Does paying a disputed debt "under protest" give
you any protection?
There are many circumstances in which a person who disputes a
debt nonetheless feels that he or she has no choice but to pay or
to sign an undertaking to pay. The creditor may have issued some
kind of threat, or merely exerted pressure.
In such circumstances, does the aggrieved debtor have a legal
right to demand that the payment be reversed or, at least, not
regarded as an implicit admission of liability?
The concept of 'duress'
The simple answer is that the law does indeed recognise the
concept of payment under duress and the law in this regard was
recently restated by the KwaZulu-Natal High Court in Firstrand
Bank Ltd v Samgram Holdings (Pty) Ltd  ZAKZDHC 41 in
which judgment was given on 26 August 2013.
In this case, a company was opposing an application that it be
wound up as insolvent on the grounds that it had bona fide and
reasonable grounds for denying its indebtedness to the applicant
bank, in that it had, allegedly under duress, signed certain
addenda to a loan agreement with the bank, involving variations to
that agreement, providing for further advances of funds to
facilitate the development of certain land as a residential
township in circumstances where the bank had failed to advance
previously agreed loan amounts.
The debtor claimed that it had paid under duress, though
without any overt protest
The debtor company averred that the duress in question resulted
from the economic consequences it would suffer if it failed to sign
the disputed loan documents, in that it was faced with the prospect
that the entire development project would collapse unless it signed
the documents required by the bank.
In his judgment, Lopes J pointed out that it is settled law that
'where improper pressure is exerted through duress of goods,
it is necessary for the party claiming duress to show that he or
she expressly reserved their rights when making payment. There must
be an unequivocal protest, and an unexpressed mental reservation is
of no avail'.
Consequently, even leaving aside other weaknesses in the
debtor's contention that the circumstances in question amounted
to duress in the legal sense of that word, the failure of
any expression of payment under protest was a fatal lacuna
in its case. Consequently, said the court -
'In the circumstances of this matter there can be no
suggestion of duress of any kind.'
It is of course clear that payment under protest does
not, in and of itself, constitute proof that there was unlawful
duress. But the absence of protest, when making payment, is fatal
to a subsequent claim of duress.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Like in other commonwealth countries, the power of sale in Nigeria is exercised either by a court order or a power of sale clause under a Mortgage Deed.
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