IN THE SUPREME COURT OF JUDICATURE COURT OF APPEAL (CIVIL DIVISION) ON APPEAL FROH THE KINGSTON-UPON-THAMES COUNTY COURT MR. ASSISTANT RECORDER RUPERT JACKSON Q.C. Royal Courts of Justice 23rd November 1989 B e f o r e :
LORD JUSTICE PURCHAS LORD JUSTICE GLIDEWBLL and LORD JUSTICE RUSSELL ____________________
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(Transcript of the Shorthand Notes of The Association of Official Shorthandwriters Ltd., Room 329, Royal Courts of Justice, and 2, New Square, Lincoln's Inn, London WC2A 3RU)
MR. FRANKLIN EVANS (instructed by Messrs John Pearson & Co) appeared on behalf of the Appellants (Defendants). MR. MR. CHRISTOPHER MAKEY (instructed by Messrs Terrence W. Lynch & Co.) appeared on behalf of the Respondent (Plaintiff). ____________________
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LORD JUSTICE GLIDEWELL : This is an appeal against the decision of Mr. Rupert Jackson Q.C., an assistant recorder, given on 31st January 1989 at Kingston-upon-Thames County Court, entering judgment for the plaintiff for �3,500 damages with El,400 interest and costs and dismissing the defendants' counterclaim.
The facts
The plaintiff is a carpenter. The defendants are building contractors who in September 1985 had entered into a contract with Shepherds Bush Housing Association Ltd. to refurbish a block of flats called Twynholm Mansions, Lillie Road, London S.W.6. The defendants were the main contractors for the works. There are 28 flats in Twynholm Mansions, but the work of refurbishment was to be carried out in 27 of the flats.
The defendants engaged the plaintiff to carry out the carpentry work in the refurbishment of the 27 flats, including work to the structure of the roof. Originally the plaintiff was engaged on three separate sub-contracts, but these were all superseded by a sub-contract in writing made on 21st January 1986 by which the plaintiff undertook to provide the labour for the carpentry work to the roof of the block and for the first and second fix carpentry work required in each of the 27 flats for a total price of �20,000.
The judge found that, though there was no express term providing for payment to be made in stages, the contract of 21st January 1986 was subject to an implied term that the defendants would make interim payments to the plaintiff, related to the amount of work done, at reasonable intervals.
The plaintiff and his men began work on 10th October 1985. The judge found that by 9th April 1986 the plaintiff had completed the work to the roof, had carried out the first fix to all 27 flats, and had substantially completed the second fix to 9 flats. By this date the defendants had made interim payments totalling �16,200.
It is common ground that by the end of March 1986 the plaintiff was in financial difficulty. The judge found that there were two reasons for this, namely:
The defendants, as they made clear, were concerned lest the plaintiff did not complete the carpentry work on time. The main contract contained a penalty clause. The judge found that on 9th April 1986 the defendants promised to pay the plaintiff the further sum of �10,300, in addition to the $20,000, to be paid at the rate of �575 for each flat in which the carpentry work was completed.
The plaintiff and his men continued work on the flats until the end of May 1986. By that date the defendants, after their promise on 9th April 1986, had made only one further payment of El,500. At the end of May the plaintiff ceased work on the flats. I will describe later the work which, according to the judge's findings, then remained to be done. Suffice it to say that the defendants engaged other carpenters to complete the work, but in the result incurred one week's time penalty in their contract with the building owners. The action
The plaintiff commenced this action by specially endorsed writ on 10th May 1987. He originally claimed the sum of �32,708.70. In a re-amended statement of claim served on 3rd March 1986 his claim was reduced to �10,847.07. It was, I think, at about this time that the matter was transferred to the county court.
It is not necessary to refer to the statement of claim. On every important issue on which the plaintiff's case differed from that of the defendants, the judge found that the plaintiff was mistaken, and preferred the evidence for the defendants. In particular, the plaintiff denied the defendants' promise of 9th April 198 6 to pay him an additional �10,300, instead alleging an earlier and different agreement which the judge found had not been made.
