Debt release on change of control did not by itself create misfeasance liability where lawful performance remained possible.

An arrangement providing for release of a shareholder-debtor's liability on a change of control was not inherently unlawful, because it could be performed lawfully if the incoming controllers supplied consideration sufficient to justify the debt release. The defendant's insistence on an effective release as a term of selling his shares did not, without more, amount to misfeasance, and his lack of knowledge of company law was relevant. Even if the release was later implemented without proper consideration, that did not make him personally responsible. The alleged breach of section 54 therefore did not establish a cause of action against him.

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Issues: Whether the defendant was liable in misfeasance for entering into an agreement under which his debt to the company was to be released when the company changed control, and whether the arrangement necessarily involved a breach of section 54 of the Companies Act, 1948.

Analysis: The arrangement did not of itself require any unlawful act by the defendant. Clause 6 could have been performed lawfully if the incoming controllers paid the company such consideration as would justify a release of the debt. The defendant merely stipulated for an effective release as a term of selling his shares and was not shown to know company law. The fact that the release, as assumed to have been made, may have been implemented without consideration from the new controllers did not make the defendant personally responsible for a misfeasance. The company's claim based on misfeasance therefore failed.

Conclusion: The defendant was not liable for misfeasance, and the alleged breach of section 54 did not establish a cause of action against him.

Final Conclusion: The action could not be maintained against the defendant and failed in substance.

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