2 Q.B. QUEEN'S BENCH DIVISION 617

Transcription

1 2 Q.B. QUEEN'S BENCH DIVISION 617 A In choosing to acquire houses which had stood unoccupied for 1965 some time and which were likely to remain unoccupied the local Moore authority were keeping in mind their statutory duties in respect Minister of of the provision of housing accommodation. Housing and It is manifest from the inspector's report that the local autho- Government. rity did not overlook the legal rights which the applicant had under LAWTON J. B the leases with his tenants, but they were entitled to weigh those rights against, first, the local demand for housing accommodation, secondly, the fact that the houses were vacant and likely to remain so, and thirdly, the statutory provisions contained in section 98 of the Housing Act, 1957, about acquiring property in which there were leasehold interests. In the course of his dealings with the C local authority the applicant had stated that these four houses had been retained by him to provide an income for his old age. He had not revealed any other reason for retaining ownership of them. The facts show that the local authority were prepared not to interfere with the applicant's rights as an owner so long as he took steps to ensure that the houses were occupied. They did weigh D his personal interests against those of public need. The Minister did the same: he said so, albeit in general terms. In my judgment the applicant has not established a case for quashing this compulsory purchase order. The motion is dismissed. E Motion dismissed with costs to both respondents. Solicitors: Wilberforce, Jackson & Co.; Solicitor, Ministry of Housing and Local Government; Clerk, Coulsdon and Purley Urban District Council. F D. & C. BUILDERS LTD. v. REES C. A Accord and Satisfaction Accord Intimidation Acceptance of Nov.\i cheque in settlement for lesser sum than amount due Debtor's <* threat to pay nothing Whether valid accord and satisfaction DEIWINO Whether inequitable to enforce payment of balance. M.R., Contract Consideration Debtor and creditor Acceptance of cheque DANCKWERTS in settlement for lesser sum than amount due Whether settlement an <*Jj»' NN binding. Equity Clean hands Equitable estoppel Acceptance of cheque in settlement for lesser sum than amount due Debtor's threat to pay nothing Whether inequitable to enforce payment of balance.

2 618 QUEEN'S BENCH DIVISION [1966] C. A. Intimidation Threat to break a contract Debt Threat by debtor not \ 1965 to pay Receipt of lesser sum by creditor Whether an accord (post, p. 625E). D. & C. \r >y Builders Ltd. The plaimiffs) jobbing builders, claimed s. Id. from the defendant as the balance due for work and labour done and goods and materials supplied in respect of alterations and repairs to the defendant's shop in May and June, In July, 1964, when there was no dispute as to the work done, the sum of s. Id. had " been owing to the plaintiffs; but the defendant had not paid. On November 13, 1964, when the plaintiffs were in desperate financial straits, the defendant, through his wife, offered to pay the plaintiffs 300 if they would accept it in settlement, stating in effect that if the plaintiffs did not accept it they would get nothing. The plaintiffs told the defendant's wife that they had no choice but to accept and on November 14, 1964, they received a cheque for 300 in exchange for a receipt stating that the sum was received " in completion of the account." On the plaintiff's claim for the balance, the defendant set up a defence of bad workmanship and also that there was a binding settlement, a question which was tried as a preliminary issue. Judge Trapnell held that there was no consideration to support the agreement of November 13 and 14 and decided the preliminary issue in favour of the plaintiffs. On appeal by the defendant: Held, dismissing the appeal, (1) that payment by a debtor, whether in cash or by cheque, of a lesser sum than the amount of the debt was not a settlement of the debt which was binding at law on the creditor (post, pp. 623G 624A, 626A, D, 632G 633A). Pinnel's Case (1602) 5 Co.Rep. 117a, Cumber v. Wane (1718) 1 Stra. 426 and Foakes v. Beer (1884) 9 App.Cas. 605 applied. Sibree v. Tripp (1846) 15 M. & W. 23 distinguished. Goddard v. O'Brien (1882) 9 Q.B.D. 37 not followed. Per Winn L.J. It is an essential element of a valid accord and satisfaction that the agreement which constitutes the accord should itself be binding in law and no such agreement can be so binding unless it is either made under seal or supported by consideration. Satisfaction, viz., performance of an agreement of accord does not provide retroactive validity to the accord, but depends for its effect upon the legal validity of the accord as a binding contract at the time when it is made (post, p. 632E-F). (2) (Winn L.J. expressing no opinion on the point.) That in view of the threat to pay nothing unless the cheque for 300 was accepted in settlement, there was no true accord between the parties, and no equity in the defendant to prevent the plaintiffs from recovering the full amount of the debt (post, pp. 625E, 626F). Per Lord Denning M.R. Where there is a true accord, under which the creditor voluntarily agrees to accept a lesser sum in satisfaction, and the debtor acts upon that accord by paying the lesser sum and the creditor accepts it, then it is inequitable for C D g F Q

