“I find in all the circumstances that the Sheikh signed the Share Transfer Forms in 2016 and that he did not act honestly, or in good faith, in doing so and in causing the transfer of the 891K Shares (or purported transfer) to JJW Guernsey on8 March 2016 , pursuant to the February 2016 Resolution. Further he did not act in the best interests of the Company.”
“(a) the liquidator has custody and control of the assets of the company; (b) the directors and other officers of the company remain in office, but they cease to have any powers, functions or duties other than those required or permitted under this Part …. ”
“i) Section 41 provides that the company shall keep a register of members, containing (amongst other things) the names and addresses of the persons who hold registered shares in the company, together with the date on which the name of each member was entered in the register. ii) Section 42(1) provides that the entry of the name of a person in the register of members as a holder of a share in the company ‘is prima facie evidence that legal title in the share vests in that person’. iii) Section 43 provides the BVI court with jurisdiction to rectify the share register, where information required under section 41 is omitted or inaccurately entered, on the application of a member of the company or any person who is ‘aggrieved’ by the omission or inaccuracy.”
“436. Accordingly, the experts agree that the legal proprietor of shares is the person whose name is entered into the share register and that such person will remain the legal proprietor for as long as his name remains in the share register. As Lord Collins observed in Nilon Ltd v Westminster Investments[2015] UKPC 2 at [39] (in the context of considering the circumstances in which a claim for rectification under section 43 BCA 2004 may be brought) ‘[t]here is no doubt that the legislation is primarily concerned with legal title’. … 439. Under BVI law, there is an evidential (rebuttable) presumption that MBI International Holdings is currently the beneficial owner of the 891K Shares. Mr Lowe [i.e. one of the experts] explained in his oral evidence, and I accept, that BVI cases identify this as a ‘strong prima facie presumption’ such that ‘cogent’ evidence is needed to rebut it (see Chen v Ng[2017] UKPC 27 (on appeal from the BVI) at [40]-[42] and Ng v Peckson Ltd & Chen BVIHCMAP2019/0011 at [25]-[26]).”
“I find that the Alleged 2016 Disposition, by which I mean the signing by the Sheikh of Share Transfer Forms on behalf of the Company on or around29 February 2016 and the registration of JJW Guernsey as the owner of the 891K Shares in JJW Inc on8 March 2016 was void … pursuant to section 175(3) of the IA 2003”
“391. I do not consider that the fact that the liquidator has ‘custody and control’ of the assets of the company pursuant to section 175 of the IA 2003 … affects this conclusion. The underlying rationale for the obligation of fiduciary stewardship on a director post-liquidation under BVI law is the need to hold to account a director who seeks to exercise control over company property and engages in unauthorised dealing with that property. In such a situation, the liquidator (who should be the fiduciary steward) will quite obviously have been deprived of that stewardship. 392. The potential for the continued existence of such obligations appears to me to be rooted firmly in the original assumption of responsibility by a director, as fiduciary steward, for company property. If a director (operating under BVI law) retains a company’s property post-liquidation (which of course he should not do) then I accept that (always subject to the specific circumstances) he continues to hold it in a fiduciary capacity. If, without authority, he subsequently deals with that property adversely to the liquidation (or if he deals with property over which he is still able to exercise control), then he will have breached his fiduciary duty of stewardship and he must account for the property as if he were a constructive trustee.”
“Standing back, and considering the coherence of the parties’ respective arguments, I agree with the Liquidators that it would be surprising if the liability of a director under BVI law for misappropriation of, or unauthorised dealing with, company assets could be extinguished solely by reason of the relevant dealing having taken place after liquidation of the company (notwithstanding his or her continuing status as a director).”
