Universe Tankships Inc of Monrovia v International Transport Workers Federation (The Universe Sentinel)
[1981] UKHL 9
-
" Entrance fees
40 at US$15 per man US$
" Membership fees
40 at US$30 per man US$per year
" SEAFARERS' INTER- " NATIONAL WELFARE" PROTECTION AND" ASSISTANCE FUND
40 at US$ 162 per man US$per yea
" TOTAL
US$8,280.-
he yielded to the demands made upon him as being the only means
open to him of regaining the use of his ship;the loss of use of his ship was to him so disastrous that he had no
practical option but to submit;the acts done by the ITF to deny him the use of his ship were,
subject to any statutory immunity which the ITF might enjoy, tortious.pressure amounting to compulsion of the will of the victim; and
the illegitimacy of the pressure exerted.
the crew-members are not obliged to make the contributions, which
are an exaction by the ITF from the owner and not an undertaking by
the owner to discharge an obligation owed by crew-members to their
union;unlike union entrance fees and annual subscriptions, they are not
mentioned in the Collective Agreement;they are not benefits made available by an employer expressly,
impliedly, or by customary practice to his employee, but merely contribu-
tions exacted by a trade union from an employer to its funds;if the contributions are of any benefit to seafarers on board the
ship, the benefit is marginal, if not infinitesimal;in so far as the Fund is beneficial to anyone other than the union
whose fund it is, it benefits all seafarers without anything special or
exclusive to those employed on the " Universe Sentinel ".Was the dispute between the shipowning company and the ITF,
in so far as it related to the payment of the sum of U.S.$6,480 by way of
contributions by the shipowning company to the Fund, a trade dispute
within section 29(1) of the Trade Union and Labour Relations Act 1974
(" the 1974 Act")?If the answer to question (2) was in the negative, was the payment
of the sum of U.S.$6,480 induced by duress, and therefore recoverable
as money had and received by the ITF to the use of the shipowning
company?
Parliamentary
Archives,
HL/PO/JU/18/242
Die Jovis 1° Aprilis 1982
Upon Report from the Appellate
Committee to whom
was referred the Cause Universe Tankships
Incorporated
of Monrovia against the International
Transport
Workers' Federation and others, That the Committee
had
heard Counsel as well on Monday the 22nd as
on Tuesday the 23rd,
and Wednesday the 24th days
of February last upon the Petition and
Appeal of
Universe Tankships Incorporated of Monrovia of 80
Broad
Street, Monrovia, Liberia, praying that the matter
of the Order
set forth in the Schedule thereto, namely
an Order of Her
Majesty's Court of Appeal of the
10th day of July 1980 might be
reviewed before Her
Majesty the Queen in Her Court of Parliament
and
that the said Order might be reversed, varied or altered
or
that the Petitioners might have such other relief in
the premises
as to Her Majesty the Queen in Her
Court of Parliament might seem
meet; as also upon
the Case of the International Transport
Workers'
Federation lodged in answer to the said Appeal; and
due
consideration had this day of what was offered
on either side in
this Cause:
It is Ordered and Adjudged,
by the Lords Spiritual
and Temporal in the Court of Parliament
of Her
Majesty the Queen assembled, That the said Order of
Her
Majesty's Court of Appeal of the 10th day of
July 1980 complained
of in the said Appeal be, and the
same is hereby, Reversed
and that the Order of Mr.
Justice Parker of the 2nd day of April
1980 be, and
the same is hereby, Restored except so far as
regards
the words " This Court doth declare that the sum
of
$6,480.00 (six thousand four hundred and eighty
dollars)
paid by the Plaintiffs to the First defendants
on 28th July 1978
and any monies now representing
the same together with interest
thereon be held by the
First Defendants upon resulting trusts for
the Plain-
tiffs ": And it is further Ordered, That
the Respondents
do pay or cause to be paid to the said Appellants
the
Costs incurred by them in the Court of Appeal and
also the
Costs incurred by them in respect of the said
Appeal to this
House, the amount of such last-mentioned
Costs to be certified by
the Clerk of the Parliaments
if not agreed between the parties:
And it is also
further Ordered, That the Cause be, and the
same is
hereby, remitted back to the Queen's Bench Division
of
the High Court of Justice to do therein as shall be
just and
consistent with this Judgment.
UNIVERSE TANKSHIPS INCORPORATED OF MONROVIA
(APPELLANTS)
INTERNATIONAL
TRANSPORT WORKERS' FEDERATION
AND OTHERS (RESPONDENTS)
Lord Diplock
Lord
Cross of Chelsea
Lord
Russell of Killowen
Lord
Scarman
Lord
Brandon of Oakbrook
Lord Diplock
my lords.
The facts that gave rise to this
action, brought by the appellants C* the
" Shipowners ")
as owners of the Liberian tankship " Universe Sentinel"
against
the respondent trade union (ITF), present no novelty. They afford
a
typical example of the application by ITF and the affiliated national
trade
unions who are its members, of the policy of " blacking
" vessels sailing under
what ITF regards as " flags of
convenience " unless the owners of the
vessel comply with
ITF's demands as to the rates of pay and other terms of
employment
of the crew and as to various other matters to which it will
become
necessary to advert in detail.
Other examples of the way in which
the blacking of flags-of-convenience
vessels is carried out are to
be found in the judgments in The " Camilla M."
[1979]
1 Lloyd's Rep. 26 and N.W.L. Ltd. v. Woods [1979]
1 W.L.R. 1294.
where the object sought to be achieved by the
blacking policy and the reasons
why it does not always command the
support of the crews of vessels to which
it is applied, are also
discussed. Both of these, however, were cases in which
an
interlocutory injunction was sought by shipowners against trade
union
officials to restrain them from committing the tort of
inducing port workers
to break their contracts of employment by
preventing or refusing to assist in
enabling the blacked vessel to
leave port; and the only issue of law before
the court was whether
the defendants were likely to establish that they were
entitled to
immunity from suit in tort by virtue of section 13(1) of the
Trade
Union and Labour Relations Act 1974—an issue that was
decided in favour
of the trade union officials by this House in
N.W.L. Ltd. v. Woods. In
those two cases it was
necessary to identify the nature of the demands that
ITF was
making upon the shipowner as the price for obtaining the lifting
of
the blacking, but it was not necessary to examine the means by
which
compliance with those demands would be effected if the
shipowner found
himself compelled to succumb to them.
What is novel in the instant case
is that the action was brought after the
Shipowners did succumb
and is not brought in tort, but is an action to
recover from ITF
part of the moneys paid by them to ITF in order to have
the
blacking of their vessel lifted so as to enable it to leave the port
of
Milford Haven. Although a substantially larger sum was claimed
in the
courts below (with partial success), the only part of the
Shipowners' claim
which is the subject of appeal to your
Lordships' House, relates to a sum
of $6,480 paid as a
contribution to a so-called Welfare Fund administered
by ITF. This
sum is sought to be recovered on one of two alternative
grounds:
the first is that it is the subject of a resulting trust in favour of
the
Shipowners, since the trusts upon which it was received from
them by ITF
were void; the second is that it is recoverable from
ITF as money had and
received, since it was exacted by subjecting
the Shipowners to economic
duress. To determine whether the
Shipowners can succeed on either of these
grounds calls for a
close consideration of the contemporary documents
relating to the
payment, and of the rules of the Welfare Fund.
My Lords, the judgment of Parker
J. in the Commercial Court and that
of the Court of Appeal (Megaw,
Brightman and Watkins LJJ.), delivered
by Lord Justice Megaw,
appear consecutively in the report of the instant
case [1980] 2
Lloyd's Rep. 523. Both judgments set out the facts briefly
and
contain lengthy quotations from the relevant documents; but in view
2
of the division of opinion between
your Lordships as to what ought to be
the fate of this appeal, I
see no way of avoiding repetition of the greater
part of such
quotations here.
The Shipowners are a Liberian
company. The tankship which they
owned, " Universe Sentinel,"
was of 269,092 tons d.w.t.: the crew consisted
in the main of
Asians employed at rates of pay substantially less than
those upon
which ITF insists, and are provided for in what it calls the
ITF
Collective Agreement. In July 1978, "Universe Sentinel" was
on
time charter to Texaco and arrived on 17th July at the Texaco
terminal
at Milford Haven to discharge her cargo there. On her
arrival the Master
was handed, by a representative of ITF, a copy
of a standard form of
document headed: "Conditions to be
fulfilled before flag-of-convenience
"vessels can be issued
with ITF Blue Certificates". An ITF Blue
Certificate, though
this is nowhere spelt out in the documents, is well
understood by
shipowners, charterers and shippers, and by the constituent
trade
unions of ITF, to exempt a vessel sailing under a flag of
convenience
from being subject to the blacking policy of ITF.
These conditions refer
to a Special Agreement which it will be
necessary to refer to in some detail,
but the only extract from
the conditions themselves which requires to be
reproduced is
paragraph 3 :
" 3. The Special Agreement
also covers the owners' contributions
" to the Seafarers'
International Welfare, Protection and Assistance
" Fund. The
contributions are US$162.— per man per year. The Fund
"
was set up to help provide welfare, social and recreational
facilities
" in ports around the world for seafarers of all
nations, especially those
" serving in flag-of-convenience
ships, and is administered by an
" international committee of
representatives of ITF-affiliated unions."
Parker J. placed considerable
reliance on these words in deciding what I
shall refer to as the
trust point in the Shipowners' favour; but, for reasons
which will
appear, I think that he was wrong in doing so.
The " Universe Sentinel "
finished discharging on 18th July, but because
of being blacked by
tugboat crews, she was prevented from sailing until
29th July,
when the blacking was lifted in consequence of a meeting held
at
the offices of ITF in London on the previous day between
representatives
of the Shipowners and officials of ITF at which
the Shipowners yielded
to the demands of ITF that they should pay
to ITF the sum of $80,000
and enter into two agreements with ITF,
viz.: one headed " Special
" Agreement " on a
standard printed form and the second in typescript (" the
"
Typescript Agreement").
The Special Agreement, after
setting out the parties, viz. the Shipowners,
therein called "
the Company ", and ITF, starts with recitals:
" WHEREAS:
" 1. the ITF is an
independent trade union organisation comprising
" fully
autonomous trade union organisations in transport and allied
"
services throughout the world and members of the Special Seafarers'
"
Section of the ITF;
" 2. the Company is the
registered owner/manager of the Ship;
" described in Schedule
1 hereto;
" 3. the ITF and the
Company desire to regulate the conditions of
"employment of
all seafarers (hereinafter individually called a
'
Seafarer') serving from time to time aboard the Ship; ".
I pause to say that recital 1 is
not strictly accurate. Under its constitution
membership of ITF is
restricted to trade unions; there are no personal
members; but in
return for what is called an entrance fee and annual
membership
fee to what it describes as the Special Seafarers' Section
(or
Department), ITF does issue to seamen, who are not members of
a national
trade union affiliated to ITF, a membership card which
entitles the holder to
request assistance from any such affiliated
trade union in whatever country
he may find himself in need of it.
3
Article 1 of the Special Agreement
needs to be set out in full:
" The Company undertakes as
follows:
" a to employ each Seafarer
in accordance with the terms of the
" current ITF Collective
Agreement for World Wide trading
" (hereinafter called the
ITF Collective Agreement) as amended
" from time to time in
accordance with Article S below;
" b to incorporate the terms
and conditions of the ITF Collective
" Agreement into the
individual contract of employment of each
" seafarer and into
the Ship's Articles and furnish copies of
" these documents
to the ITF. Any seafarer, enjoying terms and
" conditions
which are, taken as a whole, recognised by the ITF
" as more
favourable to the seafarer, shall continue to enjoy such
"
terms and conditions;
" c to pay on behalf of each
Seafarer contributions and fees at the
" rates shown in
Schedule 2 hereto to the Seafarers' International
" Welfare
Protection and Assistance Fund and to the Special
"
Seafarers' Section of the ITF. The contributions and fees
"
shall be paid to the ITF annually and in advance;
" d to display aboard the
Ship copies of the Special Agreement,
" the ITF Collective
Agreement and the ITF Blue Certificate
" to be issued under
Article 2 hereof in a prominent place to
" which each
Seafarer shall have access at all times; and
" e to grant to
representatives of the ITF and of trade union
" organisations
affiliated to the ITF free access to each Seafarer
" at all
reasonable times whether or not aboard the Ship, whether
"
the ship is in berth or not."