In the amended defence the defendants' promise to pay an additional �10,300 was pleaded as part of paragraph 5 in the following terms:
The defence then alleged that neither the balance of the original contract sum nor the �10,300 addition was payable until the work was completed, that the plaintiff did not complete the work before he left the site, and thus that no further sum was due to him. By their amended counterclaim the defendants claimed that the plaintiff was in breach of contract in ceasing work at the end of May 1986, as a result of which they had suffered damage to the extent of �18,121.46.
The judge's conclusions
The judge found that the defendants' promise to pay an additional �10,300, at the rate of �575 per completed flat, was part of an oral agreement made between the plaintiff and the defendants on 9th April 1986, by way of variation to the original contract.
The judge also found that before the plaintiff ceased work at the end of May 1986 the carpentry in 17 flats had been substantially (but not totally) completed. This means that between the making of the agreement on 9th April 1986 and the date when the plaintiff ceased work, eight further flats were substantially completed.
The judge calculated that this entitled the plaintiff to receive �4,600 (8 x �575) "less some small deduction for defective and incomplete items". He held that the plaintiff was also entitled to a reasonable proportion of the �2,200 which was outstanding from the original contract sum. (I believe this figure should be �2,300, but this makes no practical difference). Adding these two amounts, he decided that the plaintiff was entitled to further payments totalling �5,000 against which he had only received �l,500, and that the defendants were therefore in breach of contract, entitling the plaintiff to cease work.
The issues
Before us Mr. Evans for the defendants advances two arguments. His principal submission is that the defendants' admitted promise to pay an additional �10,300, at the rate of �575 per completed flat, is unenforceable since there was no consideration for it. This issue was not raised in the defence, but we are told that the argument was advanced at the trial without objection, and that there was equally no objection to it being argued before us.
Mr. Evans' secondary argument is that the additional payment was only payable as each flat was completed. On the judge's findings, 8 further flats had been "substantially" completed. Substantial completion was something less than completion. Thus none of the 8 flats had been completed, and no further payment was yet due from the defendants. I will deal with this subsidiary argument first.
Does substantial completion entitle the plaintiff to payment ?
The agreement which the judge found was made between the parties on 9th April 1986 provided for payment as follows:
Mr. Evans argues that the agreement provided for payment on completion, not on substantial completion, of each flat. Since the judge did not find that the work in any additional flat was completed after 9th April 1986, the defendants were under no obligation to pay any part of the �10,300 before the plaintiff ceased work at the end of May. In his judgment the judge does not explain why in his view substantial completion entitled the plaintiff to payment. In support of the judgment on this issue, however, Mr. Makey for the plaintiff, refers us to the decision of this court in Hoenig v. Isaacs [1952] 2 All ER 176 . In that case the plaintiff was engaged to decorate and furnish the defendant's flat for �750, to be paid "net cash, as the work proceeds, and balance on completion". The defendant paid �400, moved into the flat and used the new furniture, but refused to pay the balance on the ground that some of the work was defective. The official referee found that there were some defects, but that the contract had been substantially performed. The Court of Appeal held that accordingly the plaintiff was entitled to be paid the balance due, less only a deduction for the cost of making good the defects or omissions.
Somervell L.J. said at page 179G:
Denning L.J. said at page 180H-181D:
Romer L.J. said at page 182D-183A:
In my view this authority entirely supports the judge's decision on this issue.
Was there consideration for the defendants' promise made on 9th April 1986 to pay an additional price at the rate of �575 per completed flat?
The judge made the following findings of fact which are relevant on this issue.
The judge quoted and accepted the evidence of Mr. Cottrell to the effect that a main contractor who agrees too low a price with a sub-contractor is acting contrary to his own interests. He will never get the job finished without paying more money.
