England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HUDDERSFIELD COUNTY COURT
(His Honour Judge Hawkesworth)

		Royal Courts of Justice Strand London WC2 Friday, 16th November 2001

Friday, 16th November 2001

1. LORD JUSTICE CHADWICK: This is a renewed application for permission to appeal against an order made on 17th July 2001 (although misdated 16th July 2001) by His Honour Judge Hawkesworth, sitting at Huddersfield County Court in proceedings brought by Naylors Timber Recovery Ltd against the applicant, Mr Reginald Jones, trading (or formerly trading) as ARK Pallets or, as appears from some of the documents, as ARK Pallets and Fencing.
2. The proceedings were commenced on the 28 February 2000. The claim was for £10,000; that being the balance of monies said to be owing under an agreement between the parties which is recorded in a letter signed by the applicant and dated 28 February 1994. The pleaded defence was that the agreement was procured by duress and undue influence.
3. It is accepted that there was a running account between the parties in respect of mutual trading prior to 28 February 1994; but it is said that the true position was that the balance of that account was in favour of the applicant in an amount of some £15,000. That sum is the subject of a counterclaim. The judge found for the claimant. He gave judgment for the claimant against the applicant in the sum of £13,217.60 - the sum claimed, with interest - and he dismissed the counterclaim. The dismissal of the counterclaim appears from his judgment but is not reflected in the order itself.
4. The background to the dispute is that the claimant was the owner of an interest in land at Barnsley, known as Former Royston Drift Mine. From November 1992 until February 1994 the applicant was in occupation of part of that land for the purpose of his own business as a manufacturer and supplier of pallets. It is common ground that the applicant agreed to pay £1,000 per quarter plus VAT for his right to occupy, and also to pay for electricity. It is common ground also, I think, that there was some inter-trading between the parties on an ad hoc and informal basis.
5. The parties were on friendly terms. They were in the same line of business and, as might be expected, they helped each other out with the supply of pallets, the use of machinery and, no doubt, the use of labour from time to time. Payments were made on an irregular basis; but, again as might be expected in a timber yard of this nature, neither party seems to have kept a detailed account of what was owing between them.
6. In February 1994 the applicant gave notice of his intention to vacate the premises. That brought to a head the question what monies were owed; and, in that context, it caused the claimant company to become concerned as to what was owing to it in respect of rent and electricity and how it was to be paid.
7. There was a meeting between the applicant and a Mr Pygott, then the general manager of the claimant company, at which the state of the indebtedness was addressed. Following that meeting the applicant signed a letter, written on the headed paper of ARK Pallets and Fencing and dated 28 February 1994. The letter is in these terms:

"I wish to give you notice that we intend to terminate our tenancy at Former Royston Drift mine, Lindhill Lane, Royston, Barnsley by the end of the week commencing 1st March 1994.

As agreed with John Pygott £11,000 (Eleven thousand pounds only) Debt has accumulated in Palletts Electricity and Rent since 1 September 1993 to date and is owing to you Naylors Timber Recovery Ltd.

It was further agreed with John Pygott to repay this £11,000 over the next twelve months starting in April 1994 by amounts of £1,000 per month (one thousand pounds) or in the supply of Palletts to the value of £1,000 per month."

8. That letter was followed by a letter from the claimant company dated 2 March 1994 and countersigned by the applicant. The letter is headed: "Re: £11,000 Amount owing":

"We acknowledge receipt of your letter dated 28.2.98. I confirm that we will agree to the following arrangement to pay by instalments.

1st payment of £1,000 (one thousand pounds) or pallets to the value of £1,000 (one thousand pounds) or a combination of both to be paid not later that 30th April 1994 and the following instalments, each of £1,000 (one thousand pounds) or pallets to the value of £1,000 (one thousand pounds) or a combination of both, paid every 30 days until the full amount has been paid.

So long as you keep to this arrange and pay all your future instalments on time, no further action will be taken.

FAILURE TO PAY: If you do not pay your instalments on or before the date due then this arrangement will be cancelled and legal action may be taken against to you recover the outstanding debt."

