C.T.N. Cash and Carry Ltd v Gallaher Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Steyn |
| Judgment Date | 15 February 1993 |
| Neutral Citation | [1993] EWCA Civ 19 |
| Court | Court of Appeal (Civil Division) |
| Date | 15 February 1993 |
[1993] EWCA Civ 19
THE VICE-CHANCELLOR ( Sir Donald Nicholls)
Lord Justice Farquharson
Lord Justice Steyn
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MANCHESTER DISTRICT REGISTRY
(COMMERCIAL LIST)
(HIS HONOUR JUDGE KERSHAW Q.C. SITTING AS A DEPUTY HIGH COURT JUDGE)
Royal Courts of Justice
Miss Hilary Heilbron Q.C. and Mr Digby Jess, instructed by Messrs Simon A. Holt & Co. (Preston), appeared for the Appellant (Plaintiff).
Mr Philip Raynor, instructed by Messrs Addleshaw Sons & Latham (Manchester), appeared for the Respondent (Defendant).
HTML VERSION OF JUDGMENT
THE VICE-CHANCELLORI ask Steyn L.J. to give the first judgment.
A buyer paid a sum of money to his supplier. The sum of money was in truth not owed by the buyer to the supplier. The buyer paid the sum as a result of the supplier's threat to stop the buyer's credit facilities in their future dealings if the sum was not paid. The supplier acted in the bona fide belief that the sum was owing. Does the doctrine of economic duress enable the buyer to recover the payment? In a judgment given on 8th August 1991 His Honour Judge Michael Kershaw Q.C. gave a negative answer to this question. This appeal challenges the correctness of the judge's conclusion.
The plaintiffs used to carry on a “cash and carry” business from warehouses in six Lancashire towns, including Preston and Burnley. A feature of the plaintiffs' “cash and carry” business was the sale of cigarettes. The plaintiffs bought consignments of cigarettes from the defendants. The defendants were apparently the sole distributors in England of popular brands such as Silk Cut and Benson & Hedges. The dealings between the plaintiffs and the defendants took place on the defendants' standard terms of business. It was not a case of what is sometimes called a “requirements contract”, i.e. a transaction obliging the seller to make periodic deliveries of goods ordered pursuant to its terms. The defendants were not contractually bound to sell any cigarettes to the plaintiffs. The terms of business regulated separate contracts made from time to time. In their absolute and unfettered discretion the defendants sometimes granted credit facilities to customers. Such facilities were effective until withdrawn. The defendants granted such credit facilities to the plaintiffs.
On 20th November 1986 the manager of the plaintiffs' warehouse in Preston placed an order for a large consignment of cigarettes. The invoice value of the order inclusive of V.A.T. was of the order of C17,000. By mistake an employee of the defendants put the address of the plaintiffs' warehouse in Burnley on the delivery note. On 24th November 1986 the defendants' driver delivered the goods to the plaintiffs' warehouse in Burnley. The goods were unloaded. Mr Nuttall, an Assistant Branch Manager of the plaintiffs, signed the delivery note. Shortly afterwards Mr Nuttall discovered that the delivery was intended for the Preston warehouse and not the Burnley warehouse. He telephoned the defendants' despatch department about the matter. Eventually it was agreed that the defendants would arrange for the carriage of the goods from Burnley to Preston. The defendants were to undertake the carriage of the goods to Preston on 28th November 1986. Unfortunately, there was a robbery at the Burnley warehouse on the day before. The entire consignment of cigarettes was stolen. In due course the defendants delivered a new consignment of cigarettes to the Preston warehouse and the plaintiffs paid for it.
The question was who should suffer the loss resulting from the theft of the goods at the Burnley warehouse? On 8th December 1986 the defendants invoiced the plaintiff for the price of the stolen goods. Although property in the goods had not passed to the plaintiffs, the judge found that the defendants thought in good faith that the goods were at that time at the plaintiffs' risk. The judge's finding is not challenged on this appeal. The plaintiffs rejected the invoice. The dispute about the price of the stolen goods lingered on for some time.
In the second half of 1988 or in 1989, Mr Hayes of the defendants discussed the matter with Mr Kitt, the Financial Director of the plaintiffs. There was an issue of fact as to what was said. The judge found as a matter of fact:
(a) that Mr Hayes made it clear to Mr Kitt that unless the plaintiffs paid for the stolen goods the defendants would not in future grant credit to the plaintiffs;
(b) that the defendants regarded payment for the stolen goods as the lesser of the two evils and paid the disputed invoice for that reason.
By a writ issued in September 1989 the plaintiffs claimed repayment of the £17,000. The parties continued to deal with one another until January 1991. The plaintiffs deducted the sum in question from their last payment to the defendants.
The judge said that at the end of the trial the only issue was whether the plaintiffs were entitled to recover the original payment of €17,000 and to set off that sum against their admitted liability for under-payment in respect of the goods ordered and received in the final weeks of trading. That issue was unfortunately not pleaded, but the defendants were content for the judge to decide the issue.
On appeal the plaintiffs accept that, if the case of duress does not succeed, the claim for repayment must fail. It seems to me not to matter whether the correct analysis of the facts is that an agreement was made that the plaintiffs would pay the sum in question or whether payment is to be regarded simply as a unilateral act of the plaintiffs. In either event the claim must succeed if the case of duress is made out; if that case is not made out the claim must fail.
Miss Heilbron Q.C., who appeared for the plaintiffs, submitted that the judge erred in rejecting the plea of duress. She submitted that the payment was made under illegitimate pressure. She emphasised that there was objectively no legal basis for demanding the price of the goods, and the threat of withdrawing the credit facilities was made solely in order to obtain the payment. The threat was powerful because the removal of credit would have seriously jeopardised the plaintiffs' business. The clear purpose, she said, was to extort money to which the plaintiffs were in truth not entitled. In the circumstances, the threat was illegitimate and the case of duress was made out.
Miss Heilbron cited a number of authorities which illustrate developments in this branch of the law. While I found the exercise of interest, I was reminded of the famous aphorism of Oliver Wendell Holmes that general propositions do not solve concrete cases. It may only be a half-truth, but in my view the true part applies to this case. It is necessary to focus on the distinctive features of this case, and then to ask whether it...
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