The judge therefore concluded:
In his address to us, Mr. Evans outlined the benefits to his clients the defendants which arose from their agreement to pay the additional �10,300 as:
Mr. Evans relies on the principle of law which, traditionally, is based on the decision in Stilk v. Myrick (1809) 2 Camp. 317. That was a decision at first instance of Lord Ellenborough C.J. On a voyage to the Baltic, two seamen deserted. The captain agreed with the rest of the crew that if they worked the ship back to London without the two seamen being replaced, he would divide between them the pay which would have been due to the two deserters. On arrival at London this extra pay was refused, and the plaintiff's action to recover his extra pay was dismissed. Counsel for the defendant argued that such an agreement was contrary to public policy, but the Chief Justice's judgment (as reported in Campbell's Reports) was based on lack of consideration. It reads:
In North Ocean Shipping Co. Ltd. v. Hyundai Construction Co. Ltd. [1979] Q.B. 705 Mocatta J. regarded the general principle of the decision in Stilk v. Myrick as still being good law. He referred to two earlier decisions of this court, dealing with wholly different subjects, in which Denning L.J., as he then was, sought to escape from the confines of the rule, but was not accompanied in his attempt by the other members of the court.
In Ward v. Byham [1956] 1 WLR 496 the plaintiff and the defendant lived together unmarried for five years, during which time the plaintiff bore their child. After the parties ended their relationship, the defendant promised to pay the plaintiff El per week to maintain the child, provided that she was well looked after and happy. The defendant paid this sum for some months, but ceased to pay when the plaintiff married another man. On her suing for the amount due at El per week, he pleaded that there was no consideration for his agreement to pay for the plaintiff to maintain her child, since she was obliged by law to do so-see section 42 of the National Assistance Act 1948. The county court judge upheld the plaintiff mother's claim, and this court dismissed the defendant's appeal.
Denning L.J. said at page 498:
However, Morris L.J. put it rather differently. He said:
Parker L.J. agreed. As I read the judgment of Morris L.J., he and Parker L.J. held that, though in maintaining the child the plaintiff was doing no more than she was obliged to do by law, nevertheless her promise that the child would be well looked after and happy was a practical benefit to the father which amounted to consideration for his promise.
In Williams v. Williams [1957] 1 W.L.R. 148, a wife left her husband, and he promised to make her a weekly payment for her maintenance. On his failing to honour his promise, the wife claimed the arrears of payment, but her husband pleaded that, since the wife was guilty of desertion she was bound to maintain herself, and thus there was no consideration for his promise. Denning L.J. (at page 151) reiterated his view that
However, the other members of the court (Hodson and Morris L.JJ.) declined to agree with this expression of view, though agreeing with Denning L.J. in finding that there was consideration because the wife's desertion might not have been permanent, and thus there was a benefit to the husband.
It was suggested to us in argument that, since the development of the doctrine of promissory estoppel, it may well be possible for a person to whom a promise has been made, on which he has relied, to make an additional payment for services which he is in any event bound to render under an existing contract or by operation of law, to show that the promisor is estopped from claiming that there was no consideration for his promise. However, the application of the doctrine of promissory estoppel to facts such as those of the present case has not yet been fully developed; see e.g. the judgment of Lloyd J. (as he then was) in The Proodos C. [1980] 2 Ll.L.R. 390 at 392. Moreover, this point was not argued in the court below, nor was it more than adumbrated before us. Interesting though it is, no reliance can in my view be placed on this concept in the present case.
There is, however, another legal concept of relatively recent development which is relevant, namely, that of economic duress. Clearly if a sub-contractor has agreed to undertake work at a fixed price, and before he has completed the work declines to continue with it unless the contractor agrees to pay an increased price, the subcontractor may be held guilty of securing the contractor's promise by taking unfair advantage of the difficulties he will cause if he does not complete the work. In such a case an agreement to pay an increased price may well be voidable because it was entered into under duress. Thus this concept may provide another answer in law to the question of policy which has troubled the courts since before Stilk v. Myrick , and no doubt led at the date of that decision to a rigid adherence to the doctrine of consideration.
This possible application of the concept of economic duress was referred to by Lord Scarman, delivering the judgment of the Judicial Committee of the Privy Council in Pao On v. Lau Yiu Long [1989] A.C. 614. He said at page 632B-F:-
Unless, therefore, the guarantee was void as having been made for an illegal consideration or voidable on the ground of economic duress, the extrinsic evidence establishes that it was supported by valid consideration.
