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You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> Universe Tankships Inc of Monrovia v International Transport Workers Federation (The Universe Sentinel) [1981] UKHL 9 (01 April 1981)
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Cite as: [1981] UKHL 9, [1983] AC 366, [1983] 1 AC 366

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JISCBAILII_CASE_CONTRACT

    Parliamentary Archives,
    HL/PO/JU/18/242

    Die Jovis 1° Aprilis 1982

    Upon Report from the Appellate Committee to whom
    was referred the Cause Universe Tankships Incorporated
    of Monrovia against the International Transport
    Workers' Federation and others, That the Committee
    had heard Counsel as well on Monday the 22nd as
    on Tuesday the 23rd, and Wednesday the 24th days
    of February last upon the Petition and Appeal of
    Universe Tankships Incorporated of Monrovia of 80
    Broad Street, Monrovia, Liberia, praying that the matter
    of the Order set forth in the Schedule thereto, namely
    an Order of Her Majesty's Court of Appeal of the
    10th day of July 1980 might be reviewed before Her
    Majesty the Queen in Her Court of Parliament and
    that the said Order might be reversed, varied or altered
    or that the Petitioners might have such other relief in
    the premises as to Her Majesty the Queen in Her
    Court of Parliament might seem meet; as also upon
    the Case of the International Transport Workers'
    Federation lodged in answer to the said Appeal; and
    due consideration had this day of what was offered
    on either side in this Cause:

    It is Ordered and Adjudged, by the Lords Spiritual
    and Temporal in the Court of Parliament of Her
    Majesty the Queen assembled, That the said Order of
    Her Majesty's Court of Appeal of the 10th day of
    July 1980 complained of in the said Appeal be, and the
    same is hereby, Reversed and that the Order of Mr.
    Justice Parker of the 2nd day of April 1980 be, and
    the same is hereby, Restored except so far as regards
    the words " This Court doth declare that the sum of
    $6,480.00 (six thousand four hundred and eighty
    dollars) paid by the Plaintiffs to the First defendants
    on 28th July 1978 and any monies now representing
    the same together with interest thereon be held by the
    First Defendants upon resulting trusts for the Plain-
    tiffs ": And it is further Ordered, That the Respondents
    do pay or cause to be paid to the said Appellants the
    Costs incurred by them in the Court of Appeal and
    also the Costs incurred by them in respect of the said
    Appeal to this House, the amount of such last-mentioned
    Costs to be certified by the Clerk of the Parliaments
    if not agreed between the parties: And it is also
    further Ordered, That the Cause be, and the same is
    hereby, remitted back to the Queen's Bench Division
    of the High Court of Justice to do therein as shall be
    just and consistent with this Judgment.



    HOUSE OF LORDS

    UNIVERSE TANKSHIPS INCORPORATED OF MONROVIA

    (APPELLANTS)

    INTERNATIONAL TRANSPORT WORKERS' FEDERATION
    AND OTHERS (RESPONDENTS)

    Lord Diplock
    Lord Cross of Chelsea
    Lord Russell of Killowen
    Lord Scarman
    Lord Brandon of Oakbrook


    Lord Diplock

    my lords.

    The facts that gave rise to this action, brought by the appellants C* the
    " Shipowners ") as owners of the Liberian tankship " Universe Sentinel"
    against the respondent trade union (ITF), present no novelty. They afford
    a typical example of the application by ITF and the affiliated national trade
    unions who are its members, of the policy of " blacking " vessels sailing under
    what ITF regards as " flags of convenience " unless the owners of the
    vessel comply with ITF's demands as to the rates of pay and other terms of
    employment of the crew and as to various other matters to which it will
    become necessary to advert in detail.

    Other examples of the way in which the blacking of flags-of-convenience
    vessels is carried out are to be found in the judgments in The " Camilla M."
    [1979] 1 Lloyd's Rep. 26 and N.W.L. Ltd. v. Woods [1979] 1 W.L.R. 1294.
    where the object sought to be achieved by the blacking policy and the reasons
    why it does not always command the support of the crews of vessels to which
    it is applied, are also discussed. Both of these, however, were cases in which
    an interlocutory injunction was sought by shipowners against trade union
    officials to restrain them from committing the tort of inducing port workers
    to break their contracts of employment by preventing or refusing to assist in
    enabling the blacked vessel to leave port; and the only issue of law before
    the court was whether the defendants were likely to establish that they were
    entitled to immunity from suit in tort by virtue of section 13(1) of the Trade
    Union and Labour Relations Act 1974—an issue that was decided in favour
    of the trade union officials by this House in N.W.L. Ltd. v. Woods. In
    those two cases it was necessary to identify the nature of the demands that
    ITF was making upon the shipowner as the price for obtaining the lifting
    of the blacking, but it was not necessary to examine the means by which
    compliance with those demands would be effected if the shipowner found
    himself compelled to succumb to them.

    What is novel in the instant case is that the action was brought after the
    Shipowners did succumb and is not brought in tort, but is an action to
    recover from ITF part of the moneys paid by them to ITF in order to have
    the blacking of their vessel lifted so as to enable it to leave the port of
    Milford Haven. Although a substantially larger sum was claimed in the
    courts below (with partial success), the only part of the Shipowners' claim
    which is the subject of appeal to your Lordships' House, relates to a sum
    of $6,480 paid as a contribution to a so-called Welfare Fund administered
    by ITF. This sum is sought to be recovered on one of two alternative
    grounds: the first is that it is the subject of a resulting trust in favour of the
    Shipowners, since the trusts upon which it was received from them by ITF
    were void; the second is that it is recoverable from ITF as money had and
    received, since it was exacted by subjecting the Shipowners to economic
    duress. To determine whether the Shipowners can succeed on either of these
    grounds calls for a close consideration of the contemporary documents
    relating to the payment, and of the rules of the Welfare Fund.

    My Lords, the judgment of Parker J. in the Commercial Court and that
    of the Court of Appeal (Megaw, Brightman and Watkins LJJ.), delivered
    by Lord Justice Megaw, appear consecutively in the report of the instant
    case [1980] 2 Lloyd's Rep. 523. Both judgments set out the facts briefly
    and contain lengthy quotations from the relevant documents; but in view

    2

    of the division of opinion between your Lordships as to what ought to be
    the fate of this appeal, I see no way of avoiding repetition of the greater
    part of such quotations here.

    The Shipowners are a Liberian company. The tankship which they
    owned, " Universe Sentinel," was of 269,092 tons d.w.t.: the crew consisted
    in the main of Asians employed at rates of pay substantially less than
    those upon which ITF insists, and are provided for in what it calls the
    ITF Collective Agreement. In July 1978, "Universe Sentinel" was on
    time charter to Texaco and arrived on 17th July at the Texaco terminal
    at Milford Haven to discharge her cargo there. On her arrival the Master
    was handed, by a representative of ITF, a copy of a standard form of
    document headed: "Conditions to be fulfilled before flag-of-convenience
    "vessels can be issued with ITF Blue Certificates". An ITF Blue
    Certificate, though this is nowhere spelt out in the documents, is well
    understood by shipowners, charterers and shippers, and by the constituent
    trade unions of ITF, to exempt a vessel sailing under a flag of convenience
    from being subject to the blacking policy of ITF. These conditions refer
    to a Special Agreement which it will be necessary to refer to in some detail,
    but the only extract from the conditions themselves which requires to be
    reproduced is paragraph 3 :

    " 3. The Special Agreement also covers the owners' contributions
    " to the Seafarers' International Welfare, Protection and Assistance
    " Fund. The contributions are US$162.— per man per year. The Fund
    " was set up to help provide welfare, social and recreational facilities
    " in ports around the world for seafarers of all nations, especially those
    " serving in flag-of-convenience ships, and is administered by an
    " international committee of representatives of ITF-affiliated unions."

    Parker J. placed considerable reliance on these words in deciding what I
    shall refer to as the trust point in the Shipowners' favour; but, for reasons
    which will appear, I think that he was wrong in doing so.

    The " Universe Sentinel " finished discharging on 18th July, but because
    of being blacked by tugboat crews, she was prevented from sailing until
    29th July, when the blacking was lifted in consequence of a meeting held
    at the offices of ITF in London on the previous day between representatives
    of the Shipowners and officials of ITF at which the Shipowners yielded
    to the demands of ITF that they should pay to ITF the sum of $80,000
    and enter into two agreements with ITF, viz.: one headed " Special
    " Agreement " on a standard printed form and the second in typescript (" the
    " Typescript Agreement").

    The Special Agreement, after setting out the parties, viz. the Shipowners,
    therein called " the Company ", and ITF, starts with recitals:

    " WHEREAS:

    " 1. the ITF is an independent trade union organisation comprising
    " fully autonomous trade union organisations in transport and allied
    " services throughout the world and members of the Special Seafarers'
    " Section of the ITF;

    " 2. the Company is the registered owner/manager of the Ship;
    " described in Schedule 1 hereto;

    " 3. the ITF and the Company desire to regulate the conditions of
    "employment of all seafarers (hereinafter individually called a
    ' Seafarer') serving from time to time aboard the Ship; ".

    I pause to say that recital 1 is not strictly accurate. Under its constitution
    membership of ITF is restricted to trade unions; there are no personal
    members; but in return for what is called an entrance fee and annual
    membership fee to what it describes as the Special Seafarers' Section (or
    Department), ITF does issue to seamen, who are not members of a national
    trade union affiliated to ITF, a membership card which entitles the holder to
    request assistance from any such affiliated trade union in whatever country
    he may find himself in need of it.


    3

    Article 1 of the Special Agreement needs to be set out in full:
    " The Company undertakes as follows:

    " a to employ each Seafarer in accordance with the terms of the
    " current ITF Collective Agreement for World Wide trading
    " (hereinafter called the ITF Collective Agreement) as amended
    " from time to time in accordance with Article S below;

    " b to incorporate the terms and conditions of the ITF Collective
    " Agreement into the individual contract of employment of each
    " seafarer and into the Ship's Articles and furnish copies of
    " these documents to the ITF. Any seafarer, enjoying terms and
    " conditions which are, taken as a whole, recognised by the ITF
    " as more favourable to the seafarer, shall continue to enjoy such
    " terms and conditions;

    " c to pay on behalf of each Seafarer contributions and fees at the
    " rates shown in Schedule 2 hereto to the Seafarers' International
    " Welfare Protection and Assistance Fund and to the Special
    " Seafarers' Section of the ITF. The contributions and fees
    " shall be paid to the ITF annually and in advance;

    " d to display aboard the Ship copies of the Special Agreement,
    " the ITF Collective Agreement and the ITF Blue Certificate
    " to be issued under Article 2 hereof in a prominent place to
    " which each Seafarer shall have access at all times; and

    " e to grant to representatives of the ITF and of trade union
    " organisations affiliated to the ITF free access to each Seafarer
    " at all reasonable times whether or not aboard the Ship, whether
    " the ship is in berth or not."

    Articles 2, 3 and 4 deal with the issue and withdrawal of the Blue Certifi-
    cate; while Article 5 entitles ITF, upon giving two months' notice, to change
    the rates of pay in the Collective Agreement and the rates of entrance and
    membership fees to the ITF Special Seafarers' Section and of contributions
    to the Welfare Fund referred to in Article 1c and set out in Schedule 2.
    Schedule 2 itself is as follows:

    " ITF SPECIAL SEAFARERS' SECTION

    " Entrance fees

    40 at US$15 per man US$

    " Membership fees

    40 at US$30 per man US$per year

    " SEAFARERS' INTER- " NATIONAL WELFARE" PROTECTION AND" ASSISTANCE FUND

    40 at US$ 162 per man US$per yea

    " TOTAL

    US$8,280.-

    " The sum of US$ is equivalent to

    " Received with thanks:

    (signed) BRIAN LAUGHTON

    on behalf of the ITF "

    Although the separate totals for the entrance and membership fees to
    the ITF Special Seafarers' Section are not filled in, simple arithmetic discloses
    that of the grand total of $8,280, the sum of $6,480 is attributable to the
    contribution to Seafarers' International Welfare Protection and Assistance
    Fund (" the Welfare Fund "); and this is the sum that the Shipowners seek
    to recover in their appeal to this House.

