Bower v Bantam Investments
Chancery Division
Goff J.
1972 March 7, 8, 9; 20
Injunction—Interlocutory—jurisdiction to grant—Contract—Obligation to use best endeavours to develop marina—Proposed sale of development site—Claim for injunction to restrain sale—Uncertainty of obligation—Whether interlocutory relief appropriate
By an agreement in writing dated October 4, 1967, it was provided that the plaintiff would sell to the first defendants, B Ltd., and B Ltd. would buy and procure the purchase by the second defendants, M Ltd. of the plaintiff's land in respect of part of which outline planning permission had been granted for development as a marina. The purchase price was to be partly in shares in M Ltd. and partly in cash. Clause 9 provided that the contract was conditional on B Ltd. being satisfied that the outline planning permission was still in force and that all other consents, permissions and approvals to enable the development of the marina to proceed as envisaged were obtained. The purchase and sale of the land duly took place but no steps were taken in the development of the marina. In December 1971, M Ltd. caused ‘For sale’ notices to be erected on a part of the land and, on enquiry the plaintiff was told by the defendants that M Ltd. intended immediately to proceed with a piecemeal sale of the land originally bought from him. In January 1972 the plaintiff issued a writ claiming an injunction to restrain B Ltd. from procuring the sale of the land by M Ltd. and to restrain M Ltd. from disposing of the land.
On a motion for an interim injunction pending trial to the same effect, it was conceded that the contract was not specifically enforceable: —
Held,
(1) that in order to found a claim for relief by way of injunction it was necessary to point to something specific which a defendant had by implication agreed not to do and that the mere fact that his conduct was inconsistent with his obligations was not sufficient.
Dicta of Lord Selbourne L.C. in Wolverhampton and Walsall Railway Co. v. London and North-Western Railway Co. (1873) L.R. 16 Eq. 433 , 441 and Lindley L.J. in Whitwood Chemical Co. v. Hardman [1891] 2 Ch. 416, 426, 427, C.A. applied.
(2) That there was an implication in the contract that B Ltd. would use their best endeavours to procure, if practicable, a marina with recreational facilities, but as there was no criterion by which best endeavours or practicability could be judged, the obligation was too uncertain and, therefore, interlocutory relief by way of injunction was neither an appropriate nor a proper remedy.
De Mattos v. Gibson (1858) 4 De G. & J. 276, C.A. distinguished .The following cases are referred to in the judgment:
Catt v. Tourle (1869) 4 Ch.App. 654.
De Mattos v. Gibson (1858) 4 De G. & J. 276, C.A.
Hubbard v. Vosper [1972] 2 W.L.R. 389; [1972] 1 All E.R. 1023, C.A.
Metropolitan Electric Supply Co. Ltd. v. Ginder [1901] 2 Ch. 799.
Stirling v. Maitland (1864) 5 B. & S. 840.
Whitwood Chemical Co. v. Hardman [1891] 2 Ch. 416, C.A.
Wolverhampton and Walsall Railway Co. v. London and North-Western Railway Co. (1873) L.R. 16 Eq. 433.
The following additional cases were cited in argument:
Donmar Productions Ltd. v. Bart (Note) [1967] 1 W.L.R. 740; [1967] 2 All E.R. 338.
Fothergill v. Rowland (1873) L.R. 17 Eq. 132.
Harman Pictures N.V. v. Osborne [1967] 1 W.L.R. 723; [1967] 2 All E.R. 324.
Hill v. C. A. Parsons & Co. Ltd. [1972] Ch. 305; [1971] 3 W.L.R. 995; [1971] 3 All E.R. 1345, C.A.
Lumley v. Wagner (1852) 1 De G.M. & G. 604.
Mortimer v. Beckett [1920] 1 Ch. 571.
MOTION
An agreement dated October 4, 1967, between the plaintiff, Walter Bower, and the first defendants, Bantam Investments Ltd. recited that the plaintiff owned land at North Muskham, Newark-on-Trent for part of which he had obtained outline planning permission to develop as a marina and that he would sell the land on the terms set out therein to Bantam who would procure the purchase of the land for cash and shares by a new company to be formed. That company was Mustcome Marina Ltd. (“Marina”), the second defendants. The contract was expressed to be conditional on Bantam being satisfied that the outline planning permission for development of the land as a marina was still in force, and that all other consents enabling the development “to proceed as envisaged” had been, or would be, obtained.
