P V BRIDGECORP LIMITED (IN RECEIVERSHIP AND IN LIQUIDATION) COA CA756/2011

P V BRIDGECORP LIMITED (IN RECEIVERSHIP AND IN LIQUIDATION) COA CA756/2011 [15 November 2012]ORDER PROHIBITING PUBLICATION OF NAME, ADDRESS ORIDENTIFYING PARTICULARS OF APPLICANTIN THE COURT OF APPEAL OF NEW ZEALANDCA756/2011[2012] NZCA 530BETWEEN PApplicantAND BRIDGECORP LIMITED (INRECEIVERSHIP AND INLIQUIDATION)RespondentHearing: 18 October 2012Court: Stevens, French and Venning JJCounsel: C R Pidgeon QC and R S Pidgeon for ApplicantB J Burt and J Marcetic for RespondentJudgment: 15 November 2012 at 10.30 amJUDGMENT OF THE COURTA The application to review the decision of the Associate Judge to decline the application to set aside the admission of claim is dismissed.B The decision of the Associate Judge not to allocate a hearing for the applications to set aside the judgment, for particular discovery and for stay is quashed. The applications are dismissed.C The application to review the award of costs in the High Court is allowed. The order for costs on a High Court 2B basis is quashed and replaced with an order for costs on a District Court 2B basis.D The respondent is to have costs for a standard appeal on a band A basis plus usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Venning J)Table of ContentsPara NoIntroduction [1]Background [4]The appeal in this Court [17]Jurisdiction – can r 15.16 apply to an admission executed prior tothe filing of proceedings? [19]Unconscionable bargain, undue influence and duress [27]Unconscionable bargain [28]Undue influence [47]Duress [54]The application to set aside the judgment [61]The appeal against the costs award [64]Result [66]Costs in this Court [69]Introduction[1] On 14 October 2011 judgment was entered against the applicant, Mr P, in favour of the respondent (Bridgecorp) in the sum of $65,030.24 together with costsand disbursements. Judgment was entered following Associate Judge Christiansen'sdecision to decline Mr P's application to set aside an admission of claim.1[2] Subsequently, in a minute of 11 July 2012, the Associate Judge declined to hear an application Mr P had made to set aside the judgment and for related orders. The Associate Judge considered the application to be an abuse of process.2[3] Mr P sought to appeal both those decisions direct to this Court. For the reasons given in a minute issued on 17 October 2012, this Court did not have1 Bridgecorp Ltd v P HC Auckland CIV-2011-404-1573, 14 October 2011.2 Minute of 11 July 2012.jurisdiction to hear the appeals direct.3 At the invitation of the Court, Mr P addressed that issue by applying to the High Court for review and seeking transfer of the review applications (with the consent of the respondent) to this Court. The application was duly made and granted.Background[4] In 2003 Bridgecorp made a loan advance to a cousin of Mr P. The cousin failed to repay the loan. Bridgecorp obtained judgment and took bankruptcy proceedings against the cousin.[5] In December 2006 Mr P and his uncle entered an agreement to purchase Bridgecorp's rights against the cousin for $50,000. They were to pay the $50,000 by 8 May 2007. Their agreement to pay by that date was supported by a third mortgage over a property registered in the name of the uncle (as to a three-quarter share) and Mr P (as to a one-quarter share). Mr P executed both the agreement and the mortgage for himself and also on behalf of his uncle, purporting to act for his uncle under a power of attorney. Mr P and his uncle failed to pay the $50,000 by 8 May 2007 as required.[6] When Bridgecorp sought to exercise its rights under the mortgage the uncle sought an injunction to prevent Bridgecorp selling the property. It transpired that Mr P had forged the power of attorney. In a judgment delivered in February 2010 Joseph Williams J held that the uncle was entitled to a discharge of the mortgage insofar as it related to him but accepted that Bridgecorp held a valid security over Mr P's one-quarter share of the property.4 The Judge indicated that, if necessary, he would direct a sale of the property with distribution of the uncle's share to him andthe balance payable to Bridgecorp. Before doing so, the Judge invited the parties to discuss a practical resolution.[7] Negotiations then followed between Mr P and Bridgecorp which ultimately led, in August 2010, to the execution by Mr P of a deed of settlement together with3 Minute of 17 October 2012; Judicature Act 1908, ss 64 and s 26P(2).4 G v Bridgecorp Ltd HC Auckland CIV-2008-404-8217, 15 February 2010.an admission of claim (the settlement deed). The settlement deed attached a draft statement of claim to which the admission related.