2 Q.B.

QUEEN'S BENCH DIVISION

617

In choosing to acquire houses which had stood unoccupied for

1965
some time and which were likely to remain unoccupied the local
Moore
authority were keeping in mind their statutory duties in respect Minister of
of the provision of housing accommodation.
Housing and
It is manifest from the inspector's report that the local autho- Government.
rity did not overlook the legal rights which the applicant had under LAWTON J.
the leases with his tenants, but they were entitled to weigh those
rights against, first, the local demand for housing accommodation,
secondly, the fact that the houses were vacant and likely to remain
so, and thirdly, the statutory provisions contained in section 98
of the Housing Act, 1957, about acquiring property in which there
were leasehold interests. In the course of his dealings with the
local authority the applicant had stated that these four houses had
been retained by him to provide an income for his old age. He
had not revealed any other reason for retaining ownership of them.
The facts show that the local authority were prepared not to interfere with the applicant's rights as an owner so long as he took
steps to ensure that the houses were occupied. They did weigh
his personal interests against those of public need. The Minister
did the same: he said so, albeit in general terms.
In my judgment the applicant has not established a case for
quashing this compulsory purchase order. The motion is dismissed.
Motion dismissed with costs to
both respondents.
Solicitors: Wilberforce, Jackson & Co.; Solicitor, Ministry of
Housing and Local Government; Clerk, Coulsdon and Purley
Urban District Council.

F
D. & C. BUILDERS LTD. v. REES

C. A.
1965
Nov.\i

Accord and Satisfaction Accord Intimidation Acceptance of

cheque in settlement for lesser sum than amount dueDebtor's
<*
threat to pay nothingWhether valid accord and satisfaction DEIWINO
Whether inequitable to enforce payment of balance.
M.R.,
ContractConsiderationDebtor and creditorAcceptance of cheque DANCKWERTS
in settlement for lesser sum than amount dueWhether settlement an<*Jj'NN
binding.
EquityClean handsEquitable estoppelAcceptance of cheque in
settlement for lesser sum than amount dueDebtor's threat to
pay nothingWhether inequitable to enforce payment of balance.

618

QUEEN'S BENCH DIVISION

C. A.
1965

[1966]

IntimidationThreat to break a contractDebtThreat by debtor not

to payReceipt of lesser sum by creditorWhether an accord

D. & C.

(post, p. 625E).
\r
>y

Builders Ltd.
Rees

T h e p l a i m i f f S ) jobbing builders, claimed 182 13s. Id. from the

defendant as the balance due for work and labour done and goods
and materials supplied in respect of alterations and repairs to the
defendant's shop in May and June, 1964. In July, 1964, when there
was no dispute as to the work done, the sum of 482 13s. Id. had
"
been owing to the plaintiffs; but the defendant had not paid. On
November 13, 1964, when the plaintiffs were in desperate financial
straits, the defendant, through his wife, offered to pay the plaintiffs
300 if they would accept it in settlement, stating in effect that if
the plaintiffs did not accept it they would get nothing. The
plaintiffs told the defendant's wife that they had no choice but to
accept and on November 14, 1964, they received a cheque for
C
300 in exchange for a receipt stating that the sum was received
" in completion of the account." On the plaintiff's claim for the
balance, the defendant set up a defence of bad workmanship and
also that there was a binding settlement, a question which was
tried as a preliminary issue. Judge Trapnell held that there was no
consideration to support the agreement of November 13 and 14
and decided the preliminary issue in favour of the plaintiffs. On D
appeal by the defendant:

Held, dismissing the appeal, (1) that payment by a debtor,

whether in cash or by cheque, of a lesser sum than the amount of
the debt was not a settlement of the debt which was binding at
law on the creditor (post, pp. 6 2 3 G 6 2 4 A , 626A, D, 6 3 2 G 6 3 3 A ) .

Pinnel's Case (1602) 5 Co.Rep. 117a, Cumber v. Wane (1718)

1 Stra. 426 and Foakes v. Beer (1884) 9 App.Cas. 605 applied.
Sibree v. Tripp (1846) 15 M. & W. 23 distinguished.
Goddard v. O'Brien (1882) 9 Q.B.D. 37 not followed.
Per Winn L.J. It is an essential element of a valid accord and
satisfaction that the agreement which constitutes the accord should
itself be binding in law and no such agreement can be so binding
unless it is either made under seal or supported by consideration.
Satisfaction, viz., performance of an agreement of accord does not
provide retroactive validity to the accord, but depends for its effect
upon the legal validity of the accord as a binding contract at the
time when it is made (post, p. 632E-F).
(2) (Winn L.J. expressing no opinion on the point.) That in
view of the threat to pay nothing unless the cheque for 300 was
accepted in settlement, there was no true accord between the
parties, and no equity in the defendant to prevent the plaintiffs
from recovering the full amount of the debt (post, pp. 625E,
626F).

Per Lord Denning M.R. Where there is a true accord, under

which the creditor voluntarily agrees to accept a lesser sum in
satisfaction, and the debtor acts upon that accord by paying the
lesser sum and the creditor accepts it, then it is inequitable for

2 Q.B.
(\

QUEEN'S BENCH DIVISION

619

the creditor afterwards to insist on the balance. But he is not

bound unless there has been truly an accord between them (post,

C. A.
j9 65

p. 625A-B).

