Lambshed v Lambshed

Lambshed v Lambshed - [1963] HCA 60 - HCA 1963 case summary — Zoe

[29]

A strong attack has been made upon his Honour's finding that the contract alleged by the respondents was in fact made. It is common ground that the appellant signed the document upon which the respondents rely as containing the contract they allege. This he did on 24th September 1956. He had previously engaged an estate agent named Croser to find a purchaser for the property, and it was Croser who prepared the document, using a printed form for the purpose, and got the appellant to sign it. At that time the document corresponded in all respects with the contract alleged in the action, except that the deposit provided for was the usual ten per cent of the purchase price, namely £4,800, and as a consequence the balance of purchase money was stated at £43,200. A second contract form was partly filled in by Croser at the same time and was signed by the appellant; but so far as appeared at the trial it was never signed by the respondents. Croser repaired to the respondents, or some of them, and on the same day secured their agreement to buy the property for £48,000. But they insisted on paying only £1,000 as deposit. Croser, in order to obtain their signatures to the first document above referred to, took it upon himself to alter the document by crossing out £4,800 and substituting £1,000 and by crossing out £43,200 and substituting £47,000. This he did in the presence of the first and third respondents, saying that in his opinion £1,000 would bind the contract as well as £4,800 would. He initialled the alterations, and the first respondent then signed the document on behalf of all the respondents in the firm name. Croser returned to the appellant and told him that the respondents had signed the document but that only £1,000 had been paid as deposit. There was a dispute at the trial as to whether Croser told the appellant of his having altered the contract; but the Judge found on ample material, including the appellant's own admission under cross-examination, that the appellant formed the belief that the alterations had been made. He did not re-execute the document, and contends that he never assented to it in its altered form; but he certainly did not say at the time that he dissented from it, and both then and on subsequent occasions he so conducted himself in dealing with Croser and in dealing with the respondents that any reasonable person in their position would have inferred that he was accepting the situation that the altered document constituted a contract binding upon him.

[32]

It was not until early in November that the appellant gave the first overt indication that he was not satisfied to be bound by the contract. That was in a conversation with the first respondent, to whom he said, "You haven't got the place yet", adding when asked what he meant, "You didn't pay the full deposit". Then in a conversation with Croser, probably in the latter part of November 1956, he made his first reference to the alteration of the document, saying that because Croser had altered it he would not go on with the contract. The following passage in Croser's evidence is worth quoting: "I think he told me that he had had advice from a Q.C. in Adelaide and he was advised that the contract was null and void or something like that. He said he had been to Western Australia, I think, and he considered the land in W.A. wasn't as good as he expected to find it and he decided not to buy in W.A. I said, when he told me the contract was null and void, I said "On what basis" and he said "on account of the alteration of the contract". I said "Pat, you can't deny that you were advised of the alteration at that time and you raised no objection to the alteration because if you had I would have had no alternative but to go back to the purchaser and say "You either pay £4,800 for the property or you will not be able to buy the property" ". He said "At the time you called back with the signed contract I was going to mention it, but you kept on talking and I didn't ask the questions". I said "That is too silly because you had ample time to ask any questions you desired"." Thereafter the appellant's solicitors wrote letters to the respondents and to Croser saying that they had advised the appellant that no contract existed. Explanations given by the appellant in the witness box of his silences and of his reason for refusing to be bound by the document were disbelieved by the Judge, who inferred from the whole of the relevant evidence that he had had a change of heart which was not fully disclosed until the latter part of November. In the meantime his conduct so far as known to the respondents was such that, as his Honour thought, "it would be understood by any reasonable man as being an acceptance of the contract on the basis agreed by Croser, and that he did nothing effective to alter that state of affairs until his conversation with Croser in November". His Honour added: "During that period he obviously knew that the plaintiffs regarded themselves as liable to complete the purchase, and he knew that Croser, as his agent, was holding the deposit paid by the plaintiffs I consider his overt acts (including his silence where in the circumstances something more positive was called for) amount to ratification by him of Croser's act".

[39]