[8] Relevantly for present purposes, the settlement deed recorded inter alia:Acknowledgement of Debt2 [Mr P] acknowledges that he is indebted to Bridgecorp in the sum of $58,173.99, together with interest at the rate of 10% per annum from8 July 2010, real estate agents' charges incurred in relation toBridgecorp's sale of the Property and legal fees incurred byBridgecorp in relation to enforcement of the DAAD and the Proceeding (Debt).Payment of Debt3 In consideration for Bridgecorp signing this agreement, [Mr P] shall pay $68,173.99 to Bridgecorp, in the following instalments (inclusive of GST, if any):3.1 $1,000 on or before 31 August 2010;3.2 $5,000 on or before 29 October 2010;3.3 $5,000 on or before 31 December 2010;3.4 $5,000 on or before 31 March 2011;3.5 $5,000 on or before 31 May 2011;3.6 $5,000 on or before 31 July 2011; and3.7 $300 per week, commencing on 5 August 2011 and continuing until the amount of $68,173.99 is paid in full....Admission of claim9 Upon execution of this deed, [Mr P] shall execute an admission of claim in the form annexed to this deed and deliver the original, executed admission of claim to Bridgecorp.10 The admission of claim shall be held by Bridgecorp, and shall not be filed in Court unless [Mr P] fails to make a payment in accordance with clause 3 above. Bridgecorp undertakes that it will not use the admission of claim other than in accordance with this clause and clause 11 below.11 In the event that [Mr P] fails to make any payment strictly in accordance with clause 3 above, time being of the essence, Bridgecorp may (without any further notice) file the admission of claim together with a statement of claim in the form annexed to this deed, and immediately enter and enforce judgment, and may seal judgment under the High Court Rules, against [Mr P] for the amount of the Debt then outstanding, plus interest in accordance with clause6.2 above,5 less all payments made by [Mr P] pursuant to clause 3 above.12 [Mr P] irrevocably authorises Bridgecorp to file the admission of claim under Rule 15.16 of the High Court Rules, on behalf of [Mr P].[9] Mr P failed to keep to the repayment schedule. Bridgecorp took action. In March 2011 it filed a statement of claim against him in the High Court together with the admission. Bridgecorp also filed an affidavit by the receiver, Mr McCloy, attaching the settlement deed. The claim filed was in substantively the same form to that attached to the settlement deed, the only differences being the recalculation of the sum owing, and that, unlike the draft, the statement of claim filed did not provide for solicitor/client costs pursuant to cl 7 of the settlement deed. Bridgecorp sought judgment in the sum of $62,721.67 (after calculating interest due on the default and giving credit for the payments made).6[10] Instead of sealing the judgment under r 15.16 of the High Court Rules, the Registrar referred the file to Associate Judge Bell. The Associate Judge declined to authorise the entry of judgment in terms of the admission as Mr P had not been served with the proceedings.7[11] When Mr P was subsequently served with the proceedings he filed a statement of defence and also applied under r 15.16(2) for leave to withdraw the admission.[12] The application for leave to withdraw the admission of claim was advanced on the grounds that:(a) at the time he signed the admission Mr P was suffering from depression and post-traumatic stress disorder, so that his judgment was significantly impaired by the illness and medication. He was also affected by threats and pressure from Bridgecorp and/or its solicitors;5 Clause 6.2 of the deed provided for the payment of interest at 10 per cent in the event of default.6 Following the hearing counsel for the respondent provided a copy of the draft statement of claimto the Court.7 Minute of 24 March 2011.(b) Bridgecorp was aware of his illness;(c) he did not seek legal advice in relation to the admission;(d) the admission was an unfair bargain and was otherwise unreasonable and unjust.[13] Bridgecorp opposed the application for leave to withdraw the admission of claim. Associate Judge Christiansen dismissed the application in his judgment delivered on 14 October 2011. After reviewing the negotiations between the partieshe found Mr P's allegation of bullying and oppressive conduct to be vastlyoverstated. The Associate Judge also concluded that Mr P's mental health issueswere not such that he was unaware of or did not understand the purposes of the settlement deed and admission. The Associate Judge confirmed Bridgecorp was entitled to judgment in terms of the admission and fixed costs on the application before him.[14] Mr P then filed the appeal with this Court. Some months later he also applied to set aside the judgment of 14 October. In that application Mr P also sought discovery of communications between Bridgecorp, its solicitors and himself, and also sought a stay of the judgment. As previously noted, Associate Judge Christiansen declined to deal with the applications in a minute issued on 11 July 2012. He considered that the issues raised by the applications had been determined by his judgment of 14 October and the applications were an abuse of process. While he did not formally dismiss the applications, he effectively stayed them by declining to allocate a hearing.[15] Mr P purported to appeal to this Court from that decision as well.[16] The decisions of the Associate Judge were decisions made on interlocutory applications following hearings in Chambers. Any challenge to them should have been by application for review by a Judge of the High Court rather than by direct appeal to this Court. That matter has, however, been addressed by the procedure wereferred to above (at [3]). We are thus able to deal with Mr P's case on itssubstantive merits.The appeal in this Court[17] In this Court Mr P argues:(a) Bridgecorp was not able to use r 15.16 in this case. The rule does not permit a party to rely on an admission of claim executed prior to the filing of proceedings;(b) Mr P's decision-making ability was adversely affected by his mental illness;(c) Mr P did not have recourse to legal advice at the time of execution of the deed and admission;(d) Bridgecorp's solicitors had engaged in bullying behaviour;(e) the Associate Judge erred when proceeding to resolve conflicts in the evidence;(f) the material findings of fact relied on by the Associate Judge could not be supported on the evidence before him;(g) the Associate Judge erred in awarding costs when the statement of claim did not seek costs and the respondent had filed a memorandum confirming that costs was not in issue.