3 2 Q.B. QUEEN'S BENCH DIVISION 619 (\ the creditor afterwards to insist on the balance. But he is not C. A. bound unless there has been truly an accord between them (post, j9 65 p. 625A-B). Hughes v. Metropolitan Railway Co. (1877) 2 App.Cas. 439 B^j e^^; td and Central London Property Trust Ltd. v. High Trees House Ltd. v. [1947] K.B. 130; 62 T.L.R. 557; [1956] 1 All E.R. 256 considered. ^ff APPEAL from Judge Trapnell, sitting at Shoreditch County B Court. The plaintiffs, D. & C. Builders Ltd., claimed s. Id. in the Shoreditch County Court against the defendant, Sidney, carrying on business as B. Saunders & Son, for the balance due for work and labour done and goods and materials supplied by them in respect of certain alterations and repairs at the defendant's premises, 218, Brick Lane, London, E.l, in May and June, According to their particulars of claim, the plaintiffs' account amounted to s. Id. and credits were given for payments on account of 200, 50, 300 and a credit of 14. By his defence, the defendant contended that on November 14, 1964, the plaintiffs n accepted from the defendant the sum of 300 in completion and in satisfaction of the account mentioned in the particulars of claim as evidenced in writing by a receipt dated November 14, Alternatively it was contended that the work was done so negligently and the materials were so inferior in quality that they were of little, if any, value or use to the defendant. P On May 5, 1965, Judge Trapnell gave judgment for the plaintiffs on the preliminary issue as to whether there was a binding settlement. The defendant appealed on the ground that upon the facts found he was entitled to have the preliminary issue decided in his favour and that the judge misdirected himself in holding that a negotiable instrument, namely, a cheque for 300, was not P good consideration to support an accord and satisfaction to discharge a debt for s. Id. The facts are fully set out in the judgments. ^ Martin Reynolds for the defendant. Here there was accord and satisfaction. Accord when the plaintiffs agreed to accept 300 in settlement of the debt and satisfaction when they accepted the cheque for 300 in settlement of the account and it was honoured. Reliance is placed on Sibree v. Tripp 1 and Goddard v. O'Brien 2 and see also Bidder v. Bridges 3 [Reference was made to Cumber v. Wane 4 and Foakes v. Beer.*] The defendant relies 1 (1846) 15 M. & W. 23. * (1718) 1 Stra (1882) 9 Q.B.D (1884) 9 App.Cas (1888) 37 Ch.D. 406, C.A.

4 620 QUEEN'S BENCH DIVISION [1966J c - A - on the technical rule of law in Goddard v. O'Brien 6 that payment A 1965 of a lesser sum by cheque is good accord and satisfaction and D. & c. a l so on tne decision in Day v. McLea. 7 Builders Ltd. 5 Q Isaacs for the plaintiffs. There are two separate ques- tions: first, was there an accord?; secondly, was there satisfaction? There was a finding here of a payment of a smaller amount in discharge of a larger amount. The payment by cheque B was merely incidental, "to suit the plaintiffs' convenience." Cumber v. Wane* shows that giving a note for a smaller sum cannot be pleaded as a satisfaction for a larger sum: see Smith's Leading Cases, 13th ed. (1929), Vol. 1, p. 373, and the note on Sibree v. Tripp 9 at p Sibree v. Tripp 9 and Goddard v. O'Brien 10 proceed on a view of Cumber v. Wane " which was C not approved in Foakes v. Beer. 12 The cases where a cheque in settlement has been found to be a good satisfaction for a larger sum due are cases where the cheque has originated from a third party. No case has been found where a cheque by a party has been found to be good satisfaction in settlement of a larger sum. Goddard v. O'Brien 13 was questioned by Fletcher D Moulton L.J. in Hirachand Punamchand V. Temple." Foakes v. Beer 15 shows that the principles of Pinnel's Case " and Cumber v. Wane 17 are still intact: see per Lord Selborne L.C. 18 and Lord Blackburn. 19 Since Foakes v. Beer, 20 Goddard v. O'Brien 21 should no longer be regarded as good law. In Sibree v. Tripp 22 the settlement put an end to the litigation; the consideration was the settlement of the litigation. The statement in Halsbury's Laws of England, 3rd ed., Vol. 8 (1954), p. 207, that "a cheque or other negotiable instrument may be taken in satisfaction of a debt for a larger amount than that of the bill or note " is too broad. It can be argued that there was a new cause of action on the p negotiable instrument. In Day v. McLea 23 the cheque was clearly taken on account and there was no accord. The county court judge was right Reynolds in reply. Sibree v. Tripp 2i shows that the fact that 8 9 Q.B.D. 37. (1889) 22 Q.B.D. 610; 5 T.L.R. 379, C.A. 8 1 Stra M. & W Q.B.D Stra App.Cas Q.B.D [1911] 2 K.B. 330, 339, App.Cas G (1602) 5 Co.Rep. 117a. 1 Stra App.Cas. 605, Ibid App.Cas ! 9 Q.B.D M. & W Q.B.D i 15 M. & W. 23.

