Barton v Armstrong

Barton executed a deed buying out Armstrong's shares and interests in Landmark Corporation, and Armstrong resigned from the company boards, after Armstrong repeatedly threatened to kill him. The Privy Council declared the deed void against Barton for duress, even though commercial necessity was his main reason for signing. Borrowing the rule used for fraud, the majority held it is enough that illegitimate threats were "a" reason for signing, not the sole or predominant one.

Armstrong and Barton were rivals for control of Landmark Corporation Ltd, a public company in which Armstrong was chairman and Barton managing director. During 1966 Barton moved to exclude Armstrong from management. Armstrong's companies then demanded repayment of a $400,000 debt, and Landmark's financier, United Dominions Corporation, refused to advance any further funding for the project. Barton came to share the view, held by his co-director Bovill, that if Armstrong could be got out of the way U.D.C. would change its mind and provide the necessary finance. On that basis Barton negotiated with Armstrong's accountant to buy out Armstrong's interests in the company and Armstrong's shares, at a price well above market value. Throughout these negotiations Armstrong repeatedly threatened, by phone and in person, to have Barton killed.

Genuinely afraid, Barton hired bodyguards and moved his family into a hotel. On 17 January 1967 he executed a deed implementing the buy-out. Landmark's finances collapsed soon after and it was wound up. About a year after signing, Barton sued to have the deed set aside for duress. Street J found Armstrong had made repeated death threats which Barton genuinely feared, but held Barton signed for "commercial necessity", not because of the threats. The Court of Appeal (Mason J.A. and Taylor A.-J.A., Jacobs J.A. dissenting) upheld that result.

Could Barton avoid the deed for duress even though the trial judge found his predominant motive for signing was commercial necessity rather than fear? In particular, did he have to prove he would not have signed but for Armstrong's threats, or was it enough that the threats were a reason for signing?

The Privy Council allowed the appeal by a majority of three to two. It declared the deed of 17 January 1967 void as against Barton for duress, with liberty for any party to apply to the trial court on consequential questions between the other parties.

Lord Cross of Chelsea, delivering the majority judgment, held the real question was not whether Barton would have signed the deed but for Armstrong's threats, but whether the threats were a reason why he signed. The majority drew this from the law of fraud, where once deception is shown to have played any part in a transaction, the court does not allow an examination into the relative importance of contributory causes. Applying the same rule to duress, they held that "if Armstrong's threats were 'a' reason for Barton's executing the deed he is entitled to relief even though he might well have entered into the contract if Armstrong had uttered no threats to induce him to do so."

Once it was accepted that Armstrong's threats were meant to make Barton sign, the onus lay on Armstrong to show they "contributed nothing" to Barton's decision. The trial judge found Barton was genuinely afraid and suffered "very real mental torment" in the days before signing, even though his main reason was said to be commercial necessity. The majority held the threats and unlawful pressure still "contributed to his decision to sign the documents." They treated the case as falling outside the usual protection given to concurrent findings of fact, since the Court of Appeal had altered some of the trial judge's findings and the causation question had not been squarely addressed at trial.

Lord Wilberforce and Lord Simon of Glaisdale dissented. They agreed the correct test was whether the threats were a reason for Barton signing, not the predominant or sole reason. But they treated the question of what actually motivated Barton as one of fact, resting heavily on credibility, which was "particularly within the sphere of the trial judge." Street J and the Court of Appeal had concurrently found that Barton signed from "commercial necessity" and viewed the agreement "dispassionately with a free and independent mind." In their view a second appellate court should not disturb such concurrent findings absent a miscarriage of justice or manifest error of law, and they would have dismissed the appeal.