There was a time in the history of equity jurisprudence when the case of Gibson v. Patterson [2] was regarded as a decision that in equity time was of no consequence and delay no impediment to decreeing specific performance of agreements. It seems that Lord Loughborough first showed that the case decided no such thing (see note to Lloyd v. Collett [3] ), and the doctrine has ever since been maintained that the special remedy of specific performance is available to those only who are prompt to claim it. The degree of promptness required depends on the nature of the case and all its circumstances: Eads v. Williams [1] , Barclay v. Messenger [2] . Accordingly there is little point in citing cases for the purpose of comparing the period of delay in the present case with the delay which has been considered fatal to claims for specific performance in the circumstances of other cases. The bare fact of delay is not enough. Where there is nothing at all in the circumstances to justify either a conclusion that the delay has been to the prejudice of the defendant or of any third party, or a conclusion that the plaintiff ought to be regarded as having abandoned any rights he ever had, specific performance is not ordinarily refused: Fitzgerald v. Masters [3] . But a circumstance which is of importance, where it exists, is that the defendant has denied that he is bound by the contract. The case in which that has occurred has been called "the typical case" for refusing specific performance by reason of a delay of even a few months: Fitzgerald v. Masters [3] . "In such cases (as those of purported rescission for breach of contract or under a special condition as to title) the purchaser who wishes to attack the validity of the rescission must always come very promptly to a court of equity. It is natural and reasonable that this should be required of him, for the vendor is not to be placed indefinitely in the position of not knowing whether he can safely deal with the property in question on the footing that the contract has ceased to exist": [3] . By parity of reasoning, a definite denial by one party that he has ever become bound by a contract of sale to which the other seeks to hold him places a clear obligation upon that other to sue promptly if he is to obtain from a court of equity a decree for specific performance. Equity will not allow the possibility of its making such a decree to be held unfairly long over the head of the party who denies the existence of the contract and asserts a right to deal with the property as his own. This is a particular application of the general principle of laches as expounded in Lindsay Petroleum Co. v. Hurd [4] and Erlanger v. New Sombrero Phosphate Co. [5] . To repeat words from the latter case, "a court of equity requires that those who come to it to ask its active interposition to give them relief, should use due diligence, after there has been such notice or knowledge as to make it inequitable to lie by" [5] .

[42]

With respect, I do not think that this view is sound. The fact that the appellant might either have got rid of the action without a trial or have forced it to trial is a circumstance to be considered, no doubt, but the conclusion does not necessarily follow that during the four years and eight months in question the appellant was not prejudiced by reason of uncertainty as to whether or not he would be required to perform the contract which the respondents said he had made. He was faced with the most emphatic form of assertion that the contract existed. Yet he found that for some reasons not disclosed to him his opponents seemed unwilling to proceed to a hearing. He might let a sleeping dog lie or take the risk of waking it. There were advantages and disadvantages in either course. The respondents had shown no intention of abandoning the rights they asserted, but their apparent lack of enthusiasm for a trial might well have encouraged him to hope, and as time went on even to believe, that they lacked faith in their cause and would let it die in the manner least likely to cause loss of face. To let this happen was certainly for him the cheapest and easiest course. True, relevant evidence might be lost as time went on; the memories of witnesses might become impaired; and if the appellant honestly thought he was in the right these possibilities would seem to him important. Moreover he had constantly to face serious uncertainty as to how he stood in regard to ownership of the property, and what difficulties he might cause for himself if he were to make improvements, enter into sharefarming agreements or the like, or contract to sell the property. But, while by taking the offensive he might put an end to the uncertainty, he might lose the case. Perhaps better to let the litigation die of inanition. Such was the quandary in which the appellant was placed by the respondents' inaction. The decision under appeal means that there is nothing inequitable in a plaintiff's leaving a defendant in such a state of uncertainty for months and years, and then, when it pleases him, asking the court to decide the issue he has allowed to become stale and grant the remedy of specific performance.

[44]

Fry L.J. did not think that that was the law. In par. 1100 of his book (6th ed. (1921) p. 514) he mentioned, as one form of delay that might constitute laches disentitling a plaintiff to the aid of the court, delay in not diligently prosecuting his action when instituted. He cited in this connexion Moore v. Blake [1] , in which Lord Manners as Lord Chancellor of Ireland held that laches in not prosecuting a suit was as strong a reason for refusing the discretionary remedy of specific performance as laches in not commencing a suit. The actual decision in that case was reversed on appeal to the House of Lords [2] , and expressions in the speeches of Lord Eldon and Lord Redesdale may seem at first sight to suggest that a defence of delay in prosecuting a suit must fail if (as is the case here) the defendant might have moved to have the suit dismissed for want of prosecution. But the real point of the case seems to have been that the suit was for specific performance of an agreement to grant a lease subject to the payment to the defendant of a debt owing to him by the plaintiff. As is said in the last two lines of the report, the defendant might refuse to execute the lease until paid his debt. He was in the position of a mortgagee of the promised lease. Delay by the plaintiff in prosecuting the suit was therefore delay in paying the mortgage debt. Their Lordships appear to have considered that the defendant's proper remedy for that delay was to move, as a means of foreclosure, that the suit be dismissed for want of prosecution. The circumstances were very special. What is important in the judgments is Lord Eldon's acknowledgement of "those cases which justify a dismissal on the ground that, though begun in due time, it (the suit) has not been prosecuted with due diligence" [1] . Lord Manners' judgment as a statement of general principle as to delay seems to be unimpaired and indeed reinforced. An example of the cases to which Lord Eldon referred in the words I have quoted is Dorin v. Harvey [2] . That case, together with Moore v. Blake [3] , was followed in New South Wales in Berry v. Elyard [4] .

At a glance

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Before

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Judgment (48 paragraphs)

Parties

Cited By (6)