5 2 Q.B. QUEEN'S BENCH DIVISION 621 \ the payment was conditional is immaterial. In Foakes v. Beer, 25 c - A - Sibree v. Tripp 26 was distinguished and not overruled. There is 1965 a valid line of cases starting with Sibree v. Tripp 28 showing that D. & c. a cheque or other negotiable instrument may be taken in satisfaction of a debt for a larger amount. These cases have never been overruled and are enhanced by Bidder v. Bridges Cur. adv. vult. LORD DENNING M.R. The plaintiffs are a little company. " D" stands for Donaldson, a decorator, " C" for Casey, a plumber. They are jobbing builders. The defendant has a shop 2 where he sells builders' materials. In the spring of 1964 the defendant employed the plaintiffs to do work at his premises, 218, Brick Lane. The plaintiffs did the work and rendered accounts in May and June, which came to s. Id. altogether. The defendant paid 250 on account. In addition the plaintiffs made an allowance of 14 off the bill. So ) in July, 1964, there was owing to the plaintiffs the sum of s. Id. At this stage there was no dispute as to the work done. But the defendant did not pay. On August 31, 1964, the plaintiffs wrote asking the defendant to pay the remainder of the bill. He did not reply. On October 19, 1964, they wrote again, pointing out that the " outstanding 5 account of 480 is well overdue." Still the defendant did not reply. He did not write or telephone for more than three weeks. Then on Friday, November 13, 1964, the defendant was ill with influenza. His wife telephoned the plaintiffs. She spoke to Casey. She began to make complaints about the work: and then said: " My husband will offer you 300 in settlement. That is all you'll 7 get. It is to be in satisfaction." Casey said he would have to discuss it with Donaldson. The two of them talked it over. Their company was in desperate financial straits. If they did not have the 300, they would be in a state of bankruptcy. So they decided to accept the 300 and see what they could do about the rest afterwards. Thereupon Donaldson telephoned to the defendant's wife. He said r to her: " 300 will not even clear our commitments on the job. We will accept 300 and give you a year to find the balance." She said: "No, we will never have enough money to pay the balance. 300 is better than nothing." He said: " We have no choice but to accept." She said: " Would you like the money by 25 9 App.Cas Ch.D. 406, C.A M. & W Q.B BuUde v rs Ltd -

6 622 QUEEN'S BENCH DIVISION [1966] c A. cash or by cheque. If it is cash, you can have it on Monday. If A 1965 by cheque, you can have it tomorrow (Saturday)." p. &C. On Saturday, November 14, 1964, Casey went to collect the Builders Ltd. money jj e took w j t jj hj m a r e c e j p t prepared on the company's paper with the simple words: " Received the sum of 300 from LORD Mr.." She gave him a cheque for 300 and asked for a M.R. receipt. She insisted that the words " in completion of the account" B be added. Casey did as she asked. He added the words to the receipt. So she had the clean receipt: " Received the sum of 300 from Mr. in completion of the account. Paid, M. Casey." Casey gave in evidence his reason for giving it: " If I did not have the 300 the company would have gone bankrupt. The only reason we took it was to save the company. She knew the position we C were in." The plaintiffs were so worried about their position that they went to their solicitors. Within a few days, on November 23, 1964, the solicitors wrote complaining that the defendant had " extricated a receipt of some sort or other " from them. They said they were treating the 300 as a payment on account. On November 28, D 1964, the defendant replied alleging bad workmanship. He also set up the receipt which Casey gave to his wife, adding: " I assure you she had no gun on her." The plaintiffs brought this action for the balance. The defendant set up a defence of bad workmanship and also that there was a binding settlement. The question of settlement was tried as a preliminary issue. E The judge made these findings: " I concluded that by the middle of August the sum due to the plaintiffs was ascertained and not then in dispute. I also concluded that there was no consideration to support the agreement of November 13 and 14. It was a case of agreeing to take a lesser sum when a larger sum was already due to p the plaintiffs. It was not a case of agreeing to take a cheque for a smaller amount instead of receiving cash for a larger amount. The payment by cheque was an incidental arrangement." He decided, therefore, the preliminary issue in favour of the plaintiffs. The defendant appeals to this court. He says that there was here an accord and satisfaction an accord when the plaintiffs agreed, however reluctantly, to accept 300 in settlement of the account and satisfaction when they accepted the cheque for 300 and it was duly honoured.. The defendant relies on Sibree v. Tripp 1 and Goddard v. O'Brien 2 as authorities in his favour. 1 (1846) 15 M. & W (1882) 9 Q.B.D. 37.

