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[1967] HCA 3
High Court of Australia
1967-07-01
Owen JJ
Original judgment source is linked above.
High Court of Australia Barwick C.J. McTiernan, Taylor, Windeyer and Owen JJ. Coulls v Bagot's Executor & Trustee Co Ltd [1967] HCA 3
ORDER Leopold Perrin Coulls v. Bagot's Executor and Trustee Co. Ltd. and others. Appeal allowed with costs. Declaration and orders of the Supreme Court of South Australia set aside and in lieu thereof declare that the respondent O'Neil Construction Pty. Ltd. is entitled and bound to pay the royalties payable under the agreement dated 1st July 1959, to the respondent executor. Costs of all parties in the proceedings in the Supreme Court and of this appeal out of the estate of the testator, those of the executor as between solicitor and client. Bagot's Executor and Trustee Co. Ltd. v. Doris Sophia Coulls (Two appeals). Appeals dismissed with costs. Doris Sophia Coulls v. Bagot's Executor and Trustee Co. Ltd. and others. Appeal allowed with costs. Order of the Supreme Court of South Australia set aside and application under Testator's Family Maintenance Act, 1918-1943, remitted to Supreme Court for further hearing. Costs of the first hearing to abide the order for costs on the re-hearing.
Arthur Leopold Coulls of Highbury East, South Australia, died on 8th June, 1960, having made a will by which he appointed Bagot's Executor and Trustee Co. Ltd. (which I shall call the executor) to be his executor and trustee. He was the owner of a property known as "Watergully" comprising in all some three hundred acres. In January 1959 he gave to O'Neil Construction Pty. Ltd. (which I shall call the company) a right to quarry and remove stone from an area of approximately fifty acres of this property. The writing by which the grant of this right was made was in the following terms:
Agreement between Arthur Leopold Coulls and O'Neil Construction Proprietary Limited.
In consideration of the sum of £5 I Arthur Leopold Coulls, Anstey's Hill, Highbury East, give to O'Neil Construction Proprietary Ltd. the sole right to quarry and remove stone from an area of approximately 50 acres (fifty acres) situated around blue dolomite hill near homestead of original Newman's Nursery. The approximate 50 acres is detailed in attached map.
I also agree to grant a permanent right of way along the original Council road of "Watergully" to Perseverance Road.
O'Neil Construction Proprietary Ltd. agrees to pay at the rate of 3d. per ton for all stone quarried and sold, also a fixed minimum royalty of £12 per week for a period of ten (10) years with an option of another ten (10) years at above basis (£12 per week minimum).
I also agree to extend this period for another ten (10) years at 4d. per ton royalty with a minimum royalty of £12 per week as above.
I authorise the above Company to pay all money connected with this agreement to my wife, Doris Sophia Coulls and myself, Arthur Leopold Coulls as joint tenants (or tenants-in-common?) (the one which goes to living partner).
This agreement is effective from July 1st 1959 A. L. Coulls L. O'Neil D. S. Coulls.
It was signed by the deceased, L. O'Neil on behalf of the company and by Doris Sophia Coulls the wife of the deceased (whom I shall call the respondent), as well.
Questions having arisen in the administration of the estate of the deceased as to the rights arising from the signature of this document and under the will of the deceased, the executor, upon originating summons, asked the Supreme Court of South Australia the following questions:
In April 1960 a large house and land comprising about 33 acres, known as "Hillcrest", on the old Mount Barker Road, Aldgate, South Australia, was purchased at auction for the sum of £21,000 of which the deceased provided some £7,335 in cash. The balance was obtained by two advances secured by mortgages of the property, each to the same mortgagee, a first mortgage of £10,300 and a second of £3,800. The land was transferred into the names of the deceased and the respondent as joint tenants and they both signed each of the mortgages which contained a joint and several personal covenant to repay principal and interest.
In October 1963 the mortgagees sued the executor in two separate actions for the amount due for principal and interest under the respective mortgages. In each action the executor served a third party notice upon the respondent claiming contribution from her on the footing that she was a joint debtor with the deceased and complete indemnity from her on the footing that she was now the beneficial owner of the land upon which the mortgage debts were secured. The respondent contested both claims. Meantime, being uncertain of the outcome of these several proceedings, the respondent commenced proceedings under the Testator's Family Maintenance Act, 1918-1943 S.A., for an order making proper provision for her maintenance and advancement in life out of the estate of the deceased. The provision made by the deceased for the respondent by his will consisted of bequests of a Humber motor car, £1,000, a right to occupy the home and three acres of ground at Highbury East for her life, the respondent bearing certain outgoings in respect of the property, and also by cl. 7 he directed his
trustees to appropriate out of my residuary estate the sum of Twenty thousand pounds (which sum or the investments for the time being representing the same is hereinafter referred to as "the trust fund") and to stand possessed of the trust fund upon trust to invest same and to pay the income to arise therefrom to my wife the said doris sophia coulls during her lifetime and on the death of my said wife I direct that the trust fund together with the income thenceforth to accrue shall revert to and form part of my residuary estate and be dealt with accordingly and I expressly empower my trustees to appropriate any of the assets or investments comprising my residuary estate at the time of my death on account of the aforesaid sum of Twenty thousand pounds and to retain any such assets or investments notwithstanding the nature thereof as though such assets or investments were authorised trustee investments and with power to vary or transpose any such investments and I express the wish that my trustees will if they shall consider such a course practicable appropriate on account of the aforesaid sum of Twenty thousand pounds my property known as "Water Gulley" comprising approximately three hundred acres and I direct that pending the appropriation of the aforesaid sum my said wife shall be paid from my residuary estate an annuity of One thousand pounds per annum such annuity to be paid in equal monthly instalments the first of which to become due and payable one calendar month after my decease and to cease on the day when the aforesaid sum shall have been appropriated.
By an order made by the Master of the Supreme Court upon the application of the executor the proceedings under the Testator's Family Maintenance Act were referred into court to be heard on oral evidence at the same time as the originating summons which I have firstly mentioned and the third party proceedings in the two actions.
All four matters were therefore heard together partly upon affidavit and partly upon oral evidence. In the result the learned judge of the Supreme Court who heard them declared:
(1) that the company was neither entitled nor bound to pay to the executor the royalties payable under the writing which I have earlier set out;
(2) that the company was both entitled and bound to pay such royalties to the respondent;
(3) that the respondent is the lawful assignee of such royalties and entitled to demand payment of them to her and to hold them as her own.
He held that the respondent was not liable to indemnify or to make any contribution to the executor in respect of the judgments obtained against it by the mortgagees. He dismissed the respondent's application under the Testator's Family Maintenance Act and ordered her to pay the executor's costs of that application.
Appeals have been brought to this Court in all four matters, in three of which the executor is appellant and in the last of which, that relating to the application under the Testator's Family Maintenance Act, the respondent is appellant. All four appeals were by consent of all parties called on and heard together. It was conceded at the outset by counsel for the respondent that if the appeals by the executor were all dismissed, there would be no ground for making an order in favour of his client under the Testator's Family Maintenance Act and that, subject to consideration of the order for costs made by the primary judge, the appeal relating to the application under the Testator's Family Maintenance Act should be dismissed. It was, however, agreed by all parties to that application that if any of the executor's appeals were allowed, the dismissal of the respondent's application should be set aside. The Court intimated to the parties in that application that in that event the application would be sent to the Supreme Court for a new trial, a course which none of those parties sought to contest.
There are thus three substantial matters for decision in these appeals -
(1) What rights were created by the writing signed by the deceased, the company and by the respondent in January 1959 and what effect has the death of the deceased had upon any of those rights?
(2) Can the respondent receive and hold the said royalties as her own and also take the full benefit of the direction given in cl. 7 of the will? This matter is raised by the executor as a facet of the fourth question asked in the originating summons.
(3) What liability, if any, of the respondent to the executor arose upon the recovery of judgment by the mortgagees against the appellant executor, by reason of (a) the respondent having joined with her husband in the personal covenants of the mortgages; (b) her entitlement by survivorship upon his death to the sole proprietorship of the property "Hillcrest".
It will be convenient in respect of the first and third of these matters to relate some further part of the evidence given before the primary judge and to refer to his conclusions upon it.
