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(C) IS THERE A GENERAL GROUND OF UNDUE PRESSURE?

Although the notion of undue pressure has been implicitly recognized in these three particular circumstances, is it possible to extract a general ground of restitution which can be called undue pressure and which is applicable beyond these discrete areas? The preferable view is that there is such a general ground of restitution, as was recognized by Lord Denning in Lloyds Bank Ltd v Bundy.[1] Since undue pressure is an equitable doctrine it is clear that the main trigger for its application relates to the unconscionable behaviour of the defendant in threatening the claimant, without any need to show that the defendant’s threats were unlawful.[2] To determine whether the defendant acted unconscionably it will be necessary to examine all the circumstances of the case, especially the nature of the relationship between the parties and whether the defendant acted in good faith. These were factors which were expressly recognized in CTN Cash and Carry Ltd v Gallaher Ltd,[3] although the Court of Appeal in that case assumed that they assisted in the identification of economic duress. Similarly, in those cases where economic duress was established even though the illegitimate pressure was lawful,[4] the better view is that they involved undue pressure especially because the courts had particular regard to the defendant’s previous unlawful conduct which coloured the lawful pressure exerted by the defendant in a commercial context. In some of these cases the defendant’s conduct was explicitly characterized as unconscionable.[5]

The difficulty with recognizing a ground of restitution which is founded on the defendant’s unconscionable conduct is that unconscionability is an inherently uncertain concept. This is unavoidable, but to mitigate the uncertainty it is vital that the application of this ground of restitution is confined to the most extreme cases of unconscionable conduct, where there is such inequality between the parties that the defendant can be considered to have taken unfair advantage of the claimant.[6] Despite the general principle that there is no doctrine of unfair use of a dominant bargaining position,[7] even in the commercial context undue pressure may be applicable, at least where the defendant is aware that there are no grounds for claiming a benefit from the claimant and where the nature of the relationship is such that the defendant can be regarded as taking unfair advantage of the claimant.[8] This might be the case, for example, where the defendant was occupying a monopolistic position and the claimant had no choice but to succumb to the defendant’s threats.[9] The dual test involving consideration of the nature of the relationship between the parties and the nature of the defendant’s belief as to the legitimacy of his or her claim, can also be used to explain the result in the earlier decisions where the defendant’s threats involved prosecution, suing or disclosure of information.

  • [1] 176 This was implicitly recognized by McHugh JA in Crescendo Management Pty Ltd v Westpac Banking
  • [2] Corporation (1988) 19 NSWLR 40, 46, although the judge described the notion of unconscionable, but lawful,
  • [3] conduct as duress rather than undue pressure. But duress should be confined to where unlawful threats aremade. 177 [1994] 4 All ER 714, 717-18 (Steyn LJ).
  • [4] Borelli v Ting [2010] UKPC 21; Progress Bulk Carriers Ltd v Tube City IMS LCC [2012] EWHC 273(Comm), [2012] 1 Lloyd’s Rep 501 (Comm).
  • [5] Notably Borelli v Ting [2010] UKPC21, [32].See also Harrison v Halliwell Landau [2004] EWHC 1316(QB), [97] (Judge Eccles QC).
  • [6] Williams v Bayley (1866) LR 1 HL 200, 214 (Lord Chelmsford), 216 (Lord Westbury); Lloyd’s Bank vBundy [1975] QB 326, 338-9 (Lord Denning MR).
  • [7] Pao On v Lau Yiu Long [1980] AC 614, 634.
  • [8] In Lloyds Bank Ltd v Bundy [1975] QB 326, 339 Lord Denning MR recognized that abuse of a longstanding commercial relationship might constitute an illegitimate act for the purposes of undue pressure. Seealso Borelli v Ting [2010] UKPC 21 and Progress Bulk Carriers Ltd v Tube City IMS LCC [2012] EWHC 273(Comm), [2012] 1 Lloyd’s Rep 501 (Comm).
  • [9] This could have been the justification for awarding restitution in Smith v William Charlick Ltd (1924) 34CLR 38, see p 215, above. But, although the defendant realized that it had no legal right to demand payment ofa surcharge on wheat which it had supplied, it thought that it had a moral right to do so and this might enableits conduct to be characterized as conscionable.
 
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