“It does not follow that ‘de facto director’ must be given the same meaning in all of the different contexts in which a ‘director’ may be liable. It seems to me that in the present context of the fiduciary duty of a director not to dispose wrongfully of the company’s assets, the crucial question is whether the person assumed the duties of a director. Both Sir Nicolas Browne-Wilkinson V-C in In re Lo-Line Electric Motors Ltd[1988] Ch 477 , 490, and Millett J in In re Hydrodam[1994] 2 BCLC 180 , 183, referred to the assumption of office as a mark of a de facto director. In Fayers Legal Services Ltd v Day (unreported)11 April 2001 , a case relating to breach of fiduciary duty, Patten J, rejecting a claim that the defendant was a de facto director of the company and had been in breach of fiduciary duty, said that in order to make him liable for misfeasance as a de facto director the person must be part of the corporate governing structure, and the claimants had to prove that he assumed a role in the company sufficient to impose on him a fiduciary duty to the company and to make him responsible for the misuse of its assets. It seems to me that that is the correct formulation in a case of the present kind. See also Primlake Ltd v Matthews Associates[2007] 1 BCLC 666 , para 284.”
“It seems that there is not a single case prior to the 1980s in which the term de facto director was applied to anyone other than one who had been appointed a director, but whose appointment was defective, or one who had been, but had ceased to be, a director. Consequently the extension of statutory provisions relating to disqualification of directors and wrongful trading by directors to persons who had not been appointed as directors but who took part in management was a judicial innovation, first fully articulated in In re Lo-Line Electric Motors Ltd[1988] Ch 477 by Sir Nicolas Browne-Wilkinson V-C.”
“The cases seem to me to decide that, where a person has assumed, either with or without consent, to act as a trustee of money or other property, i.e., to act in a fiduciary relation with regard to it, and has in consequence been in possession of or has exercised command or control over such money or property, a Court of Equity will impose upon him all the liabilities of an express trustee, and will class him with and will call him an express trustee of an express trust.”
“I think that Ashwell [i.e. the solicitor] did assume to act and acted as trustee of the funds which he received, and that he has not duly discharged himself from the plaintiff’s share of those funds, and must therefore be treated as an express trustee.”
“If a person by mistake or otherwise assumes the character of trustee when it does not really belong to him, he becomes a trustee de son tort and he may be called to account by the beneficiaries for the money he has received under the colour of the trust. A trustee de son tort closely resembles an express trustee. The principle is that a person who assumes an office ought not to be in any better position than if he were what he pretends: he is accountable as if he had the authority which has been assumed.”
“There are many instances in which a person who de facto exercises an office cannot defend himself by saying, when he is called upon to bear liability in consequence of his wrong, ‘I am not rightfully in the office, there is another man who may turn me out.’ An executor de son tort is an instance in which a man incurs all the liabilities of an executor as to third persons, and he is not permitted to say, ‘I am not executor; there is another man who may take out probate.’ The answer is, ‘Your liability as to a third person rests upon your being executor de son tort; you have usurped the office and must bear the liabilities.’”
“We are familiar in the law with a great number of cases in which a man who assumes a position cannot be allowed to deny in a Court of Justice that he really was entitled to occupy that position. The most familiar instance is that of executor de son tort.”
