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)}}{\*\pnseclvl9\pnlcrm\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}\pard\plain \qr \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 [1994] 40 FLR 201}{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199 \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 \par }\pard \qc \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\b\fs24\lang2057\langfe1033\langnp2057\insrsid14950886\charrsid14950886 HIGH COURT OF FIJI \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid14950886\charrsid14950886 \par }\pard \qc \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\b\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 ESTATE MANAGEMENT SERVICES LIMITED \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid14950886\charrsid14950886 \par }\pard \qc \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 v}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 . \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 \par }\pard \qc \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\b\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 1. MINAMI T.K.K. KAISHA \par 2. SYDNEY and JACQUELINE LEE \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par }\pard \qc \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 [HIGH COURT, 1994 (Fatiaki J)}{\fs24\lang2057\langfe1033\langnp2057\insrsid14181623 ,}{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 21 October] \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 \par }\pard \qc \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 Civil Jurisdiction \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 \par }{\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 Land - breach of sale and purchase agreement - liability for damages - whether such liability an adequate foundation for presenting a winding up petition. \par }{\fs24\lang2057\langfe1033\langnp2057\insrsid14950886\charrsid14950886 \par }{\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 Company Law - whether liability for damages for breach of contract may amount to a statutory debt - Companies Act (Cap 247) Section 221. \par }{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par The Plaintiff, a real estate developer, failed to complete a sale and purchase agreement entered into with the 2nd Defendants who advancing the Plaintif}{\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 f}{ \fs24\lang2057\langfe1033\langnp2057\insrsid14181623 '}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 s liability to damages for breach of contract as a statutory debt under Section 221 of the Companies Act then sought to wind up the Plaintiff. HELD: although the Plaintiff might be liable in damages such a liability did not amount to a statutory debt and that accordingly winding up proceedings were inappropriate. \par \par Cases cited: \par \par }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 Goffin v Houlder}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 (1921) 90 L.J. Ch. 488 \par }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 Hochster v De La }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid14950886\charrsid14950886 Tour}{\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 (1853) 95 R.}{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 R. 747 \par }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 Holt Southey Ltd v Catnic Components}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 [1978] 1 W.L.R. 634 \par }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 In re London and Paris Banking Corporation}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 (1874) L.R. 19 Eq. 444 \par }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 In re Harvest Lane Motor Bodies Ltd}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 [1968] 3 W.L.R. 220 \par }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 In re a Company (No. 0012209 of 1991)}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 [1992] 2 All ER 797 \par }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14181623 In re a Company (No. 003729 of 1982)}{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par Ross v Robinson}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 (1886) 12 V.L.R. 764}{\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 \par }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 Synge v Synge}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 (1894) 1 Q.B. 466 \par \par Application for an Order restraining winding up proceedi}{\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 ngs}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par \par }{\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 Ms V. Narayan}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 for Plaintiff \par }{\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 M. Narsey}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 for first Defendant \par }{\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 F.G.R. Keil}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 for second defendants \par \par }{\b\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 Fatiaki J: \par }{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par The application before the Court is an }{\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 inter partes}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 motion issued by the plaintiff seeking to restrain the second defendants: \par \par }\pard \ql \li720\ri0\nowidctlpar\faauto\adjustright\rin0\lin720\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 "... until further order of this Court from instituting any legal}{ \fs24\lang2057\langfe1033\langnp2057\insrsid14950886 }{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 proceedings, in particular any insolvency proceedings, against the plaintiff as a result of any failure to complete any covenants and conditions under th e Sale and Purchase Agreement entered into between the Plaintiff and the Second Defendants on 22nd June, 1982." \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par It is not entirely clear what is meant by the term "insolvency proceedings" in the summons but the very able and helpful submissions of counsel makes it clear that it concerns winding-up proceedings. \par \par The brief background facts are not in dispute and are conveniently summarised in the written submissions of learned counsel for the plaintiff as follows: \par \par }\pard \ql \li720\ri0\nowidctlpar\faauto\adjustright\rin0\lin720\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 "The Plaintiff Company is a Real Estate Dev eloper which until February, 1991 was known as Pacific Hotels and Developments Limited (PHDL). On 22 June, 1982 PHDL entered into a Sale and Purchase Agreement with the Second Defendants (Mr. & Mrs. Lee) for the sale of Lot 1250 of undeveloped Section '}{ \fs24\lang2057\langfe1033\langnp2057\insrsid14950886 F'}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 of PHDL's Pacific Harbour International Resort Development. Pursuant to this Agreement, PHDL was to develop Section '}{ \fs24\lang2057\langfe1033\langnp2057\insrsid14950886 F'}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 and deliver a Certificate of Title to Lot 1250 to Mr. & Mrs. Lee.