Mr. Leggatt for the defendants submits that the consideration is illegal as being against public policy. He submits that to secure a party's promise by a threat of repudiation of a pre-existing contractual obligation owed to another can be and in the circumstances of this case was, an abuse of a dominant bargaining position and so contrary to public policy. This submission found favour with the majority in the Court of Appeal. Their Lordships, however, considered it misconceived".
Lord Scarman then referred to Stilk v. Myrick and its predecessor Harris v. Watson (1791) Peake 102, and to Williams v. Williams , before turning to the development of this branch of the law in the United States of America. He then said at page 634B-635B:
It is true that Pao On is a case of a tripartite relationship i.e. a promise by A to perform a pre-existing contractual obligation owed to B, in return for a promise of payment by C. But Lord Scarman's words at page 634/5 seem to me to be of general application, equally applicable to a promise made by one of the original two parties to a contract.
Accordingly, following the view of the majority in Ward v. Byham and of the whole court in Williams v. Williams and that of the Privy Council in Pao On the present state of the law on this subject can be expressed in the following proposition:
As I have said, Mr. Evans accepts that in the present case by promising to pay the extra �10,300 his client secured benefits. There is no finding, and no suggestion, that in this case the promise was given as a result of fraud or duress.
If it be objected that the propositions above contravene the principle in Stilk v. Myrick , I answer that in my view they do not; they refine, and limit the application of that principle, but they leave the principle unscathed e.g. where B. secures no benefit by his promise. It is not in my view surprising that a principle enunciated in relation to the rigours of seafaring life during the Napoleonic wars should be subjected during the succeeding 180 years to a process of refinement and limitation in its application in the present day.
It is therefore my opinion that on his findings of fact in the present case, the judge was entitled to hold, as he did, that the defendants' promise to pay the extra �10,300 was supported by valuable consideration, and thus constituted an enforceable agreement.
As a subsidiary argument, Mr. Evans submits that on the facts of the present case the consideration, even if otherwise good, did not "move from the promisee". This submission is based on the principle illustrated in the decision in Tweddle v. Atkinson (1861) 1 B. & S. 393. My understanding of the meaning of the requirement that "consideration must move from the promisee" is that such 16 consideration must be provided by the promisee, or arise out of his contractual relationship with the promisor. It is consideration provided by somebody else, not a party to the contract, which does not 'move from the promisee'. This was the situation in Tweddle v. Atkinson , but it is, of course, not the situation in the present case. Here the benefits to the defendants arose out of their agreement of 9th April 1986 with the plaintiff, the promisee. In this respect I would adopt the following passage from Chitty on Contracts, 25th edition, paragraph 173, and refer to the authorities there cited:
That is the situation in this case.
I repeat, therefore, my opinion that the judge was, as a matter of law, entitled to hold that there was valid consideration to support the agreement under which the defendants promised to pay an additional �10,300 at the rate of �575 per flat.
For these reasons I would dismiss this appeal.
LORD JUSTICE RUSSELL : I agree with and have nothing to add to the judgment of Glidewell L.J. insofar as it relates to the defendants' submission that the plaintiff was not entitled to any part of the �10,300 because none of the eight flats had been completed. The judge found that there had been substantial completion and made a small deduction for defective and incomplete items. He did not identify those items nor define the extent of his deductions but no complaint is made about that. For the reasons appearing in the judgment of Glidewell L.J., supported as they are by Hoenig v. Isaacs [1952] 2 All ER 176 I have no doubt that the judge was right upon what Mr. Evans, on behalf of the defendants, referred to as his secondary point.
I find his primary argument relating to consideration much more difficult. It is worth rehearsing some of the facts. The judge found that the parties made an agreement on 9th April 1986. Subject to the date, which was inaccurately pleaded, it was the defendants who pleaded the agreement in paragraph 5 of their amended defence. The relevant passage reads:
There is no hint in that pleading that the defendants were subjected to any duress to make the agreement or that their promise to pay the extra �10,300 lacked consideration. As the judge found, the plaintiff must have continued work in the belief that he would be paid �575 as he finished each of the 18 uncompleted flats (although the arithmetic is not precisely accurate). For their part the defendants recorded the new terms in their ledger.