[18] The submission in (a) raises an issue of jurisdiction and the interpretation of r 15.16. The submissions in (b), (c) and (d) raise the related issues of unconscionable bargain, duress and undue influence. The submissions in (e) and (f) challenge the factual findings of the Associate Judge. The last submission in (g)challenges the Associate Judge's decision to award costs.Jurisdiction – can r 15.16 apply to an admission executed prior to the filing of proceedings?[19] Rule 15.16 provides:Admission of cause of action(1) At any time after a party has been served with a notice of proceeding, that party may file and serve (separately from the party's pleadings) an admission of all, some, or part of the alleged causes of action on all other parties to the proceeding.(2) An admission can be withdrawn only with the leave of the court.(3) When an admission is filed and served under subclause (1), a party on whom the admission is served may seal judgment on the cause of action admitted, without prejudice to that party's right (if any) to proceed on any other cause of action.(4) An admission under subclause (1) relating to any cause of action in which a sum of money is claimed must state the exact amount admitted.(5) Any judgment entered on an admission filed and served under subclause (1) may, upon application, be set aside by the court if—(a) the plaintiff, being under a duty or obligation to the defendant not to enter judgment on the admission, acted contrary to that duty or obligation in entering judgment; or(b) the plaintiff, in entering judgment, acted fraudulently, unconscionably, or in wilful or reckless disregard of thedefendant's rights.(6) Upon an application under subclause (5), the court may direct that a proceeding be brought to determine whether judgment was wrongfully entered.(7) This rule does not affect rule 8.15.[20] We agree that the introductory words of r 15.16(1) contemplate that the admission will be filed after the proceedings have been served and the party is aware of the claim. As a matter of common sense, that must be so. Clearly proceedings must be before the Court for the admission to be filed. But in our judgment the rule does not prevent a party obtaining an admission of claim in advance of proceedings being filed.[21] There is no reason in principle why, if the parties have reached an agreed settlement, an admission cannot be prepared in anticipation that proceedings will only be commenced, and the admission filed, in the event of default. The rule does not, as Mr Pidgeon QC submitted for Mr P, prevent such a course of action.8 The rule is silent on the issue. Rule 1.2 therefore applies. To allow an admission, prepared as part of an agreed settlement, to be filed in proceedings subsequently issued if the settlement is breached, promotes, and is consistent with, the just, speedy and inexpensive determination of litigation. The alternative would be to issue proceedings at the time of the settlement and to regularly adjourn them from case management conference to case management conference, until default. That would incur unnecessary expense to the parties and would be a waste of Court resources. It would be contrary to the objectives of the rules.[22] There are safeguards for the party providing an admission in such circumstances. They may either apply to withdraw the admission or, perhaps more relevantly, may apply to set aside the judgment under r 15.16(5).[23] Mr Pidgeon also noted the rule provides for the defendant (in this case Mr P) to file the admission. However, we agree with the analysis of Heath J in Mather vO'Keefe where the Judge accepted the creditor could hold and file the admission in an agency capacity.9 There is no difference, in practical terms, between the admission completed by Mr P and an admission provided by a defendant to a plaintiff after proceedings have been commenced. Mr P knew the claim he was facing, and the nature of the proceedings in which the admission was to be filed if he defaulted. The draft statement of claim was attached to the settlement deed. We note that Mr P provided Bridgecorp with express authority to file the admission on his behalf.[24] Following the hearing before this Court, Mr Pidgeon filed a further memorandum dated 29 October 2012, in which he repeated his submission that the admission failed to comply with r 15.16(4), which requires an admission relating toany cause of action in which a sum of money is claimed to "state the exact amount8 Mr P had acted for himself in the High Court.9 Mather v O'Keefe [2012] NZHC 2240.admitted". Mr Pidgeon contends this wording should be construed strictly, and thatan admission which provides a method for calculating the sum admitted will not suffice. We disagree. In the present case, the admission was for $58,173.99, together with amounts which were readily and exactly calculable based on the terms of the admission. In our view, this more than adequately complies with r 15.16(4). The purpose of r 15.16(4) is to ensure that the admitted amount can be ascertained with precision, so that the plaintiff can determine whether or not to accept the admission, and, if accepted, to enable judgment to be sealed for a specific amount. Given the time that may pass between the provision of an admission of claim, even in extant proceedings, and when it may be filed under r 15.16 and judgment sealed, it would be impracticable to restrict admissions of claim to fixed, predetermined amounts.