9. Subsequently, the applicant made two payments of £500 for which the claimant has given credit. Therefore amount outstanding as alleged by the claimant is £10,000.
10. The judge accepted that, on or about 27 February 1994, the exit to the claimant's yard was blocked by locked gates and a wagon, and that the applicant's son, Mr Matthew Jones, was told that he could not take his lorry and equipment out of the yard unless and until the applicant had come back to the yard and signed a letter confirming the agreement already reached with Mr Pygott. The applicant did so on the following day, 28 February. The judge found that at the time when the applicant signed the agreement all his equipment had left the yard. He was not, at that time, under duress; although on the previous day pressure had been brought to bear to get him to agree to come back and sign the document.
11. The judge went on to say this:

"... at the time, if he believed that what was being extorted from him, to use that word pejoratively, was wholly unreasonable, he could have said, "Well, sue me for it", and simply packed up and gone, but the fact of the matter is that he was doing business with the claimant. He perhaps wanted go on doing business with the claimant."

12. In those circumstances the judge rejected the contention that the applicant had been subjected to duress or undue influence when he signed the letter of 28 February 1994. It must follow that he would have rejected any similar allegation in relation to the countersignature of the letter of 2 March 1994.
13. The judge took the view that the amount of £11,000 in the letter of 28 February 1994 was a compromise figure which the applicant was content to accept in circumstances that neither party really knew or was in a position to establish what the true state of the account was. The judge found that that figure took into account all the indebtedness arising from the course of dealings between the parties on the one side and on the other; and that, accordingly, not only did the claim succeed but the counterclaim must be dismissed.
14. The grounds of appeal do not raise any challenge to the judge's finding that there was no duress or compulsion on the applicant to sign the letter of 28 February 1994. In those circumstances, the question for the judge was: what did the applicant think he was doing when he signed that letter? Was he simply agreeing that the amount of the indebtedness in respect of rent and electricity was £11,000 - leaving some unquantified amount to be raised by way of cross claim - or did he think that £11,000 represented a fair balance at which to settle the claims and cross claims between the parties?
15. The judge came to the conclusion that what was intended by the parties at the end of February 1994 was to draw a line under their relationship, which was coming to an end by the vacation of the premises by the applicant. It seems to me that that was a conclusion that he was entitled to reach on the evidence; indeed, it was really the only sensible conclusion in the circumstances.
16. It would have been very strange behaviour on the part of the applicant for him to acknowledge an indebtedness of £11,000, without reservation - on terms that he was to discharge that £11,00 by instalments of £1,000 per month under the threat that, on failure to pay any of those instalments, he would be sued - if, indeed, he thought at the time that he had a cross claim which was greater than, or equal to, or which at least diminished the £11,000. In those circumstances, the applicant could have been expected to acknowledge that £11,000 was owing in respect of rent and electricity and that that would be paid subject to reduction in respect of any cross claim which was put forward and substantiated. The absence of any reference to a cross claim in the letter of 28 February 1994 seems to me to be wholly consistent with the judge's view that the arrangement was intended to draw a line under the account between the parties. The judge having heard and seen the witnesses, and having formed that view, I can see no prospect that this Court would think it right to interfere.
17. The further point taken is that, even if the judge was right, there was no consideration to support the agreement of 28 February 1994. That submission is misconceived. The whole purpose of a settled account or compromise in circumstances like this is that each party accepts the amount of the compromise figure and gives up whatever rights he may or may not have to sue for any further sum arising out of the transactions which are the subject of the account. A settled account means just that: the account is settled and neither party can reopen it. If, in a search for consideration, the court were to inquire whether, on reopening the account, the balance would be found to be in favour of the one party or the other, that would be to defeat the obvious and beneficial purpose of an agreement to treat the account as settled.
18. That, as it seems to me, is what has happened in this case; and I can see no prospect that the Court of Appeal would think it right to reopen a settled account which now is already well over seven years old.
19. For those reasons this application is dismissed.
Order: Application dismissed.