Two decisions decide important points in relation to company law and confirm that there is “no free
Two decisions decide important points in relation to company law and confirm that there is “no free shot at goal” under CPR Part 24
Stephen Jourdan QC has appeared in Royal Mail Estates Limited (“C”) v Maples Teesdale (“D”). D had signed a contract on behalf of a company to be incorporated overseas for the acquisition of a substantial property. The contract had not been completed and the property was sold on to a third party. C claims that D is liable for the shortfall between the contract prices, some £5.1 million. C argues that the contract fell within section 36C of the Companies Act. This section provided:
“A contract which purports to be made by or on behalf of a company at a time when the company has not been formed has effect, subject to any agreement to the contrary, as one made with the person purporting to act for the company or as agent for it, and he is personally liable on the contract accordingly.”
D pleaded a number of arguments why that section did not make it liable on the contract. One argument was that there was an “agreement to the contrary”, namely a statement in the contract that it was personal to the “Buyer”, which D said was the intended company. D applied for summary judgment in its favour based on that argument.
Jonathan Klein QC sitting as Deputy Judge of the High Court decided ([2015] EWHC 1890 (Ch)) that the mere fact that there was a provision in the contract that only the company would have the benefit of the contract was not a sufficient “agreement to the contrary”. What was needed was some clear agreement that the contract was not to take effect as one entered into with the person signing. Furthermore, as it was not known at the time of the contract that the company had been incorporated, it was not possible to argue that section 36C was intended to be excluded. D’s application for summary judgment was therefore refused.
Having determined that issue, on 15 October 2015, the Deputy Judge was then asked by D to clarify the effect of his judgment. D submitted that the court had not finally decided, and should not finally decide, whether the “agreement to the contrary” argument was right or not; the Court but had only ruled, and should only rule, that it was not sufficiently clear in D’s favour to enter summary judgment. There had been no cross-application by C for summary judgment.
The Deputy Judge rejected that submission. He decided that, once an application for summary judgment was made, turning on a point of law or construction of a document, then if there was sufficient information before the Court to determine the issue, it should summarily determine the issue, following ICI Chemicals & Polymers v TTE Training [2007] EWCA Civ 725. There had been sufficient evidence to determine the issue; it was difficult to conceive what further evidence there could be. Summary judgment was therefore granted against D on that part of the defence.
The balance of the case continues.
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