Harris & Anor v Charalambous

An account stated may be either a mere acknowledgment of debt, which is evidential only, or an accord and satisfaction supported by consideration and giving rise to a contractual right to payment. The court determines the parties’ agreement from the evidence as a whole. Where the agreed consideration includes cash and shares which are never issued, the creditor may recover the value of the promised shares, subject to any proper credit. A contract is not discharged by every breach; only a repudiatory breach accepted by the innocent party brings it to an end.

The claimants sought payment of £562,000 said to have been agreed at a meeting with the defendant, and evidenced by an accountants’ letter and a signed document described as a promissory note. The statutory promissory-note claim was abandoned because the document did not fall within the definition in the Bills of Exchange Act 1882. The claim proceeded principally on account stated and agreement. The defendant alleged a different settlement linked to the first claimant’s shares and directorship in Aegis, and brought a counterclaim for an account of the parties’ joint ventures.

1. The claimants succeeded. Judgment was entered for £522,100, calculated as £562,000 less £39,900 received from Annette Bergen. The counterclaim was dismissed.

2. The court applied the distinction explained by Siqueira v Noronha [1934] AC 332: an account stated can be a mere acknowledgment of debt, or a contractual accord and satisfaction supported by consideration. The claimants relied on the latter form.

3. The evidence of the claimants and Mr Evans was accepted. The defendant’s evidence was rejected because of material inconsistencies between his pleaded cases, witness statement, cross-examination and the contemporaneous documents. The court found that, at the meeting on 21 February 2008, the defendant agreed that £562,702.59 was owed, rounded down to £562,000, payable by £100,000 in cash and shares worth £462,000 in the proposed hotel business in Crete.

4. The defendant’s submission that the claimants assumed the risk of receiving only £100,000 and unspecified shares was rejected. The agreement required payment of £562,000. Although failure to issue the shares might technically sound in damages, their value at the date of issue could only be £462,000. The defendant therefore remained liable for the full agreed amount, subject to credit.

5. The court also explained that breach does not automatically discharge a contract. A repudiatory breach gives the innocent party an election to affirm the contract or accept the repudiation. That issue did not arise because the central question was the agreement actually made, and no acceptance of repudiation had been pleaded or proved.

First-instance judgment. No prior appellate decision is stated in the judgment.