Articles 2, 3 and 4 deal with the
issue and withdrawal of the Blue Certifi-
cate; while Article 5
entitles ITF, upon giving two months' notice, to change
the rates
of pay in the Collective Agreement and the rates of entrance
and
membership fees to the ITF Special Seafarers' Section and of
contributions
to the Welfare Fund referred to in Article 1c and
set out in Schedule 2.
Schedule 2 itself is as follows:
" ITF SPECIAL SEAFARERS'
SECTION
" The sum of US$ is equivalent to
" Received with thanks:
(signed) BRIAN LAUGHTON
on behalf of the ITF "
Although the separate totals for
the entrance and membership fees to
the ITF Special Seafarers'
Section are not filled in, simple arithmetic discloses
that of the
grand total of $8,280, the sum of $6,480 is attributable to
the
contribution to Seafarers' International Welfare Protection
and Assistance
Fund (" the Welfare Fund "); and this is
the sum that the Shipowners seek
to recover in their appeal to
this House.
The Collective Agreement, which is
referred to in Article 1b, contains
provisions as to rates of
wages and other terms and conditions of employ-
ment of a kind
that are generally to be found in collective agreements
negotiated
between trade unions and employers. The Collective Agreement,
as
such, is not a legally enforceable contract because of section 18 of
the
Trade Union and Industrial
Relations Act 1974; but Article 1b of the
Special Agreement
requires its terms and conditions to be incorporated
in the
individual contract of employment of each seaman, by whom it
would
be enforceable. New contracts incorporating, by reference,
the
Collective Agreement were, in fact, signed with most of the
members of
the crew on 29th July 1978, and " Universe
Sentinel" was permitted to sail
on that date.
Only one of the provisions of the Collective Agreement requires citation:
"All seafarers covered by
this Agreement shall be either members
" of an appropriate
national trade union affiliated to the ITF or, in
" the
absence of any suitable organisation, members of the Special
"
Seafarers' Section of the ITF in which case the Company shall pay
"
on behalf of each seafarer an Entrance Fee of US $15 and a Member-
"
ship Fee of US $30 per annum, annually and in advance. The
"
Company undertakes to notify any crew changes made in the ship,
"
sending names, addresses, ranks and details of qualifications,
together
" with the appropriate Entrance and Membership fees
to the ITF as
" soon as possible after the crew changes are
made. The Company
" acknowledges the right of the ITF to
appoint a liaison representative
" from among seafarers
serving on board the vessel covered by this
" Agreement."
It is to be noted that this is
confined to entrance and membership fees to
the Special Seafarers'
Section of the ITF. By incorporating the provisions
of the
Collective Agreement in the contract of employment of the
individual
seaman, the Shipowners assume no obligation whatever to
the seaman to
make any contribution to the Welfare Fund.
In addition to the demands by ITF,
which are dealt with in the Special
Agreement, shipowners, in
order to obtain the lifting of the blacking, are
required to pay,
for distribution to each seaman concerned, the difference
between
the rates of pay provided for in the Collective Agreement and
the
lower rates which had been actually paid to the seaman since the
date
of his engagement on the vessel. It is mainly with this
additional require-
ment that the Typescript Agreement is
concerned, while its terms were
highly relevant to that part of
the Shipowners' claim which is not the subject
of their appeal to
this House; this makes it unnecessary to refer to any
other
provisions of the Typescript Agreement, except those contained in
the
first paragraph :
" The ITF confirms receipt
today of US $80,000 (Eighty thousand
" United States dollars)
which is accepted by the ITF as to the one
" part of $8,280
for the Union Entrance Fees, Annual Subscriptions
" and
Welfare Fund Contributions and as to the other part of $71,720,
"
as a discretionary trustee. The beneficiaries are the Master,
Officers,
'' Engineers and crew members on board on 28th July
1978."
The sum of £71,720, referred
to in this paragraph, was an estimate,
which turned out to be
inaccurate, of the difference between the actual and
Collective
Agreement rates of pay of each member of the crew of the
"
Universe Sentinel ", during the period between the date of his
engagement
under ship's articles and 29th July 1978. The remaining
paragraphs of the
Typescript Agreement deal with the machinery for
ascertaining the detailed
facts relating to each member of the
crew, and for the adjustment of the
sum paid or payable by the
Shipowners when those facts have been
ascertained.
Lastly, I find it necessary to set
out nearly all of what are described as
the "Rules for
Seafarers' International Assistance Welfare and Protection
Fund":
" 1. The Fund shall be known
as the Seafarers' International
" Assistance Welfare and
Protection Fund. It is established under
" the auspices of
the International Transport Workers' Federation.
" 2. The object of the Fund
shall be the financing of any such
" work as may be
sanctioned by the Executive Committee of the
5
" Federation for the purpose
of promoting, advancing or protecting
" by any such means as
the Executive Committee in their absolute
" discretion may
decide, the interests of seafarers generally or groups
" of
seafarers, national or otherwise, or of assisting individual
seafarers,
" or otherwise of serving seafarers' interests.
" 3. The income of the Fund
shall consist of contributions received
" under agreements
concluded on behalf of the Seafarers' Section of
" the
Federation with shipping undertakings or shipowners, the income
"
of investments mentioned in clause 5 of these Rules, and such other
"
monies as the Executive Committee of the Federation may from time
"
to time determine.
" 4. The Fund shall be
administered by the Fair Practices
" Committee elected by the
Seafarers' and Dockers' Sections of the
" Federation, and the
General Secretary of the Federation shall be
" responsible to
that Committee for the day to day management of
" the Fund.
The Fair Practices Committee may invite any person
"
representing such shipping undertakings and shipowners as shall
have
" entered into agreements to contribute to the Fund to
act as a con-
" sultant on the administration of the Fund;
provided that there should
" not at any time be more than one
such consultant.
" 5. The General Secretary of
the Federation shall receive all
" money paid to the Fund.
Subject to the overriding authority of the
" Executive
Committee under clause 2 of these rules, he shall spend
"
such money in accordance with the directions of the Fair Practices
"
Committee, provided that no money belonging to the Fund shall be
"
spent otherwise than for the object of the Fund as defined in the
"
said clause 2. The General Secretary may invest, in accordance
"
with the directions of the Fair Practices Committee, any money
"
belonging to the Fund which, in the opinion of the Fair Practices
"
Committee, is not required for immediate expenditure for the object
"
of the Fund as defined as aforesaid."
The references to the Seafarers'
Section and the Dockers' Section appear-
ing on these rules are
references to two of the industrial sections into which
the
membership of ITF (consisting as it does of national trade unions
of
workers involved in all forms of transport) are divided. The
powers of
industrial sections are dealt with in Rule XIII of the
Constitution of ITF.
For present purposes, it is enough to say
that the sections appear to be
subject to the general control or
tutelage of the Executive Board; and the
only provision of Rule
XIII that it is necessary to cite is sub-rule (1) under
which,
presumably, the Seafarers' Assistance Welfare and Protection Fund
was
created:
" There shall be industrial
sections, as defined in the Preamble of
" this Constitution,
to deal with matters concerning individual branches
" of
transport and allied activities. The Executive Board shall have
"
authority to set up such further sections or special departments as
"
deemed necessary to improve the services of the ITF to its
affiliates
" or to deal efficiently with particular
activities or problems, and may
" create or provide for
special funds in connection with such sections
" or
departments. The Executive Board shall determine their terms
"
of reference and generally be authorized to guide their activities."
Very shortly after " Universe
Sentinel " had sailed, the Shipowners, on
10th August 1978,
demanded return of the $80,000 as money paid under
duress and
asserted that the Special Agreement and the Typescript Agree-
ment
were void upon that ground. Return of the money was refused by
ITF
and later in 1978 some 27 members of the crew assigned to
the
Shipowners their interest in the $71,720 estimated back pay of
members
of the crew from the date of their engagements referred to
in paragraph 1
of the Typescript Agreement. By the time the action
came on for hearing
before Parker J., some of these assignments
had been withdrawn; but your
Lordships are not now concerned with
any claim by the Shipowners to
recover any part of the $71,720,
either by virtue of the assignments or as
6
money paid under duress. The
Shipowners were held by Parker J., and
by the Court of Appeal, to
be entitled to recover an aliquot portion of
that sum which was
attributable to those assignments that were undisputed
and there
is no appeal to this House on that part of the case. The Ship-
owners
did not pursue, before Parker J., the claim that they had
originally
asserted to recover that part of the sum of $8,280
referred to in paragraph 1
of the Typescript Agreement that was
attributable to entrance and
membership fees of members of the
crew to the ITF Special Seafarers'
Section. So that is how it
comes about that all that is in issue in the
appeal to this House
is the $6,480 paid as a contribution to the Welfare
Fund.
Recovery of this sum, as I have
already mentioned, is claimed upon one
or other of two alternative
grounds, the first of which is that it is subject to
a resulting
trust in favour of the Shipowners, as donors, since it was paid
by
them to ITF upon trusts that were void, because their purposes
were
not exclusively charitable.
My Lords, there is a certain air
of artificiality about treating the
Shipowners as donors of money
for trust purposes, when the only object
that they had in mind in
paying any money to ITF was to get the blacking
of " Universe
Sentinel " lifted, and thereafter to get the money back from
ITF
if they could; but for the purposes of determining what it is
convenient
to refer to as the trust point, one must treat the
payment as having been
" voluntary " in the sense that
the Shipowners' consent to making it was
not vitiated by duress,
and one must ascertain the legal nature of the
payment from the
relevant documents, for no oral evidence was directed to
the
matter.
I have had the advantage of
reading the speech to be delivered by my
noble and learned friend,
Lord Russell of Killowen, which deals fully with
the trust point.
I agree with his reasoning and with the conclusion that he
reaches,
that the money was not held by ITF on any trust but was, in its
legal
nature, a contribution to the funds of ITF which ITF, by
taking
appropriate steps under its rules, could use for any
purpose it thought fit.
The Court of Appeal had reached
the same conclusion. It is contrary
to that of Parker J., who had
based his opinion upon the assumption that
the money had been paid
by the Shipowners for the purposes of a trust,
whose objects had
been represented by ITF to be those referred to in
paragraph 3 of
the document handed to the Master of " Universe Sentinel"
on
17th July 1978, which I have quoted above. Since the Shipowners
were
not, at that time, aware of the Rules of the Welfare Fund,
there might have
been a plausible argument in favour of the
conclusion reached by Parker J.
if the evidence had established
that, in making the payment of $6,480 on
28th July 1978, reliance
had been placed by the Shipowners on the
description of the
Welfare Fund and its purposes set out in the document that
had
been handed to the Master; but no mention of this document, or of
any
reliance on it by the Shipowners, is to be found either in the
pleadings
or in the oral evidence of the Master, or of the
representatives of the
Shipowners who conducted the negotiations
with ITF that resulted in the
payment. So the trust point depends
upon the other documents dealt with
by Lord Russell of Killowen,
and there is nothing that I can usefully add to
what he will say
about the legal effect of those.
My Lords, I turn to the second
ground on which repayment of the $6,480
is claimed, which I will
call the duress point. It is not disputed that the
circumstances
in which ITF demanded that the Shipowners should enter
into the
Special Agreement and the Typescript Agreement and should pay
the
moneys of which the latter documents acknowledge receipt,
amounted to
economic duress upon the Shipowners; that is to say,
it is conceded that
the financial consequences to the Shipowners
of the " Universe Sentinel"
continuing to be rendered
off-hire under her time charter to Texaco, while
the blacking
continued, were so catastrophic as to amount to a coercion
of the
Shipowners' will which vitiated their consent to those agreements
and
to the payments made by them to ITF. This concession makes it
unnecessary
7
for your Lordships to use the
instant appeal as the occasion for a general
consideration of the
developing law of economic duress as a ground for
treating
contracts as voidable and obtaining restitution of money paid
under
economic duress as money had and received to the plaintiffs'
use. That
economic duress may constitute a ground for such redress
was recognised,
albeit obiter, by the Privy Council in Pao On
v. Lau Yiu Long [1980] A.C.
614. The Board in that case
referred with approval to two judgments at
first instance in the
commercial court which recognised that commercial
pressure may
constitute duress: one by Kerr J. in Occidental
Worldwide
Investment Corporation v. Skibs A/S Avanti [1976]
1 Lloyd's Rep. 293,
the other by Mocatta J. in North Ocean
Shipping Co. Ltd. v. Hyundai
Construction Co. Ltd. [1979] Q.B.
