Murray v Leisureplay Plc

Murray v Leisureplay Plc

Clause 17.1 of the service agreement is not a penalty but a genuine pre-estimate of loss or otherwise commercially justifiable. The clause was not extravagant or unconscionable, was consistent with market expectations, and provided certainty for both parties. The burden to prove it was a penalty was not discharged. Professional fees for due diligence are recoverable under section 322(3)(b) as direct results of the arrangement, but director's costs are not. The issue of relief under section 727 is remitted to the trial judge.

Parties
Appellant: Murray; Respondent: Leisureplay PLC
Jurisdiction
England and Wales
Judgment Date
28 July 2005
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal From High Court
Outcome
Appeal allowed on penalty issue; cross-appeal allowed in part on section 320 issue; appeal allowed on section 727 issue; section 727 issue remitted to trial judge.
Legal Topics
Penalty Clauses, Liquidated Damages, Directors' Service Agreements, Section 320 Companies Act 1985, Section 322 Companies Act 1985, Section 727 Companies Act 1985, Amendment of Pleadings
Contract Law Company Law Employment Law Penalty Clauses Liquidated Damages Directors' Service Agreements Section 320 Companies Act 1985 Section 322 Companies Act 1985 +2 more

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 5 Authorities cited 16 Party arguments 2 Amounts and remedies 2
Sign in to unlock

Parties

Murray

Appellant

Leisureplay PLC

Respondent

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal From High Court

Legal Issues

  1. 1 Whether clause 17.1 of the service agreement is an unenforceable penalty clause
  2. 2 Whether the judge erred in refusing amendment to pleadings to claim common law damages
  3. 3 Whether MFC can recover professional fees and director's costs under section 322 of the Companies Act 1985

Ratio Decidendi

Clause 17.1 of the service agreement is not a penalty but a genuine pre-estimate of loss or otherwise commercially justifiable. The clause was not extravagant or unconscionable, was consistent with market expectations, and provided certainty for both parties. The burden to prove it was a penalty was not discharged. Professional fees for due diligence are recoverable under section 322(3)(b) as direct results of the arrangement, but director's costs are not. The issue of relief under section 727 is remitted to the trial judge.

Court Disposition

Appeal allowed on penalty issue; cross-appeal allowed in part on section 320 issue; appeal allowed on section 727 issue; section 727 issue remitted to trial judge.

Orders

  • Clause 17.1 is enforceable and not a penalty.
  • Professional fees for due diligence are recoverable under section 322(3)(b).