Measures v McFadyen [1910] HCA 74; (1910) 11 CLR 723 (16 December 1910)

Frank Joseph Lappen Measures Defendant, Appellant; and Mary McFadyen Plaintiff, Respondent;

In this case special leave to appeal was given on the ground that important points of law of general interest arising upon the construction of the Real Property Act were involved. In the course of the argument other questions have been raised and discussed, to some of which it will be necessary briefly to advert.

The first count of the declaration was for breach of covenant. It alleged that the plaintiff's husband Donald McFadyen, being the registered proprietor of land under the Real Property Act, demised the land with the houses and buildings thereon to the defendant for a term of five years from 1st May 1906 by a memorandum of lease duly registered, which contained a covenant that the "defendant should forthwith erect and complete on the said property certain alterations additions and improvements to the said premises up to the value of £500 at the least, which said alterations additions and improvements the defendant should execute perform and carry out forthwith and complete with all reasonable despatch such alterations additions and improvements to be in harmony with the existing buildings and to be of such construction and materials so as not to deteriorate the value of the said demised property and to be carried out in a workmanlike manner." The count then alleged that the defendant went into possession under the lease, that whilst he was in possession, to wit on 11th February 1908, D. McFadyen by a transfer registered under the Act transferred all his right title and interest in the land to the plaintiff, and that "all things happened and all times elapsed and all conditions were fulfilled necessary to entitle the said Donald McFadyen and after him the plaintiff to a performance by the defendant of the said provision yet the defendant has not performed the same."

The second count is not now material. The third was for breach of another covenant in the same lease, by which the defendant promised to keep the demised property in repair during the continuance of the lease and at the determination thereof to yield it up in good and tenantable repair.

The defendant by his pleas denied the lease, the transfer by Donald McFadyen to the plaintiff, and the breaches alleged, and as to the third count that the lease had been determined before action. He also pleaded by way of cross-action breach of an implied covenant by the plaintiff for quiet enjoyment.

At the trial an equitable plea to the first count was added, by leave, to the effect that by a course of dealings between the parties the defendant was led to believe that the covenant to build "forthwith" would not be strictly enforced, but would be held in abeyance, and that this state of things continued until the plaintiff, without any notice to the defendant, re-entered and evicted him from the land, so rendering the performance impossible.

On this plea the learned Judge (Cohen J.) told the jury that if the parties acquiesced in the postponement of the performance of the building provisions, and had not mutually understood that a definite day was fixed for erecting and giving effect to the provisions before 5th December 1909 (the date of re-entry), the defendant should have a verdict. As to this defence it is sufficient for present purposes to say that there was strong evidence to warrant a finding that a postponement had been mutually acquiesced in up to the time of the transfer from Donald McFadyen to the plaintiff in February 1909, that from that time till the following June the defendant was in occupation of the premises as tenant to the plaintiff, and that the subject was not again mentioned before the re-entry.

The jury found a general verdict for the plaintiff with £230 damages. The damages on the third count could not, upon the evidence, have exceeded £10 at the outside. The substantial damages were therefore given in respect of the breach of the building covenant.

A rule nisi for a new trial was granted on various grounds, which did not include the point that the breach of the building covenant was complete before the assignment to the plaintiff, and that an action would not lie at her suit for such a breach. This point was, however, taken by counsel for the defendant on the motion to make the rule absolute, but the Supreme Court thought that it could not then be taken, as the defendant, they thought, had practically, except for the equitable plea, confessed judgment and consented to an assessment of damages. We have not, therefore, the advantage of their opinion on the point. Mr. Knox strenuously protested that it should not be allowed to be raised before us. The propriety of allowing the point to be raised under the objection that the verdict was against the evidence depends to some extent upon what took place at the trial, as to which there was some conflict, it being alleged on one side that the point of law was mentioned by the plaintiff's counsel himself, and on the other that the defendant's counsel admitted that he could not rely upon it. But this question is quite immaterial if the point appears on the record. The form of relief called arrest of judgment assumes that at the trial the plaintiff's right to recover has been admitted. And in my opinion the point is distinctly raised on the face of the first count.

