Dawson v Bell

The Court of Appeal dismissed the claimant's appeal against HH Judge Havelock-Allan QC's Mercantile Court judgment. The judge had rejected the claimant’s primary contention that he signed the Share Purchase Agreement (SPA) under economic duress and had also rejected a related tort claim for intimidation. The court confirmed the legal test for duress as requiring pressure that (i) produced compulsion or absence of practical choice and (ii) was illegitimate, and held that the judge’s factual findings — including that the claimant had bargaining power, had taken legal advice, had affirmed the SPA by subsequent conduct and that clause 4.1.5 of the December 2008 Shareholders’ Agreement was binding — defeated the duress and intimidation claims.

The court upheld the judge’s approach to the defendant’s counterclaim as assignee of the company for misuse of company funds: a combined directors’ loan account had been maintained and most disputed withdrawals were dealt with in that combined account, but on re‑consideration certain items were found not to have been allocated to that account and were recoverable. The judge’s arithmetic in his Addendum was accepted, producing a net judgment for the defendant. The Court of Appeal agreed that a contribution claim by the claimant against the defendant failed as unjust and inequitable.

The appeal concerned the dissolution of intertwined personal, property and business relationships between Stephen Dawson (appellant) and Laura Bell (respondent) following their separation and the winding up of their interests in Adwelsh Media Limited (AML). The appellant had sold his AML shares to the respondent under a Share Purchase Agreement (SPA) dated 27 October 2009 and agreed property transfers between two flats (Brewhouse and Little Lodge), together with related Declarations of Trust. When the respondent withheld part of the secondary payment under the SPA on the grounds that the appellant had overdrawn company funds, litigation followed.

Procedural posture: This was an appeal from HH Judge Havelock-Allan QC’s reserved Mercantile Court judgment (21 May 2014) and his Addendum judgment (26 November 2014). The judge had found in favour of the defendant overall after netting-off the parties’ claims and counterclaims. The appellant obtained permission to appeal to this Court of Appeal.

Nature of the claim and relief sought:

• The claimant sought to set aside the SPA for economic duress and to recover unpaid sums under the SPA; he also claimed damages for intimidation.
• The defendant counterclaimed, as assignee of AML, for misuse of company funds, unauthorised withdrawals and unauthorised credit card expenditure; she also relied on breaches of warranties and restrictive covenants and sought damages.
• The claimant also made a Part 20 contribution claim, seeking contribution from the defendant for sums he might be held liable to repay to AML.

Issues framed by the court:

• Whether the SPA was procured by illegitimate economic pressure (duress) or whether alleged threats amounted to actionable intimidation;
• Whether clause 4.1.5 of the 2008 Shareholders’ Agreement (deeming the claimant to have served a Transfer Notice on ceasing to be a director) was binding;
• Whether the defendant’s counterclaim for misappropriated funds succeeded and, if so, the correct accounting treatment given the combined directors’ loan account;
• Whether the claimant could recover contribution from the defendant under the Civil Liability (Contribution) Act 1978 or in equity.

Court’s reasoning:

• The Court reviewed the established tests for duress and unlawful intimidation and emphasised two elements: compulsion (absence of practical choice) and illegitimacy of pressure. It accepted the judge’s factual findings that although the claimant faced commercial pressure, he was not rendered without practical choice: he had legal advice, bargaining leverage, and subsequently affirmed the SPA by conduct (requests for payment, signing the Compromise Agreement and accepting parts of the deal). The judge’s finding that clause 4.1.5 was properly incorporated (having been available in draft and explained and with opportunity to take advice) was not disturbed.
• The Court therefore dismissed the duress and intimidation claims. The SPA remained enforceable in substance and only limited damages were awarded on the contract claim for unpaid sums.
• On the counterclaim the judge had carefully analysed company accounting, noting a combined directors’ loan account. He found a prima facie entitlement of AML to recover a modest net sum but, after the post-judgment Addendum analysis, concluded additional specific withdrawals were not allocated to the combined account and were recoverable. The Court of Appeal accepted the judge’s accounting exercise and his Addendum arithmetic.
• The contribution claim failed as not just and equitable: the defendant’s knowledge or acquiescence did not make it fair for her to contribute to liabilities reflecting money spent for the appellant’s exclusive benefit.

Wider context: The court commented on the rarity of voiding commercial bargains for lawful act duress and emphasised that claims of duress require careful factual evaluation of bargaining power, availability of advice and post‑agreement conduct.

Appeal dismissed. The Court of Appeal agreed with the trial judge that the claimant had not established economic duress or actionable intimidation. Clause 4.1.5 of the Shareholders’ Agreement was held to be binding and the claimant had affirmed the SPA by subsequent conduct. The judge’s careful accounting analysis of AML’s combined directors’ loan account and his Addendum identifying further recoverable items were upheld; the claimant’s contribution claim failed as unjust and inequitable.

Appeal from the Mercantile Court, Bristol District Registry (HH Judge Havelock‑Allan QC), reserved judgment delivered 21 May 2014 with an Addendum 26 November 2014. Appeal heard in the Court of Appeal (Civil Division) on 9 February 2016; judgment given 19 February 2016 (Neutral citation: [2016] EWCA Civ 96).