The Law Restitution - Investor Voice, Securities Regulation in Canada

The Law Restitution

Peter D. Maddaugh B.A., M.A., LL.B.,LL.M. Of the Ontario Bar

John D. McCamus B.A.,M.A., LL.B.,LL.M. Professor of Law, Osgoode Hall Law School, York Universiry Of the Ontario Bar

Canada Law Book Inc. 240 Edward Street, Aurora, Ontario



above parts may normally be achieved by means of an action at common law. The third part,on the other hand, deals with equity's jurisdiction to provide for the recovery of benefits which have been obtained through the exercise of undue influence. Unlike the previous categories where the conferral of some benefit is marked by the plaintiff's protest or, at least, a grudging acquiescence, here the trust and confidence reposed in the defendant is such that the benefit is bestowed by the plaintiff with apparent willingness. A. DURESS

Duress first found recognition as a ground for the recovery of damages against an intimidating party in tort.4 Recovery in this context, however, is limited to those situations where the actual or threatened action is, in itself, unlawful.5 The extortion of benefits by means of "threats, accusations, menaces or violence" is also a crime.6 Furthermore, a contract entered into under duress, while apparently not void ab initio? is certainly voidable at Hale, "Bargaining, Duress, and Economic Liberty" (1943), 43 Col. L. Rev. 602; J.P. Dawson, "Economic Duress - An Essay in Perspective" (1947). 45 Mich. L. Rev. 253; and A.D. Courtade, "Contracts - A Question of Duress" (1970), 22 Baylor L. Rev. 260. The term has also gained recent recognition by Anglo-Canadian writers. See W.R. Cornish, "Economic Duress" (1966). 29 Mod. L. Rev. 428; R.J. Sutton, "Duress by Threatened Breach of Contract" (1974),20 McGill LJ. 554; M.H. Ogilvie. "Economic Duress, Inequality of Bargaining Power and Threatened Breach of Contract" (1981). 26 McGill L.J. 289 and "Wrongfulness, Rights and Economic Duress" (1984). 16 Ottawa L. Rev. 1; Lord Goff and G. Jones, The Law of Resriturion, 3rd ed. (London, Sweet & Maxwell, 1986), pp. 222 et seq. See Dawson, loc ciL, footnote 3, at p. 254. The tort of intimidation has been alluded to in a number of cases. See, cg., Anon. (1410), Y.B. 11 Hen. IV 14; Garret v. Taylor (16211, Cro. Jac. 567, 79 E.R. 485; Keeble v. Hickeringill(1706), 11 East. 57411, 103 E.R. 1127; Tarleton v. M'Gawky (1793). Peake 270,170 E.R. 153. It was recently reconfirmed in Rookes v. Bamard, [I9641 A.C. 1129 (H.L.); in Gershman v. Manitoba Vegetable Producers' Marketing Bd (1976). 69 D.L.R. (3d) 114,[1976] 4 W.W.R. 406 (Man. C.A.); and in Central Canada Potarh Co. Ltd v. Government of Saskatchewan,I19791 1 S.C.R. 42,88 D.L.R. (3d) 609. AUen v. FIood, [I8981 A.C. 1 (H.L.); Ware & De Frw& Ltd v. Motor Trade Assh, 11921] 3 K.B.40 (C.A.); Sorrel v. Smith, [I9251 A.C. 700 (H.L.); Thorne v. Motor Trade Ass'n, [I9371 A.C. 797 (H.L.);Sutherlandv. Sutherland,[I94614 D.L.R. 605, [I9471 1 W.W.R. 202 (B.C.S.C.); Straijord & Son Lrd v. Lindky, [I9651 A.C. 269 (H.L.); Mintuck v. Valley River Band No. 63A (1977). 75 D.L.R. (3d) 589, [I9771 2 W.W.R. 309 (Man. C.A.); Central Can& Potash Co. U d v. Government of Saskatchewan, [I9791 1 S.C.R. 42, 88 D.L.R. (3d) 609. In Rookes v. Bamrd, [1964] A.C. 1129 (H.L.), the usual grounds of threatened violence, libel, or other torts were extended to include threatened breach of contract. See also Int'l Brotherhood of Teamsters v. Therien, I19601 S,C.R. 265, 22 D.L.R. (2d) 1 and Morgan v. Fry, [I9681 2 Q.B. 7 10 (C.A.). Criminal Code, R.S.C. 1985, c. C-46, s. 346. See also s. 302 (extortion by libel) and s. 372 (threats by letter). And see K.J.M. Smith, "Duress - The Role of the Reasonably Steadfast Man" (1982), 98 L.Q. Rev. 347. 'There is, however, considerable doubt surrounding the matter. See, e.g., P.S. Atiyah, An Introduction ro the Law of Contract, 2nd ed, (Oxford, Clarendon Press, 1971), p. 192; S.M. Waddams, 7 ' ' Law of Contracts, 2nd ed. (Aurora. Canada Law Book, 1984). p. 376; Cheshire, Fifmt and Fwmsron's Law of Contract, 11th ed. by M.P. Furmston (London, Buttenvorths, 1986),pp. 296-7. See also American Law Institute,Restatement of the Law of Contracts Second (St. Paul, American Law Institute Publishers, 1981), s. 176 (with respect to physical duress). A strong argument that contracts entered into under duress ought to be held void is put forth - by DJ. Lanham, "Duress and Void Contracts" (1966), 29 Mod. L. Rev. 615. And see Barton




the instance of the party coerced.8 According to the Restatement of the Law of Contracts Second? duress may take one of two forms. In one, a person physically compels conduct that appears to be a manifestation of assent by a party who has no intention of engaging in that conduct. The result of this type of duress is that the conduct is not effective to create a contract. In the other, a person makes an improper threat that induces a party who has no reasonable alternative to manifesting his assent. The result of this type of duress is that the contract that is created is voidable by the victim. This latter type of duress is in practice the more common and more important.

The Restatement Second goes on to point out that, for purposes of what constitutes an "improper threat", the tests are not restricted to the standards of wrongful conduct set by either criminal law or tort.I0 Similarly with the law of restitution, where the focus is upon the "unjustness" of the defendant's --


v. Armstrung, [I9761 A.C. 104 (P.C.), at p. 120 per Lord Cross. In several cases involving marriages entered into under duress, the marriage was held to be void. See, cg., Hussein v. Hussein, [I9381 P. 159; Silver v. Silver, [I9551 1 W.L.R. 728 (P.D.A.); Smith v. Smith, [I9631 A.C. 280 (H.L.); Buckland v. Buckland, [I9681 P. 296; Szechter v. Szechter, [I9711 P. 286; Singh v. Singh, [I9711 P. 226 (C.A.). And see the decision of Spencer Co. Ct. J. in Saxon v. Saron, [I9761 4 W.W.R. 300 at pp. 306-7,311,24 R.F.L. 47 (B.C.S.C.). 8 The generally accepted view is that such contracts are only voidable. See, cg., P.H. Winfield, "Quasi-Contract Arising from Compulsion" (1944), 60 L.Q.Rev. 341, at p. 341; Chirty on Contracts, 25th ed. by A.G. Guest (London, Sweet & Maxwell, 1983), vol. I, p. 500; Anson's Law of Connact, 26th ed. by A.G. Guest (Oxford, Clarendon Press, 1984), p. 240; Goff and Jones, op. cir. footnote 3, at p. 207; G.H. Treitel, The Law of Contract,7th ed. (London, Stevens & Sons, 1987). p. 312. And see the Restatement Second, supra, footnote 7, s. 175 (with respect to duress by threat). In Parojcic v. Parojcic, [I9581 1 W.L.R. 1280 (P.D.A.), at p. 1283, Davies J. stated: "I am inclined to think that the effect of duress upon a marriage is the same as it is upon a contract, viz,to render it not void but voidable." See also Whelpdale'sCase (1604). 5 Co. Rep. 119a,77 E.R. 239; Tuba v. Von Boris, [I9 11I 1 K.B. 854 (C.A.); Findlay v. Findlay, [I9521S.C.R. 96, [I95 114 D.L.R. 769; Kesarmal SIO Letchman Das v. N.K V. VaUiappaCheniar SIO Nagappa Cheniar, [I9541 1 W.L.R. 380 (P.C.); Mahadman v. Mahadewan, [I9641 P. 233; Director of Public Rosecurtons for Northern Ireland v. Lynch, [1975] A.C. 653 (H.L.); North Ocean Shipping Co. Ltd v. Hyundai Construction Co. Ltd, [I9791 Q.B. 705; Pao On v. Lau Yiu Long, [I9801 A.C. 614 (P.C.); Ston v. Merit Investment Corp. (1988), 48 D.L.R. (4th) 288,63 O.R. (2d) 545 (C.A.); Byle v. Byle (1990),65 D.L.R. (4th) 641 (B.C.C.A.). There appears to be one important exception in the case of contracts induced by duress of goods. Such contracts have been held to be enforceable. although recent authorities have cast doubt on the matter. See Skeate v. Beak (1841), 11 Ad. & E. 983, 113 E.R. 688 and see, post, at pp. 541-2. The American position is set out in 77 A.L.R. 2d 426, at pp. 428-9, as follows: "A contract entered into under duress is generally considered not void, but merely voidable, and is capable of being ratified after the duress is removed, such ratification resulting if the party entering into the contract under duress intentionally accepts the benefits growing out of it, remains silent, acquiesces in it for any considerable length of time after opportunity is afforded to avoid it or have it nullified, or recognizes its validity by acting upon it" 9 Supra, footnote 7, Introductory Note, at p. 473. loWhile the original Restatement's definition of duress spoke in terms of the "wrongfulness" of the defendant's conduct, the Restatement Second makeszit clear that duress is not restricted to criminal or tortious behaviour, but that any manner of improper threat will suffice to avoid a contract: supra, footnote 7, s. 176. See also Underwood v. Cox (1912), 4 D.L.R. 66, 26 O.L.R. 303 (Div. Ct.) and Wolfv. Marlton Corp., 57 N J . Super. 278 (App. Div., 1959), at p. 287 per Freund J.A.D. In Tbrne v. Motor Trade A s h , [I9371 A.C. 797 (H.L.), at pp. 8223, Lord Wright, speaking of blackmail, remarked that to threaten to "do an act which is not unlawful, but which is calculated seriously to injure another", may be duress.



enrichment, the controlling question is whether the plaintiff has conferred a benefit which he was not otherwise obliged to bestow in response to improper pressure. The underlying theme of the Restaternerlt that consent given under pressure cannot be considered to be given voluntarily is consistent with both Canadian and English holdings. However, whether the pressure must be such as to have "overconle" the will of the victim is very much a matter of current debate - at least in terms of the application of the doctrine of "economic duress".^^ Classic duress - in the sense of threat to life or limb - does indeed require such a vitiation of consent. In Boddy v. Finley,I2 for instance, Vice-Chancellor Spragge remarked: The question seems to be, as put by Lord Eldon!I3l whether or not the mind was so subdued, that though the execution was the free act of the party, it was the act speaking the mind, not of that person but another. It follows, then, that it is not enough to find intimidation at some one point during the transaction; it must be present throughout so as to prevent the party intimidated from acting as a free agent.14Thus, like the mistake situation where a party submits to an honest claim without regard to the truth or falsity of the operative facts and thereby is said to have bestowed a benefit voluntarily; here, where the plaintiff's free will is not overwhelmed, his consent will similarly be characterized as voluntary and he will not be permitted to succeed against the recipient.15 In Maskell v. Horner,'6 Lord Reading C.J. stated: If a person with knowledge of the facts pays money, which he is not in law bound to pay, and in circumstances implying that he is paying it voluntarily to close the transaction, he cannot recover it. Such a payment is in law like a gift, and the transaction cannot be reopened. More recently, in Barton v. Armstroi1g,~7Lord Wilberforce and Lord Simon of Glaisdale put forth the following analysis of modern-day duress: This involves consideration of what the law regards as voluntary, or its opposite: See,post, at pp. 557-62. (1862). 9 Gr. 162 (Ont.), at p. 165. In Countess of Strathmore v. Bowes (1788). 2 Bro. C.C. 345 at p. 35 1.29 E.R. 194. 14 Lawless v. Chamberlain (1889), 18 O.R. 296 (H.C.J.); R. v. Beaver Lamb & Shearling Co. Lld, I19601 S.C.R. 505,23 D.L.R. (2d) 513; and Pao On v. Lau Yiu Long, I19801 A.C. 614 (P.C.). 15 See, cg., Carnvrighr v. Rowley (1799), 2 Esp. 723, 170 E.R. 509; Spragg v. Hammond (1820). 2 Br. & B. 59, 129 E.R. 880; Sheard v. Laird (1888), 15 O.A.R. 339 (C.A.); Slarer v. Burtdq Cop. (1888). 59 L.T. 636 (Q.B.); Murray v. Veinotte, [I9511 2 D.L.R. 721,28 M.P.R. 1 (N.S. u S.C. in bunco); Deacon v. Transport Regulation Bd, 119581 V.R. 458 (S.C.); Pao On V. h Yiu Long, [I9801 A.C. 614 (P.C.). And see, generally, D. Cuthbertson, "The Principle o f Voluntary Payment in Quasi-Contract" (1967). 5 U . Queensland LJ. 288. 16 [I9151 3 K.B. 106 (C.A.), at p. 118. Quoted with approval in R. v. Beaver Lamb & Shearling Co. Ltd, (19601 S.C.R. 505 at p. 513, 23 D.L.R. (2d) 513, per Taschereau J.; in R. v. Premier Mouron Products Inc., 119611 S.C.R. 361 at p. 369, 27 D.L.R. (2d) 639, per Taschereau J.; and in Glidurray Holdings Ltd v. Village of Qualicum Beach (1981), 129 D.L.R. (3d) 599 at p. 606, [I9821 1 W.W.R. 718 (B.C.C.A.),per Nemetz C.J.B.C. l7 [I9761 A.C. 104 (P.C.), at p. 121. 1'




for in life, including the life of commerce and finlmce, many acts are done under pressure, sometimes overwhelming pressure, so that one can say that the actor had no choice but to act. Absence of choice in this sense does not negate consent in law: for this the pressure must be one of a kind which the law does not regard as legitimate. Thus, out of the various means by which consent may be obtained - advice, persuasion, influence, inducement, representation, commercial pressure - the law has come to select some which it will not accept as a reason for voluntary action: fraud, abuse of relation of confidence, undue influence, duress or coercion. In this the law, under the influence of equity, has developed from the old common law conception of duress - threat to life and limb and it has arrived at the modern generalisation expressed by Holmes J.llsl "subjected to an improper motive for action".

Closely tied to the question of voluntariness is the question of the necessity of a protest. Indeed, there is some indication in the early cases that, in the absence of a protest by the plaintiff at the time of the conferral of a benefit, the transaction will be deemed to have been voluntarily entered into.19 However, the better view appears to be that of Windeyer J. in the Australian case of Mason v. State of New South

. . . there is no magic in a protest; for a protest may accompany a voluntary payment or be absent from one compelled.. .. Moreover, the word "protest" is itself equivocal. It may mean the serious assertion of a right or it may mean no more than a statement that payment is grudgingly made.