    The Collective Agreement, which is referred to in Article 1b, contains
    provisions as to rates of wages and other terms and conditions of employ-
    ment of a kind that are generally to be found in collective agreements
    negotiated between trade unions and employers. The Collective Agreement,
    as such, is not a legally enforceable contract because of section 18 of the


    Trade Union and Industrial Relations Act 1974; but Article 1b of the
    Special Agreement requires its terms and conditions to be incorporated
    in the individual contract of employment of each seaman, by whom it
    would be enforceable. New contracts incorporating, by reference, the
    Collective Agreement were, in fact, signed with most of the members of
    the crew on 29th July 1978, and " Universe Sentinel" was permitted to sail
    on that date.

    Only one of the provisions of the Collective Agreement requires citation:

    "All seafarers covered by this Agreement shall be either members
    " of an appropriate national trade union affiliated to the ITF or, in
    " the absence of any suitable organisation, members of the Special
    " Seafarers' Section of the ITF in which case the Company shall pay
    " on behalf of each seafarer an Entrance Fee of US $15 and a Member-
    " ship Fee of US $30 per annum, annually and in advance. The
    " Company undertakes to notify any crew changes made in the ship,
    " sending names, addresses, ranks and details of qualifications, together
    " with the appropriate Entrance and Membership fees to the ITF as
    " soon as possible after the crew changes are made. The Company
    " acknowledges the right of the ITF to appoint a liaison representative
    " from among seafarers serving on board the vessel covered by this
    " Agreement."

    It is to be noted that this is confined to entrance and membership fees to
    the Special Seafarers' Section of the ITF. By incorporating the provisions
    of the Collective Agreement in the contract of employment of the individual
    seaman, the Shipowners assume no obligation whatever to the seaman to
    make any contribution to the Welfare Fund.

    In addition to the demands by ITF, which are dealt with in the Special
    Agreement, shipowners, in order to obtain the lifting of the blacking, are
    required to pay, for distribution to each seaman concerned, the difference
    between the rates of pay provided for in the Collective Agreement and
    the lower rates which had been actually paid to the seaman since the date
    of his engagement on the vessel. It is mainly with this additional require-
    ment that the Typescript Agreement is concerned, while its terms were
    highly relevant to that part of the Shipowners' claim which is not the subject
    of their appeal to this House; this makes it unnecessary to refer to any
    other provisions of the Typescript Agreement, except those contained in
    the first paragraph :

    " The ITF confirms receipt today of US $80,000 (Eighty thousand
    " United States dollars) which is accepted by the ITF as to the one
    " part of $8,280 for the Union Entrance Fees, Annual Subscriptions
    " and Welfare Fund Contributions and as to the other part of $71,720,
    " as a discretionary trustee. The beneficiaries are the Master, Officers,
    '' Engineers and crew members on board on 28th July 1978."

    The sum of £71,720, referred to in this paragraph, was an estimate,
    which turned out to be inaccurate, of the difference between the actual and
    Collective Agreement rates of pay of each member of the crew of the
    " Universe Sentinel ", during the period between the date of his engagement
    under ship's articles and 29th July 1978. The remaining paragraphs of the
    Typescript Agreement deal with the machinery for ascertaining the detailed
    facts relating to each member of the crew, and for the adjustment of the
    sum paid or payable by the Shipowners when those facts have been
    ascertained.

    Lastly, I find it necessary to set out nearly all of what are described as
    the "Rules for Seafarers' International Assistance Welfare and Protection
    Fund":

    " 1. The Fund shall be known as the Seafarers' International
    " Assistance Welfare and Protection Fund. It is established under
    " the auspices of the International Transport Workers' Federation.

    " 2. The object of the Fund shall be the financing of any such
    " work as may be sanctioned by the Executive Committee of the

    5

    " Federation for the purpose of promoting, advancing or protecting
    " by any such means as the Executive Committee in their absolute
    " discretion may decide, the interests of seafarers generally or groups
    " of seafarers, national or otherwise, or of assisting individual seafarers,
    " or otherwise of serving seafarers' interests.

    " 3. The income of the Fund shall consist of contributions received
    " under agreements concluded on behalf of the Seafarers' Section of
    " the Federation with shipping undertakings or shipowners, the income
    " of investments mentioned in clause 5 of these Rules, and such other
    " monies as the Executive Committee of the Federation may from time
    " to time determine.

    " 4. The Fund shall be administered by the Fair Practices
    " Committee elected by the Seafarers' and Dockers' Sections of the
    " Federation, and the General Secretary of the Federation shall be
    " responsible to that Committee for the day to day management of
    " the Fund. The Fair Practices Committee may invite any person
    " representing such shipping undertakings and shipowners as shall have
    " entered into agreements to contribute to the Fund to act as a con-
    " sultant on the administration of the Fund; provided that there should
    " not at any time be more than one such consultant.

    " 5. The General Secretary of the Federation shall receive all
    " money paid to the Fund. Subject to the overriding authority of the
    " Executive Committee under clause 2 of these rules, he shall spend
    " such money in accordance with the directions of the Fair Practices
    " Committee, provided that no money belonging to the Fund shall be
    " spent otherwise than for the object of the Fund as defined in the
    " said clause 2. The General Secretary may invest, in accordance
    " with the directions of the Fair Practices Committee, any money
    " belonging to the Fund which, in the opinion of the Fair Practices
    " Committee, is not required for immediate expenditure for the object
    " of the Fund as defined as aforesaid."

    The references to the Seafarers' Section and the Dockers' Section appear-
    ing on these rules are references to two of the industrial sections into which
    the membership of ITF (consisting as it does of national trade unions of
    workers involved in all forms of transport) are divided. The powers of
    industrial sections are dealt with in Rule XIII of the Constitution of ITF.
    For present purposes, it is enough to say that the sections appear to be
    subject to the general control or tutelage of the Executive Board; and the
    only provision of Rule XIII that it is necessary to cite is sub-rule (1) under
    which, presumably, the Seafarers' Assistance Welfare and Protection Fund
    was created:

    " There shall be industrial sections, as defined in the Preamble of
    " this Constitution, to deal with matters concerning individual branches
    " of transport and allied activities. The Executive Board shall have
    " authority to set up such further sections or special departments as
    " deemed necessary to improve the services of the ITF to its affiliates
    " or to deal efficiently with particular activities or problems, and may
    " create or provide for special funds in connection with such sections
    " or departments. The Executive Board shall determine their terms
    " of reference and generally be authorized to guide their activities."

    Very shortly after " Universe Sentinel " had sailed, the Shipowners, on
    10th August 1978, demanded return of the $80,000 as money paid under
    duress and asserted that the Special Agreement and the Typescript Agree-
    ment were void upon that ground. Return of the money was refused by
    ITF and later in 1978 some 27 members of the crew assigned to the
    Shipowners their interest in the $71,720 estimated back pay of members
    of the crew from the date of their engagements referred to in paragraph 1
    of the Typescript Agreement. By the time the action came on for hearing
    before Parker J., some of these assignments had been withdrawn; but your
    Lordships are not now concerned with any claim by the Shipowners to
    recover any part of the $71,720, either by virtue of the assignments or as

    6

    money paid under duress. The Shipowners were held by Parker J., and
    by the Court of Appeal, to be entitled to recover an aliquot portion of
    that sum which was attributable to those assignments that were undisputed
    and there is no appeal to this House on that part of the case. The Ship-
    owners did not pursue, before Parker J., the claim that they had originally
    asserted to recover that part of the sum of $8,280 referred to in paragraph 1
    of the Typescript Agreement that was attributable to entrance and
    membership fees of members of the crew to the ITF Special Seafarers'
    Section. So that is how it comes about that all that is in issue in the
    appeal to this House is the $6,480 paid as a contribution to the Welfare
    Fund.

    Recovery of this sum, as I have already mentioned, is claimed upon one
    or other of two alternative grounds, the first of which is that it is subject to
    a resulting trust in favour of the Shipowners, as donors, since it was paid
    by them to ITF upon trusts that were void, because their purposes were
    not exclusively charitable.

    My Lords, there is a certain air of artificiality about treating the
    Shipowners as donors of money for trust purposes, when the only object
    that they had in mind in paying any money to ITF was to get the blacking
    of " Universe Sentinel " lifted, and thereafter to get the money back from
    ITF if they could; but for the purposes of determining what it is convenient
    to refer to as the trust point, one must treat the payment as having been
    " voluntary " in the sense that the Shipowners' consent to making it was
    not vitiated by duress, and one must ascertain the legal nature of the
    payment from the relevant documents, for no oral evidence was directed to
    the matter.

    I have had the advantage of reading the speech to be delivered by my
    noble and learned friend, Lord Russell of Killowen, which deals fully with
    the trust point. I agree with his reasoning and with the conclusion that he
    reaches, that the money was not held by ITF on any trust but was, in its
    legal nature, a contribution to the funds of ITF which ITF, by taking
    appropriate steps under its rules, could use for any purpose it thought fit.

    The Court of Appeal had reached the same conclusion. It is contrary
    to that of Parker J., who had based his opinion upon the assumption that
    the money had been paid by the Shipowners for the purposes of a trust,
    whose objects had been represented by ITF to be those referred to in
    paragraph 3 of the document handed to the Master of " Universe Sentinel"
    on 17th July 1978, which I have quoted above. Since the Shipowners were
    not, at that time, aware of the Rules of the Welfare Fund, there might have
    been a plausible argument in favour of the conclusion reached by Parker J.
    if the evidence had established that, in making the payment of $6,480 on
    28th July 1978, reliance had been placed by the Shipowners on the
    description of the Welfare Fund and its purposes set out in the document that
    had been handed to the Master; but no mention of this document, or of
    any reliance on it by the Shipowners, is to be found either in the pleadings
    or in the oral evidence of the Master, or of the representatives of the
    Shipowners who conducted the negotiations with ITF that resulted in the
    payment. So the trust point depends upon the other documents dealt with
    by Lord Russell of Killowen, and there is nothing that I can usefully add to
    what he will say about the legal effect of those.

    My Lords, I turn to the second ground on which repayment of the $6,480
    is claimed, which I will call the duress point. It is not disputed that the
    circumstances in which ITF demanded that the Shipowners should enter
    into the Special Agreement and the Typescript Agreement and should pay the
    moneys of which the latter documents acknowledge receipt, amounted to
    economic duress upon the Shipowners; that is to say, it is conceded that
    the financial consequences to the Shipowners of the " Universe Sentinel"
    continuing to be rendered off-hire under her time charter to Texaco, while
    the blacking continued, were so catastrophic as to amount to a coercion
    of the Shipowners' will which vitiated their consent to those agreements and
    to the payments made by them to ITF. This concession makes it unnecessary

    7

    for your Lordships to use the instant appeal as the occasion for a general
    consideration of the developing law of economic duress as a ground for
    treating contracts as voidable and obtaining restitution of money paid under
    economic duress as money had and received to the plaintiffs' use. That
    economic duress may constitute a ground for such redress was recognised,
    albeit obiter, by the Privy Council in Pao On v. Lau Yiu Long [1980] A.C.
    614. The Board in that case referred with approval to two judgments at
    first instance in the commercial court which recognised that commercial
    pressure may constitute duress: one by Kerr J. in Occidental Worldwide
    Investment Corporation
    v. Skibs A/S Avanti [1976] 1 Lloyd's Rep. 293,
    the other by Mocatta J. in North Ocean Shipping Co. Ltd. v. Hyundai
    Construction Co. Ltd.
    [1979] Q.B. 705, which traces the development of
    this branch of the law from its origin in the eighteenth and early nineteenth
    century cases.

    It is, however, in my view crucial to the decision of the instant appeal to
    identify the rationale of this development of the common law. It is not that
    the party seeking to avoid the contract which he has entered into with
    another party, or to recover money that he has paid to another party in
    response to a demand, did not know the nature or the precise terms of the
    contract at the time when he entered into it or did not understand the
    purpose for which the payment was demanded. The rationale is that his
    apparent consent was induced by pressure exercised upon him by that
    other party which the law does not regard as legitimate, with the
    consequence that the consent is treated in law as revocable unless approbated
    either expressly or by implication after the illegitimate pressure has ceased
    to operate on his mind. It is a rationale similar to that which underlies
    the avoidability of contracts entered into and the recovery of money exacted
    under colour of office, or under undue influence or in consequence of threats
    of physical duress.

    Commercial pressure, in some degree, exists wherever one party to a
    commercial transaction is in a stronger bargaining position than the other
    party. It is not, however, in my view, necessary, nor would it be appropriate
    in the instant appeal, to enter into the general question of the kinds of
    circumstances, if any, in which commercial pressure, even though it amounts
    to a coercion of the will of a party in the weaker bargaining position, may
    be treated as legitimate and, accordingly, as not giving rise to any legal
    right of redress. In the instant appeal the economic duress complained of
    was exercised in the field of industrial relations to which very special
    considerations apply.