The covenant was that the defendant would "forthwith" erect and complete alterations and additions of the value of £500, and execute, perform and carry out such alterations and additions "forthwith." The assignment to the plaintiff was made 21 months after the commencement of the lease. A promise to do an act forthwith does not mean that it is to be done instanter. Sometimes (as for instance in the case of the lease which was the subject of decision in the case of Coward v. Gregory[1]) the word may be treated as practically synonymous for some purposes (not purposes of construction but for the purpose of ascertaining whether there has been a breach) with "within a reasonable time." The question of what is reasonable depends in every case upon the facts. In cases in which the word "forthwith" may import an inquiry into facts, the only facts which are relevant, so far as regards construction, are those which were in existence and in the contemplation of the parties at the time of making the contract, and not facts which would be relevant to the performance of a subsequent agreement made between them. In the present case the question is the same as if an action for breach of the covenant had been brought by Donald McFadyen on 11th February 1909, the date of the assignment, and the defendant had pleaded that a reasonable time for performance had not elapsed before action. In my opinion such a plea would have been bad, because it would have admitted that the defendant had failed to perform the covenant for a period of 21 months, and would therefore have been in effect an argumentative plea that the word "forthwith" might, and under the circumstances did, mean a longer period than 21 months. In my judgment the word "forthwith," as used in the covenant in question, cannot bear that meaning. However liberal an interpretation is given to it, the limit of time must fall short of 21 months. Although it is sometimes difficult to draw an exact line between what is and what is not reasonable, it may be quite clear on which side of the line a particular case falls. The date of the transfer is stated in the first count under a videlicet, but when the matter stated under a videlicet is material and traversable the videlicet makes no difference (1 Chit. Pl., 350). In the present case the date of the transfer is material to the plaintiff's right to sue for the breach and is traversable.

It appears, therefore, on the face of the record that the plaintiff has sued for and has recovered in respect of a breach of covenant committed and complete before the transfer of the land to her. If she cannot do so the verdict cannot stand.

Her right depends upon the construction of secs. 51 and 52 of the Real Property Act, No. 25 of 1900.

The question is whether the right to sue for damages for a breach of covenant, not being a continuing breach, which is complete before transfer passes by virtue of these provisions to the transferee. The term "transfer" in sec. 51 means the transference of estate resulting from registration, and the word "thereto" refers to the estate or interest transferred. The estate or interest transferred is one thing, and the personal right of action in respect of an antecedent completed breach of contract is another. In my opinion the words of this section are not sufficient to transfer the right to bring an action in respect of such a past breach.

The plaintiff, however, contends that the words "the right to sue upon any ... instrument and to recover any ... damages thereunder" in sec. 52 (1) are sufficient to transfer the right. The state of the law before the Act is shown by the case of Coward v. Gregory[2], and in my judgment these words are not sufficient to alter it. The purpose of the Act was to transfer the estate or interest of the transferor in the land with all the rights incidental to present and future possession, but I do not think that it was intended to transfer also mere choses in action in respect of past and completed breaches of covenant.

For these reasons I am of opinion that the first count is incurably bad in substance. The general award of damages is therefore bad, since it appears that they are much larger than the plaintiff could possibly in law be entitled to recover.

The third count, however, is good. The practice at common law when damages have been assessed generally upon a good and a bad count was, and in New South Wales still is, I suppose, not to arrest the judgment, but to direct a venire de novo, now called a trial de novo, (see Lush Pr., 3rd ed., p. 643; Lewin v. Edwards[3]; Emblin v. Dartnell[4]).

When a trial de novo is awarded, the practice is not to give the costs of the first trial to either party (Lickbarrow v. Mason[5]; Bird v. Appleton[6]; Edwards v. Brown[7].