In short, a court must examine all the surrounding circumstances in order to determine whether a transaction is in fact voluntary21 and, while an express protest may be evidence supporting a finding of compulsion, it is not, in itself, conclusive of the matter.22 The key, as pointed out by Lord Scarman in Universe In Fairbanks v. Snow, 13 N.E. 596 (Mass. S.J.C., 18871, at p. 598. 19See, e.g., Pratt v. Vizard (1833), 5 B. & Ad. 808 at p. 812, 110 E.R. 989, per Parke J., and Valpy v. Manley (1845), 1 C.B. 594 at p. 603, 135 E.R. 673, per Tindal C.J. See also Brown v. McKinally (1795), 1 Esp. 279, 170 E.R. 356; Spragg v. Hammond (1820). 2 Br. & B. 59, 129 E.R. 880; and Close v. Phipps (1844), 7 Man. & G. 586,135 E.R. 236. Cf:Astley v. Reynolds (1731), 2 Str. 915,93 E.R. 939 and Irving v. Wikon (1791). 4 T.R. 485, 100 E.R. 1132. And, more recently, see C.R. Aggregate Saks Ltd v. District of Squamirh (1980), 115 D.L.R. (3d) 8 1 (B.C.S.C.), at p. 84 per Locke I. 20 (1959), 102 C.L.R. 108 (Aust. H.C.), at p. 143. Quoted with approval in Glidurray Holdings Ltd v. Village of Qualicum Beach (1981), 129 D.L.R. (3d) 599 at p. 602, [I9821 1 W.W.R. 718 (B.C.C.A.), per Nemetz C.J.B.C. See also S.J. Stoljar, The Law of Qunti-Contrah, 2nd ed. (Sydney, Law Book Co., 1989), p. 76. 21 MaskeU v. Homer, [19 1513 K.B. 106(C.A.), at p. 120perLordReading CJ.See also Brockkbank Ltd v. The King, [1925] 1 K.B. 52 (C.A.); Knutson v. Bourkes Syndicate, [I9411 S.C.R. 419, [I9411 3 D.L.R. 593; London (City) v. London Club Ltd. [I9521 2 D.L.R. 178, [I9521 O.R. 177 (C.A.); Wells Construction Co. Ltd v. Sugar City (No. 5). [I95412 D.L.R. 589, 10 W.W.R. (N.S.) 586 (Aha. S.C.); St. John (Cify) v. Frarer-Brgce Oversfas C o p , 119581 S.C.R. 263, 13 D.L.R. (2d) 177; Byk v. Byk (1990), 65 D.L.R. (4th) 641 (B.C.C.A.). 22 Andrew v. Bridgman, [I9081 1 K.B. 596 (C.A.), at p. 597 per Cozens-Hardy M.R. See also Baldwin v. Johnson (1846), 2 U.C.Q.B. 475; Tibbits v. Allan (1846), 5 N.B.R. 280 (S.C.); Doe d. Morgan v. Boyer (1852), 9 U.C.Q.B. 3 18; Morton v. Corbetr (1857), 6 U.C.C.P. 25 1; William Whiteley Ltd v. The King (1909), 101 L.T. 74 1 (K.B.); Hollinger Consolidated Gold Mines Ltd v. Northern Ontario Power Co., [I9401 1 D.L.R. 516, [I9401 O.W.N. 66 (C.A.), affd [I9401 '8



Tankships Inc. of Monrovia v. btt'l h n s p o r t Workers Federatwn;l' is "absence of choice": The absence of choice can be proved in various ways, e.g., by protest, by the absence of independent advice, or by a declaration of intention to go to law to recover the money paid or the property transferred . . . But none of these evidential matters goes to the essence of duress. The victim's silence will not assist the bully, if the lack of any practical choice but to submit is proved.

Generally, the recovery of benefits conferred under duress is effected by an action in restitution. Where the benefit consists of money, an action for money had and received will lie.?4Similarly, it is submitted that where the benefit consists of goods, quantum vakbar lies or, in circumstances where legal title remains with the claimant, an in rem action such as replevin is also available. Where services have been rendered under duress, the appropriate action for recovery of the benefit is quantum meruit.25 The justification for granting restitution in situations of duress is, in our opinion, most compelling; not only has the plaintiff been deprived of some benefit against his will, but the defendant has usually been guilty of some wrongful conduct in obtaining it. The following constitute the traditional categories of wrongful conduct that amount to duress: actual or threatened violence to the person; duress of goods; and the improper application of legal process. Actual or Threatened Violence to the Person The oldest, and originally the only, recognized form of duress at common law is violence to the person.26 It includes such acts as false impri~onment?~ and duress per minus, where the injury or harm is merely threatened.28 In

3 D.L.R. 659 (S.C.C.); Twyford v. Manchesrer Corp., [ 19461 Ch. 236; Peter Kiewir Sons' Co. of Canada Ltd v. Eakins Consmcrion Ltd, [I9601 S.C.R. 361, 22 D.L.R. (2d) 465; Morton Consfructiott Co. Ltd v. Ciry of Hamilton (1961), 31 D.L.R. (2d) 323, [I9621 O.R. 154 (C.A.); Glidurray Holdings Ltd v. ViUage of Qualicum Beach (1981), 129 D.L.R. (3d) 599, [I9821 1 W.W.R. 718 (B.C.C.A.). 23 [1983] 1 A.C. 366 (H.L.), at p. 400. *4 Moses v. Macferlan (1760), 2 Burr. 1005 at p. 1012, 97 E.R. 676, per Lord Mansfield. See also Wilson v. Mason (1876), 38 U.C.Q.B. 14, at p. 26 per Harrison CJ. And see Hancod v. Town of Darrmouth (18811, 14 N.S.R. 129 (S.C. in bunco), at p. 134 per counsel, arguendo. 25 Peter Kiewit Sons' Co. of Canada Lrd v. Eakins Construction Ltd, [I9601 S.C.R. 361 at pp. 380-81, 22 D.L.R. (2d) 465, per Cartwright J. See also Municipal Spraying & Connactitg L J v. ~ Newfoundland (1980), 52 Nfld. & P.E.I.R. 91,15 B.L.R. 37 (Nfld. S.C.T.D.). 26 Piper v. Harris Manufacturing Co. (18881, 15 O.A.R. 642 (C.A.), at pp. 644-5. And see Stoljar, op. cit, footnote 20, at pp. 61-2, and W.H.D. Winder, "Undue Influence and Coercion" (1939), 3 Mod. L. Rev. 97, at p. 108. 27 Earl of Northumberland's Case (1583). 4 Leon. 91,74 E.R. 750 and Blanchurd v. Jacobi (19 18). 43 O.L.R. 442 (H.C.). 28 Stewart v. Bryne (1840). 6 U.C.Q.B. (O.S.) 146; Scott v. Sebright (1886). 12 P.D.21; Piper v. Harris Manufacturing Co. (1888), 15 O.A.R. 642 (C.A.); St Thomas (City) v. Yearsley (1895). 220.A.R. 340(C.A.);Kobv. Hunker(l911), 1 W.W.R.314,4Sask.L.R.379(S.C.); Undernod v. Cox (1912), 4 D.L.R. 66, 26 O.L.R. 303 (Div. Ct); Re Bumw Ejtafe, [I9241 3 W.W.R. 807, 19 Sask. L.R. 137 (C.A.); Hussein v. Hussein, [I9381 P. 159; Friedeberg-Seeley v. K b S

A17~1stro)zg V. Ccrge," Vice-Chancellor Proudfoot stated that "[tlhe conditions that violence must include to attract the intervention of the law for its repression are as follows:

The evil threatened must be serious,death, wounds. or loss of liberty,whether the material loss of liberty, prison or chains, or the state of servitude; and in these cases it is indifferent whether the threat be directed against ourselves or our children.. . . But it is not sufficient if the menace only attacks reputation or property. nor if it only threatens an action, civil or criminal, for in these cases the law will sufficiently prevent the infliction of injury. It is next required that the fear should be well founded, that is to say, that the evil be probable and difficult to avoid. And finally, it is not enough that the fear exists; it must result from a threat, that is, it must have been excited with the design of bringing about the act attacked." This summary would appear to be too narrow for today's purposes. In Underwood v. COX,^^ for instance, it was held that a threat to expose a letter which contained reference to certain alleged immoral acts of the plaintiff was sufficient duress to set aside a settlement. Clearly, this goes beyond threatened physical harm to include threatened injury to rep~tation.~' And, as we shall see, menace to property or a threat of legal proceedings may, under certain circumstances, constitute duress as ~ e 1 1 . 3Nor, ~ it is submitted, need the target of the act or threat be the plaintiff himself or some close member of his family;33 it need only be some person for whose welfare the plaintiff would, for one reason or another, be ~oncerned.3~ Older authority suggests that we ought to apply an objective test in determining the effect of some alleged duress - whether the actual or threatened harm is such to overwhelm the person of ordinary sensibilities.35 However, the tendency today is to take a subjective look at the circumstances and their actual effect upon the particular party in question.36 (1957), 101 Sol. Jo. 275; Saxon v. Saxon, [I9761 4 W.W.R. 300, 24 R.F.L. 47 (B.C.S.C.), affd [I9781 4 W.W.R. 327, 8 C.P.C. 240 (C.A.); Barton v. Arnlsrrong, [I9761 A.C. 104 (P.C.); Fartner v. Fanner (1979). 10 R.F.L. (2d) 243 (B.C.S.C.). (1877), 25 Gr. 1 (Ont.), at pp. 17-18. 'Q(1912),4 D.L.R. 66,26 O.L.R. 303 (Div. Ct.). See also D q l e v. Carroll (1877), 28 U.C.C.P. 218 and Disher v. Chriss (1894), 25 O.R. 493 (H.C.J.). Cf: Brandon Elecnic Light Co. 11. Ciry of Brandon (1912). 1 D.L.R. 793, 2 W.W.R. 22 (Man. K.B.). 3: See, post, at pp. 538-42 and 542-7. \\T/liarns v. B a d q (1866). L.R. 1 H.L. 200; D q l e 1: Carroll (1877), 28 U.C.C.P. 218; Shorq \: Jones (1888), 15 S.C.R. 398; Sr. Thomas (City) v. Years19 (18951, 22 O.A.R. 340 (C.A.); Burris v. Rhind (1899), 29 S.C.R. 498; Kaufman v. Gerson, (19041 1 K.B. 591 (C.A.); Erwin v. Elelgrove, (19271 4 D.L.R. 1028, 61 O.L.R. 341 (S.C. App. Div.); Saxon v. Saxon, [I9761 1 W.W.R. 300, 24 R.F.L. 47 (B.C.S.C.), affd [I9781 4 W.W.R. 327, 8 C.P.C. 240 (C.A.); Bjlev. Byk(1990). 65 D.L.R. (4th) 641 (B.C.C.A.). ." See, e.g., Steinberg v. Cohen, [I9301 2 D.L.R. 916.64 O.L.R. 545 (S.C. App. Div.). 35 Bracton, De Legibus, 48. 21. 1; Coke, 2 Inst. 483; and Blackstone, 1 Cotnm. 131. And see Skente v. Beak (1841), 11 Ad. & E. 983 at p. 990, 113 E.R. 688, per Lord Denman C.J., and Piper v. Harris Manufacturing Co. (1888), 15 O.A.R. 642 (C.A.), at p. 645 per Osler J.A. ' 6 See, e.g., Scort v. Sebrighr (1886). 12 P.D. 21, at p. 24 per Butt I.; Kaufman v. Gerson, [I9041



Duress of Goods While, originally, the doctrine of duress was confined to actual or threatened violence to the person, in the eighteenth century, the concept was extended to include interference with property rights. Today, so-called "duress of goods" is a well-recognized category of duress and, clearly, benefits conferred upon another under such coercion can be recovered in restitution.'The leading decision involving this type of pressure is that of the Court of King's Bench in Astlq v. Rqtlolds.38 There, the plaintiff had pawned plate to the defendant for £20. Three years later, when he went to redeem his goods, the defendant demanded £ 10 "for the interest of it" - well in excess of the legal rate. Although the plaintiff twice offered to pay £4, which was still above the legal rate, the defendant persisted in his demand until the plaintiff ultimately acquiesced. In allowing an action for money had and received to recover the surplus payment, the Court held:

. . . this is a payment of compulsion; the plaintiff might have such an immediate want of his goods, that an action of trover would not do his business: where the rule volenti nor1 fir itljuria is applied, it must be where the party had his freedom of exercising his will, which this man had not: we must take it he paid the money relying on his legal remedy to get it back again.39 Similarly, in the Canadian case of Pople v. Dauphitt,40 the plaintiff had brought I K.B. 591 (C.A.). at p. 597 per Collins h1.R.: H. 1: H.. [I9511 P. 258. at p. 266per Karniinski J.: and Pascurri v. Puscuz5, 119551 O.W.N. 853 (H.C.J.), at pp. 854-5 per Aylen J. And see Motors Inc., 231 Minn. 46 (S.C., 1950). at p. 51 per Peterson J. See also Wise 1: Mid~owv~ Brooks I: Alkr (1975), 60 D.L.R. (3d) 577 at p. 591, 9 O.R. (2d) 409 (H.C.J.), per Henry J. In Barton v. Artnstrong, [ 19761A.C. I04 (P.C.), the defendant maintained that the threatened violence had not affected the plaintiff's decision to enter into the contract in question. The Judicial Committee of the Privy Council held that the onus rested upon the defendant to establish that fact. 27 Astley I: Rtyokds (1731), 2 Str. 915, 93 E.R. 939; Ining Y. Wilson (1791), 4 T.R. 485, 100 E.R. 1131,;Abrsk v. Port Hope Harbour Co. (1840), 6 U.C.Q.B. (O.S.) 100;Ashrnole v. Wuin~rvigl~/ (1812). 2 Q.B. 837. 114 E.R. 325; Wilson v. Muson (1876). 38 U.C.Q.B. 14; Green v. D~tckrr (1883). I 1 Q.B.D. 275; McKq i:Howard (1883). 6 O.R. 135 (H.C.J.); Kennedy v. MurDonc4 ( 1901), 1 O.L.R. 250 (Div. Ct.); Maskell v. Horner, 119 151 3 K.B. 106 (C.A.); VanHoIt v. Nen.rot~ (1916). 29 D.L.R. 425, 9 W.W.R. 1407 (Man. K.B.); Fogde \: Parsenuu (1917). 37 D.L.R. 758, (19181 1 W.W.R. 25 (Sask. S.C. en banc); CumpbeN e Halverson (1919), 49 D.L.R. 463. [I9191 3 W.W.R. 657 (Sask. S.C. en banc); Pople v. Daupl~it~ (1921). 60 D.L.R. 30, [1921] 2 W.W.R. 276 (Man. C.A.); Jolin v. Wl1itenndSauer(1922). 65 D.L.R. 643,119221 2 W.W.R. 36 (Sask. C.A.): Blakel~& Co. 1: The King.[1935] Ex. C.R. 213. [ 193514 D.L.R. 670; Mulholland 1: Borrsdt and LuFhir, (19391 1 D.L.R. 795. 119391 1 W.W.R. 100 (Alta. S.C.); W.C. 14k~lls Consrr~tcrionCo. Ltd. I: Sugar City (No. 5). 119541 2 D.L.R. 589, 10 W.W.R. (N.S.) 586 (Alta. S.C.); A1cKen:ie v. Bunk of Montreal (1975). 55 D.L.R. (3d) 641, 7 O.R. (2d) 521 (H.C.J.). affd 70 D.L.R. (3d) 113, 12 O.R. (2d) 719 (C.A.). 3 W (1731). 2 Str. 915, 93 E.R. 939. It has been pointed out rhat the extension of the ossurnpsir remedies to situations involving duress of goods had much to do with the growth and development of the doctrine of waiver of tort. See Stoljar, op. cir., footnote 20, at pp. 623, and Cuthbertson, loc. cir, footnote 15, at p. 291. And see, generally, Chapter 23. 39 Astlq v. Reynolds, supra, at p. 916 Str. See also Morgan v. Palmer (1824), 2 B. & C. 729 at pp. 731-5, 107 E.R. 554. per Abbott C.J. 40(1921),60 D.L.R. 30, [I9211 2 W.W.R. 276 (Man. C.A.). For a similar case, see Huncock v. Toaw of Darm~ourl~ (188 I), 14 N.S.R. 129 (S.C. in bunco).

