Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd

Hawker Pacific held Helicopter Charter's helicopter until Helicopter Charter promised to pay $4,300 and sign a release. The Court of Appeal upheld a finding of duress, holding that Isaacs J's test for "compulsion", conduct analogous to duress applied to a person's property or right, applies to contracts sought to be set aside, not only to payments already made.

Helicopter Charter Pty Ltd, run by Mr Barnao, hired Hawker Pacific Pty Ltd to repaint one of its helicopters for $5,200. Mr Barnao was unhappy with the work, further work followed, and the price became $5,550. Helicopter Charter took the helicopter back on 28 May 1986 and used it in its business until 25 February 1987, all the while complaining about defects and paying nothing.

On 25 February 1987 the helicopter went back to Hawker Pacific for rectification at Hawker Pacific's own cost, and was ready by 5 March. When Mr Barnao and pilot Mr Hough arrived to collect it, they met Hawker Pacific's manager Mr Bartlett. Mr Barnao came away believing the helicopter would not be released unless Helicopter Charter promised $4,300 and signed a document releasing Hawker Pacific from liability for the paint job. Mr Hough signed on Mr Barnao's instruction. Helicopter Charter took the helicopter and never paid the $4,300.

Was Brownie J wrong to find that the 5 March 1987 agreement was made under duress and rightly set aside. If there was duress, had Helicopter Charter later affirmed the agreement by not raising duress while fobbing off Hawker Pacific's requests for payment.

The appeal was dismissed. Brownie J's finding of duress stood, so the release in the 5 March 1987 document was rightly set aside, and the judgment for the respondent for $21,192.47 (following the arbitrator's award of $17,351 damages) remained.

Priestley JA held duress is not confined to payments. Isaacs J's test in Smith v William Charlick Ltd (1924) 34 CLR 38 at 56 defines "compulsion" as including "every species of duress or conduct analogous to duress, actual or threatened, exerted by or on behalf of the payee and applied to the person or the property or any right of the person who pays". Priestley JA held the same idea applies to a contract sought to be set aside. Hawker Pacific had no lien over the helicopter (common ground), so Helicopter Charter had a right to take it away. Mr Bartlett telling Mr Barnao and Mr Hough that "it is company policy to require payment before releasing the helicopter", together with the surrounding circumstances, justified their belief the helicopter would be withheld unless they signed. No express threat was needed.

On affirmation, Priestley JA held it is not a separate category but really election or estoppel. Election requires conduct "consistent only with the exercise of one of the two sets of rights and inconsistent with the exercise of the other" (Stephen J, Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 646). Helicopter Charter's fobbing off, conciliatory words mixed with continued non-payment, was not unequivocal enough. Estoppel failed for want of a clear representation and proven detriment.

Clarke JA agreed with the orders and (subject to a reservation on affirmation) with Priestley JA's reasons, adding that the traditional distinction letting a person recover money paid under duress of goods but not avoid a contract made under the same duress "is not supportable", doubting Skeate v Beale to that extent. On affirmation he preferred Brownie J's own approach but reached the same conclusion, that Helicopter Charter had not affirmed the contract. Handley JA agreed generally, found no election since the excuses did not exercise any right that existed only under the contract, and held that the appellant's forbearance and wasted attempts to collect the cheque were detriments but not a "material disadvantage" or "significant disadvantage" sufficient to found an estoppel, given the appellant's entitlement to pre-judgment interest under s 94 of the Supreme Court Act 1970.