Building dispute – Arbitration – Award – Daughter paying judgment debt owed by defendant – Claimant alleging judgment debt settled in those circumstances – Whether judgment debt paid by defendant and/or for and on his account – Judgment for the defendant
The defendant was the owner of a manor house who engaged the claimant to carry out works of refurbishment and restitution at the property. The parties fell out and their disputes were referred to an adjudicator, who decided that the defendant should pay the claimant the sum of £1,018,828.12 plus VAT, interest and his own fees and expenses. The defendant failed to pay and the claimant issued enforcement proceedings in court. In a judgment handed down on 25 October 2007, Akenhead J upheld the decision and ordered the defendant to pay a total of £1,222,818.05, together with certain other sums by way of interest: see [2007] PLSCS 205; [2007] 44 EG 181 (CS).
The parties eventually agreed that the judgment debt stood at £1,239,310.12 (the judgment debt) and on 7 November 2007, that amount was paid into the claimant’s bank account. The claimant subsequently discovered that the sum had come from the account of the defendant’s daughter. The claimant expressed concern about this but failed to obtain an explanation from the defendant as to why this had occurred. However, the money that had been paid was part utilised by the claimant to discharge various outgoings.
The issue as to whether or not, as the defendant maintained, he had paid the judgment debt was a live issue in the arbitration proceedings that were ongoing between the parties. In July 2008, the claimant issued proceedings under CPR Part 8, seeking a determination of various issues relating to the central question of whether or not the judgment debt had been paid in order to regularise the position. The defendant sought a declaration that he had paid the judgment debt.
The essential dispute between the parties was whether the judgment debt of £1.2m had been paid by the defendant and/or for and on his account. The money had in fact been paid and in part utilised by the claimant to discharge various outgoings.
Held: The court gave judgment in favour of the defendant.
A payment made by a person without compulsion, in order to discharge another’s debt, would not discharge that debt unless he acted with that other’s authority or if that other subsequently ratified the payment: Crantrave Ltd (in liquidation) v Lloyds Bank plc [2000] 4 All ER 473 applied.
A voluntary payment by a stranger, A, which purported to pay the debts of B to B’s creditor, C, would only be effective to discharge B if the payment was made as B’s agent, for and on account of B, and with B’s prior authority or subsequent ratification: Simpson v Eggington (1855) 10 Ex 845 and Smith v Cox [1942] 2 KB 558 considered.
On the evidence in the instant case, the money paid could not be said to be money owned by the defendant. However, the only sensible and realistic conclusion to be drawn from the evidence was that the judgment sum was paid by his daughter and/or his son as agents for their father, for and on account of their father and with his prior authority or subsequent ratification: Smith v Cox [1940] 2 KB 558 distinguished.
If the arbitration continued and the arbitrator concluded that the claimant had been overpaid, sums would be due back to the defendant. Any award made by the arbitrator could only relate to the defendant because he was the party to the building contract and to the arbitration. Since it could not be made in relation to his daughter or son, there was no confusion and no position that required to be regularised.
Michael Taylor (instructed by Contract & Construction Consultants, of Bristol) appeared for the claimant; Nicholas Braslavsky QC and Andrew Singer (instructed by George Davies LLP, of Manchester) appeared for the defendant.
Eileen O’Grady, barrister