    My Lords, so far as is relevant to this appeal, the policy of Parliament,
    ever since the Trade Disputes Act 1906 was passed to overrule a decision of
    this House, has been to legitimise acts done by employees, or by trade
    unions acting or purporting to act on their behalf, which would otherwise
    be unlawful wherever such acts are done in contemplation or furtherance
    of a dispute which is connected with the terms and conditions of employment
    of any employees. I can confine myself to the kind of acts and the particular
    subject matter of the trade dispute that was involved in the instant case, and
    I use the expression " legitimise " as meaning that the doer of the act is
    rendered immune from any liability to damages or any other remedy against
    him in a court of justice, at the suit of a person who has suffered loss
    or damage in consequence of the act; save only a remedy for breach of
    contract where the act is done in breach of a direct contract between the
    doer of the act and the person by whom the damage is sustained.

    The statutory provisions in force when the events with which this appeal
    is concerned took place, and which point to the public policy to which
    effect ought to be given by your Lordships, are chiefly contained in sections
    13, 14 and 29 of the Trade Union and Labour Relations Act 1974. The
    legislative history of these sections is referred to in the recent decision of
    this House in Hadmor Productions Ltd. v. Hamilton [1982] 2 W.L.R. 322.
    In terms they are confined to bestowing immunity from liability in tort; they
    do not deal with immunity in any other type of action. In the case of a

    8

    trade union such immunity is extended by section 14 to virtually all torts;
    in the case of individuals, it is extended by section 13 to defined classes of
    torts (which would include the blacking of the " Universe Sentinel") which
    are limited, not only in their nature, but also by the requirement that what
    would otherwise be the tortious act must be committed in contemplation or
    furtherance of a trade dispute as defined in section 29.

    The use of economic duress to induce another person to part with
    property or money is not a tort per se; the form that the duress takes may,
    or may not, be tortious. The remedy to which economic duress gives rise
    is not an action for damages but an action for restitution of property or
    money exacted under such duress and the avoidance of any contract that
    had been induced by it; but where the particular form taken by the economic
    duress used is itself a tort, the restitutional remedy for money had and
    received by the defendant to the plaintiff's use is one which the plaintiff is
    entitled to pursue as an alternative remedy to an action for damages in tort.

    In extending into the field of industrial relations the common law concept
    of economic duress and the right to a restitutionary remedy for it which is
    currently in process of development by judicial decisions, this House would
    not, in my view, be exercising the restraint that is appropriate to such a
    process if it were so to develop the concept that, by the simple expedient
    of " waiving the tort", a restitutionary remedy for money had and received
    is made enforceable in cases in which Parliament has, over so long a period
    of years, manifested its preference for a public policy that a particular
    kind of tortious act should be legitimised in the sense that I am using that
    expression.

    It is only in this indirect way that the provisions of the Trade Union and
    Labour Relations Act 1974 are relevant to the duress point. The immunities
    from liability in tort provided by sections 13 and 14 are not directly
    applicable to the Shipowners' cause of action for money had and received.
    Nevertheless, these sections, together with the definition of trade dispute
    in section 29, afford an indication, which your Lordships should respect, of
    where public policy requires that the line should be drawn between what
    kind of commercial pressure by a trade union upon an employer in the
    field of industrial relations ought to be treated as legitimised despite the
    fact that the will of the employer is thereby coerced, and what kind of
    commercial pressure in that field does amount to economic duress that
    entitles the employer victim to restitutionary remedies.

    My Lords, ITF does not suggest that the immunity from suit in most
    kinds of tort conferred upon trade unions by section 14 whether or not
    they are committed in contemplation or furtherance of a trade dispute,
    points to a public policy that trade unions should be immune from a
    restitutionary action for money had and received. Such a suggestion would
    not be sustainable. If Parliament had intended to give to trade unions,
    simply because they are trade unions, a wider immunity from suit than
    that for which section 14 provides, it would have done so. What ITF
    relies upon is the immunity from actions for particular kinds of tort given
    by section 13 to every person, whether a trade union or not.

    To qualify for immunity under section 13, an act, which would otherwise
    be actionable in tort, must be done in contemplation or in furtherance of
    a trade dispute; and for a dispute to qualify as a trade dispute within the
    meaning of section 39(1), it must be a dispute which is connected with one
    or more of a number of subject matters, of which the only one relied
    on by ITF in this appeal is: " terms and conditions of employment" of
    the crew of "Universe Sentinel". The members of the crew themselves
    were not in dispute with the Shipowners about the terms and conditions of
    their own employment, but this, for the reasons mentioned in N.W.L. Ltd.
    v. Woods (ubi sup.),
    is generally the case when ITF intervenes in order
    to carry out its policy in respect of vessels sailing under flags of convenience.
    Such disputes as did exist were disputes between the Shipowners and ITF
    acting upon its own behalf and not as representative of or agent for the
    members of the crew collectively or individually. But these disputes would


    9


    qualify as trade disputes under the definition in section 39, so long as they
    were connected with the terms and conditions of employment of the
    members of the crew of " Universe Sentinel". however unwelcome to those
    members the intervention of ITF in their affairs might be.

    My Lords, it was accepted by this House in Hadmor Productions Ltd. v.
    Hamilton (ubi sup. at p.331). which was decided after the judgment of the
    Court of Appeal in the instant case, that "terms and conditions of
    " employment" is a wide expression. As Lord Denning had put it in a
    passage in his judgment in B.B.C. v. Hearn [1977] I.C.R. 685, that was
    quoted with approval in the Hadmor case, the expression " may include not
    " only the contractual terms and conditions but those terms which are
    " understood and applied by the parties in practice, or habitually, or by
    " common consent, without ever being incorporated into the contract." A
    typical example of terms and conditions of employment that are not
    contractual which, although far from being exhaustive is relevant to this
    appeal, is supplied by provisions of a collective agreement which does not
    comply with the requirements of section 18(1) of the Trade Union and
    Industrial Relations Act 1974, and is accordingly conclusively presumed not
    to be intended to be a legally enforceable contract. By definition a
    " collective agreement" is an agreement or arrangement made by a trade
    union with an employer relating to one of the matters referred to in
    section 29(1), which include " terms and conditions of employment". The
    ITF Collective Agreement falls within this particular category. But wide
    as the expression " terms and conditions of employment" is, it is limited to
    terms which regulate the relationship between an employee and the person
    for whom he works, i.e. his employer. It does not extend to terms which
    regulate a relationship between an employer and some third party acting
    as principal and not as agent for an employee and for which no provision
    is made in the terms under which the employee works for the employer.

    " Connected with " also is a wide expression, but it, too, has its limits.
    In my view, it is not enough in order to create the necessary connection
    between a dispute relating to terms and conditions of employment of
    employees of a particular employer, and a demand made upon that employer
    by a trade union acting on its own behalf and not on behalf of employees
    working for the employer, that the demand should be made at a time
    when the trade union is negotiating a collective agreement relating to the
    terms and conditions of employment of those employees, and the employer's
    yielding to that demand is made a condition precedent to the lifting of
    the blacking additional to the condition precedent that the employer should
    also agree to the terms of the collective agreement insisted on by the trade
    union. To take an extreme example, if a trade union were to demand as a
    condition precedent to lifting a blacking that the employer should make a
    contribution to a particular political party favoured by the union, or to
    a guerilla group in some foreign country, such a demand whenever it was
    made would not, in my opinion, have the necessary connection with any
    dispute about terms or conditions of employment in furtherance of which
    the blacking was imposed.

    A preliminary observation appears to me to be called for as to the way
    in which the Special Agreement and the Typescript Agreement should be
    approached in dealing with the duress point. The court is not engaged in
    its normal task of construing an agreement in order to determine the common
    intention of the parties as expressed in the words that they have used.
    Ex hypothesi, and also ex concessis in the instant case, at the time that they
    entered into these agreements the will of the Shipowners was coerced. They
    had no choice as to the words in which the agreements were expressed; these
    were dictated solely by ITF. Recital 3 to the Special Agreement, which
    states the desire of the parties to regulate the terms and conditions of
    employment of the crew of the " Universe Sentinel", is not to be regarded
    as any assent by the Shipowners to the accuracy of the statement that
    everything that they were required by the Special Agreement to do was
    connected with the terms and conditions of employment of the crew, even
    if that would have been the true effect of the recital if the Special Agreement

    10

    had not been executed under duress—a matter on which I share the doubts
    expressed by Lord Russell of Killowen. The recital ought in my view to
    be wholly disregarded by a court which is called upon to determine whether
    a particular requirement is connected with terms or conditions of employment
    of the crew or not. In the same way the court would disregard a recital
    insisted on by ITF which said in terms that the Special Agreement was not
    induced by economic duress, or an express covenant by the Shipowners that
    they would not claim back any money paid to ITF pursuant to any term
    of it. Likewise the fact that ITF chose to put a demand for a payment that
    was not connected with terms and conditions of employment in the same
    clause of the Special Agreement as a demand for payment that was so
    connected cannot, in my view, alter the nature of the demand. To place a
    demand that is not legitimate in juxtaposition to a demand that is legitimate
    and to describe the two demands as a package deal is not, in my view,
    capable of legitimising the otherwise illegitimate demand.

    With these considerations in mind, I turn to the Special Agreement and
    Typescript Agreement, and in particular to Article 1, paragraphs a, b, and c
    of the Special Agreement. The Special Agreement is made by ITF as
    principal; it does not purport to be acting as agent for any member of the
    crew of " Universe Sentinel ", and this is confirmed by the provision in
    paragraph 1 of the Typescript Agreement that the excess back pay is to be
    held by ITF, not as agent for the members of the crew, but as trustee.
    Paragraphs a and b of Article 1 clearly relate to terms and conditions of
    employment of the crew of " Universe Sentinel". Paragraph c, however,
    deals with two distinct subject-matters: (1) the payment by the Shipowners
    on behalf of members of the crew employed by them of those crew-members'
    entrance and annual membership fees to the ITF Special Seafarers' Section,
    and (2) the payment by the Shipowners of contributions to the Welfare Fund;
    such contributions also being expressed to be paid on behalf of each member
    of the crew.

    As respects the first category of payments, entrance and membership fees
    to ITF Special Seafarers' Section, the payment of these fees by the
    Shipowners on behalf of each member of the crew of " Universe Sentinel"
    is made one of the terms and conditions of employment of such crew
    member by section 24 of the ITF Collective Agreement, and the crew
    member obtains, by virtue of his membership of the Special Seafarers' Section,
    benefits available to him on production of his membership card to which
    he would not otherwise be entitled. So the necessary connection with
    terms and conditions of employment is present as respects these payments;
    and the Shipowners have advanced no contention to the contrary.

    As respects the second category of payments, contributions to the Welfare
    Fund, to speak of these as being made " on behalf " of any member of the
    crew is inaccurate. All that it means, if anything, in relation to these
    contributions is that the number of members of the crew is a factor in the
    calculation of the total payment to be made, and this is not a legally
    accurate meaning which the expression " on behalf of " is capable of bearing.
    The Shipowners are given no authority under the ITF Collective Agreement
    or otherwise by any member of the crew to make any such payment as his
    agent, nor is any duty owed directly by a crew member to ITF to contribute
    to the Welfare Fund created by the Special Agreement, to which the only
    parties are the Shipowners and ITF. The crew member has no right to
    require the Shipowners to make the payment or to withhold the payment
    and to account to him for it by paying it to the crew member himself or
    expending it for some other purpose on his behalf. Put colloquially as well
    as legally, the contribution to the Welfare Fund provided for in Article 1c
    has nothing to do with him as a member of the crew; nor, with respect, do
    I see how the fact that Article 1d incorporates a requirement that the
    Special Agreement as well as the Collective Agreement should be displayed
    upon " Universe Sentinel" so as to be open to inspection by members of the
    crew is capable of converting into a term or condition of their
    employment an obligation assumed by the Shipowners to ITF that lacks
    the legal characteristics of a term or condition of employment.