The deceased prior to the signature of the writing in January 1959 had negotiated with Mr. O'Neil for the grant to the company of permission to quarry part of the area of "Watergully". At some stage he informed the respondent of these negotiations. She gave the following evidence as to the occasion on which the writing was made and signed:
my husband first informed me of the negotiations. I didn't take part in the negotiations. Mr. O'Neil and my husband talked it over, they dictated, I wrote it. I wrote out the agreement at their dictation. I wrote the agreement in the Highbury East dining room at lunch time. The agreement was drawn up without professional assistance. I rang Mr. Crump, a solicitor, but couldn't contact him. I rang him at request of Mr. O'Neil and my husband. The words "joint tenancy" came to be written in because first my husband said I was to have the income, all the income, but after discussions, I did not think that was quite fair, so he said while he lived, we would share it. But it was to come to me on his death and then, there was a discussion about the correct term.
There was discussion between all three of us, not one of us knew the correct term, we couldn't find a dictionary. We didn't know whether joint tenancy or tenants in common was the apt expression. That is why the words at the end were added.
The writing was signed in duplicate, each original in the handwriting of the respondent. Both are in evidence and it is evident from a perusal of them that the document as a whole was signed by all three persons. It was not divided into parts so that any of the signatures can be referred to only some portion of it. After the document had become operative, the company paid the royalties by cheque drawn to the deceased and the respondent. She says in her evidence:
Following on the signing of the agreement the cheques were made out to A. L. and D. S. Coulls by O'Neil. We received them once a month; my husband banked them in his account and then drew up a separate cheque for half the amount, which he gave me. That was the practice up until his death.
Since the death of the deceased the company has paid the royalties to the respondent and she has treated them as her own moneys.
The deceased and the respondent had married in 1954. She then had property of her own and, indeed, had earlier sold the property "Watergully" to the deceased. Each of them had been married before but whilst the deceased had two children, the respondent, Leopold Perrin Coulls, and the respondent, Evelyn Hazel Lange, by his first marriage, the respondent had had no children by either marriage. The deceased and the respondent occupied a house at Anstey's Hill, Highbury East, as their matrimonial home up to the time of the death of the deceased. Their marriage was a happy one but, according to the respondent, she was "not too popular with the family". The primary judge found that hostility had developed between her and the children of the deceased. The deceased and the respondent therefore decided to move the matrimonial home. Accordingly, the deceased decided to buy a better property with more facilities than existed at Highbury East. Both husband and wife attended the auction at which "Hillcrest" was put up for sale. The respondent did the bidding as the deceased was hard of hearing and whilst he did not set her any specific limit he did tell her when only two bidders remained "not to lose the property". The learned primary judge concluded that the property "was knocked down to him at her bidding for the price of £21,000". After the auction a contract was signed and the deceased gave the auctioneers his cheque for the deposit. The contract was not put in evidence and it is not known whether it was signed by the husband alone or by the husband and wife. No question was asked at the hearing by counsel for the executor to suggest that the respondent signed the contract. According to her "the house was to be his while he lives and mine after because before we bought it he said "if I buy you this house, will you promise to live in it if I go first" " to which the respondent said she responded affirmatively.
The deceased paid one-third cash for the property. As the respondent said in her evidence:
the rest was a mortgage taken out in both our names for three years at six per cent. There were two mortgages but we classed them as one. Between the date of the purchase and the date of his death the deceased endeavoured by an attempted sale of the Highbury East house and otherwise to obtain sufficient money to discharge these mortgages; but death supervened before he succeeded in doing so. According to the respondent, her husband had said that the debt on "Hillcrest" was his debt and that she had nothing to worry about. The learned primary judge concluded that it was the intention of the deceased himself to discharge the mortgage debts and that the respondent was joined in the personal covenants of the mortgages to satisfy the mortgagees.
I turn first to the construction of the writing which was signed by the three persons in January 1959. It may be accepted that this writing was the exclusive record of the agreement then made and that it may not be supplemented by parol evidence. However, its construction will be determined against the background of the then situation and known attitudes of the parties.
It is quite evident that the deceased wished to secure to his wife the produce of his grant of permission to quarry and carry away stone from "Watergully", as to one-half in his lifetime and to the whole after his death, if he predeceased her. It is also clear that he desired to do so by the writing which all three were then signing. I think it may also be taken that the respondent was very anxious in her own interest to be secure in respect of the moneys to come from the licence to quarry though she had not participated in the preliminary negotiations for its grant. The insistence upon a minimum royalty of £12 per week is indicative I think of solicitude for the respondent's security. There was a discussion in which both Mr. O'Neil and the respondent participated about the person or persons to whom the payment of the royalties should be made. At no stage do they appear to have considered that the deceased alone should be the recipient except in the possible but not probable event of his surviving the respondent. Mr. O'Neil also participated in the formulation of the last paragraph of the writing.
Then there is a reference to the survivor as the "living partner". Whilst it may be unlikely that a partnership was created between the deceased and his wife in connexion with the quarry activity, and whilst it may be that the word "partner" might possibly be a colloquial reference to their marital status, the word in the context of the writing as a whole does lend colour, to my mind, to the impression the document and the circumstances otherwise create that the persons intended a legal relationship to exist between the respondent and the company in connexion with the payment of royalty.
The right to quarry was to endure for ten years certain with an option of a further ten years on the same terms. There was also an agreement to extend the period for a further ten years at a slightly increased rate of royalty. The deceased at the date of the writing was seventy-five years of age and the respondent about sixty. It is therefore unlikely that he contemplated that he would personally be in a position to renew the licence after a lapse of twenty years. He doubtless considered that the respondent would during that period become the survivor of them.
The last paragraph in the writing refers to "all money connected with this agreement". This indicates, to my mind, that the deceased considered himself to be then determining the destination of the produce of his grant of the right to quarry for the whole period during which that right might subsist. The arrangement which was then being made for the payment of the royalty, in my opinion, was not conceived by the deceased or any of the other persons present as being or intended to be revocable but, on the other hand, was regarded as finally determining the identity of the recipients or recipient of all payment under the arrangement throughout the whole of its duration.
The last paragraph of the writing in terms refers to payment of such moneys to the deceased and to the respondent jointly with the express intention that payment should continue to be made to the survivor. Thereafter, so far as payment to himself in case he should be the survivor, the deceased, the company, and the respondent must be taken to have considered that the right to that payment would be derived from his survivorship and not from a direct promise to the deceased alone which had subsisted throughout.
However, it is the written expression of intention that must govern the rights of the parties. The use of the words "I authorise" in the last paragraph of the writing might well be taken as indicating that at that point the deceased alone was in control of the destination of the moneys promised to be paid, that is to say, that he was both the promisee and the payee. But the construction of the document involves a search for what the parties by their expressions really meant and is not to be answered by any narrow view of the customary legal significance of any particular word. I have already pointed out that the "authority" is to pay to his wife and to himself with right of survivorship. Of course, the deceased was the only person who could and did grant the right to quarry and remove stone from the land. He was the only one who could grant the necessary permanent right of way. Also, he or his representative would be the only person who could extend the period of the right to quarry. It is noteworthy that the parties do not seem to have regarded the promise to pay the royalty as the consideration for the grant by the deceased of these rights. They provided for the payment of £5 as being the consideration, but they treated the entire writing as being the agreement. Having regard to the deceased's situation in relation to the land, it would be natural I think for the parties to require some specific statement by him if he was not to be the sole recipient of the royalty payments. Thus the words "I authorise" in the last paragraph could well be read as in part indicating the concurrence of the deceased in the agreed payment of the royalty by the company to the respondent and himself jointly, and their use is not, in my opinion, but with deference to those who may think otherwise, decisive.
Whilst one cannot impute to these parties any knowledge of the law relating to mandates or assignments, it does seem to me that both the deceased and the respondent desired to bind the company to pay them both during their joint lives and thereafter the survivor whom I think they both expected to be the respondent. There is nothing to suggest that the company was unwilling so to be bound. Mr. O'Neil's interest in the correct term by which to describe the persons to whom the company was to pay the royalty is not without significance in this connexion. Of course, it may be thought that the deceased and the respondent thought that their desire in this respect could be secured by an authority to pay. But in that event there would have been no need, and I do not think the deceased and the respondent would have thought there was any need for her to sign the writing. Yet she did.
