Principles of Equity

The Doctrine of Satisfaction

prepared by

Olubunmi Afinowi, PhD

Introduction and justification for the
Doctrine.
• The doctrine of Satisfaction is based on the equitable maxim that
equity imputes an intention to fulfil an obligation.
• Illustration:
• A owes B the sum of 5 million naira. Before being able repay the debt, A dies.
He however leave B the sum of 5 million Naira in his Will. Should B be allowed
to claim the legacy and still remain entitled to repayment of the sum of 5
million Nair A owed him? The equitable maxim above becomes operative
here and the 5 million Naira legacy is deemed as full satisfaction of the debt
owed by A to B. In essence, B, having received the legacy, will not be able to
claim a repayment of the said debt from the estate of A.
Based on the above illustration, another maxim of equity becomes applicable,
that is, ‘equity leans against double portions’.
• Satisfaction is thus defined as the donation of a gift with the intention
that such gift should be used to satisfy (either wholly or partly) a pre-
existing obligation incurred by the donor against the Donee. In other
words, it is a gift intended to extinguish a prior claim of the done
against the donor. Thus, the doctrine becomes relevant as seen in our
preceding illustration where A owed an obligation to give an amount
or some other thing to B then makes a gift to B, such a gift raises a
presumption that the intention of A in making the donation is to
satisfy or discharge his prior obligation to B.
• note that the gift or donation need not be expressly stated as
extinguishing the debt or other obligation, neither does it have to be
an act strictly required by the obligation.
• It must be noted that the presumption of satisfaction can be rebutted. And
this was the case in Re: Manners where the deceased was under an
obligation to make an annual payment of £250 to his wife as marriage
settlement, he was under an obligation to keep making the payments from
his estate in case he pre-deceased her. Upon his death, his will provided for
the payment of £250 to her as annuity from an investment of £5000. From
the same amount, he directed the settlement of his funeral costs and made
several specific and residuary legacies to the extent that the sum became
insufficient to sustain the payment of the annuity. It was held by the Courts
that although there existed a prima facie case of satisfaction, this
presumption was rebuttable as the Will actually contained legacies for the
settlement of various debts, the payment to his wife being one of such.
• Relying on the earlier case of Horlock v. Wiggins (1888) 39 Ch.D 142 ,
Raymond Evershed M.R held as follows "I think that it seems now to
be tolerably clear that the presence of a direction for payment either
of debts and legacies or of debts simpliciter is treated as being,
whether or not artificially-and I do not think it is particularly artificial-
something which takes the case out of the rule.” in essence, where
there is an has an obligation to pay debts and the Will of the
deceased contains directions for the payment of such debts, then that
direction prima facie, excludes the case from the general rule of the
doctrine of Satisfaction.
Presumption of Satisfaction
There are basically two requirements in order for a presumption of
satisfaction to be raised,
• The donation must have been made in such circumstances that an
intention on the part of the donor to satisfy an obligation can be
presumed. See Goldsmid v. Goldsmid (1818) 1 Wils. Ch. 140, 149 where
Plumer M.R. held that “where there is a question of satisfaction, there
must be a reference to the intention. Satisfaction is a substitution of one
thing for another; and the question in cases of that kind is whether the
substituted thing was given for the thing proposed.”
• Secondly, there must be in existence a prior and existing claim of the done
which the donor intends to satisfy. See Re Fletcher (1888) 38 Ch. D. 373.
Limits of the application of the doctrine
• The doctrine is limited in its application and in addition to the earlier stated case,
there are several other instances where it will not be presumed.
• Where the gift is less that the obligation or debt owed. It has been held by the
courts that there is no pro tanto satisfaction of a debt and for the doctrine to
apply, the legacy must correspond to the nature of the obligation owed. See the
case of Coates v. Coates (l898) 1 I.R. 258 it was held that the legacy of a lesser
amount per week could not operate as a satisfaction of the testator's liability
under the separation deed of the greater amount. It was held that 'That which is
less is not to be presumed in satisfaction of that which is greater’. Also Atkinson v.
Webb (1704) 23 E.R. 907, the principle becomes applicable where the donor
offers to the done something equivalent to or more than the obligation owed.
Further, it has been argued that the legacy must be more beneficial than the
obligation. Thus, If, for example, a legacy based on the satisfaction of a condition
or of an uncertain amount will be seen as insufficient.
• The doctrine will not be applicable where the debt came into
existence after the will was made. See Cranner’s Case (1702) 91 E.R.
434, where the testator was indebted to another ‘C’ for a sum of £50,
he subsequently made a will in which he made a gift of £500 to C. He
later borrowed £150 from C and died. The gift of £500 can not be
presumed as a satisfaction of the subsequent indebtedness of £500.
• The doctrine of Satisfaction does not apply if the gift in the will is one
of land meant to satisfy a monetary obligation. In other words, there
will be no presumption of satisfaction where the legacy is not of the
same nature as the debt. In Barret v. Beckford (1750) 27 E.R. 1179,
The Lord Chancellor held that ‘it is a general rule of satisfaction that
the thing to be considered as a satisfaction should be exactly of the
same nature and equally certain, here, it is not of the same nature’.
• It is also said that where the debt pre-dates the will and the debt is repaid
before the testator dies, there will be no presumption of satisfaction and
the creditor cannot claim the legacy. The argument being that the debt is
repaid and the legacy is adeemed based on the assumption that the only
reason for the legacy is to satisfy the debt.
• In Re Fletcher (1888) 38 Ch.D. 373, a testator at the date of his codicil owed
his wife £625 and by his codicil he gave her that precise amount. North J.
held as follows, ‘I cannot imagine any reason for his giving that exact sum
except to provide for the payment of the debt. Afterwards the debt was
paid off and the purpose for which the legacy was given, I am convinced,
was satisfied. The testator, having paid off the debt in his lifetime, his
estate is relieved from the payment of the legacy.’
Satisfaction of portion debts by legacies or by
subsequent portions
• This rule is particularly applicable as between parents and their
children or people to whom a testator(rix) stand in loco parentis.
• Generally, equity imputes an intention to fulfil an obligation (i.e. the
normal basis for satisfaction) and there is the equitable presumption
that a parent would wish to deal fairly as between his children.
Therefore, there is the presumption that the parent would not give
legacies that favour a child or some children over other children or at
the expense of other children.
• This is known as the presumption against double portions. Based on
the maxim that equity leans against double portions.
Illustration
• Ade in a marriage settlement covenants to provide each child of his marriage with a
portion of 10 million Naira but the money has not yet been paid. This is referred to as a
portion debt (portion is a provision for a child in discharge, or partial discharge, of the
obligation to provide for that child). His two children are Titi and Shade. Upon the
occasion of Titi’s marriage, he made a gift of 10 million Naira to her which was made
payable from his Estate at a future date. A few years later, he died, there is a
presumption that the gift to Titi is in satisfaction of the portion debt and so even though
he died before paying the portion debts it is presumed that Titi’s gift was a satisfaction of
his portion debt to her. Thus, Titi will not receive any other portion, while Shade would
receive her own portion of 10 million Naira.