    11


    My Lords, as pointed out in the speech of Lord Russell of Killowen. the
    contribution to the Welfare Fund was in law a contribution to the funds of
    ITF which, by taking appropriate steps under its rules, it could use for any
    purpose it thought fit. consistent with its objects, even though that purpose
    was designed to benefit exclusively employees engaged in other forms of
    transport and had nothing to do with employees engaged in transport by
    sea. It may be a reasonable expectation that some part of the fund, at any
    rate, will continue to be used for the benefit of seamen, whether they are in
    or out of a job at the time they seek to avail themselves of the benefit,
    although the accounts suggest that such expectation would have been
    justified in relation only to a relatively minor part of the fund. But what
    I regard as fatal to the contention that the demand for contributions to the
    Welfare Fund was connected with terms and conditions of employment is
    that there is nothing whatever to suggest the entitlement of a member of
    the crew of "Universe Sentinel" to take advantage of any benefits that
    might be provided for out of the fund would be in any way dependent upon
    the existence or non-existence of a relationship of employee and employer
    between the crew member and the Shipowners. The availability of such
    benefits, if any, as the Welfare Fund might provide, had nothing to do with
    the terms and conditions of the crew members' employment by the
    Shipowners, and a demand for payment to a fund is not, in my view,
    " connected with " the terms and conditions of employment of anyone at
    all; nor can such connection be created merely by accompanying the demand
    with another demand that is connected with a trade dispute.

    As Parker J. put it: "... it is inherently unlikely that it" [sc. Parliament]
    " can have intended to confer upon unions an unlimited power to extract
    " money provided only that what may be called a trade dispute demand was
    " made at the same time, and it is a clear principle of law that any deroga-
    " tion of the subject's rights under the law can only be achieved by express
    " words or necessary implication. In the present case the demand was, in
    " my judgment, paid under what amounts to duress."

    The Court of Appeal would have taken the same view and upheld the
    judgment of Parker J. on the duress point had they not felt that they were
    prevented from doing so by certain observations in the judgment of Lord
    Justice Roskill. as he then was, in B.B.C. v. Hearn. and of my
    own in my speech in N.W.L. Ltd. v. Woods. So far as it was stated
    by Roskill L.J. in B.B.C. v. Hearn that the expression " terms and conditions
    " of employment" has a " very wide meaning" I have already pointed
    out that there is nothing in the judgments in B.B.C. v. Hearn, or the
    reference to those judgments in Hadmor Productions v. Hamilton, that
    throws any doubt upon the correctness in law of the passage I have quoted
    from the judgment of Parker J. I must, however, take the blame for
    expressing myself in N.W.L. Ltd. v. Woods in terms that could be under-
    stood as being inconsistent with that passage in Parker J.'s judgment in the

    instant case.


    All that was said in the speeches in this House in N.W.L. Ltd. v. Woods
    was said in the context of an application for an interlocutory injunction
    against officials of ITF to restrain them from blacking a vessel sailing under a
    flag of convenience. It was held in that case. overruling The " Camilla M.",
    that in order for a dispute to be connected with terms and conditions of
    employment of the crew engaged upon a flag-of-convenience vessel, so as
    to attract the immunity from an action in tort conferred by section 13(1)
    of the Trade Union and Industrial Relations Act 1974, it was not necessary
    that the improvement of the terms and conditions of employment of the
    particular seamen who composed that crew should be the predominant
    purpose of the blacking. It was sufficient that changes in terms and condi-
    tions of employment of the crew was a matter on which the officials of
    ITF were insisting. In my own speech, after referring to the suggestion
    that the ultimate object of ITF's campaign of blacking vessels sailing under
    flags of convenience unless their crews are engaged on ITF standard
    articles at ITF standard rates of wages was to drive flags of convenience

    12

    (as they define them) off the seas, and saying that this would not prevent
    the immediate dispute from being a dispute connected with the terms
    and conditions of employment of the crew of the ship that was being
    blacked, I ended that paragraph of my speech with the words cited by the
    Court of Appeal in the instant case: " one of the main commercial attrac-
    " tions of registering vessels under flags of convenience is that it facilitates
    " the use of cheap labour to man them. So even the ultimate object of
    " ITF's campaign is connected with the terms and conditions of employment
    " of seamen."

    The Court of Appeal in the instant case treated these words as an
    expression of my opinion that any demand for money made by ITF upon
    a shipowner in the course of pursuing its ultimate objective of driving
    flags of convenience off the seas was, ipso facto, connected with terms and
    conditions of employment of seamen. It was certainly not my intention to
    suggest by those words that a demand, for instance, by ITF that the
    owner of a flag-of-convenience vessel should pay to the union's funds
    £1,000,000 as the sole condition to be fulfilled in order that the blacking
    should be lifted would entitle ITF's officers who were inducing the blacking
    to immunity from an action in tort by virtue of section 13(1). That such
    was not my intention is, I hope, apparent from later passages in my speech
    and certainly no support for it is to be found in either of the other speeches
    in the case.

    Section 13(1) was directly applicable to the remedy sought in N.W.L. Ltd.
    v. Woods. In the instant case it is only indirectly relevant as an indication
    of what kind of demand for money public policy requires should be excluded
    from giving rise to a restitutionary remedy by way of an action for money
    had and received, notwithstanding that the money was exacted in circum-
    stances that would otherwise have amounted to economic duress. As
    Parker J. did, and as the Court of Appeal would have done had they not
    been misled by an incautious phrase in my own speech in N.W.L. Ltd. v.
    Woods,
    I see nothing in the Trade Union and Industrial Relations Act 1974
    that indicates any Parliamentary intention that public policy does so require;
    and for the reasons that I have already given, I would allow this appeal on
    the duress point.

    In view of the difference of opinion between the members of this House
    upon the duress point it may be appropriate that before departing from
    the subject I should state that my opinion that the demand for a contribu-
    tion to the Welfare Fund is not legitimised so as to deprive the Shipowners
    of a restitutionary remedy would not necessarily be different if a requirement
    that the Shipowners should make such a contribution were incorporated
    in the ITF Collective Agreement. Sections 13 and 29 of the Trade Union
    and Labour Relations Act 1974 are not directly applicable to restitutional
    remedies; they are relevant only for such indications as they give of the
    public policy as to what kinds of demands ought to be regarded as legitimate
    in the field of industrial relations notwithstanding that compliance with them
    is induced by economic duress. The fact that ITF had also insisted that
    a term as to the requirement of payment to the Welfare Fund should be
    inserted in the ITF Collective Agreement would not, in my opinion, affect
    the public policy under which it is excluded from being legitimised.

    Lord Cross of Chelsea





    my lords,

    The facts of this case have been stated by my noble and learned friend,
    Lord Diplock. The appeal raises two points—the " trust" point and the
    " duress " point.

    In common with all your Lordships I think that the decision of the Court
    of Appeal on the " trust" point was right. The case for the appellant on

    13

    this point, as pleaded, was that the "Welfare" Fund is not part of the
    general assets of ITF but is held on separate, albeit void, trusts and that
    accordingly any contributions made to it by third parties become held on
    resulting trusts for the contributors. In my opinion, the rules of the
    Welfare Fund do not impress it with any trusts. It is simply a fund which
    ITF set apart from its other assets with a view to its use for specified
    purposes but which remains in law part of the general assets of ITF and can
    be used if ITF so decides for other purposes.

    The "duress" point raises the question whether the demand made by
    ITF that the appellants should make contributions to the Welfare Fund was
    a " legitimate " demand in the sense that although compliance with it was
    enforced by pressure that amounted to duress the appellants are. nevertheless,
    not entitled to recover the contributions as "money had and received".
    The fact that your Lordships do not agree on the answer to be given to this
    question, shows that it is a difficult one. Up to a point there was agreement
    between the parties. In the first place it was common ground between them
    that although none of the provisions of the Trade Union and Labour
    Relations Act 1974 have any direct application to this case, guidance as to
    where the line should be drawn in the field of industrial relations between
    " legitimate " and " illegitimate " demands by a Trade Union, can be found
    in the provisions of the Act giving immunity from liability in tort for
    certain acts done in contemplation or furtherance of a trade dispute, and
    that the demand in this case would rank as legitimate if a refusal by the
    appellants to comply with it would have given rise to a dispute between
    the appellants and ITF connected with the terms and conditions of
    employment of the crew of the " Universe Sentinel". Secondly, it was
    common ground that if a trade union were to make two demands, one of
    which was legitimate and the other not, the existence of the legitimate
    demand would not preclude the employer from recovering money paid under
    duress in compliance with the illegitimate demand. If, to take an example
    suggested by Lord Diplock, ITF had coupled its demand that the appellants
    should increase the wages of the crew with a demand that they should
    contribute to a fund to assist the guerillas in El Salvador, and the appellants
    had complied with both demands under duress, the fact that they could not
    recover the increase in wage payments would not preclude them from
    recovering the contributions to the guerilla fund. I would add, although
    on the facts of this case the point does not arise for decision, that I fully
    concur with the view expressed by my noble and learned friend in the
    concluding paragraph of his speech, that in the case supposed it would
    have made no difference to the right of the appellants to recover the
    payments to the guerilla fund that ITF had insisted, as a condition of
    lifting the " blacking " of the vessel, that an undertaking by the appellants
    to make the payments should be inserted in the contracts of employment of
    each member of the crew and that the appellants had, under duress, entered
    into such undertakings with each member. A trade union cannot turn a
    dispute which in reality has no connection with terms and conditions of
    employment into a dispute connected with terms and conditions of
    employment by insisting that the employer inserts appropriate terms into the
    contracts of employment into which he enters.

    Then, was the demand that the appellants should make contributions to
    the Welfare Fund, a demand a refusal to comply with which would have
    involved a dispute between ITF and the appellants connected with the terms
    and conditions of employment of the crew of the " Universe Sentinel "? I
    would begin by observing that the Fund is not properly described as a
    " Welfare " Fund at all. Rule 2 of the present rules says that the object
    of the Fund shall be " the financing of any such work as may be sanctioned
    " by the Executive Committee of the Federation for the purpose of
    " promoting, advancing or protecting by any such means as the Executive
    " Committee in their absolute discretion may decide, the interests of seafarers
    " generally or groups of seafarers, national or otherwise, or of assisting
    " individual seafarers, or otherwise of serving seafarers' interests." There
    is nothing to limit the expression " work " to " welfare " work. The Fund

    14

    could be expended if the Executive Committee thought fit in the work of
    driving " flags of convenience " from the seas. The accounts of the Welfare
    Fund for the years 1976, 1977 and 1978 were produced on discovery. Their
    effect is summarised in the following passage in the judgment of the Court
    of Appeal:

    " The accounts are headed ' Seafarers International Assistance,
    "' Welfare and Protection Fund', but in fact the income account
    " includes not only contributions to the Welfare Fund but also the
    " contributions payable for crew membership of the Special Seafarers'
    " Section. The latter contributions are relatively small, amounting in
    " 1978 to under 8 per cent of the total income. The total income of the
    " Welfare Fund in these years, in round figures, advanced from
    " £1,700,000 in 1976 to £3,500,000 in 1978; expenditure on the welfare
    " of seafarers progressed from £263,000 to £763,000; administration
    " expenses grew from £220,000 to £613,000; the surplus income added
    " to capital in each of these years went from £1,200.000 to £2.100,000,
    " being an accumulation of no less than £5,700,000 in the three years."

    It appears from Article 5 of the Special Agreement that the rates of
    contribution to the Welfare Fund are fixed by ITF and may be increased
    by it from time to time at its discretion. ITF called no evidence to explain
    the position disclosed by these accounts. The assets of the Welfare Fund,
    which at the end of 1978 were worth some £7,870,000 net are—as a matter
    of law—the property of ITF to use as it likes. No doubt, it would be only
    in very exceptional circumstances that ITF would apply any of those assets
    to purposes other than the purposes of the Seafarers' Section. But even if
    one assumes that in practice the Welfare Fund will always be applied for
    the purposes set out in Rule 2, I cannot see how a contribution to the
    Welfare Fund differs from a contribution to the general funds of a Seamen's
    Union—nor did I understand counsel for the respondents to contend that
    there was any difference. His reply to the point was to say " the appellants
    " admit that they cannot recover the crew membership fees; what difference
    " is there between them and the contributions to the Welfare Fund? ". To
    my mind there is a world of difference. By paying his membership fees and
    getting his membership card, the member secures a right to certain benefits
    and services from the union. These are analogous to the benefits obtained
    from a private health insurance scheme or a private pension fund, and the
    fees paid are presumably calculated with some reference to the expense of
    providing the benefits and services. If an employer defrays the expense of
    obtaining such benefits for his employees, his payments are in substance
    additional wages and the benefits obtained are properly described as " fringe
    " benefits " of the employment. By contrast, the members of the crew do
    not obtain any rights to benefit from the Welfare Fund as a result of
    the appellants' contributions to it. Their chance of receiving some benefit
    from the fund is just the same whether or not the appellants contribute to the
    fund or whether or not they remain in the employment of the appellants. All
    that one can say is that the contributions add to the resources of the union.
    It might, I suppose, be argued that any increase in the wealth of a trade
    union must be beneficial to its members. As a general proposition that
    might well be doubted; but even if it were universally true, the fact would
    not establish any connection between the demand and the terms and
    conditions of employment of the crew. I cannot bring myself to think that
    even in this day and age a demand that an employer shall make contributions
    to union funds at rates fixed from time to time by the union—for that, as I
    see it, is all that this demand amounts to—is a demand which can be
    legitimately enforced by duress. In fact, of course, the appellants did not
    enter into any agreements with the members of the crew to make the
    welfare contributions but. as T have already indicated, I do not think that if
    they had entered into such agreements under duress that circumstance would
    have precluded them from recovering the payments.