Neither the promisee nor the payee are expressly mentioned in the third paragraph of the writing which contains the company's promise to pay and the last paragraph is not dissociated from the rest of the writing but is in fact subscribed on behalf of the company. What then is the right construction of the writing? Ought it to be read as a promise by the company made to the deceased to pay the deceased the royalty the benefit of which or the proceeds of which the deceased contemporaneously assigned to himself and the respondent jointly, or is it such an agreement with a contemporaneous authority to pay either intended to be revocable at the will of the deceased or necessarily so revocable because of its terms? Or does the writing express on its right construction an agreement by the company made either with the deceased alone or with the deceased and the respondent to pay the deceased and the respondent jointly? If it is an agreement made with the deceased to pay the deceased accompanied by a mere authority by him to pay the royalties to himself and his wife that authority terminated with death, notwithstanding that according to its terms the deceased contemplated that it would be operative beyond his death. In that event the answers given by the learned primary judge could not be sustained.
Apparently the primary judge construed the document as containing such an agreement by the company with the deceased to pay him the royalties, but was of opinion that the benefit of that promise was assigned by the deceased by the final paragraph of the writing to himself and the respondent. But, with respect, I am unable to find in the final paragraph of the writing any assignment. In my opinion, it cannot be held that there was a legal assignment of the benefit of the promise made to the deceased to pay him the royalty: see s. 15 of the Law of Property Act, 1936-1956 S.A.. I do not find in the writing either language appropriate to an assignment or language describing an intention to assign. Further, in so far as the proceeds of the promise, as distinct from the promise itself, are concerned, there was no consideration given by the assignees to support an equitable assignment. Though I agree with the learned trial judge that the writing clearly evidences an intention on the part of the deceased that the respondent should have the benefit of the promise to pay the royalty, if his unexpressed intention was to secure that result by assignment of the promise or of its proceeds, effect cannot be given to such an intention. Consequently, I could not in any event support the third declaration made on the originating summons. Further, it seems to me that neither of the other declarations made by the primary judge would be supportable if the basis on which he found an assignment was correct, namely, that there was a promise by the company with the deceased to pay him the royalties.
It seems to me that the radical question in the case is whether or not the last paragraph of the writing is no more than a mere authority to pay. If it were, its presence in the writing would resolve both the question as to the promisee and the payee with and to whom the company agreed to pay. If it is not a mere mandate and is not, as I think it is not, an attempted assignment, then it seems to me that the parties intended a direct legal obligation on the part of the company to make the payments of royalties as directed. The intention of all three persons that the respondent was to participate in the proceeds of the grant of the licence to quarry, in "all money connected with the agreement", is beyond question. The circumstance that payment was to be made to the deceased and the respondent and to the survivor of them, in my opinion, negatives any intention that that situation was considered to be capable of change at the will of the deceased. I have already mentioned that the use of the expression "all money connected with this agreement" in the circumstances rather tends against such a view. And significantly the last paragraph is incorporated in the agreement as a whole and the document as a whole is subscribed by all three persons and notably by the respondent. I have searched for any reason for the signature of the document by the respondent but have been unable to find any except the reason that she was intended to be a party to the document.
In In re Williams; Williams v. Ball [1] to which we were referred in argument, an authority to pay the proceeds of a life insurance policy to a named person in the event of the signatory predeceasing her was held to be no more than a revocable mandate none the less so though it was intended to operate after the death of the signatory. It was not an assignment: and as an authority to receive there was nothing to show that it was intended to be irrevocable. Indeed, it was clearly revocable because payment was only to be made if the named person survived the signatory. In that case it was sought to construe expressions in the form of an authority as an assignment. Once it was decided that there was no assignment either for want of the necessary intention, in relation to which revocability was a relevant consideration or that any such intention was ineffective, nothing remained but to give the writing an operation according to its mere form. But here of course the competition in construction is not merely between assignment or mandate. Here the intention is that payment to the deceased and the respondent jointly shall commence at once, continue throughout their joint lives and thereafter be made to the respondent for the balance of the term of the licence. In my opinion, upon its right construction the last paragraph is not a mere mandate or authority to pay. It serves in the document as a whole to complement the third paragraph and to nominate the person to whom the company promises to pay the royalties. Having formed this conclusion, after much consideration, it seems to me that the writing as a whole should be construed as evidencing an agreement by which the company, having been granted by the deceased a binding licence to quarry stone from the land, promised to pay the royalty payments to the deceased and the respondent for their joint lives and thereafter to the survivor of them.
If that is the right conclusion to draw from the writing, as I think it is, then it is clear that the company is both entitled and bound to pay the royalties to the respondent and that the executor could not require the company to pay the royalties to it. Whether the promise to pay the husband and wife jointly was a promise made to them jointly or to the deceased alone, the answers to questions 1, 2 and 3 would be the same and they would conform to the declarations 1 and 2 which the learned primary judge made.
The originating summons does not in terms raise any question as to the enforcement of payment of the royalties. Indeed, according to the facts of the case, the company is continuing to pay the royalties to the respondent and nothing in the evidence suggests that it proposes to discontinue that course. However, it was argued by counsel for the executor that whether the promise to pay the deceased and the respondent jointly be made with the deceased and the respondent or whether it be made with the deceased alone, the respondent could not enforce it or require the executor to do so for the reason that she gave no consideration for the making of the promise. As the question of the enforcement is thus specifically raised, I propose to say something about it.
Before turning to discuss its enforceability it is convenient to determine with whom the promise was made. As I have already said, there is nothing in the writing to indicate expressly to whom the promise of the company was given. But, bearing in mind the matters to which I have already referred, the grant of a licence to quarry for a cash consideration, the participation of the company's representative in the discussion as to the payees and the signature of all three parties in what was regarded as a single arrangement, I have come to the conclusion that not only was the promise to pay a promise to pay the deceased and the respondent during their joint lifetime and thereafter the survivor of them but that it was a promise given to both of them to make those payments.
It must be accepted that, according to our law, a person not a party to a contract may not himself sue upon it so as directly to enforce its obligations. For my part, I find no difficulty or embarassment in this conclusion. Indeed, I would find it odd that a person to whom no promise was made could himself in his own right enforce a promise made to another. But that does not mean that it is not possible for that person to obtain the benefit of a promise made with another for his benefit by steps other than enforcement by himself in his own right: see the recent case of Beswick v. Beswick [1] . I would myself, with great respect, agree with the conclusion that where A promises B for a consideration supplied by B to pay C then B may obtain specific performance of A's promise, at least where the nature of the consideration given would have allowed the debtor to have obtained specific performance. I can see no reason whatever why A in those circumstances should not be bound to perform his promise. That C provided no part of the consideration seems to me irrelevant. Questions of consideration and of privity are not always kept distinct. Indeed, on some occasions when lack of privity is the real reason for not allowing a plaintiff to succeed on a promise not made with him, an unnecessary and irrelevant reason is given that the plaintiff was a stranger to the consideration; that is to say, that he was not merely not a party to the agreement but was not a party to the bargain. In Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co. Ltd. [2] privity was not lacking because it was assumed, but the promise made by the defendant to the plaintiff was as between them gratuitous. But in this case whether the promise was made by the company to the deceased alone or to the deceased and the respondent, it was not as between promisor and promisee a gratuitous promise.
But as I construe this writing, we have here not a promise by A with B for consideration supplied by B to pay C. It was, in my opinion, a promise by A made to B and C for consideration to pay B and C. In such a case it cannot lie in the mouth of A, in my opinion, to question whether the consideration which he received for his promise moved from both B and C or, as between themselves, only from one of them. His promise is not a gratuitous promise as between himself and the promisees as on the view I take of the agreement it was a promise in respect of which there was privity between A on the one hand and B and C on the other. Such a promise, in my opinion, is clearly enforceable in the joint lifetime of B and C: But it is only enforceable if both B and C are parties to the action to enforce it. B, though he only supplied the consideration, could not sue alone. If C were unwilling to join in the action as plaintiff, B no doubt, after suitable tender of costs, could join C as a defendant. And A's promise could be enforced. But the judgment would be for payment to B and C. If B would not join in an action to enforce A's promise, I see no reason why C should not sue joining B as a defendant. Again, in my opinion, A's promise would be enforced and a judgment in favour of B and C would result. In neither of these cases could A successfully deny either privity or consideration. I find nothing in Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co. Ltd. [1] to suggest that he could.