705, which traces the development of
this branch of the law from
its origin in the eighteenth and early nineteenth
century cases.
It is, however, in my view crucial
to the decision of the instant appeal to
identify the rationale of
this development of the common law. It is not that
the party
seeking to avoid the contract which he has entered into with
another
party, or to recover money that he has paid to another party
in
response to a demand, did not know the nature or the precise
terms of the
contract at the time when he entered into it or did
not understand the
purpose for which the payment was demanded. The
rationale is that his
apparent consent was induced by pressure
exercised upon him by that
other party which the law does not
regard as legitimate, with the
consequence that the consent is
treated in law as revocable unless approbated
either expressly or
by implication after the illegitimate pressure has ceased
to
operate on his mind. It is a rationale similar to that which
underlies
the avoidability of contracts entered into and the
recovery of money exacted
under colour of office, or under undue
influence or in consequence of threats
of physical duress.
Commercial pressure, in some
degree, exists wherever one party to a
commercial transaction is
in a stronger bargaining position than the other
party. It is not,
however, in my view, necessary, nor would it be appropriate
in the
instant appeal, to enter into the general question of the kinds
of
circumstances, if any, in which commercial pressure, even
though it amounts
to a coercion of the will of a party in the
weaker bargaining position, may
be treated as legitimate and,
accordingly, as not giving rise to any legal
right of redress. In
the instant appeal the economic duress complained of
was exercised
in the field of industrial relations to which very
special
considerations apply.
My Lords, so far as is relevant to
this appeal, the policy of Parliament,
ever since the Trade
Disputes Act 1906 was passed to overrule a decision of
this House,
has been to legitimise acts done by employees, or by trade
unions
acting or purporting to act on their behalf, which would otherwise
be
unlawful wherever such acts are done in contemplation or
furtherance
of a dispute which is connected with the terms and
conditions of employment
of any employees. I can confine myself to
the kind of acts and the particular
subject matter of the trade
dispute that was involved in the instant case, and
I use the
expression " legitimise " as meaning that the doer of the
act is
rendered immune from any liability to damages or any other
remedy against
him in a court of justice, at the suit of a person
who has suffered loss
or damage in consequence of the act; save
only a remedy for breach of
contract where the act is done in
breach of a direct contract between the
doer of the act and the
person by whom the damage is sustained.
The statutory provisions in force
when the events with which this appeal
is concerned took place,
and which point to the public policy to which
effect ought to be
given by your Lordships, are chiefly contained in sections
13, 14
and 29 of the Trade Union and Labour Relations Act 1974.
The
legislative history of these sections is referred to in the
recent decision of
this House in Hadmor Productions Ltd. v.
Hamilton [1982] 2 W.L.R. 322.
In terms they are confined to
bestowing immunity from liability in tort; they
do not deal with
immunity in any other type of action. In the case of a
8
trade union such immunity is
extended by section 14 to virtually all torts;
in the case of
individuals, it is extended by section 13 to defined classes of
torts
(which would include the blacking of the " Universe Sentinel")
which
are limited, not only in their nature, but also by the
requirement that what
would otherwise be the tortious act must be
committed in contemplation or
furtherance of a trade dispute as
defined in section 29.
The use of economic duress to
induce another person to part with
property or money is not a tort
per se; the form that the duress takes may,
or may not, be
tortious. The remedy to which economic duress gives rise
is not an
action for damages but an action for restitution of property or
money
exacted under such duress and the avoidance of any contract that
had
been induced by it; but where the particular form taken by the
economic
duress used is itself a tort, the restitutional remedy
for money had and
received by the defendant to the plaintiff's use
is one which the plaintiff is
entitled to pursue as an alternative
remedy to an action for damages in tort.
In extending into the field of
industrial relations the common law concept
of economic duress and
the right to a restitutionary remedy for it which is
currently in
process of development by judicial decisions, this House would
not,
in my view, be exercising the restraint that is appropriate to such
a
process if it were so to develop the concept that, by the simple
expedient
of " waiving the tort", a restitutionary
remedy for money had and received
is made enforceable in cases in
which Parliament has, over so long a period
of years, manifested
its preference for a public policy that a particular
kind of
tortious act should be legitimised in the sense that I am using
that
expression.
It is only in this indirect way
that the provisions of the Trade Union and
Labour Relations Act
1974 are relevant to the duress point. The immunities
from
liability in tort provided by sections 13 and 14 are not
directly
applicable to the Shipowners' cause of action for money
had and received.
Nevertheless, these sections, together with the
definition of trade dispute
in section 29, afford an indication,
which your Lordships should respect, of
where public policy
requires that the line should be drawn between what
kind of
commercial pressure by a trade union upon an employer in the
field
of industrial relations ought to be treated as legitimised despite
the
fact that the will of the employer is thereby coerced, and
what kind of
commercial pressure in that field does amount to
economic duress that
entitles the employer victim to
restitutionary remedies.
My Lords, ITF does not suggest
that the immunity from suit in most
kinds of tort conferred upon
trade unions by section 14 whether or not
they are committed in
contemplation or furtherance of a trade dispute,
points to a
public policy that trade unions should be immune from
a
restitutionary action for money had and received. Such a
suggestion would
not be sustainable. If Parliament had intended to
give to trade unions,
simply because they are trade unions, a
wider immunity from suit than
that for which section 14 provides,
it would have done so. What ITF
relies upon is the immunity from
actions for particular kinds of tort given
by section 13 to every
person, whether a trade union or not.
To
qualify for immunity under section 13, an act, which would
otherwise
be actionable in tort, must be done in contemplation or
in furtherance of
a trade dispute; and for a dispute to qualify as
a trade dispute within the
meaning of section 39(1), it must be a
dispute which is connected with one
or more of a number of subject
matters, of which the only one relied
on by ITF in this appeal is:
" terms and conditions of employment" of
the crew of
"Universe Sentinel". The members of the crew
themselves
were not in dispute with the Shipowners about the terms
and conditions of
their own employment, but this, for the reasons
mentioned in N.W.L. Ltd.
v. Woods (ubi sup.), is generally
the case when ITF intervenes in order
to carry out its policy in
respect of vessels sailing under flags of convenience.
Such
disputes as did exist were disputes between the Shipowners and
ITF
acting upon its own behalf and not as representative of or
agent for the
members of the crew collectively or individually.
But these disputes would
9
qualify as trade disputes under
the definition in section 39, so long as they
were connected with
the terms and conditions of employment of the
members of the crew
of " Universe Sentinel". however unwelcome to those
members
the intervention of ITF in their affairs might be.
My Lords, it was accepted by this
House in Hadmor Productions Ltd. v.
Hamilton (ubi sup.
at p.331). which was decided after the judgment of the
Court
of Appeal in the instant case, that "terms and conditions of
"
employment" is a wide expression. As Lord Denning had put it in
a
passage in his judgment in B.B.C. v. Hearn [1977]
I.C.R. 685, that was
quoted with approval in the Hadmor case,
the expression " may include not
" only the contractual
terms and conditions but those terms which are
" understood
and applied by the parties in practice, or habitually, or by
"
common consent, without ever being incorporated into the contract."
A
typical example of terms and conditions of employment that are
not
contractual which, although far from being exhaustive is
relevant to this
appeal, is supplied by provisions of a collective
agreement which does not
comply with the requirements of section
18(1) of the Trade Union and
Industrial Relations Act 1974, and is
accordingly conclusively presumed not
to be intended to be a
legally enforceable contract. By definition a
" collective
agreement" is an agreement or arrangement made by a trade
union
with an employer relating to one of the matters referred to
in
section 29(1), which include " terms and conditions of
employment". The
ITF Collective Agreement falls within this
particular category. But wide
as the expression " terms and
conditions of employment" is, it is limited to
terms which
regulate the relationship between an employee and the person
for
whom he works, i.e. his employer. It does not extend to terms
which
regulate a relationship between an employer and some third
party acting
as principal and not as agent for an employee and for
which no provision
is made in the terms under which the employee
works for the employer.
" Connected with " also
is a wide expression, but it, too, has its limits.
In my view, it
is not enough in order to create the necessary connection
between
a dispute relating to terms and conditions of employment of
employees
of a particular employer, and a demand made upon that employer
by
a trade union acting on its own behalf and not on behalf of
employees
working for the employer, that the demand should be made
at a time
when the trade union is negotiating a collective
agreement relating to the
terms and conditions of employment of
those employees, and the employer's
yielding to that demand is
made a condition precedent to the lifting of
the blacking
additional to the condition precedent that the employer should
also
agree to the terms of the collective agreement insisted on by the
trade
union. To take an extreme example, if a trade union were to
demand as a
condition precedent to lifting a blacking that the
employer should make a
contribution to a particular political
party favoured by the union, or to
a guerilla group in some
foreign country, such a demand whenever it was
made would not, in
my opinion, have the necessary connection with any
dispute about
terms or conditions of employment in furtherance of which
the
blacking was imposed.
A preliminary observation appears
to me to be called for as to the way
in which the Special
Agreement and the Typescript Agreement should be
approached in
dealing with the duress point. The court is not engaged in
its
normal task of construing an agreement in order to determine the
common
intention of the parties as expressed in the words that
they have used.
Ex hypothesi, and also ex concessis in
the instant case, at the time that they
entered into these
agreements the will of the Shipowners was coerced. They
had no
choice as to the words in which the agreements were expressed;
these
were dictated solely by ITF. Recital 3 to the Special
Agreement, which
states the desire of the parties to regulate the
terms and conditions of
employment of the crew of the "
Universe Sentinel", is not to be regarded
as any assent by
the Shipowners to the accuracy of the statement that
everything
that they were required by the Special Agreement to do was
connected
with the terms and conditions of employment of the crew, even
if
that would have been the true effect of the recital if the Special
Agreement
10
had not been executed under
duress—a matter on which I share the doubts
expressed by
Lord Russell of Killowen. The recital ought in my view to
be
wholly disregarded by a court which is called upon to determine
whether
a particular requirement is connected with terms or
conditions of employment
of the crew or not. In the same way the
court would disregard a recital
insisted on by ITF which said in
terms that the Special Agreement was not
induced by economic
duress, or an express covenant by the Shipowners that
they would
not claim back any money paid to ITF pursuant to any term
of it.
Likewise the fact that ITF chose to put a demand for a payment
that
was not connected with terms and conditions of employment in
the same
clause of the Special Agreement as a demand for payment
that was so
connected cannot, in my view, alter the nature of the
demand. To place a
demand that is not legitimate in juxtaposition
to a demand that is legitimate
and to describe the two demands as
a package deal is not, in my view,
capable of legitimising the
otherwise illegitimate demand.
With these considerations in mind,
I turn to the Special Agreement and
Typescript Agreement, and in
particular to Article 1, paragraphs a, b, and c
of the Special
Agreement. The Special Agreement is made by ITF as
principal; it
does not purport to be acting as agent for any member of the
crew
of " Universe Sentinel ", and this is confirmed by the
provision in
paragraph 1 of the Typescript Agreement that the
excess back pay is to be
held by ITF, not as agent for the members
of the crew, but as trustee.
Paragraphs a and b of Article 1
clearly relate to terms and conditions of
employment of the crew
of " Universe Sentinel". Paragraph c, however,
deals
with two distinct subject-matters: (1) the payment by the
Shipowners
on behalf of members of the crew employed by them of
those crew-members'
entrance and annual membership fees to the ITF
Special Seafarers' Section,
and (2) the payment by the Shipowners
of contributions to the Welfare Fund;
such contributions also
being expressed to be paid on behalf of each member
of the crew.
As respects the first category of
payments, entrance and membership fees
to ITF Special Seafarers'
Section, the payment of these fees by the
Shipowners on behalf of
each member of the crew of " Universe Sentinel"
is made
one of the terms and conditions of employment of such crew
member
by section 24 of the ITF Collective Agreement, and the crew
member
obtains, by virtue of his membership of the Special Seafarers'
Section,
benefits available to him on production of his membership
card to which
he would not otherwise be entitled. So the necessary
connection with
terms and conditions of employment is present as
respects these payments;
and the Shipowners have advanced no
contention to the contrary.