Can the defendants now escape liability on the ground that the plaintiff undertook to do no more than he had originally contracted to do although, quite clearly, the defendants, on 9th April 1986, were prepared to make the payment and only declined to do so at a later stage. It would certainly be unconscionable if this were to be their legal entitlement.
The submissions advanced on both sides before this court ranged over a wide field. They went far beyond the pleadings, and indeed it is worth noticing that the absence of consideration was never pleaded, although argued before Mr. Assistant Recorder Rupert Jackson Q.C. Speaking for myself - and I notice it is touched upon in the judgment of Glidewell L.J. - I would have welcomed the development of argument, if it could have been properly raised in this court, on the basis that there was here an estoppel and that the defendants, in the circumstances prevailing, were precluded from raising the defence that their undertaking to pay the extra �10,300 was not binding. For example, in Amalgamated Property Co. v. Texas Bank [1982] Q.B. 84 at page 105 Robert Goff J. (as he then was) said:
When the case came to the Court of Appeal Lord Denning M.R. said at page 122:
Brandon L.J. (as he then was) said at page 131:
These citations demonstrate that whilst
consideration remains a fundamental requirement before a contract not under seal can be enforced, the policy of the law in its search to do justice between the parties has developed considerably since the early nineteenth century when Stilk v. Myrick (1809) 2 Camp. 317 was decided by Lord Ellenborough C.J. In the late twentieth century I do not believe that the rigid approach to the concept of consideration to be found in Stilk v. Myrick is either necessary or desirable. Consideration there must still be but in my judgment the courts nowadays should be more ready to find its existence so as to reflect the intention of the parties to the contract where the bargaining powers are not unequal and where the finding of consideration reflects the true intention of the parties.
What was the true intention of the parties when they arrived at the agreement pleaded by the defendants in paragraph 5 of the amended defence? The plaintiff had got into financial difficulties. The defendants, through their employee Mr. Cottrell, recognised the price that had been agreed originally with the plaintiff was less than what Mr. Cottrell himself regarded as a reasonable price. There was a desire on Mr. Cottrell's part to retain the services of the plaintiff so that the work could be completed without the need to employ another sub-contractor. There was further a need to replace what had hitherto been a haphazard method of payment by a more formalised scheme involving the payment of a specified sum on the completion of each flat. These were all advantages accruing to the defendants which can fairly be said to have been in consideration of their undertaking to pay the additional �10,300. True it was that the plaintiff did not undertake to do any work additional to that which he had originally undertaken to do but the terms upon which he was to carry out the work were varied and, in my judgment, that variation was supported by consideration which a pragmatic approach to the true relationship between the parties readily demonstrates.
For my part I wish to make it plain that I do riot base my judgment upon any reservation as to the correctness of the law long ago enunciated in Stilk v. Myrick . A gratuitous promise, pure and simple, remains unenforceable unless given under seal. But where, as in this case, a party undertakes to make a payment because by so doing it will gain an advantage arising out of the continuing relationship with the promisee the new bargain will not fail for want of consideration. As I read the judgment of the assistant recorder this was his true ratio upon that part of the case wherein the absence of consideration was raised in argument. For the reasons that I have endeavoured to outline, I think that the assistant recorder came to a correct conclusion and I too would dismiss this appeal.
LORD JUSTICE PURCHAS : The history and circumstances under which this appeal comes before the court have been set out in the judgment of Glidewell L.J. whose exposition I gratefully adopt. I repeat here only for ease of reference the significant features of the factual matrix against which the parties came together on 9th April 1986.
