Shepherd v Felt & Textiles of Australia Ltd [1931] HCA 21; (1931) 45 CLR 359 (4 June 1931)

Shepherd Plaintiff, Appellant; and Felt and Textiles of Australia Ltd. Defendant, Respondent.

I agree with the conclusion arrived at by the Supreme Court. In contracts of the kind in question, there is an implied condition that faithful service shall be rendered and that if such service is not rendered the principal may elect to determine the contract, and the determination takes place on that implied condition. The material evidence in the case is undisputed. It is contained in the telegrams and letters sent by the plaintiff, particularly the letter of the 15th October 1929. No facts remain to be found or inference to be drawn by a jury. Any analysis of the evidence discloses a course of conduct which is necessarily incompatible with continued service as being prejudicial to the principal's business. The plaintiff's conduct was a breach of an express term of his contract and of the implicit condition to which I have referred, of faithful and loyal discharge of duty towards the employer. In such circumstances the rights of the principal do not depend on the caprice of the jury or of the tribunal which tries the question. There being a breach of this term and condition, the right of the principal to determine the contract follows as matter of law (Boston Deep Sea Fishing and Ice Co. v. Ansell[1]).

The suggestion faintly made that, because the defendant was unaware of the plaintiff's misdeeds in this matter until after the termination of the contractual relationship, they could not constitute a defence, is an ancient heresy to which I am surprised to find any surviving adherent. In 1838 Tindal C.J. expressed the view that when a party is discharged and a reason is assigned at the time, another reason may afterwards be proved (Baillie v. Kell[2]); and repeated statements to the like effect have been made, the latest of which is that of Greer J. (as he then was) in Taylor v. Oakes Roncoroni & Co.[3]. The question is whether the defendant was entitled to do what it did, not whether the reason why it exercised the rights it in fact had was a good or bad one (cf. Hansson v. Hamel & Horley Ltd.[4]).

The matter then being resolved into "a matter of law," the Supreme Court was right in holding that the defendant Company was entitled to a verdict and in exercising the power conferred on the Court under sec. 7 of the Supreme Court Procedure Act 1900.

Before parting with the case I think it desirable to state my opinion upon the stamp objection, fully argued by Mr. Flannery. I find myself quite unable to agree in the decision of the Full Court of New South Wales in Wagga Finance Co. v. Lever[5]; but I agree with the observations in the judgment delivered by Street C.J. for the Full Court in Electricity Meter Manufacturing Co. v. Manufacturers' Products Pty. Ltd.[6], save in so far as that judgment concedes the correctness of the first-named judgment and distinguishes it. I fail to understand how the decision in Dent v. Moore[7], or anything that was said in that case, tends to support the conclusion reached in Wagga Finance Co. v. Lever.

For these reasons I am of the opinion that the appeal should be dismissed with costs.

By an agreement in writing made in 1928 between the appellant Shepherd and the respondent the Felt and Textiles of Australia Ltd., it was agreed that the appellant should for the term of five years act as the representative of the respondent in the city of Sydney and its suburbs for the sale of certain products of the Company, and the appellant undertook to use his best endeavours to obtain orders for the respondent and influence business on its behalf within the scope of his appointment. The respondent in 1929 terminated the agreement, and the appellant brought an action against it for damages for wrongfully terminating the agreement and dismissing him as its representative. By its fifth plea the respondent justified the termination of the agreement and the dismissal of the appellant for that he did not use his best endeavours to obtain orders for and influence business on behalf of the respondent in accordance with the agreement. But at the trial of the action the parties fought a broader issue, namely, whether the appellant had been guilty of misconduct justifying the termination of the agreement and his dismissal, and they must now abide by their conduct of the trial (Browne v. Dunn[8]). Apart from the express stipulation of the agreement that the appellant would use his best endeavours to obtain orders for the respondent, there is no doubt that the appellant was bound to render faithful and loyal service to the respondent, and not to do anything inconsistent with the continuance of confidence between them. (Cf. Boston Deep Sea Fishing and Ice Co. v. Ansell[9]; Pearce v. Foster[10].) The Supreme Court has stated very fully the uncontroverted facts of the case, and I need not recapitulate them. But they show that the appellant quoted a price to a customer of the respondent and accepted an important order from that customer at a price which was contrary to his express instructions, and also suppressed the facts of the transaction from the respondent. Further, he endeavoured to persuade this customer not to deal with the respondent at any other price, and to support him against the respondent, whose business morale he described as not of the highest standard. Such conduct is in breach of the agreement, and undoubtedly strikes at the root of that agreement, and it is also wholly inconsistent with the continuance of confidence between the parties to it. But the action was tried before a jury, and, despite this uncontroverted evidence, a verdict was given for the appellant for no less a sum than £1,600. The respondent moved to set aside this verdict, and that a verdict and judgment might be entered for it. The Supreme Court acceded to this motion, and set aside the verdict and directed that a verdict be entered for the respondent.