7 2 Q.B. QUEEN'S BENCH DIVISION 623 A This case is of some consequence: for it is a daily occurrence C. A. that a merchant or tradesman, who is owed a sum of money, is 1965 asked to take less. The debtor says he is in difficulties. He offers p. &c. a lesser sum in settlement, cash down. He says he cannot pay more. Build «rs Ud - The creditor is considerate. He accepts the proffered sum and forgives him the rest of the debt. The question arises: Is the LORD B settlement binding on the creditor? The answer is that, in point MJJ? of law, the creditor is not bound by the settlement. He can the next day sue the debtor for the balance: and get judgment. The law was so stated in 1602 by Lord Coke in Pinnel's Case 3 and accepted in 1889 by the House of Lords in Foakes v. Beer.* Now, suppose that the debtor, instead of paying the lesser sum C in cash, pays it by cheque. He makes out a cheque for the amount. The creditor accepts the cheque and cashes it. Is the position any different? I think not. No sensible distinction can be taken between payment of a lesser sum by cash and payment of it by cheque. The cheque, when given, is conditional payment. When honoured, it is actual payment. It is then just the same as cash. If a creditor D is not bound when he receives payment by cash, he should not be bound when he receives payment by cheque. This view is supported by the leading case of Cumber v. Wane,* which has suffered many vicissitudes but was, I think, rightly decided in point of law. Sibree v. Tripp" is easily distinguishable. There the plaintiffs E brought an action for 500. It was settled by the defendant giving three promissory notes amounting in all to 250. Those promissory notes were given upon a new contract, in substitution for the debt sued for, and not as conditional payment. The plaintiff's only remedy thenceforward was on the notes and not on the debt. Goddard v. O'Brien 7 is not so easily distinguishable. There a F creditor was owed 125 for some slates. He met the debtor and agreed to accept 100 in discharge of it. The debtor gave a cheque for 100. The creditor gave a written receipt " in settlement on the said cheque being honoured." The cheque was clearly given by way of conditional payment. It was honoured. The creditor sued the debtor for the balance of 25. He lost because the 100 was paid by cheque and not by cash. The decision was criticised by Fletcher Moulton L.J. in Hirachand Punamchand v. Temple* and by the editors of Smith's Leading Cases, 13th ed. (1929), Vol. 1,» (1602) 5 Co.Rep. 117a. 7 9 Q.B.D. 37. * (1884) 9 App.Cas [1911] 2 K.B. 330, 340; 27» (1721) 1 Stra T.L.R M. & W. 23.

8 624 QUEEN'S BENCH DIVISION [1966] c A - p It was, I think, wrongly decided. In point of law payment A 1965 of a lesser sum, whether by cash or by cheque, is no discharge p. & c. of a greater sum. v. ' This doctrine of the common law has come under heavy fire. It was ridiculed by Sir George Jesse! in Couldery v. Bertram? It LORD was said to be mistaken by Lord Blackburn in Foakes v. Beer} 0 DENNING M.R. It was condemned by the Law Revision Committee (1945 Cmd. B 5449), paras. 20 and 21. But a remedy has been found. The harshness of the common law has been relieved. Equity has stretched out a merciful hand to help the debtor. The courts have invoked the broad principle stated by Lord Cairns in Hughes v. Metropolitan Railway Co. 11 "It is the first principle upon which all courts of equity proceed, that if parties, who have entered into definite and distinct terms involving certain legal results, afterwards by their own act or with their own consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those D rights will not be allowed to enforce them when it would be inequitable having regard to the dealings which have taken place between the parties." It is worth noticing that the principle may be applied, not only so as to suspend strict legal rights, but also so as to preclude the enforcement of them. This principle has been applied to cases where a creditor agrees to accept a lesser sum in discharge of a greater. So much so that we can now say that, when a creditor and a debtor enter upon a course of negotiation, which leads the debtor to suppose that, on payment of the lesser sum, the creditor will not enforce payment of the balance, and on the faith thereof the debtor pays the lesser sum and the creditor accepts it as satisfaction: then the creditor will not be allowed to enforce payment of the balance when it would be inequitable to do so. This was well illustrated during the last war. Tenants went away to escape the bombs and left their houses unoccupied. The landlords accepted a reduced rent for the time they were empty. It was held that the landlords could not afterwards turn round and sue for the balance, see Central London Property Trust Ltd. v. High Trees House Ltd. 12 This caused at the time some eyebrows to be raised in high places. But they have 8 (1881) 19 Ch.D. 394, 399. «(1877) 2 App.Cas. 439, App.Cas. 605, 622. " [1947] 1 K.B. 130; 62 T.L.R. 559; [1956] 1 All E.R c E F Gr