“Mrs. Williams evidently accepted the trust, and, I regret also to say, I have come to the conclusion that her estate must be made liable, even upon her own statement of the case. She consents to become a trustee, though she resisted at first; she really knew nothing at all about the matter; she was an old lady and a widow, and it was evidently out of friendship to the Plaintiff that she consented to become a trustee. She was never regularly appointed trustee, but she acted as such, and may be said to have been in the nature of a trustee de son tort, if that expression may be borrowed from the case of an executor; and in that character she can only be answerable for the monies she actually received. But this money was actually received by her, it was transferred into her name, and it could not have been got out of her name without her consent”
“The principle of those decisions, as stated by Turner L.J. in the latter case, was, that a person who had assumed to be a trustee ‘could not be heard to say, for his own benefit, that he had no right to act as a trustee.’ Mr. Lewin, in his learned and accurate treatise upon the Law of Trusts, thus puts it (7th ed. p. 191): ‘If a person, by mistake or otherwise, assume the character of trustee when it really does not belong to him, and so becomes a trustee de son tort, he may be called to account by the cestui que trust for the monies he received under colour of the trust’”
“It can be accepted that a trustee de son tort is a kind of constructive trustee - Millett LJ says as much in the paragraph preceding those cited by [counsel] [from Paragon Finance plc v D B Thakerar & Co[1999] 1 All ER 400 , at 408-409]. Such a trustee does not really take the trust property in the consensual manner referred to by Millett LJ in his description of the first type, but insofar as the trustee de son tort has property which he holds in his own name he will be a trustee of that property for the ultimate beneficiaries. To that extent it can be accepted that a trustee de son tort of that kind ‘really is a trustee’. However, the question in this case is not whether the de facto trustees are trustees; it is whether they should be treated as being trustees of the settlement. The status of a trustee de son tort is limited. He will be liable for breach of trust much as a properly appointed trustee would be but the doctrine is more about liabilities than anything else. The trustee de son tort will be obliged to hold the property for, and to account to, the beneficiaries, but on the other side of the coin will not have the powers of the trustee conferred by the settlement …. It would be contrary to principle to allow such a person to arrogate powers to himself by virtue of his ‘intermeddling’, even if that intermeddling is innocent”
“Although directors are not properly speaking trustees, yet they have always been considered and treated as trustees of money which comes to their hands or which is actually under their control; and ever since joint stock companies were invented directors have been held liable to make good moneys which they have misapplied upon the same footing as if they were trustees, and it has always been held that they are not entitled to the benefit of the old Statute of Limitations because they have committed breaches of trust, and are in respect of such moneys to be treated as trustees.”
“Then comes the question, what was the position of the directors who made an improper and ultrà vires investment of that kind? Now, case after case has decided that directors of trading companies are not for all purposes trustees or in the position of trustees, or quasi trustees, or to be treated as trustees in every sense; but if they deal with the funds of a company, although those funds are not absolutely vested in them, but funds which are under their control, and deal with those funds in a manner which is beyond their powers, then as to that dealing they are treated as having committed a breach of trust.”
“A limited company is of course not a trustee of its own funds: it is their beneficial owner; but in consequence of the fiduciary character of their duties the directors of a limited company are treated as if they were trustees of those funds of the company which are in their hands or under their control, and if they misapply them they commit a breach of trust (Re Lands Allotment Co ([1894] 1 Ch 616 at 631, 638, [1891–94] All ER Rep 1032 at 1034, 1038), per Lindley and Kay LJJ).”
“Undoubtedly the persons who are concerned in this case, having the control and dominion over the property in question, did an act whereby the title to the property belonging to the deceased person became vested in somebody else, and they are not either ‘executors’ or ‘administrators’ in the sense in which those words are used in the Taxing Acts. Primâ facie therefore they are executors de son tort, and, primâ facie, as it appears to me, they have taken possession of and administered the property in respect of which this question arises.”
“In what way could a person, dealing with this particular class of property, otherwise intermeddle with the estate? The appellants have done that which, as I say, has created a new title in somebody else. The peculiar character of the property is such that it does not admit of its being manually and physically handed over; but they have done a legal act, and by virtue of that legal act they have enabled it to be dealt with by somebody else, and made available by him for any purpose he desires.”
“[I]t seems to us that if a stranger so deals with proceeds of sale of English property belonging to a deceased in such manner as to submit the proceeds of sale to another jurisdiction and is unable to pay and account for the proceeds of sale to the English representatives when constituted in England, the stranger has intermeddled with the estate and constituted himself an executor de son tort, liable to pay capital transfer tax in England. … By procuring payment of the£20 million in Jersey, Stype Investments [i.e. the defendant] transferred the right to the£20 million from the personal representatives constituted in England to the personal representatives constituted in Jersey …. The act of transferring title from English personal representatives to Jersey personal representatives constituted an intermeddling with the English estate and constituted Stype Investments executor de son tort. … [J]ust as the intermeddling in the New York Breweries case transferred title from the English representatives when constituted to the American representatives already constituted, so in the present case Stype Investments transferred title from the English representatives when constituted to the Jersey representatives when constituted.”