turnty mules to town on market da! to sell at an auction, which he had arranged and advertised. The town bailiff, who had misconstrued a statute that applied to horses, demanded palment of a tax of $5 per head. When the plaintiff refused to pay, the bailiff threatened to distrain the animals and sell them under the provisions of the Disrr-rss Act in order to realize the tax. In the Manitoba Court of Appeal, the defendant a r p e d that the resulting payment had been voluntary and, accordingly. could not be recovered. The Court ruled otherwise. on the basis that "[tlhere was. . . a threat of serious interference with the plaintiff's business, and as the notice was given him on the very day his sale was to take place. that interference was imminent and demanded immediate action on his part."J' In each of the foregoing cases, the court obviously placed much stress upon the immediacy of the plaintiff's situation. The normal course for the plaintiff to follow would be to refuse to pay and to seek appropriate relief through legal proceedings. Hence, it is only in circumstances of such "urgent and pressing ne~essity"~'that he will suffer serious inconvenience if he takes the time to pursue his remedy at law that the situation will be regarded as amounting to duress. Otherwise, his compliance will be characterized as voluntary.43 However, it appears that the courts may not apply this test as stringently as the language used suggests. In Maskell v. H ~ r n e r , "for ~ example, the plaintiff commenced business as a dealer in the vicinity of a market owned by the defendant. The latter demanded that certain tolls be paid and, when the former refused, his goods were seized. After seeking legal advice and upon learning that others in the area had submitted to similar demands, the plaintiff paid the tolls under protest. This scenario of threatened seizure and payment under protest repeated itself annually for some twelve years until the plaintiff finally brought an action for money had and received. At trial, Rowlatt J. concluded: . . . the protests passing into a standing joke passed out of the sphere of effective protests; they came to indicate a grumbling acquiescence and were not what they must be to satisfy the rule that there must be a declaration that the transaction was not closed but that payment, which was only made for the relief of a deadlock, was to be reclaimed.. . . I can only conclude that the transaction was regarded as closed and the payments acquiesced




Pople v. ~Ddu~hin, supra. at p. 33 D.L.R. ,blasLII v. Horner, 119151 3 K.B. 106 (C.A.), at p. 118 per Lord Reading C.J. See also Shaw 1: Woodcock (1827), 7 B. & C. 73 at p. 85, 108 E.R. 652,per Holroyd J. Tibbi~sv. Allan (1846), 5 N.B.R. 280 (S.C.); Abrton v. Corbett (1857),6 U.C.C.P. 25 1; SpririgRice v. Town of Regina (190 1), 5 Terr. L.R. 17 1 (S.C.); Hudson's Bay Co. v. Carripbell, [ 19331 3 W.W.R. 289 (B.C.Co. Ct.); G. Gordon Foster Developme~itsLtd. v. Township of Larlglty (1979). 102 D.L.R. (3d) 730, 14 B.C.L.R. 29 (C.A.); J.R.S. Holdings Ltd v. Dktrict of Maple Ridge (1981), 122 D.L.R. (3d) 398, [I9811 3 W.W.R. 632 (B.C.S.C.); Glidurray Holdings Ltd. 1: Vilhge of Qualicuin Beach (198 1). 129 D.L.R. (3d) 599, [ 19821 1 W.W.R. 7 18 (B.C.C.A.). [1915] 3 K.B. 106 (C.A.). Ibid., at p. 111.



On appeal, the Court of Appeal took adifferent view of the facts. Lord Reading C.J. stated: If a person pays money, which he is not bound to pay, under the compulsion of urgent and pressing necessity or of seizure, actual or threatened, of his goods he can recover it as money had and received. The money is paid not under duress in the strict sense of the term, that implies duress of the person, but under the pressure of seizure or detention of goods which is analogous to that of duress. . . .The payment is made for the purpose of averting a threatened evil and is made not with the intention of giving up a right but under immediate necessity and with the intention of preserving the right to dispute the legality of the demand.'6

These principles have been held to apply to a wide variety of goods and chattels, including fungibles:' deeds,48 insurance policies,49 and even ve~sels.5~ They also apply to permit recovery of money paid to prevent the wrongful sale of goods.51 And, it has been held that the subject-matter of the actual or threatened seizure need not be the property of the party who in fact confers the benefit. For example, in Fell v. Whittaker,52 a tenant was in arrears of rent and the landlord dkmanded twice the sum owing. When the tenant refused to pay more than the actual amount in arrears, the landlord distrained certain goods which were vested in a trustee on trust for the tenant's wife. Despite the fact that the plaintiff had neither legal nor equitable title to the goods, the Court held it sufficient that he had had the possession and enjoyment of them and permitted recovery of the surplus payment.53 Moreover, Ibid., at p. 118. Quoted with approval in WC. Wells Consfrucrion Co. Ltd v. Sugar Ciry (No. 5), (19541 2 D.L.R. 589 at pp. 598-9, 10 W.W.R. (N.S.) 586 (Alta. S.C.), per Cairns J.; in George (Porky) Jacobs Enterprises Ltd v. Ciry of Regina, 119641S.C.R. 326 at p. 330.44 D.L.R. (2d) 179,per Hall J.; in &die v. Township of Branrford, [I9671 S.C.R. 573 at p. 581,63 D.L.R. (2d) 561, per Spence J.; in Municipal Spraying & Contracting Ltd v. Newfoundland (1980). 52 Nfld. B: P.E.I.R. 91 at p. 101, 15 B.L.R. 37 (Nfld. S.C.T.D.), per Goodridge J.; and in Glidurra~Holdings hd. v. Village of Qualicum Beach (1981), 129 D.L.R. (3d) 599 at p. 606, (19821 1 W.W.R. 718 (B.C.C.A.),perNemetz C.J.B.C. 47 London (Cify) v. George Walt & Sons (1893), 22 S.C.R. 300 and Melady r. Jenkins Stearnship Co. (1909). 18 O.L.R. 251 (Div. Ct.). 4Vrutt v. \'i:ard (1833), 5 B. & Ad. 808, 110 E.R. 989; Stninirh v. Sleap (1844). 12 M. & W. 585, 152 E.R. 1332; Wakefieid v. Newbon (1844), 6 Q.B. 276, 115 E.R. 107; Oates v. Hudson (1851), 6 Ex. 346, 155 E.R. 576; Gibbon v. Gibbon (1853). 13 C.B. 205, 138 E.R. 1176; Fraser v. Pendlebuty (1861). 31 L.J.C.P. 1; Re Uewellin, [I8911 3 Ch. 145; Boon v. Fair (19 16). 27 O.W.R. 623 (H.C.); Cratnm \: h400nq (1931). 12 Nfld. R. 490 (S.C.). 49 Shaw v. \%odcock (1827), 7 B. & C. 73, 108 E.R. 652. "Somes I: British Empire Shipping Co. (1860), 8 H.L.C. 338, 11 E.R. 459 (duress of a ship); Pius v. O'Dvper (1891). 7 Nfld. R. 536 (S.C.) (duress of a ship); and T.D. Keegan r: Palmer, [I9611 2 Lloyd's Rep. 449 (Q.B.) (duress of an aeroplane). 5' Valpy i: Manlq (1845), 1 C.B. 594, 135 E.R. 673; Braatz v. White Whale Lake School Districr (1907), 1 Alta. L.R. 14 (S.C.); and McKeniie v. Bank of Montreal (1975), 55 D.L.R. (3d) 64 I , 7 O.R. (2d) 521 (H.C.J.), affd 70 D.L.R. (3d) 113, 12 O.R. (2d) 719 (C.A.). 52 (187 I), L.R. 7 Q.B. 120. 53 Of course, it is only the party who actually confers the benefit who may sue to recover it: Scarfe v. Hallifar (1840), 7 M. & W. 288, 151 E.R. 775. In an agency situation, a party who confers a benefit upon an agent under duress of goods may sue the agent except where the agent is unaware of the duress and has accounted to his principal: Snowdon v. Davis, (1808), 1 Taunt. 359, 127 E.R. 872; Oates v. Hudson (1851). 6 Ex. 346, 155 E.R. 576; D. Owen & Co. v. Cronk,[1895] 1 Q.B. 265 (C.A.).

these considerations are not restricted to personal property alone, but extend to include realty as welLSJ Typical of cases falling within this category are those where the plaintiff has paid taxes which have been improperly levied in order to avoid seizure and sale of his lands." In City of St. John v. FruserBruce Overseas Corp.,56 for instance, the defendant municipality levied taxes on certain real and personal property which had been leased to the plaintiffs by the United States government. Since the plaintiffs were found to be mere trustees for a foreign sovereign, these properties were clearly exempt from local taxation. The plaintiffs, however, paid the taxes. In a subsequent action to recover these sums, the Supreme Court of Canada granted recovery. The Court rejected the suggestion that the plaintiff should have litigated the issue or awaited action to be taken to seize the property before making payment.s7 One important exception remains to be mentioned. While it is clear that actual benefits conferred upon another under duress of goods can be recovered in restitution, what is the situation where the party so coerced merely promises to bestow the benefit? Here, English law appears to draw a peculiar distinction. In Skeate v. Beak,58 the Court of Queen's Bench held that duress of goods is not a sufficient ground to avoid a contract. In that case, a landlord had wrongfully distrained goods belonging to a tenant who was in arrears of rent. The latter thereupon promised to pay and the distress was withdrawn. When the tenant subsequently refused to pay the full amount that was owing, the landlord sued on the promise and succeeded. Lord Denman C.J. distinguished duress to the person from duress of goods, stating: The former is a constraining force, which not only takes away the free agency, but may leave no room for appeal to the law for a remedy: a man, therefore, is not bound by the agreement which he enters into under such circumstances: but the fear that goods may be taken or injured does not deprive any one of

" In Peter Kiewit Sons' Co. of Canada Lid

v. Eakins Consnucrion Lid, [I9601 S.C.R. 36 1 at p. 380, 22 D.L.R. (2d) 465, Cartwright J . stated that "it makes no difference whether the duress be o f goods and chattels or o f real property or o f the person". For example, a mortgagor who pays to prevent a wrongful sale o f the mortgaged property by the mortgagee may recover the payment on grounds o f duress: Close v. Phipps (1844). 7 Man. & G. 586, 135 E.R. 236 and Sanderson \: Gairdner (1863). 14 U.C.C.P. 330. 5 s Street v. County of Kent(1861), 1 1 U.C.C.P. 255; Street v. County of Simcoe(1862). 12 U.C.C.P. 284; Cornwallis(Rural Municipality)v. Canadian Pacific& Co. (189 l ) , 19 S.C.R. 702;Jasperson v. Township of Romney (1908). 12 O.W.R. 734 (Div. Ct.); Canadian Mortgage Ass'n v. City of Regina (1917), 33 D.L.R. 43, [I9171 1 W.W.R. 1130 (Sask. S.C. en banc); Sifon v. City of Toronto, 119291 S.C.R. 484, [1929]3 D.L.R. 852; Becker v. City of Toronto,[I9331 4 D.L.R. 736, [I9331 O.W.N. 716 (C.A.); Ajlesworth v. City of Toronto, 119361 4 D.L.R. 229, [I9361 O.W.N. 361 (C.A.); A . 4 . Can v. Vancouver, [I9431 1 D.L.R. 510, [I9431 1 W.W.R. 196 (B.C.C.A.), revd on other grounds [I9441 S.C.R. 23, [I9441 1 D.L.R. 497; St Vital (Rural Municipality) v. City of Winnipeg, [I9461 S.C.R. 101, [I9461 1 D.L.R. 497; St. John (Civ) v. Fraser-Brace Overseas Corp., [I9581 S.C.R. 263, 13 D.L.R. (2d) 177. 5 6 [I9581S.C.R. 263, 13 D.L.R. (2d) 177. 5 7 Ibid., at p. 272 S.C.R. per Rand J . (1841). 1 1 Ad. & E. 983, 113 E.R. 688. See also Sumner v. Fenyman (1709), 11 Mod. 201, 88 E.R. 989; Atlee v. Backhouse (1838). 3 M. & W . 633, 150 E.R. 1298; Liverpool Marine Credit Co. v. Hunter (1868). 3 Ch. App. 479; Lever Brothers & Unilever N.V. v. Procurator Generat The " h i a s " , [I9501 A.C. 536 (P.C.).



his free agency who possesses that ordinary degree of firmness which the l a w requires all to exert.-'Y

Surely, this is the very reasoning that had been rejected in Astlq tl. Rq)~olrl.s.("' Nevertheless, it is a widely held view that one who coerces a promise of some benefit by way of duress of _goods may legally enforce that promise.(1' Happily, it appears that Skeccte v. Bcule has never been adopted by a Canadian court and, in K~~utsorz v. BottrGs Syrldicute,h' Kerwin J . expressed doubt as to its validity, referring to Lord Denman's statement in a later case that ~~ "perhaps it was laid down in t e r m too general and e x t e n ~ i v e " .Indeed, there exist subsequent English decisions that seem to ignore the distinction and others suggesting that it would no longer be applied.64

Abuse of Legal Process At first glance, it may seem somewhat paradoxical to view the threat or the actual use of legal proceedings as a basis upon which to allege duress. Of course, it is quite proper to institute or to threaten to institute either civil65 or crimina166 proceedings where there exists a bona fde belief that such S h t e v. Beale, supra, at p. 990 Ad. 8: E. See, ante, at p. 538. And see Goff and Jones, op. cir., footnote 3, at pp. 213-15; Winder, loc. cii., footnote 26, at pp. 109-10; and J. Beatson, "Duress as a Vitiating Factor in Contract" (1974). 33 Camb. L.J. 97, at pp. 98-9. 106-8. b' See, e.g., Chirn, op. cit., footnote 8, at p. 348: Anson, op. cii., footnote 8, at p. 241: Treitel, op. cir., footnote 8, at pp. 270-7 1 : and Cheshire, Fgoor and Furtnsion, op. cit., footnote 7, at p. 287. Of course, there must exist consideration for the promise: WiNough!y v. Backhouse (1824). 2 B. & C. 82 1,107 E.R. 587. Quaere if the detention is wrongful, how can its withdrawal be valid consideration? See, e.g., Longridge c Dorville (182 l), 5 B. & Ald. 117, 106 E.R. 1136: Callkher v. Bkchoffsheim (1870). L.R. 5 Q.B. 449; Ex p. Bannec Re Blythe (1881), 17 Ch. D. 480 (C.A.). And see Winfield, loc. cit.. footnote 8, at p. 350. b2 [I9411 S.C.R. 4 19 at p. 424, (194 11 3 D.L.R. 593. And in Ronald Elwyn Lirter Lid v. Dunlop Canada Ltd. (1978), 85 D.L.R. (3d) 321 at p. 348, 19 O.R. (2d) 380 (H.C.J.), Rutherford I. concluded that "such an illogical distinction, if it ever existed, is no longer effective". 63 Wakefwld v. Newbon (1844), 6 Q.B. 276 at p. 281, 115 E.R. 107. Cf MeUkh v. Wilks (1855). 4 U.C.C.P. 407. b4 See, e.g., Tamvaco v. Sitnpson (1866), L.R. 1 C.P. 363; Fell v. Whirfaker (1871). L.R. 7 Q.B. 120; The "Kerouh" (1886), 11 P.D. 92. And see The "Siboen" and The "Siborre", [I9761 1 Lloyd's Rep. 293, at p. 335 per Kerr J., and North Ocean Shipping Co. Lrd. v. Hyundai Construction Co. hd., 11979) Q.B. 705, at pp. 7 16-17 per Mocatta J. 65 Hamlet v. Richardson (1833). 9 Bing. 644, 131 E.R. 756; Powell v. Hoyhnd (185 1 ), 6 Ex. 67, 155 E.R. 456; William Whirelq Ltd v. The King (1909), 101 L.T. 741 (K.B.); Murray I: Veinotte, [I9511 2 D.L.R. 721. 28 M.P.R. 1 (N.S.S.C. in banco). And see the Critninul Code. R.S.C. 1985, c. C-46, s. 346(2), where threats of civil proceedings are specifically excluded from the provisions against extortion. 66 Ward v. Lloyd (1843), 6 Man. & G. 785, 134 E.R. 1109; Goodall v. Lowndes (1844), 6 Q.B. 464, 115 E.R. 173; Bnirh v. Monteirh (1844). 13 M. & W. 427, 153 E.R. 178; Biffin v. Bigrlell (1862), 7 H. & N. 877, 158 E.R. 725; Flmur v. Sadler (1882). 10 Q.B.D. 572 (C.A.); Sheard v. Laird (1888), 15 O.A.R. 339 (C.A.); Beer v. McLeod (1890). 22 N.S.R. 535 (S.C. in barico); Fulron v. Kingston Vehicle Co. Ltd (1897). 30 N.S.R. 455 (S.C. in banco); Groves v. Harris (1914). 18 D.L.R. 475,7 W.W.R. 68 (Sask. S.C. enbanc); Hem'ngron v. Carq,(1915),9 0.W.N. 75 (S.C. App. Div.); Bow v. Pfe#er and Gilbert, [I9241 3 D.L.R. 854,119241 2 W.W.R. 1149 (Sask. C.A.); MacWiNiatns v. Higgitu, [ 19271 2 D.L.R. 781, [I9271 1 W.W.R. 772 (Man. C.A.); Dikur v. Shavchook, (19291 2 D.L.R. 232 (Aka. S.C. App. Div.); Thompson v. Schneider, [ 19291 1 D.L.R. 989,60 N.S.R. 329 (S.C. LI banco). 59


proceedings are warranted. Furthermore, there are good policy grounds for refusing to reopen settlements reached as a result of such pre~sure.~' However, where these processes have been improperly invoked or otherwise abused, a transaction induced by such means will be set aside68 and any benefits conferred can be recovered from the recipient.69 For example, in Fztller v. S r o l r ~ e the , ~ ~plaintiff was a director, secretary, and general manager of a lumber conipany. The defendants were the president of the companj and two so-called "trouble shooters". In the course of an investigation of alleged mismanagement on the part of the plaintiff, the defendants locked him in his office for a period of time and threatened him with criminal prosecution unless he signed over to them his shares in the company and resigned his various posts. The plaintiff finally acceded to these demands and then brought an action to have the transfer avoided and to recover his property. The claim succeeded. In the Supreme Court of Cartada, Davis J. stated:

. . . there was an intentional design on the part of the three appellats to obtain from the respondent, without any valuable consideration, a transfer of the respondent's shares in the company that were worth $30,000 and . . . the same was demanded and obtained from the respondent by menaces and illegal extortion. That is quite sufficient to answer the argument that a mere threat in itself is not unlawful.71 Recovery of the shares was not barred by the apparent agreement to stifle See, e.g., Brirbune v. Dacres (1813), 5 Taunt. 133 at p. 152, 128 E.R. 641,per Gibbs J., and Elmer v. Croihers (I9 14), 6 O.W.N. 288 (H.C.). A distinction is made between transactions induced by the pressure of the abuse of process and those entered into for the purpose of stifling a prosecution. In Fuller v. Stolize, [I9381 1 D.L.R. 635 at p. 646, [I9381 1 W.W.R. 241 (Sask. C.A.), Mackenzie J.A. stated: "Such a distinction is of course fundamental because coercion operates to vitiate a contract in its making while by an agreement to stifle it is rendered void becuse of its subject-matter." Hence, transactions falling within the first category are generally held to be voidable, while those falling within the second category are generally void. 69 Nen'digare v. Davy (1692). 1 Ld. R a p . 732, 91 E.R. 1397; Oughton v. Seppings ((1830). 1 B. & Ad. 241, 109 E.R. 776; Piit v. Cootnes (1835), 2 Ad. & E. 459, 111 E.R. 178; Duke de Cadaval v. Collinr (1836). 4 Ad. & E. 858, 111 E.R. 1006; Unwin v. Leaper (1840). 1 Man. & G. 747, 133 E.R. 533; Clark v. Woods (1848), 2 Ex. 395, 154 E.R. 545; Pasco v. Wegg (1857), 6 U.C.C.P. 375; De Mesnil v. Dakin (1867). L.R. 3 Q.B. 18; Bromley v. Norton (1872), 27 L.T. 478; Dmsies v. London & Provincial Marine Ins. Co. (l878), 8 Ch. D. 369; Warts r? Mitchell (1879). 26 Gr. 570 (0nt.k Hancock v. Town of Dartmouih (1881), 14 N.S.R. 129 (S.C. in bunco); Scott e Sebn'ghi (1886). 12 P.D. 21; Shorey v. Jones (1888), 15 S.C.R. 398; Cornrt~ercialBank v. Rokeby (1894). 10 Man. R. 281 (Q.B.); Burris v. Rhind (1899). 29 S.C.R. 498; Migner v. Gouki (1900). 31 S.C R. 26; W k e r v. Toww of Sydney (1903), 36 N.S.R. 48 (S.C.); CoNinr v. Gould (19 l3), 9 D.L.R. 665, 3 W.W.R. 8 11 (Aka. S.C.T.D.); Blanchard v. Jacobi (19 l8), 43 O.L.R. 442 (H.C.); v. Snelgrove, 119271 4 D.L.R. 1028.6 1 O.L.R. 341 (S.C. App. Div.); Siolize I). Fuller, (19391 S.C.R. 235, [I9391 1 D.L.R. 1; Guilfordlndusrries Lid. v. Hankirison Management Senices Lid. (1974), 40 D.L.R. (3d) 398, [I9741 1 W.W.R. 141 (B.C.S.C.). Where, however, the abuse consists of an agreement to stifle a criminal prosecution, in the absence of any coercion, the parties will generally be in pan delicto and, hence, no recovery will be granted. 'O[1938] 1 D.L.R. 635, [I9381 1 W.W.R. 241 (Sask. C.A.), affd [I9391 S.C.R. 235, [I9391 1 D.L.R. 1. Ibid., at p. 243 S.C.R.




a criminal prosecution since the plaintiff could hardly be said to have been in pun delicto with the defendants in these circum~tances.~? Other examples of such abuse of legal process include the institution of proceedings without reasonable and probable wrongful arrest or d e t a i ~ ~ e r some , ' ~ irregularity of procedure,75 including the entering into of a "diversion a g r e e n ~ e n t " ,and ~ ~ the taking advantage of legal proceedings in order to apply pressure in some unrelated matter." In Duke de Cudcnd v. Collins,78 for example, the plaintiff, who had been at one time a member of the Portuguese government, was arrested shortly after his amval in England at the instance of the defendant, Collins. Collins had claimed, quite spuriously, that the Duke and the Portuguese government were indebted to him in the sum of £ 16,200. The Duke thereupon paid £500 to obtain his release and to avoid further embarrassment. Later, the writ was set aside and the plaintiff brought an action against Collins for money had and received. The defendant maintained that the payment had been voluntary, "for legal process, even when founded on a claim which cannot be supported, does not constitute that sort of compulsion which avoids a contract".7g Lord Denman C.J. rejected this and granted recovery on the ground that "the arrest was fraudulent; and the money was parted with under the arrest, to get rid of the pressure".RO Similarly, in the early Ontario case of Pasco v. Wegg,8' the defendant had falsely and fraudulently represented to the plaintiff that the plaintiff had committed a felony and that he would be convicted and sent to the penitentiary. unless the plaintiff gave the defendant £50 not to prosecute. The plaintiff succumbed and paid the money and, subsequently, brought a successful claim for money had and received for its recovery. A further example of abuse of legal process occurs whenever threatened or actual criminal prosecution is employed to enforce a civil obligatiomg2 See Chapter 15, discussion in the text at footnotes 22-26. Scott v. Sebright (1886),12 P.D.21; Commercial Bank v. Rokeby (1894), 10 Man. R. 281 (Q.B.): Collinsv. Gould(1913),9 D.L.R. 665.3 W.W.R. 811 (Alta. S.C.T.D.). 74 Duke de Cadaval v. Collins (1836). 4 Ad. & E. 858, 1 1 1 E.R. 1006; Cumming v. Ince ( 1817). 1 1 Q.B. 112,116 E.R. 418; Bromley v. Nonon (1872),27 L.T. 478;Hancock v. Town ofDarttnortrh (1881), 14 N.S.R. 129 (S.C. in banco); Walker v. Town of Sydney (1903),36 N.S.R. 48 (S.C.); Blanchard v. Jacobi (l918),43 O.L.R. 442 (H.C.). 7 5 Pill V . Coomes (1835), 2 Ad. & E. 459, 1 1 1 E.R. 178; Clark v. Woods (1848). 2 Ex. 395. 154 E.R. 545; Ex p. Lewit~(1885), 1 1 S.C.R. 484; St. Thomas (City) v. Yearsky (1895). 22 O.A.R. 340 (C.A.);Werriere v. Cadieux (1896). 1 1 Man. R. 175 (Q.B.). C ' O'Connor v. 1su~c.s. [I9561 2 Q.B. 288 (C.A.). 76See,e.g.,R. v. Jones(1978),40 C.C.C. (2d) 173, [I9781 3 W.W.R. 271 (B.C.S.C.). 77 Grainger v. HiN (1838), 4 Bing. N.C. 212, 132 E.R. 769; Unwin v. Leaper (1840), 1 Man. & G. 747, 133 E.R. 533; Kneeshaw v. Collier (1879). 30 U.C.C.P. 265; Pease v. Randolph (19 1 1 ), 19 W.L.R. 625,2 1 Man. R. 368 (C.A.);Guilford Indushies Ltd v. Hankinson Mat~agemettJ Services Ltd. (1974),40 D.L.R. (3d) 398, [I9741 1 W.W.R. 141 (B.C.S.C.). 7 8 (1836),4 Ad. & E. 858, 1 1 1 E.R. 1006. ' 9 Ibid., at p. 862 Ad. & E. 8 0 Ibid., at p. 864. 8' (1857),6 U.C.C.P. 375. 82 R. V. Michigan Central Railroad Co. (1907). 10 O.W.R. 660 (H.C.J.); R. v. Lapham (1913). 10 D.L.R. 315, 24 O.W.R. 111 (H.C.); Truesdell v. Holden (1913),24 O.W.R. 986 (S.C. App.



In R. v. Michigan Certtral Railroad Co.,83 Riddell J., speaking for the Ontario High Court, remarked: But in any case I could not use the criminal law or allow it to be used as a lever to enforce the payment of civil claims for damages. Any one who puts the criminal law in force for the purpose of bringing about the settlement of a civil action is guilty, in law and in conscience, of a wrong. . .

However, in recent years, there appears to be a tendency on the part of Canadian courts to back away from the application of this particular doctrine Mackay J.A. stated that "[tlhis jurisdiction ought to and, in R. v. Le~lair,8~ be exercised very sparingly and only in very exceptional casesW.85 Clearly, agreements entered into for the purpose of stifling a criminal prosecution are illegal and, therefore, unenfor~eable.~6 The reason for vitiating such transactions, however, may be for one of two quite distinct grounds. Div.); Olds v. Paris, (19181 2 W.W.R. 682,25 B.C.R. 453 (S.C.); Cunningham v. Evans, (19201 1 W.W.R. 289, 13 Sask. L.R. 120 (K.B.); Friedman v. Krysak (1921), 36 C.C.C. 253 (Sask. K.B.); R. v. Penny (1925), 35 B.C.R. 414 (C.A.); McRae v. McLaughlin Motor Car Co. Ltd, [I9261 1 D.L.R. 372, [I9261 1 W.W.R. 161 (Alta. S.C.T.D.); R. v. Thornton (1926),46 C.C.C. 249, 37 B.C.R. 344 (C.A.); Jones v. Eckley, [I9281 2 D.L.R. 943, 40 B.C.R. 75 (S.C.); R. v. Lerow, [I9281 3 D.L.R. 688, 62 O.L.R. 336 (S.C. App. Div.); R. v. Bell, [I9291 3 D.L.R. 931, [I9291 2 W.W.R. 399 (B.C.C.A.); R. v. Leclair, [I9561 O.W.N. 336 (C.A.). 83 (1907). 10 O.W.R. 660 (H.C.J.), at p. 670. 84 119561O.W.N. 336 (C.A.). . . 85 ibid., at p. 340. At least with regard to quashing the criminal proceeding. See also Lawrance L: Norrqs (1890). 15 App. Cas. 2 10 (H.L.), at p. 2 19 per Lord Herschell, and Haggard v. PPlicier Freres, [I8921 A.C. 61 (P.C.), at p. 68 per Lord Watson. Indeed, there has been recent doubt as to whether the criminal courts have jurisdiction to set aside proceedings on this ground. See, e.g., R. v. Osborn, [I9711 S.C.R. 184, 15 D.L.R. (3d) 85. 86 Collins v. Blantern (1767), 2 Wils. K.B. 341,95 E.R. 847; Keir v. Leeman (1846), 9 Q.B. 371, 115 E.R. 1315; Egerton v. Brownlow (1853), 4 H.L.C. 1, 10 E.R. 359; Henry v. Little (1854). I1 U.C.Q.B. 296; Brook v. Hook (1870), L.R. 6 Exch. 89; Western Bank of Canada v. McGill (1902), 32 S.C.R. 581; Kaufman v. Gerson, [I9041 1 K.B. 591 (C.A.); Steinberg v. Cohen, [I9301 2 D.L.R. 916, 64 O.L.R. 545 (S.C. App. Div.); Howard v. Odhums Press L.rd, [I9381 1 K.B. 1 (C.A.). The agreement to stifle need not be express, but may be implied from the circumstances: Toponce v. Martin (1876), 38 U.C.Q.B. 41 1; Jones v. Merionethhire Permanent Benefit Building Society, (18921 1 Ch. 173 (C.A.); Morgan v. McFee (1908), 14 C.C.C. 308, 18 O.L.R. 30 (Div. Ct.); Pachal v. Schiller (1914), 20 D.L.R. 851, 7 Sask. L.R. 391 (S.C.); Boon v. Fair (1916), 27 O.W.R. 623 (H.C.); Bruce v. Western Canada Flour Milk Co. (1917). 36 D.L.R. 410, [I9171 3 W.W.R. 365 (Man. K.B.); U.S. Fideliry & Guarantee Co. v. Cruikshonk and Simmons (1919), 49 D.L.R. 674, (19191 3 W.W.R. 821 (Sask. C.A.); Becker v. Bachman, [I9271 2 D.L.R. 1144, [I9271 2 W.W.R. 32 (Alta. S.C.T.D.); Hawkesv. Waugh,[I9481 3 D.L.R. 397,2 1 M.P.R. 417 (N.B.S.C. App. Div.). An agreement to compound a felony was also illegal and unenforceable: Williamsv. Bayley (1866), L.R. 1 H.L. 200; R. v. Mason (1867), 17 U.C.C.P. 534; Cannon v. Ran& (1870). 23 L.T. 817; Rawlings v. Coal Consumers' Assh (1874). 43 L.J.M.C.11 1; Whirmore v. F a r 6 (1881), 2 9 W.R. 825 (C.A.). With regard to agreements to compound a misdemeanour, however, it is not so clear. In Keir v. Leeman (1846). 9 Q.B. 371, 115 E.R. 13 15, it was suggested that if the misdemeanour was of a public nature, such agreements will not be upheld. See also Clubb v. Hutson (1865). 18 C.B.(N.S.) 414, 144 E.R. 506; Windhill Local Bd of Health v. Vint (1890). 45 Ch. D. 351 (C.A.); Morgan v. McFee (1908), 14 C.C.C. 308, 18 O.L.R. 30 (Div. Ct.); Johnson v. Musselman (1917). 37 D.L.R. 162, [I9171 2 W.W.R. 444 (Alta. S.C. App. Div.). And, in Dwight v. Ehworth (1852), 9 U.C.Q.B. 539, the Court rejected the felony-misdemeanour distinction and simply laid down a test of whether the offence is injurious to the community generally. Now that felonies and misdemeanors are abolished in Canada, the Criminal Code makes it an offence to compound an indictable offence: R.S.C. 1985, c. C-46, s. 141.



