Mulcahy v Hoyne [1925] HCA 17

Held, that, even if the lessor's conduct amounted to an expression of intention not for the future to insist on observance of the covenant, the lessee could not, in the absence of consideration, rely upon that conduct as an effective waiver of the benefit of the covenant.

Held, also, that the lessor was not estopped by her conduct from relyi

upon the breaches as justifying the determination of the lease.

Decision of the Supreme Court of Victoria (Cussen A.C.J.): Hoyne Mulcahy, (1924) 46 A.L-T. 96, reversed.

An action was brought in the Supreme Court by William Hoyne against Bridget Mulcahy in which the plaintiff, by his statement o claim, alleged that he was the lessee by assignment of a certait hotel from the defendant and was the licensee thereof, and that defendant had wrongfully evicted him and had deprived him of the licence by causing it to be transferred to the defendant.

covenant in the lease for quiet enjoyment. The plaintiff clain £925 damages, for which sum the plaintiff alleged that he had a to sell his interest in the hotel and licence. The defendant, by counterclaim, claimed (inter alia) a declaration that the lease ¥ lawfully determined on 23rd February 1924. The action was heard by Cussen A.C.J., who gave judgment for the plaintiff for £ and declared that the lease should be deemed to have been cancelled on 23rd February 1924: Hoyne v. Mulcahy (1).

From that decision, so far as it gave judgment for the plaint for £600, the defendant now appealed to the High Court.

The other material facts are stated in the judgments hereunder

Owen Dixon K.C. (with him Ah Ket), for the appellant. notice of 16th February 1924, even if it was insufficient to determin the tenancy, was an effective notice of the appellant's intention put an end to the tenancy, and the subsequent acceptance of re cannot operate as indicating a change of intention. The syste! trading during prohibited hours and on Sundays was a ground wy which the renewal of the licence might have been refused (J Nolan (2) ), and was a breach of the respondent's covenant which wi

that a certain state of facts exists and the representation must b (1) (1924) 46 A.L.T. 96. (2) (1890) 16 V.L.R. 227; 11 AL

acted on to the detriment of the person to whom it is made (Maclaine H.C. or A.

v. Gatty (1); Ferrier v. Stewart (2); Yorkshire Insurance Co. v.

Craine (3) ). After the notice of 16th February 1924 the respondent Muxcany

could not have supposed that he still had permission to break the law. The acceptance of rent on 18th February cannot be treated as a waiver by the appellant of the benefit of the covenants, for the notice of 16th February 1924 was an unequivocal election by the appellant to determine the lease (Jones v. Carter (4)). What the Licensing Court did on 31st January amounted to a refusal to renew the licence (see sec. 95 of the Licensing Act 1915 (Vict.) ), so that when the notice of 16th February was given the appellant had a right to re-enter. The payment of rent afterwards did not affect that right, for under the lease rent was payable until the date of re-entry. If there was a refusal of a renewal of the licence the lease was properly determined. 4

O'Bryan and Fullagar, for the respondent. The validity of the notice of 16th February has never been set up, and the appellant is not now entitled to rely on it. There was not on 31st January a refusal of a renewal; there was only a statement of what the Licensing Court proposed to do. In the absence of the notice required by sec. 21 of the Conveyancing Act 1915, the appellant must rely on breaches of the covenant by which or by means of which the licence was or might be endangered. The acts which were relied on -as such breaches were consented to by the appellant, who has by her conduct shown an intention to waive the whole benefit of the covenant and so cannot have the benefit of sec. 17 of the Landlord and Tenant Act 1915 (Vict). Having made that general waiver, the covenant had gone (see Dumpor's Case (5) ), or, if it had not. the appellant did not get rid of the effect of the waiver by the notice of 10th February. (Counsel referred to Flattery v. Anderdon (6).| There was no evidence of acts after 16th February which endangered the licence and the appellant is not entitled to rely on acts done before that date in order to colour the acts done afterwards. The receipt of the rent

(1) (1921) 1 A.C. 376. (4) (1846) 15 M. & W. 718, at p. 725. (2) (1912) 15 C.L.R. 32, at p. 44. (5) (1603) 4 Rep. 119b; 1 Sm. L.C. (3) (1922) 2 A.C. 541, nt p. 553; 31 (12th ed.) 35, at p. 49.

