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56 Fellows Road Ltd v ABC Block Management Ltd
Factual and Procedural Background
Company A (the Appellant) obtained an adverse county court judgment in favour of Company B (the Respondent) for the sum of £7,731.28. On 15 June 2022 an Enforcement Officer acting for Company C attended the residential address of the Appellant's director (the Director) to enforce the judgment. The Director paid £9,967.56 by debit card (payment 1). Company B later applied for a charging order to enforce the judgment; a District Judge (Judge Moses) refused the application on the basis payment had been made and the charge was discharged. Company B appealed; Judge Baucher allowed that appeal, concluding payment 1 was made by the Director in his personal capacity and did not discharge the judgment. Company A (with the Director) appealed to the Court of Appeal. Subsequent correspondence between the Director and Company C resulted in an agreement dated 12 October 2022 under which Company C agreed to "return" the Amount to the Director (payment 2) in full and final settlement, subject to withdrawal of the Director's complaint (the Agreement). The Court of Appeal dismissed Company A's appeal.
Legal Issues Presented
- Whether payment 1 (the debit-card payment of £9,967.56 made by the Director at the Enforcement Officer's attendance) operated to discharge the judgment debt owed by Company A to Company B.
- Whether payment 2 (the payment made under the Agreement between the Director and Company C) was a separate payment of compensation or constituted a return of payment 1 and, if so, the legal effect on the judgment debt.
- Relatedly, whether the District Judge erred in discharging the interim charging order.
Arguments of the Parties
Appellant's Arguments (as advanced by Attorney Kessler)
- Payment 1 immediately discharged the judgment debt even if Company C subsequently misapplied or returned the funds.
- The Enforcement Officer and Company C were agents of Company B for collection; proceeds taken in execution must be applied to the judgment under Schedule 12 para 50 of the Tribunals, Courts and Enforcement Act 2007.
- The Agreement between the Director and Company C could not undo the extinguishment of the judgment by payment 1; Company A could ratify payment 1 if necessary.
Respondent's Arguments (as advanced by Attorney East and Company B / Company C)
- Payment 1 was made by the Director in his personal capacity under duress and for reasons unconnected with Company A; on his own contemporaneous statements he described the payment as personal.
- A third party payment does not discharge a debtor's obligation unless made as agent for, on account of, or with the debtor's authority; later ratification is subject to limits and may be ineffective if the third party has been repaid.
- The Agreement and contemporaneous correspondence show Company C treated payment 1 as personal funds and "returned" it to the Director; the judgment debt therefore remained outstanding and Company B was entitled to pursue enforcement.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm); [2020] 1 CLC 428 | Contemporaneous documents are a better guide to relevant commercial facts than oral evidence in certain contexts. | The court relied on contemporaneous documents (complaints, emails, receipts and the Agreement) rather than oral testimony to infer the nature and purpose of payment 1. |
| Court Enforcement Services Limited v Marston Legal Services Limited [2020] EWCA Civ 588; [2021] QB 129 | Legislative framework for writs of control, and the status/ duties of HCEOs/HCEAs (including that an HCEA is an officer of the court). | Used to summarise the enforcement regime and to show that "bank money" taken in enforcement can be proceeds for Schedule 12 para 50 purposes; but the court found the case's outcome turned on factual application rather than complex statutory questions. |
| Bone v Williamson [2024] EWCA Civ 4; [2024] 1 WLR 3235 | Recent appellate consideration of the legislative scheme governing writs of control and powers/duties of enforcement officers. | Referenced as part of the brief outline of the legislative scheme; the court held that detailed statutory analysis was unnecessary on the facts. |
| Burton v Ministry of Justice [2024] EWCA Civ 681; [2025] KB 66 | Creditor's strict liability for misbehaviour of an HCEA appointed to enforce its judgment debt. | Supported the proposition that a creditor can be liable for HCEA misbehaviour; the court observed the relevance but concluded the factual record showed payment 1 was personal and therefore returnable, not that the creditor had discharged the debt. |
| Chitty on Contracts (31st Edition) (paragraph cited) | Principle: where a third party not jointly liable pays a debt, the debt is not discharged unless payment is made as agent for/on account of the debtor; prior authority or later ratification required. | The court applied this principle to hold that payment 1 did not discharge the judgment absent evidence that the Director paid as agent or for Company A, and that later restitution to the third party prevented effective ratification. |
Court's Reasoning and Analysis
The Court of Appeal treated the matter principally as a facts-driven question, drawing on contemporaneous documents (receipt, form E4 complaint, emails, the Agreement and internal communications). The court reasoned:
- The Director's own contemporaneous statements (form E4 and correspondence with Company C) consistently described payment 1 as a personal payment made under pressure to stop enforcement at his family home.
- Absent evidence that payment 1 was made by the Director as agent for Company A or on its behalf, the legal principle (Chitty) is that a third-party payment does not discharge the debtor's obligation.
- The Agreement between the Director and Company C repeatedly described an intention to "return" the Amount to the Director; the parties treated payment 2 as restitution of payment 1, not as an independent compensation payment. The Agreement was commercial, confidential, and stated the return was not an admission of liability.
- Company C could not lawfully retain funds that the Director had paid personally where he consistently asserted they were personal and sought their return; the proceeds concept in Schedule 12 para 50 was read as referring to proceeds of lawful enforcement, and the court accepted that "proceeds" means proceeds of lawful exercise of enforcement power.
- The Director's subsequent corporate minutes purporting to ratify payment 1 were made after the monies had been returned under the Agreement; any later ratification was therefore ineffective to create discharge.
- On the totality of the contemporaneous evidence and the proper application of legal principles, payment 1 did not discharge Company A's judgment debt and the District Judge erred in concluding otherwise.
Holding and Implications
APPEAL DISMISSED
Holding: The Court of Appeal dismissed Company A's appeal and upheld Judge Baucher's conclusion that payment 1 was made by the Director in his personal capacity and did not extinguish the judgment debt owed by Company A to Company B.
Implications: The direct effect is that the judgment debt remains outstanding and Company B is entitled to continue enforcement. The Agreement between the Director and Company C constituted a return of the Director's personal payment rather than a transaction that discharged the corporate judgment. The court treated the decision as fact-specific and did not assert a new general legal principle beyond application of established authority.
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