Upon the death of one of the joint promisees the promise remains on foot and remains enforceable but it is still the same promise given to B and C though, because of the death of one and the right of survivorship, the promise is now to pay the survivor. C, it seems to me, being the survivor, may enforce the promise by an action to which both B's estate and C are parties. However, C could not, in any event, in my opinion, be the sole plaintiff against A because A's promise was not made with C alone. Consequently, B's personal representative would need to be either a co-plaintiff or joined as a defendant, though in this case the judgment would be for C alone, the promise with B and C being to pay the survivor of them: see Attwood v. Rattenbury [2] .
Being of this opinion it is unnecessary for me to discuss the question as to whether and, if so, how the respondent could enforce a promise made to the deceased alone to pay her and the deceased for their joint lives and thereafter the survivor of them. In my opinion, however, the right to quarry being specifically enforceable, the executor could enforce the promise to pay the respondent. If he happened to receive them, he could not retain the proceeds of the action beneficially. The question whether C can require the executor to enforce such a promise, or by any means use the executor's name to do so need not presently be investigated.
In my opinion, questions one, two and three should be answered in the same sense as the first and second declarations made by the primary judge.
So far as the claims of the executor that the respondent indemnify or make contribution are concerned, I have found little difficulty. The basis of these claims is, as to contribution, that the deceased and the respondent were joint debtors between whom there is generally a right of contribution, and as to indemnity, that the respondent has become absolutely and beneficially entitled to the property upon which the mortgage debts were charged. But these claims are simply answered by either of two cognate arguments. The deceased bought the house. It was not as was the case in McMillan v. National Trust Co. [1] upon which the executor's counsel set considerable store, a commercial purchase by husband and wife to which each made a separate financial contribution. It was bought by the husband and conveyed into the joint names of the two of them by way of advancement to the wife as to her joint interest in the land. Apart from any presumption, which of itself would be enough, the intention so to do is manifest in the evidence. The subject matter of the advancement was not, in my opinion, an equity but clearly a freehold: cf. per Warrington J. in Dunbar v. Dunbar [2] . So to conclude denies any right to contribution or indemnity by the respondent in respect of the mortgage debts. Alternatively, it can properly be said that the borrowing of money upon the security of the land was to provide the deceased with the purchase money for the property. It was not borrowed for them both but for him alone. The signature of the mortgage, including its personal covenant, was not intended by the parties to create any right of contribution or indemnity. The learned primary judge was right to dismiss the third party proceedings.
The third of the substantial questions which I set out earlier in these reasons can also be disposed of very briefly. The executor's submission is that the respondent as a beneficiary under the will of the deceased is put to her election. The counsel said that, because the royalties provided the income of the "Watergully" property the respondent could only take the benefit of the direction in cl. 7 of the will which I have earlier set out, if she credited against the income of the £20,000 there mentioned or of any income substituted for it under the powers given by that clause of the will the amount of the royalties received by her under the writing of January 1959. Or put another way, she must abandon the royalties to the executor if she is to take the benefit of the direction in cl. 7 of the will.
But it seems to me that this proposition stems from a misconception of the terms of the will and of the relevant facts. Clause 7 of the will gives to the respondent the income of £20,000. It does not give her the income of "Watergully", though it enables the trustees to raise, and, if thought practicable by them, indicates the deceased's desire that they should raise the amount of £20,000 out of "Watergully". Further, if it matters, there is nothing to show that the royalties do form the sole income of "Watergully". Finally, there does not seem to me to be any case for election on the part of the respondent. I see no reason why she should not retain the royalties and at the same time have the benefit of the direction given by the deceased in cl. 7 of his will.
In my opinion, all appeals should be dismissed but the order of the Supreme Court varied by substituting for the declarations therein made the following answers to the questions in the originating summons:
Question 3: If the executor received the royalties he would hold them for the respondent.
Question 4: The respondent is not the assignee of the royalties but, as one of the promisees of the company's promise to pay them, she is entitled to demand payment of the royalties to her and to hold them as her own.
I have considered the question of the order for costs made by the learned primary judge on the dismissal of the respondent's application under the Testator's Family Maintenance Act. It would seem that the reference of that application into court and the order for its contemporaneous hearing with the executor's applications was not at her request or with her consent. However, she did have the benefit of the application being on foot and, whilst I might not have taken the same course, I am not disposed to interfere with the exercise of discretion of the primary judge in making his order for costs.
The testator's estate includes an area of land which is the subject of a right to quarry which he gave some months before his death to O'Neil Construction Pty. Ltd. An agreement for the grant of the right and payment of royalties was composed by the testator and the company's representative L. O'Neil. This was done without professional assistance and an inartistic writing was made by the testator's wife at their dictation to record the transaction into which they entered. A. L. Coulls, the testator, L. O'Neil and D. S. Coulls, wife of A. L. Coulls, signed the document. The wording of the document is meagre. All it states about the grant of the right to quarry is that it is exclusive, and about the royalties that O'Neil Construction Pty. Ltd. agrees to pay stipulated amounts for a period of ten years, reserving an option to exercise the right for a further period. The grant of the right itself includes no stipulation as to its duration. It appears from a mandate of A. L. Coulls on the company which concludes the document written out by Mrs. Coulls that the testator desired that she and he would share the proceeds of the agreement as joint owners and the reversion in royalties should go to the survivor. The testator's wife is the survivor. Previous to his death the company paid the royalties as they fell due to them jointly and A. L. Coulls who received the cheques divided the proceeds equally between his wife and himself. The death of A. L. Coulls does not terminate the company's right to quarry or the obligation imposed on the company by the agreement to pay royalties.
Questions have arisen in connexion with the administration of the estate of A. L. Coulls whether (1) the agreement imposes on the company a contractual obligation to pay the royalties to the testator's widow and (2) whether the mandate is binding on the executor.
The document in question divides itself into two parts. The first consists of four memoranda of the agreements which constitute the contract between A. L. Coulls and the company for the right to quarry. The second part is a memorandum of the mandate. The third memorandum in the document contains the agreement on the part of the company to pay royalties. It is not stated expressly with whom the agreement is made or to whom the company agrees to pay the royalties. This is an instance of the meagreness that characterizes the wording of the agreement. Other examples are the incompleteness of the second and fourth memoranda in it.
Because Mrs. Coulls signed the document it is argued that she, as well as her husband, are parties to the agreement evidenced by the third memorandum and that the agreement by the company is to pay the royalties to them jointly till one dies and then to pay them to the survivor, the manner of payment being according to the mandate. I am of opinion that this argument is contrary to the whole tenor of the document. The first part of it purports to be a transaction only between A. L. Coulls and the company. The words of the document including its heading "Agreement between Arthur Leopold Coulls and O'Neil Construction Proprietary Limited" countervail against the inference that Mrs. Coulls is a party, sought to be drawn from the fact that she signed it. It seems to me that the third memorandum evidences an agreement between the company and A. L. Coulls on the amount of the royalties and the period of the right to quarry.
I am of opinion that the correct view of the first part of the document is that it is a contract to which the only parties are A. L. Coulls and the company; and it is implied in the contract that the company is liable to pay to A. L. Coulls the royalties stipulated by the third and fourth memoranda in the document. Accordingly, I hold that the provisions of the document do not impose on the company a contractual obligation to pay to Mrs. Coulls any royalty which accrues due from it after the death of the testator or at all.
The words of the mandate are as follows: "I authorise the above Company to pay all money connected with this agreement to my wife Doris Sophia Coulls and myself, Arthur Leopold Coulls as joint tenants (or tenants in common?)." I would interpret the words "all money connected with the agreement" as meaning money debts to accrue due under the agreement.