[25] Mr Pidgeon next submitted that r 15.15 may have been more appropriate than r 15.16. He noted that an application would have been required for judgment under that rule. But r 15.15 provides for a quite different situation to the present. It contemplates that, following an admission of facts (in pleadings for example) a party may apply for judgment on the basis of those particular admitted facts. In contrast, r 15.16 provides for the admission of a cause (or causes) of action or the whole of the claim. It enables a party to seal judgment on the basis of the admission without application. The rationale behind the rule is that if a party has, with full knowledge of the claim, conceded liability, there is no need for the Court to determine liability.Judgment follows the admission. A party in Mr P's position may then pursue anapplication to set the judgment aside under r 15.16(5).[26] For present purposes we are prepared to approach consideration of the issues in the way counsel did in the High Court, namely that the test to be applied on the application to withdraw the admission should be similar to the test to be applied on an application under r 15.16(5) to set aside a judgment entered on the basis of the admission. That requires consideration of whether Bridgecorp has actedfraudulently, unconscionably or in wilful or reckless disregard of Mr P's rights. The test would be satisfied if, for example, the admission which supported the judgment was obtained as a result of an unconscionable bargain, duress or undue influence. We now turn to address those issues.Unconscionable bargain, undue influence and duress[27] Although Mr P focused on the factual challenges (noted above at [17](b), (c) and (d)) it is necessary to put those challenges into a legal framework. Thechallenges and Mr Pidgeon's submissions raise issues of unconscionable bargain,duress and undue influence.Unconscionable bargain[28] In Gustav & Co Ltd v Macfield Ltd this Court identified the following principles as applying to the law of unconscionable bargain:101 Equity will intervene to relieve a party from the rigours of the common law in respect of an unconscionable bargain.2 This equitable jurisdiction is not intended to relieve parties from"hard" bargains or to save the foolish from their foolishness. Rather,the jurisdiction operates to protect those who enter into bargains when they are under a significant disability or disadvantage from exploitation.3 A qualifying disability or disadvantage does not arise simply from an inequality of bargaining power. Rather, it is a condition or characteristic which significantly diminishes a party's ability toassess his or her best interests. It is an open-ended concept. Characteristics that are likely to constitute a qualifying disability or disadvantage are ignorance, lack of education, illness, age, mental or physical infirmity, stress or anxiety, but other characteristics may also qualify depending upon the circumstances of the case.4 If one party is under a qualifying disability or disadvantage (the weaker party), the focus shifts to the conduct of the other party (the stronger party). The essential question is whether in the particular circumstances it is unconscionable to permit the stronger party to take the benefit of the bargain.5 Before a finding of unconscionability will be made, the strongerparty must know of the weaker party's disability or disadvantage andmust "take advantage of" that disability or disadvantage.6 The requisite knowledge may be that of the principal or an agent, and may be actual or constructive. Factors associated with the substance of a transaction (for example, a marked imbalance in consideration) or the way in which a transaction was concluded (for10 Gustav & Co Ltd v Macfield Ltd [2007] NZCA 205, [2007] BCL 668 at [30]. An appeal to theSupreme Court was dismissed: Gustav & Co Ltd v Macfield Ltd [2008] NZSC 47, [2008] 2NZLR 735.example, the failure of one party to receive independent advice in relation to a significant transaction) may lead to a finding that the stronger party had constructive knowledge. So, in the particular circumstances the stronger party may be put on enquiry, and in the absence of such enquiry, may be treated as if he or she knew of the disability or disadvantage.7 "Taking advantage of" (or victimisation) in this context encompasses both the active extraction and the passive acceptance of a benefit....8 If these conditions are met, the burden falls on the stronger party to show that the transaction was a fair and reasonable one and should therefore be upheld.[31] While factors such as a marked imbalance in consideration or procedural impropriety are generally present in unconscionability cases, neither is a prerequisite for relief. However, if there is no significant imbalance in consideration or if the weaker party received full independent advice it is unlikely that any issue of unconscionability will arise.