Hughes v. Metropolitan Railway Co. (1877) 2 App.Cas. 439

and Central London Property Trust Ltd. v. High Trees House Ltd.
[1947] K.B. 130; 62 T.L.R. 557; [1956] 1 All E.R. 256 considered.
APPEAL from Judge Trapnell, sitting at Shoreditch County
Court.
The plaintiffs, D. & C. Builders Ltd., claimed 182 13s. Id.
in the Shoreditch County Court against the defendant, Sidney Rees,
carrying on business as B. Saunders & Son, for the balance due
for work and labour done and goods and materials supplied by
them in respect of certain alterations and repairs at the defendant's
premises, 218, Brick Lane, London, E.l, in May and June, 1964.
According to their particulars of claim, the plaintiffs' account
amounted to 746 13s. Id. and credits were given for payments on
account of 200, 50, 300 and a credit of 14. By his defence, the
defendant contended that on November 14, 1964, the plaintiffs
accepted from the defendant the sum of 300 in completion and in
satisfaction of the account mentioned in the particulars of claim as
evidenced in writing by a receipt dated November 14, 1964.
Alternatively it was contended that the work was done so negligently and the materials were so inferior in quality that they were
of little, if any, value or use to the defendant.
On May 5, 1965, Judge Trapnell gave judgment for the
plaintiffs on the preliminary issue as to whether there was a binding
settlement. The defendant appealed on the ground that upon the
facts found he was entitled to have the preliminary issue decided
in his favour and that the judge misdirected himself in holding
that a negotiable instrument, namely, a cheque for 300, was not
good consideration to support an accord and satisfaction to
discharge a debt for 482 13s. Id.
The facts are fully set out in the judgments.
Martin Reynolds for the defendant. Here there was accord
and satisfaction. Accord when the plaintiffs agreed to accept 300
in settlement of the debt and satisfaction when they accepted
the cheque for 300 in settlement of the account and it was
honoured. Reliance is placed on Sibree v. Tripp 1 and Goddard
v. O'Brien2 and see also Bidder v. Bridges 3 [Reference was made
to Cumber v. Wane 4 and Foakes v. Beer.*] The defendant relies
1
2
3

(1846) 15 M. & W. 23.

(1882) 9 Q.B.D. 37.
(1888) 37 Ch.D. 406, C.A.

* (1718) 1 Stra. 426.

(1884) 9 App.Cas. 605.

^je^^;td
v.
^ff

620

QUEEN'S BENCH DIVISION

[1966J

- Aon the technical rule of law in Goddard v. O'Brien6 that payment

1965
of a lesser sum by cheque is good accord and satisfaction and
D. & c. a l s o o n t n e decision in Day v. McLea.7
Builders Ltd.
5 Q Isaacs for the plaintiffs. There are two separate quesRees
tions: first, was there an accord?; secondly, was there satisfaction? There was a finding here of a payment of a smaller
amount in discharge of a larger amount. The payment by cheque
was merely incidental, "to suit the plaintiffs' convenience."
Cumber v. Wane* shows that giving a note for a smaller sum
cannot be pleaded as a satisfaction for a larger sum: see Smith's
Leading Cases, 13th ed. (1929), Vol. 1, p. 373, and the note on
Sibree v. Tripp9 at p. 380. Sibree v. Tripp9 and Goddard v.
O'Brien10 proceed on a view of Cumber v. Wane " which was
not approved in Foakes v. Beer.12 The cases where a cheque
in settlement has been found to be a good satisfaction for a
larger sum due are cases where the cheque has originated from
a third party. No case has been found where a cheque by a
party has been found to be good satisfaction in settlement of
a larger sum. Goddard v. O'Brien13 was questioned by Fletcher
Moulton L.J. in Hirachand Punamchand V. Temple." Foakes v.
Beer15 shows that the principles of Pinnel's Case " and Cumber
v. Wane17 are still intact: see per Lord Selborne L.C.18 and
Lord Blackburn.19 Since Foakes v. Beer,20 Goddard v. O'Brien21
should no longer be regarded as good law. In Sibree v. Tripp22
the settlement put an end to the litigation; the consideration was
the settlement of the litigation. The statement in Halsbury's Laws
of England, 3rd ed., Vol. 8 (1954), p. 207, that " a cheque or
other negotiable instrument may be taken in satisfaction of a debt
for a larger amount than that of the bill or note " is too broad. It
can be argued that there was a new cause of action on the
negotiable instrument. In Day v. McLea23 the cheque was clearly
taken on account and there was no accord. The county court
judge was right
Reynolds in reply. Sibree v. Tripp 2i shows that the fact that
8
7

9 Q.B.D. 37.
(1889) 22 Q.B.D. 610; 5 T.L.R.
379, C.A.
8
1 Stra. 426.
9
15 M. & W. 23.
10 9 Q.B.D. 37.
11
1 Stra. 426.
12
9 App.Cas. 605.
13
9 Q.B.D. 37.
14
[1911] 2 K.B. 330, 339, 340.

15
16
17
18
19
20
2!
22
23
2i

9 App.Cas. 605.
(1602) 5 Co.Rep. 117a.
1 Stra. 426.
9 App.Cas. 605, 612.
Ibid. 617.
9 App.Cas. 605.
9 Q.B.D. 37.
15 M. & W. 23.
22 Q.B.D. 610.
15 M. & W. 23.

