court doesn’t allow examination of the relative importance of contributory clauses

• Thought that the onus was on Armstrong to establish that “the threats which he was making and the unlawful pressure which he was exerting for the purpose of inducing Barton to sign the agreement and which Barton knew were being made and exerted for the purpose in fact contributed nothing to Barton’s decision to sign”

  • The trial judge found there was threats to kill, Barton’s situation was one of ‘very real mental torment’ and there was a belief it would end if the documents executed

  • Though Barton would have executed the documents if the threats weren’t made, the threats did contribute to his decision to sign and to recommend their execution by other parties

    • Hence the appeal should be allowed and the deceleration made that the deeds were executed under duress and void so far as concerns him

Ratio (Lord Wilberforce and Lord Simon of Glaisdale):

• Of the various means that consent can be obtained – advice/persuasion/influence/inducement/representation/commercial pressure – the law has come to select some that it will not accept as voluntary action (duress/undue influence/coercion)

• Thought that the relevant test were:

  • The plaintiff must show that illegitimate means of persuasion were used

    • Threats to Barton’s life were found and accepted

  • The next step is establish the relationship between illegitimate means used and the action taken (same test that the majority preferred)

Johnson v Buttress (1936) 56 CLR 113

Relevant Facts: The plaintiff was an ‘administrator cum testament annexo’ of the will of his deceased father (Buttress) against the defendant. The plaintiff sought to set aside a document by which land was transferred to the defendant. Buttress was an illiterate person and unstable in his relationships, being in possession of very few assets. After the death of his wife he moved from place to place and administered and amended wills for his property in favour of various people (Mrs Job, Mrs Hart etc.). He visited the defendant a number of times and depended on them for general help. He wished to transfer his property o her – the clerk gave evidence that he heard the defendant say explicitly that he wished to have the property transferred as a gift and understood that he was giving it not selling it. The consideration given was hence ‘natural love and affection.

Buttress lived first in a tent and later a shack made by him on land owned by he defendant who provided him with clothes and necessaries from time to time. They visited each other regularly. Eventually he became ill and on his way to the hospital he gave another will which he had made to Mrs Hart under which she was the sole beneficiary. The transfer to the defendant and the will was not made known to Buttress’s relatives and evidence was given that he forbade disclosure.

The trial judge found that Buttress was a man of less than average intelligence, had little capacity for understanding business and when executing the transfer did not understand that he parted with it irrevocably and hence the transfer must be set aside.

Principles and Policy (Dixon J):

• Established the rules with respect to presumptions (as above) – when a presumption stands the person against which it lies must satisfy the court that he...