Freeman & Lockyer (A Firm)(Plaintiffs) Buckhurst Park Properties (Mangal) Ltd and Shiv Kumar Kapoor (Defendants)

JurisdictionEngland & Wales
CourtCourt of Appeal
Judgment Date24 January 1964
Judgment citation (vLex)[1964] EWCA Civ J0124-3
Docket Number1960. F. No. 1277.

[1964] EWCA Civ J0124-3

In The Supreme Court of Judicature

Court of Appeal

From Judge Herbert Westminster County Court


Lord Justice Willmer

Lord Justice Pearson and

Lord Justice Diplock

1960. F. No. 1277.
Freeman & Lockyer (a firm)
Buckhurst Park Properties (Mangal) Limited and Shiv Kumar Kapoor

Mr A. EDWARD HOLDSWORTH (Instructed by Messrs Wainwright & Co.) appeared on behalf of the Appellants (Defendants).

Mr FRANK J. WHITE (instructed by Messrs Doyle Devonshire & Co., Agents for Messrs Wilson & Berry, Bracknell, Berks.) appeared on behalf of the Respondents (Plaintiffs).


The plaintiffs, who carry on business as architects and surveyors, bring this action to recover fees alleged to be due to them in respect of work done during the autumn of 1959 in relation to Buckhurst Park Estate at Sunninghill, the property of the defendant company. The plaintiffs received their Instructions in August 1959 from the second defendant, one Mr Kapoor, who was at all material times a director of the defendant company. The plaintiffs admittedly executed the work which they were employed to do, and there is no dispute as to the quantum of the fees earned by them, namely, £291.6s. The question la whether the liability in respect ofthose fees is that of the defendant company or that of the second defendant, Mr Kapoor. By an amendment Mr Kapoor was added as second defendant, but at all material times up to the date of trial his whereabouts were unknown, and he was never served with the proceedings. The action accordingly proceeded against the defendant company alone. The trial took place before His Honour Judge Herbert at Westminster County Court on three days during March and April 1963, and by a reserved judgment which he delivered on the 2nd May 1963 he found in favour of the plaintiffs. The defendant company now appeals to this court, contending that the liability is not theirs but that of Mr Kapoor.


It appears that Mr Kapoor was a gentleman who carried on business as a property developer, that is to say his business was to purchase proportios for the purpose of developing them. His practice was, as and when he purchased a proporty, to form a company for the purpose of dealing with it. He had a number of such companies, all of which were controlled from a house called "Poylo Manor", which was in fact the registered office of one of his companies, namely, Reevahan Limited. Much of the business dealt with from Poyle Manor was handled by a gentleman called Mr Mackay, who was a director of Reevaham Limited and appears to have acted as general factotum for Mr Kapoor.


In September 1958 Mr Kapoor entered into a contract to purchase Buckhurst Park Estate for a sum of £75,000. Unfortunately for him he had not sufficient cash resources to enable him to complete the purchase. In these circumstances he sought and obtained assistance from a Mr Hoon, who was willing to advance a sum of approximately £40,000. On the 11th October 1958 the two men entered into a written agreement (a copy of which is before us) whoreby they agreed to form a private limited company with a nominal capital of £70,000 which they were to subscribe in equal shares. The directors of the company were to be Mr Kapoor and Mr Hoon and a nominee of each. The object of the company was as soon as practicablo to complete the purchase of the Buckhurst Park Estate.


In due course the defendant company was formed, and it was provided by artlole 12 of the articles of assoolatlon that the directors were to be Mr Kapoor and Mr Hoon, together with Mr Cohen (described In the memorandum of association as a oompany director, but In fact a managing clerk employed by Mr Kapoor's solicitors) who was Mr Kapoor's nominee, and Mr Hubbard (a managing clerk employed by Mr Hoon's solicitors) who was Mr Hoon's nominee. Article 14 of the articles of association made provision for alternate directors to act In the place of any director who might be unable to be present at a meeting. By article 19 it was provided that the quorum necessary for the transaction of the business of the directors should be four.


After entering Into the agreement with Mr Kapoor, and oven before the formation of the company, Mr Hoon wont abroad, and thereafter was at all material times out of the country except for a short period from June to August 1959. In his absence he left his interests to be protected by his nominee, Mr Hubbard. It was clearly never contemplated that Mr Hoon should take any material part In the managoment of the company. Whatever the legal formal ities, the substanco of the transaction was a loan by Mr Hoon to Mr Kapoor to enable Mr Kapoor to acquire and resell the Buckhurst Park Estate. Mr Kapoor In fact thought that he had a purchaser in view, and expected to make a quick profit, which it was agreed should be shared equally between him and Mr Hoon. Unfortunately for both of them, the prospective purchaser never materialised.