9 2 Q.B. QUEEN'S BENCH DIVISION 625 A been lowered since. The solution was so obviously just that no one C. A. could well gainsay it In applying this principle, however, we must note the qualifica- D. & C. tion: The creditor is only barred from his legal rights when it Build «sltd - would be inequitable for him to insist upon them. Where there has been a true accord, under which the creditor voluntarily LORD B agrees to accept a lesser sum in satisfaction, and the debtor acts M.R. upon that accord by paying the lesser sum and the creditor accepts it, then it is inequitable for the creditor afterwards to insist on the balance. But he is not bound unless there has been truly an accord between them. In the present case, on the facts as found by the judge, it seems C to me that there was no true accord. The debtor's wife held the creditor to ransom. The creditor was in need of money to meet his own commitments, and she knew it. When the creditor asked for payment of the 480 due to him, she said to him in effect: " We cannot pay you the 480. But we will pay you 300 if you will accept it in settlement. If you do not accept it on those terms, D you will get nothing. 300 is better than nothing." She had no right to say any such thing. She could properly have said: " We cannot pay you more than 300. Please accept it on account." But she had no right to insist on his taking it in settlement. When she said: " We will pay you nothing unless you accept 300 in settlement," she was putting undue pressure on the E creditor. She was making a threat to break the contract (by paying nothing) and she was doing it so as to compel the creditor to do what he was unwilling to do (to accept 300 in settlement): and she succeeded. He complied with her demand. That was on recent authority a case of intimidation: see Rookes v. Barnard 13 and Stratford (J. T.) & Son Ltd. v. Lindley. 1 * In these circumstances F there was no true accord so as to found a defence of accord and satisfaction: see Day v. McLea. ls There is also no equity in the defendant to warrant any departure from the due course of law. No person can insist on a settlement procured by intimidation. In my opinion there is no reason in law or equity why the creditor should not enforce the full amount of the debt due to him. G I would, therefore, dismiss this appeal. DANCKWERTS L.J. I agree with the judgment of the Master 13 [1964] A.C. 1129; [1964] 2 «[1964] 2 W.L.R. 1002, 1015, W.L.R. 269; [1964] 1 All E.R. 367, 1016; [1964] 2 All E.R. 209, C.A. H.L.(E.). 15 (1889) 22 Q.B.D. 610; 5 T.L.R. 379, C.A.

10 626 QUEEN'S BENCH DIVISION [1966] c - A - of the Rolls. Foakes v. Beer, 16 applying the decision in Pinnel's A 1965 Case, 17 settled definitely the rule of law that payment of a lesser p. & c. sum than the amount of a debt due cannot be a satisfaction of the U1 e J s ' ' debt, unless there is some benefit to the creditor added so that there is an accord and satisfaction. DANI L 7 ERTS In Foakes v - Beer, 18 Lord Selborne, while approving 19 Cumber v. Wane, 20 did not overrule the cases which appear to differ from B Cumber v. Wane, 20 saying 21 : "All the authorities subsequent to Cumber v. Wane 22 which were relied upon by the appellant at your Lordships' Bar (such as Sibree v. Tripp 23 Curlewis v. Clark 2i and Goddard v. O'Brien 25 ) have proceeded upon the distinction, that, by giving negotiable paper or otherwise there had been some new consideration for a new agreement, distinct from mere money payments in or towards discharge of the original liability." Q Lord Selborne was distinguishing 26 those cases from the case before the House. But the giving of a cheque of the debtor for a smaller amount than the sum due is very different from " the gift of a horse, hawk, D or robe, etc." mentioned in Pinnel's Case. 27 I accept that the cheque of some other person than the debtor, in appropriate circumstances, may be the basis of an accord and satisfaction, but I cannot see how in the year 1965 the debtor's own cheque for a smaller sum can be better than payment of the whole amount of the debt in cash. The cheque is only conditional payment, it may be difficult to cash, E or it may be returned by the bank with the letters " R.D." upon it, unpaid. I think that Goddard v. O'Brien, 28 either was wrongly decided or should not be followed in the circumstances of today. I agree also that, in the circumstances of the present case, there was no true accord. The really behaved very badly. They knew of the plaintiffs' financial difficulties and used their awkward F situation to intimidate them. The plaintiffs did not wish to accept the sum of 300 in discharge of the debt of 482, but were desperate to get some money. It would appear also that the defendant and his wife misled the plaintiffs as to their own financial position., in his evidence, said: " In June (1964) I could have paid 700 odd. I could have settled the whole bill." There is no G 16 9 App.Cas. 605.» 15 M. & W Co.Rep. 117a. 2i (1849) 3 Exch App.Cas «9 Q.B.D Ibid " 9 App.Cas. 605, Stra «5 Co.Rep. 117a App.Cas. 605, Q.B.D Stra. 426.