}{\fs24\lang2057\langfe1033\langnp2057\insrsid14181623 "}{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par I interpose here to observe that under the Sale and Purchase Agreemen t, Clause 6(a) required PHDL to undertake a survey of the land and carry out various construction and installation works on the land with a view to the provision of essential services to the lots. \par \par More particularly, for present purposes, Clause 6(b) provides: \par \par }\pard \ql \li720\ri0\nowidctlpar\faauto\adjustright\rin0\lin720\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 "The said survey construction and installation works shall be carried out with all reasonable speed having regard to all relevant factors provided however that the Vendor shall not be in any way liable to the Purchaser for compensation damages or oth erwise in respect of any delay which may arise from any cause whatsoever in the completion of such survey construction and installation works other than as a result of wilful delay on the part of the Vendor."}{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199 \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid14950886\charrsid14950886 \par }{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 and possession by the purchasers was also deferred until "... such time as a survey plan containing the said lot has been registered in the Titles Registry ..." "(}{ \fs24\ul\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid9703008 See}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 : Clause 7). \par }{\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 \par }{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 The agreement however is entirely silent as to a}{\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 completion date and it is comm}{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 on ground that none of the development work contracted by the PHDL has as yet begun. \par \par The correspondence on the other hand between PHDL and the 2nd defendants at a time prior to their entering into the Sale and Purchase Agree ment contains the following relevant representation on the part of a director of PHDL where he wrote in a letter of 2 March 1982: \par \par }\pard \ql \li720\ri0\nowidctlpar\faauto\adjustright\rin0\lin720\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 "The development of Section F is part of a five year development programme commenced 1 January 1981}{\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 .}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 This is to confirm that Section 7 which comprises Pacific Harbour Lot 1250 will be developed on or before the expiry of five-year development programme and the provision of all services supplied to the lot." \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par To continue then with counsel's summary of the facts: \par \par }\pard \ql \li720\ri0\nowidctlpar\faauto\adjustright\rin0\lin720\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 "In June, 1988 P HDL sold its major assets, including undeveloped Section F, to the First Defendant, Minami Taiheyo Kaihatsu Kabushiki Kaisha (MTKKK). By Deed of settlement dated 20 March, 1990 MTKKK was required to develop Section '}{ \fs24\lang2057\langfe1033\langnp2057\insrsid14950886 F}{\fs24\lang2057\langfe1033\langnp2057\insrsid12210306 '}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 and deliver sep}{\fs24\lang2057\langfe1033\langnp2057\insrsid12210306 a} {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 rate Certificates of T itle to respective purchasers. MTKKK also indemnified PHDL against any and all claims of any nature arising out of MTKKK's failure to complete any one of PHDL's covenants or obligations under original Sale and Purchase Agreements with individual Purchaser s . As to date, MTKKK has not supplied any individual Certificate of Title to Mr. & Mrs. Lee. In November 1992, the Plaintiff informed Mr. & Mrs. Lee to pursue their claim for a Certificate of Title with MTKKK. However, on 22 June, 1994 the Plaintiff was se rved with a notice under Section 221 of the Companies Act, Cap. 247 (the Act) issued by Messrs. Mitchell Keil and Associates on behalf of the Second Defendants." \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par It is no part of the Court's function at this stage to attempt any definitive interpretation o f the Deed of Settlement between the PHDL and the 1st defendant (which is the subject matter of the substantive action), save to observe that the parties to the Deed appear to differ as to their respective rights, duties and liabilities thereunder. \par \par Needle ss to say the 2nd defendants seek to dissociate themselves from the Deed of Settlement between PHDL and MTKK which was entered into without their prior knowledge or approval and some time after the 2nd defendants had paid in full the purchase price for th eir lot. \par \par The 2nd defendants claim, quite simply, is that having paid the purchase price under the Sale and Purchase Agreement entered into with PHDL and, the period having now lapsed when the development programme was supposed to have been completed on the vendor's own account, and, a further 5 years having}{\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 }{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 elapsed since the full purchase price was paid, they, as purchasers now require the vendor, PHDL, to complete its part of the Sale and Purchase Agreement and provide them with a Certificate of Title to Lot 1250 in Section F. \par \par However, the land in question having, since the Sale and Purchase Agreement, been sold to a third party, counsel firmly submits- \par \par }\pard \ql \li720\ri0\nowidctlpar\faauto\adjustright\rin0\lin720\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 "The Plaintiff, on its own admission therefore is unable on its part to complete the Sale and Purchase Agreement as the subject matter of}{\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 }{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 the agreement namely Lot 1250 is not owned by the Plaintiff any more." \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par That a party who has contracted to perform a certain act on a future date commits a breach of contract and may be sued for damages where he has put it out of his power to perform it albeit before that future date has arrived has been settled law since }{ \b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 Hochster v. De La Tour}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 (1853) 95 R.R. 747 in which it was: \par \par }\pard \ql \li720\ri0\nowidctlpar\faauto\adjustright\rin0\lin720\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 "}{\fs24\ul\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid12210306 Held}{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 : that a party to an executory agreement may, before the time for executing it, break th e contract either by disabling himself from fulfilling it or by renouncing the contract; and that an action will lie for such a breach before the time for the fulfilment of the agreement." \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par Learned counsel further argues that the Sale and Purchase Agreemen t being silent as to the rights of the purchasers in the event of a default or breach by the vendor, and the 2nd defendants, as purchasers, having effectively been denied their remedy of specific performance, are therefore entitled to treat the transfer b y PHDL as a repudiation and to rescind the agreement and recover the full purchase price paid for the Lot together with interest thereon "... from the date of acknowledgement of payment of the purchase price until the date of the demand." \par \par In support of this latter submission learned defence counsel referred to selected passages from "}{\fs24\ul\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 The Law relating to the Sale of Land in Victoria}{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 " by Voumard at pp. 279, 408 and 4}{\fs24\lang2057\langfe1033\langnp2057\insrsid13631727 0}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 9. The passages however are based on a clear "... breach committed by the vendor" (which is vigorously denied) and the 'exceptional rule' affirmed in }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 Bain v. Fothergill}{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 (1874) 7 LR.H.L. 158: \par \par }\pard \ql \li720\ri0\nowidctlpar\faauto\adjustright\rin0\lin720\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 "... that upon a contract for the purchase of a real estate, if the vendor, without fraud, is incapable of making a good title, the intended purchaser is not entitled to any compensation for the loss of his bargain." (}{ \fs24\ul\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid15020368 per}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 Lord Chelmsford at p.}{\fs24\lang2057\langfe1033\langnp2057\insrsid11553299 }{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 201) \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par I am satisfied however that the circumstances of this case falls outside that exceptional rule. In }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 Ross v. Robinson}{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 (1886) 12 V.L.R. 764 in which the facts are very similar to the present case the headnote reads: \par \par }\pard \ql \li720\ri0\nowidctlpar\faauto\adjustright\rin0\lin720\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 "A vendor of real estate has no right without the consent of his vendee to resell the estate, even expressly subject to the rights of the original purchaser. If such a resale is made, the v endor or his representative is liable to the original purchaser either for specific performance of the contract or for damages for the breach of it." \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par Webb J. in rejecting the submission that the measure of damages in that case was restricted by the rule in }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 Bain v. Fothergill}{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 (}{\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 op.cit}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 ) said at p.}{ \fs24\lang2057\langfe1033\langnp2057\insrsid14950886 }{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 773}{\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 :}{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par \par }\pard \ql \li720\ri0\nowidctlpar\faauto\adjustright\rin0\lin720\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 "The rule ... is limited to those cases where the breach arises from the inability of the vendor to make a good title and does not apply where the breach arises from some other source than want of title." \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par Earlier in his judgment Webb J. in rejecting the conditional transfer of the land to a third party said at p. 772:}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199 \par }{\fs24\lang2057\langfe1033\langnp2057\insrsid14950886\charrsid14950886 \par }\pard \ql \li720\ri0\nowidctlpar\faauto\adjustright\rin0\lin720\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 "To that contention the proper answer is that the defendant had no power or authority, without the plaintiff}{\fs24\lang2057\langfe1033\langnp2057\insrsid6250834 '}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 s concurrence, to transfer the obli gations of the contract from himself, as executor of the vendor, to any other person whatever, and that the plaintiff is not bound to look to any other person than the defendant, either for performance of the contract or for damages for the breach of it." \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par (}{\fs24\ul\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid6250834 see also}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 : the decision of Eve J. in }{ \b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 Goffin v. Houlder}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 (1921) 90 L}{\fs24\lang2057\langfe1033\langnp2057\insrsid9261292 .