As respects the second category of
payments, contributions to the Welfare
Fund, to speak of these as
being made " on behalf " of any member of the
crew is
inaccurate. All that it means, if anything, in relation to
these
contributions is that the number of members of the crew is a
factor in the
calculation of the total payment to be made, and
this is not a legally
accurate meaning which the expression "
on behalf of " is capable of bearing.
The Shipowners are
given no authority under the ITF Collective Agreement
or otherwise
by any member of the crew to make any such payment as his
agent,
nor is any duty owed directly by a crew member to ITF to
contribute
to the Welfare Fund created by the Special Agreement,
to which the only
parties are the Shipowners and ITF. The crew
member has no right to
require the Shipowners to make the payment
or to withhold the payment
and to account to him for it by paying
it to the crew member himself or
expending it for some other
purpose on his behalf. Put colloquially as well
as legally, the
contribution to the Welfare Fund provided for in Article 1c
has
nothing to do with him as a member of the crew; nor, with respect,
do
I see how the fact that Article 1d incorporates a requirement
that the
Special Agreement as well as the Collective Agreement
should be displayed
upon " Universe Sentinel" so as to
be open to inspection by members of the
crew is capable of
converting into a term or condition of their
employment an
obligation assumed by the Shipowners to ITF that lacks
the legal
characteristics of a term or condition of employment.
11
My Lords, as pointed out in the
speech of Lord Russell of Killowen. the
contribution to the
Welfare Fund was in law a contribution to the funds of
ITF which,
by taking appropriate steps under its rules, it could use for
any
purpose it thought fit. consistent with its objects, even
though that purpose
was designed to benefit exclusively employees
engaged in other forms of
transport and had nothing to do with
employees engaged in transport by
sea. It may be a reasonable
expectation that some part of the fund, at any
rate, will continue
to be used for the benefit of seamen, whether they are in
or out
of a job at the time they seek to avail themselves of the
benefit,
although the accounts suggest that such expectation would
have been
justified in relation only to a relatively minor part of
the fund. But what
I regard as fatal to the contention that the
demand for contributions to the
Welfare Fund was connected with
terms and conditions of employment is
that there is nothing
whatever to suggest the entitlement of a member of
the crew of
"Universe Sentinel" to take advantage of any benefits
that
might be provided for out of the fund would be in any way
dependent upon
the existence or non-existence of a relationship of
employee and employer
between the crew member and the Shipowners.
The availability of such
benefits, if any, as the Welfare Fund
might provide, had nothing to do with
the terms and conditions of
the crew members' employment by the
Shipowners, and a demand for
payment to a fund is not, in my view,
" connected with "
the terms and conditions of employment of anyone at
all; nor can
such connection be created merely by accompanying the demand
with
another demand that is connected with a trade dispute.
As Parker J. put it: "... it
is inherently unlikely that it" [sc. Parliament]
" can
have intended to confer upon unions an unlimited power to extract
"
money provided only that what may be called a trade dispute demand
was
" made at the same time, and it is a clear principle of
law that any deroga-
" tion of the subject's rights under the
law can only be achieved by express
" words or necessary
implication. In the present case the demand was, in
" my
judgment, paid under what amounts to duress."
The Court of Appeal would have
taken the same view and upheld the
judgment of Parker J. on the
duress point had they not felt that they were
prevented from doing
so by certain observations in the judgment of Lord
Justice
Roskill. as he then was, in B.B.C. v. Hearn. and of
my
own in my speech in N.W.L. Ltd. v. Woods. So far
as it was stated
by Roskill L.J. in B.B.C. v. Hearn that
the expression " terms and conditions
" of employment"
has a " very wide meaning" I have already pointed
out
that there is nothing in the judgments in B.B.C. v. Hearn,
or the
reference to those judgments in Hadmor Productions
v. Hamilton, that
throws any doubt upon the correctness
in law of the passage I have quoted
from the judgment of Parker J.
I must, however, take the blame for
expressing myself in N.W.L.
Ltd. v. Woods in terms that could be under-
stood as
being inconsistent with that passage in Parker J.'s judgment in the
instant case.
All that was said in the speeches
in this House in N.W.L. Ltd. v. Woods
was said in
the context of an application for an interlocutory injunction
against
officials of ITF to restrain them from blacking a vessel sailing
under a
flag of convenience. It was held in that case. overruling
The " Camilla M.",
that in order for a
dispute to be connected with terms and conditions of
employment of
the crew engaged upon a flag-of-convenience vessel, so as
to
attract the immunity from an action in tort conferred by section
13(1)
of the Trade Union and Industrial Relations Act 1974, it was
not necessary
that the improvement of the terms and conditions of
employment of the
particular seamen who composed that crew should
be the predominant
purpose of the blacking. It was sufficient that
changes in terms and condi-
tions of employment of the crew was a
matter on which the officials of
ITF were insisting. In my own
speech, after referring to the suggestion
that the ultimate object
of ITF's campaign of blacking vessels sailing under
flags of
convenience unless their crews are engaged on ITF standard
articles
at ITF standard rates of wages was to drive flags of convenience
12
(as they define them) off the
seas, and saying that this would not prevent
the immediate dispute
from being a dispute connected with the terms
and conditions of
employment of the crew of the ship that was being
blacked, I ended
that paragraph of my speech with the words cited by the
Court of
Appeal in the instant case: " one of the main commercial
attrac-
" tions of registering vessels under flags of
convenience is that it facilitates
" the use of cheap labour
to man them. So even the ultimate object of
" ITF's campaign
is connected with the terms and conditions of employment
" of
seamen."
The Court of Appeal in the instant
case treated these words as an
expression of my opinion that any
demand for money made by ITF upon
a shipowner in the course of
pursuing its ultimate objective of driving
flags of convenience
off the seas was, ipso facto, connected with terms
and
conditions of employment of seamen. It was certainly not my
intention to
suggest by those words that a demand, for instance,
by ITF that the
owner of a flag-of-convenience vessel should pay
to the union's funds
£1,000,000 as the sole condition to be
fulfilled in order that the blacking
should be lifted would
entitle ITF's officers who were inducing the blacking
to immunity
from an action in tort by virtue of section 13(1). That such
was
not my intention is, I hope, apparent from later passages in my
speech
and certainly no support for it is to be found in either of
the other speeches
in the case.
Section 13(1) was directly
applicable to the remedy sought in N.W.L. Ltd.
v. Woods.
In the instant case it is only indirectly relevant as an
indication
of what kind of demand for money public policy requires
should be excluded
from giving rise to a restitutionary remedy by
way of an action for money
had and received, notwithstanding that
the money was exacted in circum-
stances that would otherwise have
amounted to economic duress. As
Parker J. did, and as the Court of
Appeal would have done had they not
been misled by an incautious
phrase in my own speech in N.W.L. Ltd. v.
Woods, I see
nothing in the Trade Union and Industrial Relations Act 1974
that
indicates any Parliamentary intention that public policy does so
require;
and for the reasons that I have already given, I would
allow this appeal on
the duress point.
In view of the difference of
opinion between the members of this House
upon the duress point it
may be appropriate that before departing from
the subject I should
state that my opinion that the demand for a contribu-
tion to the
Welfare Fund is not legitimised so as to deprive the Shipowners
of
a restitutionary remedy would not necessarily be different if a
requirement
that the Shipowners should make such a contribution
were incorporated
in the ITF Collective Agreement. Sections 13 and
29 of the Trade Union
and Labour Relations Act 1974 are not
directly applicable to restitutional
remedies; they are relevant
only for such indications as they give of the
public policy as to
what kinds of demands ought to be regarded as legitimate
in the
field of industrial relations notwithstanding that compliance with
them
is induced by economic duress. The fact that ITF had also
insisted that
a term as to the requirement of payment to the
Welfare Fund should be
inserted in the ITF Collective Agreement
would not, in my opinion, affect
the public policy under which it
is excluded from being legitimised.
Lord Cross of Chelsea
my lords,
The facts of this case have been
stated by my noble and learned friend,
Lord Diplock. The appeal
raises two points—the " trust" point and the
"
duress " point.
In common with all your Lordships
I think that the decision of the Court
of Appeal on the "
trust" point was right. The case for the appellant on
13
this point, as pleaded, was that
the "Welfare" Fund is not part of the
general assets of
ITF but is held on separate, albeit void, trusts and that
accordingly
any contributions made to it by third parties become held
on
resulting trusts for the contributors. In my opinion, the rules
of the
Welfare Fund do not impress it with any trusts. It is
simply a fund which
ITF set apart from its other assets with a
view to its use for specified
purposes but which remains in law
part of the general assets of ITF and can
be used if ITF so
decides for other purposes.
The "duress" point
raises the question whether the demand made by
ITF that the
appellants should make contributions to the Welfare Fund was
a "
legitimate " demand in the sense that although compliance with
it was
enforced by pressure that amounted to duress the appellants
are. nevertheless,
not entitled to recover the contributions as
"money had and received".
The fact that your Lordships
do not agree on the answer to be given to this
question, shows
that it is a difficult one. Up to a point there was agreement
between
the parties. In the first place it was common ground between
them
that although none of the provisions of the Trade Union and
Labour
Relations Act 1974 have any direct application to this
case, guidance as to
where the line should be drawn in the field
of industrial relations between
" legitimate " and "
illegitimate " demands by a Trade Union, can be found
in the
provisions of the Act giving immunity from liability in tort
for
certain acts done in contemplation or furtherance of a trade
dispute, and
that the demand in this case would rank as legitimate
if a refusal by the
appellants to comply with it would have given
rise to a dispute between
the appellants and ITF connected with
the terms and conditions of
employment of the crew of the "
Universe Sentinel". Secondly, it was
common ground that if a
trade union were to make two demands, one of
which was legitimate
and the other not, the existence of the legitimate
demand would
not preclude the employer from recovering money paid under
duress
in compliance with the illegitimate demand. If, to take an
example
suggested by Lord Diplock, ITF had coupled its demand that
the appellants
should increase the wages of the crew with a demand
that they should
contribute to a fund to assist the guerillas in
El Salvador, and the appellants
had complied with both demands
under duress, the fact that they could not
recover the increase in
wage payments would not preclude them from
recovering the
contributions to the guerilla fund. I would add, although
on the
facts of this case the point does not arise for decision, that I
fully
concur with the view expressed by my noble and learned
friend in the
concluding paragraph of his speech, that in the case
supposed it would
have made no difference to the right of the
appellants to recover the
payments to the guerilla fund that ITF
had insisted, as a condition of
lifting the " blacking "
of the vessel, that an undertaking by the appellants
to make the
payments should be inserted in the contracts of employment of
each
member of the crew and that the appellants had, under duress,
entered
into such undertakings with each member. A trade union
cannot turn a
dispute which in reality has no connection with
terms and conditions of
employment into a dispute connected with
terms and conditions of
employment by insisting that the employer
inserts appropriate terms into the
contracts of employment into
which he enters.
Then, was the demand that the
appellants should make contributions to
the Welfare Fund, a demand
a refusal to comply with which would have
involved a dispute
between ITF and the appellants connected with the terms
and
conditions of employment of the crew of the " Universe Sentinel
"? I
would begin by observing that the Fund is not properly
described as a
" Welfare " Fund at all. Rule 2 of the
present rules says that the object
of the Fund shall be " the
financing of any such work as may be sanctioned
" by the
Executive Committee of the Federation for the purpose of
"
promoting, advancing or protecting by any such means as the
Executive
" Committee in their absolute discretion may
decide, the interests of seafarers
" generally or groups of
seafarers, national or otherwise, or of assisting
"
individual seafarers, or otherwise of serving seafarers' interests."
There
is nothing to limit the expression " work " to "
welfare " work. The Fund
14
could be expended if the Executive
Committee thought fit in the work of
driving " flags of
convenience " from the seas. The accounts of the Welfare
Fund
for the years 1976, 1977 and 1978 were produced on discovery.
Their
effect is summarised in the following passage in the
judgment of the Court
of Appeal:
" The accounts are headed '
Seafarers International Assistance,
"' Welfare and Protection
Fund', but in fact the income account
" includes not only
contributions to the Welfare Fund but also the
"
contributions payable for crew membership of the Special Seafarers'
"
Section. The latter contributions are relatively small, amounting
in
" 1978 to under 8 per cent of the total income. The total
income of the
" Welfare Fund in these years, in round
figures, advanced from
" £1,700,000 in 1976 to
£3,500,000 in 1978; expenditure on the welfare
" of
seafarers progressed from £263,000 to £763,000;
administration
" expenses grew from £220,000 to
£613,000; the surplus income added
" to capital in each
of these years went from £1,200.000 to £2.100,000,
"
being an accumulation of no less than £5,700,000 in the three
years."
