07 January 2009

Extinguishing a debt

The following case is quite interesting: Treasure & Son Ltd v Dawes [2008] EWHC 2181.

Mr Justice Coulson, "... It seems to me that the relevant principles are these:

(a) A payment made by a person without compulsion, intending to discharge another's debt, will not discharge that debt unless he acted with that other's authority or if that other subsequently ratifies the payment: see Crantrave Limited v Lloyds Bank plc [2002] All ER (Comm) 89 at 94, Pill LJ.

(b) A voluntary payment by a stranger, A, which purports to pay the debts of B to B's creditor, C, will only be effective to discharge B if the payment is made as B's agent, for and on account of B, and with B's prior authority or subsequent ratification: see Simpson v Eggington (1855) 10 Exch 845 at 847 and Smith v Cox [1942] 2 KB 558.

Consider, for example, when "Can't pay, wont pay" pensioners threaten to go to jail rather than pay, eg, council tax and some benefactor comes out of the shadows to save them from prison by an anonymous donation, think of this case.

Are the pensioners being hypocritical and accepting payment of the debt on their behalf; or, has the council waived the demand?

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