“It seems to me on the evidence that she was doing what she could to progress the Liquidation in the face of stonewalling from the Sheikh, that the steps she took to progress the Liquidation were reasonable and, in so far as it is necessary for me to do so, I find that had she been provided with accurate information she would have taken appropriate steps ‘to take control’ of the 891K Shares and to realise them for the benefit of the creditors.”
“[The MBI Respondents] have … adduced no evidence in support of the proposition that there would have been no market for the 891K Shares (or that they would have had no value, or a reduced value) had the Liquidators sought to realise them at or around that date [i.e.31 December 2016 ] or that the directors of JJW Inc would have refused or delayed the registration of the transfer pursuant to the terms of the Articles of JJW Inc (a point raised in argument but not anywhere pleaded). If the MBI Respondents wished to seek to make out these defensive points at trial, the onus was on them to produce the necessary evidence. They have not done so.”
“Assessing the available evidence as at the date of this judgment and having regard to hindsight and the application of common sense, I consider that making an award of€67,123,403.36 (or the equivalent in pounds sterling) would provide appropriate equitable compensation for the misappropriation of the 891K Shares. Accordingly, I make that award against both the Sheikh and JJW Guernsey (Issue 28).”
“I bear in mind that the July 2017 Transfer appears (on the MBI Respondents’ own evidence) to have had the effect of denuding the 891K Shares of all value and I note that the MBI Respondents have not sought to adduce any evidence to contradict that state of affairs, whether as at the date of the transfer or the date of judgment (which for these purposes is the relevant date).”
“In the instant case, the Liquidators do not seek to bring a concealed derivative claim and do not rely on losses to JJW Inc to ground any part of their claims. All the alleged wrongs were directed at the Company, not JJW Inc. While it is now common ground between the parties that JJW Inc has no assets (for … the MBI Respondents allege and the Liquidators accept that all JJW Inc’s assets were transferred away from it in July 2017), there is no need for JJW Inc to have suffered any wrong under that restructuring for the Liquidators’ claim to be made out.”
“[i]f specific restitution of the trust property is not possible, then the liability of the trustee is to pay sufficient compensation to the trust estate to put it back to what it would have been had the breach not been committed”
“there are two types of compensatory claim which can lie against trustees: substitutive performance claims and reparation claims. These are mediated through proceedings for an account in different ways. In the case of a substitutive performance claim where the trustees have made an unauthorised distribution of trust property or used trust funds to purchase an unauthorised investment, the court will not permit the trustees to enter the distribution or expenditure into the accounts as an outgoing because it will not permit the trustees to say that they acted in breach of duty. Instead, they will be treated as though they have spent their own money and kept the trust assets intact. The accounts will be falsified to delete the unauthorised outgoing, and the trustees will be ordered to produce the relevant trust property in specie or pay a money substitute out of their own pockets. Reparation claims are brought into the scheme of the accounts in a different way. The loss claimed by the beneficiaries is translated into an accounting item by surcharging the trustees with the amount of the loss as if they had already received this amount for the beneficiaries. They must then pay this sum into the trust funds out of their own pockets.”
“Substitutive performance claims are claims for a money payment as a substitute for performance of the trustees’ obligation to produce trust assets in specie when called upon to do so. Claims of this sort are apposite when trust property has been misapplied in an unauthorised transaction, and the amount claimed is the objective value of the property which the trustees should be able to produce.”
“Once the plaintiff has been provided with an account he can falsify and surcharge it. If the account discloses an unauthorised disbursement the plaintiff may falsify it, that is to say ask for the disbursement to be disallowed. This will produce a deficit which the defendant must make good, either in specie or in money. Where the defendant is ordered to make good the deficit by the payment of money, the award is sometimes described as the payment of equitable compensation; but it is not compensation for loss but restitutionary or restorative.”