    I agree with my noble and learned friends, Lord Diplock and Lord
    Russell of Killowen, that the appeal should be allowed.

    15

    Lord Russell of Killowen

    my lords.

    This appeal is concerned with an episode in a substantially world-wide
    battle between the International transport Workers' Federation ("ITF")
    and owners of vessels sailing under flags of convenience. ITF is an
    unincorporated trade union the members of which consist of other trade
    unions in various countries and has its H.Q. in London. The facts and the
    circumstances leading to the payment to ITF by the appellant owners of
    the large tankship " Universe Sentinel" of the sum of US$6,480 presently
    in dispute have been outlined by my noble and learned friend Lord Diplock
    and are also to be found in the reports ([1980] 2 Lloyd's Rep. 523) of the
    case at first instance (Parker J.) and in the Court of Appeal (Megaw,
    Brightman and Watkins L.JJ.). The size of the sum now claimed suggests
    that the owners' appeal has the backing of other flag-of-convenience owners
    who may have paid or may be required to pay similar sums in similar
    circumstances.

    The owners' claim to repayment of the sum mentioned is based upon
    two contentions. The first contention is that the payment was made to
    ITF as trustee to be held upon certain supposed trusts, that those trusts
    were not as such valid or enforceable, and that consequently the sum was
    held by ITF upon trust for the owners under the principle of a resulting
    trust. The second contention was that the payment was extorted by ITF
    by the application of illegitimate and irresistible pressure in that the vessel
    was taken out of service as long as ITF continued to procure (as ITF
    would have done unless the owner complied with the ITF demands including
    payment of inter alia this sum) that tug service would not be available to
    enable the vessel to sail. Under this head the owner claimed repayment
    as money had and received.

    The first contention I will label the trust point: and the second conten-
    tion I will label the duress point. I deal first with the trust point which
    found favour with Parker J. but not with the Court of Appeal.

    In order to procure the cessation of blacking of the vessel by the tugs
    the owner was required by ITF to qualify for a Blue Certificate. The
    first document was served by ITF on the Captain of the vessel on 17th
    July 1978 and set out the conditions of such qualification. These were (1)
    the owners must sign with ITF a Special Agreement undertaking to apply
    to the crew all sections of the ITF Collective Agreement which were to
    cover the terms and conditions of employment of the crew. (2) Insofar
    as any member of the crew was not eligible to become a member of a
    union member of ITF, he must be enrolled in the ITF Special Seafarers'
    Section, which was set up by the seafarers' union members of ITF: such
    enrolment would entitle those enrolled to trade union representation
    although not a member of a member union, nor of course of the ITF the
    membership of which consisted of trade unions. These benefits of " outside
    " membership " were dependent upon payment on their behalf of entrance
    and annual fees of US$15 per man and US$30 per man per annum. The
    Collective Contract of employment required such payments to be made
    by the owner employer. Thirdly it was noted that the Special Agreement
    " also covers the owners' contributions to the Seafarers International
    " Welfare, Protection and Assistance Fund, [at] $162 per man per year.
    " The Fund was set up to help provide welfare, social and recreational
    " facilities in ports around the world for seafarers of all nations, especially
    " those serving in flag-of-convenience ships, and is administered by an
    " international committee of representatives of ITF-affiliated unions."

    It is, my Lords, important to note that the document last summarised
    is in no way relied upon by the Owners in the pleadings in support of the
    contention that the Welfare Fund was held upon or intended to be held
    upon trusts, as distinct from being a fund belonging to ITF at its disposal
    from time to time as the constituent members pursuant to the contract
    contained in the constitution of the unincorporated ITF should decide.


    16

    On the 28th July 1978 what is referred to as the Special Agreement was
    signed on behalf of the owners and ITF. The owners undertook to employ
    each seafarer in accordance with the terms of the ITF Collective Agreement
    and to incorporate its terms into the individual contract of each seafarer:
    and " (c) to pay on behalf of each seafarer contributions and fees at the
    " rates shown in Schedule 2 hereto to the Seafarers' International Welfare
    " Protection and Assistance Fund and to the Special Seafarers' Section of
    " the ITF. The contributions and fees shall be paid to the ITF annually
    " and in advance ". The Schedule described the payments to be made as
    " ITF Special Seafarers' Section Entrance Fees at 40 X US$15 per man,
    " 40 X membership fees at US$30 per man, and Seafarers' International
    " Welfare Protection and Assistance Fund 40 X US$162 per man per
    " year." This last head of contributions, as distinct from fees, amounted to
    US$6,480, the sum now in dispute. The owners paid the Special Agreement
    sums to ITF. (It is suggested on behalf of ITF—though this point relates to
    the duress point rather than to the trust point—that because the Special
    Agreement recited under (3) that " ITF and the [owners] desire to regulate the
    conditions of employment " of all seafarers . . . serving from time to time
    " aboard the Ship ", that meant that the parties had laid it down that
    everything that was agreed in the body of the agreement was a condition
    of such employment, including the agreement to contribute to the Welfare
    Fund. I cannot accept that suggestion. There is ample in the body of the
    agreement within the scope of the recital without embracing the contributions
    which are markedly not within the Collective Agreement.)

    On the same day the owners and ITF signed what is referred to as the
    Typescript Agreement. The function of this was to estimate and provide
    for the total due to members of the crew applying the new rates since
    signing on. I need say no more on this save to note that it shows that the
    amount of the estimate and of the Special Agreement sums (including the
    Fund contribution of US$6,480) were included in a sum of US$80.000
    paid to ITF and accepted as to US$6,480 for Welfare Fund contributions.

    Under the Points of Claim the owners alleged that under and by virtue
    of the Special Agreement ... the sum of US$6,480 was paid by the
    owners " upon the trusts of the Seafarers International Welfare Protection
    " and Assistance Fund " and that " the trusts of the Welfare Fund are
    " declared by a document entitled ' Rules for Seafarers International
    " ' Assistance Welfare and Protection Fund which was adopted by the ITF
    " ' in December 1958 '". Accordingly the trust point is squarely based
    on the allegation that the rules establish a trust fund to be held upon trusts
    which, however, must in law be held to be ineffective. Those rules have
    been set out in the speech of my noble and learned friend Lord Diplock.

    In connection with those rules it is convenient to note some points in
    the constitution of ITF. Congress is the supreme authority meeting normally
    every three years with delegates from the constituent unions members of
    ITF. Congress appoints members of the General Council, which exercises
    functions delegated to it by Congress and meets after each ordinary Congress
    and when called upon to do so by the Executive Board. Then there is the
    Executive Board which consists of 23 members elected by Congress from
    among the members of the General Council, plus the General Secretary.
    This Board, which was formally called the Executive Committee, is the
    governing body of ITF. The constituent members of ITF are divided into
    industrial sections of which one is the Seafarers' section and another the
    Dockers' section.


    In 1952 the Dockers' and Seafarers' sections met in Joint Conference
    with a view to a campaign to deal with flags-of-convenience ships problems.
    It was agreed to establish a Seafarers' International Welfare Fund as part
    of the campaign, and that six individuals should be appointed to administer
    the fund—as I understand it to be known as the Fair Practices Committee
    and formerly styled the Boycott Committee. At the same conference
    " Rules to govern the functioning of the Welfare Fund " were approved:
    these rules were replaced in December 1958. This replacement was the

    17

    work of the Executive Committee (Board) of ITF and in their final form
    have been already set out. Parker J. in concluding that here was an
    intended trust placed some reliance on the fact that the first draft of the
    1958 rules contained a clause to say that the Executive Committee might
    alter the rules or add to them at any time, which did not appear in the
    rules as adopted: in my opinion any such reliance in construing the rules
    is unsound and at least arguably impermissible.

    The accounts of the Fund are summarized in the judgment of the Court
    of Appeal thus:

    " We have before us the accounts of the Welfare Fund for the years
    " 1976, 1977 and 1978. The accounts are headed ' Seafarers
    " ' International Assistance. Welfare and Protection Fund'. but in fact
    " the income account includes not only contributions to the Welfare
    " Fund but also the contributions payable for crew membership of the
    " Special Seafarers' Section. The latter contributions are relatively
    " small, amounting in 1978 to under 8 per cent of the total income.
    " The total income of the Welfare Fund in these years, in round
    " figures, advanced from £1,700.000 in 1976 to £3,500,000 in 1978;
    " expenditure on the welfare of seafarers progressed from £263,000 to
    " £763,000; administration expenses grew from £226,000 to £613,000;
    " the surplus income added to capital in each of these years went from
    " £1,200,000 to £2,100,000, being an accumulation of no less than
    " £5,700,000 over the three years."

    I would however comment on that extract that what are referred to as
    " contributions" payable for crew membership of the Special Seafarers'
    Section are more accurately described as " fees ".

    My Lords, it is commonplace for a trade union to have, in addition to its
    general funds, special funds. Indeed in the constitution of ITF special
    funds are envisaged—see Rule IX (3) and Rule XIII (I). Essentially the
    internal affairs of the union, including the use and destination of any funds
    of the union, are dependent not upon the setting up of trust funds but upon
    the contract between the members found in the constitution.

    The Points of Claim, as I have already indicated assert (paragraph 10 c)
    that the rules of the Welfare Fund declare trusts, and it is upon that assertion
    that the trust point is based. In my opinion that is a false assertion: the
    fund is a fund of ITF subject for the time being to an earmarking subject
    to the contractual arrangements between the members under the
    constitution. The contribution of the owners to the ITF under this head
    is not a contribution to ITF upon trust, and is not in law different from a
    payment generally to ITF. That view may well not assist ITF in argument
    on the duress point, but in my opinion suffices to deny the trust point to the
    owners.

    I turn next to the second contention of the owners—the duress point. I
    have earlier in this speech in a parenthesis touched on this point by
    expressing my opinion that the third recital in the Special Agreement cannot
    be regarded as establishing that the Welfare Fund contribution relates to the
    terms and conditions of employment of the crew. For the rest, on this point,
    I content myself with adopting the speech of my noble and learned friend,
    Lord Diplock, and on that basis I would allow the appeal. I finally observe
    that that would have been the view of the four judges below had the Court
    of Appeal not, in my opinion, misconstrued a passage in a speech of my
    noble and learned friend, Lord Diplock in N.W.L. Ltd. v. Woods.


    Lord Scarman

    my lords,


    The decisive question in this appeal is whether in any circumstances, and
    if in any in what circumstances, an employer who has paid money to a
    trade union under the compulsion of actual or threatened industrial action
    can recover the money as having been paid under duress.


    18

    My noble and learned friend. Lord Diplock, has stated the facts and
    outlined the history of the litigation. It is nevertheless necessary for me. as
    I am respectfully dissenting from his conclusion that the appeal should be
    allowed, to state briefly those facts upon which I base my view that the
    appeal should be dismissed.

    The original claim of the appellant shipowner (" the owner ") against the
    respondent trade union (" the ITF ") was for: —

    (i) a declaration that two agreements (the "special agreement" and
    the " typescript agreement") are invalid;

    (ii) a declaration that the ITF hold on trust for the owner the sum of
    US$80,000 paid to the ITF by the owner pursuant to the special

    agreement;


    (iii) $80,000, a sum certain together with interest.

    There was also a claim for damages and for certain other declaratory relief.
    By the time the case reached your Lordships' House one issue alone
    remained, namely whether the ITF is liable to repay to the owner the sum
    of US$6,480, being that part of the $80,000 which constituted a contribution
    which the owner was required to make to the Seafarers' International
    Welfare, Protection and Assistance Fund (the " Welfare Fund") under
    the terms of the " special agreement". Parker J. held at first instance that
    the sum must be repaid. The Court of Appeal allowed the appeal of the
    ITF and held that it is irrecoverable.