It was decided by Mayo J. that the mandate operated as an immediate assignment by A. L. Coulls of an interest concurrent with his interest in the royalties during their joint lives and Mrs. D. S. Coulls would become entitled by survivorship to the royalties falling due as from her husband's death. With respect I do not agree that the mandate is a good assignment. I think that it is not a good statutory assignment because it is not an immediate transfer of the entire interest of A. L. Coulls in any of the royalties and Mrs. Coull's right to the entire interest is conditional on her husband predeceasing her. The mandate is of the nature of a direction by a creditor to a debtor to pay his debt to himself and a third party - communicated to such party. An equitable assignment of a legal chose in action could take that form. The mandate in the instant case is not a completely constituted trust. As already stated the interest purported to be assigned is a part interest in future debts, not being specific funds. The mandate is not effective to transfer such interest because Mrs. Coulls is a volunteer and as has been said the mandate is not a completely constituted trust.
I am of opinion that the company was merely acting as mandatory of A. L. Coulls during the period it paid the royalties to him and his wife. The mandate was therefore revocable by him and it lapsed by reason of his death. There is no ground for holding that it is binding on the executor. I am of opinion that the first appeal should be allowed.
The second and third appeals should, in my opinion, be dismissed. I agree with the reasons of the Chief Justice in each of those appeals.
As regards the fourth appeal I think that, because I reach the conclusion that Mrs. Coulls is not entitled to the royalties under the document in question, the judgment and order of the Supreme Court of South Australia should be set aside and a new trial of the matter be had.
These four appeals were heard together and it is convenient to dispose of them in the same way.
Leopold Perrin Coulls v. Bagot's Executor and Trustee Co. Ltd., O'Neil Construction Pty. Ltd. and Doris Sophia Coulls.
The appellant was one of the defendants to proceedings commenced by way of originating summons for the determination of certain questions relating to the construction of an agreement in writing said to have been made in January 1959 between Arthur Leopold Coulls, deceased (the testator) in his lifetime and O'Neil Construction Pty. Ltd. (the company). The plaintiff in the proceedings was the respondent Bagot's Executor and Trustee Co. Ltd. (the trustee) and the defendants, other than the present appellant, were the company and the respondent Doris Sophia Coulls who was the widow of the deceased. We have said that the agreement was made between the testator and the company but there is a question whether the lastnamed respondent was also a party.
In his lifetime the testator was the owner of a substantial portion of land in South Australia and the questions arise with respect to an agreement which purported to give to the company the sole right to quarry and remove stone from a portion of it. The agreement in question is in the following terms:
Agreement between Arthur Leopold Coulls and O'Neil Construction Proprietary Limited.
In consideration of the sum of £5, I Arthur Leopold Coulls, Anstey's Hill, Highbury East, give to O'Neil Construction Proprietary Ltd. the sole right to quarry and remove stone from an area of approximately 50 acres (fifty acres) situated around blue dolomite hill near homestead of original Newman's Nursery. The approximate 50 acres is detailed in attached map.
I also agree to grant a permanent right of way along the original Council road of "Watergully" to Perseverance Road.
O'Neil Construction Proprietary Ltd. agrees to pay at the rate of 3d. per ton for all stone quarried and sold, also a fixed minimum royalty of £12 per week for a period of ten (10) years with an option of another ten (10) years at above basis (£12 per week minimum).
I also agree to extend this period for another ten (10) years at 4d. per ton royalty with a minimum royalty of £12 per week as above.
I authorise the above Company to pay all money connected with this agreement to my wife Doris Sophia Coulls and myself, Arthur Leopold Coulls as joint tenants (or tenants-in-common?) (the one which goes to living partner).
This agreement is effective from July 1st 1959 A. L. Coulls L. O'Neil D. S. Coulls.
Some eighteen months after the making of the agreement the testator died and questions arose whether the trustee or the testator's widow were entitled to the royalties which accrued after his death. In particular the following questions were raised by the originating summons:
These questions were not precisely answered by the learned judge of first instance but he disposed of the originating summons by making the following declarations:
It was argued in the court below that the wife of the testator was a party to the contract and, alternatively, that the last paragraph of the contract operated as an equitable assignment to her of the royalties payable thereunder after the death of her husband. For our part we are quite unable to see how the last paragraph of the agreement can operate as an equitable assignment having regard both to its terms and to the fact that, even if its terms had not precluded this result, it was not supported by consideration. If, however, the correct conclusion is that the widow was a party to the contract it is, to our minds, clear that she is entitled to receive the royalties payable after her husband's death notwithstanding that she, personally, gave no consideration for the company's promise. We do not accept the contention advanced on behalf of the appellant that if one, only, of two joint promisees provides the consideration for a promisor's promise the other promisee cannot, in any circumstances, sue to recover moneys payable according to the promise. Indeed it is apparent that in such circumstances at common law an action to recover must have been brought by both promisees and that it would fail if brought by one alone. Further it is established that on the death of one of such joint promisees the right of action against the debtor vests at common law in the survivor though of course this does not necessarily determine the ultimate rights, inter se, of the the survivor and of the estate of the deceased promisee (Martin v. Crompe [1] ; Anderson v. Martindale [2] ; and Jell v. Douglas [3] ). The question to be determined, then, is whether the testator's wife was a party to the contract and whether, upon its true construction, the contract contains a promise by the company to pay to her the royalties falling due under the contract after the testator's death.
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:
Bagot's Executor and Trustee Co. Ltd. v. Doris Sophia Coulls (2 Appeals).
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.
Doris Sophia Coulls v. Bagot's Executor and Trustee Co. Ltd., Leopold Perrin Coulls and Evelyn Hazel Lange.
This is an appeal from an order dismissing an application by the appellant made under the provisions of the Testator's Family Maintenance Act, 1918-1943. We were informed that in the event of the Court dismissing the three appeals with which we have already dealt the appellant would not wish to proceed with this appeal. However, having regard to the fact that we are of the opinion that the appeal with respect to the royalties payable under the contract of January 1959 should be allowed and that the destination of the royalties under that agreement was a vital consideration upon the hearing of this application, the order of dismissal should be set aside and the application remitted for a fresh hearing.
The question in the first of these appeals is whether Mrs. Coulls, the widow of Arthur Leopold Coulls deceased, is since his death entitled to moneys becoming due and payable by O'Neil Construction Pty. Ltd. (which I shall call the construction company) under the contract which has been called the royalty agreement.
In the Supreme Court, and at first before us, the question was put as a choice between regarding the last clause of this agreement as an irrevocable assignment by the deceased, or as a mere authority by him to the construction company to deal in the way specified with moneys which were his, an authority revocable by him during his life and revoked by his death.
When the document was executed the Watergully land belonged to the deceased. His wife had no proprietary interest in it. It had once been hers, but she had sold it to him some years before they were married. Only he could sell the stone that was on it. If she was to participate in the price for which it was sold, that could only be by his assent. In cross-examination she was asked: "You did not pay your husband any moneys for the right to receive those royalties?" She replied: "No. It was a gift to me." There is no doubt about that, but the question is, How was this gift effected? A right to receive the royalties could be conferred by assignment or in other ways. When A by contract with B secures a promise from B, he may, if he wishes to benefit C, assign to him his contractual right. But, as it was put in an American case, La Mourea v. Rhude [1] , "instead of waiting to do it by assignment, A may, at the outset, exact from B the same promise in favour of C".
The learned judge in the Supreme Court regarded the royalty agreement as a contract between the deceased, Coulls, and the construction company, and an immediate assignment by him of the royalties to accrue under it. But the last clause is not expressed as a transaction between the deceased and his wife. It does not purport to be an assignment to her of a legal chose in action pursuant to the statute in that behalf. And if it could be read as an attempted equitable assignment it would fail for want of consideration; for a legal chose in action is now assignable at law, and there is no equity to perfect an imperfect voluntary gift. If therefore it was an attempted assignment it was ineffectual, and the appellant would succeed in his appeal. But I am unable to read the last clause as an attempted assignment. What then is its effect?
The appellant contends that it is nothing more than a mandate by the deceased to pay to his wife moneys to which he was to become entitled. If that were all that it was, it was revocable by him at any time, and was revoked on his death in respect of all moneys not already paid pursuant to it. A mere mandate given by a creditor to his debtor to pay the debt to a third party can be countermanded before it is acted upon; and it is terminated by the death of the creditor. The argument is that there was such a mandate in this case. The words "I authorise" are apt for that; and, although not composed by a lawyer, the document as a whole is carefully worded. It can, I appreciate, be read as a contract between the deceased and the construction company, followed by a revocable direction by him to the company as to the payment of royalties becoming due to him under the contract. But, with respect for the opinion of those who hold this view of the document, I have come to the conclusion that it is not what on its true construction it means.
