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In the Court of Appeal
X-treme Ltd v Wilson
David Wilson booked an all-inclusive holiday with X-treme Ltd, a holiday company specialising in extreme sport package deals. The holiday was 7 days long, with a different extreme sporting activity being scheduled for each whole day. The cost was £3000, with £1000 paid up front to secure the booking and the balance upon completion of the holiday. He chose X-treme as he had used them in the past and had always been happy with the service they provided.
Later, David discovered that a friend going on the same holiday package had received a 50% discount on the cost of his holiday via an email voucher. David had registered his details on the X-treme website at the same time as his friend, but had not received the same email voucher. Having unexpectedly lost his job, David telephoned X-treme, to ask for the discount to be applied to the balance of his holiday as he feared he may not be able to afford to pay it otherwise and would have to cancel the holiday, and explaining that he was a loyal customer. Thinking that they may obtain further custom from him if they acceded to David’s wishes, X-treme’s area manager orally agreed to the reduction in price.
The holiday went well, as planned – David had a great time hang-gliding, white-water rafting, abseiling and the like. X-treme then sent their invoice, asking for £2000. David protested vehemently, saying that X-treme should not renege on its earlier promise of the 50% discount on the balance, and saying that he would only pay £1000, as agreed. He then sent a cheque for this amount and X-treme wrote back to say the account had been settled.
X-treme suffered a downturn in business due to the credit crunch. They decided to seek to claim the £1000 from David, arguing that they were not bound to the area manager’s promise as no consideration had been given for it. They further argued that, if the court agreed that the earlier promise was not binding upon them, the later acceptance of David’s cheque for £1000 did not preclude them from claiming the remaining £1000 as no consideration had been provided by David for X-treme’s promise that the account had been settled and, even in the absence of consideration, David could not raise an estoppel to prevent X-treme from going back on this promise, on the basis that estoppel does not apply to one-off debts. (It was not argued in either instance that X-treme’s promise was procured under duress.)
In the County Court, Air J found that David was not liable for the £1000 balance because:
1. X-treme was bound by its original promise to give the 50% discount because there was consideration for the promise, albeit a promise to reduce the price, stemming from the principle in Williams v Roffey.
2. Even if X-treme's original promise of a discount had not been binding, X-treme would be estopped by the later promise to accept £1000 in full settlement of the balance as the promise had been made with the intention that it be acted upon and David had relied on this. Furthermore, given that duress had not been argued in either instance, it would appear that David had come to equity with ‘clean hands’.
X-treme appeals against both of these findings.
For promissory estoppel generally, you'd want to argue that D didn't rely on the promise as per WJ Alan v El Nasr or that there was no intention it be believed. Although bear in mind promissory estoppel is a defence so if your senior were to win, your arguments would be unnecessary.
With regard to undue influence (you want D to have done undue influence, not the other way around!!) the relationship is not really one of trust and confidence so you want to show D had the capacity to coerce the manager and that he did this under Aboody.
Alternatively, you could argue that D exercised illegitimate pressure, distinguishing it from CTN v Gallagher, and thus did use duress.
its an appeal against a previous court decision..the court held that D would be entitled to the 50% discount through the argument of promissory estopppel i am basically appealing against that decision.
the undue influence is against D that the manager was indued into agreeing and promising the discount? do i have to argue manifest advantage?
Well, D is the one you want to prove came to equity with unclean hands so yes, D is the one who had to do the undue influence (i suspect duress may be easier to argue). And you have to show every aspect of undue influence is there if you want to argue it.
The respondent cited Williams v Roffey. Draw a distinction that one of the defining facts of that case was the time pressure. The benefit that made up the consideration wasn't that the carpentry work was done at all, but that it was to be done quickly due to the penalty clause in their building contract.
Your client is under no such pressure. The same consideration does not exist. The only claimed benefit that X-treme might get is that that David didn't cancel the holiday.
Raising of PE:
But this case reads much, much more like D&C Builders v Rees. In that case, the debtor similarly offered to pay a smaller amount of the total, otherwise the creditor would get nothing. Creditor accepts a cheque, and later demands settlement in full. In this case, it was held (by Denning MR - the architect of the doctrine) that PE could not operate as the promise was not freely given, hence it was not inequitable to go back on it.
In the current case, debtor demands discount, and infers that due to his unemployment he may have to cancel.
Like the Rees family, he does not advertise his dissatisfaction immediately. Not until his discovery that a friend has paid less for a similar holiday.
At this point, he calls your client and demands a discount of £1500, using as leverage his own altered financial status - (clearly not so onerous that he would instead ask for his money back, and cancellation). Your client agrees, despite having been given no consideration. Very much like the Rees.
Following enjoyment of the holiday, when presented with a statement for the full sum, the respondent issues a cheque - much like the Rees.
Having considered Hughes and High Trees, all three judges at the Court of Appeal in D & C Builders v Rees held that there was no binding settlement, and that PE could not operate under those circumstances, which are directly analogous to X-treme.
I was a junior appellant so I only dealt with the second part.
It was submitted that even if X-treme’s original promise of discount had not been binding, X-treme would be estopped by later promise. At this point, it ought to be established that, X-treme cannot be estopped.
Promissory estoppel has been invoked in situations concerning continuing obligations such as rent or maintenance. However, the estoppel had NOT been applied where there was a ONE-OFF PAYMENT. Saying that, Lord Denning suggested OBITER, in D & C Builders Ltd v Rees (1966) that the doctrine may apply to a debt if the debtor had acted equitably. However, Lord Denning DID NOT argue that creditor should NEVER be allowed to enforce payment of balance of a debt but merely that the creditor should be limited if it would be inequitable. Further argument is illustrated in High Trees that promissory estoppel may SUSPEND debtor’s obligation to pay for a period of time but not EXTINGUISH creditors’ right to balance of the debt.
The facts of this case correlate very much with those of D & C Builders Ltd v Rees. Like the defendants in DC Builders, Mr Wilson does not show his dissatisfaction until his discovery that his friend had paid less for the same holiday package. Only then, Mr Wilson decided to get in touch with X-treme Ltd for a discount. In D C Builders the debtor offered to pay a smaller amount of the total, otherwise the creditor would get nothing. In this case the creditor, X-treme Ltd, accepted a cheque and later demanded settlement in full. Lord Denning held in DC Builders that Promissory Estoppel could not operate as the promise was not freely given, hence it was inequitable to go back on it. In this case, Mr Wilson demanded a discount using as leverage his own altered financial status, which clearly was not so onerous otherwise he would have simply asked for his money back. The Area manager, naturally, conceded as it would be the lesser of two evil.
When Mr Wilson contacted the Area Manager for request to pay less, Mr Wilson had relinquished undue Influence on the Area Manager. Undue Influence operates where there exists a relationship between the parties which has been exploited by one party to gain an unfair advantage. Clearly there was a relationship between Mr Wilson and the Area Manager as was established by my learned colleague. As mentioned earlier Mr Wilson used his recent unemployment as leverage and did not give much option to the area manager. Therefore the area manager was not in a state of free mind to make the decision. This act of undue influence was illustrated in the Bank of Credit Commerce International v Aboody 1990.
Finally as stated above that there are similarities of this case with DC Builders, the decision of the three judges in that case held that there was no binding settlement and that Promissory Estoppel could not operate. I therefore submit that this case should be seen in the same light as DC Builders and conclude my case for the appellant.