[29] In the present case the first issue that arises is whether, as Mr Pidgeon submitted, Mr P was under a qualifying disability or disadvantage by reason of mental infirmity, stress or anxiety such that his ability to assess his best interests when negotiating and entering the settlement was significantly diminished.[30] The relevant time must be the date the settlement deed was completed in August 2010. Mr P relied on the reports of Drs Shieff and Louw, both of whom had assessed him prior to his entry into the settlement deed. Dr Shieff saw Mr P in January 2008. In his opinion Mr P was battling chronic post-traumatic stress disorder with major depression. Dr Louw examined Mr P on 21 September 2009 in order to prepare a report for ACC purposes. At that time, Dr Louw concluded that Mr P was not fit for work, largely on the basis of his low mood, chronic insomnia, fatigue, poor concentration and memory. However, he also noted that, in terms of his mental state examination, Mr P cognitively appeared to be grossly intact, of high average intelligence, with fair insight and good judgment. Dr Louw further assessed Mr P in March 2010.[31] For the purposes of the proceedings Mr P obtained a further report from a Dr Newburn. Dr Newburn assessed Mr P in September 2011. Dr Newburn's reportwas largely in response to a report prepared by Dr Fraser on behalf of Bridgecorp.Dr Fraser had effectively peer reviewed the reports of Drs Shieff and Louw. Dr Fraser concluded that those reports did not support the contention that Mr P was unable to make rational judgments or that his decision-making was impaired at the time he entered the settlement deed.[32] Dr Newburn concluded that Mr P was subject to:... distractibility in response to interoceptive or extroceptive stimuli ... reflecting a reduced ability to divide and alternate attention. Secondly, the characteristic issues around memory impairment were also noted, allowing hypothesis to be generated relating to function in particular of the hippocampus. Thirdly, [Mr P's] personality style, reflecting an avoidance ofissues that he cannot fully control, and then clear anxiety with physiological changes, when forced to do so within the context of the assessment, demonstrates that he was indeed not as comfortable as reported.[33] In summary, the medical evidence confirms that Mr P suffers from recognised mental illness, namely post-traumatic stress disorder which is associated with depression. Dr Newburn suggests Mr P could have had an impaired ability to understand the significance of the material before him at the relevant time, but accepted that does not mean Mr P had a complete lack of awareness. Importantly, not one of the reports goes so far as to say that at the time Mr P entered the agreement in August 2010 his mental illness was such that it would have significantly diminished his ability to assess his own interests or that he was incapable of understanding the consequences of entering the settlement deed and signing the admission. The evidence simply does not establish that. The claim of unconscionable bargain falls at the first hurdle.[34] Even if it could be said that Mr P's decision-making was impaired at the time he entered the settlement deed, that would not of itself be sufficient for a finding of an unconscionable bargain to be made. For the settlement and admission to be an unconscionable bargain it must also be established that Bridgecorp knew of hisdisability and took advantage of it. The circumstances surrounding the execution ofthe settlement deed, including the issue of independent advice, are relevant to thisissue.[35] By the time the settlement was completed in August 2010 Bridgecorp was aware that Mr P had suffered from some psychological illness. Mr P says that heprovided Dr Shieff's psychiatric report to Ms Gear, a senior recovery officer forBridgecorp. Ms Gear also confirmed that in November 2008 Mr P advised her that he had recently been in hospital and was receiving psychiatric care.[36] It is relevant that the information of Mr P's mental illness was imparted toBridgecorp in late 2008 or shortly thereafter. By 2010, and during the negotiations leading to the settlement, Mr P painted a quite different picture of his condition to Bridgecorp. In an email of 29 April 2010 to Bridgecorp's solicitors (copied tocounsel acting for his uncle) Mr P stated inter alia:... By way of update. Since I have resumed part time consultancy work (after successfully receiving medical / psychiatric treatment) I have been able to repay Marac who had a charge against the ... property and had filed bankruptcy proceedings against me in the High Court. That was finally dismissed last week after they were repaid in full. Some 20,000 k I believe. I will forward that documentation and an up to date final statement from them. I believe that they were about to, or may have already removed their charge against the title. ...[37] Rather than suggesting Mr P was so affected by his mental condition that he was not capable of assessing his best interests or was under some form of disadvantage in negotiating a settlement, that communication would reasonably have suggested to Bridgecorp that Mr P's mental illness had been treated and controlled. The balance of the email suggests that he had a good grasp of his financial position. It is also relevant to note at this point that Bridgecorp was aware Mr P had trained and worked as a lawyer for a number of years. The evidence does not support the submission that Bridgecorp knowingly took advantage of Mr P's mental illness.