11 2 Q.B. QUEEN'S BENCH DIVISION 627 A evidence that by August, or even by November, their financial situa- C. A. 196s tion had deteriorated so that they could not pay the 482. Nor does it appear that their position was altered to their D. &C.,., * r r,.. Builders Ltd. detriment by reason or the receipt given by the plaintiffs. The v. receipt was given on November 14, On November 23, 1964, the plaintiffs' solicitors wrote a letter making it clear that the pay- L.J. ment of 300 was being treated as a payment on account. I cannot see any ground in this case for treating the payment as a satisfaction on equitable principles. In my view the county court judge was right in applying the rule in Foakes v. Beer, 29 and I would dismiss the appeal. C WINN LJ. The judge found the following relevant facts: 1. When the plaintiff builders ceased work on the defendant's house there was no dispute as to the amount, in terms of money, of the work they had done. 2. After allowing due credits, the defendant in August, 1964 owed the plaintiffs s. Id. 3. The D plaintiffs submitted accounts and by letters of August 31 and October 19 requested payment: the defendant ignored the letters: he did not put any complaint into writing before November On November 13, the defendant's wife, on his behalf, telephoned to plaintiffs, offered to pay 300 in satisfaction of their account and said that this was all they would get: she did not E base her offer of a lesser amount on any dispute about workmanship or any items charged: she said her husband could not pay more. The judge thought that he could have paid the whole amount in the previous June or July but was unable to say whether he could have done so in November. 5. The plaintiffs were hard pressed for money and therefore agreed through one Donaldson to accept 300 F in settlement of their account. 6. After Donaldson had agreed to take 300 he was given the choice of taking it in cash or by a cheque drawn by the defendant: he was content to take a cheque. 7. When a cheque for 300 was collected the next day a receipt was given, at the insistence of the defendant's wife, including Q the words " in completion of account." 8. The arrangement to pay by cheque was merely incidental to the settlement agreement: it was arranged " to suit the plaintiffs' convenience." The judge summed up his conclusion in law upon those facts in the succinct phrase " this case did not fall under the cheque 29 9 App.Cas. 605.

12 628 QUEEN'S BENCH DIVISION [1966] c. A. cases." He also said in his judgment that he had found the issue A 1965 difficult in law: of that I am myself also conscious. D. & c. The question to be decided may be stated thus: Did the Builders Ltd. def endant ' s agreement to give his own cheque for 300 in full settlement of his existing debt to the plaintiffs of 482 and the WINNLJ. plaintiff's agreement to accept it in full payment of that debt, followed by delivery and due payment of such a cheque, constitute B a valid accord and satisfaction discharging the debt in law? Apart altogether from any decided cases bearing upon the matter, there might be a good deal to be said, as a matter of policy, in favour of holding any creditor bound by his promise to discharge a debtor on his paying some amount less than the debt due: some judges no doubt so thought when they held readily that C acceptance by the creditor of something of a different nature from that to which he was entitled was a satisfaction of the liability; cf. Pinnel's Case, 30 Smith v. Trowsdale, 31 Cooper v. Parker. 32 A like approach might at some time in the past have been adopted by the courts to all serious assurances of agreement, but as English law developed, it does not now permit in general of such treatment D of mere promises. In the more specific field of discharge of monetary debt there has been some conflict of judicial opinion. Where a cheque for a smaller sum than the amount due is drawn by a person other than the debtor and delivered in satisfaction of his debt, it is clear that the debt is discharged if the cheque be accepted on that basis and duly paid; cf. Hirachand Punamchand v. Temple? 3 In the instant case the debtor's own cheque was accepted, though not stipulated for by the creditor, as the equivalent of cash, conditionally of course upon its being duly paid on presentation: such is the modern usage in respect of payments of money due, common, though not yet universal, in domestic no less than commercial transactions. This court must now decide the effect of that transaction. Had this case arisen in 1883 it would have fallen to be determined in favour of the defendant by force of the decision of a Divisional Court of two judges, Grove J. and Huddleston B. in Goddard v. O'Brien 3 * in which Cumber v. Wane 35 was distinguished and not followed. Goddard's case 80 came to be decided upon a case stated by the 30 5 Co.Rep. 117a.»* 9 Q.B.D (1854) 3 E. & B S 1 Stra (1855) 15 C.B Q.B.D [1911] 2 K.B. 330.

13 2 Q.B. QUEEN'S BENCH DIVISION 629 A judge of the Southwark county court in which it was set out that the C. A. defendant in the action was indebted to the plaintiffs in the sum 1965 of 125 odd for billiard table slates sold and delivered by them to D. &C. him. A representative of the plaintiffs agreed with the defendant to accept the sum of 100 in discharge of the debt of 125 odd and thereupon the defendant gave to the plaintiffs a cheque for B 100 payable on demand and the plaintiffs gave him a receipt stating that the cheque was taken " in settlement of account of 127 7s. 9d. on said cheque being honoured." The cheque was duly honoured. No other consideration was given by the defendant or received by the plaintiffs in satisfaction of the debt. The county court judge held that there had been a good accord and satisfaction C by reason of the cheque being a negotiable security. The question for the opinion of the court was whether he was right in so ruling. Grove J. and Huddleston B. were of the opinion that he was right. Grove J. said S7 : " The difficulty arose from the rule laid down in Cumber v. D Wane. 38 But that doctrine has been much qualified, and I am not sure that it has not been overruled." F G He referred to Sibree v. Tripp 89 and treated it as " a direct authority that the giving of a negotiable security is not within the rule of Cumber v. Wane." i0 Huddleston B. was also of the opinion 41 that " the doctrine of Cumber v. Wane* 2 if not actually overruled, has been very much qualified." He approved 43 the terms of a note in Smith's Leading Cases, 8th ed., p. 366, which was in the following terms: " The general doctrine in Cumber v. Wane," and the reason of all the exceptions and distinctions which have been engrafted on it, may perhaps be summed up as follows, viz., that a creditor cannot bind himself by a simple agreement to accept a smaller sum in lieu of an ascertained debt of a larger amount, such an agreement being nudum pactum. But, if there be any benefit, or even any legal possibility of benefit, to the creditor thrown in, that additional weight would turn the scale and render the consideration sufficient to support the agreement." I interpose the comment that I find it impossible in the instant case to visualise any benefit or legal possibility of benefit to the builders which might derive from the receipt of the defendant's cheque for 300 instead of the same amount of cash Q.B.D. 37, Q.B.D. 37, Stra Stra M. & W. 23. *» 9 Q.B.D. 37, Stra Stra BuiId^sLtd - WINN L.J.

