High Court of Australia|1927-12-08|Before: Starke JJ, Act J

For the reasons I have stated, I think that Long Innes J. should have allowed the demurrer and that we should do so now.

In this case the point in limine is whether the Supreme Court of New South Wales in its equitable jurisdiction had power to entertain the matter. In the opinion I have formed I find it unnecessary to embark on a discussion of the history of the genesis of the New South Wales Supreme Court and the distribution of its powers. I may say, in passing, that from my experience as counsel at the New South Wales bar and afterwards as a Judge of the Supreme Court of the State the separation of the two systems has worked admirably. This separation does not, from my observation in other States, show to any disadvantage by comparison with the judicature system there prevailing. This opinion is, I believe, shared by lawyers in some, at any rate, of these States.

The amended statement of claim, after alleging the lease to the plaintiff company by the defendants' predecessors in title and the covenant for payment of rates, taxes, &c., sets out in full the covenant for quiet enjoyment, which is in the restricted form usually found in leases: "That they" (the lessees) "paying the said rent hereby reserved in the manner aforesaid and performing all and singular the covenants herein contained on their part to be performed shall and may quietly enjoy the said demised premises during the said term without any interruption from or by the said lessors their his or her heirs or assigns or any person or persons lawfully claiming or to claim through under or in trust for him her or them." The statement of claim contains (inter alia) the following prayers: "(1) that it may be declared that the plaintiff is not under the said indenture and memoranda liable to pay any part of the said rate to any person and that the plaintiff has not been guilty of any breach of covenant of the said lease and memoranda and that the defendants are not and never have been entitled to re-enter upon the said land for breach of covenant by the plaintiff; ... (2) (a) that the defendants may be restrained from committing or continuing to commit a breach of the covenant mentioned in par. 2 (a) hereof; (3) that the defendants may be restrained from proceeding with the said action."

I agree with Long Innes J. that the suit may be regarded as one praying for equitable relief in the shape of an injunction to restrain a breach by the lessors of their covenant contained in the lease. It is trite law that a Court of equity has jurisdiction to entertain a suit to restrain a breach of covenant. Under the old practice the jurisdiction was ordinarily exercised only in cases where it was proper to grant an interlocutory injunction to prevent irreparable injury pending the trial of the legal right at law. But to this there was an exception. When the covenant was negative it was the practice to entertain jurisdiction whether risk of irreparable injury could be shown or not. This position is clearly established by the "rule enunciated" by Lord Cairns in Doherty v. Allman[46]: - "My Lords, if there had been a negative covenant, I apprehend, according to well-settled practice, a Court of equity would have had no discretion to exercise. If parties, for valuable consideration, with their eyes open, contract that a particular thing shall not be done, all that a Court of equity has to do is to say, by way of injunction, that which the parties have already said by way of covenant, that the thing shall not be done; and in such case the injunction does nothing more than give the sanction of the process of the Court to that which already is the contract between the parties. It is not then a question of the balance of convenience or inconvenience, or of the amount of damage or of injury - it is the specific performance, by the Court, of that negative bargain which the parties have made, with their eyes open, between themselves." (See also Elliston v. Reacher[47]; Sharp v. Harrison[48].) The position is the same where the covenant though positive in form is negative in substance, save that in such a case the Court exercises a somewhat larger discretion (Doherty v. Allman[49]; O'Keefe v. Williams[50]).

When a breach of substantially a negative covenant is alleged a Court of equity has jurisdiction to entertain a suit to restrain the breach whatever form the alleged breach may take; and it makes no difference, in my opinion, that the breach takes the form of the institution of an ejectment action, assuming that the institution of such an action does constitute a breach. In the present case the covenant, although to some extent positive in form, is clearly negative in substance. The question, then, is whether there has been what may be claimed to be a breach of the covenant for quiet enjoyment. The terms of the covenant are prefaced with the qualification that the lessee performs the covenants of the lease. It, however, alleges it has done so, and this is an issue which is raised. Moreover, under the words of this covenant the payment of rent is not a condition precedent to the performance of the covenant for quiet enjoyment (Edge v. Boileau[51]).

