Definition of Crime (CASES)

Melling v O’Mathghamhna [1962] IR 1.

• The plaintiff, Peter Melling, was charged in the District Court on fifteen charges, all of which were of a similar nature, relating to the smuggling of butter into the State.
• The court had to determine if this amounted to a criminal charge.
• The Supreme Court held it did. Kingsmill Moore J. held that a criminal charge could be identified by three elements:-
• a) offences committed must be against the community at large and not against an individual
• b) the punitive nature of the sanction
• c) the requirement of mens rea, for the act must be done knowingly.

McLoughlin v Tuite [1986] IR 235; [1989] IR 82.

• The plaintiff was required by notice issued by the first defendant (an Inspector of Taxes) to deliver returns of income for certain income tax years. The plaintiff failed to comply with the notice within the time specified. The first defendant sued the plaintiff, claiming penalties which arose under s. 500 of the Income Tax Act, 1967, by virtue of the plaintiff’s failure to comply with the terms of the notice.
• The court used the decision in Melling’s case to see if the indicia of a criminal offence are present.
• (a ) Whether there is a crime against the community”If an offence must of necessity be implied by reason of the existence of a penalty, therefore it would be an offence against the community at large and not against an individual. The fact that the Inspector of Taxes can sue in his own name does not mean that he is entitled as an individual to the money. It is the Central Fund which is entitled to the penalty, i.e., the community at large.”(b ) Whether the sanction is punitive, and failure to pay involves imprisonment

  “The sanction is first of all coercive. It is calculated to make taxpayers send in their returns within a limited time for fear of having to pay a penalty. If the coercive element does not work then it becomes punitive. I do not think it could be argued that a penalty of £500 for failure to make each return was not punitive. It is a penalty which is intended to pinch. However, if the penalty is not paid there is no provision for imprisonment.”

  (c ) Whether mens rea is required

  “As to the existence of mens rea , it is not an ingredient in a failure to make a return of income. The penalty arises for failure to make a return, not because of a deliberate decision not to make a return. The fact that the liability to pay the penalty does not cease on death but continues against the estate of the deceased, indicates that mens rea is absent.”

• Judgment was duly entered in favour of the first defendant.

People (DPP) v Boyle [1993] ILRM 128.

• The defendant was a registered bookmaker.
• Under section 24(1) of the Finance Act 1982 all bookmakers were required to pay a duty on every bet entered into. Failure to do so would result in an excise penalty of up to £500 under s.24(5).
• The court held, following Melling, that the provision was a criminal offence.

Unconscionability

Unconscionable Bargains

Fry v Lane (1888) 40 Ch.D.312 – Factors which will cause the courts to set aside a contract for unconstitutionality were set out. They are :

1. The poverty and ignorance of the plaintiff.
2. An undervalued consideration.
3. A lack of independent advice.

Rae v Joyce (1892) 29 LR (Ir) 500

• A pregnant woman mortgaged an interest in real property at an undervalue to a money lender.
• The money lender was clearly more commercially astute than the woman.
• The woman was also not in the best of health and in very needy circumstances but had no independent advice.
• The interest rate was 60% .
• The contract between the money lender and the woman was set aside by the Court of Appeal, which substituted and interest rate of 5%.

Rooney v Conway (1986, unreported NI)

• An elderly man sold his farm at an undervalue to a young man who had befriended him and helped him in his old age.
• The sale was set aside even though there was no evidence of improper behavior.
• The court stated that in case where the sale is at large undervalue and the parties are not on an equal footing then there is no need to show improper behavior before relief will be granted.

In England a different approach is used. In the case of Hart v O’Connor (1985) 2 AER 880 it was stated that the stronger party must have shown behavior which is ‘morally reprehensible’ or shocking ‘ to the conscience of the court’ before relief will be granted in equity.

Upholding the Bargain

The stronger party must show that the agreement is fair, just and reasonable. The stronger party must convince that the other party knew what he was doing when he entered the contract and that he got the market value of his property.

Smyth v Smyth ( unreported. HC November 22, 1978)

• A young man who was an alcoholic  asked the other party to buy his property.
• This sale took a long time to complete so that there was no question of not giving the vendor enough time to reflect the contract.
• Costello J upheld the bargain. He found that the consideration was adequate and did not find that the transaction was unconscionable because the same solicitor acted for both sides.

Undue Influence

Contracts which are entered into as a result of one party putting pressure on the other are dealt with under the doctrine of undue influence in equity.

In Barclays Bank Plc v O’Brien (1993) 3 AER 417

• The house of lords divided contracts which may be rescinded for undue influence into 2 categories:

1. Actual Undue Influence
2. Presumed undue influence – (a) Relationships which give rise to the presumption of undue influence as a matter of law. (b)  Relationships of actual confidence

Actual Undue Influence

The claimant must prove affirmatively that the wrongdoer exerted undue influence on the complainant to enter into a particular transaction.

William v Bayley (1886) LR 1 HL 200

• A man forged  his father’s name on some promissory notes.
• A representative from the bank met with the father and stated that the son would be prosecuted if some solution could not be reached and transportation for life was even mentioned.
• The father was extremely upset and felt that he no other option than to mortgage property to the bank in return for the promissory notes,
• It was held that the agreement between the bank and the father was invalid as the bank had exerted undue pressure on the father by exploiting concerns for his son.
• This was not a case of duress because the banks threats were lawful.

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Special Relationships which give rise to the presumption of undue influence

(a) Relationships which give rise to the presumption of undue influence as a matter of law

Certain relationships are deemed automatically to attract the presumption of undue influence. Relationships in which undue influence exists are doctor/patient, trustee/beneficiary, solicitor/client, parent/child, guardian/ward, religious adviser/ discipline.