}{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 J.Ch. 488 at 490 and the discussion of the rule in }{\fs24\ul\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 McGregor on Damages}{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 (15 edn.) at paras. 873-900). \par \par Furthermore in }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 Synge v. Synge}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 (1894) 1 Q.B. 466 where land was conveyed by a husband to a third party in breach of his promise to leave it to his wife it was:}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199 \par }{\fs24\lang2057\langfe1033\langnp2057\insrsid14950886\charrsid14950886 \par }\pard \ql \li720\ri0\nowidctlpar\faauto\adjustright\rin0\lin720\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 "}{\fs24\ul\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid9261292 Held}{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 : ... that as the defendant had put it out of his power to perform the contract there had been a breach, in respect of which the plaintiff had an immediate right of action to rec over damages ..." \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 \par }{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 The 2nd defendants however have not come by way of an action claiming damages instead they, through their solicitors, issued a demand notice pursuant to Section 221 of the Companies Act (Cap. 247) which provides (so far as relevant for present purposes): \par \par }\pard \ql \li720\ri0\nowidctlpar\faauto\adjustright\rin0\lin720\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 "A company shall be deemed unable to pay its debts- \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par }\pard \ql \li1440\ri0\nowidctlpar\faauto\adjustright\rin0\lin1440\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 (a) If a creditor, ..., to whom the company is indebted in a sum}{ \fs24\lang2057\langfe1033\langnp2057\insrsid14950886 }{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 exceeding on}{\fs24\lang2057\langfe1033\langnp2057\insrsid202441 e}{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 hundred dollars then due has served on the company, by leaving at the registered office of the company, a demand under his hand requiring the company to pay the sum so due and the company has for three weeks thereafter neglected to pay the sum ..." \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par There is some suggestion that the 2nd defendants are not creditors within the meaning of Section 221(a) and therefore have no }{\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 locus standi}{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 to issue the statutory demand notice. I am satisfied however in the absence of a definition of the term in the Companies Act that, for the purposes of a statutory demand under S ection 221(a), the term ought to be given a broad meaning consistent with the meaning envisaged by the provisions of Section 222 so as to include any contingent or prospective creditor. \par \par Needless to say both Sections occur under the same part of the Compan ies Act and it would in my view be incongruous if for the purposes of a preliminary statutory demand a creditor's status had to be affirmatively established yet not so, if he was actually presenting a winding-up petition. \par \par I receive some support for this view in the judgment of Megarry J. in }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 In re Harvest Lane Motor Bodies Ltd.}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 [1968] 3 W.L.R. 220 where the claim of a widow against a company in an action for damage for the death of her husband in a road accident was upheld.}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199 \par }{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par Megarry J. in discussing the meaning of the term said in words which I would respectfully adopt at p. 224: \par \par }\pard \ql \li720\ri0\nowidctlpar\faauto\adjustright\rin0\lin720\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 "I doubt very much whether in using the word creditor }{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid202441 simpliciter}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 the legislature can have been intending thereby to differentiate between those creditors whose debts are fixed and ascertained and those whose debts are contingent or prospective providing redress for the grievances of}{ \fs24\lang2057\langfe1033\langnp2057\insrsid14950886 }{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 the former but ignoring the grievances of the latter. In short I think it would be wrong to construe the word creditor narrowly [ }{\fs24\ul\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid202441 See also}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 : }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 Ho}{ \b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199 l}{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 t Southey Ltd. v. Catnic Components}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 }{ \fs24\lang2057\langfe1033\langnp2057\insrsid14950886 (1978) 1}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 W.L.R. 630] \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par Be that as it m}{\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 a}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 y it is this particular form of procedure adopted by the 2nd defendants that the plaintiff strenuously opposes as being not only inappropriate but an abuse of process. \par \par Support for this submission may be found in }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 Re a Company }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 (No. 00}{ \b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 12209 of 1991)}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 (1992) 2 All E.R. 797 in }{\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 which the decision of Hoffmann J}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 . }{\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 i}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 s summarised in the headnote as follows: \par \par }\pard \ql \li720\ri0\nowidctlpar\faauto\adjustright\rin0\lin720\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 "It is an abuse of