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.
I therefore conclude that in the present case it was a term of the contract that, as from the death of Coulls (he having predeceased his wife), all moneys becoming due under the agreement should be payable to the respondent, Mrs. Coulls. That being so, the answer to the question in the originating summons: "Is O'Neil Construction Pty. Ltd. entitled or bound to pay the royalties under the agreement to Doris Sophia Coulls the deceased's widow?", must I think be "Yes. It is entitled to do so; and it is bound to do so". That is because that is what it must do to perform its contract.
Whether by agreement between Coulls and the construction company the royalty agreement could have been varied in his lifetime without the concurrence of Mrs. Coulls, or could now without her consent be varied by agreement between the executor and the company, is a question which I shall consider later. While the royalty agreement stands, the executor cannot require that payments which under it are to be made to Mrs. Coulls should not be made to her: and, if the executor intercepted any payments destined for her, it could not lawfully withhold them from her: In re Schebsman [1] .
Nevertheless it was argued that, because Mrs. Coulls had furnished no consideration for the promise of the construction company to pay the royalties to her, she could not herself enforce its promise, and that therefore it could not be said to be bound to pay her. In a practical sense this proposition lacks reality; for the company does not dispute its liability to pay the royalties; and, on the hypothesis under consideration, namely that its undertaking was to pay the survivor of Coulls and his wife, it has no obligation to pay anyone except Mrs. Coulls. However, I think I must examine the argument, which raised some fundamental questions.
As I have said, I read the document as an undertaking by the company to pay royalties in the stipulated manner. The transaction can then be analysed, in terms of contract, in either of two ways. One is that the company (by its agent O'Neil) promised Coulls and his wife, for valuable consideration (actually provided by him but on behalf of both of them), that it would pay the royalties to them for their joint lives and afterwards to the survivor.
The other analysis is that the company (by O'Neil) promised Coulls alone for consideration moving from him alone that it would pay the royalties to him and his wife for their joint lives and afterwards to the survivor. In my view the former analysis is, for reasons I shall give, the correct one. However, as I appreciate that the other is open and derives some support from the heading of the document, I shall consider the consequences of each to shew why in my opinion the ultimate answer in this case is the same in whichever way the contract be viewed.
My reasons for saying that the promise by the construction company was made to Coulls and Mrs. Coulls as joint promisees are as follows. Mrs. Coulls was present when the agreement was drawn up: she wrote the document from dictation: she, Coulls and O'Neil all took part in a discussion of how an arrangement for payment to the deceased and herself jointly and then to the survivor solely should be expressed. She said in her evidence:
The words "joint tenancy" came to be written in because first my husband said I was to have the income, all the income; but after discussion I did not think that was quite fair, so he said while he lived we would share it and then there was a discussion about the correct term. There was a discussion between all three of us, not one of us knew the correct term, we couldn't find a dictionary. We didn't know whether joint tenancy or tenancy in common was the apt expression. That is why the words at the end were added.
This evidence could not be used to contradict or explain the document if there were any doubt about its meaning. But, taken with the fact of Mrs. Coulls being one of the signatories to the document, and with the fact that the promise was to pay the deceased and her jointly during their lives, it does I think aid the conclusion which I draw from its terms, that she and he were joint promisees. On that basis she was not a stranger to the contract, but a party to it with him.
Still, it was said, no consideration moved from her. But that, I consider, mistakes the nature of a contract made with two or more persons jointly. The promise is made to them collectively. It must, of course, be supported by consideration, but that does not mean by considerations furnished by them separately. It means a consideration given on behalf of them all, and therefore moving from all of them. In such a case the promise of the promisor is not gratuitous; and, as between him and the joint promisees, it matters not how they were able to provide the price of his promise to them. That is the position as I see it. It accords with the very old decision in Rookwood's Case [1] and with general principle.
On this view, that Coulls and Mrs. Coulls were joint promisees, an action against the construction company would, during their joint lives, have had to be brought in the names of both. If one had refused to be joined as a plaintiff, he or she could, after an offer of indemnity against costs, have been made a defendant: Whitehead v. Hughes [2] ; Cullen v. Knowles [3] ; Rodriguez v. Speyer Brothers [4] . After the death of either of two joint promisees an action on a contract can be brought by the survivor alone: see Halsbury's Laws of England, 3rd ed., vol. 8, p. 67. Therefore Mrs. Coulls, on the basis that she is a surviving joint promisee, could now bring an action on the contract; and in respect of moneys becoming due and payable under it since the death of her husband recover them for herself alone.
I turn now to the other view of the transaction - as a contract between Coulls and the construction company that it would pay the royalties to himself and his wife during their joint lives and afterwards to the survivor of them.
By the common law of England only those who are parties to a contract can sue upon it. For us that statement is incontrovertible. But what exactly is meant by it? Is there a useful distinction between denying a right of action to a person because no promise was made to him, and denying a right of action to a person to whom a promise was made because no consideration for it moved from him? The change the learned authors of Cheshire and Fifoot on Contract made in their sixth (1964) edition, p. 65, from their earlier editions illustrates the question. Now, after a recantation of earlier opinion, they say that
So long as consideration is an essential feature of English law it would seem to be immaterial whether a person is forbidden to sue on the ground that he has given no consideration or on the ground that he is a stranger to the contract. They are but two ways of saying the same thing. Yet a distinction was from an early date made, verbally at least, between the two matters. Actions of assumpsit were sometimes said to fail because the promise sued on was not made to the plaintiff - a very early example is Jordan v. Jordan [1] . In other cases they were said to fail because, as it was put in Bourn v. Mason and Robinson [2] the plaintiff did nothing of trouble to himself or benefit to the defendant but is a mere stranger to the consideration. And sometimes it was said of an unsuccessful plaintiff that he was not privy to either the promise or the consideration. The two matters were stated separately, and each was said to be fundamental, by Lord Haldane in the well-known passage in his speech in Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co. Ltd. [3] And Lord Wright, in Vandepitte v. Preferred Accident Insurance Corporation of New York [4] also stated them separately when he said that no doubt at common law no one can sue on a contract except those who are contracting parties and (if the contract is not under seal) from and between whom consideration proceeds. Doubtless the two requisites merge in the strict view of a contract as a bargain, a promise for which the promisee has paid the price. Yet the question as posed by Williston has perhaps not been firmly and finally answered: Does the law require that promises shall be paid for by the promisee, or does it merely require that the promise shall be paid for by someone?: Williston on Contracts, 3rd ed., vol. 1, s. 114. 1. (1595) Cro. Eliz. 369 [ 78 E.R. 616]. 2. (1669) 1 Vent. 6, at p. 7 [86 E.R. 5, at p. 6]. 3. [1915] A.C. 847, at p. 853. 4. [1933] A.C. 70, at p. 79.
In the United States the question does not now arise in the same way as it does for us. There, in most but not in all jurisdictions, third persons (both donee-beneficiaries and creditor-beneficiaries as they are called) are now able to sue directly upon contracts made by others for their benefit. This rule, now accepted by the Restatement of the Law of Contracts, was arrived at only after much conflict among courts and commentators, as the following passage, from the judgment in Tweeddale v. Tweeddale [1] shews:
It is useless to endeavour to review the authorities touching the subject before us with a view of harmonizing them upon any one single theory as to the principle upon which the liability to the third person is based, or as to what are the essential elements to effect it. There is as much confusion, probably, in the judicial holdings in respect to the matter, as on any question of law that can be mentioned There is confusion not only between different courts, but confusion in the decisions in many jurisdictions in the same court. 1. (1903) 116 Wis. 517; 93 N.W. 440, at p. 442.
