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I wish to indicate that, in my previous post, not having had the benefit of reading the judgment, I had mistakenly assumed that payment had been made before the action was commenced. Having read the judgment, I think that Dr Smith's post is correct and that Rimer J reached the correct decision.

The would-be payor was essentially trying to force the would-be payee, by way of action, to accept a conditional payment, in addition to trying to seek a pre-emptive freezing order (Mareva injunction to us non-UK lawyers who haven't converted to plain English). From a procedural perspective, the attempt to use the freezing order to obtain priority in insolvency was clearly misguided from the beginning and Rimer J rightly noted that.

Rimer J was right to reject the would-be payor's argument that he would have a good arguable case because it is far from clear that the would-be payee would be willing to accept a conditional payment. My only criticism of the judgment is that Rimer J was perhaps too harsh on the merits of the would-be payor's claim. The only way it can be said that the claim has no hope is to insist that failure of consideration be total. But that sort of thinking is hardly fashionable these days. Even if "total" is insisted upon, it is not difficult to imagine a claim succeeding where it can be demonstrated that the payment was entirely intended to purchase an easement, with no part intended to buy certainty. Such a scenario is, of course, unlikely since one party would not be willing to make an unconditional payment of the full price and the other would not be willing to accept a fully conditional payment.

If the insolvency angle is set aside, the solution really would be for both parties to negotiate a settlement for the payor to pay the full price and for the parties to agree that part of it is to purchase certainty (and hence not refundable whatever the outcome of the appeal) and the other part to purchase the easement (and hence refundable, either by agreement or for failure of consideration, if the appeal succeeds). To protect himself from the payee's insolvency risk, the payment can be made by way of a trust, which incidentally was an argument rejected by Rimer J, I believe correctly but for the wrong reasons.

Insofar as the would-be payor was attempting to force the would-be payee to accept payment on trust, the action surely cannot succeed since the payee is entitled to insist on unconditional payment for the easement. But it is difficult to see why there should be any objection to the fact that the facts arguably do not fit neatly into the usual Quistclose scenario since there was no relevant purpose (at least according to Rimer J). One of the biggest criticisms of the Quistclose trust has been that it was a purpose trust so it is difficult to object to a trust arrangement where the trust does not fall foul of this criticism.

Kelvin Low
Faculty of Law
National University of Singapore