Allcard v Skinner (1887) 36 Ch D 145

• The plaintiff entered the convent, of which the defendant was Mother Superior.
• On entering the convent she took vows of poverty, chastity and obedience. The vow of poverty required that she surrender all of her personal property.
• She gave gifts to the defendant that valued at £7,000. After 8 years she left the convent and £1,600 remained of her gifts.
• She did not take any action against the defendant for 6 years.
• She then sued the defendant for the recovery of her money.
• It was held that no personal pressure was exerted on the plaintiff while she was in the convent, nor was any unfair advantage taken of her position. Despite this, the court found that the gifts were made under a pressure which she could not resist. No independent advice had ever been given to her and even if she did want such advice, the rules of the convent forbade the seeking of it.
• However, the court held that she was not entitled to recover the money due to her delay in seeking relief.

(b) Relationships of Actual Confidence

This is a relationship in which the presumption of undue influence does not arise as a matter of law, but where there is a relationship between the parties and the party setting to set aside the transaction did, in fact, have trust and confidence in the other party.The weaker party must show that he trusted and placed his confidence in the other party and that the other party dominated him in some way.

McGonigle v Black (unreported, High court, November 1998)

• The presumption arose from a relationship between an elderly farmer ( who was lonely, ill and unable to generally to cope) and his neighbor, a relationship that on the facts was one in which the farmer placed considerable trust and confidence in his neighbor.

Royal Bank of Scotland PLC v Etridge (No.2) (1998) 4 AER 705

• Stuart Smith LJ reviewed the principles as set out in the O’Brien case regarding the issue of constructive notice. He reiterated the fact that it is necessary that the complainant receive independent legal advice.

Bank of Ireland v Smyth (1995) 2 IR 102

• The Supreme Court held that where a spouse is giving consent to a mortgage of the family home her consent must be fully informed consent. The bank should inquire as to whether she understood the nature and effect of the transaction.
• The bank should also advise the wife to obtain independent legal advice; otherwise the mortgage is valid.

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Loss of Right to avoid the contract.

1. Where there has been a delay in seeking relief.
2. Where the contract has been affirmed.
3. Where a third party has acquired goods under the contract for value and without notice.

Duress

Duress at common law

• Duress is a defence rendering a contract voidable. Duress may basically be defined as illegitimate pressure brought to bear on one of the parties with the result that the latter has no reasonable alternative but to enter into the contract.
• At common law the doctrine of duress is restricted to actual physical violence or threats of physical violence or imprisonment (unless the imprisonment be lawful) against one party.
• In the 1970’s the doctrine was also extended to cover case of economic duress.

Skeate v Beale (1840) 11 A & E 983

• A tenant agreed to pay his landlord more than he owed him because the landlord had threatened his goods.
• He later attempted to recover the extra money because the threat was unlawful and he had only paid the extra money as a result of the threat.
• It was held that he could not recover the extra money.
• This is due to the fact that the threat was related to goods and not to actual physical violence or threats of physical violence or imprisonment.

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The duress must have induced the other party to enter into the contract even if it was not the only reason why they entered it.

Barton v Armstrong (1976) AC 104

• The defendants abducted the plaintiff and threatened to kill him and harm his family if he didn’t sign a deed, entering a business agreement with them.
• It was also in the interests of the plaintiff to enter this agreement as it would benefit his company.
• The defendants argues that the plaintiff’s plea of duress should fail because the threat was not his sole reason for entering the contract.
• The court held that the contract was voidable for duress.

Onus of Proof

Once the plaintiff can show that unlawful threats were made to him, the onus is on the defendant to show that they were not a reason for his entering the contract.

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Griffith v Griffith (1944) IR 35

• The High Court held that a marriage entered by a nineteen year old man as a result of threats of imprisonment by his father, the girl’s mother and the parish priest was void ab initio for duress.

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Economic duress 

It has been acknowledged that certain forms of economic pressure may constitute duress, even where there is no threat to life ,limb or liberty.

Economic duress had occurred in North Ocean Shipping v Hyundai (1979) QB 705

• The defendants had agreed to built a tanker for the plaintiffs.
• The agreed price was US $30 m. and it was agreed that it would be paid in 5 installments.
• The first installment was paid but after this the value of the dollar plummeted.
• The defendants then demanded a price increase of 10%.
• They threatened that they would not complete the tanker if the increase was not paid.
• The plaintiffs had already contracted with a third party to charter the ship when it was finished. Therefore the plaintiffs paid the extra money and received the tanker.
• 8 months later they claimed repayment of the extra money.
• Mocatt J held that this constituted economic duress. The threat by the defendants was both wrongful and highly coercive of the plaintiffs will. Despite the finding of the presence of economic duress the plaintiffs were held to have affirmed the contract because they had not demanded the extra money for 8 months. Therefore, they lost their right to avoid it.

Atlas Express v Kafco Ltd (1989) 1 AER 641

• The defendant engaged the plaintiff carrier company to deliver cartons to a third party (Woolworth’s) in June 1986.
• The plaintiffs manager had been mistaken when he calculated the contract price and the plaintiff was actually transporting the cartons at a loss.
• In November the plaintiff and the defendant agreed that the plaintiff would get more money.
• The defendant agreed because its business was entirely dependent on its contract with Woolworth’s and it would be impossible to find another carrier in time to fulfill its obligations under this contract.
• If they had not agreed to increase the price, Woolworth’s would have sued it for loss of profit and would have ceased trading with them.
• The defendants manager stated in court that he felt he was ‘over a barrel’
• It was held that the agreement was unenforceable on the ground that it had been obtained by economic duress.