B. & S. Contracts and Design Ltd v Victor Green Publications Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE EVELEIGH,LORD JUSTICE GRIFFITHS,LORD JUSTICE KERR |
| Judgment Date | 31 January 1984 |
| Judgment citation (vLex) | [1984] EWCA Civ J0131-4 |
| Docket Number | 84/0052 |
| Court | Court of Appeal (Civil Division) |
| Date | 31 January 1984 |
[1984] EWCA Civ J0131-4
Lord Justice Eveleigh
Lord Justice Griffiths
and
Lord Justice Kerr
84/0052
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE WORKSOP COUNTY COURT
Royal Courts of Justice
MR JOHN ARNOLD HODGSON, instructed by Messrs Hodders, appeared for the Appellants (Plaintiffs).
MR GABRIEL STEPHEN MOSS, instructed by Messrs Michael Freeman & Co., appeared for the Respondents (Defendants).
In September of 1978 the plaintiffs agreed to erect stands for the defendants at Olympia for an international fire, security and safety exhibition, which was to be open to the public on 23rd April 1979 until 27th April 1979.
The contract price was £11,731.50. The contract contained a force majeure clause in these terms. "Force Majeure"; "Every effort will be made to carry out any contract based on an estimate, but the due performance of it is subject to variation or cancellation owing to an act of God, War, strikes, civil commotions work to rule or go-slow or overtime bans, lock-outs, fire, flood, drought or any other cause beyond our control, or owing to our inability to procure materials or articles except at increased prices due to any of the foregoing causes".
The plaintiffs had a subsidiary company in Wales. That company was in some financial difficulty and indeed at the end of 1978 had become insolvent. In February of 1979 that company gave notice to its employees that there was a danger that they would have to close down the works and it was later indicated that the directors were contemplating closing down the works on 27th April 1979. In the event 60 days' notice was given to that work force, terminating on 27th April 1979.
The contract provided for the dismantling of the stands and that would take place perhaps on 27th but certainly on 28th and perhaps 29th April. The plaintiffs decided to use the men who were threatened with redundancy in the subsidiary company and some 18 of them were brought to Olympia to do the work, and they arrived on 12th April. In the meantime there had been some negotiations between the subsidiary and trade union officials, and of course the plaintiffs were concerned in controlling that situation. The workmen were demanding severance pay. They asked for 60 days wages. They were not entitled to any severance pay, and at some stage the plaintiff company did indicate that they would be prepared to pay two weeks ex gratia. When the men arrived on 12th April at Olympia they stopped work: they wanted their 60 days severance pay. They were also annoyed at the fact that the plaintiffs intended to use other labour to dismantle the equipment.
News of the stoppage reached Mr Barnes, who was the director responsible for the exhibition on behalf of the defendants, and he discussed the matter with Mr Fenech on 17th April. The men had for a short while resumed work in the interval, but on that day, 17th, they stopped working again. On 13th, 14th, 15th and 16th there was no work because Olympia was closed for the Bank Holiday period. Mr Fenech told Mr Barnes that the work force had stated that they would settle for 28 days severance pay and Mr Barnes said that he would have to refer that to his board.
There came the moment when Mr Barnes, realising that the plaintiff company were short of money, in the sense that their cash flow was not good, offered Mr Fenech £4,500. He intended that offer to be as an advance payment on the contract price. Mr Fenech apparently understood it as an offer over and above the contract price, and when Mr Fenech subsequently, on 18th April, spoke with Mr Barnes and said that the plaintiff company were prepared to pay £4,500 towards the severance pay and to accept Mr Barnes' offer of £4,500—which figures together would have amounted to a sum acceptable to the men, namely £9,000—it then became clear to Mr Fenech that Mr Barnes' offer had been an advance payment and not one over and above the contract price. Mr Fenech then said that it would be necessary for him to consult the managing director as to whether or not the plaintiffs would be prepared to pay £4,500 and accept the £4,500 from the defendants as an advance payment only. Later Mr Fenech told Mr Barnes that that offer was not acceptable and it was made clear during these discussions to Mr Barnes that the defendants would not be able to carry out their obligations under the contract unless the men could be pursuaded to stay at work. When Mr Fenech told Mr Barnes that his proposition was not acceptable Mr Barnes said, "Well, you have me over a barrel" and he paid £4,500 to the plaintiffs.
The men were paid and the work was done. The plaintiffs sent in their bill and the defendants deducted £4,500 from the price and sent a cheque for the balance. The plaintiffs sued for £4,500; the remainder, as they regarded it, of the purchase price.
The defence was that the money had been paid under duress and consequently the defendants were entitled to claim back the sum of £4,500.
The matter came before Sir Douglas Frank, Q.C. sitting as a deputy judge of the High Court, and he said, "The realities of the situation were this: leaving aside the force majeure clause, the Plaintiffs were under a contractual obligation to carry out this work for the contract sum. The Plaintiffs were saying 'We are not going to carry out that work; we are going to repudiate that contract because we are not prepared to pay the additional £4,500 demanded by the men'". He then went on, "It is necessarily implicit in that attitude adopted by the Plaintiffs that unless somebody—and who else but the Defendants—paid off the men, they would not carry out the contract. If the work was not done, then the exhibition would go with what would have been disastrous consequences to the Defendants and I would think to the exhibitors. As I see it, Mr. Barnes really had no alternative but to agree to pay that money. That seems to me to be a clear case of duress and it does not need any authorities to support it. It speaks for itself".
He then considered the force majeure clause and concluded that it could not come to the rescue of the plaintiffs, and consequently he held that their intimation that they would not carry on with the work amounted to a breach of contract and therefore they had caused the defendants to pay the £4,500 unlawfully under duress.
The matters that have to be established in order to substantiate a claim for the return of money on the grounds that it was paid under duress have been stated in a number of different ways. We have been referred to a number of cases and indeed we have been taken through the history of the common law on distress, so thoroughly set out in the judgment of Mr Justice Mocatta in the case of North Ocean Shipping Co. Ltd. v. Hyundai Construction Co. Ltd. and Another, reported in 1979, 1 Queen's Bench Division at page 705. It is not necessary to consider these cases: for the purpose of my judgment all I require to read is a passage from the speech of Lord Diplock in Universe Tankships Inc. of Monrovia v. International Transport Workers Federation and Others, reported in 1983 Appeal Cases at page 366. At page 384 he said, referring to the law on duress, "The rationale is that his apparent consent was induced by pressure exercised upon him by that other party which the law does not regard as legitimate, with the consequence that the consent is treated in law as revocable unless approbated either expressly or by implication after the illegitimate pressure has ceased to operate on his mind. It is a rationale similar to that which underlies the avoidability of contracts entered into and the recovery of money exacted under colour of office, or under undue influence or in consequence of threats of physical duress". It is not necessary to consider precisely the meaning of the word "legitimate" in that context. For the purpose of this case it is sufficient to say that if the claimant has been influenced against his will to pay money under the threat of unlawful damage to his economic interests he will be entitled to claim that money hack, and as I understand it that proposition was not dissented from.
In this case the appellant says that there was no threat; that Mr Fenech was really stating the obvious, stating the factual situation, namely that unless they could retain the work force they would be unable to perform their contract, though I have had some difficulty in deciding whether or not the evidence in this case did disclose a threat. But on a full reading of the evidence of Mr Fenech and Mr Barnes and the cross-examination of Mr Fenech I have come to the conclusion that the learned judge was right in the way in which he put it. There was here, as I understand the evidence, a veiled threat although there was no specific demand, and this conclusion is very much supported, as...
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