If reasonable men might find the verdict which was found in this case, then no Court ought to disturb a decision of fact which the law has confided to juries and not to Judges (Metropolitan Railway Co. v. Wright[11]). It is plain, however, on the facts above stated, that no reasonable men might find the verdict; and it was therefore rightly set aside. But was the Supreme Court right in taking the further step of entering a verdict for the defendant, or should it have remitted the action for a new trial? That question depends, I think, upon the provision of the Supreme Court Procedure Act 1900, sec. 7: "In any action, if the Court in Banco is of opinion that ... upon the evidence the plaintiff or the defendant is as a matter of law entitled to a verdict in the action or upon any issue therein, the Court may order ... such verdict to be entered." Where on the uncontroverted facts the action or an issue must be determined in favour of one party, then, as a matter of law, that party is entitled to the verdict in the action or upon the issue. And it is necessarily wrong to leave any conclusion or inference in such circumstances as a question of fact to the jury. In such a case a direction should be given to the jury that as a matter of law the verdict must be for the party entitled to succeed—here the respondent (cf. Cawley v. Furnell[12]; Cuthbertson v. Parsons[13]; Morgan v. Savin[14]). The fact that the appellant's misconduct was unknown to the respondent at the time of the termination of the agreement is quite immaterial. If there were, in fact, any circumstances in existence at the time of the termination of the agreement which could have justified the respondent in so terminating it, then it may justify the termination by subsequent proof of those circumstances (Smith's Law of Master and Servant, 5th ed., p. 107; Taylor v. Oakes Roncoroni & Co.[15]; Swale v. Ipswich Tannery Ltd.[16]).

Another ground was relied upon in support of the judgment of the Supreme Court, namely, that the agreement was not stamped upon its production in evidence at the trial in accordance with the provisions of the Stamp Duties Act 1920-1924. The point does not call for decision in the view I take of the case, but as the matter was argued at length and is said to be of great importance in New South Wales, and I have had the opportunity of reading the opinion of my brother Dixon upon it, perhaps it is permissible to say that I concur in his opinion and have nothing to add.

The appellant carries on a business as a manufacturers' agent, and the respondent Company, which manufactures felt, appointed him its selling agent in Sydney for a period of five years. By an agreement in writing he engaged to act as the respondent's representative in the city of Sydney and its suburbs for the sale of the goods, to the customers, at the prices and upon the terms described in some letters which had passed between the parties, and the respondent agreed to give him a remuneration of five per cent of the net amount received by it in respect of all orders which it executed, obtained in the home market whether as the result of the appellant's exertions or not. The appellant undertook to use his best endeavours to obtain orders for the respondent and to "influence business on their behalf within the scope of his appointment" and to observe all instructions of the respondent in relation to its business. Before two years were completed of the period of the appellant's agency, the respondent terminated his appointment because it was dissatisfied with his services. He thereupon brought an action for damages upon the agreement and obtained a verdict for £1,600. The Full Court of the Supreme Court of New South Wales set aside this verdict and entered a verdict and judgment for the respondent upon the ground that, because of the appellant's own conduct, the respondent had become lawfully entitled to determine the agreement. Being of opinion that upon the evidence the respondent was as a matter of law entitled to a verdict in the action, the Full Court exercised the power conferred upon it by sec. 7 of the Supreme Court Procedure Act 1900, and ordered such a verdict to be entered. The questions upon this appeal are whether the verdict for the appellant should have been set aside, and, if so, whether a new trial should have been directed or the defendant was "as a matter of law entitled to a verdict" so that the case fell within the statutory power to order such a verdict to be entered. The conduct on the part of the appellant which appeared to the Supreme Court to justify the termination of his agency took place during his temporary absence in Tasmania. While he was there he received from the respondent a telegram informing him, as the fact was, that an important customer whom he had secured for it had called for tenders for the supply of a large quantity of felt. The telegram asked the appellant if he would return to Sydney, and alternatively what suggestion he had to make, and it ended with a statement to the effect that a reduction in the price of more than 3d. a yard meant a loss to the respondent. The respondent's price then stood at 45d. a yard. The appellant telegraphed a confident reply that with equal prices he would obtain the contract, but he reminded the respondent of the price of a previous tender by a competitor and suggested that he should be allowed to submit a price of 42d. a yard, and he requested the respondent to telegraph to him in Tasmania its lowest acceptable prices. The appellant's commission upon a price of 42d. would be a little over 2d. a yard. The respondent answered in a telegram which suggested that if the appellant considered it necessary to reduce the price to 42d. a yard he should contribute half the reduction to the extent of his commission, but stated the opinion that if he returned to Sydney he could "by his personal touch" obtain the contract without a reduction of price. The appellant replied that he was awaiting a letter from the buyer of the customer inviting tenders and if the letter was unsatisfactory he would return to Sydney. Some communications which were not given in evidence appear already to have passed between the appellant and this buyer, with whom he was well acquainted, and in the course of them the appellant proposed a price of 43½d. for his principal's felt, but he did not disclose this fact to the respondent. Whether the appellant received the letter for which he said that he would wait does not appear, but he did receive from the buyer a telegram which ran: "No need for you to return to Sydney will close at 43d."; and he replied "Many thanks accept please delay informing my Company" (scil., the respondent) "until you receive my letter Monday."

