Duress is the use of illegitimate pressure, applied in a transaction such that the victim has no reasonable choice but to submit. It consists of four elements. For example, a Mafioso levels a Tommy gun (illegitimate act) and demands the sale of a business at below market rates (the transaction) or concrete shoes and fish naps will follow (application of pressure). The reasonable choice is to submit. Later however, the transfer might be reversed on grounds of duress.

What then, for so-called “lawful act duress”, where the action exerts pressure, but that pressure is not inherently unlawful? The scheming villain threatens (illegitimate act) the noble, but false-facing, hero that if said hero does not turn over the keys to the sultanate (the transaction) his true identity as a street urchin will be revealed to the princess (application of pressure). Revealing the truth of a matter is not inherently illegal (unless blackmail), but does the pressure need to be unlawful to be illegitimate?

Current Australian doctrine follows ANZ Banking Group v Karam [2005] NSWCA 344, in which the New South Wales Court of Appeal limited duress to threatened or actual unlawful conduct. In doing so, the courts created a very small gap in the law between duress (an unlawful act) and unconscionable conduct/undue influence (which requires an abuse of power). The gap is so small that some asked whether a case would ever exist to fill it.

The case of Electricity Generation Corp (t/as Verve Energy) v Woodside Energy Ltd [2013] WASCA 36 concerned gas supply. Verve (a gas supplier) found itself in a sudden position of economic power, and although it had a contractual agreement with Woodside to increase supply as needed, Verve instead used its position to demand a number of short-term contracts with Woodside at massively inflated prices.

In that case, McLure P added (at [25]) that “[pressure] may be illegitimate if there is no reasonable or justifiable connection between the pressure being applied and the demand which that pressure supports”. Such a test might let off the above scheming villain (the identity of the future prince being sufficient nexus to his ability to rule the sultanate) while proving duress if the demand were of insufficient connection (demanding an otherwise worthless lamp, for example).

The High Court appeal of Electricity Generation Corp (t/as Verve Energy) v Woodside Energy Ltd (2014) 88 ALJR 447; [2014] HCA 7 raised hopes for clarification of the issue. Instead, the case was decided on contractual construction grounds. Duress did not need to be discussed and it appears that Woodside did not even attempt to rescind the short-term contracts.

Some might see this as a missed opportunity for the duress debate, but other leading authorities have argued that the High Court instead saved this opportunity for a more appropriate case, when judgment on duress would be ratio decidendi, not obiter. In the meanwhile, the gap remains open.

Lawful act duress is examined in the updated The Laws of Australia Subtitle 35.7 “Duress”.

For more information about The Laws of Australia.