2 Q.B.

QUEEN'S BENCH DIVISION

621

the payment was conditional is immaterial. In Foakes v. Beer,25

Sibree v. Tripp 26 was distinguished and not overruled. There is
a valid line of cases starting with Sibree v. Tripp28 showing that
a cheque or other negotiable instrument may be taken in satisfaction of a debt for a larger amount. These cases have never
been overruled and are enhanced by Bidder v. Bridges.27

3
Cur. adv. vult.

LORD DENNING M.R. The plaintiffs are a little company.

" D " stands for Donaldson, a decorator, " C " for Casey, a
plumber. They are jobbing builders. The defendant has a shop
where he sells builders' materials.
In the spring of 1964 the defendant employed the plaintiffs to
do work at his premises, 218, Brick Lane. The plaintiffs did the
work and rendered accounts in May and June, which came to
746 13s. Id. altogether. The defendant paid 250 on account. In
addition the plaintiffs made an allowance of 14 off the bill. So
in July, 1964, there was owing to the plaintiffs the sum of
482 13s. Id. At this stage there was no dispute as to the work
done. But the defendant did not pay.
On August 31, 1964, the plaintiffs wrote asking the defendant
to pay the remainder of the bill. He did not reply. On October
19, 1964, they wrote again, pointing out that the " outstanding
account of 480 is well overdue." Still the defendant did not
reply. He did not write or telephone for more than three weeks.
Then on Friday, November 13, 1964, the defendant was ill with
influenza. His wife telephoned the plaintiffs. She spoke to Casey.
She began to make complaints about the work: and then said:
" My husband will offer you 300 in settlement. That is all you'll
get. It is to be in satisfaction." Casey said he would have to discuss
it with Donaldson. The two of them talked it over. Their company
was in desperate financial straits. If they did not have the 300,
they would be in a state of bankruptcy. So they decided to accept
the 300 and see what they could do about the rest afterwards.
Thereupon Donaldson telephoned to the defendant's wife. He said
to her: " 300 will not even clear our commitments on the job.
We will accept 300 and give you a year to find the balance."
She said: " N o , we will never have enough money to pay the
balance. 300 is better than nothing." He said: " We have no
choice but to accept." She said: " Would you like the money by
25
26

9 App.Cas. 605.
15 M. & W. 23.
2 Q.B. 1966.

27

37 Ch.D. 406, C.A.

41

- A1965
D. & c.
BuUde rs Ltd
v

Rees

622

QUEEN'S BENCH DIVISION

[1966]

c A.
cash or by cheque. If it is cash, you can have it on Monday. If
1965
by cheque, you can have it tomorrow (Saturday)."
p . &C.
On Saturday, November 14, 1964, Casey went to collect the
Builders Ltd. m o n e y j j e t o o k w j t jj h j m a r e c e j p t prepared on the company's
Rees
paper with the simple words: " Received the sum of 300 from
LORD
Mr. Rees." She gave him a cheque for 300 and asked for a
M.R.
receipt. She insisted that the words " in completion of the account"
be added. Casey did as she asked. H e added the words to the
receipt. So she had the clean receipt: " Received the sum of 300
from Mr. Rees in completion of the account. Paid, M . Casey."
Casey gave in evidence his reason for giving it: " If I did not have
the 300 the company would have gone bankrupt. The only reason
we took it was to save the company. She knew the position we
were in."
The plaintiffs were so worried about their position that they
went to their solicitors. Within a few days, on November 23, 1964,
the solicitors wrote complaining that the defendant had " extricated
a receipt of some sort or other " from them. They said they were
treating the 300 as a payment on account. On November 28,
1964, the defendant replied alleging bad workmanship. H e also
set up the receipt which Casey gave to his wife, adding: " I assure
you she had no gun on her." The plaintiffs brought this action
for the balance. The defendant set u p a defence of bad workmanship and also that there was a binding settlement. The question
of settlement was tried as a preliminary issue.
The judge made these findings:
" I concluded that by the middle of August the sum due to the
plaintiffs was ascertained and not then in dispute. I also
concluded that there was no consideration to support the
agreement of November 13 and 14. It was a case of agreeing
to take a lesser sum when a larger sum was already due to
the plaintiffs. It was not a case of agreeing to take a cheque
for a smaller amount instead of receiving cash for a larger
amount. The payment by cheque was an incidental
arrangement."
He decided, therefore, the preliminary issue in favour of the
plaintiffs. The defendant appeals to this court. He says that there
was here an accord and satisfactionan accord when the plaintiffs
agreed, however reluctantly, to accept 300 in settlement of the
accountand satisfaction when they accepted the cheque for 300
and it was duly honoured.. The defendant relies on Sibree v. Tripp 1
and Goddard v. O'Brien 2 as authorities in his favour.
1

(1846) 15 M. & W. 23.

2 (1882) 9 Q.B.D. 37.