Sec. 10 of the New South Wales Equity Act 1901, before its amendment by sec. 18 of the Administration of Justice Act 1924, is a re-enactment of sec. 50 of 15 & 16 Vict. c. 86. That section was construed in Sheo Singh Rai v. Mussumut Dakho[52]. Their Lordships adhered to the opinion declared in several decisions of the Board that sec. 15 of the Indian Act VIII. of 1859, relating to declaratory decrees, ought to receive the same construction as sec. 50 of the English Act 15 & 16 Vict. c. 86, which is similarly worded, has received from the English Courts. After referring to a case where it had been laid down that a declaratory decree ought not to be made unless there is a right to some consequential relief which, if asked for, might have been given by the Court, or unless in certain cases a declaration of right is required as a step to relief in some other Court, it was said: - "The question whether a right to some consequential relief exists must therefore arise in all suits in which a declaration of title is sought. It is enough for the present purpose to observe that a right to come to the Court to have a document or act which obstructs the title or enjoyment of property cancelled or set aside or for an injunction against such obstruction would be sufficient to sustain a declaratory decree." This test is satisfied in the case under consideration. The facts in this case show an interference with the title and possession of the land (Dennett v. Atherton[53]; Robinson v. Kilvert[54]; Cohen v. Tannar[55]).

"A breach" of the covenant for quiet enjoyment "may occur either by molestation arising from an action of any kind relating to the title of possession, or by any act by which the lessee is disturbed in the possession of the premises. Of the first sort is an ejectment by a person having a lawful title; or any other suit by which the peaceable occupation of the premises is prevented: thus, a covenant" in a lease, "that the lessee should quietly enjoy the estate discharged from tithes, was held broken by a suit for them, although commenced after the expiration of the term (Lanning v. Lovering4(1603) Cro. Eliz. 916.)" (Woodfall's Landlord and Tenant, 21st ed., p. 865). Whether a writ of ejectment is equivalent to re-entry by the landlord was left open in In re Morrish; Ex parte Hart Dyke[57]. But that case does not in any way impeach or throw doubt on the authority of the judgment of Willes J. in Grimwood v. Moss[58] (see Serjeant v. Nash, Field & Co.[59]). In the last-mentioned case Collins M.R. says[60]: - "The only question is whether the lessor had availed herself of the breach of covenant in a final manner. I think that she had done so, for, except by taking physical possession of the premises, she had done the only thing that she could do to indicate her intention to put an end to the lease." His Lordship, referring to the judgment of Willes J. in Grimwood v. Moss said: - "The learned Judge" (Willes J.) "added, with reference to the case of Jones v. Carter9(1846) 15 M. & W. 718.: - I entirely agree that the true principle upon which that decision was founded was, that the bringing of the action of ejectment is equivalent to the ancient entry. It is an act unequivocal in the sense that it asserts the right of possession upon every ground that may turn out to be available to the party claiming to re-enter. ... It is quite clear if the landlord, instead of bringing ejectment, had entered, he could have justified in an action of trespass by reference to any act of forfeiture which he could prove." Collins M.R. then proceeds[62]: - "That principle is as much applicable to the procedure of to-day as to that under the Common Law Procedure Act which dispensed with the old allegation of entry and ouster. That being so, it is clear that the writ in the action to recover possession was a conclusive election to treat the act of the lessee in sub-demising the premises without the consent of the lessor as creating a forfeiture. It is true that the rights of the parties were not determined by the issue of the writ, and could not be finally determined until the result of the action was known; but that consideration does not affect the fact of the election of the lessor to treat the lease as at an end, subject to proof that there had been a breach of covenant which entitled her to do so." (See also Commissioners of Works v. Hull[63]; Scarf v. Jardine[64].) In Moore v. Ullcoats Mining Co.[65] Warrington J., as he then was, says with reference to a proviso for re-entry similar to that in this case: - "Is the writ ... a re-entry within the words of the proviso for re-entry or equivalent to a re-entry? I think that it is now settled that under a proviso for re-entry, such as the one in the present case, a writ claiming possession simpliciter, and any further relief which is incidental to a claim for possession, would be equivalent to a re-entry." "The bringing of an ejectment for the forfeiture is equivalent to an entry, and amounts to an election to determine the term from the day on which the plaintiff claims to be entitled to possession" (Cole on Ejectment, p. 408). Such a determination puts an end to the right of possession, both of the tenant himself and of all sub-tenants (Great Western Railway Co. v. Smith[66]). The person who re-enters is remitted to his former estate and all mesne estates are avoided (Bac. Abr., "Conditions," (O) 4; Co. Litt. 202_A_).

