Collier v Wright [2007]
Court: Court of Appeal
Facts: In Collier v P & MJ Wright (Holdings) Ltd [2007] EWCA Civ 1329, Mr. Collier, one of three partners in a property development company, was bound by a court order to pay £46,000 to Wright Ltd in monthly installments of £600. Payments were later reduced to £200 a month. In 2000, Mr. Collier claimed that Wright Ltd assured him he would be severally liable for £15,600 rather than jointly with his bankrupt partners. After the bankruptcy of the other partners, Wright Ltd demanded the full debt amount from Mr. Collier. Mr. Collier argued that either a binding variation agreement existed or, if not, Wright Ltd was estopped from demanding the full payment due to reliance on the altered payment arrangement.
Issue: Whether promissory estoppel could prevent Wright Ltd from enforcing the full debt amount after Mr. Collier had relied on a reduced payment arrangement.
Held: The Court of Appeal held that there was a triable issue concerning the application of promissory estoppel. The court found that promissory estoppel could potentially be applied to limit Wright Ltd’s claim to the amount Mr. Collier had already paid, based on the reliance on the assurance.
Key Judicial Statement: Arden LJ emphasized that if a debtor offers to pay part of a debt, and the creditor accepts this in reliance on the arrangement, the creditor may be bound by promissory estoppel to accept the partial payment as full satisfaction of the debt. This reliance can make it inequitable for the creditor to resile from their promise, effectively extinguishing the original debt.
💡 Leveluplaw: This case explores the application of promissory estoppel in debt payment contexts, indicating that a lesser payment can discharge the entire debt if reliance on a promise has occurred. It challenges the traditional doctrines of Pinnel’s Case and Foakes v Beer by highlighting how reliance and fairness principles can affect debt obligations. Understanding the conditions under which promissory estoppel applies can be crucial in cases involving debt and payment arrangements.