In some cases, such as Stoltie t: Fuller, a benefit will have been obtained directly as a result of a threat of criminal prosecution. This constitutes duress and such benefits can be recovered in restitution.R7 Indeed, to coerce benefits by way of threat of criminal prosecution has Ions been an offence at common lawhRand today is prohibited in Canada under the C~iri~ir~trl In other cases, where the threat to prosecute has not induced the transaction and, hence. the agreement is voluntarily entered into, it will nevertheless be set aside on the ground that the consideration for the agreement - namely. to stifle a prosecution - is bad for reasons of public policy.90 Here, it is doubtful that any benefits bestowed can be recouped for, generally, the parties will be in pan delicto?l On the other hand, where it can be shown that the threat of prosecution was made in good faith and without malice and that the benefit was conferred in settlement of an acknowledged obligation rather than to stifle the prosecution, the settlement will be upheld?* In cases where a good Pacco v. Wegg (1857). 6 U.C.C.P. 375; Davies v. Lorldon & Provincial Marine Inr Co. (1878), 8 Ch. D. 469; W m v. MucheU (1879), 26 Gr. 570 (Ont.); Shorey v. Jones (1888). 15 S.C.R. 398: Bun+ v. Rhind (1899). 29 S.C.R. 498; Migner v. Gouki (1900), 31 S.C.R. 26; Erwin v. Snelgrme. [I9271 4 D.L.R. 1028.61 O.LR. 341 (S.C. App. Div.); Stolne v. Fuller,119391 S.C.R. 235, [I9391 I D.L.R. 1. C' Steinberg v. Cohen, [I9301 2 D.L.R. 916.64 O.L.R. 545 (S.C. App. Div.), where the Court found the parties not to be in pan' &to but nevertheless refused its aid to recover money paid under the agreement to stifle. See C.A. Wright, "Note" (1931), 2 Can. Bar Rev. 131. 88 See. e.g., R. v. Woodward (1707). 11 Mod. 137, 88 E.R. 949 and R. v. Southerron ( 1805 ). 6 East. 126, 102 E.R. 1235. 89 R.S.C. 1985, c. C-46, s. 346(1), as amended R.S.C. 1985, c. 27 (1st Supp.), s. 46. However. the section only applies where the accused has acted "without reasonable justification or excuse and with intent to obtain anything". 90 Collins v. Blantem (1767). 2 Wils, K.B. 341.95 E.R. 847; Keir v. Leeman (1846), 9 Q.B. 37 I , 115 E.R. 1315; Williams v. Bayley (1866), L.R. 1 H.L. 200; Canada Farmers' Mutual Ins. Co. v. Watson (1875). 25 U.C.C.P. 1; Whirmore v. Farley (1881). 29 W.R. 825 (C.A.); Bell v. Riddell (1884), 10 O.A.R. 544 (C.A.); Lound v. Grimwade (1888). 39 Ch. D. 605; Windhill Loccil Bd. of Health v. Vint (1890), 45 Ch. D. 351 (C.A.); Peopkf Bank of Halifax v. Johnson (1892). 20 S.C.R. 541; Jones v. Merionethshire Permanent Benefit Building Society, [I8921 1 Ch. 173 (C.A.): Meriden Brirtania Co. v. Bowell (1896), 4 B.C.R. 520 (C.A.); Major v. McCranq (189s). 29 S.C.R. 182,2 C.C.C. 547; Leggait v. Brown (1899). 30 O.R. 225 (Div. Ct.); bfanri 1: Holron (1904), 3 O.W.R. 804 (Div. Ct.): Bowins v. Home Bank of Canada (1907), 9 O.W.R. 938 (H.C.J.):Pachalv. Schilkr(l9 14). 20 D.L.R. 85 1.7 Sask. L.R. 391 (S.C.); Johnson v. Mussc/mon (1917). 37 D.L.R. 162, [I9171 2 W.W.R. 444 (Alta. S.C. App. Div.); Rurhenian Far~ncrsElm~ror Co. Ltd v. Hrycak, 119241 3 D.L.R. 402, [I9241 2 W.W.R. 825 (Sask. C.A.). 91 Wood v. Adams (1905), 10 O.L.R. 63 1 (Div. Ct.): Chipman v. Whitman (I9 12), 1 1 E.L.R. 3 13 (N.S.S.C.): George White & Sons v. JashansX~(1917), 34 D.L.R. 271, [I9171 2 W.W.R. 173 (Sask. S.C.); Fainr,eutherv. McCullough (19 18),43 D.L.R. 525,43 O.L.R. 299 (S.C. App. Div.); U.S. Fidelity & Guarantee Co. 1. Cruihhank and Simmons (1919), 49 D.L.R. 671, [I9191 3 W.W.R. 821 (Sask. C.A.). 92 Ward v. Lloyd (1843). 6 Man. & G. 785. 134 E.R. 1109; Re Mapleback, ex. p. Caldecorr (1876). 4 Ch. D. 150 (C.A.); Flowr v. Sadler (1882). LO Q.B.D. 572 (C.A.); Beer v. McLPod (1890). 22 N.S.R. 535 (S.C. in banco); Henry v. Dickie (1896), 27 O.R. 416 (H.C.J.); Groves 1: Hams (19 14). 18 D.L.R. 475,7 W.W.R. 68 (Sask. S.C. en banc);Hem'ngton v. Carey (1915). 9 O.W.N. 75 (S.C. App. Div.); Bow v. Pfeiffer and Gilbert, 119241 3 D.L.R. 854. [I9241 2 W.W.R. 1149 (Sask. C.A.); MacWilliarns v. Higgins. (1927) 2 D.L.R. 781, [I9271 1 W.W.R. 772 (Man. C.A.1: Dikur e Shavchook, [I9291 2 D.L.R. 232 (Alta. S.C. App. Div.); Mutual Finance Ltd. 1: John Werron & Sons L d , 119371 2 K.B. 389; Rogers v. Rogers, [I9381 1 D.L.R. 99, 12 M.P.R. 321 (N.S.S.C. in banco); Smerchanski v. M.N.R., [I9741 1 F.C. 554, 45 D.L.R. (3d) 254 (C.A.). affd 119771 2 S.C.R. 23.68 D.L.R. (3d) 745.


faith settlement is argued, however. there appears to be a fairly heavy onus upon the defendant to establish such Dotin f i h . This onus, it seems, can best be discharged by showing that the criniinal proceeding was not abandoned. but. in fact, actually c o n i n ~ e n c e d . ~ ~ B. PRACTICAL COMPULSION AND ECOSO>IIC DURESS

Practical Compulsion Apart from the established categories of duress, there is growing recognition - certainly on the part of Canadian courts - that other forms of unwarranted pressure may just as surely vitiate the voluntariness of a transaction as, say, the more obvious effect of threatened physical violence. Thus, just as duress of goods and abuse of legal process were gradually engrafted upon the narrow doctrine of duress at common law, today there appears to be a similar development taking place with what Kerwin J. termed, in Kitutson 1: Bourks Sydicate, "practical c0mpulsion".9~ A common feature of such coercion is that the defendant may be unaware that his demand is not j~stified.~5 Another is that often the pressure brought to bear is of an economic nature. To illustrate, in the Bourkes case, the defendant, Knutson, had contracted to sell lands to the plaintiff syndicate free and clear of a certain interest for a specified consideration. Subsequently, the defendant acquired that interest for himself and, believing that he was entitled to further compensation. he demanded an additional sum. In the meantime, the syndicate had arranged for the further sale of the lands to a third party and it was clear that the delay involved to resolve the issue with Knutson in legal proceedings would have put the plaintiff in breach of its contractual commitment. Hence, it paid Knutson the additional money under protest and later sought to recover the payment in an action for money had and received. Although it could be argued that the syndicate had been merely "inconvenienced" by the defendant's demand and not really "compelled" since it could have included in its suit against Knutson its loss resulting from the breach of contract, the Supreme Court of Canada held: See. e.g. Gibsorl i: Coures (1905). 1 W.L.R. 556 (Man. C.A.); Mac\Vi/liarns v. Higgins, 119271 2 D.L.R. 781. 119271 1 W.W.R. 772 (Man. C.A.); Hawkes v. Wa~igh.I19481 3 D.L.R. 397. 2 1 H.P.R. 417 (S.B.S.C. App. Div.). It has also been stated that where a party "has the choice between a ci\il and a criminal remedy", he may enter into a compromise: Fisher & Co. I: Apollirioris Co. ( 1879, 10 Ch. App. 297, at p. 302 per James L.J. And see Kneeshaw v. Collier (1879). 30 U.C.C.P. 265 and Union Bank of Nenfoundland v. Hurton and Bradshaw (1888). 7 Nfld. R. 290 (S.C.). "'{1941] S.C.R. 119 at p. 425, [I9411 3 D.L.R. 593. The term seems to have originated with a statement of Channel1 J. in North v. Waltl~atnsrorvUrban Council (1898). 67 L.J.Q.B. 972, at p. 974. V5 In Peter Kie~vitSons' Co. of Canada Lrd v. Eakins Construcrion Lrd., [I9601 S.C.R. 361 at p. 380, 22 D.L.R. (2d) 465, Cartwright J. noted "that in such cases the plaintiff's right to recover is not affected by the circumstance that the defendant honestly believed he was entitled to the payment which he demanded".



. . . the evidence is plain that the payments . . . were not voluntary in the sense referred to in the cases . . . In order to protect its position under the option agreement and to secure title to the lands which it was under obligation to transfer.. . , the Syndicate was under a practical compulsion to make the payments in question and is entitled to their repayment.9" Thus, in the absence of any physical threats, seizure of property. or abuse of legal process, the Court found sufficient compulsion to warrant recovery in the practical consequences of failing to meet a contract deadline.9' In the absence of a finding of practical compulsion, the conferral of any benefit will be characterized as voluntary and, accordingly, the benefit will not be recoverable.98 Such was the case, for example, in Peter Kiewit Knutson v. Bourkes ~ y d i c a r esupra, , footnote 94, at p. 425 S.C.R. per Kerwin J. For other examples of recovery of benefits conferred under practical compulsion, see R. 1: Chappelle (1902). 32 S.C.R. 586, affd I19041 A.C. 127 ( P C ) (royalties paid on threat of forfeiture of a mining claim); Day v. Day (1923), 23 O.W.N. 566 (H.C.) (mamage settlement entered into by wife on threat of losing children); Pilhorrh v. Cobourg, [I9301 4 D.L.R. 757, 65 O.L.R. 541 (S.C. App. Div.) (improper taxes paid in order to obtain a loan); London (Cig) v. London Club Ltd., [I9521 2 D.L.R. 178, [I9521 O.R. 177 (C.A.) (improper taxes paid on threat of closure of business); R. v. Premier Mouton Products Inc., [I9611 S.C.R. 361,27 D.L.R. (2d) 639 (improper excise taxes paid on threat of closure of business); George (Porky) Jacobs Enterprises Ltd. v. City of Regina, [I9641 S.C.R. 326, 44 D.L.R. (2d) 179 (overpayment of licence fees on threat of closure of business); Eadie v. Township of Brantford, [I9671 S.C.R. 573, 63 D.L.R. (2d) 561 (improper severance fees paid and conveyance of property under compulsion of illness and other general circumstances); Ken, Property Planning & Managonc~nt Ltd I: T o ~ wof Burlington, [I9801 2 S.C.R. 598, 110 D.L.R. (3d) 263 (taxes paid pursuant to retroactively repealed provision in statute); Municipal Spraying & Contracting Ltd. I: h'e~tlfoundland(1980), 52 Nfld. & P.E.I.R. 91, 15 B.L.R. 37 (Nfld. S.C.T.D.) (extra serviccs provided on threat of loss of contract); WH. Violette Lrd. v. Ford Motor Co. of Cariadtr Ltd. (1981). 34 N.B.R. (2d) 238 (C.A.) (extra destination and distribution charges paid to avert "economic suicide"); Conin Consnuction Co. Ltd v. Borough of Scarborough (198 1 ), 122 D.L.R. (3d) 291,32 O.R. (2d) 500 (H.C.J.) (improper charges demanded by municipality for issuance of building permit); Phoenix Ass'ce Co. of Canada v. Ciry of Toronto (1981), 129 D.L.R. (3d) 351. 35 O.R. (2d) 16 (H.C.J.), affd 142 D.L.R. (3d) 767n, 39 O.R. (2d) 680n (C.A.) (taxes paid to municipality on default of third party to avoid guarantee being called upon); Re Hc~y arid Civ of Burlington (1981), 13 1 D.L.R. (3d) 600.38 O.R. (2d) 376 (C.A.) (cost of acquirin: land for road-widening purposes demanded by municipality for consent to rezoning application); A.J. Sa,erseri Inc. v. Village of Qualicum Beach (1982), 135 D.L.R. (3d) 122, I19821 1 W.W.R. 374 (B.C.C.A.)(improper impost fees paid to municipality for approval of suhdivision deve1opment);Re Haslri~nand Costain Ltd. (1986), 54 O.R. (2d) 790 (H.C.J.)(increased purchase price paid to obtain occupancy of condominium prior to closing). C t Corporate Prop~t.tI'(.s Ltd. I . Manufacturers Life Ins. Co. (1987). 40 D.L.R. (4th) 506, 60 O.R. (2d) 263 (H.C.J.). re\.d on other grounds 63 D.L.R. (4th) 703, 70 O.R. (2d) 737 (C.A.) (excessive rent paid to avoid any question of default under sublease). q8 Cushen 1: Cig of Hamilton (1902), 4 O.L.R. 265 (C.A.); Smith L: Williatn Charlick Lid. (1924). 33 C.L.R. 38 (Aust. H.C.); Colwood Park Ass'n Ltd v. Oak Bay, [I9281 3 D.L.R. 812,[19281 2 W.W.R. 593 (B.C.S.C.); Vancouver Growers Ltd v. Snow Ltd., 119371 4 D.L.R. 128, [I9371 3 W.W.R. 12 1 (B.C.C.A.); Hollinger Consolidated Gold Mines Ltd. v. Northern Ontario Power Co., [I9401 1 D.L.R. 5 16,[1940] O.W.N. 66 (C.A.), affd [I9401 3 D.L.R. 659 (S.C.C.); Twyford r-. Manchester Corp., [I9461 Ch. 236; Eric Gnapp Ltd v. Petroleum Bd, [I9491 1 All E.R. 980 (C.A.); J.H.Samuelr& Co. Ltd v. Crown Tmr Co. (1959), 18 D.L.R. (2d)451,27 W.W.R. 160 (Aha. S.C.); Peter Kiewit Sons' Co. of Canada Ltd v. Eakins Consfruction Ltd, [I9601 S.C.R. 361, 22 D.L.R. (2d) 465; R. v. Beaver Lamb & Shearling Co. Ltd, [I9601 S.C.R. 505. 23 D.L.R. (2d) 513; Beaver Valley Developments Ltd. v. Towwhip of North York (1961), 28 D.L.R. (2d) 76 (S.C.C.); Morton Consfruction Co. Ltd. v. City of Hamilton (1962), 3 1 D.L.R.

