Citation(s) [2007] EWCA Civ 1329, [2008] 1 WLR 643 Court Court of Appeal of England and Wales Judge sittings Mary Arden, Andrew Long, John Mummery Similar Pinnel's Case, Foakes v Beer, Re Selectmove Ltd, D & C Builders Ltd v Rees, Central London Property | ||
Collier v P & MJ Wright (Holdings) Ltd [2007] EWCA Civ 1329 is an English contract law case, concerning the doctrine of consideration and promissory estoppel in relation to "alteration promises".
Contents
Facts
Mr Collier was one of three partners of a property developer. They had assented to a court order to pay £46,000 to Wright Ltd in monthly installments of £600, and were jointly liable. From 1999 the payments went down to £200 a month. In 2000, swore Mr Collier, there was a meeting where Wright Ltd said he would be severally liable (for £15,600), rather than jointly (as a partner). The other two partners went bankrupt in 2002 and 2004. In 2006, when Mr Collier had finally made his payments (totalling exactly one third of the debt) Wrights served on him a statutory demand for the 'balance of the debt'. Mr Collier applied under rule 6.4 of the Insolvency Rules 1986 (because the debt was disputable on ‘substantial grounds’ (r.6.5(4)(b)); so he only needed to show there was a ‘genuine triable issue’ in which case the court would set aside the demand.
He alleged the variation agreement was binding, or if not that Wright Ltd was estopped from enforcing the full payment.
Judgment
The Court of Appeal reversed the judgment 'below' (= 'at first instance') on the promissory estoppel point.
Arden LJ held that Foakes v Beer applied, but referring to the ‘brilliant dictum’ of Denning J in High Trees, held that promissory estoppel could aid Mr Collier. Where he had been assured that he could repay only part of the debt, he had relied on the assurance by making his payments, Wright Ltd resiling from the promise ‘would of itself be inequitable’ [42].
Longmore LJ was more cautious than Arden LJ, confirming the need for some ‘meaningful reliance’ (after Rees), suggesting it was not a foregone conclusion that Wright's demand was entirely 'inequitable', but most importantly stressing the need for 'true accord'; stating:
Mummery LJ agreed, and stated that the appeal should be allowed because there was a prospect of real success on the "estoppel argument".
Significance
David Uff (for Collier) sought to carve out a third exception to Pinnel's Case (above and beyond Sir Edward Coke's own "the gift of a horse, hawk, robe etc in satisfaction is good" and that established by Williams v Roffey) submitting that:
serving to illustrate the ongoing tension between Pinnel's Case/Foakes v Beer "doctrine" and that of promissory estoppel and the judicial reticence to displace/modify a doctrine that flowed from no less a man than Sir Edward Coke; some commentators seeing the case as seeming to leave door open to side-stepping Foakes v Beer via “promissory estoppel” (see: Central London Property Trust Ltd v High Trees House Ltd) whilst others have criticised the judgment, Alexander Trukhtanov, suggesting:
Poole suggests there was an implicit assumption that Williams v Roffey Bros & Nicholls (Contractors) Ltdcould not apply in this context; she also suggests that the importance of the case should not be exaggerated, relating only to a finding of an "arguable defence of promissory estoppel".
Perhaps the final word should rest with Robert Pearce QC who after highlighting the uncertainty as to whether the courts will follow the implications inherent in High Trees (Central London Property Trust Ltd v High Trees House Ltd and D & C Builders v Rees; (and subsequently adopted by Arden LJ in Collier v P & MJ Wright (Holdings) Ltd) in that "as a corollary, if there is 'true accord', it will necessarily follow that it will be inequitable for the creditor to seek payment of the balance" going on to say: