Chattan Developments Ltd v Reigill Civil Engineering Contractors Ltd

Where a court orders payment by a stated deadline but prescribes no payment method, payment by cheque may satisfy the order if the creditor accepts the cheque, expressly or by conduct. Acceptance may be inferred where the cheque is paid into the creditor’s account, the creditor does not promptly reject or return it, and the cheque is met on first presentation. In that event, the debt is discharged when the cheque is delivered or credited, according to the circumstances. The court may also extend time under the Civil Procedure Rules 1998 where the overriding objective requires that course.

The claimant sought to pursue an arbitration appeal concerning an award. In an earlier order, the court extended the time for making the arbitration claim, subject to payment of the defendant’s costs by 4 pm on 29 January 2007. The claimant paid a cheque into the defendant’s solicitors’ client account at 3:07 pm, but the credit appeared on the account on the following day.

The defendant argued that payment by cheque was not an agreed method and that the condition had not been met. The central issue was whether the cheque payment constituted timely compliance with the order.

1. The payment condition was satisfied. There was no prescribed means of payment. A creditor is not generally obliged to accept a cheque, but acceptance may be implied from conduct.

2. The cheque was paid into the defendant’s solicitors’ client account before the deadline. Although the defendant was not initially bound to accept it, no steps were taken to reject the payment or stop the clearing process. That conduct amounted to implied acceptance.

3. Applying the principle discussed in Coltrane v Day [2003] EWCA Civ 342, and the principle identified through Felix Hadley & Co v Hadley [1898] 2 CH 680 and Homes v Smith (2000) Lloyds Law Reports (Banking) 139, a cheque accepted by the creditor and met on first presentation discharges the debt when delivered.

4. The sum was therefore treated as paid at 3:07 pm on 29 January 2007. The claimant had complied with paragraph 4 of the order and the extension of time remained effective.

5. Alternatively, if the payment had been late, the court would have extended time under rules 1.1 and 3.1(2)(a) of the Civil Procedure Rules 1998, applying the overriding objective and any appropriate terms concerning costs and interest.

The judgment records an earlier order of this court dated 15 January 2007 extending time for the arbitration claim by 13 days, subject to payment of £16,000 by 4 pm on 29 January 2007. This judgment determined whether that condition had been met.