Under these circumstances it is not necessary to determine the question whether the verdict of the jury upon the equitable plea could be successfully impeached. It is not, however, the practice of the Court to give special leave to appeal on mere questions of fact.

The question raised upon the third count and the plea of cross-action is of considerable importance, but the utmost sum involved does not exceed a few pounds, and I do not think that the Court would have been justified in giving special leave in this case in order to raise that question only. I think, therefore, that we should not express any opinion upon it.

In mercy to both parties they should have leave to amend as they may be advised.

As I agree with the course proposed to be taken in this case by my learned brother the Chief Justice I shall confine my observations to the important questions of law which have arisen under the first count of the declaration. Leaving aside for the moment the meaning which ought to be attached to the word "forthwith," as used in the lease, it is clear that, when the time has arrived, whenever it may be, for the erection of the buildings, and they have not been erected, the covenant has been broken.

It is also clear that, in the case of a covenant to build, the breach is not a continuing breach. As Mr. Justice Willes says in Coward v. Gregory[8] that kind of covenant can only be broken once for all. It is well settled law that, apart from any statutory provision, the assignment of a reversion does not vest in the assignee a right of action for breach of covenant in the lease committed before the assignment. Woodfall, Landlord and Tenant, 17th ed., p. 279. The plaintiff, however, relied on secs. 51 and 52 of the Real Property Act as operating to vest in the assignee any cause of action which had accrued under the lease before the assignment of the reversion. If that contention is well founded, it is immaterial in an action by the assignee whether the breach occurred while the estate was vested in the assignor, or after it had become vested in the assignee. The interpretation of those sections is therefore the first matter to be disposed of. In my opinion the mere transfer of the freehold estate does not empower the transferee to sue for breaches of covenants in the lease committed by the lessee before the transfer. The words of sec. 52, referring to damages, relied on by the respondent's counsel, cannot, consistently with the other portions of the Act, material in this connection, be so interpreted. It therefore became incumbent on the plaintiff at the trial to show that the breach of the covenant took place after transfer. Appellant's counsel now contends that the breach was complete before the transfer, and that that is so plain that the jury could not legally have come to any other conclusion. Respondent's counsel objects to that point being now raised as it was not taken before the Judge of first instance, and because the trial was conducted on the assumption that there had been a breach of the covenant which would entitle the plaintiff to nominal damages on the first count. If it were necessary to decide the matter, I should have no hesitation in determining that the point was not taken until Mr. Owen took it on the argument of the rule absolute before the Supreme Court, and that the trial was conducted by both sides on the footing that there had been a breach of the covenant, as alleged in the first count, for which the plaintiff was entitled to sue. If the objection were such that it could have been met if taken at the trial by evidence or by a finding of the jury or by an amendment, it ought not to be allowed to be taken now. (See Sir George Jessel's judgment in Ex parte Firth[9]). But in my opinion the objection is incurable, and no evidence could have been given, and no finding or verdict of the jury could have been arrived at which could cure the objection as it stands on the face of the proceedings. It appears from the declaration that twenty-one months had elapsed from the date of the lease until the reversion became vested in the plaintiff by transfer. The term of the lease is alleged by the declaration to be five years. Allowing every possible margin for a generous interpretation of the word "forthwith," no Court could avoid holding as a matter of law that there had been a breach of the covenant to erect buildings "forthwith" when twenty-one months from the commencement of the lease had gone by without even a beginning to erect them.

No doubt the expression "forthwith" in such a covenant does not mean "immediately," and may be read as equivalent to "as soon as reasonably possible:" Kenney v. Hutchinson[10]. But the circumstances to be brought into the consideration of what was reasonably possible are such as existed when the covenant was made, or as must be taken to have been then within the contemplation of the parties having regard to the subject matter. In this case there are no circumstances of that kind which could possibly have made the delay of twenty-one months reasonable. The circumstances relied on by the appellant as showing the reasonableness of the delay are no other than those proved in support of the ninth plea. They were not existing when the covenant was made but are new circumstances and new agreements created by the acts of the parties giving perhaps new remedies on those agreements but in no way admissible to affect the interpretation of the covenant.