H.C. or A. on 18th February precluded the appellant from relying on a

breaches of covenant before that date (R. v. Paulson (1) ; Davenpo v. The Queen (2); Croft v. Lumley (3) ). [Isaacs J. referred to Matthews v. Smallwood (4); Puller Theatre and Vaudeville Co. v. Rofe (5).] The appellant did not at any time withdraw her acquiescence in the breaches of covenant, or the representation by her knowl and acquiescence that she would not rely on those breaches. [Isaacs J. referred to Hoyt's Proprietary Ltd. v. Spencer (6).]

Owen Dixon K.C., in reply. Sec. 17 of the Landlord and Tenant Act 1915 was intended to restrict the effect of a general waiver, an not to give it an effect which it had not before. Receipt of rent isa waiver only of breaches which have already occurred, for the breaches were continuing ones (Doe d. Griffith v. Pritchard (7); Lloyd y Crispe (8); Roe d. Gregson v. Harrison (9); Macher v. Foundling Hospital (10); Doe d. Muston v. Gladwin (11); Doe d. Flower y Peck (12) ).

The following written judgments were delivered : - Kyox C.J. The appellant was the lessor and the respondent the assignee of the lessee of a public house under a lease for a t

of six years from 17th November 1919. On the assignment of

he would perform and observe all the covenants, agreements conditions contained in the lease. The rent reserved was £5 10s

on each succeeding fourth Monday during the term. The reddendum

(1) (1921) 1 A.C. 271, at p. 282. (8) (1813) (2) (1877) 3 App. Cas. 11 (9) (1788) 2 (3) (J857-58) 6 H.L.C. (10) (1813 (4) (1910) 1 Ch ay (1845) (5) (1923) A. (12) (1830) (6) (1919) 27 (13) (1898,

also provided for the payment, in the event of the term being H.C. oF A.

determined by re-entry, of a proportionate part of the rent for the then current lunar month up to the date of such re-entry. The relevant covenants and provisions contained in the lease are as follows : - (1) Covenants by the lessee: (a) that the lessee and his permitted transferees should reside on the said premises and person- ally manage, carry on and conduct the trade or business of a licensed victualler in a quiet and orderly manner and comply with and conform to all the duties and liabilities of a licensed person or holder of a victualler's licence as required by and should not be guilty of or permit any breach or breaches of the provisions of the Licensing Acts or of any other Acts affecting or relating to licensed hotels or the holders of victuallers' licenses or any statutory modification, re-enactment or amendment thereof or any part thereof for the time being during the term by the said lease granted in force in the State of Victoria; and (b) that the lessee and his permitted transferees would not do, commit, omit or suffer to be done, committed or omitted any act, matter or thing whatsoever whereby or by means whereof any victualler's licence or any renewal thereof for the time being in force in respect of the said hotel should be allowed to expire or become void or should or might be forfeited or rendered liable to be forfeited, suspended, taken away or refused or whereby the lessee or licensee should be disqualified from receiving or holding or having a victualler's licence or any renewal thereof granted in respect of the said hotel. (2) A proviso for re-entry on breach or default in observance of the above covenants (although the lessor might not have taken advantage of some previous breach or default of a like nature) by giving twenty-four hours' notice in writing to the lessee determining the lease. (3) A covenant by the lessor for quiet enjoyment in the usual form. (4) A proviso in the words following: ' Provided always and the lessee doth hereby expressly covenant with the lessor that each and every breach of any covenant or condition on the lessee's part herein contained shall be deemed a separate and con- tinuing breach from day to day and that if the lessee shall be guilty of any breach of the provisions herein contained or implied or other acts which would render this lease liable to be forfeited or entitle the lessor to cancel the same under the provisions herein contained

the receipt of rent by the lessor or the doing of any other a whatsoever by the lessor (which but for this covenant would amoun to a waiver of the lessor's rights in respect of such breach or after such breach or act shall not be nor be deemed to be a wait in any way of the lessor's rights and powers in respect of such breaeh or act any rule of law or equity to the contrary notwithstanding."

