The Times Of Ceylon Company, Ltd. V. The Attorney General

1936 Present : Macdonell C.J. and Poyser J.

THE TIMES OF CEYLON COMPANY, LTD. v.
THE ATTORNEY-GENERAL.

97-D. C. Colombo, 1,063.

Agreement for sale of land-Covenant to sell property in the event of the vendor purchasing it -No covenant to buy-Option to buy-No implied covenant to purchase-Successful party deprived of costs-Discretion of Court.

An agreement was entered into between the plaintiff company and the Crown for the sale to the company of a block of land adjoining its premises, the buildings to be erected thereon, and the transfer of a certain strip of land belonging to the company to the Crown for the purpose of street-widening in exchange for the transfer by the Crown to the company of a strip of land belonging to the Crown.
In the first seven clauses of the agreement the Crown binds itself to sell and the company binds itself to buy the aforesaid block of land adjoining its premises. The two parties bind themselves mutually to give in exchange the two strips of lands mentioned. There are convenants by the company as to the value of the buildings it will erect on the block of land, covenants as to the earliest date at which the company can ask for a Crown grant and a provision in the event of the agreement failing. Clause 8 provides as follows: -

The company further agrees to sell to the Crown (in the event of the company becoming the owner thereof) such portions of lot 2 and 3 coloured red in the said sketch marked A as are inside of and to the north and north-west of the street lines of Main street at a price to

be calculated at the same rate per acre as that at which the company-shall have bought the said lots, provided however the company shall not be bound to sell until the completion of the aforesaid buildings. And further the Crown hereby agrees that in the event of negotiations taking place for the acquisition or purchase by the Crown of the whole of the said two lots, the Crown in effecting such acquisition or purchase will, as regards so much thereof as is outside of and to the south and south-east of the street lines of Main street as depicted as aforesaid, do so as agents of and on behalf of the company, and the company shall be obliged to purchase the same from the Crown at a price to be calculated at the same rate per acre as that at which the Crown shall have acquired or purchased the same.

Held, that under clause 8 the Crown did not enter into a binding agreement to purchase the land mentioned therein, and that the clause was meant only to give the Crown an option to buy.

Held, further, that a covenant to buy on the part of the Crown cannot be implied into clause 8 of the agreement.

A Court has a discretion to deprive a successful party of its costs where it disapproves of its conduct in connection with or leading up to the action.

Donald Campbell and Company, Ltd. v. Pollak (1927, A.C. 732) followed.

THE plaintiff the "Times of Ceylon" Company, Ltd., sued the Attorney-General as representing the Crown for the recovery of a sum of Rs. 128,331.46 as damages sustained by the plaintiff for breach of an agreement entered into by the Crown with the plaintiff. The fact as well as the relevant terms of the agreement are set out in the head-note. The learned District Judge held that the Crown did not by virtue of clause 8 enter into a binding agreement to purchase the land. The main question argued in appeal was whether a Covenant by the Crown to buy may be implied into clause 8 of the Agreement.

Hayley, K. C. (with him A. E. Keuneman and Gratiaen), for plaintiffs, appellants.-Where two persons mutually agree that one of them shall sell his property to the other, the law implies a corresponding and correlative obligation on the other party to purchase the property. Pordage v. Cole [1 (1669) 1 Wm. Sound 319 ; 85 E. B. 449. ]; Wood v. Copper Miners Co.[2 (1849) 17 C. B. 906. ] Church Ward v.

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