• In relation to Titi, there is a presumption of satisfaction as the gift is made by a father to

his legitimate child.
• It should be noted that a lesser amount or smaller gift may be deemed to be a
satisfaction pro tanto of the portion debt Lawes v. Lawes (1881 .
• Further on the nature of a portion, a portion is something given by a parent to their child
with a view to establishing the child in life ( Taylor v. Taylor (1875) L.R. 20 Eq. 155).
• Examples of gifts by way of portions include, marriage portion; money laid out either for
the training of the child into a profession or setting him up in business; paying for his
commission, paying for the goodwill of child's business and giving him stock-in-trade.
Also, gifts of shares of residue, of shares in partnership property and of real estate have
been considered and treated as portions.
• Portions can also be made by a person who stands in loco parentis. In Powys v
Mansfield (1837) 3 My & Cr 359, a person made payments for the education and
maintenance of the children of his brother. He had arranged a marriage settlement for
the brother’s daughter. The court held that despite the fact that the daughter lived with
her father until her marriage her uncle stood in loco parentis to her.
• The intention of the donor and the circumstances surrounding the gift are essential in
determining whether a gift is to be treated as a portion or not.
• Note the case of Phillips v Cameron and Others (1999) 2 All ER 924
where it was pointed out that a payment to a child may amount to a
portion even though it is not directly received by that child. Where a
grandfather (A) undertakes to pay the school fees of his grandchild
(C), this could be construed as a portion benefit to the grandfather’s
child (B) – the father of C – as it would relieve B of the responsibility
for and expenses of providing C with education.
Satisfaction of Portion-debt by Legacy
• Following the illustration above, the rule is that where a parent or a
person in loco parentis covenants to provide a portion for a child and
the parent or the person in loco parentis subsequently gives a legacy
to the child, there is a presumption that the legacy was intended as a
satisfaction of the portion-debt.
• Equity will not favour a child or ward claiming the legacy and at the
same time insisting on enforcing his rights under the covenant. In
instances where the legacy is equal to or greater than the portion-
debt, there is satisfaction in toto, but where the legacy is less valuable
than the portion-debt, there is satisfaction pro tanto.
• Re Pollock (1885) 28 Ch.D. 552 at 555
“When a testator gives a legacy to a child or to any other person
towards whom he has taken on himself parental obligations and
afterwards makes a gift or enters into a binding contract in his lifetime
in favour of the same legatee, then (unless there be distinctions
between the nature and conditions of the two gifts) there is a
presumption prima facie that both gifts were made to fulfill the same
natural or moral obligation of providing for the legatee, and
consequently, that the gift inter vivos is either wholly or in part a
substitution for, or an 'ademption' of the legacy.”
Per Cotton, L.J., Montagu v. Earl of Sandwich (1886) 32 Ch.D. 525 at
534-535,
“as between father and son the presumption arises that a father does
not intend to give double portions to his children; that is to say, if a
father has made a provision by way of covenant in favour of his child
before the date of his will; then unless it appears upon the will or by
testimony ... that he intends to give the benefit conferred by will in
addition to that which is already secured to the child by covenant, then
the child will not take both”.
Satisfaction of Portion-Debts by Subsequent
Portions
• A covenanted portion debt could also be satisfied where a child
received a portion or the right to receive a portion inter vivos. For
instance, where a father or a person in loco parentis had agreed to
give a portion to a child and subsequently makes some other
provision inter vivos which has the character of a portion, the second
provision is deemed to be a satisfaction either wholly or in part of the
agreed or covenanted provision. In Lawes v. Lawes (1881) 20 Ch.D. 81
Who may benefit?
• Note that only children or persons recognised to benefit are considered in
the application of this principle. Thus, the doctrine will not be applied if to
do so would benefit a stranger. The doctrine is premised on the need to
treat all children equally and equitably, thus there is no probability that it
will apply to others. “In other words, satisfaction will not apply if it would
work to the benefit of people other than a father’s children or children to
whom an individual stood in loco parentis.” See Re Heather [1906] 2 Ch
230, where a testator left £3,000 to his adopted daughter, Mary, and
divided the rest of his property between Mary and another. The testator
had made several gifts during his lifetime to Mary, including one of £1,000.
The court held that the doctrine of satisfaction could not be applied in the
case. The Courts held, inter alia, that the other beneficiary was a stranger
and not one of those for whose benefit the doctrine was designed.