“The focus should, it seems, be straightforwardly on the precise nature of the particular obligations in issue and their intended objectives. As it is, the language of equitable compensation and accounting lies like a cloak over so much of fiduciary law. It does not illuminate, explain or justify what goes on under its cover.”
“In an appropriate case the defendant will be charged, not merely with the value of the property at the date when it ought to have been acquired or at the date when the account is taken, but at its highest intermediate value. This is on the footing either that the defendant was a trustee with power to sell the property or that he was a fiduciary who ought to have kept his principal informed and sought his instructions.”
“In my judgment that case was wrongly decided not only because the wrong principle was applied but also because the judge awarded compensation by assessing the quantum on an assumption (viz. that the house in question would have been sold at a particular date) when he found as a fact that such sale would not have taken place even if there had been no breach of trust.”
“153. In this case, it appears to me clear that equitable compensation should be assessed by reference to the value of the Shares at the date when they were sold by the Bank, even if the claim for knowing receipt arose some 18 months earlier. As [counsel for the Bank] pointed out, until the Shares were actually sold, it was always open to Akai to recover them from the Bank. Even more significantly, it seems to me clear that, if the Bank had not accepted the share certificates and retained them until selling the shares, Akai would have retained those shares until Akai Electric was placed into [administration] by the Japanese courts. The uncontested evidence very strongly suggests that this is so: Akai Electric was Akai’s effective operating subsidiary; there was no history of the STC group transferring its assets, let alone its shareholdings in subsidiaries, out of its ultimate control; after the Bank returned the 5.5m Akai Electric shares to Akai, they were retained by Akai until they became valueless. 154. In those circumstances, it is clear on the balance of probabilities, indeed it is, in truth, clear beyond any real doubt, that, if the Bank had returned the share certificates to Akai, far from being sold earlier than the date upon which the Bank sold them, Akai would have kept the Shares until they had become worthless. The ironic fact is that Akai is substantially better off as a result of the Bank having received and sold the Shares. Of course, that does not mean that Akai has no right to equitable compensation, and the Bank is entitled to keep the proceeds of sale of the Shares: normal equitable principles entitle Akai to elect between receiving a sum equal to the proceeds of sale of the Shares or, unless it is impossible to obtain them, an equivalent number of Akai Electric shares. 155. Accordingly, even though I consider that, although Akai may well have a claim in knowing receipt, it takes matters no further.”
“I am now therefore obliged to take immediate steps to recover funds in order to pay David Britt’s claim. Not doing this could be deemed to be a breach of my statutory duties and it is therefore imperative that I take action now. As such I am now inviting you to settle this claim to avoid me commencing the realisation of the Company’s investments.”
“2. TRANSFER OF SHARES 2.1 The Seller [i.e. JJAB] hereby irrevocably transfers its legal and beneficial interests in the Company Shares [i.e. the 324,205 shares in JJW Inc] to the Buyer [i.e. the Company] free from Encumbrance in consideration for€32,420,500.00 (the ‘Consideration’) to be paid on demand by the Buyer to the Seller in such way that is mutually agreed by the Buyer and the Seller. 2.2 Upon receipt of the Consideration by the Seller, completion of the transfer of the Company Shares pursuant to this Agreement shall take place immediately, when 2.2.1 the Seller shall deliver to the Buyer a share transfer [form] duly executed by the Seller in respect of the Company Shares in favour of the Buyer and procure that the Company shall register such transfers and issue and deliver to the Buyer a certificate representing the Company Shares in the name of the Buyer; and 2.2.2 the Seller shall, at the request of the Buyer, do and execute or procure to be done and executed all such acts, deeds, documents and things as may be reasonably necessary to give effect to this Agreement.” 2.2.1 the Seller shall deliver to the Buyer a share transfer [form] duly executed by the Seller in respect of the Company Shares in favour of the Buyer and procure that the Company shall register such transfers and issue and deliver to the Buyer a certificate representing the Company Shares in the name of the Buyer; and 2.2.2 the Seller shall, at the request of the Buyer, do and execute or procure to be done and executed all such acts, deeds, documents and things as may be reasonably necessary to give effect to this Agreement.”