[38] There is a related issue. As this Court noted in Gustav & Co Ltd v Macfield Ltd, the lack of independent advice (and particularly knowledge of that by the creditor) may support a finding of constructive knowledge of a party'sdisadvantage.11 In the present case, Bridgecorp understood Mr P had independent advice (independent of Bridgecorp at least) from counsel, Mr Cunningham. During the course of the negotiations following the judgment in February 2010, Mr Cunningham (who had acted for Mr P's uncle in the case before Joseph Williams J) emailed Mr Burt, Bridgecorp's solicitor (copying in Mr P), in the following terms:11 See above at [28].Hello JamesI am informed that [Mr P] is in a position to pay Bridgecorp Ltd payments of $300 a week from next week.Would Bridgecorp agree to fix the total amount payable reflecting some saving in litigation costs so that [Mr P] can effectively reduce the debt and not merely slow the rate of increase resulting from accruing interest? Such a reduction in the debt could be contingent upon the payments being made on a regular basis.[39] In light of that communication, which was expressly an offer on behalf of Mr P, it was not unreasonable for Bridgecorp to take the view that Mr Cunningham was acting for Mr P, at least to the extent of negotiating the settlement they ultimately concluded.[40] Further, as Mr Burt noted in his email correspondence with Bridgecorp and Bridgecorp's solicitors, Mr P consistently copied Mr Cunningham into the emails.[41] Next, we note that Bridgecorp's understanding of Mr Cunningham'sinvolvement continued even after the settlement and admission were completed. Mr Cunningham wrote to Bridgecorp's solicitors in March 2011 after Mr P had defaulted in terms of his obligations under the deed. He referred to the default noting that:[Mr P] assures me that he will be back on track with his repayments by 31 March 2011. It would seem to be somewhat precipitate to force a sale for the sake of a $2,500 default in repayment.[42] Mr Cunningham has sworn an affidavit. He says that he was not acting for Mr P in his dealings with Bridgecorp in 2010. He says that in the interests of facilitating a settlement he just passed on to Bridgecorp's solicitors the informationMr P had given him.[43] While we accept that evidence, Bridgecorp was not aware of that at the time. It is the impression Bridgecorp had of the position that is important on this issue. Bridgecorp had no cause to suspect that Mr P was not in receipt of legal advice during the negotiations leading up to completion of the deed. Importantly, when Mr P was provided with the settlement deed for execution he advised, on 23 July 2010, that:I have had a quick look. It looks fine.I will carefully review this over the next day or so and take advice over theweekend and then come back to you by Monday. But I don't see any issues....[44] We conclude on this aspect of the matter that, on the information that it had at the relevant time, Bridgecorp had no reason to believe or understand that Mr P'smental condition or illness affected his ability to properly assess his best interests or to understand the settlement he was entering in August 2010. Nor was there anything from the surrounding circumstances that should have put Bridgecorp on inquiry in relation to that issue or as to Mr P's lack of independent advice. It cannotbe said that Bridgecorp took advantage of any disability Mr P may have been suffering from.[45] Before leaving this point we note the last consideration of an unconscionable bargain (if one got that far), is whether the transaction was a fair and reasonable one and should, in any event, be upheld. In this regard it is relevant that Mr P had an existing obligation to pay $50,000 to Bridgecorp by 8 May 2007 under the 2006 agreement. Default interest was running at 10 per cent per annum on that debt, so that by August 2010 Mr P had an existing obligation to Bridgecorp of approximately $66,250 (including interest), with interest continuing to run. The settlement deed completed in August 2010 capped his obligation at $68,173.99 (which includedwasted real estate agent's charges) and stopped interest running. The settlement alsoavoided the need for the property to be sold and further extended the time for Mr P to pay the debt.[46] It can hardly be said that the settlement Mr P agreed to in August 2010 was anything other than a fair and reasonable one. This was no unconscionable bargain.Undue influence[47] In Contractors Bonding Ltd v Snee Richardson J summarised the elements of undue influence as follows:1212 Contractors Bonding Ltd v Snee [1992] 2 NZLR 157 (CA) at 165.... undue influence consists in the gaining of an unfair advantage by an unconscientious use of power by a stronger party against a weaker in the form of some unfair and improper conduct, some coercion from outside, some overreaching, some form of cheating, and generally, though not always, some personal advantage obtained by the stronger party. It is directed at conduct within a relationship which justifies the conclusion that the disposition or agreement was not the result of a free exercise of thedisponer's will. The doctrine is founded on the principle that equity will protect the party who is subject to the influence of another from victimisation.