Universe Tankships Inc of Monrovia v International Transport Workers Federation (The Universe Sentinel) [1981] UKHL 9 (01 April 1981)

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

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.

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

” 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

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

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

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

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

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.

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

(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

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

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.

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.

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

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.

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

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. 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. 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

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

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. 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

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

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

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. 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

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

” 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;

” (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 . . . .

” (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

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.

Source: https://www.bailii.org/

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Universe Tankships Inc of Monrovia v International Transport Workers Federation (The Universe Sentinel) [1981] UKHL 9 (01 April 1981)

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