Coulls v Bagot's Executor & Trustee Co Ltd

Coulls v Bagot's Executor & Trustee Co Ltd - [1967] HCA 3 - HCA 1967 case summary — Zoe

[102]

We observe first of all that there is nothing whatever in the contract apart from the last paragraph upon which a conclusion could be based that she was a party to the contract. On the contrary the contract purports expressly to be one made between Arthur Leopold Coulls and O'Neil Construction Pty. Ltd. It is the testator alone who engaged to give to the company the sole right to quarry and remove stone from the land described, to grant a "permanent right of way" along the original council road of "Watergully" to Perseverance Road and to extend the initial "period" of ten years for another ten years. On its part the company agrees with the testator to pay royalties at the rates specified. But it is said that the only promise to pay royalties made by the company is that contained in the last paragraph and that this is a promise to pay "all money connected with this agreement" to the testator and his wife jointly during their lives and, after the death of one of them, to the survivor. In our view, however, this is not the effect of that paragraph; there was no express promise by the company to pay royalties to the wife nor is it possible to imply such a promise. One cannot doubt, of course, that the testator intended that the royalties should be paid to his wife after his death if she should survive him but it seems to us that the method which he chose to carry this intention into effect miscarried in spite of the fact that his wife's signature appears at the foot of the contract following those of the testator and L. O'Neil for the company. The evidence showed that the contract had been written out by the testator's wife at his request and it may have been thought that the effect of the last paragraph was to make her a party and that therefore her signature was necessary. But the mere fact that her signature appears does not make her a party; this is a question to be resolved upon a consideration of the written instrument itself. It seems to us that the terms of the last paragraph do not prescribe the persons who are to be entitled to demand and receive the royalties payable under the agreement and, therefore, do not negative the certain implication which would otherwise arise that it was the testator who was to be so entitled. On what other basis could the husband, alone, "authorise" the survivor to receive them after the death of either himself or his wife? It is, of course, obvious that in the preparation of this informal agreement the persons concerned contemplated, and provided for, the contingency of the death of the testator or his wife during its currency and it is not without significance that, whereas the testator authorized his wife to receive the royalties payable after his death, there is no corresponding authorization by the wife in the event of her husband surviving her. We think it is clear that the only person entitled to demand royalties under the contract was the testator and that his wife was not a party to it. Accordingly we are of the opinion that, since the last paragraph cannot operate as an equitable assignment, the authority which that paragraph gave came to an end on the testator's death. We may say that we come to this conclusion with some regret since it operates to defeat what must, in the circumstances, be presumed to have been the manifest intention of the testator. In our opinion the appeal should be allowed and the questions asked answered:

[104]

These are appeals from third party proceedings in the Supreme Court in which the executor of the will of the testator sought to recover from the testator's widow two separate sums of money as and for indemnities in respect of moneys paid after the death of the testator in discharge of two mortgages over a house property near Adelaide. The property was bought at auction and title was taken in the joint names of the testator and his wife. The mortgages in question were given on 4th May 1960 by the testator and his wife jointly and were for the amounts respectively of £10,300 and £3,800, the proceeds being applied in payment of the purchase money for the property. The purchase price was £21,200 and the balance of the purchase money was paid by the testator out of his own funds. There is, of course, no doubt that both the executor of the will and the wife of the testator were as between the mortgagees and themselves, bound to repay the principal moneys. But whether a right to an indemnity or to a contribution accrues to one of two joint mortgagors upon repayment of the principal sum by one of them depends upon the implication of a contractual obligation or arises in some other way In re a Debtor [1] ; Re Salisbury-Jones [2] ; and Anson v. Anson [3] it seems that no such right will arise where such a result would clearly be contrary to the intentions of the parties at the time when the joint obligation was undertaken (Dunbar v. Dunbar [4] ). In the present case there is evidence, which the learned judge of first instance appears to have accepted without question - and which there is no reason to doubt - that the house was bought by the testator expressly as a new and "better" home for himself and his wife during their joint lives, that he had planned to sell the "Highbury East house" to finance the purchase, that, having failed in this, he had sought an overdraft from his bankers, that on the completion of the contract he gave his own cheque for the deposit and that the two mortgages in question were given in order, temporarily, to enable him to complete the purchase and, further, that at the time of the purchase he announced, in effect, that he was buying the home for his wife. In these circumstances we can see no grounds upon which it can be asserted that the appellant is on any basis entitled either to contribution or a complete indemnity from the respondent.

[113]

