Hoad v Swan [1920] HCA 50; (1920) 28 CLR 258 (26 August 1920)

The written judgment of the Court, which was delivered by Isaacs J., was as follows:—

The parties at the trial agreed to disregard the actual pleadings, and to try what Cullen C.J. described as "the real issue, namely, whether the respondents had a right to sell the property on 23rd December 1914." His Honor observed that any necessary amendments should be taken as having been made. Unfortunately "the real issue" is a composite one, consisting of various issues of law and of fact which were not defined, and were in controversy even after the charge to the jury; and, as some of the essential issues of fact are still left unsettled, a new trial is necessary. It is proper to say only so much as is necessary for the purposes of this appeal.

The cause of action now under consideration is that the respondents, before the time for completion, resold land which they had already agreed to sell to the appellant, and incapacitated themselves from carrying out the contract with him. They assert a right to do so on two grounds, which must be carefully distinguished. The first is that as the appellant failed to pay a stipulated instalment on the stipulated day, 22nd July 1914, he had committed a breach which entitled them to treat the contract as at an end. The second is that, quite apart from actual breach, the appellant had announced his inability to perform an essential part of the bargain, and this also gave them the right to elect to terminate the contract. Pring J. held that the defendants were clearly entitled to a verdict and judgment on the ground that the appellant was not ready and willing to perform the contract, having failed to pay and having stated that he was unable to pay the instalment due on 22nd July; Gordon J. held in favour of the defendants on the ground that the appellant had repudiated the contract; and Ferguson J. simply stated his concurrence. It is requisite therefore to deal with both grounds.

The first step necessary in the consideration of the matter must be decided in favour of the respondents. The question being here not whether the appellant's actual default entitled the respondents to sue him for damages but whether it entitled them to refuse to proceed further with the contract, it must be resolved by reading and construing the contract as a whole. Clause 21 provides: "Time shall be of the essence of the contract." There is nothing else in the contract which is inconsistent with this clause receiving its natural meaning. In Bettini v. Gye[1] Blackburn J. says: "Parties may think some matter, apparently of very little importance, essential; and if they sufficiently express an intention to make the literal fulfilment of such a thing a condition precedent, it will be one." The learned Judge proceeds further to elucidate the whole subject argued before us as to the right to terminate a contract for breach, but the passage quoted is all that is here material. Bettini v. Gye is a common law case under the Common Law Procedure Act, which still survives in New South Wales, and so it is placed in the forefront. Where parties have made such a stipulation as clause 21 without qualifying it, then it cannot be said, as it was said by Lord Blackburn himself in Mersey Steel and Iron Co. v. Naylor, Benzon & Co.[2], that the breach does "not go to the root or essence of the contract." The test is instantly satisfied, and where that is so, the vendor, even if the failure is a trivial one, is entitled, as the Privy Council said in Brickles v. Snell[3], to stand upon "the letter of his bond." So far the matter is clear. The appellant not only was not ready to pay the instalment due on 22nd July 1914, but he actually failed to pay it. The respondents then clearly had the right to terminate the contract if they had chosen to do so. They had the right of choice and, whichever course they took, they not only bound the appellant but they necessarily bound themselves. Waiver of such an express stipulation as clause 21 reattaches the jurisdiction of equity to give its remedies, for in that event the stipulation as to time ceases to be applicable (Steedman v. Drinkle[4]). And similarly at law, where the party having the right to terminate the contract so acts as to insist on its performance—and he may do so if he thinks it more advantageous to him to hold the defaulting party to his full undertaking—he cannot afterwards fall back on his freedom to elect. The evidence given at the trial as to the conduct of the parties and the negotiations between them after the plaintiff had made default was such as to make it proper to leave to the jury the question whether the defendants had elected, prior to the resale, to determine the contract or to treat it as subsisting, or whether, up to that time, they had made no election: but none of these questions were submitted to the jury. It is not desirable that we should express any opinion as to the effect of this evidence further than that it was not so decisive in favour of either view as to justify a direction to the jury. The Supreme Court appear to have assumed that the appellant's statement that he was unable to pay the instalment which had become due necessarily amounted to a repudiation by him of all his obligations under the contract, and ipso facto relieved the respondents from any further performance of it. But even if the statement did amount to a total repudiation, as to which we do not think the evidence is necessarily conclusive, the question whether the respondents elected to treat the contract as existing, still remains for determination, and, as we have already indicated, the state of the evidence required that this question should be submitted to the jury. Next it is assumed that if he did make such statement, he is concluded by his statement. He would not necessarily be concluded thereby. He would be at full liberty to treat it as an admission only and repel it by counter evidence, which might or might not be believed. In Slatterie v. Pooley[5] Parke B. says: "What a party himself admits to be true may reasonably be presumed to be so." Where no estoppel exists, he is, however, entitled to prove the admission to have been wrong; the burden of proof of disproving it is on him, and he should do it satisfactorily. The position is fully discussed by Lord Atkinson for the Privy Council in Chandra Kunwar v. Narpat Singh[6]. That is all on the basis that the statement is regarded as an admission only. If, however, as pointed out by Lord Atkinson, the circumstances establish estoppel, if the respondents were induced by it to act upon it as being true, then the appellant would be precluded from denying it. If the respondents, believing such a statement, had acted upon it, on the principle stated in Johnstone v. Milling[7], Bradley v. H. Newsom Sons & Co.[8] and National Provident Institution v. Brown[9] the contract would have been ended, and no contradiction would have been of any avail, or indeed admissible. Whether they did so is a matter in controversy as a fact, and the evidence as before is open to the jury to consider in that connection. It need scarcely be added that nothing here said is intended to indicate any view of the facts other than that they are not conclusive one way or the other, and that the jury must form their own opinion.

In these circumstances, it is evident that the ultimate facts have not been sufficiently ascertained by the jury, and a new trial is necessary.

A question was raised about the damages, but, for obvious reasons, this is a matter on which it is proper that nothing should now be said.

Appeal allowed. Judgment appealed from reversed. New trial ordered. Costs in all Courts to abide the result of the new trial.

[1] 1 Q.B.D., 183, at 187.

[2] 9 App. Cas., at p. 444.

[3] (1916) 2 A.C., 599, at p. 604.

[4] (1916) 1 A.C., 275, at p. 280.

[5] 6 M. & W., 644, at p. 669.

[6] L.R. 34 I.A., 27, at p. 35.

[7] 16 Q.B.D., at pp. 460, 472.

[8] (1919) A.C., 16, particularly at pp. 35 (Lord Haldane), 36 (Lord Sumner) and 51-54 (Lord Wrenbury).

[9] (1919) 2 K.B., 497.

High Court of Australia

Hoad v Swan [1920] HCA 50; (1920) 28 CLR 258 (26 August 1920)

HIGH COURT OF AUSTRALIA