Summary

A statutory demand was set aside where the debtor had an arguable case of promissory estoppel.

Facts

The appellant (C) appealed against a decision not to set aside a statutory demand served on him by the respondent (W). W had obtained a judgment by consent against three partners of whom C was one. The partners' liability was joint. The consent order provided for the three partners to pay the judgment debt by monthly instalments. C had paid a third of the debt by instalments. His partners had become bankrupt. W served a statutory demand on C for the balance of the judgment debt. C applied to set aside the demand relying on an alleged agreement by W that if C continued to pay his share of the judgment W would not look to him but only to his partners for the balance. C submitted that (1) his alleged agreement with W was binding because by agreeing to accept sole responsibility for his one-third share he gave consideration for W's promise to accept him as a debtor for only a one-third share of the judgment debt; (2) a promissory estoppel prevented W from proceeding against him for more than a one-third share of the debt.

Held

(1) The mere fact that a creditor agreed with a joint debtor to accept payment from him alone of his proportionate share did not result in a binding agreement. The alleged agreement made between C and W was merely to accept a lesser sum from C than that which was due and that was not a binding agreement in law since it had no consideration to support it, Foakes v Beer (1883-84) LR 9 App Cas 605 applied. (2) There was a real prospect of success on the promissory estoppel issue. It was arguable that there was an agreement or representation by W not to sue C for the full judgment sum. It could be sufficient reliance for the purpose of promissory estoppel if a lesser payment was made as agreed, provided there was an accord, D&C Builders Ltd v Rees (1966) 2 QB 617 considered. It was arguable that it would be inequitable for W to resile from its promise, D&C Builders Ltd v Rees considered.

Appeal allowed

Court of Appeal
Mummery LJ, Arden LJ, Longmore LJ

References
​LTL 14/12/2007 : (2007) NPC 136