By a supplemental agreement dated October 30, 1967, some further land subsequently acquired by the plaintiff was brought into the principal agreement. There were negotiations in 1968 and 1969 concerning detailed planning permission, but the development of the marina did not proceed. In December 1971 Marina put up “for sale” notices intending a piecemeal disposal of the land. The plaintiff's request for an undertaking on behalf of Marina that the land would not be disposed of was refused.
On January 31, 1972, the plaintiff issued a writ for an injunction to restrain Bantam from exercising its voting powers in Marina so as to procure the sale of the land by Marina; and for an injunction restraining Marina from disposing of the land. By notice of motion he now asked for interlocutory injunctions in the same terms.
The facts are stated in the judgment.
Gerald Godfrey Q.C. and K. J. Farrow for the plaintiff.
John K. Wood Q.C. and Harry Woolf for both defendants.
Cur. adv. vult.GOFF J.
March 20. read the following judgment. The plaintiff in this case, a Mr. Walter Bower, conceived the idea of developing a marina together with related recreational facilities on the banks of the River Trent at North Muskham in Nottinghamshire. To this end he bought and paid for some 24 acres of land, described on the exhibited plan as plot A , for a total of approximately £12,000. He also contracted to buy two other plots, and D, containing together some 31 acres at a price of £15,000, of which he paid £3,000 and the balance was to be paid by instalments before completion.
The plaintiff obtained outline planning permission in respect of plotA , 1122 but he was unable to make the necessary financial arrangements for the prosecution of the venture. He therefore advertised the project and as a result came into touch with a Mr. Pentland Hick who was chairman and managing director of Associated Pleasure Parks Ltd., a public company controlled by the first defendants, Bantam Investments Ltd., (“Bantam”) and this resulted in a proposition which Mr. Pentland Hick was prepared to recommend to his board and which he set out in a letter to the plaintiff dated September 20, 1967. The proposition, with minor amendments, was accepted by the plaintiff through his solicitors. The letter was written by Mr. Pentland Hick in his capacity, it would seem, of chairman and managing director of Bantam. It stated amongst other things that the site being in fact plot A accommodated the entire scheme, provided for its purchase and further stated that it was proposed that “we,” which must, I think, mean Bantam, should invest in the plaintiff's company, Mustcome Boating Co. Ltd. or a new company to be formed, and that the company, whichever form it should take, should also acquire plots B and D and be capitalised under arrangements which would give to the plaintiff, originally, one half less one share but altered by him to one quarter, and to Bantam the balance. These arrangements are not entirely easy to understand as they speak in one breath of Bantam subscribing for their shares in the capital of the company, and lending or arranging for the company to borrow the amount required to pay for those shares, but nothing turns on that. The letter further said:
“It will be our intention to endeavour to carry out your plans through the company without increasing the share capital or calling on you for any loan money.”
The arrangements between the parties were then embodied in a formal agreement dated October 4, 1967, and made between the plaintiff and Bantam. This was in two parts, a preamble and agreed terms. The preamble was as follows:
(A) The vendor,” that is the plaintiff, “owns at North Muskham a 24 acre site (‘the main site’) shown edged red on the attached plan and a 31 acre site (‘the second site’) edged blue on the plan.
(B) The vendor has obtained outline planning permission to develop the main site as a marina and has agreed to sell it on the terms stated below.” The agreed terms, so far as material, were as follows. By clause 2 (a) Bantam agreed to form a new company, which it did. That company was Mustcome Marina Ltd., (“Marina”) the second defendants. Subject to certain conditions in clause 9 and a power of rescission in clause 10, which was not exercised, the plaintiff agreed to sell to Bantam and Bantam agreed to buy and procure the purchase by Marina of plots A , B and D in part for shares in Marina credited as fully paid up, in part for cash, and in part in consideration of an indemnity against the plaintiff's liability to the vendor of plots B and D . The total consideration made this in effect a sale at cost price. BY clause 6 (a) the parties agreed that if they acquired any further property (with a certain exception) within half a mile of the main site they would on request convey it to Marina at cost. I now read clauses 7, 9 (a) and 9 (b):
“7. On completion of the sales Bantam will procure that [Marina] enters into a service contract with the vendor [the plaintiff] appointing him managing director of [Marina] for 10 years at a fee of not less 1123 than £250 per annum plus one free berth in the marina on the basis that he will devote such time and attention as may be required by [Marina] to establishing the proposed marina on the main site and in the service contract the [plaintiff] will undertake that he will not during that period or thereafter be directly or indirectly engaged interested or concerned with any competing activity within a radius of 10 miles of the main site.
