When Pressure Stops Being “Just Business”: Lessons from the Equiticorp Case

Home › Case Studies › Case Law Library › Commercial & Business Cases › Business Judgment & Corporate Governance › Equiticorp Financial Services Ltd v Bank of New Zealand (1993) 32 NSWLR 50

Published: 17 November 2025 | Reviewed: 17 November 2025
(3-minute read)

Case Summary

In Equiticorp Financial Services Ltd v Bank of New Zealand (1993) 32 NSWLR 50, corporate collapse placed several Equiticorp entities under extreme liquidity pressure. The liquidators sought to recover funds transferred to Bank of New Zealand (BNZ), alleging that the bank’s conduct amounted to economic duress, breached directors’ duties, and relied on decisions made without proper authority.

The focus of this article is the duress claim - and the Court’s careful distinction between permissible commercial pressure and illegitimate coercion.

Kirby P distilled the issue at [d] on page 8:

“When does pressure, such as that exerted by a bank on a customer in difficult economic times… cross the line which separates permissible commercial pressure from unlawful economic duress which is unconscionable or illegitimate?”

The companies argued that BNZ’s insistence on releasing funds, at a time when the group was in “economic jeopardy”, left them with no meaningful choice. The bank denied this, characterising its conduct as ordinary commercial negotiation under its own regulatory constraints.

Giles J, at first instance, agreed with the bank in paragraph [c] on page 5:

“Although Bank of New Zealand exerted commercial pressure… such pressure was not illegitimate. It did not therefore constitute economic duress…”

The Court of Appeal upheld this conclusion. The pressure was real, but not improper. The bank was itself under constraint, and nothing pointed to threats, bad faith, or coercion beyond the normal commercial dynamics of a failing corporate group.

The case remains a leading illustration of the threshold between toughness and unlawfulness in commercial negotiations.

Why It Still Matters

For modern executives and boards, the case reveals a persistent vulnerability:

when organisations enter urgent, high-stakes negotiations, the people at the table may feel pressure that is intense, compressive, and asymmetrical, yet legally classified as “legitimate commercial pressure”.

This distinction matters because once a dispute escalates:

• the narrative hardens,

• positions become entrenched, and

• parties become more susceptible to making decisions they later cannot unwind.

Equiticorp shows that the law only intervenes when pressure becomes illegitimate, not simply when it is acute. In many negotiations, this line is only visible in hindsight.

A safer approach is to structure your advisory environment so that escalation, conflict, or brinkmanship cannot create financial incentives for your own advisers.

How to Avoid the Same Trap: The Conflict-Shield Safeguard

The risk revealed in Equiticorp is not just the behaviour of the bank, it is the absence of a protective structure around decision-makers when pressure intensifies.

Clean Law’s Conflict-Shield Safeguard is built to prevent advisers from benefiting when a matter escalates or becomes adversarial. This removes a subtle but powerful structural bias that can otherwise tilt negotiations toward brinkmanship.

Key elements include:

• No referral fees or shared profits - confirmed through ACNC-governed reporting and Law-Society-audited trust arrangements.

• No financial benefit from conflict escalation - because the advisory and litigation pathways are structurally separated.

• Governance transparency - so boards and executives can see, in clear language, that adviser incentives remain aligned with stability, not heat.

In the Equiticorp scenario, where the distinction between permissible and impermissible pressure was finely balanced, this type of structure materially reduces the chance that advisers contribute to, or fail to de-escalate, negotiations that drift into unsafe territory.

If you’re exploring how pressure dynamics can be re-designed rather than merely endured, the Conflict-Shield explainer offers a clearer, more detailed breakdown of the architecture.

Reflection

High-pressure commercial negotiation is an environment where legality, fairness and prudence do not always align. Equiticorp shows that even in moments of extreme corporate stress, the law protects only against illegitimate pressure, not pressure itself.

Many clients consider building institutional safeguards around their advisers to ensure that when pressure rises, incentives stay neutral and judgement stays clear.

Understanding how structural independence reduces negotiation risk often raises further questions about implementation.

You can explore the underlying architecture here:

If your organisation is facing time-sensitive negotiations or pressure from lenders, boards often seek a confidential, obligation-free discussion to map structural risks before decisions harden.

Book a confidentially discussion

By Nicky Wang
Principal Solicitor
Legal Liaison Ltd (trading as Clean Law)
Prepared in accordance with public-interest governance,
annual Law Society trust-account audits, and ACNC-reported standards.

Disclaimer: This page is intended to provide general information only and is not legal advice. The contents may not reflect the most current legal developments and do not take into account your individual circumstances. You should not act or refrain from acting on the basis of this information without obtaining legal advice tailored to your situation.