14 630 QUEEN'S BENCH DIVISION [1966] C A. Only two years after the decision in Goddard's case" the A 1965 House of Lords in Foakes v. Beer* 6 had to consider the effect D.&C. of an agreement between a judgment debtor and a judgment Builders Ltd. cre iitor that in consideration of the debtor paying down part of the judgment debt and costs of paying the residue by instalments, WINN L.J. the creditor would not take any proceedings on the judgment. The House held this to be a nudum pactum, being without consideration, B and that it did not prevent the creditor after payment of the whole debt and costs from proceeding to enforce payment of interest upon the judgment. Pinnel's Case" and Cumber v. Wane" were expressly followed. Lord Selborne L.C. said 48 : "The question, therefore, is nakedly raised by this appeal whether your Lordships are now prepared, not only to overrule, as contrary to law, the doctrine stated by Sir Edward Coke to have been laid down by all the judges of the Common Pleas in Pinnel's Case 60 in 1602, and repeated in his note to Littleton, section 344 (2), 61 but to treat a prospective agreement, not under seal, for satisfaction of a debt, by a series of payments on account to a total amount less than the whole debt, as binding in law, provided those payments are regularly made; the case not being one of a composition with a common debtor, agreed to, inter se, by several creditors." Pausing there, it may be observed that the Lord Chancellor was considering in this passage the nature and effect of such an agreement rather than the effect of its performance as a satisfaction. He went on to say 52 : " It may well be that distinctions, which in later cases have been held sufficient to exclude the application of that doctrine (of Cumber v. Wane Si ) existed and were improperly disregarded in Cumber v. Wane 58 ; and yet that the doctrine itself may be law, rightly recognised in Cumber v. Wane, 53 and not really contradicted by any later authorities. And this appears to me to be the true state of the case." The Lord Chancellor then stated 34 his understanding of the doctrine to which he was referring, as stated in Pinnel's Case, 15 to be " that payment of a lesser sum on the day (it would of course be the same after the day) in satisfaction of a greater, cannot be any satisfaction for the whole, because it appears to the «9 Q.B.D Co.Litt. 212b. *«9 App.Cas App.Cas. 605, 612. «5 Co.Rep. 117a. " 1 Stra «1 Stra «9 App.Cas. 605, App.Cas. 605, 611. S5 5 Co.Rep. 117a. '«5 Co.Rep. 117a. C D E p G

15 2 Q.B. QUEEN'S BENCH DIVISION 631 A. judges, that by no possibility a lesser sum can be a satisfaction C. A. to the plaintiff for a greater sum." 1965 He further said S8 : D & c Builders Ltd. " If the question be... whether consideration is, or is not, given in a case of this kind, by the debtor who pays down part R v ees of the debt presently due from him, for a promise by the WDJNLJ. B creditor to relinquish, after certain further payments on account, the residue of the debt, I cannot say I think consideration is given, in the sense in which I have always understood that word as used in our law. It might be (and indeed I think it would be) an improvement in our law, if a release or acquittance of the whole debt, on payment of any sum which the creditor might be content to receive by way of accord and C satisfaction (though less than the whole) were held to be, generally, binding, though not under seal... but I think it impossible... to treat such a release or acquittance as supported by any new consideration proceeding from the debtor. All the authorities subsequent to Cumber v. Wane "... such as Sibree v. Tripp, 5 * Curlewis v. Clark" 9 and Goddard v. Q O'Brien?" have proceeded upon the distinction, that, by giving negotiable paper or otherwise, there had been some new consideration for a new agreement, distinct from mere money payments in or towards discharge of the original liability." It is clear that this speech did not deal with the effect of the giving of any cheque or negotiable instrument in respect of part E of the debt due since it left any case involving such an element upon one side: on the other hand, it did go a long way to restore the authority of Pinnel's Case 61 and Cumber v. Wane." 2 It is further to be noted that the Lord Chancellor in the last passage quoted emphasised the need for consideration to support the accord and he said es : p " What is called ' any benefit, or even any legal possibility of benefit' in Mr. Smith's notes to Cumber v. Wane 64 (8th ed., p. 366) is not (as I conceive) that sort of benefit which a creditor may derive from getting payment of part of the money due to him from a debtor who might otherwise keep him at arm's length or possibly become insolvent, but is some independent 3 benefit, actual or contingent, of a kind which might in law be a good and valuable consideration for any other sort of agreement not under seal." so 9 App.Cas. 605, Co.Rep. 117a. " 1 Stra Stra '8 15 M. & W S 9 App.Cas. 607, Exch «* 1 Stra Q.B.D. 37.