He did not inform the respondent of what he had thus agreed upon, but he at once sent it a telegram: "Will you accept 43d. paying usual commission competitors quoting 42d. cable here urgent." Unless he was prepared to contribute out of his commission half the difference between 45d. and 43d. a yard, when he agreed to a price of 43d. a yard, he had acted in opposition to the instructions given by the respondent's telegram to him. The explanation which the appellant gave in his evidence was, in effect, that he believed the respondent knew it could not obtain the contract for the sale of its felt at 45d., and it was endeavouring to force him to reduce his commission; that he considered he was entitled to resist this endeavour: that he knew he could secure the contract for it at a proper price, and that he desired to do so for his own credit's sake. In answer to his telegram asking if it would accept 43d., the respondent telegraphed to the appellant that the price left it no reasonable profit, and it would agree to it only if he contributed part of his commission as it had previously telegraphed, and it urged him to return and endeavour to obtain the contract at the existing price. The appellant answered the respondent by a telegram that he could secure the contract definitely at 43d. a yard but the commission must be usual, and that it was not essential to return to Sydney as he was in continual communication with the customer's buyer. At the same time he telegraphed to the buyer as follows:—"Require your assistance. Company consider my quotation too low. Suggest me accept half commission which wish avoiding. You will probably be approached to increase prices. Will you favour me by allowing contract to go through me only. I will guarantee their acceptance of 43 pence." Later in the same day the appellant received a telegram from the respondent declining to reduce the price of 45d. per yard unless he contributed, and saying it would interview the buyer next day; and during the day the appellant and the respondent exchanged further telegrams maintaining their respective positions. Next day the appellant received a telegram from the respondent saying that it had arranged to supply the customer's requirements for the next three months at full prices and instructing the appellant to suspend further negotiations, if any, for the time being. The transaction to which this telegram refers was not in writing, and the jury may not have accepted the oral evidence of it which described how at first the buyer gave an order for 50 pieces of felt at the unreduced price and later cancelled this order. But when the appellant received the telegram he at once wrote a lengthy letter to the buyer in which he narrated what had taken place between himself and the respondent and set out this telegram. The letter then went on:—"My price quoted to you from Launceston, i.e. 3s. 7d., stands good and a rebate of 2d. per yard will be credited to you from my Sydney office. In the meantime I need your support as I have no faith whatever in my Company's treatment of their representative and with your assistance I can get the agreed commission... Unfortunately, whatever their attitude, I cannot at the moment afford to give them the sailor's farewell, as their productions are good, but their business morale is not of the highest standard." The appellant went on to say that he did not subscribe to the respondent's view that the contract could not be undertaken at less than 45d. per yard, and that even if he had to forgo a portion or all of his commission, the customer would be supplied at the price he had accepted. Ultimately the contract was negotiated between the respondent and the customer directly and without any more of the appellant's doubtful assistance.

When the respondent terminated his agency it was not aware of the contents of the telegrams and the letter which he had sent to its customer's buyer, and it acted upon other grounds. It is well established, however, that a servant's dismissal may be justified upon grounds on which his master did not act and of which he was unaware when he discharged him (Boston Deep Sea Fishing and Ice Co. v. Ansell[17]; Spotswood v. Barrow[18]; Willets v. Green[19]; Mercer v. Whall[20]; Ridgway v. Hungerford Market Co.[21]). It is true that the agreement between the appellant and the respondent does not amount to a contract of service. But the rule is of general application in the discharge of contract by breach, and enables a party to any simple contract who fails or refuses further to observe its stipulations to rely upon a breach of conditions, committed before he so failed or so refused, by the opposite party to the contract as operating to absolve him from the contract as from the time of such breach of condition whether he was aware of it or not when he himself failed or refused to perform the stipulations of the contract. "It is a long established rule of law that a contracting party, who, after he has become entitled to refuse performance of his contractual obligations, gives a wrong reason for his refusal, does not thereby deprive himself of a justification which in fact existed, whether he was aware of it or not" (per Greer J., Taylor v. Oakes Roncoroni & Co.[22]; see, too, per Lord Sumner in British and Beningtons Ltd. v. North Western Cachar Tea Co.[23] and per Starke J. in Henry Dean & Sons (Sydney) Ltd. v. P. O'Day Pty. Ltd.[24]).

In considering whether the appellant's conduct amounted to a breach of the conditions of his contract of agency, it must first be ascertained what material conditions the contract contained. The express promise of the appellant to use his best endeavours to obtain orders for the respondent and to influence business on its behalf necessarily includes an obligation not to hinder or prevent the fulfilment of its purpose. Moreover, the contract established a relation between the parties intended to subsist for a period, and it involved some degree of mutual confidence and required a continual co-operation. Its object was the increase of the sale of the respondent's manufactures, and to that end the extension of the respondent's business connection. Such an agreement inevitably imported a tacit condition that the appellant should perform the services faithfully which he contracted to give the respondent, and should not endeavour to impede or defeat the respondent in the sale of its manufactures at the prices it might think proper to ask. By their verdict the jury must be taken to have found that the appellant's conduct did not amount to a breach of this condition. No more favourable explanation can be placed upon his communications with the customer who invited tenders for the supply of felt than that to which the appellant himself deposed. Yet, allowing that his motives were those he claimed, he first agreed to a price for the sale of a large quantity of his principal's goods which was entirely unauthorized save upon conditions with which he refused to comply, he next concealed the transaction from his principal with a view to persuading it to authorize such a price unconditionally, and he then sought to prevent it dealing with the customer lest it should effect a sale at a higher price. A finding that this conduct was no breach of condition appears to me to be unreasonable, and one which ought not to be allowed to stand. I am therefore of opinion that the Supreme Court was right in setting aside the verdict obtained by the appellant.

