Hellmuth, Obata & Kassabuam Incorporated v. Geoffrey King, Gernot Frauenstein [2000] EWHC Technology 64 (29th September, 2000)

Hellmuth, Obata & Kassabuam Incorporated v. Geoffrey King, Gernot Frauenstein [2000] EWHC Technology 64 (29th September, 2000)

Mr King, by signing the letter of intent and acting as a promoter for a company never formed, became personally liable under section 36C of the Companies Act 1985 for the contract with HOK Sport. The 'subject to contract' label did not preclude liability where work was requested and performed with the expectation of payment, and there was no agreement to the contrary excluding personal liability. The evidence showed Mr King was a principal actor, not merely an adviser, and the statutory provision applied to make him personally liable for the sums claimed.

Citation
[2000] EWHC Technology 64
Parties
Claimant: Hellmuth, Obata & Kassabaum Incorporated (trading as HOK Sport); First Defendant: Geoffrey King; Second Defendant: Gernot Frauenstein
Jurisdiction
England and Wales
Procedural Posture
Civil (contract/quasi Contract) / Preliminary Issue Trial on Personal Liability
Outcome
Defendant Geoffrey King held personally liable for the sums claimed by the Claimant under section 36C of the Companies Act 1985.
Legal Topics
Pre Incorporation Contracts, Personal Liability of Promoters, Subject to Contract, Quantum Meruit, Architectural Services Agreements
Contract Law Company Law Quasi Contract Construction Law Pre Incorporation Contracts Personal Liability of Promoters Subject to Contract Quantum Meruit +1 more

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Parties

Hellmuth, Obata & Kassabaum Incorporated (trading as HOK Sport)

Claimant

Geoffrey King

First Defendant

Gernot Frauenstein

Second Defendant

Procedural Posture

Civil (contract/quasi Contract) / Preliminary Issue Trial on Personal Liability

Legal Issues

  1. 1 Are the Defendants or either of them personally liable to pay the Claimant for the works it carried out for the Hannover Arena project?
  2. 2 Does section 36C of the Companies Act 1985 apply to make the Defendants personally liable for contracts made on behalf of a company not yet formed?
  3. 3 Does the 'subject to contract' letter of intent preclude the formation of a binding contract or personal liability?

Ratio Decidendi

Mr King, by signing the letter of intent and acting as a promoter for a company never formed, became personally liable under section 36C of the Companies Act 1985 for the contract with HOK Sport. The 'subject to contract' label did not preclude liability where work was requested and performed with the expectation of payment, and there was no agreement to the contrary excluding personal liability. The evidence showed Mr King was a principal actor, not merely an adviser, and the statutory provision applied to make him personally liable for the sums claimed.

Court Disposition

Defendant Geoffrey King held personally liable for the sums claimed by the Claimant under section 36C of the Companies Act 1985.

Orders

  • Judgment for the Claimant against Geoffrey King for the invoiced amounts.
  • No order as to the settled claim against Gernot Frauenstein.