D & C Builders Ltd v Rees [1965]

D & C Builders Ltd v Rees [1965] EWCA Civ 3 revolved around part payment of debt, estoppel, duress, and just accord and satisfaction. The case highlights the tension between the common law principle that part payment does not discharge the entire debt and equitable doctrines such as estoppel and duress.

D & C Builders Ltd, a two-man building firm, performed work for Mr Rees at 218 Brick Lane, London, amounting to £732. Mr Rees only paid £250, leaving a balance of £482. Faced with the threat of bankruptcy, D & C reluctantly agreed to accept £300 from Mrs Rees, who claimed the work was unsatisfactory. The receipt for this payment was marked in completion of account. Subsequently, D & C sought the balance through legal action.

Lord Denning MR acknowledged the criticism the doctrine of part payment had received but highlighted that estoppel, derived from Hughes v Metropolitan Railway Co [1877], could provide relief in equity. While he believed that part payment of a debt could satisfy the whole debt, he found that Mrs Rees had effectively compelled the builders to accept a reduced amount. Therefore, any variation of the original agreement was deemed voidable due to duress.

Lord Denning referred to the principle stated by Lord Cairns in Hughes v Metropolitan Railway Co, emphasising that if parties engage in negotiations that lead one party to believe strict contractual rights will not be enforced, the enforcing party may be estopped in equity.

He acknowledged the legal doctrine that payment of a lesser sum does not discharge a greater sum but noted that equity has provided relief. The principle applies when a debtor believes, based on negotiations, that paying a lesser sum will settle the debt, the creditor accepts it, and it would be inequitable to enforce the balance.

However, Lord Denning found that in this case, there was no true accord. Mrs Rees had pressured the creditor by threatening not to pay anything unless £300 was accepted in settlement, constituting undue pressure and intimidation. Therefore, there was no valid accord and satisfaction. As a result, there was no legal or equitable reason preventing the creditor from enforcing the full amount of the debt.

In summary, the court dismissed the appeal, ruling in favour of D & C Builders Ltd, allowing them to enforce the full amount of the debt. The judgment in this case reflects the court's attempt to reconcile the common law principles with equitable considerations, providing relief in situations where strict enforcement of legal rights would be inequitable.
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