I am therefore of opinion that the objection is incurable, and as it appears on the face of the proceedings it may be taken now by the appellant in support of an application to arrest judgment, or for a trial de novo. If the award of damages had been on the first count only, arrest of judgment would have been the proper remedy, but on the state of the record that is not possible. The jury awarded the damages on two counts, the first and the third, and this Court has no way of ascertaining the amount to be apportioned to each count. The proper remedy is therefore an order for a trial de novo. The same question as to the choice between these two courses arose in Howard v. Williams[11] and it was decided by the Court on the principle I have stated. The other cases cited by my learned brother the Chief Justice support the view that an award of a trial de novo is the form of order most appropriate in this case.

I therefore agree in all respects with the order proposed in the judgment of my learned brother the Chief Justice.

It is necessary to remember that the first count of the declaration is based on the original covenant to "forthwith erect and complete" the alterations, additions and improvements.

The appellant objects that on the face of the pleadings it appears that he is not liable to the respondent, because the breach alleged took place before the transfer of the reversion to her: Cohen v. Tannar[12]. Two answers have been given to that. The first is that liability was admitted at the trial, the only question being the quantum of damages. Sir George Jessel M.R. said in Chilton v. Corporation of London[13], a case where the general legal right asserted by the plaintiff was admitted on the pleadings:—"If the right by itself is one which cannot be supported in law, it cannot entitle the plaintiff to judgment merely because the defendant does not deny the right. The Court is bound to give judgment according to law."

If a defendant has mistakenly admitted liability where the law denies it, he ought not to be shut out from correcting his error before final judgment, always compensating the plaintiff for any loss occasioned by it without any fault imputable to the plaintiff. The other answer is of a more serious nature, and was given effect to by the Supreme Court. It was this, that the breach might have occurred in fact after the transfer, and the defendant's admission consequently dispensed with the necessary evidence on the part of the plaintiff. If this were so, the principle of The Tasmania[14] would apply. That principle was adhered to and The Tasmania[15] followed by the Privy Council in Karunaratne v. Ferdinandus[16], and it would be unjust to depart from the rule. But this case is outside that principle. The transfer of the reversion to the plaintiff took place over one year and nine months after the date of the lease. The lease contemplated immediate possession, it contains no provision deferring the operation of the covenant, and consequently the initial point of time for its operation is the date of the lease, May 1906. So much would be primâ facie presumed from the declaration itself, and reference to the lease itself confirms the presumption. "Forthwith" has been defined in several cases, and they are not altogether uniform, but the greater number and the most authoritative afford a clear idea of the meaning. In Ex parte Lamb; In re Southam[17] Jessel M.R. and Lush L.J. pointed out that its meaning depends to a great degree upon the circumstances in which it is used. It is evident that a contract to forthwith deliver a ton of flour demands much more prompt performance than to forthwith construct an ironclad, and so the word cannot be said to have an invariable meaning, irrespective of the subject matter in connection with which it is used.

"Forthwith of course means," says Bowen L.J. "at once, having regard to the circumstances of the case": Lowe v. Fox[18]. Sir James Hannen thought it meant "with as little delay as possible": Furber v. Cobb[19], and similarly in Roberts v. Brett[20] Lord Chelmsford considered it meant "without delay or loss of time." In the Queen v. Berkshire Justices[21] Cockburn C.J. said:—"The words forthwith and immediately have the same meaning. They are stronger than the expression within a reasonable time, and imply prompt, vigorous action, without any delay, and whether there has been such action is a question of fact, having regard to the circumstances of the particular case."