    The appellant owner puts his case in two ways: —

    (1) the trust point: the sum of $6,480 was paid, it is submitted, upon
    the trusts of the Welfare Fund: those trusts are void and of no effect:
    accordingly the sum is held upon resulting trusts for the owner;

    (2) the duress point: the two agreements, it is submitted, were signed
    and the moneys paid under duress: accordingly the owner can recover the
    $6,480 as money had and received to his use.

    I have had the advantage of reading the opinions of my noble and learned
    friends Lord Cross of Chelsea and Lord Russell of Killowen on the trust
    point and I agree with them. There is, in my opinion, no resulting trust.
    It follows that to recover the sum of $6,480 the owner must show a common
    law right to recover the sum as money paid under duress.

    The facts follow a familiar pattern, although the relief and remedies sought
    are unusual in this area of litigation. Questions as to the validity of trusts
    are more frequently raised in the quiet waters of family settlements, gifts,
    and bequests to charity than on the turbulent seas navigated by the ITF.
    It is highly artificial to impute to this owner any intention of gift or
    settlement. His common law claim accurately reflects the true nature of
    his case; and it is, so far as I am aware, the first time that a shipowner
    has sought in the English courts to recover as money had and received a
    sum paid to a trade union to secure the release of his ship from a blacking
    procured by the trade union. The claim raises an important question as to
    the inter-relation of the law of duress with the statutory immunities enjoyed
    under English law by persons acting in contemplation or furtherance of
    a trade dispute.

    The owner, a company incorporated in Liberia, owns and operates the
    tankship "Universe Sentinel". 269,092 tons deadweight. The ship is
    registered in Liberia and sails under the Liberian flag. The ITF is an
    international federation of national trade unions which represent transport
    workers, including seamen, in many countries of the world. The ITF is
    a trade union for the purposes of the Trade Union and Labour Relations
    Act 1974 ("the Act"), even though it has no individual members. It
    maintains, however, a Special Seafarers' Section in which seafarers who are
    not eligible for membership of an ITF affiliate union may be enrolled. The
    purpose of the Special Section is to provide trade union representation for

    19

    crews of flag-of-convenience ships who have no national union which they
    can join.

    The policy of the ITF towards ships which sail under what it regards as
    flags of convenience has been described by my noble and learned friend,
    Lord Diplock. in N.W.L. Ltd. v. Woods [1979] 1 WLR 1294 at 1297C. It
    seeks to compel the owners of such ships to employ seamen on terms
    comparable to those contained in collective agreements negotiated by its
    affiliate unions for ships registered in Western Europe. To this end the
    ITF seeks to procure the "blacking" of flag-of-convenience ships whose
    owners have not accepted ITF terms.

    The " Universe Sentinel " was regarded by the ITF as sailing under a flag
    of convenience. On the 17th July 1978 she docked at Milford Haven. By
    the afternoon of the 18th July she was ready to sail. But she could not
    because she was "blacked". The ITF had procured those who were
    operating the tugs at Milford Haven to refuse, in breach of their contracts
    of employment, to make tugs available to assist the ship's departure from
    port.

    The blacking of the ship followed upon a presentation by an ITF
    representative to the master of the union's demands. These were contained
    in an ITF document entitled : —

    " Conditions to be fulfilled before flag-of-convenience vessels can be
    " issued with ITF Blue Certificates— effective from 1st September 1977."

    A blue certificate is a notice that terms of employment on board ship comply
    with ITF requirements. The conditions included a requirement that the
    owner sign a " special agreement " undertaking to apply all sections of the
    ITF Collective Agreement to all seafarers on board the ship; a requirement
    that any seafarers not eligible for membership of an ITF affiliate union
    must be enrolled in the ITF Special Seafarers' Section: a requirement that
    the owner pay each crew-member's union entrance fee and annual subscrip-
    tions : and a requirement that the owner contribute annually to the Welfare
    Fund which was described as having been set up " to help provide welfare,
    " social and recreational facilities in ports around the world for seafarers
    " of all nations, especially those serving in flag-of-convenience ships ". The
    document made it very clear that unless and until the owner signed the
    " special agreement " incorporating these requirements, a printed draft of
    which the ITF provided for the owner to fill in the blanks and sign, and
    paid the moneys demanded, no blue certificate would be issued and the
    blacking would continue.

    By the 29th July the owner had complied with these demands and the
    ship was able to sail. The owner had on the 28th signed two agreements
    and paid by cheque to the order of the ITF the sum of US$80,000.

    The first of the two agreements was the " special agreement ". It recited
    that " the ITF and the Company desire to regulate the conditions of employ-
    " ment of all seafarers . . . serving from time to time aboard the ship "
    and included seven articles of agreement and two schedules. I need quote
    only Article 1 (c) and Schedule 2 : —

    " Article 1 ...

    " c to pay on behalf of each Seafarer contributions and fees at the
    " rates shown in Schedule 2 hereto to the Seafarers' International
    " Welfare Protection and Assistance Fund and to the Special Seafarers'
    " Section of the ITF. The contributions and fees shall be paid to the
    " ITF annually and in advance; "

    " Schedule 2

    .

    " ITF SPECIAL SEAFARERS' SECTION


    "Entrance fees

    40 at US $15 per man US $

    "Membership fees

    40 at US $30 per man per year US $ .

    " Seafarers' International Welfare Protection and Assistance Fund

    40 at US $162 per man per year US $

    " Total

    US $8280 "


    The $6,480 now claimed is the total of the contributions to the Fund included
    in the $80,000 paid to the Union.

    The second agreement (the " typescript agreement", so called to
    distinguish it from the printed draft of the special agreement) confirmed
    receipt of the $80,000 and included provisions for calculating the wages and
    other benefits due to crew-members under the ITF Collective Agreement.

    In his written case the owner has, in my view correctly, summarised the
    effect of these transactions as follows: —

    1. he yielded to the demands made upon him as being the only means
      open to him of regaining the use of his ship;

    2. the loss of use of his ship was to him so disastrous that he had no
      practical option but to submit;

    3. the acts done by the ITF to deny him the use of his ship were,
      subject to any statutory immunity which the ITF might enjoy, tortious.

    In a sentence, he had no choice but to submit to the economic pressure
    applied by the prima facie unlawful acts of the union. The ITF, as I
    understand their case, do not challenge that such was the effect of what
    they did but deny that they acted unlawfully or that their pressure was
    illegitimate. They rely on the policy of the law granting statutory immunity
    from tortious liability to persons acting in contemplation or furtherance
    of a trade dispute; section 13(1) of the Act as amended in 1976.

    The issue between the parties is a narrow one. Was the dispute over
    the contributions to the Welfare Fund a trade dispute within the meaning
    of section 29 of the Act? The owner conceded that, if it was, the moneys
    paid would be irrecoverable. The issue turns upon analysis of what the
    parties agreed and upon the proper construction of section 29 of the Act.

    Before turning to this issue, it is necessary to state, albeit very briefly,
    my view as to the nature of the modern law of duress.

    It is, I think, already established law that economic pressure can in law
    amount to duress; and that duress, if proved, not only renders voidable a
    transaction into which a person has entered under its compulsion but is
    actionable as a tort, if it causes damage or loss: Barton v. Armstrong
    [1976] AC 104, and Pao On v. Lau Yiu Long [1980] AC 614. The
    authorities upon which these two cases were based reveal two elements in
    the wrong of duress: —

    1. pressure amounting to compulsion of the will of the victim; and

    2. the illegitimacy of the pressure exerted.

    There must be pressure, the practical effect of which is compulsion or the
    absence of choice. Compulsion is variously described in the authorities
    as coercion or the vitiation of consent. The classic case of duress is,
    however, not the lack of will to submit but the victim's intentional submission
    arising from the realisation that there is no other practical choice open
    to him. This is the thread of principle which links the early law of duress
    (threat to life or limb) with later developments when the law came also
    to recognise as duress first the threat to property and now the threat to a
    man's business or trade. The development is well traced in Goff and Jones,
    The Law of Restitution, 2nd edition, chapter 9.

    The absence of choice can be proved in various ways, e.g. by protest,
    by the absence of independent advice, or by a declaration of intention to
    go to law to recover the money paid or the property transferred: see
    Maskell v. Horner [1915] 3 K.B. 106. But none of these evidential matters

    21

    goes to the essence of duress. The victim's silence will not assist the bully,
    if the lack of any practicable choice but to submit is proved. The present
    case is an excellent illustration. There was no protest at the time, but
    only a determination to do whatever was needed as rapidly as possible to
    release the ship. Yet nobody challenges the judge's finding that the
    owner acted under compulsion. He put it thus:

    " It was a matter of the most urgent commercial necessity that the
    " plaintiffs should regain the use of their vessel. They were advised
    " that their prospects of obtaining an injunction were minimal, the
    " vessel would not have been released unless the payment was made,
    " and they sought recovery of the money with sufficient speed once
    " the duress had terminated."

    The real issue in the appeal is, therefore, as to the second element in the
    wrong duress: was the pressure applied by the ITF in the circumstances
    of this case one which the law recognises as legitimate? For, as Lords
    Wilberforce and Simon of Glaisdale in Barton v. Armstrong, supra, p.121
    said:

    "... the pressure must be one of a kind which the law does not

    " regard as legitimate."

    As the two noble and learned Lords remarked doc. cit.), in life, including
    the life of commerce and finance, many acts are done "under pressure,
    "sometimes overwhelming pressure": but they are not necessarily done
    under duress. That depends on whether the circumstances are such that
    the law regards the pressure as legitimate.

    In determining what is legitimate two matters may have to be considered.
    The first is as to the nature of the pressure. In many cases this will be
    decisive, though not in every case. And so the second question may have
    to be considered, namely, the nature of the demand which the pressure is
    applied to support.

    The origin of the doctrine of duress in threats to life or limb, or to
    property, suggests strongly that the law regards the threat of unlawful
    action as illegitimate, whatever the demand. Duress can, of course, exist
    even if the threat is one of lawful action: whether it does so depends
    upon the nature of the demand. Blackmail is often a demand supported
    by a threat to do what is lawful, e.g. to report criminal conduct to the
    police. In many cases, therefore, " what [one] has to justify is not the
    " threat, but the demand ..." Lord Atkin, Thome v. Motor Trade
    Association
    [1937] A.C 797, 806.

    The present is a case in which the nature of the demand determines
    whether the pressure threatened or applied, i.e. the blacking, was lawful
    or unlawful. If it was unlawful, it is conceded that the owner acted under
    duress and can recover. If it was lawful, it is conceded that there was no
    duress and the sum sought by the owner is irrecoverable. The lawfulness
    or otherwise of the demand depends upon whether it was an act done in
    contemplation or furtherance of a trade dispute. If it was, it would not
    be actionable in tort: section 13(1) of the Act. Although no question of
    tortious liability arises in this case and section 13(1) is not, therefore, directly
    in point, it is not possible, in my view, to say of acts which are protected
    by statute from suit in tort that they nevertheless can amount to duress.
    Parliament having enacted that such acts are not actionable in tort, it
    would be inconsistent with legislative policy to say that, when the remedy
    sought is not damages for tort but recovery of money paid, they become
    unlawful.

    In order to determine whether the making of the demand was an act
    done in contemplation or furtherance of a trade dispute, it is necessary to
    refer to section 29 which sets out the statutory meaning of " trade dispute ".

    The issue therefore is reduced to the one question. Was the demand for
    contributions to the Welfare Fund connected with one or more of the
    matters specified in section 29 of the Act? It is common ground that unless

    22

    the demand was connected with " terms and conditions of employment"
    it was not within the section.

    Parker J. found it " plain " that a dispute about payments to the ITF
    for the Welfare Fund would not be connected with any of the matters
    mentioned in section 29. The Court of Appeal would have been disposed
    to take the same view, if they had not felt that they were precluded from
    doing so by the guidance given in B.B.C. v. Hearn [1977] 1 W.L.R. 1004,
    by Roskill L.J. at p.1015 and in N,W.L. v. Woods, supra, by Lord Diplock
    at p. 1302. While I am prepared to accept, for the reasons given by my
    noble and learned friend, Lord Diplock, that the Court of Appeal misunder-
    stood the guidance given in those two cases, it does not follow that the
    payments to the Welfare Fund were unconnected with the terms and
    conditions of employment of the crew-members of the ship.