These authorities satisfy me that there is jurisdiction to entertain this suit in the New South Wales Court of Equity, and the question becomes one of convenience and exercise of discretion - whether the State Court should have dealt with it or left the parties to their common law action. As the suit has proceeded to judgment and the facts are before this Court, it would be most inconvenient and unjust to place the burden on the parties of relitigating the same facts in the common law Courts. The result of this will be that a jury will automatically return a verdict by direction. This will, no doubt, be followed by an appeal to the Full Court of the Supreme Court of the State and thence again to a final Court of appeal.

As I understand the majority of the Court think that there is no jurisdiction to entertain this suit, I shall refrain from giving the opinion I have written on the substance of the case.

The Imperial statute 9 Geo. IV. c. 83, secs. 3 and 11, enacted that the Supreme Court of New South Wales should be a Court of Record and should have cognizance of all pleas civil, criminal and mixed as fully and amply as His Majesty's Courts of King's Bench, Common Pleas, and Exchequer, or either of them lawfully had in England, and also that it should be a Court of equity in New South Wales and should have power and authority to administer justice and to do, exercise and perform all such acts, matters and things necessary for the due execution of such equitable jurisdiction as the Lord High Chancellor of Great Britain could or lawfully might within the realm of England, and all such matters and things as could or might be done by the said Lord High Chancellor within the realm of England in the exercise of the common law jurisdiction belonging to him. Originally this jurisdiction was exercised by the Full Court, but in 1840 the statute 4 Vict. No. 22, sec. 20, authorized the appointment of the Chief Justice or one of the puisne Judges to sit and hear without the assistance of the other Judges all causes or matters depending in the Supreme Court in Equity, and, ultimately, it was provided that the jurisdiction of the Supreme Court in Equity should be exercised by the Chief Judge in Equity or other Judge of the Supreme Court of New South Wales (Equity Act 1880, No. 18; Equity Act 1901, No. 24; Supreme Court and Circuit Courts Acts 1900, No. 35, sec. 15; 1912, No. 9, sec. 5). Thus the Supreme Court of New South Wales acquired the jurisdiction of the High Court of Chancery. However, the common law and equitable jurisdictions of the Supreme Court were never exercised in the same proceeding and law and equity were not administered in one or the same cause or matter as under the judicature system of England. The provisions of various Acts passed in England to amend the practice and course of proceedings in the Court of Chancery were adopted in New South Wales. Thus it was enacted that no suit should be open to objection on the ground that a merely declaratory decree is sought thereby and the Court might make binding declarations of right without granting consequential relief (Chancery Procedure Act 1852 (15 & 16 Vict. c. 86), sec. 50; Equity Act 1880, No. 18, sec. 50, re-enacted by Equity Act 1901, sec. 10). So also it was enacted: "In any suit or proceeding in equity wherein it may be necessary to establish any legal title or right as a foundation for relief the Court shall itself determine such title or right without requiring the parties to proceed at law to establish the same and wherever any question now cognizable only at law shall arise in the course of any proceeding the Judge shall have cognizance thereof as completely as if the same had arisen in a Court of law and shall exercise in relation to such title right or question all the powers of the Supreme Court in its common law jurisdiction and no suit in equity shall be open to objection on the ground that the remedy or appropriate remedy is in some other jurisdiction" (Equity Act 1880, No. 18, sec. 4; Equity Act 1901, sec. 8; cf. Chancery Procedure Act 1852, sec. 62, and Chancery Regulation Act 1862, sec. 1). "Decisions upon this section have imposed a limitation upon the apparent generality of its closing words. The section does not make the Court a Court of law but only empowers the Court to decide common law questions incidentally arising in an equity suit. The plaintiff must establish some recognized equitable ground for coming to the Court and then all questions, whether legal or equitable, arising in the suit can be determined" (Rich, Newham and Harvey's Practice in Equity, p. 7). It is too late now to question these decisions even if in our opinion more weight should have been given to the closing words of the section: they have been acted upon for years and must be accepted as the true construction of the section. In 1924, however, the Equity Act of 1901 was amended and, as a result of that amendment, which follows the words of Order XXV., r. 5, of the English Judicature Rules, the Equity Act 1901, sec. 10, reads thus: "No suit shall be open to objection on the ground that a merely declaratory decree is sought thereby, and the Court may make binding declarations of right whether any consequential relief is or could be claimed or not" (Equity Act 1901, sec. 10: Administration of Justice Act 1924, sec. 18). So far as procedure is concerned the Equity Act 1901, sec. 22, prescribes that all suits in equity shall be commenced by filing in the office of the Master a statement of the plaintiff's case, to be called the statement of claim, in the forms and manner prescribed. Under the Regulœ Generales (1st August 1902), Part VII., r. 82, the statement of claim shall contain as concisely as may be a narrative of the material facts and circumstances on which the plaintiff relies and shall pray specifically for the relief to which the plaintiff may consider himself entitled and also for general relief.

