Collier v P & MJ Wright (Holdings) Ltd [2007] EWCA Civ 1329; [2008] 1 WLR 643
Facts
Collier and two business partners were liable under a consent judgment payable by instalments. Collier alleged that the creditor agreed to look only to him for one-third of the debt and to the others for the remainder. He continued paying and ultimately paid that share. The other partners became bankrupt, and the creditor served a statutory demand on him for the outstanding balance. Collier applied to set it aside, relying on the alleged agreement and promissory estoppel. The court had to decide whether a sufficient dispute existed to prevent use of the statutory demand.
Legal Issue
Could C enforce and rely upon a promissory estoppel and prove it would be unconscionable for W to go back on the agreement.
Held
The Court of Appeal set aside the statutory demand because Collier had an arguable promissory estoppel defence. It did not finally determine that the creditor's entire remaining claim had been extinguished. Collier's payment of part of a debt for which he was already responsible supplied no fresh consideration for a binding contractual release under the orthodox rule.
Arden LJ nevertheless considered that voluntary acceptance of part-payment, followed by payment in reliance on the assurance, could make pursuit of the balance inequitable. Longmore LJ expressed caution about the promise's meaning and the adequacy of reliance, but agreed that the defence was arguable. Those matters required fuller consideration at trial rather than being resolved conclusively in the insolvency-demand procedure.
⭐ Legal Principle
An alleged promise to accept part-payment of a debt may support an arguable promissory estoppel defence despite the absence of fresh consideration. The assurance, reliance and inequity require examination. Collier set aside a statutory demand; it did not establish that every accepted part-payment automatically extinguishes the balance.
Significance
Collier is essential when applying Foakes v Beer to a debt compromise. The common law consideration rule does not by itself dispose of a separately supported estoppel defence. Equally, the procedural outcome and Longmore LJ's reservations prevent treating Collier as automatic extinction of debt whenever a creditor accepts less. In an exam, analyse the promise's intended duration and scope, the debtor's reliance and whether resiling is inequitable. Do not invoke the shield metaphor to dismiss a defence to the creditor's action.
Common exam questions about this case
Did Collier finally establish that the balance could never be recovered?
No. The court found an arguable defence sufficient to set aside the statutory demand. It did not conduct the full trial needed to determine the assurance, reliance and inequity conclusively. Treating the procedural result as a final release overstates what the Court of Appeal actually decided.
Why did the payment not supply fresh consideration?
Collier remained responsible for the judgment debt. Paying the proposed share did not provide something beyond his existing obligation sufficient to support the asserted contractual release. That conclusion concerned consideration. The court separately considered whether the creditor's assurance and Collier's response made a promissory estoppel defence arguable.
Why is “estoppel is a shield” not an answer to Collier’s defence?
Collier was resisting the creditor's demand, which is a defensive use of estoppel. The real questions concerned the promise, reliance and inequity, not an attempt to create an independent cause of action. The shield principle therefore does not eliminate the defence merely because its practical effect may protect against payment.