96 97

Sotts' Co. of Curtadu Lrd. v. Eakirls Constnictiorl Lrd.Y9 There, the defendant company had subcontracted to the plaintiff certain work involving pile-driving in connection with the construction of a bridge. The required depth of the timber piles was found to be substantially greater than what had been originally anticipated. The defendant maintained that the additional work Lvas covered by the terms of the subcontract. The plaintiff, however, argued that it was entitled to extra compensation. When the defendant threatened to call in the bonding company,IOO the plaintiff acquiesced and proceeded with the additional work under protest. Afterwards, the plaintiff brought an action for breach of contract or, alternatively, for quatlturn rnerziir claiming the reasonable value of the services which it had provided beyond the scope of the subcontract. The majority of the Supreme Court of Canada took the view that the plaintiff, by electing to proceed with the extra work, had accepted the defendant's interpretation of the subcontract. If the plaintiff had wanted to dispute the issue, the proper procedure, according to the majority, would have been to refuse performance except on its own interpretation and, if this were rejected, to treat the subcontract as repudiated and sue for damages.lo1 In a vigorous dissenting judgment, Cartwright J. argued: It can scarcely be denied that the work done by the respondent, under continuing protest, was done under circumstances of practical compulsion. The appellant (who held what turns out to be a mistaken view as to the meaning of the sub-contract) threatened the respondent with what might well amount to financial ruin unless it did the additional work which the sub-contract did not obligate it to do. To say that because in such circumstances the respondent was not prepared to stop work and so risk the ruinous loss which would have fallen on it if its view of the meaning of the contract turned out to be erroneous the appellant may retain the benefit of all the additional work done by the (2d) 323, [I9621 O.R. 154 (C.A.); Bell Brothers Pry. Ltd. v. Shire of Serpentine-Jarrahdale, 119691 W.A.R. 104 (Aust. S.C.); G. Gordon Foster Developments Ltd. v. Towship of langkq (1979). 102 D.L.R. (3d) 730, 14 B.C.L.R. 29 (C.A.); C.R. Aggregate Sales Ltd v. Dismct of Squatnish (1980), 115 D.L.R. (3d) 81 (B.C.S.C.), affd 8 D.L.R. (4th) 88, 49 B.C.L.R. 196 (C.A.); Wilson I: Disnict of Surrey, [I9811 3 W.W.R. 266.26 B.C.L.R. 28 (S.C.);J.R.S. Holdings Ltd v. Dirnict ojMaple Ridge (1981), 122 D.L.R. (3d) 398, [1981] 4 W.W.R. 632 (B.C.S.C.): Glidurray Holdings Ltd v. Village of Qualicum Beach (1981). 129 D.L.R. (3d) 599, 119821 1 W.W.R. 718 (B.C.C.A.); Condev Project Planning Ltd. v. Kratner Auto Sales Ltd., 119821 2 W.W.R. 445, 18 Alta. L.R. (2d) 107 (Q.B.); Peel (Regional [email protected]) I? Viking Houses (1982), 38 O.R. (2d) 78 (H.C.J.). '+"1960]S.C.R.361,22 D.L.R.(2d)465. ;',o This was apparently tantamount to "industrial murder". See B.E. Crawford, "Restitution Unconscionable Transactions Undue Advantage Taken of Inequality Between Parties" (1966). 44 Can. Bar Rev. 142, at p. 150. 101 In Stott v. Merit hvesttnent Cop. (1988), 48 D.L.R. (4th) 288 at p. 308, 63 O.R. (2d) 545 (C.A.), Finlayson J.A. observed: "In the majority of cases where effective economic pressure is applied, redress to the courts or arbitral tribunals is illusory. In fact it is usually a creditor or a person entitled to the benefit of a contract who is pressured into accepting something less than he is entitled to receive by law. Either he cannot afford the time and expense of litigation or he has every reason to believe that he will not be able to realize on his judgment if he resorts to the courts."




respondent without paying for it would be to countenance a n unjust enrichment of a shocking character, which, in my opinion, can and should be prevented by imposing upon the appellant the obligation to pay . . .lo2 Similarly. in Mortort Cor~stntctiortCo. Ltti. v. C i q of Hrlritilron,lo3the plaintiff company had built sidewalks for the defendant nlunicipality in accordance \sith specifications provided by the latter's engineer. It was discovered that a number of these sidewalks had become badly "spalled", apparently as 3 result of salt used by the city in winter time rather than some fault in construction. Although the plaintiff's covenant to keep the sidewalks in repair for a period of twelve months had expired, the city demanded that the damaged sidewalks be replaced by Morton at its own expense. Upon its refusal to do so, certain members of the city council indicated to the plaintiff that it would not be considered for any future contracts. Morton then went ahead and replaced the damaged sidewalks and sued the city for reimbursement. Gibson J.A., speaking for the Ontario Court of Appeal, concluded: The plaintiff's consent to do the work in question was not deprived of its voluntary character by reason of the threats made by certain members of the City Council to the effect that the plaintiff would receive no further contracts from the city unless it effected the required repairs at its own expense. The defendant was legally entitled to make a threat of that nature and, indeed, to carry it out.. . He went on to add. however: I refrain from making any comment upon the plaintiff's allegation as to thc alleged want of commercial morality on the part of the members of the City Council in that, after having had this work done under strict supervision and in accordance with the specifications provided by the city, they nevertheless insisted upon the contractor replacing the work at its own cost and expcnse under the threat of cutting it off from any further city contracts if it failed to comply with such demand.'04

It is indeed difficult to justify the decisions to deny recovery in Ptwr Kiewir and Morton Consrnrction, especially in light of the Supreme Court of Canada's earlier holding in K~lutsorrv. Bourkes Syndicate. Whether this failure to appreciate the realities of modern business pressure stems from a somewhat naive assun~ptionon the part of our courts that businessmen dealing in a commercial setting stand in roughly equal bargaining positionc is hard to ascertain.I0' However, the Peter Kiewit decision was not follo\~cd by the Supreme Court of Newfoundland in Municipal Spraying & Corttrtrcting "12

P t w Kicwir Sorts' Co., supra, footnote 99, at pp. 378, 379-80 S.C.R. Quoted with apprcwl in A41o1icipulSprajirig & Corltractirlg Lrd. 1: Neuifouttdlar~d(1980). 52 Nfld. & P.E.I.R. 9 1 at p. 99. 15 B.L.R. 37 (Nfld. S.C.T.D.).perGoodridge J. ( 1962). 3 1

D.L.R. (2d) 323, [I9631 O.R. 154 (C.A.). Ibid, at pp. 330-31 D.L.R. See also Smith v. Williarrl Charlick Lrd. (1924). 34 C.L.R. 3s (Aust. H.C.). at p. 5 1 per Knox C.J. C ' Terrr~ir~ul Warehouses Ltd. v. J.H. Lock & Sorts Lid ( 1957). 9 D.L.R. (2d) 1 9 0 (Ont. H.C.J.), at pp. 498-9 per Aylen J. IUsSee, e.g.. S.R. Ellis, "Note" (1961), 19 U.T. Fac. L. Rev. 171. I"

Ltcl. v. NewJoirndkut~d.'"~ Yet the case was very similar. The petitioner had contracted to work on two roads for the Province of Newfoundland. Materials excavated from one road were to be used to grade some 5.8 kilometres of the second road. When the first road produced far more excavated material than anticipated, the respondent instructed Municipal to grade a further 4 kilometres of the second road. The petitioner initially refused on the basis that this work was not part of the original contract. The Province took the position that its request was covered by a provision in the agreement dealing with "disposal" at the direction of the engineer and that its right to require haulage included grading and embanking. If Municipal chose not to proceed, the Province threatened to bring in another contractor at the petitioner's expense. Municipal, after consulting legal counsel, eventually performed the additional work and sought compensation. Goodridge J. distinguished the Peter Kiewit case1O7and concluded: "There has been unjust enrichment. The respondent has insisted on the performance of a work which it had no right to insist upon. It has received the work and it must bear the cost of that work.''108 Of particular concern in such cases as Peter Kiewit and Morton Construcrion is the intimation in the judgments that the defendants had done nothing "wrong" in bringing pressure to bear in order to achieve their objectives.'09 Professor Dawson notes: It is indeed this concentration on distinctions between legal and illegal means which has chiefly arrested the modern development of the law of duress. No single formula has achieved so wide a circulation as the statement that "It is not duress to threaten to do what there is a legal right to do". Certainly no other formula is anything like so misleading.. . . [I]t by no means follows that the effects of pressure exerted in particular cases will always escape judicial scrutiny. Doctrines of duress are intended to raise precisely the question whether it is "rightful" to use particular types of pressure for the purpose of extracting an excessive or disproportionate return.Il0 Perhaps the historical connection between duress and the law of crime and tort has obscured the focus of the doctrine in the context of the law of

52 .i''6(1980). -

Nfld. 8: P.E.I.R. 91, 15 B.L.R. 37 (Nfld. S.C.T.D.). Goodridge J. (at p. 98 Nfld. & P.E.I.R.) distinguished Peter Kiewit primarily on the basis that, in that case, the contract specifications were altered prior to commencement of performance, whereas in the case before him, the additional work was requested after perfornlance had commenced. Thus, in Kiewit the "extra" work formed part of the contract, while here it fell clearly outside of the contract. '/bid., at p. 102 Nfld. & P.E.I.R. See. e.g.,Peter Kiewit, supra, footnote 99, at pp. 365-6 S.C.R., and Morton Construction,supra. footnote 103, at p. 330 D.L.R. The American authorities completely reject this notion. See, cg., Illinois Merchants' Tntst Co. v. H a n q , 335 111. 284 (S.C., 1929); \Vise v. Midtown Motors lnc., 23 1 Minn. 46 (S.C., 1950); Rubenstein v. Ruberrstein, 20 N.J. 359 (S.C., 1956): Wolf I: Marlton Corp., 57 N.J. Super. 278 (App. Div., 1959); and MircheN v. C.C. Sanitation Co., 430 S.W. 2d 933 (Tex. Civ. App., 1968). ! : " Dawson, loc. cir, footnote 3, at pp. 287, 288. ",




restitution - to prevent an unjust enrichment.''' Surely, as with the traditional categories of duress, the essential question is whether the plaintiff has conferred a benefit against his will which he otherwise was not obliged to bestow. If such is the case, then it is an involuntary transaction that cannot be justified. This was clearly appreciated by Lord Atkin in Thor-ne v. MotorZade Assil,jj? when he stated: The ordinary blackmailer normally threatens to do what he has a perfect right to do - namely, communicate some compromising conduct to a person whose knowledge is likely to affect the person threatened.. . . What he has to justify is not the threat, but the demand of money.

In certain areas, the doctrine of practical compulsion can draw upon some fairly well-established roots. For example, it has long been held that a party may recover money paid to obtain the performance of some public or quasi-public duty that ought to have been rendered without charge.113 Such benefits are said to have been obtained colore officii. The doctrine also applies to regain surplus payments made in excess of the proper charge.J14The reason behind granting restitution in these circumstances was recognized by Willes J. in Great Western Ry. Co. v. Sutton:ll5

. . . when a man pays more than he is bound to do by law for the performance of a duty which the law says is owed to him for nothing, or for less than he has paid, there is a compulsion or concussion in respect of which he is entitled to recover the excess by condictio indebiti,or an action for money had and received. Similarly, where an official uses his position to demand money, not for the public coffers, but rather for his personal enrichment, an action in restitution will lie for its return."6 The same reasoning holds where carriers have demanded excessive rates to carry or where public utilities have See, e.g., M.H. Ogilvie, "Wrongfulness, Rights and Economic Duress" (1984), 16 Ottawa L. Rev. 1, at p. 27. 112 [I9371 A.C. 797 (H.L.), at p. 806. See also SiCrbee v. Webber, 171 Mass. 378 (S.J.C., 1898), at pp. 380-81 per Holmes J. "3 Longdill v. Jones (18 l6), 1 Stark. 345, 17 1 E.R. 492; Lewk v. Hammond (18 18). 2 B. & Aid. 206, 106 E.R. 342; Hammond v. Robinson (1843). 4 N.B.R. 295 (S.C.); Steele v. Williams (1853), 8 Ex. 625, 155 E.R. 1502; Traheme v. Gardner (1856). 5 El. & BI. 913, 119 E.R. 72 1 ; Hooker v. Gurnett (1858). 16 U.C.Q.B. 180; Lambion (County) v. Pousseti (1862). 2 1 U.C.Q.B. 472; Hooper v. Ereter (18871, 56 L.J.Q.B. 457; Piirs v. O'Dwyer (1891), 7 Nfld. R. 536 (S.C.); Martin v. Tomkinson, [1893] 2 Q.B. 121; Richard v. Taylor (1896). 28 N.S.R. 31 1 (S.C. in banco); R. & W Paul Lrd v. Wheat Com h, [I9371 A.C. 139 (H.L.). 114 Empson v. Barhursr (1620), Hut. 52, 123 E.R. 1095; Jons v. Perchard (1796). 2 Esp. 507, 170 E.R. 436; LoveU v. Simpson (1800), 3 Esp. 153, 170 E.R. 570; Parsons v. Blandy (1810), Wight. 22, 145 E.R. 1160; UmphPlby v. McLaan (1817), 1 B. & Ald. 42, 106 E.R. 16; Dew v. Parsons (1819), 2 B. & Ald. 562, 106 E.R. 471; Haldimand (County) v. Martin (18601, 19 U.C.Q.B. 178. 'I5 (1868), L.R. 4 H.L. 226, at p. 249. Morgan v. Palmer (1824). 2 B. & C. 729, 107 E.R. 554; Ken, v. Powell (1875), 25 U.C.C.P. 448; Overn v. Strand, 1193314 D.L.R. 541, [1933] 3 W.W.R. 85 (B.C.C.A.). ]I7 Parker v. Great Wesrern Ry. Co. (1844). 7 Man. & G. 253, 135 E.R. 107; Parker v. Bktol & Ereier Ry. Co. (185 1). 6 Ex. 702, 155 E.R. 726; Baxendale v. Great Western @. Co. (1864). "1




overcharged for their services.~~* Again, the plaintiff can recover the amount paid over and above that which was legally due.I19 There have been a number of "practical compulsion" cases in Canada involving suits against municipalities. In Re Hay arid Civ of Bwlir~gtorz,~'o for example, the appellants had applied to have certain property removed from the applicable zoning designation. The respondent municipality gave its consent on condition that they repay to it the cost of acquiring a portion of the property from the appellants' predecessor in title for road-widening purposes. The appellants protested, but eventually entered into a development control agreement with the municipality in which they agreed to pay - and, subsequently, did pay - the demanded sum. The Ontario Court of Appeal found that the municipality had improperly imposed the condition upon the rezoning application and that the appellants needed the land for their medical clinic and that "time was running along".121 In the words of Weatherston J.A.: "If the agreement had not been signed, the Council would not have passed the rezoning by-law, and the appellants would have had to apply to the Ontario Municipal Board for a direction that it be passed. I think there was practical compulsion on them to agree to the paymentW.'22 Even in circumstances where the plaintiff is not dealing directly with the municipality - and, hence, any trace of colore officii is absent - the courts have granted restitutionary relief.1'3 In Phoenix Ass'ce Co. of Canada v. Ciry of T ~ r o n r o , ~ ? ~ the plaintiff had guaranteed a development contract of a third party, Ownix Developments Ltd. The third party defaulted and the plaintiff paid taxes to the defendant municipality in order to avoid the guarantee being called upon. Montgomery J., in the High Court of Ontario, ruled that the taxes were paid


16 C.B.(N.S.) 137, 143 E.R. 1077; Great Western Ry. Co. v. Suiton (1868). L.R. 4 H.L. 226; Lees v. Ottawa & New York /@ Co. (1900), 31 O.R. 567 (C.A.); Warson v. Canadian Pacific Ry. Co. (1914), 20 D.L.R. 472. 32 O.L.R. 137 (S.C. App. Div.); New York Cenrral System v. Sparrow, [I9571 Que. Q.B. 808 (C.A.). Link v. Dundas & Waterloo Macadami;ed Road Co. (1853). 2 U.C.C.P. 399; Lindberg v. City of Halifar (1898). 3 1 N.S.R. 154 (S.C. in banco); Lewis v. Andover & Perth Elecm'c Light C o m h , 119291 1 D.L.R. 34 (K.B.K.B.); Sourh of Scotland Elecrricity Bd v. British Oxygen Co. L i d . [ 19591 1 W.L.R. 587 (H.L.): Chastain v. British Columbia Hydro & Power Authority

(1972), 32 D.L.R. (3d) 443, il973j 2 W.W.R. 481 (B.C.S.C.). Love11 v. Simpson (1800). 3 Esp 153. 170 E.R. 570; Longdill v. Jones (1816), 1 Stark. 345, 171 E.R. 192; Dew v. Pmons (1819). 2 B. & Ald. 562, 106 E.R. 471; Haldimand (County) v. Martin ( 1860). 19 U.C.Q.B. 178. Cf: Simplor Chemical Co. Lrd v. Government of Maniroba, 119751 I W.W.R. 289 (Man. Q.B.). affd 119751 3 W.W.R. 480 (C.A.). I 2 O (1981). 131 D.L.R. (3d) 600. 38 O.R. (2d) 476 (C.A.). See also Kew Property PIanning & Management Ltd v. Town of Burlmgion, [I9801 2 S.C.R. 598, 110 D.L.R. (3d) 263 and Conin Consmction Co. Ltd v. Borough of Scarborough (1981), 122 D.L.R. (3d) 291, 32 O.R. (2d) 500 (H.C.J.). I * ' Re Hay and City of Burlington, supra, at p. 603 D.L.R. per Weatherston J.A.