It appears from Article 5 of the
Special Agreement that the rates of
contribution to the Welfare
Fund are fixed by ITF and may be increased
by it from time to time
at its discretion. ITF called no evidence to explain
the position
disclosed by these accounts. The assets of the Welfare Fund,
which
at the end of 1978 were worth some £7,870,000 net are—as
a matter
of law—the property of ITF to use as it likes. No
doubt, it would be only
in very exceptional circumstances that ITF
would apply any of those assets
to purposes other than the
purposes of the Seafarers' Section. But even if
one assumes that
in practice the Welfare Fund will always be applied for
the
purposes set out in Rule 2, I cannot see how a contribution to
the
Welfare Fund differs from a contribution to the general funds
of a Seamen's
Union—nor did I understand counsel for the
respondents to contend that
there was any difference. His reply to
the point was to say " the appellants
" admit that they
cannot recover the crew membership fees; what difference
" is
there between them and the contributions to the Welfare Fund? ".
To
my mind there is a world of difference. By paying his
membership fees and
getting his membership card, the member
secures a right to certain benefits
and services from the union.
These are analogous to the benefits obtained
from a private health
insurance scheme or a private pension fund, and the
fees paid are
presumably calculated with some reference to the expense of
providing
the benefits and services. If an employer defrays the expense
of
obtaining such benefits for his employees, his payments are in
substance
additional wages and the benefits obtained are properly
described as " fringe
" benefits " of the
employment. By contrast, the members of the crew do
not obtain any
rights to benefit from the Welfare Fund as a result of
the
appellants' contributions to it. Their chance of receiving some
benefit
from the fund is just the same whether or not the
appellants contribute to the
fund or whether or not they remain in
the employment of the appellants. All
that one can say is that the
contributions add to the resources of the union.
It might, I
suppose, be argued that any increase in the wealth of a trade
union
must be beneficial to its members. As a general proposition
that
might well be doubted; but even if it were universally true,
the fact would
not establish any connection between the demand and
the terms and
conditions of employment of the crew. I cannot bring
myself to think that
even in this day and age a demand that an
employer shall make contributions
to union funds at rates fixed
from time to time by the union—for that, as I
see it, is all
that this demand amounts to—is a demand which can
be
legitimately enforced by duress. In fact, of course, the
appellants did not
enter into any agreements with the members of
the crew to make the
welfare contributions but. as T have already
indicated, I do not think that if
they had entered into such
agreements under duress that circumstance would
have precluded
them from recovering the payments.
I agree with my noble and learned
friends, Lord Diplock and Lord
Russell of Killowen, that the
appeal should be allowed.
15
Lord Russell of Killowen
my lords.
This appeal is concerned with an
episode in a substantially world-wide
battle between the
International transport Workers' Federation ("ITF")
and
owners of vessels sailing under flags of convenience. ITF is
an
unincorporated trade union the members of which consist of
other trade
unions in various countries and has its H.Q. in
London. The facts and the
circumstances leading to the payment to
ITF by the appellant owners of
the large tankship " Universe
Sentinel" of the sum of US$6,480 presently
in dispute have
been outlined by my noble and learned friend Lord Diplock
and are
also to be found in the reports ([1980] 2 Lloyd's Rep. 523) of
the
case at first instance (Parker J.) and in the Court of Appeal
(Megaw,
Brightman and Watkins L.JJ.). The size of the sum now
claimed suggests
that the owners' appeal has the backing of other
flag-of-convenience owners
who may have paid or may be required to
pay similar sums in similar
circumstances.
The owners' claim to repayment of
the sum mentioned is based upon
two contentions. The first
contention is that the payment was made to
ITF as trustee to be
held upon certain supposed trusts, that those trusts
were not as
such valid or enforceable, and that consequently the sum was
held
by ITF upon trust for the owners under the principle of a
resulting
trust. The second contention was that the payment was
extorted by ITF
by the application of illegitimate and
irresistible pressure in that the vessel
was taken out of service
as long as ITF continued to procure (as ITF
would have done unless
the owner complied with the ITF demands including
payment of inter
alia this sum) that tug service would not be available to
enable
the vessel to sail. Under this head the owner claimed repayment
as
money had and received.
The first contention I will label
the trust point: and the second conten-
tion I will label the
duress point. I deal first with the trust point which
found favour
with Parker J. but not with the Court of Appeal.
In order to procure the cessation
of blacking of the vessel by the tugs
the owner was required by
ITF to qualify for a Blue Certificate. The
first document was
served by ITF on the Captain of the vessel on 17th
July 1978 and
set out the conditions of such qualification. These were (1)
the
owners must sign with ITF a Special Agreement undertaking to apply
to
the crew all sections of the ITF Collective Agreement which were
to
cover the terms and conditions of employment of the crew. (2)
Insofar
as any member of the crew was not eligible to become a
member of a
union member of ITF, he must be enrolled in the ITF
Special Seafarers'
Section, which was set up by the seafarers'
union members of ITF: such
enrolment would entitle those enrolled
to trade union representation
although not a member of a member
union, nor of course of the ITF the
membership of which consisted
of trade unions. These benefits of " outside
"
membership " were dependent upon payment on their behalf of
entrance
and annual fees of US$15 per man and US$30 per man per
annum. The
Collective Contract of employment required such
payments to be made
by the owner employer. Thirdly it was noted
that the Special Agreement
" also covers the owners'
contributions to the Seafarers International
" Welfare,
Protection and Assistance Fund, [at] $162 per man per year.
"
The Fund was set up to help provide welfare, social and recreational
" facilities in ports around the world for seafarers of all
nations, especially
" those serving in flag-of-convenience
ships, and is administered by an
" international committee
of representatives of ITF-affiliated unions."
It is, my Lords, important to note
that the document last summarised
is in no way relied upon by the
Owners in the pleadings in support of the
contention that the
Welfare Fund was held upon or intended to be held
upon trusts, as
distinct from being a fund belonging to ITF at its disposal
from
time to time as the constituent members pursuant to the
contract
contained in the constitution of the unincorporated ITF
should decide.
16
On the 28th July 1978 what is
referred to as the Special Agreement was
signed on behalf of the
owners and ITF. The owners undertook to employ
each seafarer in
accordance with the terms of the ITF Collective Agreement
and to
incorporate its terms into the individual contract of each
seafarer:
and " (c) to pay on behalf of each seafarer
contributions and fees at the
" rates shown in Schedule 2
hereto to the Seafarers' International Welfare
" Protection
and Assistance Fund and to the Special Seafarers' Section of
"
the ITF. The contributions and fees shall be paid to the ITF
annually
" and in advance ". The Schedule described the
payments to be made as
" ITF Special Seafarers' Section
Entrance Fees at 40 X US$15 per man,
" 40 X membership fees
at US$30 per man, and Seafarers' International
" Welfare
Protection and Assistance Fund 40 X US$162 per man per
"
year." This last head of contributions, as distinct from fees,
amounted to
US$6,480, the sum now in dispute. The owners paid the
Special Agreement
sums to ITF. (It is suggested on behalf of
ITF—though this point relates to
the duress point rather
than to the trust point—that because the Special
Agreement
recited under (3) that " ITF and the [owners] desire to regulate
the
conditions of employment " of all seafarers . . . serving
from time to time
" aboard the Ship ", that meant that
the parties had laid it down that
everything that was agreed in
the body of the agreement was a condition
of such employment,
including the agreement to contribute to the Welfare
Fund. I
cannot accept that suggestion. There is ample in the body of
the
agreement within the scope of the recital without embracing
the contributions
which are markedly not within the Collective
Agreement.)
On the same day the owners and ITF
signed what is referred to as the
Typescript Agreement. The
function of this was to estimate and provide
for the total due to
members of the crew applying the new rates since
signing on. I
need say no more on this save to note that it shows that the
amount
of the estimate and of the Special Agreement sums (including the
Fund
contribution of US$6,480) were included in a sum of US$80.000
paid
to ITF and accepted as to US$6,480 for Welfare Fund contributions.
Under the Points of Claim the
owners alleged that under and by virtue
of the Special Agreement
... the sum of US$6,480 was paid by the
owners " upon the
trusts of the Seafarers International Welfare Protection
"
and Assistance Fund " and that " the trusts of the Welfare
Fund are
" declared by a document entitled ' Rules for
Seafarers International
" ' Assistance Welfare and Protection
Fund which was adopted by the ITF
" ' in December 1958 '".
Accordingly the trust point is squarely based
on the allegation
that the rules establish a trust fund to be held upon trusts
which,
however, must in law be held to be ineffective. Those rules have
been
set out in the speech of my noble and learned friend Lord Diplock.
In connection with those rules it
is convenient to note some points in
the constitution of ITF.
Congress is the supreme authority meeting normally
every three
years with delegates from the constituent unions members of
ITF.
Congress appoints members of the General Council, which
exercises
functions delegated to it by Congress and meets after
each ordinary Congress
and when called upon to do so by the
Executive Board. Then there is the
Executive Board which consists
of 23 members elected by Congress from
among the members of the
General Council, plus the General Secretary.
This Board, which was
formally called the Executive Committee, is the
governing body of
ITF. The constituent members of ITF are divided into
industrial
sections of which one is the Seafarers' section and another
the
Dockers' section.
In 1952 the Dockers' and
Seafarers' sections met in Joint Conference
with a view to a
campaign to deal with flags-of-convenience ships problems.
It was
agreed to establish a Seafarers' International Welfare Fund as
part
of the campaign, and that six individuals should be appointed
to administer
the fund—as I understand it to be known as the
Fair Practices Committee
and formerly styled the Boycott
Committee. At the same conference
" Rules to govern the
functioning of the Welfare Fund " were approved:
these rules
were replaced in December 1958. This replacement was the
17
work of the Executive Committee
(Board) of ITF and in their final form
have been already set out.
Parker J. in concluding that here was an
intended trust placed
some reliance on the fact that the first draft of the
1958 rules
contained a clause to say that the Executive Committee might
alter
the rules or add to them at any time, which did not appear in
the
rules as adopted: in my opinion any such reliance in
construing the rules
is unsound and at least arguably
impermissible.
The accounts of the Fund are
summarized in the judgment of the Court
of Appeal thus:
" We have before us the
accounts of the Welfare Fund for the years
" 1976, 1977 and
1978. The accounts are headed ' Seafarers
" ' International
Assistance. Welfare and Protection Fund'. but in fact
" the
income account includes not only contributions to the Welfare
"
Fund but also the contributions payable for crew membership of the
"
Special Seafarers' Section. The latter contributions are relatively
"
small, amounting in 1978 to under 8 per cent of the total income.
"
The total income of the Welfare Fund in these years, in round
"
figures, advanced from £1,700.000 in 1976 to £3,500,000
in 1978;
" expenditure on the welfare of seafarers progressed
from £263,000 to
" £763,000; administration
expenses grew from £226,000 to £613,000;
" the
surplus income added to capital in each of these years went from
"
£1,200,000 to £2,100,000, being an accumulation of no
less than
" £5,700,000 over the three years."
I would however comment on that
extract that what are referred to as
" contributions"
payable for crew membership of the Special Seafarers'
Section are
more accurately described as " fees ".
My Lords, it is commonplace for a
trade union to have, in addition to its
general funds, special
funds. Indeed in the constitution of ITF special
funds are
envisaged—see Rule IX (3) and Rule XIII (I). Essentially
the
internal affairs of the union, including the use and
destination of any funds
of the union, are dependent not upon the
setting up of trust funds but upon
the contract between the
members found in the constitution.
The Points of Claim, as I have
already indicated assert (paragraph 10 c)
that the rules of the
Welfare Fund declare trusts, and it is upon that assertion
that
the trust point is based. In my opinion that is a false assertion:
the
fund is a fund of ITF subject for the time being to an
earmarking subject
to the contractual arrangements between the
members under the
constitution. The contribution of the owners to
the ITF under this head
is not a contribution to ITF upon trust,
and is not in law different from a
payment generally to ITF. That
view may well not assist ITF in argument
on the duress point, but
in my opinion suffices to deny the trust point to the
owners.
