Fullers' Theatres Limited v Musgrove [1923] HCA 12

Fullers' Theatres Limited v Musgrove [1923] HCA 12 - HCA 1923 case summary — Zoe

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Fullers' Theatres and Vaudeville Limited a company duly incor- porated according to the laws of New South Wales hereinafter called ' Fullers' Company ' of the first part and Majestic Amuse- ments Limited a company duly incorporated according to the laws of South Australia hereinafter called ' Majestic Company' of the second part and Harry George Musgrove of Sydney in the State of New South Wales hereinafter called 'Musgrove' of the third part Whereas Fullers' Company are the present lessees of the Theatre Royal situate in Perth in Western Australia And whereas Majestic Company are the present lessees of the theatre known as Majestic Theatre situate in King William Street Adelaide South Australia And whereas Musgrove is entitled to a sub-lease of the Prince of Wales Theatre situate in Grote Street Adelaide aforesaid And whereas the said Fullers' Company have agreed as herein mentioned to sub-lease the said Theatre Royal in Perth to the said Musgrove the Majestic Company have agreed to lease the Majestic Theatre to the said Musgrove and the said Musgrove has agreed to sub-lease the Prince of Wales Theatre to Majestic Company upon the terms and conditions hereinafter mentioned Now therefore this agree- ment witnesseth as follows : - (1) Fullers' Company shall grant a sub-lease to Musgrove of the said Theatre Royal Perth for a term of two years from the date Fullers' Company are able to obtain posses- sion of the said theatre from one Thomas George Malloy namely on or about the thirtieth day of April one thousand nine hundred and twenty-one (2) The rent to be paid by the said Musgrove shall be the sum of one hundred and twenty pounds per week whilst the said Musgrove shall exhibit only pictures in the said theatre but in the event of the said Musgrove producing vaudeville or any other theatrical entertainments therein the rent to be paid by the said Musgrove shall be the sum of two hundred and fifty pounds per week (3) Musgrove shall pay all rates taxes fire insurance and other outgoings in respect to the said theatre so that the rent shall be clear to the said Fuller's Company (4) The other covenants of the lease shall be in the same terms as the lease from Malloy to Fullers' Company (5) Majestic Company shall execute a lease of the said Majestic Theatre to the said Musgrove for the term of five years from the twenty-sixth day of March instant (6) The rent to

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was used as an office by the representative of Tivoli Theatres Ltd., and in fact was the registered office of that company. Correspon- dence ensued between the parties and their solicitors, the plaintiffs complaining that they were entitled to possession and a lease of the whole of the theatre including the office, and the defendant denying that the plaintiffs were entitled to more than they had been given. Ata later stage the defendant stated that if the plaintiffs insisted on the inclusion of the office in the lease he would take steps to have the agreement corrected. and the plaintiffs insisted that the inclusion of the office was vital to them. Further correspondence followed ; and on 7th June 1921 the plaintiffs informed the defendant that owing to his refusal to execute a lease of the Prince of Wales Theatre including the office they were " determined to cancel the lease of the Majestic Theatre and of the Theatre Royal, Perth, and to sue him for the damage suffered by reason of his not carrying out the agree- ment in regard to the Prince of Wales Theatre," and gave him notice that, unless within seven days the lease of that theatre in the form demanded by them was executed and delivered to them, they would " resume possession of the Majestic Theatre and Theatre Royal and would issue a writ " for damages for breach of agreement. The defendant suggested, in answer to this, that the plaintiffs should take the necessary steps to have the question of his liability to execute a lease of the premises including the office determined in the proper manner. This suggestion was ignored by the plaintiffs, and on 13th June their agent gave formal notice in writing to the defendant that they intended "at the end of this week to resume possession of the Majestic Theatre and Theatre Royal and to instruct their solicitors to issue a writ for damages for breach of contract with regard to the Prince of Wales Theatre." Some negotiations followed,and on 22nd June the plaintiffs' solicitor gave definite notice that they would during the next week resume possession of the theatres and issue a writ for damages. This notice was repeated on ist July. On 4th July the defendant expressed his willingness to give a lease of the Prince of Wales Theatre leaving the question of his liability in respect of the office to be determined in the proper

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formance. Walker J. held that the conduct of the plaintiff debarred him from obtaining specific performance, on the ground that, where a party seeks a remedy at law which is inconsistent with any idea of specific performance, and does not seek or intimate any intention of seeking equitable relief until he has failed in the inconsistent relief which he sought at law, he comes into equity too late. " The plain- tiff," he said (1), "' by his conduct, has shown that he waived the equitable relief, and elected to regard the contract, not as one still existing and to be specifically performed, but as one that was at an end, except for the purpose of recovering damages for the breach of it." That isin line with the dictum of Lord Cranworth in Blackett v. Bates (2). The Lord Chancellor decided the case on another ground, but expressed the opinion that the plaintiff's title to relief by way of specific performance would have been barred by his conduct in endeavouring to set aside the award which at a later date he sought to have specifically performed. He said: " It is a strong thing to say that, after a party has denied the validity of an agreement, and taken proceedings to set it aside, he can, when the result of those proceedings has proved adverse, turn round and insist on specific performance." In Fry on Specific Performance, 5th ed., p. 19, par. 44, it is said that the Court in granting or refusing specific performance has regard to the conduct of the plaintiff and to circumstances outside the con- tract itself, and that the mere fact of the existence of a valid con- tract is not conclusive in the plaintifi's favour. And at p. 56, par. 119, the dictum of Lord Cranworth in Blackett v. Bates (2) is cited in support of the proposition that the Court will not interfere when the plaintiff has elected to proceed in some other manner than for specific performance. The rule is stated broadly by Plumer V.C., in Clowes v. Higginson (3), that if the defendant can show any circumstance dehors, independent of the writing, making it inequit- able to interpose for the purpose of a specific performance, a Court of equity will not interpose. This appears to be the meaning of the

