Estates v Freeguard & Anor

Accord and satisfaction requires both an agreement and satisfaction of the agreed performance. Where a creditor agrees to accept a lesser sum and the circumstances contemplate payment, a promise to send a cheque is insufficient if the cheque is not received. Depending on the circumstances, satisfaction may require the cheque to be presented and paid. The underlying judgment debt therefore remains enforceable. A proposed appeal concerning the alleged settlement had no real prospect of success.

Arun Estates obtained a judgment for commission and secured enforcement of the judgment debt by a charging order over the applicant’s house. The applicant alleged that a telephone agreement to accept £3,900 in settlement had discharged the debt. He later posted a letter accepting the offer and enclosed a cheque, but Arun did not receive the payment before enforcement proceedings began.

The district judge and Judge Barratt QC rejected the applicant’s case. The applicant sought permission to appeal, alleging errors concerning acceptance, accord and satisfaction, the rule in Pinnel’s case, estoppel, further evidence and the conduct of the hearing. The central issue was whether the alleged agreement had been completed by satisfaction.

1. Permission refused. The proposed appeal had no real prospect of success.
2. Assuming that Arun’s telephone offer and the applicant’s posted letter created an accord, there also had to be satisfaction. A promise of payment, or executory satisfaction, can sometimes suffice, but it did not do so on these facts.
3. The circumstances showed that Arun required payment, or at least receipt of the cheque, before the impending bankruptcy. Satisfaction therefore required receipt of cash or a cheque. It was possibly necessary for a posted cheque to be presented and paid, although the court did not need to decide that further point.
4. As the cheque was not received, the agreed satisfaction had not occurred and the original judgment debt remained enforceable. It was unnecessary to decide the rule in Pinnel’s case or equitable estoppel.
5. Lord Justice Tuckey added that, if necessary, he would have agreed with the lower court that the acceptance was too late and that Arun’s conduct did not estop it from enforcing the debt. The complaints about further evidence and the fairness of the hearing disclosed no arguable error.

Order: Application refused.

• Court of Appeal (Civil Division): refused permission to appeal from the decision of Judge Barratt QC in the Chichester County Court.
• Chichester County Court: dismissed the applicant’s appeal from the district judge’s charging order.
• District judge: made a charging order to enforce the judgment debt.