On whatever foundation the American doctrine be put, it cannot, I think, be accepted as a part of the common law as we have inherited it. For us the rule prevails that a plaintiff who sues on a promise must shew a consideration for it provided by him. It may be a mistake to regard the judgments in Tweddle v. Atkinson [2] - reported somewhat differently in 1 B. & S. 393 and in 30 L.J. N.S. 265 - as the apotheosis of this rule. That came later, in the House of Lords, in Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co. Ltd. [3] , reiterated in Midland Silicones Ltd. v. Scruttons Ltd. [4] . Nevertheless Lord Denning M.R. has said that the common law allowed a person for whose benefit a contract was made to sue on it, that the decision in Tweddle v. Atkinson was a mistaken departure from this the true rule, "settled law for two hundred years before 1861". His Lordship seems to have modified his views recently, in Beswick v. Beswick [5] . Instead of condemning Tweddle v. Atkinson as an unfortunate and wrong decision, he now regards it as explainable and distinguishable, while adhering to his view of the common law. His Lordship's assertions - vigorously and insistently made, if I may say so - must put one upon respectful and careful inquiry, notwithstanding that they have been disputed by other judges and by commentators.
But at the commencement of the inquiry come some misgivings about the method and purpose. To wish that the law of England recognized the tertius and allowed a ius quaesitum tertio, as Scots law does, or recognized a stipulation pour autrui, as French law does, or to regret that the common law has not developed in England as it has in America is an attitude that I can appreciate. But it is it seems to me another thing to hope that the desired result can now be brought about by looking back to the sixteenth and seventeenth centuries. I do not, I hope, undervalue the history of a legal doctrine as an aid to an understanding of it. But I am unable to think that looking at the common law "in its original setting" necessarily determines what it is in the setting of today. The history of much of our law is a story of development over centuries. The process still goes gradually on. The law of today is a living law. I would not suggest we should arrest its growth. But is a rule, which for a century or more has been said to be a fundamental principle of the common law and which has been asserted as such upon the highest authority, to be now condemned as a mistaken aberration because at some earlier stage in the history of our law a different rule prevailed? I think not. The common law develops, but not by looking back to an assumed golden age. I have said elsewhere that
the only reason for going back into the past is to come forward to the present, to help us to see more clearly the shape of the law of to-day by seeing how it took shape: Attorney-General (Vict.) v. The Commonwealth [1] . And I developed this view in a passage in what I wrote in Commissioner for Railways (N.S.W.) v. Scott [2] . I shall not repeat it. Statements made by courts hundreds of years ago about the doctrine of consideration ought not I think to be taken as pronouncements of the law today, ignoring all that has been said in the meantime, ignoring all changes in social conditions and men's ways. It is I think equally erroneous - and for this even Holdsworth (History , vol. 8, pp. 12,13) can be cited - to suppose that the earlier statements were not authoritative pronouncements of the law at the time they were made because those who made them did not see the shape of things to come. 1. (1962) 107 C.L.R. 529, at p. 595. 2. (1959) 102 C.L.R. 392, at p. 447.
It was supposed at one time in the history of our common law, that there was an exceptional class of cases, in which where a contract was made for the benefit of a person who was not a contracting party, that is to say, a stranger, it could be enforced by that person at law. It would be mere pedantry now to go through the history of that idea: it is sufficient to say that in the case of Tweddle v. Atkinson [1] the true common law doctrine has been laid down: Gandy v. Gandy [2] . I would leave it at that, were it not for the statements still being made that in 1861 the Court of Queen's Bench subverted the common law and that we should now struggle to restore the faith. Because of these I have ventured upon the pedantry which Lord Bowen deprecated, and in particular upon an examination of the case of Dutton v. Poole [3] , on which Lord Denning has persuasively relied. 1. (1861) 1 B. & S. 393 [121 E.R. 762]; 30 L.J. N.S. ( Q.B.) 265. 2. (1885) 30 Ch. D. 57, at p. 69. 3. (1677) 2 Levinz 210 [ 83 E.R. 523]; T. Raym. 302 [ 83 E.R. 156].
It is true that in the reports of the sixteenth and seventeenth centuries many cases may be found in which third persons, not themselves promisees, from whom no consideration had moved, successfully sued in assumpsit. Those that I have looked at are Disborne v. Denabie and other cases in 1 Rolle Abr. 31 pl. 5; Lever v. Heys [4] ; Provender v. Wood [5] , where it was said that "the party to whom the benefit of a promise accrews, may bring his action"; Starkey v. Mill [6] ; Thomas v. Thomas [7] ; Hornsey v. Dimocke [8] ; Bell v. Chaplain [9] ; Bafeild v. Collard [10] . In the last two cases it was said that either the party to the promise or the person to be benefited might sue.
However, soon after those decisions another current was running, and with some force. In editions of Selwyn's Nisi Prius, published many years before 1861, there was a heading "Consideration must move from Plaintiff", for which Bourne v. Mason [11] ; Crow v. Rogers [12] and Price v. Easton [13] were cited. Bourne v. Mason [14] came before the Court of King's Bench on several occasions, and produced enough discussion of principle to make it worth while looking at each of the references in Keble's Reports. Buller's Nisi Prius, 7th ed. (1817) 133 (a), stated that "assumpsit lies only for the person to whom the promise was made and not for those who are strangers and for whose benefit it was intended", citing Ritly v. Dennett [15] . As late as 1812 counsel argued that "assumpsit may be brought either by the person to whom the benefit accrues, or by the person to whom the promise is made". But the proposition did not then go unquestioned: Phillipps v. Bateman [1] .
The fact is that the early cases are conflicting, because during the sixteenth, seventeenth and eighteenth centuries the doctrine of consideration in the common law was still in process of formation. Whether, and in what circumstances, third parties should be allowed to bring assumpsit was still debatable. The law was not in fact "settled" either way during the two hundred years before 1861. But it was, on the whole, moving towards the doctrine that was to be then and thereafter taken as settled. And with the growth of the rule that consideration must move from the promisee there went a hardening of the meaning of consideration. For the common lawyers it was not something evidencing an intention to be bound by a simple promise, rather it was an essential of an action of express assumpsit. Whatever influence Roman and Canonist ideas of causa may perhaps at one stage have had, consideration came to be the material price of a bargain, not the origin of a moral obligation.
The true explanation of the decision in Dutton v. Poole [2] is not, I think, that the judges of the King's Bench in 1677 thought that an action of assumpsit might be brought by a person who was not privy to the promise and who had furnished no consideration. The case was twice argued. The report in Levinz's Reports shews, in an entertaining way, doubts, differences and dissents among the judges of the King's Bench. True, in the Exchequer Chamber the point taken was, according to the report in Thomas Raymond's Reports (p. 302), that
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.
For these reasons I must respectfully, and I may add somewhat regretfully, say that I cannot from an excursion into history reach the conclusion that Lord Denning has. Whether we like them or not, the rules relating to consideration seem to me a stubborn part of our law. They cannot be displaced by courts by head-on collision. Fortior et potentior est dispositio legis quam hominis. Where then does the law now stand?
Suppose that A makes a contract with B that, for consideration moving from A, B will pay $500 to C, and that B fails to do so, C cannot sue B at law. Nor can he seek relief in equity unless A has become a trustee for him of his, A's, rights under the contract. (I leave out of consideration any statutory modification of these rules.) It is, however, equally certain that A can sue B for damages; for, by not paying C, B has broken his contract with A. (Alternatively A may sue B for specific performance in a case where that remedy is available.) Two questions arise. If A sues for damages, what damages can he recover from B? Secondly - for whom does he get them, himself or C?
Although the third person cannot as a rule sue alone in his own name, nevertheless there is no difficulty whatever in the one contracting party suing the other party for breach of the promise. So far, I suppose no-one could disagree. But his Lordship goes on to say: The third person should, therefore, bring the action in the name of the contracting party, just as an assignee used to do; and he concludes that by this means the third party can obtain what the promisor had promised to pay him. 1. [1966] Ch. 538, at p. 554.