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Atkinson) the case of Hunt v. Silk (1) is cited, and Lord Ellenborough's judgment is quoted for the following passage : - * Now where a contract is to be rescinded at all, it must be rescinded in toto, and the parties put in statu quo. But here was an intermediate occupation, a part execution of the agreement, which was incapable of being rescinded. If the plaintiff might occupy the premises two days beyond the time when the repairs were to have been done and the lease executed, and yet rescind the contract, why might he not rescind it after a twelvemonth on the same account. This objec- tion cannot be gotten rid of: the parties cannot be put in statu quo." That passage is singularly apposite to the case in hand. In the judgments both of Lord Atkinson and Lord Shaw, the learned Lords treat Adam v. Newbigging (2) as a strong authority against the proposition that where the parties cannot be restored to their position in fact, rescission may be decreed simply upon the terms of the payment of a sum of money by the party seeking rescission to the other party or vice versd. The business, said Lord Atkinson, speaking of that case, deteriorated "from its own inherent vice. not from anything done or omitted by the respondent" before he discovered the misrepresentation. Lord Shaw agreed with what Lord Atkinson said as to Adam v. Newbigging. Lord Parmoor says (3): - '' The remedy of reduction is not in general available unless the party seeking reduction is able to place the party against whom it is sought in substantially the same position as he occupied before the contract. In substance there must be restitutio in integrum." Those judgments were delivered in a case which differed from the present in two relevant respects. First, all the work - a line of railway - had been done, and could not be undone ; and next, the rescission was by order of the Court. The first difference does not affect the principle that restitutio must be substantially in integrum. Lord Loreburn says (4): - "I do not enter upon the question how far this was an essential error which would have justified rescission, or how far it was a cause of action in itself, because what I have said is enough to dispose of the point. These contractors continued their contract when they knew the statements

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To take Blackett v. Bates (2) first : - To begin with, the case was not decided on the grounds suggested. Lord Cranworth L.C. expressly said so, It was decided on the ground that specific per- formance is never granted in cases of that nature. There was, however, a dictum added by the Lord Chancellor that he was " dis- posed to think " that conduct would have barred the title to relief. That conduct included delay, it included a denial of the validity of the agreement. it included obtaining a rule nisi to set aside the award, an argument on its return and an adverse de charging the rule. And still, as is observed, the Lord Chancellor did not give any positive decision on the point or enunciate any tigid rule of practice. In Fry on Specific Performance (6th ed., p. 726, sec. 1598) the case is quoted as making it " doubtful" in such cases whether a plaintiff can succeed. That observation appears as early as the second edition. In Williamson v. Bors (1) it was held that the plaintiff had disentitled himself to specific performance on grounds which are very fully set out at pp. 308-309 of the report. One sentence from those pages has been cited to us as laying down a strict rule. It is as follows: "' Where a party seeks a remedy at law which is absolutely inconsistent with any idea of specific performance, and does not seek nor intimate any inten- tion of seeking the equitable relief until he has failed in the incon- sistent relief which he sought at law, he, in my opinion, comes into equity too late." It is said that that is an authority for refusing the relief in the present case. Hven if the passage quoted could be divorced from the rest of the judgment, it contains an ¢lement not present here. There the plaintiff had been met with plea of the Statute of Frauds, which we assume was recognized as _ insuperable. Then he retired beaten, on the ground that there _ Was no enforceable contract. He had elected to proceed at law on the contract itself, and on the basis that it was not to be performed,

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Tt is well established that the Court cannot judicially exercise its discretion by refusing the remedy in a case of the appropriate class, unless some sound and recognized reason is shown (see per Sir W. Grant M.R. in Hall vy. Warren (1) ). In Hexter v. Pearce (2) Farwell J. states the position very clearly. He reaffirmed it in Rudd v. Lascelles (3). In Stewart v. Kennedy (4) Lord Watson says: "Specific performance is not a matter of legal right, but a purely equitable remedy, which the Court can withhold when there are sufficient reasons of conscience or expediency against it." In Davis v. Maung Shwe Go (5) the Privy Council were urged on the ground of discretion not to affirm a decree for specific performance having regard to the onerous nature of the bargain. But their Lordships held that in the absence of fraud or misrepresentation or any unconscionable feature, or proof of improper advantage having been taken, they could not accede to the argument. Nothing here said is intended to limit the power of the Court under sec. 9 of the Equity Act 1901. It was contended here that the appellants, by their conduct in demanding restoration and suing for possession and damages, had proved they were not at all times ready and willing to perform their part of the bargain, and that that established a bar to their success. There is no such rule even at law. A party plain- tiff must be ready and willing at the proper time to perform his part of the contract (Cohen & Co. v. Ockerby & Co. (6) ). But he may, before the proper time arrives, form an intention to break his contract. If he declares that intention, the opposite party may accept that declaration and terminate their relations, except for suing for damages; or the opposite party may ignore the declara- tion, and in that case the contract remains intact for the benefit of both parties just as if the declaration had never been made. "In that case," says Cockburn C.J. in Frost v. Knight (7), "he keeps the contract alive for the benefit of the other party as well as his own." The interim intention to break the contract may prove to have been

At a glance

Court

Decision date

Before

Source

Judgment (149 paragraphs)

H.C. or A. 1923.

Cited By (2)