    It is not necessary to spend time on the construction of section 29. It
    has been accepted since B.B.C. v. Hearn that "terms and conditions of
    " employment" is a phrase of wide meaning and includes not only the
    rights but also the customary benefits and reasonable expectations provided by reason
    of his employment to the employee by his employer. But it is said that in
    this case the employer's obligation was to the union, not to the employee.
    The argument may be summarised as follows: —

    1. the crew-members are not obliged to make the contributions, which
      are an exaction by the ITF from the owner and not an undertaking by
      the owner to discharge an obligation owed by crew-members to their
      union;

    2. unlike union entrance fees and annual subscriptions, they are not
      mentioned in the Collective Agreement;

    3. they are not benefits made available by an employer expressly,
      impliedly, or by customary practice to his employee, but merely contribu-
      tions exacted by a trade union from an employer to its funds;

    4. if the contributions are of any benefit to seafarers on board the
      ship, the benefit is marginal, if not infinitesimal;

    5. in so far as the Fund is beneficial to anyone other than the union
      whose fund it is, it benefits all seafarers without anything special or
      exclusive to those employed on the " Universe Sentinel ".

    The demand that the special agreement be signed was one which certainly
    related to the terms and conditions of employment on board the ship.
    The parties were well aware that the Special Agreement was, as recited,
    intended to regulate the conditions of employment: and its terms were
    such that it clearly did specify the terms and conditions on which crew
    members were to be employed. But did the demand for contributions to
    the Welfare Fund relate to their terms and conditions of employment?
    The question cannot be answered save by an examination of the circum-
    stances in which it was made.

    It is of some significance, though not in itself decisive, that the demand
    is to be found in the same set of documents as the other demands as to
    rates of pay and the payment of union fees which were indisputably
    connected with terms and conditions of employment. However, it would
    be wrong (quite apart from any question of duress) to adopt towards the
    documents of agreement in this case the strict approach which the law
    requires in determining the true construction of a commercial contract.
    What calls for analysis and explanation is the nature of the demand. And
    this can only be understood by a common-sense approach, after considering
    such ancillary questions as whether the demand was made merely for the
    union's benefit or was made for the benefit, or on behalf, of the workers
    whose terms and conditions of employment the union was admittedly
    seeking to regulate by the documents which contain the demand.

    The demand was expressed to be made " on behalf of each seafarer "
    on board ship. It was for contributions to a fund which, though not a
    trust fund, existed, as a matter of contract between the affiliate unions of
    the ITF, for the benefit of seafarers. There was no indication in the

    23

    evidence that the ITF had any intention of scrapping the Fund or going
    back on their word to apply the payments in the manner and for the
    purpose stated in the Special Agreement. I have no doubt that their
    intentions in regard to the Fund were as set out in the " Blue Certificate
    " Conditions " and the Special Agreement. There is certainly no evidence
    to the contrary: and it would be unjust to the point of cynicism to impute
    to the ITF any intention other than to use the Fund for the purpose set
    forth in those conditions.

    I turn, therefore, to the five points enumerated above. Do they constitute
    a case against the view that the obligation accepted by the owner under
    the pressure of blacking his ship to contribute to the Fund was related
    to the terms and conditions of employment on board the ship?

    (1) and (2). The fact that there is no obligation upon crew members
    to contribute to the Fund proves nothing. The demand upon the owner
    to contribute was made by the union for the benefit of the crew and on
    their behalf and incorporated in the Special Agreement. Each seaman
    secured a written contract, the terms of which were "the current ITF
    " Collective Agreement, brought into force by the Special Agreement . . . ".
    The owner was obliged to display aboard the ship copies of the Special
    Agreement, the ITF Collective Agreement and the Blue Certificate in a
    prominent place accessible to all seamen. Bearing in mind the very wide
    meaning given by the law to terms and conditions of employment (see
    B.B.C. v. Hearn, supra), I find it totally unreal to infer that because the
    seamen are themselves not obliged to contribute to the Fund the obligation
    accepted by the owner to contribute " on behalf of each seafarer " was
    not an obligation related to the conditions of employment. The owner
    has undertaken, albeit under pressure, to make payments on behalf of each
    seaman which could be of benefit to him: and the undertaking was
    recognised as a term of the total bargain between the union and the owner
    on the basis on which the seamen were to be employed. Further, it can
    be of no importance that the Collective Agreement makes no mention of
    the obligation, when it is incorporated in the Special Agreement which is
    not only mentioned in the seaman's contract but has to be published on
    board the ship.

    Finally, could it be said, I ask, that the obligation to contribute "on
    " behalf of each seafarer" to the Fund would not be a condition of
    employment if it had been mentioned in the ITF Collective Agreement?
    I suggest not. And, if it be capable of being a condition of employment,
    I would think its presence in the Special Agreement, of which each seaman
    had notice, would constitute sufficient notice to make its absence from
    the ITF Collective Agreement immaterial.

    (3) - (5). It is a necessary part of the immediately preceding argument
    that payments to the union for the Fund were made on behalf of crew-
    members and were intended to be for their benefit. The Fund is governed
    by rules which the ITF, if it acts in accordance with the rules, can amend.
    The objects of the Fund, as defined by the rules, are very wide (" promoting
    "... by any such means as the Executive Committee in their absolute
    " discretion may decide, the interests of seafarers ": Rule 2): and there
    is no legal principle to prevent the ITF, if it acts constitutionally, from
    winding up the Fund and transferring its substantial cash assets to itself.
    But the Fund does exist: it is used to provide amenities in many ports for
    seamen: there is no indication that the union has any present intention
    other than to maintain the Fund in the interests of seafarers: and without
    contributions obtained from owners there would be no Fund available
    for their welfare. I am not prepared, on the evidence, to find that the
    payment of contributions to the Fund is of no benefit to seafarers in
    general, or to the crew-members of this ship, even though I recognise that
    some may never benefit from it.

    For these reasons I conclude that the demand for contributions related
    to the terms and conditions of employment on the ship, and, if it had been
    resisted by the owner, would have led to a trade dispute. Blacking the

    24

    ship in support of the demand was, therefore, not actionable in tort. It
    was, accordingly, a legitimate exercise of pressure and did not constitute
    duress. The owner cannot recover the contributions. I would dismiss the
    appeal.

    Lord Brandon of Oakbrook

    my lords,

    This appeal arises out of the blacking at the port of Milford Haven in
    July 1978 of the tankship " Universe Sentinel", which I shall call " the
    " ship ". The ship was owned by the respondent corporation, which I shall
    call " the shipowning company ". The blacking, which took the form of
    a refusal by tugs' crews to give to the ship the assistance which she needed
    in order to leave the port, was instigated by the appellant federation, which
    I shall call "the ITF", in the course of its long-continuing campaign
    against what it regards as " flag of convenience " ships and their owners.

    By the 28th July 1978, as a result of the blacking, the ITF had compelled
    the shipowning company, as the price of putting an end to the severe
    financial loss caused to it by the detention of the ship, to comply with
    two demands presented to it by the ITF. The first demand was that the
    shipowning company should enter into two written agreements with the
    ITF relating to improvements in the pay and other terms and conditions
    of employment of those on board the ship. Those agreements have been
    called " the Special Agreement" and " the Typescript Agreement"
    respectively. Their effect was to oblige the shipowning company to substi-
    tute for the rates of pay and other terms and conditions of employment
    prescribed by the existing contracts of employment of those on board the
    ship the higher rates of pay and improved other terms and conditions of
    employment, approved by the ITF and laid down by it in what is known
    as the ITF Collective Agreement.

    The second demand was that the shipowning company should pay forth-
    with to the ITF the sum of US$80,000. This sum was made up of three
    separate items: first US$71,720, being an estimate of the back-pay due
    to those on board the ship on the footing that the agreed higher rates of
    pay should be applied retrospectively; secondly, U.S.$1,800 in respect of
    entrance and membership fees payable by those on board the ship to the
    Special Seafarers' Section of the ITF; and, thirdly, U.S.$6,480 paid by
    way of contributions to a fund of the ITF known as the Seafarers' Inter-
    national Welfare Protection and Assistance Fund, which I shall call " the
    " Fund ".

    Following compliance by the shipowning company with the two demands
    referred to above, the blacking of the ship was lifted, the necessary tug
    assistance became available and the ship, which had been detained in the
    port of Milford Haven for about ten days, left that port and resumed her
    interrupted voyage.

    It had been the intention of the shipowning company all along, while
    acceding to the ITF's demands in order to obtain the release of the ship,
    to claim back later by legal proceedings the sum of U.S.$80,000 which it
    had been compelled to pay. In accordance with that intention the ship-
    owning company subsequently began an action against the ITF and one
    of its officers in the Commercial Court, claiming inter alia on various
    legal grounds repayment of the whole or part of the sum of U.S.$80,000
    which had been exacted from it.

    The action was tried by Parker J. and, either before or in the course
    of the trial, the matters in dispute between the shipowning company and
    the ITF were narrowed down to four questions of which only the first
    three are now material. These three questions were:

    (1) Was the shipowning company entitled to recover back from the
    ITF the sum of U.S.$6,480 which it had paid by way of contributions

    25

    to the Fund, on the ground that such sum was paid for the purposes of
    a void trust and was therefore held by the ITF on a resulting trust for
    the benefit of the shipowning company?

    1. Was the dispute between the shipowning company and the ITF,
      in so far as it related to the payment of the sum of U.S.$6,480 by way of
      contributions by the shipowning company to the Fund, a trade dispute
      within section 29(1) of the Trade Union and Labour Relations Act 1974
      (" the 1974 Act")?

    2. If the answer to question (2) was in the negative, was the payment
      of the sum of U.S.$6,480 induced by duress, and therefore recoverable
      as money had and received by the ITF to the use of the shipowning
      company?

    Parker J. answered all three questions in favour of the shipowning
    company: that is to say he gave an affirmative answer to question (1), a
    negative answer to question (2) and an affirmative answer to question (3).

    The ITF appealed against the decision of Parker J. to the Court of
    Appeal, consisting of Megaw, Brightman and Watkins L.JJ. By the
    judgment of that court, which was delivered by Megaw L.J., the ITF's
    appeal was allowed. Question (1) was answered in the negative and
    question (2) in the affirmative, with the result that it was not necessary
    to answer question (3). The shipowning company now appeals, with the
    leave of the Appeal Committee, against the judgment of the Court of
    Appeal, seeking to have the judgment of Parker J. in its favour restored.

    It is necessary to state, by way of preliminary matter, that the parties,
    for the purposes of the ITF's present appeal to your Lordships' House,
    have agreed to treat as correct the following four propositions of law. First,
    that, if the sum of U.S.$6,480 paid by the shipowning company to the
    ITF was paid for the purposes of a trust, such trust was not a charitable
    one, and the consequence of that was that the sum was held by the ITF
    on a resulting trust for the benefit of the shipowning company. Secondly,
    that severe economic pressure could amount to duress in law. Thirdly,
    that, if the relevant economic pressure was applied in furtherance of a
    trade dispute within the meaning of section 29(1) of the 1974 Act, it
    would not constitute duress in law, and any sum exacted by such pressure
    would not be recoverable. But, thirdly, that, if the relevant economic
    pressure was applied in furtherance of a dispute which was not a trade
    dispute within the meaning of section 29(1), any sum exacted as a result
    of such pressure would be recoverable as money had and received by
    the payee to the use of the payor. The effect of this last agreed proposi-
    tion was to give an agreed affirmative answer to question (3).

    My Lords, there can, I think, be no doubt about the correctness of the
    first and second of these four agreed propositions of law. With regard
    to the other two propositions, however, the fact that the parties were
    agreed about them has meant that your Lordships have not heard any
    argument either supporting or attacking the correctness of them. In
    these circumstances, while I think that your Lordships should accept, for
    the purposes of this appeal alone, that the last two propositions of law
    agreed between the parties are correct, it should be made quite clear
    that your Lordships are not necessarily, by doing so, giving the seal of
    your approval to those propositions.

    I turn now to consider the only two questions now remaining in dispute,
    namely, question (1) (the trust point) and question (2) (the duress point).

