Jared (S) Properties Ltd v Simpkins
| Jurisdiction | Cayman Islands |
| Judge | (Harre, C.J.) |
| Judgment Date | 02 November 1995 |
| Court | Grand Court (Cayman Islands) |
| Date | 02 November 1995 |
(Harre, C.J.)
Mrs. S.M. Corbett for the plaintiff;
M.S. Parkinson for the first and second defendants;
A. McN. McLaughlin, Jnr. for the third defendant.
(1) Beach Club Enterprises Ltd. v. Horizon Management Ltd., 1980–83 CILR 223.
(2) Campbell Discount Co. Ltd. v. BridgeELRUNK, [1961] 1 Q.B. 445; [1961] 2 All E.R. 97; on appeal, sub nom. Bridge v. Campbell Discount Co. Ltd., [1962] A.C. 600; [1962] 1 All E.R. 385.
(3) Dagenham (Thames) Dock Co., In re, ex p. Hulse(1873), L.R. 8 Ch. App. 1022; 43 L.J. Ch. 261.
(4) Galbraith v. Mitchenall Estates Ltd., [1965] 2 Q.B. 473; [1964] 2 All E.R. 653, considered.
(5) Howe v. SmithELR(1884), 27 Ch. D. 89; [1881–5] All E.R. Rep. 201, considered.
(6) Mussen v. Van Diemen”s Land Co., [1938] 1 Ch. 253; [1938] 1 All E.R. 210.
(7) Steedman v. Drinkle, [1916] 1 A.C. 275; [1914–15] All E.R. Rep. 298.
(8) Stockloser v. Johnson, [1954] 1 Q.B. 476; [1954] 1 All E.R. 630, observations of Romer, L.J. followed.
(9) Windsor Secs. Ltd. v. Loreldal Ltd., High Court, Chancery Division, The Times, September 10th, 1975, unreported, followed.
(10) Workers Trust & Merchant Bank Ltd. v. Dojap Invs. Ltd., [1993] A.C. 573; [1993] 2 All E.R. 370, considered.
Contract-payment-deposit-deposit acts as purchaser”s earnest of intention to complete-forfeited if purchaser fails to complete, part of purchase price if completes
Contract-payment-part-payment-if purchaser fails to pay instalment of purchase price, may obtain extra time to complete if no rescission by vendor-following rescission, purchaser only entitled to recover payments if fraud or sharp practice-disentitled to recover if already granted generous extension of time and delays seeking equitable relief against forfeiture
The plaintiff sought a declaration that a contract it had entered into contained a penalty clause and sought equitable relief against forfeiture.
The plaintiff company entered into an agreement to purchase property from the deceased and the second defendant. The contract provided that the purchase price was to be paid by a ‘deposit and part-payment’ followed by four instalments to be paid at six-monthly intervals. Clause 4 of the contract provided that should the plaintiff fail to make any of the payments on time the whole balance of the purchase price would immediately become due and the vendors could give the plaintiff written notice requiring it to complete the purchase within 28 days, the vendors being entitled to forfeit and keep all payments made in the event of the plaintiff”s failing to do so.
After paying the first two instalments, the plaintiff failed to pay the third. The deceased and the second defendant granted it a six-month extension in which to make the payment, and subsequently granted a further extension for a reasonable time subject to payment of interest on the outstanding sum. That extension lasted four years, during which time the plaintiff attempted unsuccessfully to sell the property at a considerable profit. The deceased and the second defendant then gave the plaintiff notice to complete and subsequently rescinded the contract, retaining the deposit and two instalments paid. The day before the expiry of the limitation period following the rescission, and 13 years after the original breach, the plaintiff brought the present proceedings against, inter alia, the first defendant, who was the personal representative of the deceased, and the second defendant seeking a declaration that cl. 4 of the contract was in
the nature of a penalty clause and seeking an order that the first and second defendants refund the sum retained following rescission.
The plaintiff submitted that cl. 4 of the contract was in the nature of a penalty clause because the sum forfeited was disproportionate to the damage caused by its breach of contract and it was unconscionable for the first and second defendants to retain the money, and that consequently it was entitled to equitable relief against forfeiture.
The first and second defendants, in reply, submitted that (a) the initial deposit was an indication that the plaintiff as purchaser was in earnest and could therefore be validly forfeited when it failed to perform the contract; (b) equitable relief against forfeiture, in the form of repayment of the two instalments, following rescission could only be given if there were special circumstances such as fraud or sharp practice, which were not present in this case; and (c) moreover, the plaintiff was barred from obtaining relief by the substantial length of time which had elapsed between the rescission of the contract and its bringing the present proceedings.
Held, refusing to grant the relief sought:
(1) The giving of the initial deposit and part-payment was an indication that the plaintiff was in earnest in entering the transaction, with the consequence that it could be validly forfeited on the plaintiff”s failure to perform the contract, although had it been performed the part-payment would have formed part of the purchase price (page 541, lines 10–22).
(2) With regard to the two instalments paid by the plaintiff, before the deceased and the second defendant rescinded the contract it might have been entitled to equitable relief against forfeiture, giving it extra time in which to carry out its obligations under the contract. However, following rescission it would only have been entitled to repayment in special circumstances such as fraud or sharp practice, which were not present here. Since the plaintiff had freely entered into the contract, had been granted a generous and unavailing extension of time in order to complete the purchase and had delayed seeking restitution, commencing its action the day before the expiry of the limitation period, it had disentitled itself to relief and its claim would be dismissed (page 543, line 41 – page 544, line 2; page 544, line 39 – page 545, line 14; page 545, lines 19–23).
| HARRE, C.J.: Among the reliefs which the plaintiff seeks are the | |
| following, which the court has ordered shall be the subject of a trial of | |
| 20 | preliminary issues: |
| 1. A declaration that cl. 4 of an agreement for sale between the first and | |
| second defendants as vendors and Great Beach Ltd. as purchaser dated | |
| January 12th, 1981 is in the nature of a penalty clause. | |
| 2. An order that the first and second defendants do forthwith pay the | |
| 25 | sum of US$357,500 (or such other sum as this court |
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Jared (S) Properties Ltd v Simpkins
...not be granted the relief sought, since this had not happened in the present case. The proceedings in the Grand Court are reported at 1994–95 CILR 538. On appeal, the appellant submitted that (a) cl. 4 of the contract operated as a penalty clause since the respondents, who had received inte......