A building contract provided for forfeiture on the tenant’s breach and not on bankruptcy. The bankrupt builder had broken the terms of his agreement with the landowner and it was provided in the agreement that the chattels would be forfeited to the landowner ‘as and for liquidated damages’.
Held: The provision was valid. Where an owner continued to make advances after the failure of a building contractor to complete on a particular day, that amounted to a waiver of his contractual right of forfeiture.
James LJ said: ‘Another point taken before us, which does not appear to have been really argued before the judge of the county court, was this – that the seizure was not made in sufficient time, that it was not made before the filing of the liquidation petition. To my mind it is immaterial at what particular moment the seizure was made. The broad general principle is that the trustee in a bankruptcy takes all the bankrupt’s property, but takes it subject to all the liabilities which affected it in the bankrupt’s hands, unless the property which he takes as the legal personal representative of the bankrupt is added to by some express provision of the bankrupt law. There is no such provision applicable to the present case. The building agreement provides, in effect, that in a certain event certain property of the builder may be taken by the landowner in full satisfaction of the agreement. It appears to me analogous to a sale of property with a power of repurchase in a certain event.’
Judges:
Brett, James LJJ
Citations:
(1881) 16 Ch D 52
Jurisdiction:
England and Wales
Cited by:
Cited – Belmont Park Investments Pty Ltd v BNY Corporate Trustee Services Ltd and Another SC 27-Jul-2011
Complex financial instruments insured the indebtedness of Lehman Brothers. On that company’s insolvency a claim was made. It was said that provisions in the documents offended the rule against the anti-deprivation rule. The courts below had upheld . .
Lists of cited by and citing cases may be incomplete.
Insolvency, Contract
Updated: 07 October 2022; Ref: scu.442614