123 The

situation is similar to an action for money paid in circumstances where the plaintiff has been compelled to discharge an obligation of the defendant by making payment to a third party. See, generally, Chapter.29. 124(1981),129 D.L.R. (3d) 351, 35 9.R. (2d) 16 (H.C.J.), affd 142 D.L.R. (3d) 767n. 39 O.R. 6QOn fC A 1



under compulsion125and, in light of the fact that Ownix was insolvent, went on to grant a constructive trust in favour of the ~ 1 a i n t i f f . I ~ ~ The problem of practical compulsion is further complicated where one or both of the parties are operating under a Thus, a person conferring a benefit may honestly believe that the other's demand is completely justified, although, in fact, it is unwarranted. In such cases, a finding of practical compulsion may be more difficult since it will generally appear that the benefit has been bestowed with apparent voluntariness as a result of the mistake rather than in response to some pressure. Nevertheless, there are cases where the courts have found both elements to be present. Where the mistake can be characterized as one of fact,128this will simply provide an additional ground for recovery. For instance, in George (Porky) Jacobs Enterprires Ltd v. City of Regina,129the Supreme Court of Canada granted restitution on alternate grounds of practical compulsion and mistake of fact. The plaintiff was a wrestling promoter in the City of Regina. In 1947, a by-law was passed by the defendant municipality requiring an annual licence fee of $100 in order to hold boxing and wrestling matches. One year later, the by-law was amended to increase the fee to $25 per day. In 1955 and 1957, the fee was again changed to $37.50 and $50, respectively. However, the latter amendments, due to a drafting error, failed to stipulate that the fee was to be paid on a per diem basis. Hence, the tax reverted to an annual levy. Both parties proceeded on the mistaken assumption that the fees were to be paid daily and, during the period from 1955 through 1959, the plaintiff paid an excess of $8,125 to the defendant. Hall J., on behalf of the Supreme Court of Canada, concluded that the mistake was one of fact and not one of law since the parties were in error, not as to the interpretation of the bylaw, but rather as to its very He then went on to find that "the payments were made under compulsion of urgent and pressing necessity and not voluntarily as claimed by the respondent". It is clear from the evidence that the licence inspectors were firm in telling Jacobs that a per day fee had to be paid if he was to continue the business of promoting wrestlin_gexhibitions in the City of Regina. Believing that the by-law in force for the rime being called for a per day fee, Jacobs had no actual alternative

but to pay the fee being demanded by the agents of the respondent.131

See also Hums I: Cuntqir. 119331 4 D.L.R. 760, (19331 O.R. 844 (C.A.). But c$ Condev Project Pht~ttitigLid. I Aiutner Auto Sales Lrd., (19821 2 W.W.R. 445, 18 Alta. L.R. (2d) 107 (Q.B.). "Restitution alone will not suffice because of the insolvency of Ownix": Phoenir Ass'ce Co., supra, footnote 124, 129 D.L.R. (3d) 351, at p. 354per Montgomery J. For an excellent analysis of this problem in the Canadian context, see B.E. Crawford, "Mistake of Law and Practical Compulsion" (1967). 17 U.T.L.J. 344 and B. McKenna, "Mistake of Law Between Statutory Bodies and Private Citizens" (1979). 37 U.T.Fac. L. Rev. 223. See, generally, Chapter 10. 119641 S.C.R.326,44 D.L.R. (2d) 179. 13Vbid.. at p. 330 S.C.R. Ibid., at pp. 330-3 1 .

Hall J., therefore, held that "on either or both of these grounds the appellant is entitled to succeedW.l32 Where, however, the mistake is characterized as one of law, the traditional rule would bar recovery.133 In such cases, a finding of practical con~pulsion becomes crucial, for without it the plaintiff may fail.'?4 On the other hand, where a mistake of law is coupled with a finding of practical compulsion, relief will generally be granted.l-75 The decision of the Supreme Court of Canada in Eadie v. Township of Brutzrford~-'6 raises some intriguing questions in this regard. The plaintiff had owned a ten-acre plot located in the Township of Brantford which he desired to subdivide and sell. He was informed by the township authorities, from time to time, of various conditions that would have to be satisfied before approval would be given - namely, to convey to the township a seventeen-foot road-widening allowance along with a "daylight corner" and, in addition, to pay a severance fee of $400 per lot. Eadie initially rejected this proposal, but later, he became seriously ill and had to be hospitalized. In order to move his wife to a more suitable location, closer to town, he reluctantly complied with the township's demands. The following year, the by-law, under which the defendant had purported to draw its authority for imposing these conditions upon Eadie, was declared ultra vires.13' The plaintiff then sought to recover the severance payments and to obtain a reconveyance of his property from the township. In the Supreme Court of Canada, Spence J., speaking for the majority, found that Eadie had proceeded under a mistake of law.138 However, without deciding whether the case might fit within one of the exceptions to the usual mistake of law rule, Spence J. preferred to base his opinion "upon the exception to the general principle outlined by Lord Reading C.J. in Maskell v. Homer".l39 He stated: It was submitted by counsel for the respondent that in order to justify the plaintiff demanding repayment of money paid under mutual mistake in law upon the basis that he was under compulsion to do so, the plaintiff must have been faced Ibid, at p. 33 1. See,generally. Chapter 1I, where it is suggested that the traditional rule may now be considered overruled. ".'See, e.g., Cushen v. Ciry of Hamilton (1902), 4 O.L.R. 265 (C.A.). But c$ Maskell v. Homer, [I9151 3 K.B. 106 (C.A.). See also Colwood Park Ass'n Ltd. v. Oak Bay, [I9281 3 D.L.R. 812, [I9281 2 W.W.R. 593 (B.C.S.C.); Vancouver Growers Lrd. v. Snow Ltd, [I9371 4 D.L.R. 128, 1 19371 3 W.W.R. 12 1 (B.C.C.A.); G. Gordon Foster Developmenis Ltd v. Tow~shipof Lar~gley(1979). 102 D.L.R. (3d) 730, 1 1 B.C.L.R. 29 (C.A.); C.R. Aggregate Sales Ltd. v. DistrictofSquamish(1980), 115 D.L.R.(3d) 81 (B.C.S.C.),affd 8 D.L.R.(4th)88,49 B.C.L.R. 196 (C.A.); Wilson v. District of Surrey, [I9811 3 W.W.R. 266, 26 B.C.L.R. 28 (S.C.); J.R.S. Holdirlgs Ltd v. DDism'ct of Maple Ridge (1981). 122 D.L.R. (3d) 398,119811 4 W.W.R. 632 (B.C.S.C.). " 5 But cf: A.J. Ser9ersen Inc. v. Village of Qualicum Beach (1982), 135 D.L.R. (3d) 122, [I9821 4 W.W.R. 374 (B.C.C.A.), where the Court denied restitutionary relief on grounds that the plaintiff had obtained a benefit from the mistaken payments. 119671 S.C.R. 573.63 D.L.R. (2d) 561. 137 Noble v. Township of Brantford (1963). 39 D.L.R. (2d) 610, [I9631 2 O.R. 393 (H.C.J.). 138 See Chapter 11, discussion in the text at footnotes 85-101. Eadie v. Township of Bruntford, supra, footnote 136, at p. 581 S.C.R.





with a situation where there was no other alternative available to him. I am of the opinion that the bar to the plaintiffs recovery is not so stringent and that a practical compulsion is alone necessary. In each of the three cases in this Court approving Maskel v. H~rner!'~~~. . . there were other courses available to the plaintiffs but those other courses were time consuming and impractical.l41

Spence J. then went on to point out that, in the particular circumstances of this case, it would have been most inconvenient for Eadie to have resolved the issue in legal proceedings.14*He, therefore, grant4 restitution of the severance payments and ordered the conveyance to the township to be expunged from the register. The implications of the Eadie decision for the Canadian law of practical compulsion are significant. First, the nature of the compulsion in Eadie differs somewhat from that found in the earlier cases. Unlike the situation in the Bo& or Jacobs cases, for example, the compelling circumstances were completely extraneous to the dealings between the parties. In the Bourkes case, Knutson knew full well the time constraints placed upon the syndicate as a result of its contractual obligation to convey the lands free and clear of any cloud on title. In the Jacobs case, the inspectors threatened to close down the plaintiffs business and refused him access to a copy of the relevant by-law. However, in Eadie, the plaintiff was not singled out for unusual treatment by the township and it was only because of his subsequent illness and the remote location of his wife that he came to feel obliged to submit. Thus, the Supreme Court appears to have expanded the concept of "an urgent and pressing necessity" as the condition for relief in such cases.143No longer, it seems, must the plaintiff demonstrate that he had no real, practical alternative but to acquiesce in the defendant's demands. The question now appears to be simply whether he "acted reasonably in all the circumstances in meeting the demand when it was made, and bringing action for restitution, as soon thereafter as was practical".144Second, it is interesting to speculate whether, in the absence of a mistake, the Court would have nevertheless found sufficient compulsion to grant recovery. In other words, will a mistake of law, although not traditionally a ground for relief in itself, serve to extend the circumstances where a finding of practical compulsion will be made? There is some logic in this when one remembers that the essential question n m n v. BowkesSyndicate,[I9411 S.C.R. 419, [I9411 3 D.L.R. 593; St. b h n ([email protected])v. FraserBrace Overseas Corp., (19581 S.C.R. 263, 13 D.L.R. (2d) 177; and Georgc (Porky) Jacobs Enrerprks Lrd v. [email protected] of Rf?gi~, (19641 S.C.R. 326.44 D.L.R. (2d) 179. '4' Eadie v. Township of [email protected],supra, footnote 136, at p. 582 S.C.R. 142 Ibid. 143 In Peel (Regional Municipality) v. Viking Houses (1982). 38 O.R. (2d) 78 (H.C.J.), at pp. 812, Rutherford J. remarked: "Thus, in Eadie, the Supreme Court of Canada enlarged the circlrmstances in which a plaintiff could successfully claim for the return of money paid under mistake of law. Whereas formerly such a claim would be permitted only in a case where the plaintiff had proved duress, Eadie proposed a less stringent test, that of practical compulsion." I44 Crawford, loc.cit.,footnote 127, at p. 350. Cf: the view of Isaacs J. in Smith v. William Charlick Lfd (1924), 34 C.L.R. 38 (Aust. H.C.), at pp. 55-7. 140 K



in both contexts is precisely the same - was the benefit conferred voluntarily? If the plaintiff is truly operating under a mistake of law, how can he be expected to treat the possibility of going to court to resolve the issue as a serious alternative open to him? Perhaps an unexpressed regret over the narrowness of the mistake of law doctrine has led to this result. In any event, the Eadie decision has certainly opened the door to expanded treatment of traditional notions of duress in Canada.14S More controversial issues emerge where the "practical compulsion" in question arises, in part at least, from the impecuniosity of the plaintiff In J.R.S. Holdings Ltd v. Dktrict of Maple Ridge,146 for example, the plaintiffs had paid impost fees improperly levied by the defendant municipality in order to obtain permission to develop some five sites. Berger J., in the Supreme Court of British Columbia, found that the parties had acted under a mutual mistake of law. The plaintiffs argued that they had been practically compelled to make the payments in that they were in such a difficult financial position that "they had no choice but to go through with the transaction, that to back out at that point would have entailed severe losses".147Berger J. rejected this type of circumstance as constituting practical compulsion, stating: "To hold otherwise would be to put a premium on poor business judgment."l4* This, then, brings us to issues that lie at the very heart of the concept of "economic duress".

Economic Duress In recent years, a number of cases have come before the English courts in which one party has sought to set aside a contract on the ground that it was entered into under economic The concept was first given express 145 For a discussion of the recent treatment and, perhaps, overruling of

the mistake of law doctrine,

see, generally, Chapter 11. See also Law Reform Commission of British Columbia, [email protected]

Conferred Under a Mistake of Law (Vancouver, 1980), p. 43. And see AJ. Sevmsl Inc v. Village of Qualicwn Beach (1982). 135 D.L.R. (3d) 122 at p. 126, [I9821 4 W.W.R.374 (B.C.C.A.), per Hutcheon J.A. "6(1981), 122 D.L.R. (3d) 398, I19811 4 W.W.R. 632 (B.C.S.C.). See also G. Gordon Foster Dodopments Lul v. Township of Langky (19791, 102 D.L.R. (3d) 730,14 B.C.LR. 29 (C.A.) and C.R Aggregate Soles Ltd v. District of Sguamish (1980), 115 D.L.R. (3d) 81 (B.CS.C.), affd 8 D.L.R. (4th) 88,49 B.C.L.R. 196 (C.A.). 147 1R.S Holdings, supra, at p. 406 D.L.R. 148 Ibid, at p. 407. Cf: AJ. Seversen Inc. v. Vihge of Qualicum Beach (1982), 135 D.L.R. (3d) 122 at pp. 125-6, [I98214 W.W.R. 374 (B.C.C.A.),pHutcheon J.A. 149 The "Siboen"and The "Sibotre", [I9761 1 Uayd's Rcp. 293; North Ocean Shipping Co. Ltd v. lfyundai Construction Co. Ltd, [1979] Q.B. 705; Pao On v. Lau Yiu Long, [I9801 A.C. 614 (P.C.X Akc Lobb (Garages) Ud v. Tofal Oil Great Britain Ltd, [I9831 1 W.L.R. 87 (Ch.), vard [I9851 1 W.L.R. 173(C.A.); Universe TMkshipsInc. of Monmia v. Int'l %mport Hbrkers Federation,[ 19831 1 A.C. 366 (H.L.); B & S Contracts& Deign Ltd v. VictorGreen PuMicmions Ltd,[I9841 I.C.R. 419; Atlas Express Lid v. Kafco (Importers and Distributors) Dd, [I9891 3 W.L.R. 389 (Q.B.). Australia also appears to have developed a similar doctrine of economic , v. Fwphy (1925). 25 S.R. (N.S.W.) 151 (S.C.) (payment induced by duress. See, c ~ .Nixon threat to rescind a contract);~eHbo~erand ~rass'~onnacf,[1949] ~ . ~ . ~ .(2~ .6~ 9. ) ( i m ~ r o p e i charge paid on threat to rescind a contract); TA. SundPU & Sons Pty. Ltd v. Emm Yannoulatos



