Phyllison Ltd v GH Ltd

• Jurisdiction: Cayman Islands
• Judge: (Schofield, J.)
• Judgment Date: 08 December 1992
• Date: 08 December 1992
• Court: Grand Court (Cayman Islands)

Grand Court

(Schofield, J.)

PHYLLISON LIMITED

and

G.H. LIMITED

A. Turner for the plaintiff;

N.W. Hill, Q.C. and B. Ashenheim for the defendant.

Case cited:

(1) Erlanger v. New Sombrero Phosphate Co.ELR(1878), 3 App. Cas. 1218; 48 L.J.Ch. 73; [1874–80] All E.R. Rep. 271, dictum of Lord Blackburn applied.

Legislation construed:

Grand Court Law (Law 8 of 1975), s.18: The relevant terms of this section are set out at page 185, lines 25–39.

Rules of the Supreme Court, O.45, r.10: The relevant terms of this rule are set out at page 184, lines 18–25.

Contract-rescission-restitutio in integrum-in absence of application for directions as to mode of payment, vendor rescinding contract of sale to make full restitution of purchase price as precondition to rescission-failure to do so results in forfeiture of relief under Rules of Supreme Court, O.45, r.10

The plaintiff brought proceedings against the defendant to compel him to fulfil the terms of a contract.

The plaintiff unsuccessfully brought proceedings against the defendant (reported at 1992–93 CILR 160). The court made a declaration that the defendant was entitled to rescind a contract between them for the purchase by the plaintiff of an apartment from the defendant. The defendant did not apply for any consequential orders and accepted that as a condition of the rescission it would have to make restitution in full and return to the plaintiff the money it had paid. Following the judgment the defendant sent a notice of rescission of the contract to the plaintiff but did not return the payment in the five months which followed. The plaintiff brought the present proceedings seeking orders that the defendant comply with its obligations pursuant to the judgment by paying the sum owed plus interest immediately.

The defendant submitted that the court should order that the amount be paid into court to offset (a) any costs that were due to it from the plaintiff in connection with the suit, and (b) any amount that might be awarded to it in an action yet to be commenced against the plaintiff and its beneficial owner for deceit.

Held, giving judgment for the plaintiff:

It was a requirement that, on the rescission of a contract, restitutio in integrum be made and any direction as to the payment of restitution and its terms would be a direction consequent upon the judgment. Since no application had been made by the defendant for consequential orders, the plaintiff was entitled to a full refund of the sum paid as a precondition to the defendant”s obtaining relief. The defendant had no proper grounds for seeking an order for the payment of the restitution into court (a) to offset its costs in the earlier proceedings, especially since it had not yet prepared its bill of costs; or (b) to offset damages in proceedings not yet started and which might indeed be argued to be an abuse of process. Accordingly, since under O.45, r.10 of the Rules of the Supreme Court, the defendant stood to lose the benefit of the judgment for failing to meet an essential condition, the court...