Without statutory authority the Court could not enter a verdict in lieu of that set aside, unless empowered to do so by a reservation made at the trial with the consent of the parties actual or implied (cf. Dewar v. Purday[25]; Minchin v. Clement[26]; Mathews v. Smith[27]; Rickets v. Burman[28], and Tippets v. Heane[29]). The statutory power of the Supreme Court of New South Wales to enter a verdict is much less extensive than that conferred upon the Court of Appeal in England by Order LVIII., r. 4, and is confined by the terms of sec. 7 of the Supreme Court Procedure Act 1900 to cases in which upon the evidence the party is, as a matter of law, entitled to a verdict. Such a case arises when a party upon whom the burden lies of proving an issue fails to adduce evidence sufficient to discharge the onus. For the insufficiency of evidence to support an issue is a matter of law, upon which the Court must direct the jury. But it is not always a question of law whether evidence adduced in support of an issue is not only sufficient to discharge the burden of proof but so conclusively establishes the issue that a finding to the contrary should be set aside. Indeed, more often than not, it is a question whether, having regard to the great probative force of the evidence, the Court in Banco, in the exercise of its control, ought to set aside the verdict as perverse. (See the discussion by Cussen A.C.J. in Driver v. War Service Homes Commissioner [No. 1][30].) But sometimes the facts from which a legal conclusion arises in favour of the party who has the onus of proof appear in a manner which entitles or requires the Court to notice and act upon them. This may be because facts are admitted or undisputed, or because the question turns upon the interpretation or effect of documents. In Morgan v. Savin[31] Willes J. decided that when the circumstances of the engagement and the dismissal are all proved by written documents in evidence, the question whether the dismissal was justified is one of law for the decision of the Court and not for the jury. In the present case the contract is in writing and the justification for its termination is found in the telegrams and the letter of the appellant the despatch of which is undisputed. In my opinion the jury could not adopt any explanation or modification of these documents which is compatible with a due observance on the part of the appellant of the condition of his contract of agency. I therefore agree with the Supreme Court in thinking the respondent was, as a matter of law, entitled to a verdict.

The respondent relied upon a further ground in support of the order directing that a verdict should be entered for it. At the trial it was objected on the respondent's behalf that the agreement upon which the appellant sued, although liable to a stamp duty of 1s. as an agreement under hand within the Second Schedule of the Stamp Duties Act 1920-1924, was not duly stamped, because the stamp for 1s. which it bore had not been cancelled by the person who first executed the instrument as required by sec. 22 of that Act. The appellant thereupon sought to overcome the objection by paying, pursuant to sec. 27, to the officer whose duty it was to read the instrument, what he considered the "unpaid duty and the fine payable by law." The document was then received in evidence notwithstanding the respondent's objection. It is now contended that it ought not to have been received in evidence because sec. 27 does not apply to a case in which an instrument has been stamped but the stamp has not been cancelled, and because, even if it did so apply, the appellant had misconceived what he was required to pay by way of penalty and, therefore, did not comply with sec. 27. It is further contended that if the instrument did become admissible in evidence, yet it remained true that when the alleged breach of contract was committed the instrument was not duly stamped and by reason of sec. 29 was not good, useful, or available in law or in equity so that a refusal to perform the contract it contained could not be wrongful. For this proposition the decision of the Supreme Court in Wagga Finance Co. v. Lever[32] was relied upon. In my opinion the order directing a verdict for the respondent could not be supported upon any of these contentions, and, in the circumstances, I think it is desirable to give reasons for this opinion.

In the first place, I do not agree with the view that sec. 27 is confined to instruments which bear no stamp, or a stamp of insufficient amount, and does not extend to cases in which a sufficient stamp is uncancelled or has not been regularly cancelled. It is true that, in referring to "unpaid duty" and to "any omission or insufficiency of the stamp thereon," the provision uses terms appropriate rather to unstamped and insufficiently stamped instruments. But the language is by no means incapable of including other cases of failure to comply with the requirements of the stamp laws. The provision contained in sec. 27 has its origin in secs. 28 and 29 of the English Common Law Procedure Act 1854. It was enacted so that stamp objections might be cured without the necessity of sending the instrument to the Stamp Office during a trial, a practice then often adopted which is illustrated by the reports of Beckwith v. Benner[33] and Dudley v. Robins[34]. In sec. 27 of the New South Wales Stamp Duties Act 1920-1924 it is evident that the provision serves the same purpose, and it appears reasonable to place upon it a meaning which will include every case where an instrument might be made admissible by stamping under sec. 25 and payment of a penalty. Moreover, in Allen v. Pullay[35] the Privy Council overruled a like contention upon a provision enabling the Collector to stamp an instrument executed without being properly stamped, and, although the provision was not expressed in the same terms, many of the reasons given for assigning a meaning to it wide enough to embrace all the defects which might arise from non-compliance with the stamp laws apply with even greater force to sec. 27.

In the next place, I think the contention that sec. 27 was not exactly pursued because less than the full penalty was paid to the officer in Court, even if it be correct, ought not to lead to a verdict being entered for the respondent. No doubt, if the document were rejected as evidence, the appellant would have no case, but the proper course would be to order a new trial in order to enable the appellant to pay the proper fine and have the instrument duly stamped with a particular stamp denoting the amount of the duty and fine paid. The view appears to have been adopted that the Court in Banco must give effect to an objection taken at the trial, although after the trial and before the proceedings in Banco the instrument has been duly stamped (Prudential Mutual Assurance Investment and Loan Association v. Curzon[36]). The provisions of sec. 31 of the Common Law Procedure Act 1854 which provide that no new trial shall be granted by reason of a ruling that a document is insufficiently stamped or requires no stamp do not appear to have been adopted in New South Wales, but the decisions upon this enactment show that it operated to preclude all appeals from such rulings because it would not be right to reject the document and enter judgment when the evidence which might have been available was not exhausted (see Blewitt v. Tritton[37]; Siordet v. Kuczynski[38]). It would not be in accordance with these views to reject a document the duty and fine for which were intended to be paid at the trial, and then enter judgment for want of evidence.