I think that the last clause must be read as part and parcel of a contract by which, in consideration of the grant by the deceased of the sole right to take stone from the land, the construction company promised to pay in the way provided. I think that the promise of the company was to pay for the stone at the rate stipulated, such payments to be made to the husband and wife jointly during their lives and thereafter to the survivor. Several factors lead me to that conclusion. The document was signed not only by the deceased and the representative of the construction company, but also by the wife. I can see no reason for her signature except upon the basis that she had an interest in the performance of the contract. It is not, I think, altogether incongruous that a contractual term as to the manner of payment should be introduced by the words "I authorise". It was the deceased who could stipulate how his stone was to be paid for. His expression, "I authorise", should I consider be read as equivalent to a requirement by him. It can hardly have been intended by him that an arrangement expressed to continue in favour of the survivor of himself and his wife should be destroyed if he died first. It is true that a mandate by a living person which is revocable in his lifetime cannot become irrevocable on his death, except by means of a will duly executed. But I do not from that deduce that this was an ineffectual attempt by the deceased to give to a revocable mandate a quality which it could not have. I deduce rather that the clause as to payment was not revocable by the deceased. The case of In re Williams; Williams v. Ball [1] on which the appellant relied, does not, as I read it, contain anything which controverts this. That was a case of a man who had insured his life attempting to make a gift of the proceeds of the policy to another person by an authority to her to draw them if he should predecease her. The question was whether there was a complete and effectual assignment to her. It was held that there was not, that the authority given by him was revocable during his lifetime, and that therefore it was revoked by his death. The insurance company was not in any way a party to the transaction between the policy holder and the purported assignee. There was no promise on its part to pay her. The case was not even one of a mandate or authority given by a creditor to his debtor to pay a third person, which is what is contended for here. It was simply an authority given by the policy holder to a third person to receive the policy moneys.

[141]

the promise is made to Sir Edward Poole and the action is brought by Grizel and her husband, to whom the payment was agreed to be made, which ought not to be. That was in a sense a procedural objection; but, having regard to the form of the action of express assumpsit, it was more than merely procedural. Yet the Exchequer Chamber upheld the judgment. The case really turned however upon the expansive views of consideration then held, arising from close relationship and from the moral claims of a daughter to her portion. It is not at all surprising that Lord Mansfield warmly approved the decision. It accorded with his view that a moral obligation provided consideration for a binding promise, a notion not finally dispelled from the law until Eastwood v. Kenyon [1] . Today on the same facts as in Dutton v. Poole [2] the defendant could I imagine be compelled to make good his promise by an order for specific performance - not however in an action by Grizel, but by her father's representative, the defendant having obtained the land with the timber on it. Moreover today a court of equity would I imagine in a suit by the father's representative charge the land with the amount the defendant had promised to pay. Until Lord Denning recalled it, Dutton v. Poole [2] had been forgotten or disregarded in England. In Tweddle v. Atkinson [3] , Blackburn J. had said of it: We cannot overrule a decision of the Exchequer Chamber; but there is a distinct ground on which that case cannot be supported natural love and affection are not a sufficient consideration whereon an action of assumpsit may be founded. In 1918 Pound J., in the Court of Appeals of New York, while upholding in certain cases the right of the third party to bring an action, remarked that Dutton v. Poole [2] had been "long since repudiated in England": Seaver v. Ransom [4] . And in this Court, Fullagar J. said that it "must be taken to have been long since overruled": Wilson v. Darling Island Stevedoring and Lighterage Co. Ltd. [5] . 1. (1677) 2 Levinz 210 [ 83 E.R. 523]; T. Raym. 302 [ 83 E.R. 156]. 2. (1840) 11 Ad. & E. 438 [113 E.R. 482]. 3. (1677) 2 Levinz 210 [ 83 E.R. 523]; T. Raym. 302 [ 83 E.R. 156]. 4. (1677) 2 Levinz 210 [ 83 E.R. 523]; T. Raym. 302 [ 83 E.R. 156]. 5. (1861) 1 B. & S. 393, at p. 399 [121 E.R. 762, at p. 764]. 6. (1677) 2 Levinz 210 [ 83 E.R. 523]; T. Raym. 302 [ 83 E.R. 156]. 7. (1918) 224 N.Y. 233, 120 N.E. 639. 8. (1956) 95 C.L.R. 43, at p. 67.

[148]

I consider it to be an established rule of law that where a contract is made with A for the benefit of B, A can sue on the contract for the benefit of B and recover all that B could have recovered if the contract had been made with B himself. But I think we must take it that when the learned Lord Justice spoke of a contract for the benefit of B he was thinking of a contract of which A was a trustee for B - that is to say of a case in which A held his legal rights under a contract as a trustee for B. In such a case of course the question disappears: but the case I have supposed, a contract by A with B that B will pay C $500, is a transaction at law devoid of any equity in C. Yet I do not see why, if A sued B for a breach of it, he must get no more than nominal damages. If C were A's creditor, and the $500 was to be paid to discharge A's debt, then B's failure to pay it would cause A more than nominal damage. Or, suppose C was a person whom A felt he had a duty to reward or recompense, or was someone who, with the aid of $500, was to engage in some activity which A wished to promote or from which he might benefit - I can see no reason why in such cases the damages which A would suffer upon B's breach of his contract to pay C $500 would be merely nominal: I think that, in accordance with the ordinary rules for the assessment of damages for breach of contract, they could be substantial. They would not necessarily be $500; they could I think be less, or more. That is as I see it. I realize that (as Messrs. Goff and Jones mentioned in their work the Law of Restitution and as Mr. Treitel has recently emphasized) there are statements in Cleaver v. Mutual Reserve Fund Life Association [1] (by Lord Esher at p. 153 and by Fry L.J. at pp. 157, 158) which suggest that the promisee could recover not unliquidated damages but the sum which the promisor had agreed he would pay to the third party: but I find difficulty in seeing how this could be so. 1. (1879) 4 C.P.D. 197. 2. [1939] S.A.S.R. 164. 3. [1899] 1 I.R. 176. 4. [1962] S.R. (N.S.W.) 455, at p. 472. 5. (1880) 16 Ch. D. 290, at p. 321. 6. [1892] 1 Q.B. 147.

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