The Tort Of Intimidation And Economic Duress: Another High Hurdle For Claimants To Jump?

The High Court recently handed down its decision in Oliver Dean Morley t/a Morley Estates v. The Royal Bank of Scotland plc [2020] EWHC 88 (Ch), in which the claimant made allegations of intimidation and economic duress against The Royal Bank of Scotland (RBS). In this alert, we look specifically at how the court considered these allegations and how this compares to the court's approach in considering similar allegations, such as unlawful means conspiracy.

The facts in Morley

In Morley, the claimant alleged that, following various events of default in his loan facilities, RBS tortiously intimidated him and subjected him to economic duress by threatening to appoint receivers over his property portfolio. These receivers would in turn arrange for the entire portfolio to be transferred in a "pre-pack" sale to West Register (Property Investments) Limited (West Register), a subsidiary of RBS.

In August 2010, the claimant entered into written agreements with RBS (the Agreements), which enabled him to salvage a proportion of the portfolio for £20.5 million, with the remainder transferred to West Register. The claimant alleged that RBS obtained the Agreements by using threats that amounted to the tort of intimidation, and/or that they were entered into under economic duress and should therefore be rescinded.

The court looked closely at the conduct of RBS. It did not consider that anything said by RBS up until 8 July 2010 amounted to a threat to appoint a receiver. It therefore focused on a meeting that took place on 8 July 2010 and considered three alleged threats made at that meeting: that unless the claimant signed up to a consensual deal, RBS would:

appoint receivers on the following Monday (12 July 2010); appoint receivers on the Monday to sell the portfolio on a pre-pack basis to West Register; appoint receivers on the Monday to sell the portfolio on a pre-pack basis to West Register at an undervalue and/or without proper market testing and/or for an improper purpose. On consideration of the facts and the law on the tort of intimidation and economic duress, the court found that the claimant had failed to establish either cause of action.

Elements of the tort of intimidation and economic duress

The court accepted recent authority on the elements of both causes of action, as follows:

for the tort of intimidation: "there must be a threat to do something unlawful or 'illegitimate'; it must be intended to coerce the claimant to take or not take certain action; the threat must in fact coerce the claimant to take (or not take) that action; and damage must be incurred as a result"; and for economic duress: "there must be pressure to enter into a contract with the practical effect of compulsion or a lack of practical choice, which is 'illegitimate' and is a significant cause inducing the victim to enter into the contract". Therefore, in order to make out both causes of action, the claimant first needed to prove that the threatened conduct from RBS was illegitimate, and that was the reason he entered into the Agreements.

How to determine whether conduct is "illegitimate"

To assist in assessing whether the threatened conduct was...