Halpern & Anor v Halpern & Ors

A contract procured by duress is voidable, but the right to avoid it at common law requires the claimant to be able to provide counter-restitution. The requirement follows from the restorative nature of rescission and applies by analogy with fraudulent misrepresentation. Equity applies the same principle more flexibly, permitting practical justice where precise restoration is impossible. The fact that the defendant obtained the contract through wrongdoing does not remove the need to account for benefits received. Accordingly, inability to offer substantial restitutio in integrum prevents avoidance for duress.

The claimants sought damages for breach of a compromise agreement resolving an inheritance dispute. The defendants pleaded that the agreement had been procured by duress. A preliminary issue arose because the agreement required documents to be destroyed, making restoration to the pre-contract position impossible. The court had to decide whether a party could avoid a contract for common-law duress without being able to offer the other party substantial counter-restitution.

1. Disposition. The answer to the preliminary issue was no. A party cannot avoid a contract procured by duress where it cannot offer the other party substantial restitutio in integrum.
2. At common law, rescission for fraudulent misrepresentation required an ability to provide counter-restitution. The logic of rescission is restoration of the parties to the position they would have occupied had the contract not been made. That reasoning applies equally where the ground of avoidance is duress.
3. The fact that no authority had been found applying the requirement specifically to duress did not justify a different rule. The analogy between fraud and duress was supported by Barton v Armstrong [1976] AC 104. The restorative principles explained in Spence v Crawford [1939] 3 All ER 271 also applied.
4. Both common law and equity require counter-restitution, although equity applies the requirement more broadly and less strictly. Equity may grant relief where precise restoration is impossible if practical justice can be achieved, including by accounting for profits, deterioration and work performed.
5. The court did not need to decide whether equitable rescission takes effect by court order or by the claimant’s election. That assumed distinction did not alter the application of counter-restitution principles to common-law duress.