Event and Time
Event Description
This case involves a contract for the sale of land for $20.6 million, where the purchaser is a special purpose vehicle with nominal issued share capital. The sole director of the purchaser, Mr. Bhushan, has guaranteed "observance by the Purchaser" of the contract's terms. The vendors seek specific performance against Mr. Bhushan as the guarantor regarding the balance of the purchase price and an indemnity against losses stemming from any breach of contract.
Application and Claims
- Vendors' Claims: The vendors, Mr. and Mrs. Evagelakos, argue that Mr. Bhushan is obliged under the guarantee to ensure performance by the purchaser (UPG 318) and that they are entitled to specific performance for the balance of the purchase price and indemnity for potential losses.
- Bhushan's Claims: Mr. Bhushan contends that his obligation under the guarantee does not extend to performing the contract if the purchaser defaults; rather, it merely requires the purchaser to observe the contract terms.
Judicial Decisions
The court refused the vendors' request for specific performance against Mr. Bhushan, determining that: 1. The language of the guarantee did not create a primary obligation for Mr. Bhushan to perform the contract. 2. The indemnity clause did not warrant specific performance as an adequate remedy in law (monetary damages) existed.
Dispute Points and Legal Basis
Dispute Points
- Contract Interpretation:
- Vendors argued that "observe" imposed an active duty on Mr. Bhushan to ensure UPG 318 performed its obligations. - Mr. Bhushan asserted that "observe" merely meant that UPG 318 would adhere to the terms, without imposing personal performance obligations on him.
- Nature of Guarantee vs. Indemnity:
- Vendors claimed that the indemnity warranted specific performance, as it was meant to prevent losses before they occurred. - Mr. Bhushan argued that his indemnity obligation merely required him to compensate for losses that had already occurred, not to prevent them.