Warren v Hide

A payment made in connection with a debt is treated according to the agreement and the surrounding evidence establishing its purpose. Where the evidence shows that a cash payment was part payment of an existing liability, it reduces that liability accordingly. Alternatively, where a payment was made in consideration of entering into an agreement and that agreement was wholly unperformed, the payer may recover the payment for total failure of consideration. Issues unnecessary to the result, including authority to enter the agreement and alleged misrepresentation, should not be determined.

The claimant, a boxing promoter, sought a declaration that he owed the defendant no further sum from the purse for a 1999 boxing contest. A boxing tribunal had determined the purse and the amount payable, after which the parties discussed payment by instalments. The claimant paid the defendant £50,000 in cash and made further payments, while also sending a £50,000 cheque to the defendant’s supervisor. The defendant disputed the character of the cash payment.

The court had to determine whether the cash was part payment of the purse or an additional payment made in consideration of the defendant’s agreement to accept instalments and enter further negotiations. It also considered the alternative consequence if the latter case were established.

1. Declaration granted. The court found that the £50,000 cash payment was made as part payment of the amount due from the purse. Together with the other payments, it discharged the claimant’s liability to the defendant in respect of that purse.
2. The court preferred the claimant’s evidence. The defendant’s account was inherently less probable because the alleged credit period was short, while the claimant had paid substantial sums immediately and discharged the balance within a few months. The defendant’s repeated denial that he had received the money seriously damaged his credibility.
3. Alternatively, even if the cash had been paid in consideration of the defendant entering into the agreement providing for payment by instalments, there had been a total failure of consideration. The agreement was never performed: payments were not made by instalments and the proposed negotiations for further promotional arrangements did not take place. The £50,000 would therefore have been repayable.
4. The court did not decide whether the defendant lacked authority to enter the agreement or whether he induced the claimant to enter it by misrepresentation, because those issues were unnecessary to the result.

The court accordingly declared that no liability remained in respect of the purse and that the cash payment had been made in part payment of it.