Periodic Reminder from the High Court that Part Payment Does Not Equal Satisfaction of the Whole

Creditors are regularly faced with claims from debtors to the effect that there had been a binding agreement (often oral, unwitnessed and seemingly entered into by a former staff member) by the creditor to write off the balance of a debt if part payment of the debt is made.  There may be older precedents that are referred to in the Irish courts, but not many older than Pinnel's Case of 1602, in which it was found that “… it appears to the Judges that by no possibility, a lesser sum can be a satisfaction to the plaintiff for a greater sum: but the gift of a horse, hawk, or robe, etc. in satisfaction is good. For it shall be intended that a horse, hawk, or robe, &c. might be more beneficial to the plaintiff than the money.

In Permanent TSB plc -v- Walsh1, no horse, hawk, or robe was provided in purported satisfaction of the debt, but rather the Defendant had paid off one of two loan facilities.  It was claimed that an agreement had been reached with a staff member of the Plaintiff, at a local hotel, to the effect that only that one account needed to be cleared and “nothing further would happen” upon doing so; this was disputed by the Plaintiff.  A statement of account for both facilities only referred to the balance for the first account, and this was relied upon to demonstrate that this agreement had been reached.

Mr Justice Barrett found that there had been no concluded restructuring agreement, given the contents of letters from the Defendant that made no mention of there having been one.  However, he also went on to rule that, even had such an agreement been concluded, it could not bind the Plaintiff, on the basis of the principles established in Pinnel's Case.  In the absence of any detriment to the Defendant by reason of having made part payment, the Plaintiff was not estopped from insisting on the payment of the remainder of the moneys owing to them.  Mr Justice Barrett had delivered two judgments in 20182 by reference to the more than 400 year old principles of Pinnel's Case, and no doubt the High Court will be called on to issue another such reminder before long.
1. [2019] IEHC 45; delivered on 31 January 2019.
2. Healy -v- Ulster Bank Ireland Ltd. & anor, [2018] IEHC 12; Clones Credit Union Limited -v- Strain & ors, [2018] IEHC 241.

Article by William Corcoran, Senior Associate in OSM Partners’ Litigation and Dispute Management Department.

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