of the covenants set out above and counterclaimed for a declaration that the lease was lawfully determined. The respondent in his reply set up (a) that after the alleged breaches and with knowledge of them the appellant accepted rent under the lease and there affirmed the lease or waived her right to forfeit ; (b) that if # breaches alleged were committed the appellant was not: entitled, according to the proper construction of the lease, to re-enter ; and (c) (by amendment at the trial) that if the breaches alleged did occur the defendant "had at all times during the currency of 'the le referred to in par. 1 of the statement of claim full knowledge that such breaches had been were being and/or were about to be committed and the defendant continued to accept rent from the plaintiff and his predecessors and treated the lease in all respects as subsisting and the defendant thereby waived generally the bene of the covenants alleged in par. 8 of the defence and is estopp from alleging the said breaches of covenant and/or relying upon the said breaches as causes of forfeiture." On the trial of the action Cussen A.C.J. found that there during the whole period of the respondent's occupation of

hours and on Sundays, and that the appellant had at all times fi knowledge that such unauthorized trading had been, was being, and was about to be, carried on, and acquiesced in it. On footing he held that there was an actual waiver extending generally to any breach of the covenants relied on by the appellant, and that to that extent an intention to waive the benefit of the covenants appeared - at all events until notice to the contrary should be given;

and that the respondent was therefore entitled to succeed in the H.C. oF A.

The relevant facts are not now in dispute, and may be briefly Muzcany

stated as follows : - The respondent went into possession of the hotel in July 1923. In August 1923 he was convicted of an offence against the Licensing Act, namely, that persons were found in the hotel during prohibited hours. The appellant was informed of this conviction in the same month. The finding of the learned trial Judge that both before and after the respondent went into possession of the hotel the appellant knew of and acquiesced in systematic unauthorized trading is not challenged. On 31st October 1923 the respondent lodged an application for the renewal of his licence ;_ the application came on in November and was adjourned to a date to be fixed. Subsequently the sitting of the Licensing Court was extended under sec. 88 of the Licensing Act till the end of February 1924, and 31st January 1924 was fixed for the hearing of the adjourned application for renewal. On that day the Licensing Court, after hearing an objection on the ground of systematic unauthorized trading in prohibited hours and on Sundays, intimated that a renewal would not be granted to the respondent, but adjourned the application in order to give him an opportunity to sell and transfer the licence. The appellant's solicitor was present in Court on this occasion. On 16th February the respondent entered into a conditional contract for the sale of the licence, &c., and on the same day the appellant served on the respondent a notice purporting to

determine the lease as from 19th February on the ground that the

Licensing Court had refused to renew the respondent's licence. This notice has been treated by both parties as inoperative. On 18th February (Monday) the usual fortnightly payment of rent was

made by the respondent and received by the appellant's agents without objection. It appears that the practice was to pay the rent

fortnightly instead of monthly as provided by the lease. The learned

trial Judge expressly found, and it is not disputed, that at the time

of the payment the appellant had full knowledge of the facts relating

_ to unauthorized trading in prohibited hours and on Sundays. On

21st February the appellant gave to the respondent notice in writing

_ purporting to determine the lease, and requiring possession to be

given and the licence transferred at the expiration of twenty hours, the ground of forfeiture relied on being breaches of covenants set out above. On 23rd February the appellant tool possession of the hotel. The substantial question for decision whether the appellant was entitled to determine the lease by ¢ notice of 2lst February. If she was, she committed no bre: the covenant for quiet enjoyment and the respondent's action m fail. If she was not, the respondent is entitled to succeed.

I agree with Cussen A.C.J. in thinking that the receipt by # appellant on 18th February of rent due under the lease preclud her in the circumstances of this case from relying on any insta of unauthorized trading during prohibited hours or on Sundays that day. The decision in R. v. Paulson (1) is clear on this p It follows that, in order to support the notice of 21st February ar to justify the re-entry in pursuance of it, the appellant must establis that between the 18th and 21st days of February the responde committed breaches of the covenants above set out of which she w entitled to complain. The learned trial Judge found that durin these three days there were some instances of trading durin prohibited hours, though the result of what had happened make them much less numerous than they had previously b He appears to have been of opinion, without actually decidi point, that the instances of unauthorized trading which occum after 18th February should, for the purposes of the present regarded as isolated transactions, and that it was doubtful whether! appellant was entitled to rely on other cireumstances - for insta on the fact that the respondent had previously committed si

respondent had after 18th February done acts whereby the lice might be rendered liable to be forfeited or refused. I cannot ag in this view of the matter. The appellant is not entitled ton on any instance of unauthorized trading which occurred before I February as a breach of the lessee's covenant entitling her determine the lease, but I see no reason why she should no allowed to contend that, in view of all the circumstances, includi the previous conduct of the lessee, the acts of unauthorized trad

committed after 18th February were acts whereby the licence or a H. C. oF A.

