An agreement to pay off part of a judgment debt owed jointly with others will not of itself amount to consideration sufficient to prevent a creditor going against a debtor for the unpaid balance of the judgment.

The Court of Appeal held in Collier v P & M J Wright (Holdings) Ltd that an alleged agreement with one of three judgment debtors to pay off one third of the debt was merely an agreement to accept a lesser sum from the debtor than was due. That, of itself, was not a binding agreement in law as it had no consideration in terms of some detriment to the debtor or benefit to the creditor, to support it. An agreement to pay a debtor's proportionate share of an existing debt is not sufficient to constitute consideration.

However, on the issue of promissory estoppel, the court held that there was at least a triable issue that there was an agreement with the company that they would accept payment of the one third share of the judgment, that the sum had been paid and that it would be inequitable for the company to thereafter insist on payment of the balance. This was sufficient to set aside the statutory demand served in relation to the balance of the judgment debt.

Things to consider

It is therefore important to be very clear what is said and what the terms of payment are when less than the full debt is being accepted from co-debtors.