    With regard to question (1), the administration of the Fund was
    governed by a body of rules, six in number, which I shall call " the Fund
    " Rules ". The terms of the Fund Rules are set out in full in the judgment
    of Parker J. (see [1980] 2 Lloyd's Rep. 527), and it is therefore not
    necessary that I should set them out in full again here. The view of the
    Court of Appeal about the effect of the Fund Rules can be summarised in
    this way. The Fund had been set up by the Executive Board (then the

    26

    Executive Committee) pursuant to its power to create or provide for special
    funds in connection with industrial sections or special departments. The
    Executive Committee had power to set up such a fund, either by way of
    trust or by way of contract between the affiliated unions. The language of
    the Fund Rules was capable of being interpreted in either way. To
    interpret them as creating a trust would, however, defeat the whole purpose
    for which the Fund was set up, whereas to interpret them as creating a
    contract would give effect to such purpose. It was an established principle
    of construction that, where an instrument was capable of two interpretations,
    one of which would give effect to the purpose of the persons who drew
    it up, and the other of which would frustrate such purpose, to prefer the
    former interpretation to the latter. Parker J. was, therefore, wrong to
    interpret the Fund Rules as purporting to create a trust which was void,
    and the right way to interpret them was as creating a contract between the
    affiliated unions which was valid (see [1980] 2 Lloyd's Rep. 540-541).

    I find myself in complete agreement with that analysis by the Court of
    Appeal of the effect of the Fund Rules, and it follows that I think that that
    court was right to answer question (1) in the negative.

    It remains to consider question (2), namely, whether the dispute between
    the shipowning company and the ITF, in so far as it related to the payment
    of US$6,480, by way of contributions to the Fund, was a trade dispute
    within section 29(1) of the 1974 Act. In considering that question it is, in
    my view, essential to take two matters fully into account. Those matters
    are, first, so much of the terms of the Special Agreement and the Typescript
    Agreement as is relevant to the obligation of the shipowning company to
    make contributions to the Fund, and secondly, the indication of the purposes
    of the Fund contained in the Fund Rules.

    The Special Agreement begins by setting out the names and addresses of
    the parties to it and indicating that the shipowning company will in the
    remainder of the agreement be referred to as " the Company". The
    agreement then continues as follows:

    " WHEREAS

    " 1. the ITF is an independent trade union organisation comprising
    " fully autonomous trade union organisations in transport and allied
    " services throughout the world and members of the Special Seafarers'
    " Section of the ITF;

    " 2. the Company is the registered owner/manager of the Ship;
    " described in Schedule 1 hereto;

    " 3. the ITF and the Company desire to regulate the conditions of
    "employment of all seafarers (hereinafter individually called a
    " ' Seafarer ') serving from time to time aboard the ship;

    " NOW IT IS AGREED

    " Article 1: The Company undertakes as follows:

    " (a) to employ each Seafarer in accordance with the terms of the
    " current ITF Collective Agreement for World Wide trading (hereinafter
    " called ' the ITF Collective Agreement') as amended from time to time

    " (b) to incorporate the terms and conditions of the ITF Collective
    " Agreement into the individual contract of employment of each
    " seafarer and into the Ship's Articles and furnish copies of these
    " documents to the ITF. Any seafarer, enjoying terms and conditions
    " which are, taken as a whole, recognised by the ITF as more favourable
    " to the seafarer, shall continue to enjoy such terms and conditions.

    " (c) to pay on behalf of each Seafarer contributions and fees at the
    " rates shown in Schedule 2 hereto to the Seafarers' International
    " Welfare Protection and Assistance Fund and to the Special Seafarers'
    " Section of the ITF. The contributions and fees shall be paid to the
    " ITF annually and in advance;

    27

    " (d) to display aboard the Ship copies of the Special Agreement,
    " the ITF Collective Agreement and the ITF Blue Certificate to be
    " issued under Article 2 hereof in a prominent place to which each
    " Seafarer shall have access at all times; and

    " (e) to grant to representatives of the ITF and of trade union
    " organisations affiliated to the ITF free access to each Seafarer at all
    " reasonable times whether or not aboard the Ship, whether the Ship
    " is in berth or not.

    " Article 2: the ITF undertakes, having received and approved the
    " copies of the documents referred to in Article Kb) above, and received
    " the fees and contributions payable under Article 1 (c) above, to issue
    " and each year to renew an ITF Blue Certificate . . . certifying that
    " the Ship is covered by a Collective Agreement acceptable to the
    " ITF. . . . "

    Following Articles 1 and 2 quoted above there come four further Articles
    numbered 3 to 7, the terms of which it is not necessary to set out. Then,
    on the second page of the Agreement there appear two Schedules numbered
    1 and 2 respectively. Schedule 1 contains a description of the ship.
    Schedule 2 is in this form: —

    "Schedule 2
    " ITF SPECIAL SEAFARERS' SECTION


    " Entrance fees 40 at US$15 per man

    US$

    " Membership fees 40 at US$30 per man per year

    US$

    " SEAFARERS' INTERNATIONAL WELFARE PROTECTION AND ASSISTANCE FUND 40 at US$162 per man per year

    US$

    "TOTAL:

    US$8,280"


    Although the relevant sub-totals were left blank in Schedule 2, it is
    apparent that the total of US$8,280 was made up of entrance and
    membership fees in respect of the Special Seafarers' Section of US$600 and
    US$1,200 respectively, and contributions to the Fund of US$6,480.

    The Typescript Agreement begins by setting out the names and addresses
    of the parties to it. It then continues with the following heading and first
    paragraph:-

    " IN RESPECT OF THE LIBERIAN FLAG
    " TANKER ' UNIVERSE SENTINEL '

    " The ITF confirms receipt to-day of US$80,000 . . . which is
    " accepted by the ITF as to the one part of $8,280 for the Union
    " Entrance Fees, Annual Subscriptions and Welfare Fund Contributions,
    " and as to the other part of $71,720 as a discretionary trustee. The
    " beneficiaries are the Master, Officers, Engineers and crew members on
    " board on 28th July 1978."

    Rule 2 of the Fund Rules provided : —

    " The object of the Fund shall be the financing of any such work
    " as may be sanctioned by the Executive Committee of the Federation
    " for the purpose of promoting, advancing or protecting by any such
    " means as the Executive Committee in their absolute discretion may
    " decide, the interests of seafarers generally or groups of seafarers,
    " national or otherwise, or of assisting individual seafarers, or otherwise
    " of serving seafarers' interests."

    Section 29(1) and (4) of the 1974 Act provide: —

    " (1) In this Act ' trade dispute ' means a dispute between employers
    " and workers, or between workers and workers, which is connected
    " with one or more of the following, that is to say—

    " (a) terms and conditions of employment . . . .


    28

    " (4) A dispute to which a trade union ... is a party shall be treated
    " for the purposes of this Act as a dispute to which workers ... are
    " parties."

    The dispute in the present case, in so far as it related to the payment by
    the shipowning company of US$6,480 by way of contributions to the Fund,
    was a dispute between an employer and a trade union. The effect of
    section 29(4) above is that the dispute concerned must be treated as a
    dispute between employers and workers for the purposes of section 29(1). It
    follows that the only issue to be determined in relation to question (2) is
    whether the dispute between the shipowning company and the ITF about
    the payment of those contributions was, to use the words of section
    29(1)(a), connected with terms and conditions of employment.

    It has been established by authority that the expression " terms and
    "conditions of employment", as used in section 29(l)(a) of the 1974 Act,
    is to be given the widest possible construction: see BBC v. Hearn [1977]
    1 WLR 1004 per Lord Denning M.R. at p. 1010 and Roskill L. J., as he
    then was, at p. 1015. The relevant observations of Lord Denning M.R. in
    that case were expressly approved by your Lordships' House in the recent
    case of Hadmor Productions Ltd v. Hamilton [1982] 2 W.L.R. 322 in a speech
    of Lord Diplock with which all the other four members of the Appellate
    Committee agreed. The effect of giving the expression concerned the very
    wide meaning which these authorities show that it should be given is that
    any arrangement which affects, directly or indirectly, the benefits which a
    worker enjoys in connection with his employment, can properly be treated
    as a condition of such worker's employment for the purposes of section
    29(l)(a) of the 1974 Act, even though there is no reference to such
    arrangement, expressly or by incorporation, in the contract under which the
    worker is employed.

    My Lords, it appears to me to be crystal clear that the parties themselves
    regarded the dispute, in so far as it related to the payment by the shipowning
    company of contributions to the Fund, as being a dispute connected with the
    terms and conditions of employment of those on board the ship, both those
    on board her at the time and those contemplated as being on board her
    from time to time in the future. I say that for two reasons. The first reason
    is to be found in the terms of the Special Agreement. The recital numbered
    3 in that agreement stated unequivocally that the purpose of the parties
    in entering into the agreement was to regulate the conditions of employment
    of all seafarers serving from time to time aboard the ship. It is, in my
    view, a necessary inference from this that the parties, in agreeing to the
    substantive provisions of the agreement contained in Articles 1 to 7, were
    intending to give effect, directly or indirectly, to their previously recited
    purpose. The obligation of the shipowning company to make contributions
    to the Fund was imposed by paragraph (c) of Article 1, which is sandwiched
    between other obligations of the shipowning company imposed by paragraphs
    (a) and (b) of Article 1 above and paragraphs (d) and (e) below. These five
    paragraphs of Article 1 must, in my view, be regarded as a package of terms
    imposed by the ITF on the shipowning company for the benefit of those
    who were then, or would be later, employed on board the ship and, having
    regard to the stated purpose of the agreement, namely, the regulation of the
    conditions of employment of such persons, it must be inferred that the parties
    intended those paragraphs to form part of the process of giving effect to
    that purpose.

    The second reason is to be found in the terms of the first paragraph
    of the Typescript Agreement, which I also set out earlier. Here again
    the whole tenor of the paragraph is only consistent with the conclusion
    of a package deal in which both the payment of the union entrance and
    membership fees on the one hand, and the payment of contributions to
    the Fund on the other hand, are treated as having the same quality. It
    was conceded on behalf of the shipowning company that its obligation
    to pay union entrance and membership fees came within the expression
    "terms and conditions of employment" as used in section 29(l)(a) of the

    29

    1974 Act. If that concession was rightly made, as I consider that it was,
    then it seems to me that it is impossible to treat as having a different
    quality the closely linked obligation of the shipowning company to pay
    contributions to the Fund.

    Two main arguments were, however, advanced on behalf of the ship-
    owning company in order to show that, whatever the parties themselves
    may have intended, the obligation of the shipowning company to pay
    contributions to the Fund did not come within the expression "terms
    "and conditions of employment" as used in section 29(l)(a) of the 1974
    Act. The first argument was that the obligation was not contained in
    the then current ITF Collective Agreement and was not therefore
    incorporated into the individual contracts of those on board the ship.
    The second argument was that there was nothing to show that those on
    board the ship would ever receive any benefit from the contributions to
    the Fund made by the shipowning company.

    With the greatest respect to those of your Lordships who think otherwise,
    I do not find these arguments convincing. So far as the first argument
    is concerned, it seems to me that it is inconsistent with the established
    principle, to which I referred earlier, that the expression " terms and
    "conditions of employment" as used in section 29(l)(a) of the 1974
    Act, should be given the widest possible meaning. So far as the second
    argument is concerned, I accept that it cannot be established affirmatively
    that persons employed as seafarers on board the ship, either in July 1978
    or subsequently, have benefited, or will necessarily benefit in the future,
    from the contributions made by the shipowning company to the Fund.
    On the other hand, the Fund has been established and maintained for
    the benefit of such persons, and is funded solely by contributions from
    shipowners. In these circumstances it seems to me that the existence
    of the Fund, maintained by contributions from the shipowning company
    here concerned and many other shipowners upon whom the same obligation
    to contribute has been imposed, should be regarded as constituting at
    least a potential fringe benefit to workers on board the ship.

    On the footing, firstly, that the contributions to the Fund can fairly
    be regarded as going to maintain a potential fringe benefit for those on
    board the ship, and, secondly, that the fact that the shipowning company's
    obligation to make such contributions is not written into either the ITF
    Collective Agreement or the individual contracts of those persons is not
    of itself a reason for excluding such obligation from the expression " terms
    "and conditions of employment" as used in section 29(l)(a) of the 1974
    Act, I am of opinion that such obligation can and should be categorised
    by the court, as it was by necessary implication categorised by the parties
    themselves, as a term or condition of employment of those on board the
    ship within the meaning of that statutory provision.

    My Lords, the effect of the views which I have expressed is
    that the shipowner fails both on the resultant trust point (question (1) and
    on the duress point (questions (2) and (3)). It follows that I would dismiss
    the appeal.

    313903—2 Dd 8208150 C3 3/82


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