renewal thereof might be forfeited or refused or whereby the lessee might be disqualified from receiving a renewal of his licence. On an application for renewal the Licensing Court would, presumably, take into consideration all the circumstances of the case, and the determination of that Court would, no doubt, be influenced by the previous conduct of the licensee. In order to determine whether a given act would amount to a breach of this covenant the Court which has to decide that question should, in my opinion, consider all the facts and circumstances which would be relevant on an application to the Licensing Court for a renewal of the licence.

In my opinion, the respondent should, on the facts proved, be held to have broken during these days his covenant not to do any act whereby the licence in respect of the premises might be forfeited or rendered liable to be forfeited or refused, or whereby the lessee should be disqualified from receiving a licence or a renewal thereof in respect of the said hotel.

The ground depending on the construction of the lease on which the respondent relied at the trial was not seriously pressed before us, and I agree with Cussen A.C.J. in thinking that it cannot be supported.

The remaining ground on which the respondent relies is that raised by the amendment made at the trial, and it was on this ground that the decision in his favour was based. The contention for the respondent was that the appellant by her conduct consented to the respondent doing the acts now relied on as breaches of covenant and thereby either waived the benefit of the covenant or was estopped from complaining of the breaches on which she relied.

First, as to waiver : - Some reliance was placed on the provisions of sec. 17 of the Landlord and Tenant Act 1915, which provides that an actual waiver of the benefit of a covenant in one particular instance shall not be deemed to extend to any other instance or to be a general waiver of the benefit of such covenant unless an intention to that effect shall appear. But this section was intended to limit or cut down in favour of the lessor the effect of a waiver, and cannot properly be read as extending the right of the lessee to treat a waiver

of particular breaches of a covenant as a general waiver of the VoL, XXXVI. 4

benefit of the covenant. Dealing with the question apart from thi statutory provision, it seems that a passive acquiescence in one breach of covenant cannot be considered to be a waiver for all futur time of the right to complain of any other breach (per Lord Chel) ford L.C. in Western v. MacDermott (1) ). The finding in the present case is that the appellant knew of and acquiesced in unauthori: trading, and in my opinion this is not sufficient to support a conelusi that the appellant waived the benefit of the covenant. It is n suggested that there was any valuable consideration for the all agreement to waive the benefit of the covenant. It is said that conduct of the appellant was equivalent to an expression by her of intention not to insist upon her right to have this covenant observer by the lessee; but, even so, the mere statement of an intention not to insist on a right is not effectual unless made for consideratio1 nh. In Stackhouse v. Barnston (2) Sir W. Grant said : - "' A waiver is nothing; unless it amount to a release. It is by a release, something equivalent, only, that an equitable demand can be given away. A mere waiver signifies nothing more than an expressi of intention not to insist upon the right; which in equity will not without consideration bar the right any more than at law acco without satisfaction would be a plea."

There remains the question whether the appellant is estopped by her conduct from taking advantage of a breach of this covenant committed after 18th February. The conduct of the appellant which is said to give rise to the estoppel consists of her continuil to accept rent under the lease and treating the lease as subsisting with knowledge that breaches of the covenant in question had bee were being and/or were about to be committed. In other word the respondent sets up estoppel by acquiescence. In this connection acquiescence may be said to be quiescence in such circumstant that assent may reasonably be inferred, and, applying this definition to the facts of this case, the respondent in order to succeed must establish that he might reasonably have inferred from the condu of the appellant that she consented to any breach of the cove which he might choose to commit and would not attempt to advantage of any such breach. Having regard to the serio

(1) (1866) L.R. 2 Ch. 72, at p. 74. (2) (1805) 10 Ves. 453, at p. 466.