I turn next to the second
contention of the owners—the duress point. I
have earlier in
this speech in a parenthesis touched on this point by
expressing
my opinion that the third recital in the Special Agreement cannot
be
regarded as establishing that the Welfare Fund contribution relates
to the
terms and conditions of employment of the crew. For the
rest, on this point,
I content myself with adopting the speech of
my noble and learned friend,
Lord Diplock, and on that basis I
would allow the appeal. I finally observe
that that would have
been the view of the four judges below had the Court
of Appeal
not, in my opinion, misconstrued a passage in a speech of my
noble
and learned friend, Lord Diplock in N.W.L. Ltd. v. Woods.
Lord
Scarman
my lords,
The
decisive question in this appeal is whether in any circumstances,
and
if in any in what circumstances, an employer who has paid
money to a
trade union under the compulsion of actual or
threatened industrial action
can recover the money as having been
paid under duress.
18
My noble and learned friend. Lord
Diplock, has stated the facts and
outlined the history of the
litigation. It is nevertheless necessary for me. as
I am
respectfully dissenting from his conclusion that the appeal should
be
allowed, to state briefly those facts upon which I base my view
that the
appeal should be dismissed.
The original claim of the
appellant shipowner (" the owner ") against the
respondent
trade union (" the ITF ") was for: —
(i) a declaration that two
agreements (the "special agreement" and
the "
typescript agreement") are invalid;
(ii) a
declaration that the ITF hold on trust for the owner the sum
of
US$80,000 paid to the ITF by the owner pursuant to the special
agreement;
(iii)
$80,000, a sum certain together with interest.
There was
also a claim for damages and for certain other declaratory relief.
By
the time the case reached your Lordships' House one issue
alone
remained, namely whether the ITF is liable to repay to the
owner the sum
of US$6,480, being that part of the $80,000 which
constituted a contribution
which the owner was required to make to
the Seafarers' International
Welfare, Protection and Assistance
Fund (the " Welfare Fund") under
the terms of the "
special agreement". Parker J. held at first instance that
the
sum must be repaid. The Court of Appeal allowed the appeal of the
ITF
and held that it is irrecoverable.
The appellant owner puts his case in two ways: —
(1) the
trust point: the sum of $6,480 was paid, it is submitted, upon
the
trusts of the Welfare Fund: those trusts are void and of no
effect:
accordingly the sum is held upon resulting trusts for the
owner;
(2) the
duress point: the two agreements, it is submitted, were signed
and
the moneys paid under duress: accordingly the owner can recover
the
$6,480 as money had and received to his use.
I have had
the advantage of reading the opinions of my noble and learned
friends
Lord Cross of Chelsea and Lord Russell of Killowen on the trust
point
and I agree with them. There is, in my opinion, no resulting
trust.
It follows that to recover the sum of $6,480 the owner must
show a common
law right to recover the sum as money paid under
duress.
The facts
follow a familiar pattern, although the relief and remedies
sought
are unusual in this area of litigation. Questions as to the
validity of trusts
are more frequently raised in the quiet waters
of family settlements, gifts,
and bequests to charity than on the
turbulent seas navigated by the ITF.
It is highly artificial to
impute to this owner any intention of gift or
settlement. His
common law claim accurately reflects the true nature of
his case;
and it is, so far as I am aware, the first time that a shipowner
has
sought in the English courts to recover as money had and received
a
sum paid to a trade union to secure the release of his ship from
a blacking
procured by the trade union. The claim raises an
important question as to
the inter-relation of the law of duress
with the statutory immunities enjoyed
under English law by persons
acting in contemplation or furtherance of
a trade dispute.
The owner,
a company incorporated in Liberia, owns and operates the
tankship
"Universe Sentinel". 269,092 tons deadweight. The ship
is
registered in Liberia and sails under the Liberian flag. The
ITF is an
international federation of national trade unions which
represent transport
workers, including seamen, in many countries
of the world. The ITF is
a trade union for the purposes of the
Trade Union and Labour Relations
Act 1974 ("the Act"),
even though it has no individual members. It
maintains, however, a
Special Seafarers' Section in which seafarers who are
not eligible
for membership of an ITF affiliate union may be enrolled. The
purpose
of the Special Section is to provide trade union representation for
19
crews of flag-of-convenience ships
who have no national union which they
can join.
The policy of the ITF towards
ships which sail under what it regards as
flags of convenience has
been described by my noble and learned friend,
Lord Diplock. in
N.W.L. Ltd. v. Woods [1979] 1 WLR 1294 at 1297C.
It
seeks to compel the owners of such ships to employ seamen on
terms
comparable to those contained in collective agreements
negotiated by its
affiliate unions for ships registered in Western
Europe. To this end the
ITF seeks to procure the "blacking"
of flag-of-convenience ships whose
owners have not accepted ITF
terms.
The " Universe Sentinel "
was regarded by the ITF as sailing under a flag
of convenience. On
the 17th July 1978 she docked at Milford Haven. By
the afternoon
of the 18th July she was ready to sail. But she could not
because
she was "blacked". The ITF had procured those who
were
operating the tugs at Milford Haven to refuse, in breach of
their contracts
of employment, to make tugs available to assist
the ship's departure from
port.
The blacking of the ship followed
upon a presentation by an ITF
representative to the master of the
union's demands. These were contained
in an ITF document entitled
: —
" Conditions to be fulfilled
before flag-of-convenience vessels can be
" issued with ITF
Blue Certificates— effective from 1st September 1977."
A blue certificate is a notice
that terms of employment on board ship comply
with ITF
requirements. The conditions included a requirement that the
owner
sign a " special agreement " undertaking to apply all
sections of the
ITF Collective Agreement to all seafarers on board
the ship; a requirement
that any seafarers not eligible for
membership of an ITF affiliate union
must be enrolled in the ITF
Special Seafarers' Section: a requirement that
the owner pay each
crew-member's union entrance fee and annual subscrip-
tions : and
a requirement that the owner contribute annually to the Welfare
Fund
which was described as having been set up " to help provide
welfare,
" social and recreational facilities in ports around
the world for seafarers
" of all nations, especially those
serving in flag-of-convenience ships ". The
document made it
very clear that unless and until the owner signed the
"
special agreement " incorporating these requirements, a printed
draft of
which the ITF provided for the owner to fill in the
blanks and sign, and
paid the moneys demanded, no blue certificate
would be issued and the
blacking would continue.
By the 29th July the owner had
complied with these demands and the
ship was able to sail. The
owner had on the 28th signed two agreements
and paid by cheque to
the order of the ITF the sum of US$80,000.
The first of the two agreements
was the " special agreement ". It recited
that "
the ITF and the Company desire to regulate the conditions of
employ-
" ment of all seafarers . . . serving from time to
time aboard the ship "
and included seven articles of
agreement and two schedules. I need quote
only Article 1 (c) and
Schedule 2 : —
" Article 1 ...
" c to pay on behalf of
each Seafarer contributions and fees at the
" rates shown in
Schedule 2 hereto to the Seafarers' International
" Welfare
Protection and Assistance Fund and to the Special Seafarers'
"
Section of the ITF. The contributions and fees shall be paid to
the
" ITF annually and in advance; "
" Schedule 2
.
" ITF SPECIAL SEAFARERS' SECTION
|
"Entrance fees |
40 at US $15 per man US $ |
|
"Membership fees |
40 at US $30 per man per year US $ . |
|
" Seafarers' International Welfare Protection and Assistance Fund |
40 at US $162 per man per year US $ |
|
" Total |
US $8280 " |
The $6,480 now claimed is the
total of the contributions to the Fund included
in the $80,000
paid to the Union.
The second agreement (the "
typescript agreement", so called to
distinguish it from the
printed draft of the special agreement) confirmed
receipt of the
$80,000 and included provisions for calculating the wages and
other
benefits due to crew-members under the ITF Collective Agreement.
In his written case the owner has,
in my view correctly, summarised the
effect of these transactions
as follows: —
In a sentence, he had no choice
but to submit to the economic pressure
applied by the prima
facie unlawful acts of the union. The ITF, as I
understand
their case, do not challenge that such was the effect of what
they
did but deny that they acted unlawfully or that their pressure
was
illegitimate. They rely on the policy of the law granting
statutory immunity
from tortious liability to persons acting in
contemplation or furtherance
of a trade dispute; section 13(1) of
the Act as amended in 1976.
The issue between the parties is a
narrow one. Was the dispute over
the contributions to the Welfare
Fund a trade dispute within the meaning
of section 29 of the Act?
The owner conceded that, if it was, the moneys
paid would be
irrecoverable. The issue turns upon analysis of what the
parties
agreed and upon the proper construction of section 29 of the Act.
Before turning to this issue, it
is necessary to state, albeit very briefly,
my view as to the
nature of the modern law of duress.
It is, I think, already
established law that economic pressure can in law
amount to
duress; and that duress, if proved, not only renders voidable
a
transaction into which a person has entered under its compulsion
but is
actionable as a tort, if it causes damage or loss: Barton
v. Armstrong
[1976] AC 104, and Pao On v. Lau Yiu
Long [1980] AC 614. The
authorities upon which these two
cases were based reveal two elements in
the wrong of duress: —
There must be pressure, the
practical effect of which is compulsion or the
absence of choice.
Compulsion is variously described in the authorities
as coercion
or the vitiation of consent. The classic case of duress is,
however,
not the lack of will to submit but the victim's intentional
submission
arising from the realisation that there is no other
practical choice open
to him. 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 also
to recognise as duress
first the threat to property and now the threat to a
man's
business or trade. The development is well traced in Goff and
Jones,
The Law of Restitution, 2nd edition, chapter 9.
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: see
Maskell
v. Horner [1915] 3 K.B. 106. But none of these evidential
matters
21
goes to the essence of duress. The
victim's silence will not assist the bully,
if the lack of any
practicable choice but to submit is proved. The present
case is an
excellent illustration. There was no protest at the time, but
only
a determination to do whatever was needed as rapidly as possible
to
release the ship. Yet nobody challenges the judge's finding
that the
owner acted under compulsion. He put it thus:
" It was a matter of the most
urgent commercial necessity that the
" plaintiffs should
regain the use of their vessel. They were advised
" that
their prospects of obtaining an injunction were minimal, the
"
vessel would not have been released unless the payment was made,
"
and they sought recovery of the money with sufficient speed once
"
the duress had terminated."
The real issue in the appeal is,
therefore, as to the second element in the
wrong duress: was the
pressure applied by the ITF in the circumstances
of this case one
which the law recognises as legitimate? For, as Lords
Wilberforce
and Simon of Glaisdale in Barton v. Armstrong, supra,
p.121
said:
"... the pressure must be one of a kind which the law does not
" regard as legitimate."
As the two noble and learned Lords
remarked doc. cit.), in life, including
the life of
commerce and 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.
The origin of the doctrine of
duress in threats to life or limb, or to
property, suggests
strongly that the law regards the threat of unlawful
action as
illegitimate, whatever the demand. Duress can, of course, exist
even
if the threat is one of lawful action: whether it does so
depends
upon the nature of the demand. Blackmail is often a demand
supported
by a threat to do what is lawful, e.g. to report
criminal conduct to the
police. In many cases, therefore, "
what [one] has to justify is not the
" threat, but the demand
..." Lord Atkin, Thome v. Motor Trade
Association
[1937] A.C 797, 806.
The present is a case in which the
nature of the demand determines
whether the pressure threatened or
applied, i.e. the blacking, was lawful
or unlawful. If it
was unlawful, it is conceded that the owner acted under
duress and
can recover. If it was lawful, it is conceded that there was
no
duress and the sum sought by the owner is irrecoverable. The
lawfulness
or otherwise of the demand depends upon whether it was
an act done in
contemplation or furtherance of a trade dispute. If
it was, it would not
be actionable in tort: section 13(1) of the
Act. Although no question of
tortious liability arises in this
case and section 13(1) is not, therefore, directly
in point, it is
not possible, in my view, to say of acts which are protected
by
statute from suit in tort that they nevertheless can amount to
duress.
Parliament having enacted that such acts are not
actionable in tort, it
would be inconsistent with legislative
policy to say that, when the remedy
sought is not damages for tort
but recovery of money paid, they become
unlawful.
In order to determine whether the
making of the demand was an act
done in contemplation or
furtherance of a trade dispute, it is necessary to
refer to
section 29 which sets out the statutory meaning of " trade
dispute ".