2 Q.B.
A

QUEEN'S BENCH DIVISION

This case is of some consequence: for it is a daily occurrence

that a merchant or tradesman, who is owed a sum of money, is
asked to take less. The debtor says he is in difficulties. He offers
a lesser sum in settlement, cash down. He says he cannot pay more.
The creditor is considerate. He accepts the proffered sum and
forgives him the rest of the debt. The question arises: Is the
settlement binding on the creditor? The answer is that, in point
of law, the creditor is not bound by the settlement. He can the
next day sue the debtor for the balance: and get judgment. The
law was so stated in 1602 by Lord Coke in Pinnel's Case3and
accepted in 1889 by the House of Lords in Foakes v. Beer.*
Now, suppose that the debtor, instead of paying the lesser sum
in cash, pays it by cheque. He makes out a cheque for the amount.
The creditor accepts the cheque and cashes it. Is the position any
different? I think not. No sensible distinction can be taken between
payment of a lesser sum by cash and payment of it by cheque. The
cheque, when given, is conditional payment. When honoured,
it is actual payment. It is then just the same as cash. If a creditor
is not bound when he receives payment by cash, he should not
be bound when he receives payment by cheque. This view is
supported by the leading case of Cumber v. Wane,* which has
suffered many vicissitudes but was, I think, rightly decided in
point of law.
Sibree v. Tripp" is easily distinguishable. There the plaintiffs
brought an action for 500. It was settled by the defendant giving
three promissory notes amounting in all to 250. Those promissory notes were given upon a new contract, in substitution for
the debt sued for, and not as conditional payment. The plaintiff's
only remedy thenceforward was on the notes and not on the debt.
Goddard v. O'Brien7 is not so easily distinguishable. There a
creditor was owed 125 for some slates. He met the debtor and
agreed to accept 100 in discharge of it. The debtor gave a cheque
for 100. The creditor gave a written receipt " in settlement on the
said cheque being honoured." The cheque was clearly given by
way of conditional payment. It was honoured. The creditor sued
the debtor for the balance of 25. He lost because the 100 was
paid by cheque and not by cash. The decision was criticised by
Fletcher Moulton L.J. in Hirachand Punamchand v. Temple* and
by the editors of Smith's Leading Cases, 13th ed. (1929), Vol. 1,
(1602) 5 Co.Rep. 117a.
* (1884) 9 App.Cas. 605.
(1721) 1 Stra. 426.
6
15 M. & W. 23.

9 Q.B.D. 37.
[1911] 2 K.B. 330, 340; 27
T.L.R. 430.
8

623
C. A.
1965
p. &c.
Build rs U d

Rees

LORD

MJJ?

624

QUEEN'S BENCH DIVISION

[1966]

c A

p. 380. It was, I think, wrongly decided. In point of law payment A

1965
of a lesser sum, whether by cash or by cheque, is no discharge
p. & c.
of a greater sum.
'
This doctrine of the common law has come under heavy fire.
v.
Rees
It was ridiculed by Sir George Jesse! in Couldery v. Bertram? It
0
LORD
w a s sa id to be mistaken by Lord Blackburn in Foakes v. Beer}
DENNING
M.R.
It was condemned by the Law Revision Committee (1945 Cmd. B
5449), paras. 20 and 21. But a remedy has been found. The
harshness of the common law has been relieved. Equity has
stretched out a merciful hand to help the debtor. The courts have
invoked the broad principle stated by Lord Cairns in Hughes v.
Metropolitan Railway Co.11
c
"It is the first principle upon which all courts of equity
proceed, that if parties, who have entered into definite and
distinct terms involving certain legal results, afterwards by
their own act or with their own consent enter upon a course
of negotiation which has the effect of leading one of the parties
to suppose that the strict rights arising under the contract will
not be enforced, or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those D
rights will not be allowed to enforce them when it would be
inequitable having regard to the dealings which have taken
place between the parties."
It is worth noticing that the principle may be applied, not only
so as to suspend strict legal rights, but also so as to preclude the
enforcement of them.
E
This principle has been applied to cases where a creditor agrees
to accept a lesser sum in discharge of a greater. So much so that
we can now say that, when a creditor and a debtor enter upon a
course of negotiation, which leads the debtor to suppose that, on
payment of the lesser sum, the creditor will not enforce payment
of the balance, and on the faith thereof the debtor pays the lesser F
sum and the creditor accepts it as satisfaction: then the creditor
will not be allowed to enforce payment of the balance when it
would be inequitable to do so. This was well illustrated during
the last war. Tenants went away to escape the bombs and left
their houses unoccupied. The landlords accepted a reduced rent for
the time they were empty. It was held that the landlords could not Gr
afterwards turn round and sue for the balance, see Central London
Property Trust Ltd. v. High Trees House Ltd.12 This caused at
the time some eyebrows to be raised in high places. But they have
8
10

(1881) 19 Ch.D. 394, 399.

9 App.Cas. 605, 622.

(1877) 2 App.Cas. 439, 448.

" [1947] 1 K.B. 130; 62 T.L.R.
559; [1956] 1 All E.R. 256.

