Millhouse Gloucester Ltd v Millhouse Land Developments Ltd (2002)
Payments made by the first claimant to the first defendant under a failed development agreement were not recoverable as advance payments of future remuneration, but were irrecoverable introduction fees. The second defendant had no defence to a claim by the remaining claimants for specific performance of a share sale agreement.
Trial of an action in which: (i) the first claimant ('MGL') sought to recover from the first defendant ('Land') two payments of #50,000, following the failure of a development agreement ('DA'); and (ii) the other claimants ('Rhesus' and 'MG') sought specific performance of a share sale agreement ('SSA') against the second defendant ('W'). In 1999 MGL and Land entered into the DA, under which (as subsequently varied) MGL agreed to finance the costs of developing two sites owned by Land. The DA provided for the payment of a so-called "introduction fee" of #50,000 for each site, which sums were duly paid by MGL. The development did not proceed smoothly, but MGL was reluctant to provide further finance. It terminated the DA and sought to recover the #100,000 paid to MGL on the ground that it was in fact an advance payment against future remuneration. In February 2000 a new company ('Group') was established by W to pursue the development, into which Rhesus and MG injected some #90,000 in return for a 70 per cent shareholding. However, Group did not prosper, and Rhesus and MG alleged that at a board meeting of Group in November 2000 W entered into the SSA, under which he agreed to buy their shares in Group for #100,000, which agreement was recorded in a handwritten memorandum. W denied that the SSA was intended to be binding, and further contended that it had been procured by duress or undue influence and/or was an unconscionable bargain.
(1) On a proper construction of the DA, Land was entitled to retain the two sums of #50,000 already paid. Those payments were not for future remuneration, but were properly to be regarded as part of the (irrecoverable) pre-development costs under the DA. MGL's claim therefore failed. (2) The SSA was clearly intended to be binding, and none of the equitable defences upon which W sought to rely was made out on the facts. Rhesus and MG were entitled to specific performance of the SSA.
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