judicial recognition in The "Siboen"and The " S i b ~ t r e " . ~ ~ ~ T hthe e r edefendant , had chartered two tankers to the plaintiff's subsidiary. The oil market slumped and the charterer sought to renegotiate the charterparty rate. The plaintiff falsely represented that it had no substantial assets and that, if the rates were not reduced, it would be forced into bankruptcy. The threat of cancellation of the charterparty was particularly effective in that, given the slumping market, the owner would have to lay the tankers up and it would be unable to meet the mortgage payments due on the ships. The defendant agreed to lower the rates and, when market conditions later improved, attempted to have the original terms reinstated. The charterer declined and the owner withdrew the tankers on the ground that the renegotiated terms had been obtained by misrepresentation and dure~s.l5~ Kerr J. was prepared to recognize that economic pressure resulting from a threat to breach a contract might well give rise to relief on the basis of compulsion falling short of duress to the person or duress of goods.152 He suggested the appropriate test to be as follows: [Tlhe Court must in every case at least be satisfied that the consent of the other party was overborne by compulsion so as to deprive him of any animus contrahe)idi. This would depend on the facts of each case. One relevant factor would be whether the party relying on the duress made any protest at the time or shortly thereafter. Another would be to consider whether or not he treated the settlement as closing the transaction in question and as binding upon him, or whether he made it clear that he regarded the position as still open.153 On the facts before him, Kerr J. concluded that the owner was "acting under great pressure, but only commercial pressure, and not under anything which could in law be regarded as coercion of his will so as to vitiate his ~onsent".l5~ This concept of economic duress was reaffirmed in two subsequent cases - North Oceatr Shipping Co. Ltd v. Hyundai Constructiort Co. Ltd15S and Pao (Overseas) PC Ld (1955), 56 S.R. (N.S.W.) 323 (S.C. in bunco) (overpayment made on threat of cutting off supply of goods); Mason v. State of New South Wales (1959), 102 C.L.R. 108 (Aust. H.C.) (licence fees paid on threat of ulna vires statutory penalties); and ltrtercotiritwnrul Puclsrs P n Ltd. v. Hanqj, 119691 Qd. R. 159 (S.C.) (improper fees paid on threat of past transactions being reopened and subjected to costly litigation). Cf:Re Gasbourne PC: Ltd.. 11984) V.R. KO1 (S.C.). I5O 119761 1 Lloyd's Rep. 293. And see J. Beatson, "Duress by Threatened Breach of Contract" (1976). 92 L Q Re\ 496. ' 5 ' Kerr J. held that thc charterer was liable for fraudulent and innocent misrepresentation, but that the action In duress could not succeed in that there was neither sufficient coercion of the will nor prote\t. 15: While I k r r J . ' 5 judgment appears to be the first express recognition of "economic duress", there are indications of the development of the doctrine in earlier cases. See, e.g., D. & C. Builders Lrd Y. Red, 119661 2 Q.B. 617 (C.A.), where Lord Denning M.R., in the Court of Appeal, appears to have recognized the doctrine of economic duress - at least as a bar to raising promissory estoppel. See Cornish, lor. cit, footnote 3. And see the further comments of Lord Dennins M.R. in Uqdr Bank Ld v. Bundy, [I9751 Q.B. 326 (C.A.), at p. 338. See also Smirh 1: Cuff (1817). 6 M. & S. 160, 105 E.R. 1203; Ormes v. Beadel (1860), 2 De G.F.& J. 333,45 E.R. 649; and Kendal v. Wood (18701, L.R. 6 Exch. 243. '53 The "Siboen " and The "Sibowe': supra, footnote 150. at p. 336. 154 Ibid. 155 [I9791 Q.B. 705.



On v. Luu Yiu L0ng.'5~In North Ocean, the defendant shipbuilders, who were building a ship for the plaintiffs, threatened to terminate the contract unless the plaintiffs agreed to increase the purchase price by ten per cent. The plaintiffs had immediate need for the vessel and reluctantly acquiesced in the defendants' demand under protest and without prejudice to their rights. 540catta J. found that the threat amounted to economic duress and that the plaintiffs could have legitimately refused payment of the additional amount. However, since the plaintiffs did not take any subsequent steps to avoid the transaction, the learned judge found that the variation in the contract had been affirmed and, consequently, they were bound by it.'S7 Similarly, in Pao On v. Luu Yiu Long, it was alleged that one party had obtained a variation to a commercial arrangement by means of a threat to breach the contract with the other party. The Privy Council accepted Kerr J.'s view that duress constitutes the "coercion of the will" so as to vitiate consent and that mere "commercial pressure" will not suffice. Lord Scarman, speaking for the Board, remarked: In their Lordships' view, there is nothing contrary to principle in recognizing economic duress as a factor which may render a contract voidable, provided always that the basis of such recognition is that it must amount to a coercion of will, which vitiates consent. It must be shown that the payment made or the contract entered into was not a voluntary act.158 It is submitted that the "coercion of the will" approach espoused in the foregoing cases harkens back to a narrow interpretation of duress typical of an earlier era. If applied literally, few cases, it would seem, would qualify for relief. The fact of the matter is not that the will of the coerced party is overcome when he submits, but that he is giving his real consent to a lesser evil than the other alternatives that are available to him.I59 It is in this sense that his submission may be characterized as "involuntary". The correctness of the "overborne will" approach has generally been rejected in the United States160 and. as the practical compulsion cases discussed above 119801 A.C. 613 (P.C.). In the words of Profeswr Ogilvie, they "had made a calculated business decision to submit and then tried to recover rheir money by disguising themselves as the innocent victims of economic duress": 51.H.Ogilvie. "Economic Duress, Inequality of Bargaining Power and Threatened Breach of C o n t r x ~ "(1981). 26 McGill L.J. 289, at p. 302. " 8 Pao On v. Lou Yiu Long. supra. footnote 156, at p. 636. Quoted with approval in Atlas Erpress Ltd. v. Kofco (Inrporrcrs urrd Disrriburors) Ltd., [I9891 3 W.L.R. 389 (Q.B.), at pp. 394-5 per Tucker J. See alw Gordon \.. Roebuck (1989), 64 D.L.R. (4th) 568 at pp. 572-3,71 O.R. (2d) 201 (H.C.J.), per F~fzpatrickJ. ' 5 9 In Union Pacific Rj. Co. 1.. Publrc SenYce Com'n of Missouri, 248 U.S.67 (1918), at p. 70, Holmes J. remarked: "It always is for the interest of a party under duress to choose the lesser of two evils. But the fact that a choice was made according to interest does not exclude duress. It is the characteristic of duress properly so called." IhO Professor Palmer writes: "[Tlhe test that a party's will must be overcome is not useful except as it expresses an indispensable element of causation: in order to obtain relief the coercion must have caused a party to do something he otherwise would not have done.": G.E. Palmer, The Lnw of Restitunon (Boston, Little, Brown & Co., 19781, vol. 2, p. 237. And see, generally, the writings referred to. supra, footnote 3.




would seem to indicate, in Canada as we11.I61 Indeed, the better approach to the modern concept of duress is well presented by the House of Lords itself in Director of Public Prosecrrtions for Northern Irelutld v. Lynch.166' The case contains a most extensive analysis of the doctrine of duress163and all five speeches of the law lords clearly reject any notion that duress deprives a person of his free choice or renders his actions non-~oluntary.~6~ Lord Wilberforce expressly stated that "duress does not destroy the will . . . to enter into a contract, but prevents the law from accepting what has happened as a contract valid in lawW.'65And Lord Simon of Glaisdale remarked that "[d]uress . . . deflects, without destroying, the will of one of the contracting parties. There is still an intention on his part to contract in apparently The same view consentual terms; but there is coactus volui on his ~ide."I6~ is expressed by the House of Lords in the case of Universe Tankships Inc. Both Lord Diplock and of Monrovia v. Int'l Transport Workers Feder~tion.16~ Lord Simon pointed out that a person subject to duress is fully aware of the nature and terms of the contract and that there is still an intention to contract on his part, although he does so unwillingly.168 "The classic case of duress is . . . not the 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. This is the thread of principle which links the early law of duress (threat to life or limb) with later developments when the law came

The Canadian concept of "practical compulsion" is of sufficient breadth to encompass "economic duress". See, generally, the cases referred to, supra, footnote 97. In Knutson v. Bourks Syndicare, [I9411 S.C.R. 419, [I9411 3 D.L.R. 593, the Supreme Court of Canada made it clear that practical compulsion consisted of a party having to choose the lesser of two evils and, in h d i e v. Township of Branford, [I9671 S.C.R. 573, 63 D.L.R. (3d) 561, the Supreme Court of Canada seems to have expanded the concept of "urgent and pressing necessity" to a requirement that the plaintiff need only to have acted reasonably in the circumstances. As the Law Reform Commission of British Columbia observed: "Eadie v. Branrford is a particularly difficult case to explain in terms of the plaintiff's will being . 145, at p. 45. Professor Clark writes that "the reluctance of overborne": op. c ~ r footnote the Canadian judges to accept the 'overborne will' theory is to be applauded. The tendency of the Canadian judges to talk in terms of 'practical compulsion' and 'improper pressure' is a more realistic approach. both in terms of legal theory and practicability": R.W. Clark, Inequaliry of Bargaining Power (Toronto, Carswell, 1987). p. 246. But cf: Gordon v. Roebuck (1989), 64 D.L.R. (4th) 568.71 O.R. (2d) 201 (H.C.J.). 16? [I9751 A.C. 653 (H.L.). And see P.S. Atiyah, "Economic Duress and the 'Overborne Will"' (1982). 98 L.Q. Rev. 197. ' 6 ) Although the discussion centres on the concept of duress in the criminal context, it is made clear that, on this question, the same considerations apply in the civil context. Director of Public Prosecutionsfor Northern Ireland v. Lynch, supra, footnote 162, at pp. 670, 675 per Lord Moms of Borth-y-Gest, at p. 680 per Lord Wilberforce, at pp. 690-91, 695 per Lord Simon of Glaisdale. at p. 703 per Lord Kilbrandon, and at pp. 709-11 per Lord Edmund-Davies. 165 Ibid, at p. 680. 166 Ibid, at p. 695. 1 6 7 [I9831 1 A.C. 366 (H.L.). And see Ogilvie, lor. cit., footnote 111. 168 See also Alec Lobb (Garages) Ltd v. Total Oil Great Britain Ltd, [I9831 1 W.L.R. 87 (Ch.), at p. 93.



56 1

also to recognise as duress first the threat to property and now the threat to a man's business or trade."l69 Economic duress has also recently gained express recognition - apart from its implicit presence in the concept of "practical compulsion" - by Canadian courts. In Rorlald E l w y Lister Lrd. 1? Dunlop Canada Lrd, Weatherston J.A., speaking for the Ontario Court of Appeal, noted the jurisdiction "exercised by the common law Courts to set aside an agreement obtained by economic duress or to order restitution where a benefit has been obtained through economic d~ress".'~OFurther affirmation of the doctrine of economic duress was given by the same court in the recent case of Stott v. Merit Investment C ~ r p . ' The ~ * plaintiff, Stott, had a client who reneged on some gold futures contracts with the result that his contracts were sold out in a declining market with a consequent loss. Stott's employer, the defendant investment dealer, demanded that he sign an acknowledgment of his own liability for the amount of the client's debt of approximately $66,000 - or else it would not "go well" with him in the firm and he would find difficulty in securing other employment. Sums were deducted from the plaintiff's commissions and, over a year later, he signed a second document in which he agreed to pay $35,000 towards the defendant's loss. More than two years after the initial incident, Stott resigned from his position with the defendant and sought to recover some $30,000 that had been deducted from his commissions. At tria1,I7*the agreements were held to be void for want of consideration. The Court of Appeal disagreed;173but, although the agreements were found to be voidable on grounds of economic duress, the plaintiff had subsequently affirmed them by staying on in his employment for an extended length of time and not seeking immediate legal redress. In the course of this judgment, however, Finlayson J.A. made the following observations on the concept of "economic duress": The term "economic duress" as used in recent cases, particularly in England, is no more than a recognition that in our modern life the individual is subject to societal pressures which can be every bit as effective, if improperly used, as those flowing from threats of physical abuse. It is an expansion in kind but 169


17' 17?


Universe Tankrhips Inc., supra, footnote 167, at p. 400 per Lord Scarman. Professor Ogilvie notes: "Lord Scarman's modest assertion of historical continuity should not blind us to the fact that he has discarded the overborne will fallacy and admitted that the victim's consent is intentional and real. Once that is accepted, it is not unexpected that the focus of economic duress is turned to some other element, in this case, the legitimacy of the pressure used": lor. cit ,footnote 111, at p. 20. (1979), 105 D.L.R. (3d) 684 at p. 694, 27 O.R. (2d) 168 (C.A.). For an illustration of the application of this doctrine, see, e.g., Graham v. Vorh Brothers C o m c r w n (1974) Lki,[I9821 6 W.W.R. 365,39 B.C.L.R. 305 (Co. Ct.). (1988). 48 D.L.R. (4th) 288.63 O.R. (2d) 545 (C.A.). (1985), 33 A.C.W.S. (2d) 403 (Ont. H.C.J.). The majority found that it was a custom in the industry for salesmen to take responsibility for all clients' obligations, whether at fault or not. Hence, the defendant's forbearance from taking legal action against the plaintiff was good consideration: supra, footnote 171, at pp. 301-4 D.L.R.

not class of practices that the law already recognizes as unacceptable such as those resulting from undue influence or from persons in authority. But not all pressure, economic or otherwise, is recognized as constituting duress. It must be a pressure which the law does not regard as legitimate and it must be applied to such a degree as to amount to "a coercion of the will", to use an expression found in English authorities, or it must place the party to whom the pressure is directed in a position where he has no "realistic alternative" but to submit to i t . .

While Finlayson J.A. makes reference to "coercion of the will", it is clear from the context and from the facts of the case before him that the term is used as a convenient shorthand to describe the situation where the pressured party has no "realistic alternative" but to submit.I75 In this, we suggest, the learned judge mirrors the views of their Lordships in Universe Tankships Inc. of Monrovia v. Int'l Transport Workers Federation.176As Lord Scarman remarked in that case: "[Iln life, including the life of commerce and in finance, many acts are done 'under pressure, sometimes overwhelming pressure'; but they are not necessarily done under duress. That depends on whether the circumstances are such that the law regards the pressure as legitimate. . . . In determining what is legitimate two matters may have to be considered. The first is as to the nature of the pressure. In many cases this will be decisive, though not in every case. And so the second question may have to be considered, namely, the nature of the demand which the pressure is applied to support."'77 Hence, the focus is upon the practical choices open to the party subjected to the duress, rather than the sufficiency of his consent as a matter of contract law.178 This point, it would appear, has long been recognized in the Canadian jurisprudence dealing with "practical compulsion".

C. UNDUE INFLUENCE While the common law doctrine of duress, originally quite limited, has grown and expanded to include not only duress of property, but other forms of economic and practical compulsion as well, the courts of equity, at an at p. 305. See, generally, Ogilvie, bc. cit, footnote 159, and D. Tiplady, "Concepts of Duress" (1983), 99 L.Q. Rev. 188. '76 [1983] 1 A.C. 366 (H.L.). See, ante, at pp. 560-61. '77 Ibid., at pp. 400-401. Quoted with approval in Sron v. Merit Investment Cotp. (1988), 48 D.L.R. (4th) 288 at p. 307,63 O.R. (2d) 545 (C.A.). In Gordon v. Roebuck (1989). 64 D.L.R. (4th) 568 at pp. 572-3.71 O.R. (2d) 201 (H.C.J.), Fitzpatrick J. seems to require both coercion of the will and illegitimate pressure before a contract can be avoided. 178 "The limitation of the overborne will theory is not that it is misleading or inept, but that it is truistic. The essence of duress is a threat, and all threats offer a choice. In making his choice a rational individual obviously 'intends' the one rather than the other, but to deduce that he thereby, in all situations, exercises his free will, or gives his 'free' consent, or that his action is 'voluntary' begs too many questions": Tiplady, loc. cir., footnote 175, at p. 194.

174 Ibid,



The Law Restitution - Investor Voice, Securities Regulation in Canada

The Law Restitution Peter D. Maddaugh B.A., M.A., LL.B.,LL.M. Of the Ontario Bar John D. McCamus B.A.,M.A., LL.B.,LL.M. Professor of Law, Osgoode Ha...

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