2 Q.B.
A

QUEEN'S BENCH DIVISION

been lowered since. The solution was so obviously just that no one
could well gainsay it.
In applying this principle, however, we must note the qualification: The creditor is only barred from his legal rights when it
would be inequitable for him to insist upon them. Where there
has been a true accord, under which the creditor voluntarily
agrees to accept a lesser sum in satisfaction, and the debtor acts
upon that accord by paying the lesser sum and the creditor accepts
it, then it is inequitable for the creditor afterwards to insist on the
balance. But he is not bound unless there has been truly an accord
between them.
In the present case, on the facts as found by the judge, it seems
to me that there was no true accord. The debtor's wife held the
creditor to ransom. The creditor was in need of money to meet
his own commitments, and she knew it. When the creditor asked
for payment of the 480 due to him, she said to him in effect:
" We cannot pay you the 480. But we will pay you 300 if you
will accept it in settlement. If you do not accept it on those terms,
you will get nothing. 300 is better than nothing." She had
no right to say any such thing. She could properly have said:
" We cannot pay you more than 300. Please accept it on
account." But she had no right to insist on his taking it in
settlement. When she said: " We will pay you nothing unless you
accept 300 in settlement," she was putting undue pressure on the
creditor. She was making a threat to break the contract (by paying
nothing) and she was doing it so as to compel the creditor to do
what he was unwilling to do (to accept 300 in settlement): and she
succeeded. He complied with her demand. That was on recent
authority a case of intimidation: see Rookes v. Barnard13 and
Stratford (J. T.) & Son Ltd. v. Lindley.1* In these circumstances
there was no true accord so as to found a defence of accord and
satisfaction: see Day v. McLea.ls There is also no equity in the
defendant to warrant any departure from the due course of law.
No person can insist on a settlement procured by intimidation.
In my opinion there is no reason in law or equity why the
creditor should not enforce the full amount of the debt due to him.
I would, therefore, dismiss this appeal.
DANCKWERTS

L.J. I agree with the judgment of the Master

13
[1964] A.C. 1129; [1964] 2
W.L.R. 269; [1964] 1 All E.R. 367,
H.L.(E.).

[1964] 2 W.L.R. 1002, 1015,

1016;
[1964] 2 All E.R. 209, C.A.
15
(1889) 22 Q.B.D. 610; 5 T.L.R.
379, C.A.

625
C. A.
1965
D. & C.
Build sLtd

Rees

LORD

M.R.

626

QUEEN'S BENCH DIVISION

[1966]

c A

- of the Rolls. Foakes v. Beer,16 applying the decision in Pinnel's A

1965
Case,17 settled definitely the rule of law that payment of a lesser
p. & c.
sum than the amount of a debt due cannot be a satisfaction of the
U1 e s
J ' ' debt, unless there is some benefit to the creditor added so that there
Rees
is an accord and satisfaction.
ERTS
I n Foakes
v
DANI
L7
- Beer,18 Lord Selborne, while approving19 Cumber
20
v. Wane, did not overrule the cases which appear to differ from B
Cumber v. Wane,20 saying21:
"All the authorities subsequent to Cumber v. Wane22 which
were relied upon by23the appellant at your Lordships'
Bar (such
2i
as Sibree
v.
Tripp
Curlewis
v.
Clark
and
Goddard
v.
O'Brien25) have proceeded upon the distinction, that, by giving
negotiable paper or otherwise there had been some new con- Q
sideration for a new agreement, distinct from mere money
payments in or towards discharge of the original liability."
Lord Selborne was distinguishing26 those cases from the case
before the House.
But the giving of a cheque of the debtor for a smaller amount
than the sum due is very different from " the gift of a horse, hawk, D
or robe, etc." mentioned in Pinnel's Case.27 I accept that the cheque
of some other person than the debtor, in appropriate circumstances,
may be the basis of an accord and satisfaction, but I cannot see
how in the year 1965 the debtor's own cheque for a smaller sum
can be better than payment of the whole amount of the debt in cash.
The cheque is only conditional payment, it may be difficult to cash, E
or it may be returned by the bank with the letters " R.D." upon it,
unpaid. I think that Goddard v. O'Brien,28 either was wrongly
decided or should not be followed in the circumstances of today.
I agree also that, in the circumstances of the present case, there
was no true accord. The Rees really behaved very badly. They
knew of the plaintiffs' financial difficulties and used their awkward
F
situation to intimidate them. The plaintiffs did not wish to accept
the sum of 300 in discharge of the debt of 482, but were desperate
to get some money. It would appear also that the defendant and
his wife misled the plaintiffs as to their own financial position.
Rees, in his evidence, said: " In June (1964) I could have paid
700 odd. I could have settled the whole bill." There is no G
16

9 App.Cas. 605.
5 Co.Rep. 117a.
18
9 App.Cas. 605.
19
Ibid. 613.
20
1 Stra. 426.
21 9 App.Cas. 605, 613.
22
1 Stra. 426.
17

15 M. & W. 23.
(1849) 3 Exch. 375.
9 Q.B.D. 37.
2" 9 App.Cas. 605, 613.
5 Co.Rep. 117a.
9 Q.B.D. 37.

2i

2 Q.B.
A

QUEEN'S BENCH DIVISION

627

evidence that by August, or even by November, their financial situation had deteriorated so that they could not pay the 482.
Nor does it appear that their position was altered to their
,

*r

, .

detriment by reason or the receipt given by the plaintiffs. The

receipt was given on November 14, 1964. On November 23, 1964,
the plaintiffs' solicitors wrote a letter making it clear that the payment of 300 was being treated as a payment on account. I cannot
see any ground in this case for treating the payment as a satisfaction
on equitable principles.
In my view the county court judge was right in applying the
rule in Foakes v. Beer,29 and I would dismiss the appeal.
C

WINN LJ. The judge found the following relevant facts:

1. When the plaintiff builders ceased work on the defendant's
house there was no dispute as to the amount, in terms of money,
of the work they had done. 2. After allowing due credits, the
defendant in August, 1964 owed the plaintiffs 482 13s. Id. 3. The
plaintiffs submitted accounts and by letters of August 31 and
October 19 requested payment: the defendant ignored the letters:
he did not put any complaint into writing before November 28.
4. On November 13, the defendant's wife, on his behalf, telephoned to plaintiffs, offered to pay 300 in satisfaction of their
account and said that this was all they would get: she did not
base her offer of a lesser amount on any dispute about workmanship
or any items charged: she said her husband could not pay more.
The judge thought that he could have paid the whole amount in the
previous June or July but was unable to say whether he could have
done so in November. 5. The plaintiffs were hard pressed for
money and therefore agreed through one Donaldson to accept 300
in settlement of their account. 6. After Donaldson had agreed
to take 300 he was given the choice of taking it in cash or by a
cheque drawn by the defendant: he was content to take a cheque.
7. When a cheque for 300 was collected the next day a receipt
was given, at the insistence of the defendant's wife, including
the words " in completion of account." 8. The arrangement to pay
by cheque was merely incidental to the settlement agreement: it
was arranged " to suit the plaintiffs' convenience."
The judge summed up his conclusion in law upon those facts
in the succinct phrase " this case did not fall under the cheque
29

9 App.Cas. 605.

C. A.
196s

D. &C.
Builders Ltd.

v.
L.J.

628

QUEEN'S BENCH DIVISION

[1966]

c. A.
cases." He also said in his judgment that he had found the issue A
1965
difficult in law: of that I am myself also conscious.
D. & c.
The question to be decided may be stated thus: Did the
Builders Ltd. defendant's agreement to give his own cheque for 300 in full
Rees
settlement of his existing debt to the plaintiffs of 482 and the
WINNLJ. plaintiff's agreement to accept it in full payment of that debt,
followed by delivery and due payment of such a cheque, constitute B
a valid accord and satisfaction discharging the debt in law?
Apart altogether from any decided cases bearing upon the
matter, there might be a good deal to be said, as a matter of
policy, in favour of holding any creditor bound by his promise to
discharge a debtor on his paying some amount less than the debt
due: some judges no doubt so thought when they held readily that C
acceptance by the creditor of something of a different nature from
that to which he was entitled was a satisfaction of the liability;
cf. Pinnel's Case,30 Smith v. Trowsdale,31 Cooper v. Parker.32 A
like approach might at some time in the past have been adopted by
the courts to all serious assurances of agreement, but as English
law developed, it does not now permit in general of such treatment D
of mere promises. In the more specific field of discharge of
monetary debt there has been some conflict of judicial opinion.
Where a cheque for a smaller sum than the amount due is
drawn by a person other than the debtor and delivered in satisfaction of his debt, it is clear that the debt is discharged if the cheque
be accepted on that basis and duly paid; cf. Hirachand Punamchand v. Temple?3
In the instant case the debtor's own cheque was accepted,
though not stipulated for by the creditor, as the equivalent of cash,
conditionally of course upon its being duly paid on presentation:
such is the modern usage in respect of payments of money due,
common, though not yet universal, in domestic no less than
commercial transactions. This court must now decide the effect
of that transaction.
Had this case arisen in 1883 it would have fallen to be determined in favour of the defendant by force of the decision of a
Divisional Court of two judges, Grove J. and Huddleston B. in
Goddard v. O'Brien3* in which Cumber v. Wane35 was distinguished and not followed.
Goddard's case 80 came to be decided upon a case stated by the
30
81
32
33

5 Co.Rep. 117a.
(1854) 3 E. & B. 83.
(1855) 15 C.B. 822.
[1911] 2 K.B. 330.

* 9 Q.B.D. 37.
1 Stra. 426.
30
9 Q.B.D. 37.
3S

2 Q.B.

QUEEN'S BENCH DIVISION

629

judge of the Southwark county court in which it was set out that the
C. A.
defendant in the action was indebted to the plaintiffs in the sum
1965
of 125 odd for billiard table slates sold and delivered by them to
D. &C.
him. A representative of the plaintiffs agreed with the defendant BuiId ^ sLtd Rees
to accept the sum of 100 in discharge of the debt of 125 odd
and thereupon the defendant gave to the plaintiffs a cheque for WINN L.J.
100 payable on demand and the plaintiffs gave him a receipt
stating that the cheque was taken " in settlement of account of
127 7s. 9d. on said cheque being honoured." The cheque was
duly honoured. No other consideration was given by the defendant
or received by the plaintiffs in satisfaction of the debt. The county
court judge held that there had been a good accord and satisfaction
by reason of the cheque being a negotiable security. The question
for the opinion of the court was whether he was right in so ruling.
Grove J. and Huddleston B. were of the opinion that he was right.
Grove J. saidS7:
" The difficulty arose from the rule laid down in Cumber v.
Wane.38 But that doctrine has been much qualified, and I am
not sure that it has not been overruled."
He referred to Sibree v. Tripp89 and treated it as " a direct
authority that the giving of a negotiable security is not within
the rule of Cumber v. Wane."i0 Huddleston B. was also of the
opinion41 that " the doctrine of Cumber v. Wane*2 if not actually
overruled, has been very much qualified." He approved43 the
terms of a note in Smith's Leading Cases, 8th ed., p. 366, which
was in the following terms:
" The general doctrine in Cumber v. Wane," and the reason
of all the exceptions and distinctions which have been engrafted
on it, may perhaps be summed up as follows, viz., that a
creditor cannot bind himself by a simple agreement to accept
a smaller sum in lieu of an ascertained debt of a larger amount,
such an agreement being nudum pactum. But, if there be any
benefit, or even any legal possibility of benefit, to the creditor
thrown in, that additional weight would turn the scale and
render the consideration sufficient to support the agreement."
I interpose the comment that I find it impossible in the instant
case to visualise any benefit or legal possibility of benefit to the
builders which might derive from the receipt of the defendant's
cheque for 300 instead of the same amount of cash.
37

