Haines v Carter CA286/99, 19 December 2000
- Court
- Court of Appeal
- Judgment
- 19 December 2000
Areas of law
Judgment analysis
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Facts
Following the breakdown of their personal relationship in February 1999, Mr Haines and Ms Carter agreed to a mediation to divide their assets. The mediators were an accountant, Mr Goodall, who had worked with both parties; Ms Carter's father, Mr Max Carter, who was suggested by Mr Haines; and a barrister, Mr Lendrum, who had previously acted for Mr Haines. The mediation, which the parties entered into without separate legal representation, resulted in a signed agreement on 11 March 1999. The agreement required Mr Haines to pay Ms Carter a sum, provisionally set at $1.7 million, in exchange for control and ownership of the Haines Group and other assets. The payment sum was later adjusted by the mediators to $1.5 million on 14 April 1999. The agreement contained an acceleration clause, making the full sum due immediately upon default of certain interim payments. Mr Haines subsequently took steps to implement the agreement by taking control of the companies but also defaulted on required payments starting in March 1999. He then sought to avoid the agreement, alleging it was subject to a condition subsequent and was entered into under duress. Ms Carter commenced summary judgment proceedings to enforce the agreement.
Held
- A defence of duress will fail, even on an arguable basis that illegitimate pressure was applied, if the defendant's subsequent conduct—such as selectively performing favourable terms while defaulting on others, and taking control of assets under the agreement without protest of duress—amounts to an unequivocal affirmation of the contract.
- In a summary judgment application, where a plaintiff provides detailed evidence on oath of the defendant's affirming conduct, the defendant's failure to provide a sworn response explaining that conduct as being the result of continuing duress will be fatal to the duress defence.
- A term cannot be implied into a written agreement where it is directly contrary to an express term, such as a finality clause stating the agreement is a 'full and final agreement on all matters'.
- Contractual interpretation in a summary judgment context is appropriate where there is no reliance on extrinsic contextual evidence by the party resisting the interpretation.
Orders
The appeal is dismissed. The appellant is ordered to pay the respondent costs in the sum of $5,000 together with disbursements and reasonable travelling expenses, if necessary, to be fixed by the Registrar.
Key passages8
A defendant resisting summary judgment is expected to identify their defence, provide appropriate particulars, and a reasonable level of circumstantial detail. A bald assertion of a defence is unlikely to be sufficient.
“The process of summary judgment is intended to be summary. So the Courts are entitled to expect a defendant who wishes to maintain that there is an arguable defence will identify that defence in accordance with the ordinary rules and will give appropriate particulars of it and a reasonable level of circumstantial detail.”
Where a plaintiff provides detailed evidence on oath as to why a defence is not sustainable (e.g., affirmation), a failure by the defendant to respond on oath will almost invariably lead to the conclusion that there is no answer to the plaintiff's evidence, thereby discharging the plaintiff's onus of proof.
“So where a plaintiff has gone on oath and given chapter and verse as to why a particular defence is not sustainable, a failure by the defendant to respond on oath will, almost invariably, result in the conclusion that there is, in fact, no answer to what the plaintiff has said. In that way, the plaintiff will be held to have discharged the onus of proof, see for instance MacLean v Stewart (1997) 11 PRNZ 66.”
An alleged implied term, such as a condition subsequent, cannot be seriously contended if it is 'flatly inconsistent with the finality expressly stipulated for in the agreement'.
“The alleged condition subsequent can hardly be seriously contended to be an implied term of the agreement. It is flatly inconsistent with the finality expressly stipulated for in the agreement...”
Duress involves the illegitimate application of pressure by threats. The illegitimacy can stem from the illegality of the actions threatened or the illegitimacy of the threats in their specific context.
“Duress necessarily involves the illegitimate application of pressure by threats. The illegitimacy of the pressure may lie in the illegality of the actions threatened or, alternatively, may be associated with the illegitimacy of the particular threats in the context in which they were made.”
In duress, compulsion is not a lack of will to submit, but the victim's intentional submission arising from the realization that there is no other practical choice open to him.
“Compulsion is variously described in the authorities as coercion or the vitiation of consent. The classic case of duress is, however, not the lack of will to submit but the victim’s intentional submission arising from the realisation that there is no other practical choice open to him.”
A party alleging duress must show that the duress was at least an appreciable factor in influencing them to enter the bargain.
“At the very least, a party alleging duress must show that the duress alleged was at least an appreciable factor in influencing that party to enter into the bargain in question, see Barton v Armstrong [1976] AC 104.”
The Contractual Remedies Act 1979 does not apply to contracts entered into by duress; the issue is considered in accordance with common law and equitable principles of rescission.
“But because that Act does not apply to contracts entered into by duress, we are required to consider this issue in accordance with common law and equitable principles related to rescission, see Meagher Gummow & Lehane, Equity 3rd edit at para 2401 et seq.”
In duress cases, steps taken by the victim while still under the influence of pressure from the other party will not be regarded as affirmation or as conduct precluding rescission.
“What is important in this context, is that in duress cases, the courts will not regard as affirmation (or as conduct precluding rescission) steps taken by the victim while still under the influence of pressure from the other party, see for instance the discussion in North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] 1 QB 705.”
Cases mentioned in judgment
Legislation mentioned
- Contractual Remedies Act 1979