The issue therefore is reduced to
the one question. Was the demand for
contributions to the Welfare
Fund connected with one or more of the
matters specified in
section 29 of the Act? It is common ground that unless
22
the demand was connected with "
terms and conditions of employment"
it was not within the
section.
Parker J. found it " plain "
that a dispute about payments to the ITF
for the Welfare Fund
would not be connected with any of the matters
mentioned in
section 29. The Court of Appeal would have been disposed
to take
the same view, if they had not felt that they were precluded
from
doing so by the guidance given in B.B.C. v. Hearn
[1977] 1 W.L.R. 1004,
by Roskill L.J. at p.1015 and in N,W.L.
v. Woods, supra, by Lord Diplock
at p. 1302. While I am
prepared to accept, for the reasons given by my
noble and learned
friend, Lord Diplock, that the Court of Appeal misunder-
stood the
guidance given in those two cases, it does not follow that
the
payments to the Welfare Fund were unconnected with the terms
and
conditions of employment of the crew-members of the ship.
It is not necessary to spend time
on the construction of section 29. It
has been accepted since
B.B.C. v. Hearn that "terms and conditions of
"
employment" is a phrase of wide meaning and includes not only
the
rights but also the customary benefits and reasonable
expectations provided by reason
of his employment to the employee
by his employer. But it is said that in
this case the employer's
obligation was to the union, not to the employee.
The argument may
be summarised as follows: —
The demand that the special
agreement be signed was one which certainly
related to the terms
and conditions of employment on board the ship.
The parties were
well aware that the Special Agreement was, as recited,
intended to
regulate the conditions of employment: and its terms were
such
that it clearly did specify the terms and conditions on which
crew
members were to be employed. But did the demand for
contributions to
the Welfare Fund relate to their terms and
conditions of employment?
The question cannot be answered save by
an examination of the circum-
stances in which it was made.
It is of some significance, though
not in itself decisive, that the demand
is to be found in the same
set of documents as the other demands as to
rates of pay and the
payment of union fees which were indisputably
connected with terms
and conditions of employment. However, it would
be wrong (quite
apart from any question of duress) to adopt towards the
documents
of agreement in this case the strict approach which the law
requires
in determining the true construction of a commercial contract.
What
calls for analysis and explanation is the nature of the demand.
And
this can only be understood by a common-sense approach, after
considering
such ancillary questions as whether the demand was
made merely for the
union's benefit or was made for the benefit,
or on behalf, of the workers
whose terms and conditions of
employment the union was admittedly
seeking to regulate by the
documents which contain the demand.
The demand was expressed to be
made " on behalf of each seafarer "
on board ship. It
was for contributions to a fund which, though not a
trust fund,
existed, as a matter of contract between the affiliate unions of
the
ITF, for the benefit of seafarers. There was no indication in the
23
evidence that the ITF had any
intention of scrapping the Fund or going
back on their word to
apply the payments in the manner and for the
purpose stated in the
Special Agreement. I have no doubt that their
intentions in regard
to the Fund were as set out in the " Blue Certificate
"
Conditions " and the Special Agreement. There is certainly no
evidence
to the contrary: and it would be unjust to the point of
cynicism to impute
to the ITF any intention other than to use the
Fund for the purpose set
forth in those conditions.
I turn, therefore, to the five
points enumerated above. Do they constitute
a case against the
view that the obligation accepted by the owner under
the pressure
of blacking his ship to contribute to the Fund was related
to the
terms and conditions of employment on board the ship?
(1) and (2). The fact that
there is no obligation upon crew members
to contribute to the Fund
proves nothing. The demand upon the owner
to contribute was made
by the union for the benefit of the crew and on
their behalf and
incorporated in the Special Agreement. Each seaman
secured a
written contract, the terms of which were "the current ITF
"
Collective Agreement, brought into force by the Special Agreement . .
. ".
The owner was obliged to display aboard the ship copies
of the Special
Agreement, the ITF Collective Agreement and the
Blue Certificate in a
prominent place accessible to all seamen.
Bearing in mind the very wide
meaning given by the law to terms
and conditions of employment (see
B.B.C. v. Hearn, supra), I
find it totally unreal to infer that because the
seamen are
themselves not obliged to contribute to the Fund the
obligation
accepted by the owner to contribute " on behalf of
each seafarer " was
not an obligation related to the
conditions of employment. The owner
has undertaken, albeit under
pressure, to make payments on behalf of each
seaman which could be
of benefit to him: and the undertaking was
recognised as a term of
the total bargain between the union and the owner
on the basis on
which the seamen were to be employed. Further, it can
be of no
importance that the Collective Agreement makes no mention of
the
obligation, when it is incorporated in the Special Agreement which
is
not only mentioned in the seaman's contract but has to be
published on
board the ship.
Finally, could it be said, I ask,
that the obligation to contribute "on
" behalf of each
seafarer" to the Fund would not be a condition of
employment
if it had been mentioned in the ITF Collective Agreement?
I
suggest not. And, if it be capable of being a condition of
employment,
I would think its presence in the Special Agreement,
of which each seaman
had notice, would constitute sufficient
notice to make its absence from
the ITF Collective Agreement
immaterial.
(3) - (5). It is a
necessary part of the immediately preceding argument
that payments
to the union for the Fund were made on behalf of crew-
members and
were intended to be for their benefit. The Fund is governed
by
rules which the ITF, if it acts in accordance with the rules, can
amend.
The objects of the Fund, as defined by the rules, are very
wide (" promoting
"... by any such means as the
Executive Committee in their absolute
" discretion may
decide, the interests of seafarers ": Rule 2): and there
is
no legal principle to prevent the ITF, if it acts constitutionally,
from
winding up the Fund and transferring its substantial cash
assets to itself.
But the Fund does exist: it is used to provide
amenities in many ports for
seamen: there is no indication that
the union has any present intention
other than to maintain the
Fund in the interests of seafarers: and without
contributions
obtained from owners there would be no Fund available
for their
welfare. I am not prepared, on the evidence, to find that the
payment
of contributions to the Fund is of no benefit to seafarers
in
general, or to the crew-members of this ship, even though I
recognise that
some may never benefit from it.
For these reasons I conclude that
the demand for contributions related
to the terms and conditions
of employment on the ship, and, if it had been
resisted by the
owner, would have led to a trade dispute. Blacking the
24
ship in support of the demand was,
therefore, not actionable in tort. It
was, accordingly, a
legitimate exercise of pressure and did not constitute
duress. The
owner cannot recover the contributions. I would dismiss the
appeal.
Lord Brandon of Oakbrook
my lords,
This appeal arises out of the
blacking at the port of Milford Haven in
July 1978 of the tankship
" Universe Sentinel", which I shall call " the
"
ship ". The ship was owned by the respondent corporation, which
I shall
call " the shipowning company ". The blacking,
which took the form of
a refusal by tugs' crews to give to the
ship the assistance which she needed
in order to leave the port,
was instigated by the appellant federation, which
I shall call
"the ITF", in the course of its long-continuing
campaign
against what it regards as " flag of convenience "
ships and their owners.
By the 28th July 1978, as a result
of the blacking, the ITF had compelled
the shipowning company, as
the price of putting an end to the severe
financial loss caused to
it by the detention of the ship, to comply with
two demands
presented to it by the ITF. The first demand was that the
shipowning
company should enter into two written agreements with the
ITF
relating to improvements in the pay and other terms and conditions
of
employment of those on board the ship. Those agreements have
been
called " the Special Agreement" and " the
Typescript Agreement"
respectively. Their effect was to
oblige the shipowning company to substi-
tute for the rates of pay
and other terms and conditions of employment
prescribed by the
existing contracts of employment of those on board the
ship the
higher rates of pay and improved other terms and conditions
of
employment, approved by the ITF and laid down by it in what is
known
as the ITF Collective Agreement.
The second demand was that the
shipowning company should pay forth-
with to the ITF the sum of
US$80,000. This sum was made up of three
separate items: first
US$71,720, being an estimate of the back-pay due
to those on board
the ship on the footing that the agreed higher rates of
pay should
be applied retrospectively; secondly, U.S.$1,800 in respect
of
entrance and membership fees payable by those on board the ship
to the
Special Seafarers' Section of the ITF; and, thirdly,
U.S.$6,480 paid by
way of contributions to a fund of the ITF known
as the Seafarers' Inter-
national Welfare Protection and
Assistance Fund, which I shall call " the
" Fund ".
Following compliance by the
shipowning company with the two demands
referred to above, the
blacking of the ship was lifted, the necessary tug
assistance
became available and the ship, which had been detained in the
port
of Milford Haven for about ten days, left that port and resumed
her
interrupted voyage.
It had been the intention of the
shipowning company all along, while
acceding to the ITF's demands
in order to obtain the release of the ship,
to claim back later by
legal proceedings the sum of U.S.$80,000 which it
had been
compelled to pay. In accordance with that intention the ship-
owning
company subsequently began an action against the ITF and one
of
its officers in the Commercial Court, claiming inter alia on
various
legal grounds repayment of the whole or part of the sum of
U.S.$80,000
which had been exacted from it.
The action was tried by Parker J.
and, either before or in the course
of the trial, the matters in
dispute between the shipowning company and
the ITF were narrowed
down to four questions of which only the first
three are now
material. These three questions were:
(1) Was the shipowning company
entitled to recover back from the
ITF the sum of U.S.$6,480 which
it had paid by way of contributions
25
to the Fund, on the ground that
such sum was paid for the purposes of
a void trust and was
therefore held by the ITF on a resulting trust for
the benefit of
the shipowning company?
Parker J. answered all three
questions in favour of the shipowning
company: that is to say he
gave an affirmative answer to question (1), a
negative answer to
question (2) and an affirmative answer to question (3).
The ITF appealed against the
decision of Parker J. to the Court of
Appeal, consisting of Megaw,
Brightman and Watkins L.JJ. By the
judgment of that court, which
was delivered by Megaw L.J., the ITF's
appeal was allowed.
Question (1) was answered in the negative and
question (2) in the
affirmative, with the result that it was not necessary
to answer
question (3). The shipowning company now appeals, with the
leave
of the Appeal Committee, against the judgment of the Court of
Appeal,
seeking to have the judgment of Parker J. in its favour restored.
It is necessary to state, by way
of preliminary matter, that the parties,
for the purposes of the
ITF's present appeal to your Lordships' House,
have agreed to
treat as correct the following four propositions of law. First,
that,
if the sum of U.S.$6,480 paid by the shipowning company to the
ITF
was paid for the purposes of a trust, such trust was not a
charitable
one, and the consequence of that was that the sum was
held by the ITF
on a resulting trust for the benefit of the
shipowning company. Secondly,
that severe economic pressure could
amount to duress in law. Thirdly,
that, if the relevant economic
pressure was applied in furtherance of a
trade dispute within the
meaning of section 29(1) of the 1974 Act, it
would not constitute
duress in law, and any sum exacted by such pressure
would not be
recoverable. But, thirdly, that, if the relevant economic
pressure
was applied in furtherance of a dispute which was not a trade
dispute
within the meaning of section 29(1), any sum exacted as a result
of
such pressure would be recoverable as money had and received by
the
payee to the use of the payor. The effect of this last agreed
proposi-
tion was to give an agreed affirmative answer to question
(3).
My Lords, there can, I think, be
no doubt about the correctness of the
first and second of these
four agreed propositions of law. With regard
to the other two
propositions, however, the fact that the parties were
agreed about
them has meant that your Lordships have not heard any
argument
either supporting or attacking the correctness of them. In
these
circumstances, while I think that your Lordships should accept,
for
the purposes of this appeal alone, that the last two
propositions of law
agreed between the parties are correct, it
should be made quite clear
that your Lordships are not
necessarily, by doing so, giving the seal of
your approval to
those propositions.
I turn now to consider the only
two questions now remaining in dispute,
namely, question (1) (the
trust point) and question (2) (the duress point).
With regard to question (1), the
administration of the Fund was
governed by a body of rules, six in
number, which I shall call " the Fund
" Rules ".
The terms of the Fund Rules are set out in full in the judgment
of
Parker J. (see [1980] 2 Lloyd's Rep. 527), and it is therefore
not
necessary that I should set them out in full again here. The
view of the
Court of Appeal about the effect of the Fund Rules can
be summarised in
this way. The Fund had been set up by the
Executive Board (then the
26
Executive Committee) pursuant to
its power to create or provide for special
funds in connection
with industrial sections or special departments. The
Executive
Committee had power to set up such a fund, either by way of
trust
or by way of contract between the affiliated unions. The language
of
the Fund Rules was capable of being interpreted in either way.