9 Q.B.D. 37, 39.

1 Stra. 426.
39 15 M. & W. 23.
40
1 Stra. 426.
38

41

9 Q.B.D. 37, 40.

1 Stra. 426.
* 9 Q.B.D. 37, 40.
44
1 Stra. 426.
42

630

QUEEN'S BENCH DIVISION

[1966]

C A.
Only two years after the decision in Goddard's case" the
1965
House of Lords in Foakes v. Beer*6 had to consider the effect
D.&C. of an agreement between a judgment debtor and a judgment
Builders Ltd. creiitor that in consideration of the debtor paying down part of
Rees
the judgment debt and costs of paying the residue by instalments,
WINN L.J.
the creditor would not take any proceedings on the judgment. The
House held this to be a nudum pactum, being without consideration,
and that it did not prevent the creditor after payment of the whole
debt and costs from proceeding to enforce payment of interest upon
the judgment. Pinnel's Case" and Cumber v. Wane" were
expressly followed. Lord Selborne L.C. said 48 :
"The question, therefore, is nakedly raised by this appeal
whether your Lordships are now prepared, not only to overrule, as contrary to law, the doctrine stated by Sir Edward
Coke to have been laid 60down by all the judges of the Common
Pleas in Pinnel's Case in
1602, and repeated in his note to
Littleton, section 344 (2),61 but to treat a prospective agreement, not under seal, for satisfaction of a debt, by a series
of payments on account to a total amount less than the whole
debt, as binding in law, provided those payments are regularly
made; the case not being one of a composition with a common
debtor, agreed to, inter se, by several creditors."
Pausing there, it may be observed that the Lord Chancellor was
considering in this passage the nature and effect of such an
agreement rather than the effect of its performance as a satisfaction.
He went on to say 52 :
" It may well be that distinctions, which in later cases have
been held sufficient to exclude
the application of that doctrine
(of Cumber v. WaneSi) existed
and were improperly disregarded in Cumber v. Wane58; and yet that the doctrine
itself may be law, rightly recognised in Cumber v. Wane,53
and not really contradicted by any later authorities. And
this appears to me to be the true state of the case."

The Lord Chancellor then stated34 his understanding of the

doctrine to which he was referring, as stated in Pinnel's Case,15
to be
" that payment of a lesser sum on the day (it would of course
be the same after the day) in satisfaction of a greater, cannot G
be any satisfaction for the whole, because it appears to the

'

9 Q.B.D. 37.
9 App.Cas. 605.
5 Co.Rep. 117a.
1 Stra. 426.
9 App.Cas. 605, 611.
5 Co.Rep. 117a.

51

Co.Litt. 212b.
9 App.Cas. 605, 612.
" 1 Stra. 426.
9 App.Cas. 605, 612.
S5
5 Co.Rep. 117a.

52

2 Q.B.
A.

QUEEN'S BENCH DIVISION

judges, that by no possibility a lesser sum can be a satisfaction

to the plaintiff for a greater sum."
He further said S8 :

631
C. A.
1965
D&c
Builders Ltd.

v
" If the question be . . . whether consideration is, or is not,
R ees
given in a case of this kind, by the debtor who pays down part
of the debt presently due from him, for a promise by the WDJNLJ.
creditor to relinquish, after certain further payments on
account, the residue of the debt, I cannot say I think consideration is given, in the sense in which I have always understood
that word as used in our law. It might be (and indeed I think it
would be) an improvement in our law, if a release or acquittance of the whole debt, on payment of any sum which the
creditor might be content to receive by way of accord and
satisfaction (though less than the whole) were held to be,
generally, binding, though not under seal . . . but I think it
impossible . . . to treat such a release or acquittance as supported by any new consideration proceeding from the debtor.
All the authorities subsequent to Cumber v. Wane " . . . such
as Sibree v. Tripp,5* Curlewis v. Clark"9 and Goddard v.
O'Brien?" have proceeded upon the distinction, that, by giving
negotiable paper or otherwise, there had been some new
consideration for a new agreement, distinct from mere money
payments in or towards discharge of the original liability."
It is clear that this speech did not deal with the effect of the
giving of any cheque or negotiable instrument in respect of part
of the debt due since it left any case involving such an element upon
one side: on the other hand, it did go a long way to restore the
authority of Pinnel's Case 61 and Cumber v. Wane."2
It is further to be noted that the Lord Chancellor in the last
passage quoted emphasised the need for consideration to support
the accord and he said es :

" What is called ' any benefit, or even any legal possibility of
benefit' in Mr. Smith's notes to Cumber v. Wane 64 (8th ed., p.
366) is not (as I conceive) that sort of benefit which a creditor
may derive from getting payment of part of the money due
to him from a debtor who might otherwise keep him at arm's
length or possibly become insolvent, but is some independent
benefit, actual or contingent, of a kind which might in law be
a good and valuable consideration for any other sort of
agreement not under seal."
so 9 App.Cas. 605, 613.
" 1 Stra. 426.
'8 15 M. & W. 23.
59
3 Exch. 375.
60
9 Q.B.D. 37.