Evidence given by Mr. Cottrell, the defendants' surveyor, established that, to their knowledge, the original contract price was too low to enable the plaintiff to operate satisfactorily and at a profit by something a little over �3,780. It was also known that the plaintiff was falling short in the supervision of his own labour force with the result that productivity fell and his financial difficulties had been aggravated. A further difficulty, which the judge found had arisen by the time of the meeting in April, was that the plaintiff had been paid for more than 80% of the work but had not completed anything like this percentage. These facts were all obviously known to the plaintiff as well as the defendants. Also known to the defendants through Mr. Cottrell, and probably also appreciated by the plaintiff, was that the carpentry work to be executed by the plaintiff was on what was known as "the critical path of the defendants global operations". Failure to complete this work by the plaintiff, in accordance with the contract, would seriously prejudice the defendants as main contractors vis-a-vis the owners for whom they were working.
In these circumstances there were clearly incentives to both parties to make a further arrangement in order to relieve the plaintiff of his financial difficulties and also to ensure that the plaintiff was in a position, or alternatively was willing, to continue with the sub-contract works to a reasonable and timely completion. Against this context the judge found that on 9th April 1986 a meeting took place between the plaintiff and a man called Hooper, on the one hand, and Mr. Cottrell and Mr. Roffey on the other hand. The arrangement was that the respondents would pay the plaintiff an extra �10,300 by way of increasing the lump sum for the total work. It was further agreed that the sum of �10,300 was to be paid at the rate of �575 per flat on the completion of each flat. This arrangement was beneficial to both sides. By completing one flat at a time rather than half completing all the flats the plaintiff was able to receive moneys on account and the respondents were able to direct their other trades to do work in the completed flats which otherwise would have been held up until the plaintiff had completed his work.
The point of some difficulty which arises on this appeal is whether the judge was correct in his conclusion that the agreement reached on 9th April failed for lack of consideration within the principle established by the old cases of Stilk v. Myrick [1809] 2 Camp. 317 approving Harris v. Watson [1791] Peake 102. Mr. Makey, who appeared for the plaintiff, was bold enough to submit that Harris v. Watson , albeit a decision of Lord Kenyon, was a case tried at the Guildhall at Nisi Prius in the Court of King's Bench and that Stilk v. Myrick was a decision also at Nisi Prius albeit a judgment of no less a judge than Lord Ellenborough and that, therefore, this court was bound by neither authority. I feel I must say at once that, for my part, I would not be prepared to overrule two cases of such veneration involving judgments of judges of such distinction except on the strongest possible grounds since they form a pillar stone of the law of contract which has been observed over the years and is still recognised in principle in recent authority: see the decision of Stilk v. Myrick to be found in North Ocean Shipping Co. Ltd. v. Hyundai Construction Co. Ltd. [1979] 1 Q.B. 705 at page 712 per Mocatta J. With respect, I agree with his view of the two judgments by Denning L.J. (as he then was) in Ward v. Byham [1956] 1 W.L.R. 498 and Williams v. Williams [1957] 1 W.L.R. 148 in concluding that these judgments do not provide a sound basis for avoiding the rule in Stilk v. Myrick . Although this rule has been the subject of some criticism it is still clearly recognised in current textbooks of authority: see Chitty on Contract and Cheshire and Fifoot Law of Contract. By the same token I find myself unable to accept the attractive invitation offered by Mr. Makey to follow the decision of the Supreme Court of New Hampshire in Watkins and Sons Inc. v. Carrig (1941) 21 A.2d 591.
