Summary

A person who went into negotiations as the agent of another could not subsequently claim to have been negotiating, and to have contracted, as principal on his own account.

Facts

Action by the claimant ('GL') for a declaration that the defendant ('AL') held the issued shares of Tradition of London Ltd ('Tradition') on trust for GL. In September 1992 GL was concerned to relieve himself of certain guarantee liabilities in relation to an insolvent company involved in the manufacture and sale of model soldiers ('X Ltd'), of which he was the sole or principal shareholder, whilst, at the same time, preserving that company's business for his benefit. He instructed AL to negotiate on his behalf with the receivers of X Ltd and its bank ('the Bank'). AL indicated to GL that he would propose that Tradition, which he had formed for another purpose, be used as the vehicle for the acquisition of the business of X Ltd on terms which would be satisfactory both to the receivers and the Bank. GL assented to that course, which was duly agreed by the receivers and the Bank. Following the transfer of the business to Tradition, AL maintained that he alone was beneficially entitled to the shares in Tradition.

Held

(1) AL had clearly gone into the negotiations as the agent of GL for the purpose of preserving the business of X Ltd by transferring it to Tradition. It had been understood at the time that GL was to be the beneficial owner of Tradition. AL could not now say that, pursuant to some uncommunicated change of position, he had been negotiating on his own behalf rather than as the agent of GL. (2) In the absence of any evidence of detrimental reliance on the part of AL, defences based on estoppel and/or laches were not made out.

Declaration accordingly.