Dear colleagues:

 I would be interested in what others think of the decision. On first reading it appears sloppily reasoned. The court seems in several places to conflate the two elements necessary for a successful duress claim, namely: (1) the illegitimate pressure and (2) the coercion (see eg, para. 34) into some global search for unconscionable conduct/bad faith all things considered (see eg, para. 19, 32, 41).

Also, the court often stresses that one of the primary reasons for its finding of illegitimate pressure is that the defendant threatened and then voted his shares to oppose the complicated scheme proposed by the liquidators “for no good reason” (para. 5 & 35) or for  “improper motives” (i.e. in his best interest rather than the company’s, see para. 8 & 28). Is there a rule of HK/Bermuda Company law that requires a shareholder to vote their shares in someone else’s interest?  If there is an oppression remedy and it does apply to these facts why didn’t anyone mention it?

Of course, there is a much more direct way to come to the same conclusion, that (1) the unlawful pressure was the defendant's breach of his duty to co-operate with the liquidators as a former officer of the company (see para. 32) and (2) that given the tight time lines this left the liquidators with no practical alternative but to enter into the settlement agreement--but the court never really makes this clear.

Cheers,

Jason Neyers
Associate Professor of Law
Faculty of Law
University of Western Ontario
N6A 3K7
(519) 661-2111 x. 88435 

Dear all,

List-members may be interested in Borelli & ors v Ting v ors [2010] UKPC 21, in which the respondent, the former chairman and CEO of Akai Holdings Ltd (and who appears to have misappropriated the company's property on a grand scale, leading to its eventual collapse), refused to cooperate with and obstructed the appellant liquidators of Akai by, inter alia, fraudulently procuring opposition to a proposed scheme of arrangement. 

As this scheme was necessary for the liquidation, and as there was a tight deadline to work against, the appellants entered a settlement agreement with the respondent, under which the latter agreed to end his opposition in return for a compromise or waiver of all claims against him (and his associated companies).

The Privy Council held that the settlement agreement was invalid as it had been entered into under duress, and the Privy Council seems to emphasise the elements of "illegitimate pressure" and the lack of a reasonable or practicable alternative. 

The Privy Council also appears to have flirted at [41] with a lack of consideration argument, although there was no reference to Williams v Roffey Bros, and no actual decision on this point.  

Regards,

Colin