[48] More recently in Royal Bank of Scotland plc v Etridge (No 2) Lord Nicholls noted that equity identified broadly two forms of unacceptable conduct.13 The first, which overlapped with the principle of duress, comprised overt acts of improper pressure or coercion, such as unlawful threats. The second form arose out of a relationship between two persons where one had acquired over another a measure of influence or ascendency of which the ascendant person took unfair advantage. For such a relationship the question was whether one party reposed sufficient trust and confidence in the other. There is no such relationship in the present case. The issue is whether Bridgecorp applied improper pressure on Mr P to enter the settlement and provide the admission.[49] It is submitted for Mr P that he was subject to undue influence by Bridgecorp and its advisers leading up to the completion by him of the settlement agreement. Having considered the context and course of dealing that preceded the settlement agreement, we are not able to accept that submission.[50] The starting point is that, as noted, Mr P had an existing obligation to Bridgecorp under the agreement of December 2006. Next, there was the judgment of Joseph Williams J. In that judgment, delivered in February 2010, Mr P was effectively invited and encouraged by the Judge to negotiate with Bridgecorp to avoid the need for the property to be sold. There was no suggestion from the judgment that Mr P was not liable for the entire amount under the earlier agreement. Mr P knew that, if the property was sold, his one-quarter share would be applied towards repayment of that debt.13 Royal Bank of Scotland plc v Etridge (No 2) [2002] 2 AC 773 (HL) at 795.[51] It is relevant that, although that judgment was delivered in February 2010, the settlement deed was not executed by Mr P until August 2010, some six months later. That passage of time does not support his submission that he was under pressure to agree to the settlement. There is then the content of the course of communications between Bridgecorp's solicitors and Mr P. We have reviewed the course of communications, which were conducted by email exchange. There is nothing in the exchanges to suggest any undue influence or improper pressure was being placed on Mr P by Bridgecorp (or its solicitors). We do not overlook the evidence of Mrs P that Mr P was very distressed after receiving the emails, and that, in her opinion, the emails appeared to be threatening and harassing. However, the emails that we have reviewed do not objectively support that conclusion.[52] At this point we note that in the second application Mr P sought discovery of emails that he had not retained. Mr Burt had the emails with him in Court. With the consent of both parties we granted leave for those emails to be adduced as further evidence on the appeal. None of those emails disclose any undue or unreasonable pressure on Mr P. We have to say that the tone of the emails from Bridgecorp'ssolicitors is both reasonable and considerate of Mr P's position. The most pointedcommunication in the material before the Court is one of 26 April 2010, in which Mr Burt wrote to Mr Cunningham in the following terms:Brett,Has there been any progress on the statement and details of the other debts?It has been almost a month since our e-mail below. [31 March 2010]. Unless there is some progress within the next couple of days, the receivers will need to give consideration to other steps, including making submissions on sale / partition and sale of the ... property.[53] In his memorandum submitted after the hearing Mr Pidgeon sought discovery of the communications between Bridgecorp, its employees and Mr P. It is apparentfrom the review of the communications between Bridgecorp's solicitors and Mr Pthat at the material time the relevant communications were between those parties rather than between Mr P and Bridgecorp direct. We are satisfied there is no evidence of any threat or unreasonable pressure by Bridgecorp for Mr P to completethe settlement deed. There is no evidence of any undue influence by Bridgecorp in its dealing with Mr P.Duress[54] In Pharmacy Care Systems Ltd v Attorney-General14 this Court discussed the development of duress as a cause of action. Hammond J identified the elements of duress as:15... First, there must be a threat or pressure. Secondly, that threat or pressuremust be improper. Thirdly, the victim's will must have been overborne by the improper pressure so that his or her free will and judgment have beendisplaced. Fourthly, the threat or pressure must actually induce the victim'smanifestation of assent. Fifthly, the threat or pressure must be sufficiently grave to justify the assent from the victim, in the sense that it left the victim no reasonable alternative. Sixthly, duress renders the resulting agreement voidable at the instance of the victim. This may be addressed either by raising duress as a defence to an action, or affirmatively, by applying timeously to a Court for avoidance of the agreement. Seventhly, the victim may be precluded from avoiding the agreement by affirmation.[55] The first question is the nature of the pressure or threat.