The property was duly conveyed to the company, and the Minutes of the first meeting of the Board held on the 11th December 1958 record that It was resolved that the company's soal should be affixed to the conveyance. It had been agreed between Mr Kapoor and Mr Hoon that, pending resale of the property, the running expenses of maintaining it were to be defrayed by Mr Kapoor personally, and that he was to be reimbursed out of the profit of the resale. This agreement appears to have been accepted by the Board, although I cannot find that it was ever the subject of any resolution at a Board meeting. A Board meeting was held on the3rd April 1959, by whloh time it is clear from the Minutes that any prospeot of a quick resale of the property had already disappeared. It is to be observed that none of the resolutions purported to be carried at this Board meeting could be of any legal effeot since only three members of the Board were present thereat. The Minutes of the meeting, however, are of considerable evidential value as showing what was taking place at the time and what was In the minds of the respective parties. The Minutes show (1) that Mr Kapoor (through another of his companies called Gurjvoer Limited) was In fact paying the expenses of upkeep of Buckhurst Park and thereby, discharging his obligation to maintain the property, and (2) that consideration was being given to the obtaining of planning pormlsslcn for the development of the property. There was In fact a purported resolution authorising payment on account of £100 to agents who had been employed.


In the summer of 1959 Mr Kapoor Instructed an architect, ono Mr Hayler, to make application for planning permission for certain development In respect of Buckhurst Park Estate, This Mr Hayler proceeded to do, and an application for planning permission was submitted by him dated the 8th July 1959. It Is noteworthy that this application was expressed to be made on behalf of Mr Kapoor personally as owner. The application was In fact refused by a notice of refusal dated the 10th August 1959. In the meantime, however, on the 4th or 5th August Mr Kapoor Instructed the plaintiffs to act for him because, as he said, he wanted a local firm to act on his behalf. The plaintiffs duly submitted a fresh application for planning permission dated the 1st September 1959, which was again expressed to bo made on behalf of Mr Kapoor ss owner. Alittlelater they also entered an appeal on behalf of Mr Kapoor against the refusal of the original application for planning permission. During the ensuing months the plaintiffs did other work for Mr Kapoor, not only In respect of Buckhurst Park Estate, but also on behalf of several of his other companies. The fees due to them in respect of work done for the other companies have all been paid, but those relating to work in respect of the Buckhurst ParkEstate remain outstanding, and form the subject of the present aotlon. The work done by the plaintiffs In respect of the Buokburst Park Estate falls under three heads, namely, (a) submitting application for planning permission and preparing appeal at. ln st the refusal of the application made by Mr Hayler; (b) preparing plans of each floor of the main house and anolllary buildings; and (c) defining the boundaries of the estate and preparing plans. So for as concerned the work done in respect of the Buckhurst Park Estate, Mr oeman gave ovldence, which was corroborated by Mr Mackay, that he was Instructed by Mr Kapoor on behalf of the defendant oorapany. This evidence was specifically accepted by the learned judge.


About the time that the plaintiffs were first instructed, Mr Hoon was in this country. But he was not apparently consulted about the matter, and thero Is no Minute of any resolution of the Board authorising the employment of the plaintiffs. It appears, however, that at this time relations between Mr Hoon and Mr Kapoor were already somewhat less than friendly. Mr Koon was complaining that some of the expenses incurred by Mr Kapoor were not proporly speaking maintenance expenses. There was also some negotiation between them with regard to a plan whereby one or other of them was to buy the other out. Nothing, however, came of this, and it is not necessary to ref jrtoit further since it is in no way relevant to the present appeal.


Throughout the autumn of 1959 the plaintiffs were in constant communication in relation to the work they were doing both with Mr Kapoor personally and with Mr Mackay at the office of Reevaham Limited. Throughout the whole of this correspondence no mention whatsoever of the defendant company's name is to be found. On the face of it the plaintiffs were purporting to act entirely for Mr Kapoor personally. The appeal from the refusal of planning permission was submitted in his name, and a certificate under section 37 of the Town and Country Planning Act 1959 was submitted by the plaintiffs...

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    ...such as Hely-Hutchinson v Brayhead L td [1968] 1 QB 549 and Freeman & Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, one gets a sense of how important the context provided by the company is to the development of the law generally. 119 The traditional function......
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