The jurisdiction of the Supreme Court in its equitable jurisdiction to hear and determine the case now before us depends upon the true effect of the enactments and rules already referred to, and, essentially, in my opinion, upon the proper construction of the Equity Act 1901, sec. 10, as amended in 1924 by the Administration of Justice Act 1924, sec. 18. Now, the amended section is a remedial provision and should receive as liberal a construction as possible. It seems to me that the question is whether the Supreme Court in its equitable jurisdiction has been given a general power to make declaratory orders at the instance of a party interested in the subject matter or whether, as the Chief Judge in Equity, Harvey J., held in Tooth & Co. v. Coombes[67], the power is confined to suits for equitable relief or relating to equitable rights and titles. (See also Furphy v. Nixon[68] and see Schnelle v. Dent[69].) The origins of the jurisdiction of the Court of Chancery are, according to Lord Redesdale, obscure, but its powers and duties became "fixed and acknowledged" (see Mitford on Pleading, 4th ed., pp. 1, 2, 111). When, however, it was said that the Court of Chancery had no jurisdiction to make a declaration of right, what was meant was that it would "not according to its settled practice do so except in a certain way and under certain circumstances" - "that it was not matter proper or convenient for it to adjudicate upon" (Guaranty Trust Co. of New York v. Hannay & Co.[70]). Consequently, when in England the jurisdictions vested in the Courts of common law and chancery were transferred to the High Court of Justice, the validity of a rule - Order XXV., r. 5 - was sustained enabling the High Court to entertain what might be called "an action of declarator." It was argued that the decision rests upon two considerations. The first, that the Judicature Act substituted one High Court for the former common law and chancery Courts. Now, as to this, in New South Wales both common law and chancery jurisdiction had always been vested in one Court - the Supreme Court. No doubt those jurisdictions were administered separately, but that they existed in the same organ is beyond dispute. The second, that the Chief Judge or other Judge sitting in equity had an equitable jurisdiction only. But that denies that the Equity Act, sec. 10, as amended in 1924, "creates a new practice which cannot be limited by the old equitable practice"; and that is the very matter in dispute. Unless it does create a new practice, the Supreme Court of New South Wales cannot, apparently, use the convenient modern device provided in Order XXV., r. 5, of the English Judicature Rules. It certainly cannot do so in the common law jurisdiction of the Supreme Court. Actions for declarations were, however, commonplace in its equitable jurisdiction and the jurisdiction to declare rights extended even to legal rights if incidental to some equitable claim. There is no reason in the nature of things why that power should not be extended to declare rights generally (see Russian Commercial and Industrial Bank v. British Bank of Foreign Trade Ltd.[71], especially the speech of Lord Dunedin). For my part I can find no meaning for the words "whether any consequential relief is or could be claimed or not" unless the power be general. The Supreme Court in its equitable jurisdiction might without those words have declared equitable rights or titles and even legal rights if incidental to some equitable claim (Jenner v. Jenner[72]). We have been warned, however, that if the clause were so construed as to give the Supreme Court of New South Wales in its equitable jurisdiction a general power to entertain actions of declarator, juries would be abolished, the construction of any contract or document might be drawn into equity and a revolution would have been accomplished. Personally I do not think much harm would result from such a revolution: it has not been noticeable in England or in the other States which have adopted the English practice. But the real answer to the argument is that the power is one which would be carefully watched and only exercised in appropriate cases by the learned Judges who administer the equitable jurisdiction of the Supreme Court of New South Wales. In my opinion the Supreme Court in its equitable jurisdiction had power to make a declaration defining the rights of the parties in relation to the dispute mentioned in par. 8 of the amended statement of claim. If so, the jurisdiction is limited only by the discretion of the Court. That discretion should be exercised judicially (Hanson v. Radcliffe Urban Council[73]), but I do not think this Court should say at this stage that the Supreme Court ought not to have exercised its power in this suit. Had the learned Judge who heard the suit allowed the question in dispute between the parties to be determined in the ejectment action brought on the common law side of the Court, I should have been content to abide by that determination. The dispute, however, involved a mere point of law which does not require the investigation of any facts. This suit was, I think, on the whole, the most expeditious and the least costly method of settling it. In any event no useful purpose would now be served by setting aside the whole proceedings and leaving the parties to have the dispute settled in the common law action of ejectment - a course which can only cause much extra expense and delay and will probably result in further appeals. In my opinion, this Court should deal with the dispute and give its judgment upon the substance of the matter. But as a majority of the Court is of a contrary opinion it would be idle for me to express any opinion upon the question whether the plaintiff is or is not bound to discharge the rate imposed under the Sydney Harbour Bridge Act 1922.

