Newsam v Inland Revenue

Duress requires coercion of the claimant’s will which vitiates consent. Improper conduct, including withholding documents, is insufficient unless it caused the agreement to be made without true consent. Relevant considerations include protest, the availability of an adequate alternative remedy, independent advice and subsequent steps to avoid the agreement. An appellate court may reject an adjournment challenge where the judge considered the litigant’s ability to present the case and no specific prejudice or disadvantage is shown.

Mr Newsam appealed against Lawrence Collins J’s refusal to adjourn and his decision to strike out an application seeking annulment or rescission of a bankruptcy order. The application relied principally on alleged duress arising from the Inland Revenue’s withholding of documents before a compromise agreement was signed. Earlier proceedings had upheld the agreement and bankruptcy order. The central issues were whether the adjournment should have been granted and whether the newly relied-on material disclosed a triable issue that the withholding of documents had coerced Mr Newsam into contracting.

1. Application dismissed. The refusal to adjourn and the striking-out decision disclosed no arguable error warranting appellate intervention.
2. The court applied the formulation of duress in Pao On v Lau Yiu Long [1980] Appeal Cases 614. Duress is coercion of the will which vitiates consent. Commercial or economic pressure alone is insufficient.
3. Even assuming that the Inland Revenue had improperly or maliciously withheld relevant papers, that conduct did not establish duress. The necessary question was whether the withholding caused Mr Newsam to sign without true consent. His contemporaneous letter showed that he intended to sign and then seek to challenge the liability before the Commissioners or recover the papers. He therefore regarded alternative courses as available.
4. In determining whether consent was coerced, it is material to consider whether the claimant protested, had an adequate alternative legal remedy, received independent advice and later took steps to avoid the agreement. The evidence disclosed no triable issue on those matters.
5. There was no right to legal representation at the hearing of the application for annulment or rescission. Lawrence Collins J had considered Mr Newsam’s loss of advisers, the volume of documentation and his ability to represent himself. No particular disadvantage was identified.

• Court of Appeal (Civil Division): The application was dismissed.
• High Court: Lawrence Collins J refused an adjournment and struck out the application seeking annulment or rescission of the bankruptcy order.
• Earlier proceedings: Lloyd J made the bankruptcy order after reversing the Chief Registrar’s dismissal of the bankruptcy petition. Rimer J later dismissed an earlier application under the Insolvency Act 1986.