61

5
1
6S
9
* 1
92

Co.Rep. 117a.
Stra. 426.
App.Cas. 607, 613.
Stra. 426.

632

QUEEN'S BENCH DIVISION

[1966]

C A.
1965
D.&c.

Lord Blackburn made it clear in his speech that he had felt

hesitation in concurring as he did in the decision because he felt
convinced85 that

v.

" all men of business, whether merchants or tradesmen, do

every day recognise and act on the ground that prompt
payment of a part of their demand may be more beneficial
to them than it would be to insist on their rights and enforce
payment of the whole."
He remarked obiter66 that " if it had been a promissory note the
authorities are that it would have been a good satisfaction."
In 1911, in the case already referred to of Punamchand,67
Fletcher Moulton L.J. said 68 :
" I have grave doubts whether Goddard v. O'Brien89 was
rightly decided, because, when the facts are looked at, it
appears that the cheque was there given, not in substitution
for the debt, but only as conditional payment of the amount, so
that the case really stood on the same footing as payment
of a less amount in discharge of a greater."
Farwell L.J. in the same case said,70 referring to the case of
Day v. McLea71:
" In that case, there being no consideration for the discharge
of the balance of the debt, it was held that the creditor could
retain the money, and sue for the balance."

Builders Ltd.
8

WINN L.J.

In my judgment it is an essential element of a valid accord

and satisfaction that the agreement which constitutes the accord
should itself be binding in law, and I do not think that any such
agreement can be so binding unless it is either made under seal or
supported by consideration. Satisfaction, viz., performance, of an
agreement of accord, does not provide retroactive validity to the
accord, but depends for its effect upon the legal validity of the
accord as a binding contract at the time when it is made: this I
think is apparent when it is remembered that, albeit rarely, existing
obligations of debt may be replaced effectively by a contractually
binding substitution of a new obligation.
In my judgment this court should now decline to follow the
decision in Goddard v. O'Brien,2 and should hold that where
a debtor's own cheque for a lesser amount than he indisputably
owes to his creditor is accepted by the creditor in full satisfaction
<> 9 App.Cas. 607, 622.
88

Ibid. 615.
87
[1911] 2 K.B. 330.
ss Ibid. 340.

9 Q.B.D. 37.

[1911] 2 K.B. 330, 342.

'i 22 Q.B.D. 610.
9 Q.B.D. 37.

2 Q.B.
A

633

of the debt, the creditor is to be regarded, in any case where he has

c. A.
not required the payment to be made by cheque rather than in
1965
cash, as having received the cheque merely as conditional payment ~ DT&~C
of part of what he was entitled to receive: he is free in law, Builders Ltd.

QUEEN'S BENCH DIVISION

V.

if not in good commercial conscience, to insist upon payment of

the balance of the amount due to him from the debtor.
I would dismiss this appeal.

Rees
WINNZJ.

Appeal dismissed with costs.

Solicitors: Merton Jones, Lewsey & Jefferies; Bishop & Co.
A H R

NAGLE v. FEILDEN AND OTHERS

Q

C.A.

1966
ContractFormationIntention
to create legal relationshipIssue of Feb- 3 ' 4 > 2 2
training licences by Jockey ClubRepeated
refusal to issue
LORD
licences to woman trainerGrant of licences to male employees
DENNINO
Whether contract between Jockey Club and woman applicant for TJANCKWERTS
licenceWhether refusal of licence because applicant a woman
an(i
contrary to public policySex Disqualification {Removal) Act, SALMON L.JJ.
1919 (9 & 10 Geo. 5, c. 71), s. 1.
Public PolicyRight to workTrade association with
monopoly
powersRefusal of licence by Jockey Club to woman trainer
Whether sex discriminationWhether contrary to public policy
Sex Disqualification (Removal) Act, 1919 (9 & 10 Geo. 5, c. 71),
s. I. 1
Restraint of TradeTrade associationMonopoly
powersRight to
workJockey Club's refusal of training licence to woman
Whether sex discriminationWhether contrary to public policy
Sex Disqualification (.Removal) Act, 1919, s. I. 1
DiscriminationSexRight
to workWhether
woman entitled to
train racehorsesSex Disqualification (Removal) Act, 1919, s. 1.
The stewards of the Jockey Club controlled horseracing on
the flat throughout Great Britain. They made rules of racing,
sanctioned the holding of race meetings and no person was
allowed to train horses for racing at their meetings unless he
held a licence. The plaintiff, a woman, had trained racehorses
for many years. It was the practice of the stewards to refuse to
grant a trainer's licence to a woman in any circumstances. The
1
Sex Disqualification (Removal)
Act, 1919, s. 1: " A person shall not
be disqualified by sex . . . from the
exercise of any public function, or
from being appointed to or holding

any civil or judicial office or post, or

from entering or assuming or carrying on any civil profession or
vocation. . . ."