Borrelli v Ting [2010]
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Borrelli v Ting [2010] UKPC 21 revolved around the concept of economic duress, where both unlawful acts and lawful acts conducted in bad faith were found to constitute duress.
Ting, the Chairman of Akai, opposed a scheme of arrangement proposed by the liquidators after the company's collapse due to a sudden disappearance of assets. To secure Ting's consent to the scheme, the liquidators offered a settlement in which they agreed to drop any investigations and future claims against him. Subsequently, when the liquidators discovered Ting's misappropriation of company funds, they sought to sue him, arguing that the settlement was voidable due to duress.
The Privy Council established several principles related to duress. Lord Saville emphasised that duress involves obtaining agreement or consent through illegitimate means, which can include economic duress where one party exerts illegitimate economic or similar pressure on another. An agreement obtained through duress is considered invalid, giving the party subjected to duress the right to withdraw from the agreement.
In the current case, the Privy Council held that the settlement agreement was avoided, and duress was established. Lord Saville pointed out that Ting had acted unconscionably by failing to assist the liquidators, opposing the scheme without a valid reason, and resorting to forgery and false evidence. The finding suggested that both lawful acts (opposing the scheme and failing to assist the liquidators) and unlawful acts (forgery and giving false evidence) amounted to illegitimate pressure. The key factor was that these acts were conducted in bad faith, with the purpose of preventing Ting's misappropriation from being discovered.
Furthermore, the judgment highlighted the relevance of the lack of practical alternatives, indicating that the liquidators had no reasonable or practical alternative but to enter into the settlement agreement given Ting's conduct. This case underscores the nuanced considerations involved in determining economic duress and the significance of assessing the good faith of the parties involved.
Ting, the Chairman of Akai, opposed a scheme of arrangement proposed by the liquidators after the company's collapse due to a sudden disappearance of assets. To secure Ting's consent to the scheme, the liquidators offered a settlement in which they agreed to drop any investigations and future claims against him. Subsequently, when the liquidators discovered Ting's misappropriation of company funds, they sought to sue him, arguing that the settlement was voidable due to duress.
The Privy Council established several principles related to duress. Lord Saville emphasised that duress involves obtaining agreement or consent through illegitimate means, which can include economic duress where one party exerts illegitimate economic or similar pressure on another. An agreement obtained through duress is considered invalid, giving the party subjected to duress the right to withdraw from the agreement.
In the current case, the Privy Council held that the settlement agreement was avoided, and duress was established. Lord Saville pointed out that Ting had acted unconscionably by failing to assist the liquidators, opposing the scheme without a valid reason, and resorting to forgery and false evidence. The finding suggested that both lawful acts (opposing the scheme and failing to assist the liquidators) and unlawful acts (forgery and giving false evidence) amounted to illegitimate pressure. The key factor was that these acts were conducted in bad faith, with the purpose of preventing Ting's misappropriation from being discovered.
Furthermore, the judgment highlighted the relevance of the lack of practical alternatives, indicating that the liquidators had no reasonable or practical alternative but to enter into the settlement agreement given Ting's conduct. This case underscores the nuanced considerations involved in determining economic duress and the significance of assessing the good faith of the parties involved.