9. This contract is conditional upon Bantam being satisfied: —
(a) That the outline planning permission is still in force and has not been rescinded or varied in any way
(b) That all other consents permissions and approvals (with the exception of detailed planning permission) to enable the development of the marina to proceed as envisaged have been or will he obtained.”
At the date of this agreement the plaintiff was already in treaty for the purchase of a further piece of land, plot C, which was shortly afterwards acquired at a cost of £20,000, of which £14,000 was left on mortgage. This was brought into the principal agreement by a supplemental agreement dated October 30, 1967, which appears to give rise to a question of construction as to the terms upon which Marina were to acquire plot D , but that is not relevant for present purposes. It was in fact conveyed to Marina. Plot C had the benefit of outline planning permission for residential purposes, but the plaintiff says he envisaged its user as a car park in connection with the marina, although the planning permission of course inflated the price. The defendants say this would be commercial nonsense. That is, of course, a dispute to be resolved at the trial.
The development of a marina has not progressed. indeed, it has not even started. The plaintiff says this is the fault of the defendants, or at any rate Bantam who have lost interest largely following a takeover of Associated Pleasure Parks Ltd. by another public company, Scotia Investments Ltd. which, so it is suggested, has other uses for its money. The defendants, on the other hand, say that it is all the fault of the plaintiff, whose ideas are too grandiose, and that despite strenuous efforts they have been unable to raise the necessary finance for any scheme which would satisfy the plaintiff. That, again, is a matter to be investigated at the trial.
In December 1971, however, Marina caused “for sale” notices to be erected on plot C , and the plaintiff says in his affidavit of February 7, 1972, that on inquiry he was informed by the defendants that it was Marina's intention to proceed immediately with a piecemeal disposal of the land originally acquired from him. Mr. Pentland Hick's affidavit says that a purchaser had been found who had offered £30,000 for plot C which was in excess of an independent valuation, that so far as he was aware no attempt had been made by the defendants to sell plots A , B or D , and that if the defendants were in a position to proceed with their sale of plot C they would be in a better position to proceed with a viable marina on plotA , which was the only useful purpose to which that plot could be put.
Nevertheless, the plaintiff's request before action for an undertaking met with an uncompromising refusal. In the solicitors' letter of January 20, 1972 to his solicitors they say:
“You asked for an undertaking that the company's land will not be disposed of. It is, of course, for the company's board to decide whether or not to dispose of the company's land and it is not for Bantam to propose the sale or for that matter for Mr. Bower to resist it, as Bantam and Mr. Bower are in this sense merely interested as shareholders.” 1124 In these circumstances the plaintiff has commenced this action and moves for an interim injunction pending trial restraining the defendants from selling or disposing of the whole or any part of the total site, plots A , B , C and D .
It is clear, and plaintiff's counsel admits, that his case at the trial must depend on something, which is not in terms expressed in the agreement of October 4, 1967, being spelt out of it by construction as a necessary inference or upon some implied term. The defendants say that even if anything is to be read in, or implied, it can only be such a provision as will leave the decision whether there is a practicable scheme entirely within the discretion of the defendants, or one of them. Obviously all this involves serious questions to be determined at the trial on what, in the light of the facts and circumstances as then ascertained, is the true construction and effect of this curious agreement which is so silent where one would expect it to be explicit. The plaintiff says, however, “Give me protection pending the trial and do not let the defendants put it out of their power now to perform the contract if I succeed at the trial in establishing some enforceable positive obligations binding on them.”
Now whatever positive effect this contract may have, it is clear and not disputed by the plaintiff — that it is not one capable of being specifically enforced. In the long run if the defendants remain adamant and refuse to perform it the plaintiff's only possible remedy must be in damages but he says that, subject always to the exercise of the court's discretion on the principles reiterated by the Court of Appeal in Hubbard v. Vosper [1972] 2 W.L.R. 389 , he is entitled to have pressure brought upon the defendants negatively by restraining any action inconsistent with their contractual duty — or at least the particular act of selling the property — or that he is, subject as aforesaid, entitled to such relief irrespective of exerting pressure.
As, even taking the most favourable view of the plaintiff's position, he cannot directly obtain specific performance, so that I cannot grant an interim injunction to preserve the position pending the court's decision whether or not to enforce the contract in that way, it seems clear to me that the first question I have to determine is whether on any showing this contract can be enforced by injunction at the trial. If not, then the plaintiff cannot have an injunction pending trial, but if that would be an appropriate form of relief at the trial then I must for the purposes of this motion “look at the whole case,” in the words of Lord Denning M.R. in Hubbard v. Vosper [1972] 2 W.L.R. 389 , 396, “and then decide what is best to be done,” or, in the words of Megaw L.J., at p. 398, a decision should be reached on a basis of “fairness, justice and common sense in relation to the whole issues of fact and law which are relevant to the particular case.” I embark, therefore, upon consideration of that first question.