There remains the contention that, conceding the application of sec. 27 to an instrument bearing a sufficient but uncancelled stamp, and conceding the payment of the correct amount of "the unpaid duty and the fine payable by law," nevertheless the document was not efficacious at the time of the alleged breach, which therefore could not be wrongful. This argument depends upon sec. 29 of the Stamp Duties Act, the material words of which are: "Except as aforesaid, no instrument ... shall ... be pleaded or given in evidence, or admitted to be good, useful, or available in law or in equity for any purpose whatsoever, unless it is duly stamped in accordance with the law in force at the time when it was first executed." The words "except as aforesaid" qualify the whole section, and it is evident that whatever is comprised within them is not vitiated by its provisions. The words refer to the preceding sections, including sec. 25, which allows instruments to be stamped after execution and upon payment of a fine if more than a month has elapsed, and sec. 27, which authorizes the reception in evidence of an instrument although there is some omission or insufficiency of the stamp thereon, if the amount of the unpaid duty and the fine payable by law is paid to the officer of the Court. Further, the condition expressed in the section upon which the usefulness of the instrument is made to depend is not introduced by the word "until" but by the word "unless." It is not to be pleaded or given in evidence or admitted to be good, useful or available unless it is duly stamped. The expressions "pleaded," "given in evidence" and "admitted" refer to the use or the recognition of the document or of its operation in judicial proceedings or otherwise, and, I think, would naturally be understood as intending that when by due stamping it had become pleadable, receivable in evidence and admissible as good, useful and available, then its validity and operation as from the beginning were to be construed as unaffected by the enactment. It is to be noticed too that the words "duly stamped" include late stamping under sec. 25. There is, perhaps, a little difficulty in applying them literally to the payment in Court of duty together with fine under sec. 27 because the officer does not stamp the instrument. But it is his duty at once to transmit the instrument to the Commissioner to be stamped. These considerations without more, in my opinion, combine to require an interpretation of the provisions of the Stamp Duties Act 1920-1924 which allows an instrument to receive its full force and effect ab initio, if it is stamped under sec. 25 or if duty and fine are paid under sec. 27. But when to these considerations is added the history of the provisions now standing as secs. 25, 27 and 29 and of their interpretation, it is impossible to doubt that instruments which may legally be stamped after execution, upon due stamping or payment under sec. 27 of duty and fine become in contemplation of law as efficacious from their execution as if they had never fallen within the operation of sec. 29. Sec. 29 takes its origin in sec. 11 of 5 Will. & M. c. 21, and in sec. 59 of 9 & 10 Will. III. c. 25; and upon those statutes, in 1725, the Court of Kings Bench said: "It is every day's practice, that upon payment of the duty and penalty, the writing is made good" (R. v. Bishop of Chester[39]). For the course of legislation since that time, it is enough to refer to sec. 19 of 31 Geo. III. c. 25; secs. 10 and 11 of 35 Geo. III. c. 55; sec. 6 of 43 Geo. III. c. 126; sec. 8 of 55 Geo. III. c. 184; secs. 12 and 14 of 13 & 14 Vict. c. 97; secs. 28 and 29 of 17 & 18 Vict. c. 125 (Common Law Procedure Act 1854); secs. 15, 16 and 17 of 33 & 34 Vict. c. 97 (Stamp Duties Act 1870), and the New South Wales Stamp Duties Act of 1880, sec. 14. Throughout this course of legislation the Courts have uniformly acted upon the view that instruments which may upon payment of a fine be stamped at any time are to be received in evidence and enforced although duly stamped after the commencement of the proceedings. In 1805 Lord Eldon said that it "is the judgment of the law; that, where a paper can be stamped, paying the penalty, it is no objection, that it has not been stamped before the commencement of the suit... If the agreement is one, upon which no action is to be brought unless it is stamped, it must be stamped before action brought; but if it is an agreement, which you may get stamped, paying the penalty, there pending the action it may be stamped; and a cause has been allowed to stand over here upon that distinction. The consequence is, that, if the Court is not to act, where there has not been an observance of the revenue laws, neither is it to turn the party round, if, before the suit is over, those laws are complied with" (Huddleston v. Briscoe[40]). In Rogers v. James[41] Gibbs C.J. said that numberless instances have occurred in which a party has been nonsuited because the deed under which he claimed a right of action has had an insufficient stamp; but it has never been contended that after a valid stamp has been put upon it he has not by retrospection a good right of action. In Chervet v. Jones[42] Sir John Leach V.C. directed that a suit upon an unstamped instrument should go on, but that before the decree was delivered the instrument should be produced to the Registrar stamped. The principle was applied in Burton v. Kirkby[43], in Rose v. Tomblinson[44] and in Clarke v. Jones[45]. It was recognized by Coleridge J. in Rankin v. Hamilton[46], by Lord Campbell C.J. in Alcock v. Delay[47] and by Martin B. in Whitehouse v. Hemmant[48]. In Wagga Finance Co. v. Lever[49] the Supreme Court decided that an action of detinue could not be maintained by a plaintiff who depended for his title to the goods he claimed upon an assignment from the former owner which was not stamped until after the commencement of the action. In Electricity Meter Manufacturing Co. v. Manufacturers' Products Pty. Ltd.[50] Street C.J., in whose judgment Ferguson and James JJ. concurred, distinguished this decision and confined its application within narrow limits. Whether the distinction was well taken it is unnecessary for me to consider because I do not think the decision in Wagga Finance Co. v. Lever can be supported, but otherwise I agree with the judgment of Street C.J.