To
interpret them as creating a trust would, however, defeat the
whole purpose
for which the Fund was set up, whereas to interpret
them as creating a
contract would give effect to such purpose. It
was an established principle
of construction that, where an
instrument was capable of two interpretations,
one of which would
give effect to the purpose of the persons who drew
it up, and the
other of which would frustrate such purpose, to prefer the
former
interpretation to the latter. Parker J. was, therefore, wrong
to
interpret the Fund Rules as purporting to create a trust which
was void,
and the right way to interpret them was as creating a
contract between the
affiliated unions which was valid (see [1980]
2 Lloyd's Rep. 540-541).
I find myself in complete
agreement with that analysis by the Court of
Appeal of the effect
of the Fund Rules, and it follows that I think that that
court was
right to answer question (1) in the negative.
It remains to consider question
(2), namely, whether the dispute between
the shipowning company
and the ITF, in so far as it related to the payment
of US$6,480,
by way of contributions to the Fund, was a trade dispute
within
section 29(1) of the 1974 Act. In considering that question it is,
in
my view, essential to take two matters fully into account.
Those matters
are, first, so much of the terms of the Special
Agreement and the Typescript
Agreement as is relevant to the
obligation of the shipowning company to
make contributions to the
Fund, and secondly, the indication of the purposes
of the Fund
contained in the Fund Rules.
The Special Agreement begins by
setting out the names and addresses of
the parties to it and
indicating that the shipowning company will in the
remainder of
the agreement be referred to as " the Company".
The
agreement then continues as follows:
" WHEREAS
" 1. the ITF is an
independent trade union organisation comprising
" fully
autonomous trade union organisations in transport and allied
"
services throughout the world and members of the Special Seafarers'
"
Section of the ITF;
" 2. the Company is the
registered owner/manager of the Ship;
" described in Schedule
1 hereto;
" 3. the ITF and the Company
desire to regulate the conditions of
"employment of all
seafarers (hereinafter individually called a
" ' Seafarer ')
serving from time to time aboard the ship;
" NOW IT IS AGREED
" Article 1: The Company undertakes as follows:
" (a) to employ each Seafarer
in accordance with the terms of the
" current ITF Collective
Agreement for World Wide trading (hereinafter
" called ' the
ITF Collective Agreement') as amended from time to time
" (b) to incorporate the
terms and conditions of the ITF Collective
" Agreement into
the individual contract of employment of each
" seafarer and
into the Ship's Articles and furnish copies of these
"
documents to the ITF. Any seafarer, enjoying terms and conditions
"
which are, taken as a whole, recognised by the ITF as more
favourable
" to the seafarer, shall continue to enjoy such
terms and conditions.
" (c) to pay on behalf of
each Seafarer contributions and fees at the
" rates shown in
Schedule 2 hereto to the Seafarers' International
" Welfare
Protection and Assistance Fund and to the Special Seafarers'
"
Section of the ITF. The contributions and fees shall be paid to the
"
ITF annually and in advance;
27
" (d) to display aboard the
Ship copies of the Special Agreement,
" the ITF Collective
Agreement and the ITF Blue Certificate to be
" issued under
Article 2 hereof in a prominent place to which each
"
Seafarer shall have access at all times; and
" (e) to grant to
representatives of the ITF and of trade union
" organisations
affiliated to the ITF free access to each Seafarer at all
"
reasonable times whether or not aboard the Ship, whether the Ship
"
is in berth or not.
" Article 2: the ITF
undertakes, having received and approved the
" copies of the
documents referred to in Article Kb) above, and received
"
the fees and contributions payable under Article 1 (c) above, to
issue
" and each year to renew an ITF Blue Certificate . . .
certifying that
" the Ship is covered by a Collective
Agreement acceptable to the
" ITF. . . . "
Following Articles 1 and 2 quoted
above there come four further Articles
numbered 3 to 7, the terms
of which it is not necessary to set out. Then,
on the second page
of the Agreement there appear two Schedules numbered
1 and 2
respectively. Schedule 1 contains a description of the ship.
Schedule
2 is in this form: —
"Schedule
2
" ITF SPECIAL SEAFARERS' SECTION
|
" Entrance fees 40 at US$15 per man |
US$ |
|
" Membership fees 40 at US$30 per man per year |
US$ |
|
" SEAFARERS' INTERNATIONAL WELFARE PROTECTION AND ASSISTANCE FUND 40 at US$162 per man per year |
US$ |
|
"TOTAL: |
US$8,280" |
Although the relevant sub-totals
were left blank in Schedule 2, it is
apparent that the total of
US$8,280 was made up of entrance and
membership fees in respect of
the Special Seafarers' Section of US$600 and
US$1,200
respectively, and contributions to the Fund of US$6,480.
The Typescript Agreement begins by
setting out the names and addresses
of the parties to it. It then
continues with the following heading and first
paragraph:-
" IN RESPECT OF THE LIBERIAN
FLAG
" TANKER ' UNIVERSE SENTINEL '
" The ITF confirms receipt
to-day of US$80,000 . . . which is
" accepted by the ITF as
to the one part of $8,280 for the Union
" Entrance Fees,
Annual Subscriptions and Welfare Fund Contributions,
" and as
to the other part of $71,720 as a discretionary trustee. The
"
beneficiaries are the Master, Officers, Engineers and crew members
on
" board on 28th July 1978."
Rule 2 of the Fund Rules provided : —
" The object of the Fund
shall be the financing of any such work
" as may be
sanctioned by the Executive Committee of the Federation
" for
the purpose of promoting, advancing or protecting by any such
"
means as the Executive Committee in their absolute discretion may
"
decide, the interests of seafarers generally or groups of
seafarers,
" national or otherwise, or of assisting
individual seafarers, or otherwise
" of serving seafarers'
interests."
Section 29(1) and (4) of the 1974 Act provide: —
" (1) In this Act ' trade
dispute ' means a dispute between employers
" and workers, or
between workers and workers, which is connected
" with one or
more of the following, that is to say—
" (a) terms and conditions of employment . . . .
28
" (4)
A dispute to which a trade union ... is a party shall be treated
"
for the purposes of this Act as a dispute to which workers ... are
"
parties."
The
dispute in the present case, in so far as it related to the payment
by
the shipowning company of US$6,480 by way of contributions to
the Fund,
was a dispute between an employer and a trade union. The
effect of
section 29(4) above is that the dispute concerned must
be treated as a
dispute between employers and workers for the
purposes of section 29(1). It
follows that the only issue to be
determined in relation to question (2) is
whether the dispute
between the shipowning company and the ITF about
the payment of
those contributions was, to use the words of section
29(1)(a),
connected with terms and conditions of employment.
It has
been established by authority that the expression " terms
and
"conditions of employment", as used in section
29(l)(a) of the 1974 Act,
is to be given the widest possible
construction: see BBC v. Hearn [1977]
1 WLR 1004 per
Lord Denning M.R. at p. 1010 and Roskill L. J., as he
then was, at
p. 1015. The relevant observations of Lord Denning M.R. in
that
case were expressly approved by your Lordships' House in the
recent
case of Hadmor Productions Ltd v. Hamilton [1982]
2 W.L.R. 322 in a speech
of Lord Diplock with which all the other
four members of the Appellate
Committee agreed. The effect of
giving the expression concerned the very
wide meaning which these
authorities show that it should be given is that
any arrangement
which affects, directly or indirectly, the benefits which a
worker
enjoys in connection with his employment, can properly be treated
as
a condition of such worker's employment for the purposes of
section
29(l)(a) of the 1974 Act, even though there is no
reference to such
arrangement, expressly or by incorporation, in
the contract under which the
worker is employed.
My Lords,
it appears to me to be crystal clear that the parties
themselves
regarded the dispute, in so far as it related to the
payment by the shipowning
company of contributions to the Fund, as
being a dispute connected with the
terms and conditions of
employment of those on board the ship, both those
on board her at
the time and those contemplated as being on board her
from time to
time in the future. I say that for two reasons. The first reason
is
to be found in the terms of the Special Agreement. The recital
numbered
3 in that agreement stated unequivocally that the purpose
of the parties
in entering into the agreement was to regulate the
conditions of employment
of all seafarers serving from time to
time aboard the ship. It is, in my
view, a necessary inference
from this that the parties, in agreeing to the
substantive
provisions of the agreement contained in Articles 1 to 7,
were
intending to give effect, directly or indirectly, to their
previously recited
purpose. The obligation of the shipowning
company to make contributions
to the Fund was imposed by paragraph
(c) of Article 1, which is sandwiched
between other obligations of
the shipowning company imposed by paragraphs
(a) and (b) of
Article 1 above and paragraphs (d) and (e) below. These
five
paragraphs of Article 1 must, in my view, be regarded as a
package of terms
imposed by the ITF on the shipowning company for
the benefit of those
who were then, or would be later, employed on
board the ship and, having
regard to the stated purpose of the
agreement, namely, the regulation of the
conditions of employment
of such persons, it must be inferred that the parties
intended
those paragraphs to form part of the process of giving effect to
that
purpose.
The second
reason is to be found in the terms of the first paragraph
of the
Typescript Agreement, which I also set out earlier. Here again
the
whole tenor of the paragraph is only consistent with the
conclusion
of a package deal in which both the payment of the
union entrance and
membership fees on the one hand, and the
payment of contributions to
the Fund on the other hand, are
treated as having the same quality. It
was conceded on behalf of
the shipowning company that its obligation
to pay union entrance
and membership fees came within the expression
"terms and
conditions of employment" as used in section 29(l)(a) of the
29
1974 Act. If that concession was
rightly made, as I consider that it was,
then it seems to me that
it is impossible to treat as having a different
quality the
closely linked obligation of the shipowning company to
pay
contributions to the Fund.
Two main arguments were, however,
advanced on behalf of the ship-
owning company in order to show
that, whatever the parties themselves
may have intended, the
obligation of the shipowning company to pay
contributions to the
Fund did not come within the expression "terms
"and
conditions of employment" as used in section 29(l)(a) of the
1974
Act. The first argument was that the obligation was not
contained in
the then current ITF Collective Agreement and was not
therefore
incorporated into the individual contracts of those on
board the ship.
The second argument was that there was nothing to
show that those on
board the ship would ever receive any benefit
from the contributions to
the Fund made by the shipowning company.
With the greatest respect to those
of your Lordships who think otherwise,
I do not find these
arguments convincing. So far as the first argument
is concerned,
it seems to me that it is inconsistent with the
established
principle, to which I referred earlier, that the
expression " terms and
"conditions of employment"
as used in section 29(l)(a) of the 1974
Act, should be given the
widest possible meaning. So far as the second
argument is
concerned, I accept that it cannot be established affirmatively
that
persons employed as seafarers on board the ship, either in July
1978
or subsequently, have benefited, or will necessarily benefit
in the future,
from the contributions made by the shipowning
company to the Fund.
On the other hand, the Fund has been
established and maintained for
the benefit of such persons, and is
funded solely by contributions from
shipowners. In these
circumstances it seems to me that the existence
of the Fund,
maintained by contributions from the shipowning company
here
concerned and many other shipowners upon whom the same obligation
to
contribute has been imposed, should be regarded as constituting
at
least a potential fringe benefit to workers on board the ship.
On the footing, firstly, that the
contributions to the Fund can fairly
be regarded as going to
maintain a potential fringe benefit for those on
board the ship,
and, secondly, that the fact that the shipowning company's
obligation
to make such contributions is not written into either the
ITF
Collective Agreement or the individual contracts of those
persons is not
of itself a reason for excluding such obligation
from the expression " terms
"and conditions of
employment" as used in section 29(l)(a) of the 1974
Act, I am
of opinion that such obligation can and should be categorised
by
the court, as it was by necessary implication categorised by the
parties
themselves, as a term or condition of employment of those
on board the
ship within the meaning of that statutory provision.
My Lords, the effect of the views
which I have expressed is
that the shipowner fails both on the
resultant trust point (question (1) and
on the duress point
(questions (2) and (3)). It follows that I would dismiss
the
appeal.
313903—2 Dd 8208150 C3 3/82
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