“In my judgment, the terms of the March 2009 Transfers, objectively construed, plainly exclude the existence of the lien for which the MBI Respondents contend. Clause 2.1 expressly provides that the transfers will take place ‘free from Encumbrance’. Encumbrance is a defined term which ‘includes any mortgage, charge, pledge, lien, hypothecation, security interest, trust arrangement, option or other third party interest whatsoever’. This is extremely broad and expressly includes reference to a lien. The terms of the March 2009 Transfers give rise to a clear and manifest inference that it was the intention of the parties to extinguish any possibility of a lien. That this is so is entirely consistent with the rationale and purpose of the March 2009 Transfers to which I have already referred. The existence of the lien would have prevented a sale of the 891K Shares by the Company in the IPO and use of the proceeds of sale to pay the consideration, thereby thwarting the purpose and rationale for those transfers.”
“Complaints that a party was permitted to rely upon an unpleaded point at trial cannot be raised by way of appeal unless, at the trial, the complaining party requested the judge expressly to rule upon the point. Thus, if this is done and a ruling is made preventing departure from the pleading, the other party is obliged formally to seek permission to amend their pleading (Hawksworth v Chief Constable of Staffordshire[2012] EWCA Civ 293 ).”
“As soon as a binding contract for sale of land is entered into the vendor has a lien on the property for the purchase money and a right to remain in possession of the property until payment is made. The lien does not arise on completion but on exchange of contracts. It is discharged on completion to the extent that the purchase money is paid: In re Birmingham, decd.; Savage v. Stannard[1959] Ch. 523 , cited with approval in London and Cheshire Insurance Co. Ltd. v. Laplagrene Property Co. Ltd.[1971] Ch. 499 , 514. Even if the vendor executes an outright conveyance of the legal estate in favour of the purchaser and delivers the title deeds to him, he still retains an equitable lien on the property to secure the payment of any part of the purchase money which remains unpaid. The lien is not excluded by the fact that the conveyance contains an express receipt for the purchase money. The lien arises by operation of law and independently of the agreement between the parties. It does not depend in any way upon the parties’ subjective intentions. It is excluded where its retention would be inconsistent with the provisions of the contract for sale or with the true nature of the transaction as disclosed by the documents. It is also excluded where, on completion, the vendor receives all that he bargained for: Capital Finance Co. Ltd. v. Stokes[1969] 1 Ch. 261 and Congresbury Motors Ltd. v. Anglo-Belge Finance Co. Ltd.[1971] Ch. 81 .” “[T]he test”, Millett LJ said at 420, “is an objective one”: “[t]he question is: what intention is to be attributed to the parties from the transaction into which they have entered?”
“Mr. Bensley, as a vendor, retained the lien by operation of law unless there was something in the transaction itself which would lead to the necessary inference that the parties must objectively be taken to have excluded the lien. Mr. Bensley and his son almost certainly had no idea that equity would hold Mr. Bensley entitled to an unpaid vendor’s lien. That, however, is irrelevant. In my view, therefore, the fact that the vendor expects the purchaser to sell the property in lots free from incumbrances is not enough to exclude the lien, though it may postpone it to the sub-purchasers’ equitable interest.”
“I then turn to the question of whether there is anything in the present case which would lead to the irresistible inference that Mr. Bensley and his son must be taken to have excluded the unpaid vendor’s lien. In my judgment there is nothing. Mr. Bensley did not receive the whole of the purchase money on completion, nor did he receive all that he bargained for. He received£19,000 out of a minimum of£70,000 and received no other security or means of payment whatever. All that can be relied upon now is the fact that Mr. Bensley and his son both contemplated that the land would be developed, if possible, and sold in lots, and that, if so, then Mr. Bensley could expect to receive the balance of the purchase money and whatever profit was available out of the proceeds of the redevelopment. To my mind it follows that Mr. Bensley must be taken to have expected to be called upon to subordinate his unpaid vendor’s lien to any mortgage which was needed for the redevelopment of the property, but that his consent would be required for such subordination when the time came, and that the transaction would not exclude the existence of the lien in the meantime.”