The present appeal, in my opinion, fails not because of the Stamp Duties Act 1920-1924, but because the respondent was entitled, by reason of the manner in which the appellant behaved, to terminate his agency.

The substantive command contained in sec. 25 of the New South Wales Stamp Duties Act 1920-1924 is that, subject to certain conditions, "any instrument may be stamped after the first execution thereof," on payment of the proper duty and possibly a fine. Sec. 27 deals with the situation created when a document chargeable with stamp duty is tendered in evidence in a civil Court. The proper officer is directed to call the attention of the Judge to any omission or insufficiency of the stamp on the document. If the instrument comes within the description of sec. 25, and may legally be stamped after execution, then, upon payment of the unpaid duty and fine, it may be received in evidence. Sec. 29 of the Act next provides: "Except as aforesaid, no instrument executed in New South Wales or relating (wheresoever executed) to any property situate or to any matter or thing done or to be done in any part of New South Wales, shall, except in criminal proceedings, be pleaded or given in evidence, or admitted to be good, useful, or available in law or equity for any purpose whatsoever, unless it is duly stamped in accordance with the law in force at the time when it was first executed." The effect of this section is to set up a general rule that documents unstamped or insufficiently stamped shall not be made use of or treated as having any legal efficacy in any civil proceedings in the State. But the section commences with the words "except as aforesaid." Both the stamping of an instrument after its execution, which is allowed under the conditions set out in sec. 25, and the stamping during the course of a civil proceeding under the circumstances set out in sec. 27, are obvious instances to which the prohibition of sec. 29 is inapplicable. The reason why sec. 29 does not "strike with sterility" (Dent v. Moore[51]) documents which, belonging to the class which may legally be stamped after execution, are discovered at the trial to be unstamped or insufficiently stamped but are receivable in evidence on payment of the unpaid duty and the legal fine, is that sec. 29 does not "strike at" such documents at all.

What is known as the Wagga Finance Case[52] was based on the view that sec. 29 of the Stamp Duties Act debars a document unstamped or insufficiently stamped at the time of its tender in a civil action from having any efficacy whatever until the very moment when the full stamp duty is paid. "The new section provides that this document shall not be pleaded or given in evidence or admitted to be good, useful or available in law or equity for any purpose whatsoever until it is duly stamped. It seems to me that I am compelled by the decision to which I have just referred to hold that that means that until it was stamped it was not an effective document, that it conferred no rights of any kind and was entirely inoperative. Therefore at the time when this action was brought there was no effective assignment in existence from which the plaintiffs took any rights. It seems to me, therefore, that no amendment would help the plaintiffs and that the plaintiffs must be nonsuited" (Wagga Finance Case[53]).

It may be pointed out that the word used in sec. 29 itself is not "until," as might be supposed from the remarks quoted, but "unless." The broader answer to the view expressed is that the whole of sec. 29 is preceded and conditioned by the words "except as aforesaid," and the Wagga Finance[54] decision omits to give effect to the statutory exceptions.

In my opinion the subsequent decision of the Full Court of the Supreme Court in Electricity Meter Manufacturing Co. v. Manufacturers' Products Pty. Ltd.[55] is irreconcilable with the Wagga Finance Case[56] and the latter should now be considered as overruled. Unfortunately, the Wagga Finance decision caused many difficulties in the administration of justice in New South Wales. It suddenly brought to an end the recognized practice of stamping documents during the hearing of a case. Actions which had been commenced before the promulgation of the decision were abandoned or, if continued, were defeated by the stamp objection. Amendment of pleadings after payment of duty was of no avail because of the view that the instrument remained a nullity until stamping. It was therefore void at the time of the breach of any obligation alleged to have been created by it. The cause of action, consequently, never came into existence. Payment of stamp duty could not operate as from the prior point of time when the cause of action was supposed to have arisen.

The irony of the situation thus created by judicial decision was that the defendant who took the fatal stamp objection at a trial was, as often as not, primarily liable to stamp the document. Having failed to perform that duty, he successfully cheated the revenue a second time. For the plaintiff had no inducement whatever to pay duty and fine at the time of trial when payment could avail him nothing.

It is not surprising that some Judges sought, more or less successfully, to distinguish the Wagga Finance Case[57], when confronted with it during a trial. But the learned Chief Justice, during the hearing of the present case, interpreted secs. 27 and 29 of the Stamp Duties Act correctly when he allowed the further stamping of the agreement between the parties, and the admission of the document in evidence. The judgment of Street C.J. (for the Full Court) in the Electricity Meter Case[58] was delivered shortly after his present ruling at nisi prius. It states the legal position fully and precisely with the single addition that (as the learned Chief Justice undoubtedly considered) the Wagga Finance Case[59] was wrongly decided.