[56] Mr P may well have felt under pressure facing the possible sale of the property and with his existing debt to Bridgecorp. However, for economic pressure to amount to duress, two elements must be established. The pressure must amount to compulsion of the will of a victim and the pressure must be illegitimate: Universe Tankships Inc of Monrovia v International Transport Workers' Federation.16[57] There is no evidence of any threat or unreasonable pressure by Bridgecorp for Mr P to complete the settlement deed. Again the context is important, including the length of time during which the negotiations took place, as well as the content and tone of those negotiations.14 Pharmacy Care Systems Ltd v Attorney-General (2004) 2 NZCCLR 187 (CA).15 At [98].16 Universe Tankships Inc of Monrovia v International Transport Workers' Federation [1983] 1 AC366 (HL) at 400.[58] Further, as noted above, when the deed was presented to Mr P for execution he advised on the Friday that he would review it and take advice over the weekend and come back by Monday. Then on Tuesday, some four days later, he replied:I am happy with the deed. Can you provide that once payment in full is made that your client will sign a discharge of mortgage in [registrable] form.As a sign of good faith, I have made the $1,000 payment to BNZ St Lukes. This is the payment due at the end of August.[59] We also note that over the months following execution of the deed Mr P made arrangements to meet the payments under the deed without at any time challenging the deed or suggesting that he had been placed under any improper pressure to execute it.[60] We conclude that there is no arguable basis to set aside the settlement deed and the admission of claim in this case. It follows we reject the submissions for Mr P noted at [17](e) and (f). We agree with the Associate Judge's factual findingsand accept he was entitled to reach the conclusion he did.The application to set aside the judgment[61] We can deal with Mr P's subsequent application to set aside the judgment shortly. Associate Judge Christiansen considered the application to set aside was an abuse of process. We agree.[62] The points Mr P relied upon to set aside the judgment had already been determined against him on the application to withdraw the claim. Mr P effectively conceded this point by his own evidence. He said in his affidavit to support the application to set the judgment aside:31. The Primary Application [to set aside the judgment] is made essentially for the same reasons as my Opposition to the application which gave rise to the Judgment.[63] Mr P was estopped from seeking to raise the same point again. The Associate Judge should have gone on to dismiss the application rather than declining to dealwith it. We quash the Associate Judge's decision not to allocate a hearing of theapplication and dismiss the application to set the judgment aside.The appeal against the costs award[64] In his written submissions Mr Pidgeon submitted the Associate Judge was wrong to order costs on a 2B basis when the respondent's claim did not seek costsand the respondent had filed a memorandum confirming costs was not an issue. Mr Pidgeon realistically accepted the point made by Mr Burt that the statement of claim did not seek costs because it anticipated judgment would be entered, without opposition, and the memorandum was filed before the application to withdraw was filed. That was a proper concession. The agreed position on costs did not contemplate a challenge to the admission and entry of judgment. When Mr P challenged the admission, Bridgecorp was put to further additional costs.[65] The only issue is quantum. We note that Associate Judge Bell had indicated costs on a District Court scale would be appropriate as the sum claimed was within the jurisdiction of the District Court. Associate Judge Christiansen applied costs on the High Court scale. Rule 15.16 of the High Court Rules could have been applied in the District Court.17 However, the judgment sum was well within the jurisdiction of the District Court. In the circumstances, and bearing in mind r 14.13 of the High Court Rules, we agree that the costs in the High Court should have been on the District Court scale.Result[66] The application to review the decision of the Associate Judge to decline the application to set aside the admission of claim is dismissed.[67] The decision of the Associate Judge not to allocate a hearing for the applications to set aside the judgment, for particular discovery and for stay is quashed. The applications are dismissed.17 District Court Rules, rr 12.19 and 1.6.[68] The application to review the award of costs in the High Court is allowed. The order for costs on a High Court 2B basis is quashed and replaced with an order for costs on a District Court 2B basis.Costs in this Court[69] In its submissions to this Court Bridgecorp sought costs on a standard appealbasis. In his memorandum filed after the hearing Mr Burt drew the Court's attentionto cl 7 of the settlement deed which provides for solicitor/client costs and sought costs on that basis. If the respondent had wished to rely on that provision it should have raised it before us so that Mr P had an opportunity to respond. It is too late to do so now.[70] The respondent is to have costs for a standard appeal on a band A basis plus usual disbursements.Solicitors:Pidgeon Law, Auckland for ApplicantChapman Tripp, Auckland for Respondent