Collier v P&M J Wright Ltd [2007] EWCA Civ 1329 is an English contract law

English contract law

English contract law is a body of law regulating contracts in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries across the Commonwealth , and the United States...

 case, concerning the doctrine of consideration and promissory estoppel.

Facts

Mr Collier was one of three partners of a property developer. They had assented to a court order to pay £46,000 to Wright Ltd in monthly installments of £600, and were jointly liable. From 1999 the payments went down to £200 a month. In 2000, swore Mr Collier, there was a meeting where Wright Ltd said he would be severally liable (for £15,600), rather than jointly (as a partner). The other two partners went bankrupt in 2002 and 2004. In 2006, when Mr Collier had finished paying his lot, Wright Ltd went after Mr Collier for the lot outstanding. Mr Collier applied under rule 6.4 of the Insolvency Rules 1986, because the debt was disputable on ‘substantial grounds’ (r.6.5(4)(b)). So the court just had to decide, was there a ‘genuine triable issue’. He alleged the variation agreement was binding, or if not that Wright Ltd was estopped from enforcing the full payment.

Judgment

Arden LJ held that Foakes v Beer applied, but referring to the ‘brilliant dictum’ of Denning J in High Trees, held that promissory estoppel could aid Mr Collier. Where he had been assured that he could repay only part of the debt, he had relied on the assurance by making his payments, Wright Ltd resiling from the promise ‘would of itself be inequitable’ [42].

Longmore LJ was more cautious than Arden LJ, and stressed some need for ‘meaningful reliance’.

Mummery LJ agreed, and stated that the appeal should be allowed because there was a prospect of real success on the estoppel argument.

Significance

While the case did not actually reach a conclusion, but rather sent the matter for a hearing (after which the case was probably settled), it stands as a significant indication for the proposition that the courts are prepared to sidestep Foakes v Beer and allow debtors to assert that creditors will be estopped from denying an agreement for a part payment of debt to extinguish the whole. In a case note on the issue, Alexander Trukhtanov, said the following.