16 632 QUEEN'S BENCH DIVISION [1966] C A. Lord Blackburn made it clear in his speech that he had felt A 1965 hesitation in concurring as he did in the decision because he felt D.&c. Builders Ltd. convinced 85 that v. " all men of business, whether merchants or tradesmen, do 8 every day recognise and act on the ground that prompt WINN L.J. payment of a part of their demand may be more beneficial to them than it would be to insist on their rights and enforce payment of the whole." B He remarked obiter 66 that " if it had been a promissory note the authorities are that it would have been a good satisfaction." In 1911, in the case already referred to of Punamchand, 67 Fletcher Moulton L.J. said 68 : " I have grave doubts whether Goddard v. O'Brien 89 was C rightly decided, because, when the facts are looked at, it appears that the cheque was there given, not in substitution for the debt, but only as conditional payment of the amount, so that the case really stood on the same footing as payment of a less amount in discharge of a greater." Farwell L.J. in the same case said, 70 referring to the case of Day v. McLea 71 : " In that case, there being no consideration for the discharge of the balance of the debt, it was held that the creditor could retain the money, and sue for the balance." In my judgment it is an essential element of a valid accord E and satisfaction that the agreement which constitutes the accord should itself be binding in law, and I do not think that any such agreement can be so binding unless it is either made under seal or supported by consideration. Satisfaction, viz., performance, of an agreement of accord, does not provide retroactive validity to the accord, but depends for its effect upon the legal validity of the F accord as a binding contract at the time when it is made: this I think is apparent when it is remembered that, albeit rarely, existing obligations of debt may be replaced effectively by a contractually binding substitution of a new obligation. In my judgment this court should now decline to follow the decision in Goddard v. O'Brien,2 and should hold that where G a debtor's own cheque for a lesser amount than he indisputably owes to his creditor is accepted by the creditor in full satisfaction <>» 9 App.Cas. 607, » 9 Q.B.D Ibid [1911] 2 K.B. 330, [1911] 2 K.B 'i 22 Q.B.D ss Ibid «9 Q.B.D. 37.

17 2 Q.B. QUEEN'S BENCH DIVISION 633 A of the debt, the creditor is to be regarded, in any case where he has c. A. not required the payment to be made by cheque rather than in 1965 cash, as having received the cheque merely as conditional payment ~ DT&~C of part of what he was entitled to receive: he is free in law, B Builders Ltd -... V. if not in good commercial conscience, to insist upon payment of the balance of the amount due to him from the debtor. I would dismiss this appeal. Appeal dismissed with costs. Solicitors: Merton Jones, Lewsey & Jefferies; Bishop & Co. WINNZJ. C A H R NAGLE v. FEILDEN AND OTHERS Q 1966 Contract Formation Intention to create legal relationship Issue of Feb - 3 4> 22 ' training licences by Jockey Club Repeated refusal to issue LORD licences to woman trainer Grant of licences to male employees DENNINO Whether contract between Jockey Club and woman applicant for TJANCKWERTS licence Whether refusal of licence because applicant a woman an(i contrary to public policy Sex Disqualification {Removal) Act, SALMON L.JJ (9 & 10 Geo. 5, c. 71), s. 1. E Public Policy Right to work Trade association with monopoly powers Refusal of licence by Jockey Club to woman trainer Whether sex discrimination Whether contrary to public policy Sex Disqualification (Removal) Act, 1919 (9 & 10 Geo. 5, c. 71), s. I. 1 Restraint of Trade Trade association Monopoly powers Right to work Jockey Club's refusal of training licence to woman Whether sex discrimination Whether contrary to public policy P Sex Disqualification (.Removal) Act, 1919, s. I. 1 Discrimination Sex Right to work Whether woman entitled to train racehorses Sex Disqualification (Removal) Act, 1919, s The stewards of the Jockey Club controlled horseracing on the flat throughout Great Britain. They made rules of racing, sanctioned the holding of race meetings and no person was allowed to train horses for racing at their meetings unless he held a licence. The plaintiff, a woman, had trained racehorses for many years. It was the practice of the stewards to refuse to grant a trainer's licence to a woman in any circumstances. The 1 Sex Disqualification (Removal) any civil or judicial office or post, or Act, 1919, s. 1: "A person shall not from entering or assuming or carrybe disqualified by sex... from the ing on any civil profession or exercise of any public function, or vocation...." from being appointed to or holding C.A.