In my judgment, therefore, the rule in Stilk v. Myrick remains valid as a matter of principle, namely that a contract not under seal must be supported by consideration. Thus, where the agreement upon which reliance is placed provides that an extra payment is to be made for work to be done by the payee which he is already obliged to perform then unless some other consideration is detected to support the agreement to pay the extra sum that agreement will not be enforceable. The two cases, Harris v. Watson and Stilk v. Myrick involved circumstances of a very special nature, namely the extraordinary conditions existing at the turn of the eighteenth century under which seamen had to serve their contracts of employment on the high seas. There were strong public policy grounds at that time to protect the master and owners of a ship from being held to ransom by disaffected crews. Thus, the decision that the promise to pay extra wages even in the circumstances established in those cases, was not supported by consideration is readily understandable. Of course, conditions today on the high seas have changed dramatically and it is at least questionable, as Mr. Makey submitted, whether these cases might not well have been decided differently if they were tried today. The modern cases tend to depend more upon the defence of duress in a commercial context rather than lack of consideration for the second agreement. In the present case the question of duress does not arise. The initiative in coming to the agreement of 9th April came from Mr. Cottrell and not from the plaintiff. It would not, therefore, lie in the defendants' mouth to assert a defence of duress. Nevertheless, the court is more ready in the presence of this defence being available in the commercial context to look for mutual advantages which would amount to sufficient consideration to support the second agreement under which the extra money is paid. Although the passage cited below from the speech of Lord Hailsham of St. Marylebone L.C. in Woodhouse A.C. Israel Cocoa Ltd. S.A. v. Nigerian Produce Marketing Co Ltd . [1972] A.C. 741 was strictly obiter dicta I respectfully adopt it as an indication of the approach to be made in modern times. The case involved an agreement to vary the currency in which the buyer's obligation should be met which was subsequently affected by a depreciation in the currency involved. The case was decided on an issue of estoppel but Lord Hailsham commented on the other issue, namely the variation of the original contract in the following terms at page 757:-
In the light of those authorities the question now must be addressed: Was there evidence upon which the judge was entitled to find that there was sufficient consideration to support the agreement of 9th April, as set out in the passage from his judgment already set out in the judgment of Glidewell L.J.? The references to this problem in Chitty on Contracts, 25th edition, General Principles, are not wholly without some conflict amongst themselves. In paragraph 1491 the learned editors turn to the question of consideration to support an agreement to vary an existing contract:-
Reference is made to the Woodhouse case to which I have already referred:-
These statements are based upon Stilk v. Myrick and The Syrus Shipping Co. S.A. v. Elaghill Trading Co. [1982] Lloyds Rep. 390. Reference is also made to paragraph 185 earlier in the textbook where the case of Stilk v. Myrick is considered at some length. On the other hand, at paragraph 173 the learned editors make this proposition:-
This is an accurate recital of the facts in De la Bere v. Pearson Ltd. but when the argument and judgments are read the case turned on issues other than consideration, namely remoteness of damage, etc. So the case is doubtful support for the proposition made in this paragraph.
The question must be posed: What consideration has moved from the plaintiff to support the promise to pay the extra �10,300 added to the lump sum provision? In the particular circumstances which I have outlined above, there was clearly a commercial advantage to both sides from a pragmatic point of view in reaching the agreement of 9th April. The defendants were on risk that as a result of the bargain they had struck the plaintiff would not or indeed possibly could not comply with his existing obligations without further finance. As a result of the agreement the defendants secured their position commercially. There was, however, no obligation added to the contractual duties imposed upon the plaintiff under the original contact. Prima facie this would appear to be a classic Stilk v. Myrick case. It was, however, open to the plaintiff to be in deliberate breach of the contract in order to "cut his losses'' commercially. In normal circumstances the suggestion that a contracting party can rely upon his own breach to establish consideration is distinctly unattractive. In many cases it obviously would be and if there was any element of duress brought upon the other contracting party under the modern development of this branch of the law the proposed breaker of the contract would not benefit. With some hesitation and comforted by the passage from the speech of Lord Hailsham, to which I have referred, I consider that the modern approach to the question of consideration would be that where there were benefits derived by each party to a contract of variation even though one party did not suffer a detriment this would not be fatal to the establishing of sufficient consideration to support the agreement. If both parties benefit from an agreement it is not necessary that each also suffers a detriment. In my judgment, on the facts as found by the judge, he was entitled to reach the conclusion that consideration existed and in those circumstances I would not disturb that finding. This is sufficient to determine the appeal. The judge found as a fact that the flats were "substantially completed" and that payment was due to the plaintiff in respect of the number of flats substantially completed which left an outstanding amount due from the defendants to the plaintiff in the absence of the payment of which the plaintiff was entitled to remove from the site. For these reasons and for the reasons which have already been given by Glidewell L.J. I would dismiss this appeal.
Order: Appeal dismissed, with costs; leave to appeal to House of Lords granted.