That again I must respectfully take leave to doubt. In the first place, it supposes that the damages which the promisee suffered because the contract with him was broken are to be measured by, and equated with, the benefits which the third person would have got had it been performed. In the second place, it assumes that the plaintiff brings his action on behalf of the third person, who becomes entitled to its fruits. For reasons which will appear, I cannot accept either proposition. In the third place, I doubt whether the case of an assignee suing in the name of his assignor, according to the practice before the Judicature Act, provides a sound analogy. That kind of action was brought to recover a debt due from the defendant to the assignor, who had assigned it to the assignee, who thereupon became entitled to sue for it in the assignor's name. On this I venture to refer to what I said in Norman v. Federal Commissioner of Taxation [2] . But equity has not come to the aid of third persons for whose benefit contracts were made in the same way as it did for assignees of debts. In Tweddle v. Atkinson [3] Blackburn J. said:
I should think that a court of equity would say that the sum, if recovered by the father, would be a trust fund for the son. But, as we know now, this was not to be the general rule in such cases. It may be that, if, instead of authorizing John Tweddle to sue the contracting parties in his own name, the document in Tweddle v. Atkinson had authorized him to sue either one in the name of the other, and he had sued his father-in-law Atkinson in his father's name, the result would have been different. I should say here that since I wrote what appears above I have learnt that an appeal to the House of Lords is now pending in the case of Beswick v. Beswick [1] . Until the opinions of their Lordships be known any expressions of agreement or disagreement with anything said in the judgments in the Court of Appeal must therefore be somewhat tentative; but, on the particular hypothesis as to the transaction in the present case which I am now considering, it is not possible to avoid the matter which was argued before us. I shall therefore deal with it as I now see it. 1. (1963) 109 C.L.R. 9, at p. 27. 2. (1861) 30 L.J. (N.S.) Q.B. 265, at p. 267. 3. [1968] A.C. 58.
The question which presents itself at this point is what is the measure of damages for breach of a promise to confer a benefit upon a third party? Take the case supposed above - a contract by A with B under which B is to pay $500 to C. A sues B for breach of contract. There are authorities which say that he could recover only nominal damages, because it is C who has suffered not he: see West v. Houghton [2] ; Viles v. Viles [3] ; but cf. Drimmie v. Davies [4] . As Else-Mitchell J. remarked in Cathels v. Commissioner of Stamp Duties [5] , the cases on this point are "conflicting and unsatisfactory". No difficulty would arise if a statement of Lush L.J., in Lloyd's v. Harper [6] , could be accepted without qualification and regardless of its context. He said:
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.
Suppose that A does recover substantial damages for B's failure to perform his promise to A to pay C $500 - the next question is does he recover these damages for himself or for C. Notwithstanding the statements in Beswick v. Beswick [2] suggesting that he would recover them for C, I do not see why this should be. On the hypothesis of a purely contractual right with no trust attached, why should A hold for C the proceeds of his action? He sued at law for damages he himself suffered, not as the representative of C. C had no right of action. A, not being a trustee of his contractual rights, might, had he wished, have released B from his contract, or declined to sue him for breach of it; or by agreement between A and B the contract could have been varied. C could not have complained. Why then is it said that proceedings brought by A to enforce his legal right give C a right against A when previously he had none? (I leave out of consideration the possibility of a bargain between A and C supported by consideration moving from C.) Of course A, whose purpose had miscarried because of B's breach of contract, might make over any damages he recovered to C: but that would not be because C had a right to them, but because A still wished to give effect to his plan to confer a benefit on him. In a case in which specific performance was an available remedy, A might choose to seek that form of redress against B, and thus obtain a judgment that B pay C $500. But that would not be because A was enforcing a right of C, but because he was enforcing his own right against B by obtaining an order that B perform his contract with him, A. For this reason - and always on the assumptions that there was no trust and that the transaction was as between A and C wholly gratuitous - I am not persuaded that C could force A to seek redress from B, or dictate to him what form of redress, specific performance or damages, he should seek.
On the interpretation of the royalty agreement now under consideration Coulls, or his executor, could in my opinion obtain an order for specific performance by the construction company of its promise to pay the royalties. This agreement can be regarded as specifically enforceable because of the interests in land involved. That suffices, in this case, but I would be prepared to go further. The decision in Beswick v. Beswick [1] points out the way and, as at present advised. I would follow it. I do not think it is really a new way, although it is perhaps now more easily seen. It seems to me that contracts to pay money or transfer property to a third person are always, or at all events very often, contracts for breach of which damages would be an inadequate remedy - all the more so if it be right (I do not think it is) that damages recoverable by the promisee are only nominal. Nominal or substantial, the question seems to be the same, for when specific relief is given in lieu of damages it is because the remedy, damages, cannot satisfy the demands of justice.
"The Court", said Lord Selborne, "gives specific performance instead of damages only when it can by that means do more perfect and complete justice": Wilson v. Northampton and Banbury Junction Railway Co. [2] . Lord Erskine in Alley v. Deschamps [3] said of the doctrine of specific performance: This Court assumed the jurisdiction upon this simple principle; that the party had a legal right to the performance of the contract; to which right the courts of law, whose jurisdiction did not extend beyond damages, had not the means of giving effect. Complete and perfect justice to a promisee may well require that a promisor perform his promise to pay money or transfer property to a third party. I see no reason why specific performance should not be had in such cases - but of course not where the promise was to render some personal service. There is no reason today for limiting by particular categories, rather than by general principle, the cases in which orders for specific performance will be made. The days are long past when the common law courts looked with jealousy upon what they thought was a usurpation by the Chancery Court of their jurisdiction. 1. (1874) 9 Ch. App. 279, at p. 284. 2. (1806) 13 Ves. Jun. 225, at pp. 227, 228 [33 E.R. 278, at p. 279].
Nevertheless I fail to see how allowing a promisee to obtain an order for specific performance by a promisor of his promise to pay moneys or transfer property to a third person can give the third person himself any right to enforce a contract to which he was not a party. The promisee has a choice of remedies. But, unless he be a trustee of his contractual rights, he can, if he chooses, abandon both. On the hypothesis that Mrs. Coulls was not a party to the contract, that the contract was only with her husband, it seems to me that there is a logical hiatus in saying that she could compel proceedings to enforce it.
The situation thus created does not fit quite neatly into a classification of rights and reciprocal remedies. It suffices, however, to refer to the analysis by Du Parcq L.J. in In re Schebsman [1] , which I respectfully adopt. The primary obligation of a party to a contract is to perform it, to keep his promise. That is what the law requires of him. If he fails to do so, he incurs a liability to pay damages. That however is the ancillary remedy for his violation of the other party's primary right to have him carry out his promise. It is, I think, a faulty analysis of legal obligations to say that the law treats a promisor as having a right to elect either to perform his promise or to pay damages. Rather, using one sentence from the passage from Lord Erskine's judgment which I have quoted above, the promisee has "a legal right to the performance of the contract". Moreover, we are concerned with what Fullagar J. once called "a system which has never regarded strict logic as its sole inspiration": Tatham v. Huxtable [2] .
For these reasons I conclude that, even on the hypothesis that Mrs. Coulls was a third person to be benefited but not a party to contract, the answer to the question in the originating summons is still that the construction company is bound to pay the royalties to her, for, whatever difficulties she might have in compelling it to do so, it would break its contract if it did not do so.
The construction company was bound by contract to pay the royalties to Coulls and his wife during their lives and to the survivor after the death of either.
Whether the contractual promise of the company was with Coulls and his wife jointly or with Coulls alone, the result for the purposes of this originating summons is the same.
I need express no opinion about the scope and effect of the South Australian enactment corresponding to s. 56 (1) of the English Law of Property Act, 1925. I find difficulty in seeing in it a complete reversal of the rule that only those who are parties to a bargain can enforce it at law. But the question is debatable and it will it seems soon be considered by the House of Lords. There is as yet no authority upon it in this Court, and this case can be decided without making one.
I do not think that Mrs. Coulls is required to elect between her right to the royalties and the benefit of cl. 7 of the will. I do not wish to add anything to what the Chief Justice has said for that conclusion.
I would therefore dismiss the appeal in this case, but answer the questions in the originating summons as the Chief Justice proposes instead of as they were answered in the Supreme Court.
As to the appeals concerning the mortgage: I agree that they should be dismissed. I do not wish to add anything to the reasons for that conclusion which are given in the judgments of the other members of the Court.
I agree in what the Chief Justice has said about the testator's family maintenance proceedings and the order for costs made therein. I would dismiss that appeal also.
Coulls
Bagot's Executor & Trustee Co Ltd