It may still be possible for aggrieved parties to enforce their rights notwithstanding their first failure by reason of the Wagga Finance[60] decision. In most cases nonsuits only were granted, and actions may be recommenced without further miscarriage upon this ground.

The respondent's objection based upon sec. 29 of the Stamp Duties Act to the allowance in evidence of exhibit A (the agreement between the parties) therefore fails. It becomes necessary to consider the merits of the appeal.

The appellant succeeded at the trial in an action founded upon the breach by the respondent of the agency agreement dated 3rd February 1928. The jury assessed damages at £1,600. In its pleadings justifying the breach, the fifth plea of the respondent was: "And for a fifth plea the defendant Company says that it was a term and condition of the said contract that the plaintiff should use his best endeavours to obtain orders for the defendant Company and influence business on its behalf, and the defendant Company did not excuse the performance by the plaintiff of the said term and condition yet the plaintiff did not use his best endeavours as aforesaid wherefore the defendant Company rescinded the said contract and dismissed the plaintiff from its service which is the alleged breach."

The matters relied on by the respondent to prove this plea were certain acts of disloyalty on the part of the appellant during the month of October 1929 in relation to negotiations he was then carrying on with a view to making a contract between his principal and Beard, Watsons Ltd. By clause 2 of the agreement the appellant expressly undertook "to use his best endeavours to obtain orders for the Company and influence business on their behalf within the scope of his employment." Clearly it is this obligation upon the breach of which the respondent relied in the justification. The termination of the agreement took place in December 1929 but the disclosures as to the appellant's conduct in the previous October were not made until September 1930, during the progress of the present trial.

It is, therefore, not true to say that the respondent rescinded the agreement because of the misconduct in relation to the "Beard, Watson" contract. It follows that the fifth plea was not made out as pleaded. (Cf. Mercer v. Whall[61].) Counsel for the appellant might have asked the learned Chief Justice to withdraw the plea from the jury, but he did not do so.

On the other hand, counsel for the respondent did not ask the learned Chief Justice to amend the pleadings or to nonsuit the plaintiff or to direct a verdict in his favour upon the submission of law made later to the Full Court with success. This submission was that the admitted conduct of the appellant was a breach of condition and constituted a legal justification for the dismissal. Every opportunity was given at the trial to raise this submission. Other contentions of law were raised. I think that the Chief Justice was impliedly invited to treat the question of misconduct as one of degree only and therefore proper for final determination by the jury. In his summing-up to the jury he said:—

Later on, dealing with the letter sent by the appellant to Beard, Watson's employee, the Chief Justice said:—

Where a litigant conducts a case before a Judge and jury, and allows an issue of fact to be remitted to the jury with directions in point of law, and makes no submission in a contrary sense to these directions, he should not be encouraged after the jury decide adversely, to scrutinize the summing-up for the purpose of detecting or spelling out some misdirection or non-direction and of grounding thereon an application for a second trial. Even in such a case, no doubt, jurisdiction is often conferred upon Courts of appeal or review in sufficiently wide terms to empower them to order a new trial. But instances where such a jurisdiction should fairly be exercised will necessarily be rare. The control over the costs of the proceedings is not always sufficient to remove the great mischief involved in the rehearing of an action before a jury. It should be remembered that the proper time to raise objections or criticisms of a legal nature to a Judge's charge is at the trial. (Cf. Wilson v. United Counties Bank[62].)

What I have said is subject to the terms of any special rules governing the practice and procedure of the Courts in question. Moreover, directions as to the proper measure of damages have often been treated as belonging to a special category where the trial Judge is said to direct "at his peril." And exceptional cases may arise where, in spite of failure to object or suggest, the jurisdiction to order a new trial should justly be exercised.

In the present case the Full Court did allow the question of law to be argued before them in spite of the conduct of the trial by the respondent. The learned Judges were, no doubt, impressed by the fact that the point went to final judgment, so that no retrial was involved. They acted within their jurisdiction and exercised their discretion (Banbury v. Bank of Montreal[63]). I think special terms as to costs might well have been imposed upon the respondent because the Chief Justice would, presumably, have upheld its later submission and nonsuited the plaintiff. In the result, some of the costs of the action and most of the costs of the appeal to the Supreme Court have been thrown away. But no complaint in respect of the Full Court order as to costs was made in the notice of appeal to this Court.

Is the respondent's submission well founded? I must say that for a time I was inclined to the opinion that the question of misconduct in relation to the Beard, Watson contract was one of fact—the question for the jury being whether the actions of the appellant in the peculiar circumstances of the case, particularly the respondent's unjustifiable attempt to compel the appellant to agree to a diminution of the commission provided for by the contract, were inconsistent with his duty to render loyal service to the respondent.

On further consideration, however, I see no answer to the reasoning of the judgment prepared by my brother Dixon. The question of misconduct in relation to this matter arises from undisputed facts and documents, emerges as one of law and must be resolved in favour of the respondent. I think that this conclusion finds support in the judgment of Lord Atkinson in Federal Supply and Cold Storage Co. of South Africa v. Angehrn[64], which was not referred to during argument.

In these circumstances the entry of a verdict for the respondent is authorized by sec. 7 of the Supreme Court Procedure Act 1900, and the appeal must, accordingly, be dismissed.

I have had the advantage of reading the judgment of my brother Dixon, and, for the reasons stated by him, I agree that the appeal should be dismissed.