Where a positive contract is in substance negative the court may grant an injunction: see Metropolitan Electric Supply Co. Ltd. v. Ginder [1901] 2 Ch. 799 . It will be observed there that the substance was indeed negative as there was no contract to take the supply of electricity. Buckley J. (referring to the decision of Fry J. in Donnell v. Bennett (1883) 22 Ch.D. 835 ) said, at p. 808:
“He says this at the beginning of his judgment, after reading or referring to the passage in Lord Selborne's judgment to which I have referred: ‘that the court ought to look at what is the nature of the contract between the parties, that if the contract as a whole is the subject of equitable jurisdiction, then an injunction may be granted in support1125 of the contract whether it contain or does not contain a negative stipulation.’ I think this is such a contract, because it appears to me that the contract for this present purpose is not one for the supply by the plaintiffs to the defendant of electricity — he is not bound to take any. The contract really is a contract, the whole of which is in substance the negative part of it, that he will take the whole from them, involving that he will not take any from anybody else. I therefore think that the fact that the contract is affirmative in form and not negative in form is no ground for refusing an injunction.” That, however, is not the present case where the agreement as a whole is clearly positive, but it is clear that in some cases the court will grant an injunction restraining a breach of a negative provision which is part of a positive contract, and moreover, of a contract which is not capable of specific performance: see Wolverhampton and Walsall Railway Co. v. London and North-Western Railway Co. (1873) L.R. 16 Eq. 433 and Catt v. Tourle (1869) 4 Ch.App. 654 , particularly per Giffard L.J., pp. 661–662.
Further, except probably in cases of contracts of personal service and, think, fiduciary agency as to which special considerations apply, it is not necessary in my judgment to found an express negative covenant; an implied one will suffice: see the interlocutory observation of Buckley J. in Metropolitan Electric Supply Co. Ltd. v. Ginder [1901] 2 Ch. 799 , 801, and, as to the requirement of an express covenant in the particular cases mentioned, see the judgment at p. 807.
However, in my view, to found a claim for relief by way of injunction it is necessary to point to something specific which a defendant has by implication agreed not to do. The mere fact that his conduct or proposed conduct is inconsistent with his obligations under the contract is not sufficient, although, of course, if he does so act, that may well be in itself a breach of contract giving rise to an immediate right to damages as in Stirling v. Maitland (1864) 5 B. & S. 840 . This, in my judgment, follows from the basic principle that an injunction will never be granted unless it is clear and certain exactly what a defendant may not do. Even in nuisance cases, although the order does not define what will be a nuisance, there is an objective test by which any alleged breach of the injunction can be tried and by which the defendant can shape his conduct. It is also, in my judgment, clearly established by the authorities. I refer first to the judgment of Lord Selborne L.C., in Wolverhampton and Walsall Railway Co. v. London and North-Western Railway Co., L.R. 16 Eq. 433 , where he said, at p. 441:
“If the defendants are not using the line as they promised to use it, it appears to me that the other party, who is out of possession by virtue of this Parliamentary agreement, is quite at liberty to come to this court, and to ask that they may be compelled to use the line as they agreed, provided the court sees its way to define that which they ought, or ought not, to do.” There, of course, the matter was certain because there was an agreement to carry traffic particularly specified. Next there is Whitwood Chemical Co. v. Hardman [1891] 2 Ch. 416 . That was a master and servant case, but there are two passages in the judgment of Lindley L.J. which were, in my view, intended to be and are of general application. The first is where he said, at p. 426:
“Now every agreement to do a particular thing in one sense involves 1126 a negative. It involves the negative of doing that which is inconsistent with the thing you are to do. If I agree with a man to be at a certain place at a certain time, I impliedly agree that I will not be anywhere else at the same time, and so on ad infinitum ; but it does not at all follow that, because a person has agreed to do a particular thing, he is, therefore, to be restrained from doing everything else which is inconsistent with it. The court has never gone that length, and I do not suppose that it ever will.” Secondly, he said, at p. 427:
“… and there are observations, in which I concur, made by Lord Selborne L.C. in the Wolverhampton and Walsall Railway Co. v. London and North-Western Railway Co., L.R. 16 Eq. 433 , to the effect that the principle does not depend upon whether you have an actual negative clause, if you can say that the parties were contracting in the sense that one should not do this, or the other — some specific thing upon which you can put your finger.”
