Jones v Lipman [1962] 1 WLR 832

Company Law,  Property, sale of land, performance

 

Jones v Lipman [1962] concerns the order of specific performance against the defendant and his newly formed company.

 

Keywords:

Company law – Property – Sale of land – Transfer – Specific performance

Facts:

In the present case, the defendant, Mr Lipman contracted to sell his house. After the contract was agreed, the seller realised that the property was much more valuable than the agreed price. In order to avoid completion of the contract, Mr Lipman then conveyed the house to a company that he owned and controlled. He argued that he was no longer the owner of the property and therefore he could not transfer the ownership to the plaintiff. The latter sought specific performance against either Mr Lipman or his company.

Held:

The court ordered specific performance against both, the company and Mr Lipman. It concluded that the new company was a sham. The judge described the company as ‘the creature of [Lipman], a device and a sham, a mask which he holds before his face in an attempt to avoid recognition by the eye of equity’.

So, in these circumstances, the judge ignored the corporate veil for the purposes of the defendant’s argument. He followed the reasoning in Gilford v Horne and ordered specific performance.

 

Applied: Gilford Motor Co Ltd v Horne [1933] Ch. 935, [1933] 4 WLUK 22. 

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