[2] (1895) 16 N.S.W.L.R. (Eq.) 221.

[6] (1895) 16 N.S.W.L.R. (Eq.) 221.

[9] (1895) 16 N.S.W.L.R. (Eq.) 221.

[10] (1913) 13 S.R. (N.S.W.) 444.

[12] (1895) 16 N.S.W.L.R. (Eq.) 221.

[17] [1758] EngR 226; (1758) 2 Burr. 665, at p. 668.

[18] (1924) 1 Ch. 236, at p. 247.

[22] (1871) L.R. 7 Ex. 26, at p. 35.

[25] (1872) L.R. 8 Ch., at p. 27.

[26] (1873) L.R. 16 Eq. 433, at p. 440.

[29] (1859) 4 DeG. & J. 276, at p. 300.

[30] (1873) L.R. 16 Eq., at p. 440.

[32] (1895) 16 N.S.W.L.R. (Eq.) 221.

[33] (1913) 13 S.R. (N.S.W.) 444.

[34] (1833) 5 B. & Ad. 584, at p. 588.

[38] (1837) 2 My. & Cr. 558, at pp. 573-576.

[39] (1811) 18 Ves. 56, at p. 58.

[40] (1837) Sau. & Sc. 615, at p. 622.

[42] (1923) 23 S.R. (N.S.W.) 299.

[45] (1925) 42 N.S.W.W.N., at p. 94.

[46] (1878) 3 App. Cas., at pp. 719-720.

[47] (1908) 2 Ch. 374, at p. 395.

[48] (1922) 1 Ch. 502, at p. 514.

[49] (1878) 3 App. Cas., at p. 730.

[50] [1910] HCA 40; (1910) 11 C.L.R. 171, at pp. 211, 212.

[52] (1878) L.R. 5 Ind. App. 87, at p. 111.

[53] (1872) L.R. 7 Q.B. 316, at p. 326.

[54] (1889) 41 Ch. D. 88, at pp. 96, 97.

[55] (1900) 2 Q.B. 609, at p. 613.

[57] (1882) 22 Ch. D. 410, at pp. 425, 427.

[59] (1903) 2 K.B. 304, at pp. 313, 315.

[60] (1903) 2 K.B., at pp. 310, 311.

[63] (1922) 1 K.B. 205, at pp. 208, 209.

[64] (1882) 7 App. Cas. 345, at p. 361.

[65] (1908) 1 Ch. 575, at p. 584.

[66] (1875) 2 Ch. D. 235, at p. 253.

[68] [1925] HCA 34; (1925) 37 C.L.R. 161, per Isaacs J. at p. 173.

[69] [1925] HCA 12; (1925) 35 C.L.R. 494, at p. 524.

[70] (1915) 2 K.B. 536, at pp. 563, 567.

[72] (1866) L.R. 1 Eq. 361, at p. 368.

[73] (1922) 2 Ch. 490, at p. 507.

Harbour Bridge Act 1922

Law Procedure Act 1899

Laws Validity Act 1865

South Wales Equity Act 1901

David Jones Ltd v Leventhal [1927] HCA 53; (1927) 40 CLR 357 (8 December 1927)

David Jones Ltd v Leventhal [1927] HCA 53;

At a glance

Court

Decision date

Before

Source

Judgment (53 paragraphs)

Parties

Legislation Cited (7)

Cases Cited (2)

David Jones Ltd v Leventhal [1927] HCA 53; (1927) 40 CLR 357 (8 December 1927)