But where on the facts only one answer can reasonably be given, it becomes in one sense a question of law: Watkins v. Rymill[22]. And no conceivable evidence could, in my opinion, so overcome the effect of the lapse of so much time with reference to the thing to be done under this lease, that a jury could reasonably find that completion after the transfer was completion "forthwith." The work consisted of alterations, additions and improvements up to the value of £500. The practical choice of order, style, material and method was left to the defendant, and nothing has been suggested which could, if the work were promptly begun, possibly prolong it beyond the date of the transfer—even allowing for the temporary occupation of the premises by the McFadyens, if indeed that were an allowable interruption of the covenant.

The suggested acquiescence in delay has no bearing on this question. That cannot affect the construction of the covenant, which, as already stated, is the contract sued upon. The circumstances in this case mean the time the obligation began to operate, the condition of the premises, and the nature and extent of the work to be done.

Consequently, the breach, not being a continuing one, must be taken to have been complete before the assignment.

Then it was urged by Mr. Knox, that even so, sec. 52 of the Real Property Act passed the right to the damages for the breach to the plaintiff. But the object of the section is only to perfect the transaction effected by the statutory transfer. With respect to personal obligations the Act primarily concerns itself with their security upon land for their fulfilment, and having provided a statutory transfer of the benefits of the obligation as between the transferor and the transferee, proceeds in this section to completely effectuate the transfer by affecting the third person, the obligor also. To this end it transfers the right to sue and recover whatever debt, sum of money, annuity or damages (that is, right to damages) has been thereunder transferred.

But whether a right to damages has been transferred depends not on that section, but on the terms of the transfer and other sections of the Act. The real key to the section is contained in the words "notwithstanding the same may be deemed or held to constitute a chose in action." The general non-assignability of choses in action at common law was well known. So too was the vagueness of the meaning of the term, making it very uncertain in many cases whether a given claim fell within that designation. And to transfer a debt at common law required, as a rule, the assent of the debtor—really a novation.

Sec. 52 was intended to put an end to all this, and to perfect, even in regard to legal procedure, the simplicity and directness which otherwise characterise the Statute.

It was not intended to extend, and its language is not sufficient to extend to so radical and unexpected a change, and probably so unfair a change, as bodily transferring all accrued rights to damages, limited only by the Statutes of Limitation and existing independently of the continuance of the obligation under which they arose, and of the land upon which they were originally secured.

I am therefore of opinion there is no answer to the appellant's contention upon the first count.

For the rest I quite agree with what has been said by the learned Chief Justice.

[1] L.R. 2 C.P., 153.

[2] L.R. 2 C.P., 153.

[3] [1842] EngR 514; 9 M. & W., 720.

[4] [1844] EngR 538; 12 M. & W., 830.

[5] 6 T.R., 131.

[6] 1 East, 111.

[7] [1831] EngR 71; 1 Cr. & J., 354.

[8] L.R. 2 C.P., 153, at p. 171.

[9] 19 Ch. D., 419, at p. 429.

[10] [1840] EngR 128; 6 M. & W., 134.

[11] [1842] EngR 526; 9 M. & W., 725.

[12] (1900) 2 Q.B., 609.

[13] 7 Ch. D., 735, at p. 740.

[14] 15 App. Cas., 223.

[15] 15 App. Cas., 223.

[16] (1902) A.C., 405, at p. 409.

[17] 19 Ch. D., 169, at pp. 172 and 173.

[18] 15 Q.B.D., 667, at p. 679.

[19] 18 Q.B.D., 494, at p. 504.

[20] [1865] EngR 321; 11 H.L.C., 337, at p. 355.

[21] 4 Q.B.D., 469, at p. 471.

[22] 10 Q.B.D., 178, at p. 190.

High Court of Australia

Measures v McFadyen [1910] HCA 74; (1910) 11 CLR 723 (16 December 1910)

HIGH COURT OF AUSTRALIA