Universe Tankships Inc. of Monrovia v International Transport Workers Federation

Universe Tankships paid the I.T.F. $80,000, including $6,480 to a "welfare fund", to end the blacking of its ship at Milford Haven. The House of Lords held, by majority, that the $6,480 was recoverable as money paid under economic duress, because a demand for payment to the fund was not "connected with" the crew's terms and conditions of employment and so was not protected by the Act's trade dispute immunity.

The Universe Sentinel, a Liberian tankship owned by the appellants, docked at Milford Haven on 17 July 1978 and finished discharging the next day. She had no I.T.F. "blue certificate" and was blacked, tugs refusing to assist her to sail. To get the blacking lifted, the owners signed a "special agreement" and a "typescript agreement" with the I.T.F. on 28 July 1978 and paid it $80,000, made up of $71,720 back pay for the crew, $1,800 in I.T.F. entrance and membership fees, and $6,480 to the I.T.F.'s "Seafarers' International Welfare Protection and Assistance Fund". The ship sailed the next day. The owners later demanded the whole $80,000 back as paid under duress, but after this House's decision in N.W.L. Ltd. v. Woods held I.T.F. blacking to be a trade dispute, they abandoned the back pay and fees claims and pursued only the $6,480. Parker J allowed recovery of that sum on both the trust and duress grounds. The Court of Appeal reversed him, holding the fund was not a trust and that the demand for it was connected with the crew's terms and conditions of employment.

Was the $6,480 paid to the welfare fund held by the I.T.F. on a trust that failed, giving the owners a resulting trust in it? If not, was the payment recoverable as money had and received on the ground of economic duress, which turned on whether the demand for it was "connected with" the crew's terms and conditions of employment under s 29(1) of the Trade Union and Labour Relations Act 1974 so as to attract the trade dispute immunity in s 13(1)?

The House allowed the appeal. The $6,480 was recoverable.

On the trust point all their Lordships agreed the welfare fund rules created no trust. The fund was, as Lord Russell put it, part of the I.T.F.'s own funds, subject to "an earmarking subject to the contractual arrangements between the members under the constitution", which the I.T.F. could apply to other purposes if it chose. No trust meant no resulting trust, whatever happened on duress.

On duress, it was conceded the owners paid under economic pressure that would be duress unless the demand was legitimised as being made in a trade dispute "connected with" terms and conditions of employment under s 29(1)(a) of the Trade Union and Labour Relations Act 1974. Lord Diplock held that expression, though wide, "is limited to terms which regulate the relationship between an employee and the person for whom he works, i.e. his employer." The availability of any benefit from the welfare fund did not depend on the crew's employment by these owners, so, in his words, "a demand for payment to a fund, is not, in my view, 'connected with' the terms and conditions of employment of anyone at all." Lord Cross agreed a contribution to the fund was no different from a payment into the union's general funds, giving the crew no benefit comparable to what membership fees bought. Lord Russell agreed with Lord Diplock's reasoning. The demand for $6,480 was therefore not protected by the immunity, and the money was recoverable as paid under duress.

Lord Scarman and Lord Brandon of Oakbrook would have dismissed the appeal. They agreed there was no trust, but held the payment to the welfare fund was connected with terms and conditions of employment and so was protected. Lord Brandon treated the five paragraphs of article 1 of the special agreement as "a package of terms" imposed for the crew's benefit, and found the fund at least "a potential fringe benefit" to seafarers, even though no one could show any particular crew member would actually benefit from it. Lord Scarman likewise held the demand was part of the same bargain that regulated the crew's conditions of employment, observing that "the demand upon the owner to contribute was made by the union for the benefit of the crew and on their behalf," so the blacking used to enforce it was not tortious and no duress arose.