In the present case I cannot find any implication which can be made sufficiently certain or specific for this purpose. I leave entirely open, of course, the question whether when all the circumstances have been investigated at the trial there may not be an implication which ought to be made and which is sufficiently certain to found a cause of action in damages.
As framed in the writ and notice of motion, the plaintiff asks for an unqualified injunction against sale or disposal of the whole or any part of the land, but that clearly cannot be right at the trial, and in testing the matter one must see what relief could then be given to the plaintiff if he succeeds. The relief must be commensurate with the duties, express or implied, of the defendants under the contract, and those at most only require Bantam to use their best endeavours to procure if practicable the development of the property for the purposes of a marina with associated recreational facilities, as shown by the declaration framed by Mr. Godfrey for the plaintiff in the course of his argument. I ask myself, could anything be less specific or more uncertain? There is absolutely no criterion by which best endeavours and practicability are to be judged. If it be said indeed that the injunction ought to be against parting with the land without using best endeavours, and so long as it is practicable to develop all the land, then in my judgment that must be too uncertain.
To escape the difficulty Mr. Godfrey suggested that the injunction could be absolute, but subject to liberty to Bantam to apply to discharge it upon evidence that they have used their best endeavours to procure the development of the property by Marina for the purposes aforesaid and that it has proved impracticable. However, in my judgment that is no solution. It cannot be correct to grant the plaintiff an injunction wider than his right, on any showing, protecting Bantam, if at all, by giving them the right to move to discharge the order when they think — based on a wholly uncertain test — that it is operating wrongly. Indeed, this form of relief seems to me either an attempt to obtain specific performance of the contract, or a claim to relief based upon mere inconsistency of the proposed course of conduct with the positive obligations under the contract which, as observed above in Whitwood Chemical Co. v. Hardman [1891] 2 Ch. 416 , 426, Kay L.J. said is not permissible.
I have not overlooked De Mattos v. Gibson (1858) 4 De G. & J. 276 (to which Kay L.J: referred in Whitwood Chemical) where the Court of Appeal granted an interlocutory injunction restraining a mortgagee, one Gibson, from selling a vessel which was the subject of a charter-party, and where Knight-Bruce L.J. said, at p. 281:
“If the acts done by the defendant Mr. Gibson, of which the plaintiff complains, had been done by the other defendant, without any participation or interference on the part of the defendant Mr. Gibson, and he had been wholly quiescent, I am of opinion that it would have been the duty of the Court of Chancery to grant, on the plaintiff's application, and the materials now before us, varied only as I have mentioned, an injunction against the defendant Mr. Curry. This, according to my view, both principle and precedent forbid us to doubt.” There, however, first it had not then been decided whether the charter-party was not something which could be specifically enforced, and an injunction to preserve the position meanwhile was appropriate relief on that ground alone: see the questions propounded by Turner L.J., at p. 284; secondly, the court could see precisely what was agreed to be done, and restrain diverting the ship or selling it as being a breach of an implied negative covenant, and I observe that Lord Chelmsford L.C. on appeal from the decision of Page Wood V.-C. at the trial said, at p. 297:
“I will first of all consider what the case would have been as against Curry, if he himself, instead of remaining passive, had done or threatened to do some act which would have been a breach of his engagement to employ the vessel in the plaintiff's service. Could the court have restrained him, and so, indirectly perhaps, have compelled him to perform his contract?
It is said that there was no negative stipulation in the charter-party which could thus be enforced, for that there was nothing to prevent Curry from carrying coals in his vessel for other persons, but I agree with Vice-Chancellor Wood's view of the case of Webster v. Dillon , that affirmative agreements may involve a negative; and when by this charter-party Curry undertakes to carry to Suez a full and complete cargo of coals for the plaintiff, it necessarily implies that if the plaintiff provides a full cargo, the vessel shall not be employed for any other person or purpose.”
For these reasons, in my judgment interlocutory relief by way of injunction is not an appropriate or proper remedy, and the motion must be refused. In the circumstances it is unnecessary for me to say anything on the further point which was canvassed, whether an injunction should in any event be refused, or at least that plot C should be excluded on the grounds alleged by the defendants of there being no sufficient evidence of any present intention to sell any of the other plots and that plot itself was not, or was not necessarily, to be included in the marina development. Motion dismissed.Defendants' costs in cause.