Court of Appeal
Published Mar 14, 2007
Halpern and Another v Halpern and Others (No 2)
Before Lord Justice Waller, Lord Justice Sedley and Lord Justice Carnwath
Judgment April 3, 2007

It was not necessarily the case that a party wishing to obtain rescission of a contract on the ground of duress had to be able to provide counter-restitution. The Court of Appeal so stated, inter alia, when: (i) allowing an appeal by the defendants, Nochum Halpern, David Halpern, Bezalel Halpern, Akiva Halpern and Eshter Vaisfische, against a decision of Mr Justice Christopher Clarke in the commercial court ([2006] 2 All ER (Comm) 251) and (ii) allowing their appeal against a decision of Mr Nigel Teare, QC, sitting as a deputy Queen’s Bench Division judge ( The Times July 18, 2006; [2006] 3 WLR 946) on a preliminary issue whether rescission was available as a remedy for duress if substantial restitution could not be given.

The first appeal related, inter alia, to the applicable law of a compromise agreement between the claimants, Yisroel Halpern and Shmuel Halpern, and the defendants. The Court of Appeal held that the applicable law of the contract was English but that Jewish law could assist on matters of interpretation.

Mr David Berkley, QC and Mr Richard Selwyn Sharpe for the defendants; Mr Romie Tager, QC and Ms Juliette Levy for the claimants.

LORD JUSTICE CARNWATH said that the second appeal arose from the judge’s determination that a party could not avoid a contract procured by duress in circumstances where he could not offer the other party substantial restitution.

The judge had proceeded on the basis that all documents relating to the compromise had been destroyed by the defendants. It now appeared there was a triable issue as to what documents had been destroyed and what remedies were available.

The defendants abandoned the stance that duress at common law was distinguishable from undue influence at equity. They contended that the criterion of practical justice expounded in Erlanger v New Sombrero Phosphate Co ((1878) 3 App Cas 1218) applied to both and by that test counter-restitution was never impossible.

His Lordship did not accept that there was a special common law rule for duress. For the purposes of practical justice the primary objective might not always need to be to restore both parties to their previous position.

His Lordship would be inclined to agree with the judge that rescission for duress should be no different in principle from rescission for other vitiating factors.

However, the practical effect of counter-restitution, as explained in Erlanger, would depend on the circumstances of the case.

If the defendants were able to establish that their consent to the compromise agreement was procured by improper pressure, whether characterised as duress or undue influence, it would be surprising if the law could not provide a suitable remedy.

The form of the remedy, whether equitable or tortious, was a matter which could not sensibly be decided until the facts were known about the nature of the alleged improper pressure and the identity and significance of the documents destroyed.

The judge’s answer would be set aside.

Lord Justice Waller and Lord Justice Sedley agreed.

Solicitors: Simon Bergin, Stockport; Shammah Nicholls, Manchester.

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