process to present a winding up petition against a solvent company as a means of putting pressure on}{\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 }{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 it to pay money which is bona fide disputed instead of applying f}{ \fs24\lang2057\langfe1033\langnp2057\insrsid10965215 o}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 r summary judgment under RSC Order 14, and the Court will in those circumstances issue an injunction restraining presentation of the petition and may penalise the petitioner in costs." \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par Furthermore in }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 In re A Company (No.003729 of 1982)}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 Mervyn Davies J. in dismissing the winding-up petition in that case: \par \par }\pard \ql \li720\ri0\nowidctlpar\faauto\adjustright\rin0\lin720\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 "}{\fs24\ul\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid10965215 Held}{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 : that, since the company in goal faith and on substantial grounds disputed the amount of the debt, a petition for the winding up of the company was not a legitimate means of seeking to enforce payment; that, since the company could not know the sum due but was willing to pay a lesser amount (albeit exceeding the statutory figure), its omission or failure to pay either the statutory demand or the lesser amount within 21 days did not constitute neglect within the meaning of Section 223(a) [the English equivalent of our Section 221(a)]; that accordingly, the petitioner, being unable to rely on a debt of a sp ecified sum which could not be seriously questioned as to quantum, was not a}{\fs24\lang2057\langfe1033\langnp2057\insrsid11741323 t}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 liberty to present a petition based on Section 223(a)." \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par More particularly Mervyn Davies J. in discussing the meaning of "neglected to pay" in the Section said at p. 1094:}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199 \par }{\fs24\lang2057\langfe1033\langnp2057\insrsid14950886\charrsid14950886 \par }\pard \ql \li720\ri0\nowidctlpar\faauto\adjustright\rin0\lin720\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 "Sectio n 223(a) does not speak of an omission or failure to pay, but of neglect to pay, so that there is no neglect to pay when the sum demanded is disputed. This conte}{\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 ntion is supported by authority,}{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 In re London and Paris Bank Corporation}{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 (1874) L.R. 19 Eq. 444." \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 \par }{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 and later at p. 1095, he said in relation to the nature of the requisite claim under the Section: \par \par }\pard \ql \li720\ri0\nowidctlpar\faauto\adjustright\rin0\lin720\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 "Section 223(a) contemplates a creditor being able to p oint to a debt of a specified sum that cannot be seriously questioned either as to existence or quantum. It follows that the petitioner was not at libe}{\fs24\lang2057\langfe1033\langnp2057\insrsid7694001 rty to make use of Section 223(a}{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 ). The position is no doubt otherwise where the petitioner can, without serious argument." \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par In this latter regard learned counsel for the plaintiff company submits: \par \par }\pard \ql \li720\ri0\nowidctlpar\faauto\adjustright\rin0\lin720\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 "There is not, at this time, any debt due to be paid by the Plaintiffs to the second defendants. The Sale and Purchase Agreement between the Plaintiff and the 2nd defendants}{\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 }{ \fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 provides for the Plaintiff to develop Section F and deliver an individual Certificate of Title to the 2nd defendants. It does not however, state that this must be done by a certain date or time limit, at the expiry of which the 2nd defendant}{ \fs24\lang2057\langfe1033\langnp2057\insrsid14950886 '}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 s m oney shall be refunded to them. There is no such default clause which could make any money payable to the Plaintiffs due and owing now." \par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid14950886 {\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 \par With that submission I entirely agree and would only add that the mere fact that the 2nd defendants are able or willing to limit their claim to a liquidated amount does not conclude the issue. \par \par Needless to say whilst I can sympathise with the 2nd defendants I am constrained to hold that their claim properly lies in an action for damages for breach of contract and the issu ance of a statutory demand notice under Section 221(a) of the Companies Act is a clumsy attempt at invoking the Court's winding-up jurisdiction in a case wholly unsuited for such a procedure. \par \par The plaintif}{\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 f}{\fs24\lang2057\langfe1033\langnp2057\insrsid14887796 '}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 s application must be granted but the terms of the injunction sought are far too wide and accordingly in the exercise of the Court's discretion I order that the 2nd defendants be restrained until further order of this Court from instituting winding-up proceedings and that service of this order upon the 2 nd defendant's solicitors shall be sufficient service and notice thereof to the 2nd defendants.}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199 \par }{\fs24\lang2057\langfe1033\langnp2057\insrsid14950886\charrsid14950886 \par }{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 The plaintiff shall receive the costs of this application to be taxed if not agreed. \par }{\fs24\lang2057\langfe1033\langnp2057\insrsid14950886 \par }{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 (}{\i\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 Application granted.}{\fs24\lang2057\langfe1033\langnp2057\insrsid12724199\charrsid14950886 ) \par }}