“If, then, the intention of the parties to this instrument be considered, it seems impossible to infer that, consistently with that intention, any such lien as the Western Society contends for could have been contemplated. The intention expressed in the agreement is, that ‘an amalgamation of the Western Society and a transfer of its business and liabilities and assets to the Albert Company’ should be effected. That is, as I read it, that the business and dealings of the amalgamated company shall, for the future, be carried on in the same manner and by the same means as those of each society had been theretofore carried on separately; that the assets of both should form a common stock, subject to all the existing liabilities and debts of both companies, and to all such as should thereafter be contracted by the Albert Company. To hold that there should be any distinction between any of the articles of which this common stock consisted would frustrate the very object of the arrangement - and it may, I think, be also properly observed that, if it had been so intended, nothing would have been more obvious and simple than to preserve and secure such distinction by declaring trusts to that effect - of which the document referred to contains no trace. Then the terms in which the transfer is made are as explicit as the intention is plain. They are, that ‘in consideration of the transfer of the funds and property of the WesternSociety , the Albert Company shall pay and satisfy all claims and demands upon the said society when and as the same shall successively arise, and shall take upon itself all other the liabilities of every description of the said society.’ It appears to me, therefore, clear, upon the principles I have adverted to, that the claim of the Western Company cannot be sustained; for it is impossible to infer from the nature of the transaction that it was the intention of the parties that any lien upon the assets transferred should exist; and, further, by the very terms of the contract, not only is such an inference excluded, but the true construction of the contract is, that the consideration for which the transfer was made was not the payment of any price, nor was it a condition of the transfer that the engagement of the Albert Company should be performed, but the consideration was simply and solely the agreement that the company should take upon itself the debts and engagements of the Western Society, and all the risk and loss which might attend the realisation of the assets transferred.”
“the nature of the transaction excludes vendor’s lien. This is not the case of a simple agreement to sell for£6000 . No doubt the vendor got a higher price by agreeing to accept payment in the way he did, and taking his chance of capital being subscribed or capital being borrowed to an amount sufficient to pay him. He says in fact, ‘Half of the first capital moneys that come in to the extent of£6000 is to be my purchase-money.’ No day for payment was named: he agreed to receive his purchase-money if and when capital should come in. He got for his property a charge upon and a right to the capital of the company to the extent of£6000 when it came in. To my mind it is clear that he intended to rely on that fund for payment, and intended that the company should have the means of borrowing. This is quite inconsistent with a lien which would probably make the company unable to pledge their property.”
“It is clear that the case would have gone the other way if the consideration had been£6,000 simpliciter, even though it was obvious to both parties that the company would have no means of paying the£6,000 unless it was able to borrow money or issue shares to that amount. The fact that the parties contemplated that the purchase price would be paid out of money raised by borrowing or issuing shares was neither here nor there. What was determinative was that the consideration expressed in the conveyance was not£6,000 simpliciter but£6,000 to be paid if and when the company borrowed or issued shares to that amount.”
“39. In this case, the exclusion of the lien, in my judgment, stems from the fact that the intention which the parties have expressed is that merger should follow swiftly upon completion. The idea of enforcing a lien for the unpaid purchase price after completion is inconsistent with that agreement. The lien would give the vendor a beneficial interest in the property which, unless discharged, would prevent the merger taking place. Merger is an essential feature of the transaction. 40. In those circumstances, it is not correct to say … that the unpaid vendor’s lien would only make any difference if there was a default on the part of the purchaser so that the lien became enforceable. The very existence of the lien is inconsistent with the parties’ common intention of achieving a merger of the freehold and leasehold interests in the property on completion.”