[1] (1888) 39 Ch. D. 339, at pp. 363, 365.

[2] (1838) 4 Bing. (N.C.) 638, at p. 650; [1838] EngR 661; 132 E.R. 934, at p. 939.

[3] (1922) 127 L.T. 267, at p. 269.

[4] (1922) 2 A.C. 36, at p. 42.

[5] (1929) 30 S.R. (N.S.W.) 76.

[6] (1930) 30 S.R. (N.S.W.) 422.

[7] [1919] HCA 11; (1919) 26 C.L.R. 316.

[8] (1893) 6 Rep. 67.

[9] (1888) 39 Ch. D. 339.

[10] (1886) 17 Q.B.D. 536.

[11] (1886) 11 App. Cas. 152.

[12] [1851] EngR 638; (1851) 12 C.B. 291; 138 E.R. 915.

[13] [1852] EngR 597; (1852) 12 C.B. 304; 138 E.R. 921.

[14] (1867) 16 L.T. 333, 457.

[15] (1922) 27 Com. Cas. 261, at p. 266.

[16] (1906) 11 Com. Cas. 88, at p. 98.

[17] (1888) 39 Ch. D. 339.

[18] [1850] EngR 292; (1850) 5 Ex. 110; 155 E.R. 48.

[19] [1850] EngR 436; (1850) 3 Car. & K. 59; 175 E.R. 462.

[20] [1845] EngR 1048; (1845) 5 Q.B. 447, at p. 466; [1845] EngR 1048; 114 E.R. 1318, at p. 1325.

[21] [1835] EngR 676; (1835) 3 Ad. & E. 171; 111 E.R. 378.

[22] (1922) 127 L.T., at p. 269; 27 Com. Cas., at p. 266.

[23] (1923) A.C. 48, at p. 71.

[24] [1927] HCA 20; (1927) 39 C.L.R. 330, at p. 359.

[25] [1835] EngR 671; (1835) 3 Ad. & E. 166; 111 E.R. 376.

[26] (1818) 1 B. & Ald. 252; 106 E.R. 93.

[27] [1828] EngR 690; (1828) 2 Y. & J. 426; 148 E.R. 985.

[28] (1836) 4 Dowl. 578.

[29] [1834] EngR 362; (1834) 4 Tyr. 772; 149 E.R. 1074.

[30] (1924) V.L.R. 515; 46 A.L.T. 102; 30 A.L.R. 375.

[31] (1867) 16 L.T., at p. 334.

[32] (1929) 30 S.R. (N.S.W.) 76.

[33] [1834] EngR 1127; (1834) 6 Car. & P. 681; 172 E.R. 1417.

[34] [1827] EngR 700; (1827) 3 Car. & P. 26; 172 E.R. 307.

[35] (1882) 51 L.J. P.C. 50.

[36] [1852] EngR 787; (1852) 8 Ex. 97, at p. 104; [1852] EngR 787; 155 E.R. 1275, at p. 1278.

[37] (1892) 2 Q.B. 327.

[38] [1855] EngR 825; (1855) 17 C.B. 251; 139 E.R. 1067.

[39] (1725) 8 Mod. Rep. 364; 88 E.R. 260.

[40] (1805) 11 Ves. 583, at p. 595; [1805] EngR 388; 32 E.R. 1215, at p. 1219.

[41] (1816) 2 Marsh. 425 (reported also [1816] EngR 723; 7 Taunt, 147); 129 E.R. 59.

[42] [1822] EngR 404; (1822) 6 Madd. 267; 56 E.R. 1093.

[43] (1816) 2 Marsh. 480; [1816] EngR 766; 7 Taunt. 174; 129 E.R. 70.

[44] (1834) 3 Dowl. 49.

[45] (1834) 3 Dowl. 277.

[46] [1850] EngR 516; (1850) 15 Q.B. 187, at p. 196; [1850] EngR 516; 117 E.R. 429, at p. 433.

[47] [1855] EngR 136; (1855) 4 El. & Bl. 660, at p. 664; [1855] EngR 136; 119 E.R. 243, at p. 245.

[48] (1858) 27 L.J. Ex. 295.

[49] (1929) 30 S.R. (N.S.W.) 76.

[50] (1930) 30 S.R. (N.S.W.) 422.

[51] (1919) 26 C.L.R., at p. 324.

[52] (1929) 30 S.R. (N.S.W.) 76.

[53] (1929) 30 S.R. (N.S.W.), at p. 82, per Halse Rogers J.

[54] (1929) 30 S.R. (N.S.W.) 76.

[55] (1930) 30 S.R. (N.S.W.) 422.

[56] (1929) 30 S.R. (N.S.W.) 76.

[57] (1929) 30 S.R. (N.S.W.) 76.

[58] (1930) 30 S.R. (N.S.W.) 422.

[59] (1929) 30 S.R. (N.S.W.) 76.

[60] (1929) 30 S.R. (N.S.W.) 76.

[61] (1845) 5 Q.B., at p. 466; 114 E.R., at p. 1325.

[62] (1920) A.C. 102, at pp. 123, 127-128, 137-138.

[63] (1918) A.C. 626.

[64] (1910) 80 L.J. P.C. 1.

High Court of Australia

Shepherd v Felt & Textiles of Australia Ltd [1931] HCA 21; (1931) 45 CLR 359 (4 June 1931)

HIGH COURT OF AUSTRALIA