consequences which might result from a breach of this particular H- ©. oF A.

covenant, I do not think the respondent could reasonably draw the inference suggested. The respondent admitted that the appellant warned him that he would have to be very careful, if he traded after hours, not to get caught. If the respondent succeeded in not getting caught, there would be little or no danger of the renewal of the licence being refused on the ground of unlawful trading, and presumably the appellant did not care what happened so long as the licence was not jeopardized. According to the evidence of the respondent's brother, the appellant was concerned about convictions for "trading" being obtained as such convictions " went against the house." The real substantial obligation undertaken by the respondent under this covenant was that he would do nothing to jeopardize the renewal of the licence, and I can find no evidence of any conduct on the part of the appellant which would justify the respondent in inferring that she would abstain from insisting on the observance of that obligation. Her warning that he must be careful not to be caught trading after hours supports this view.

The respondent's case on the ground of estoppel is defective also in another respect. In order to raise an estoppel against a person who stands by while his legal right is being infringed, it must be shown that the person setting up the estoppel was mistaken as to his own legal rights, for, if he is aware that he is infringing the legal rights of another, he takes the risk of these rights being asserted, and the possessor of the legal right must know of the other party's mistaken belief (Willmott v. Barber (1) ). The evidence in this case does not, in my opinion, establish either of these propositions. There is nothing to show either that the respondent believed that the appellant had lost her legal right to complain of a breach of the covenant or that the appellant knew of such mistaken belief, if the respondent had it.

On a consideration of all the evidence, and accepting the findings -of fact of the learned trial Judge, I have come to the conclusion that the defence set up on the ground of estoppel has not been made out.

Isaacs J. The respondent, William Hoyne, sued the appell Bridget Mulcahy, to recover damages for wrongful determinatio of a lease of an hotel called the '' Tam o'Shanter Hotel," at N Melbourne, and for wrongfully evicting him and depriving him o the premises and the licence for them. The defence, so far as is noy material, was that the lease granted by the appellant to respondent contained a covenant by Hoyne that he " would not commit or suffer to be done committed or omitted any act matter o thing whatsoever whereby or by means whereof any victualler's licence or any renewal thereof for the time being in force in respect of the said hotel should be allowed to expire or become void or should o1 might be forfeited or rendered liable to be forfeited suspend taken away or refused." The lease also provided that "if whenever there shall be any breach or default in the performance or observance of any or either of the covenants . . . of this lea on the part of the lessee to be performed and observed then in ev or any of such cases it shall be lawful for the lessor (although

of or in respect of any covenant . . . of this lease to which si 21 of the Conveyancing Act 1915 does not extend . . . bygi twenty-four hours' notice in writing to the lessee determining thi lease," &c. The lease was dated 17th November 1919, and created. term of six years from that date. On 16th February 1924 a notie in writing was given purporting to determine the lease as on 19th February, the reason being alleged to be the refusal by the Licensin; Court to renew the respondent's licence. That notice was given und another clause of the lease which, as both parties at the trial treated the notice as inoperative, is immaterial except for one reason to be mentioned presently. This was followed by another notice im writing dated and served on 21st February 1924 purporting to be twenty-four hours' notice determining the lease. This notice based on two covenants alleged to have been broken, one of #

being the covenant above quoted. This appeal concerns the legal effect of that notice.

Cussen A.C.J., who tried the case, held the notice ineffectual on H.C. or A.

the ground that there had been, within the meaning of sec. 17 of the Landlord and Tenant Act 1915, a general waiver by the appellant of the covenant referred to. I agree with the learned primary Judge as to his construction of the lease with reference to the Conveyancing Act 1915, and that that Act does not apply. But with respect to sec. 17 of the Landlord and Tenant Act 1 come to a difierent conclusion. 'The conclusion arrived at by Cussen A.C.J. is one partly of fact and partly of law. I pass by, as unnecessary for determination now, the full force of the expression " actual waiver " in sec. 17 (see Mills v. Griffiths (1)). As far as the question is one of fact, I assume the finding of the learned primary Judge to be correct. I do not decide so because if it were necessary for me to determine the question I should have to weigh various considerations. For instance, "waiver "' - a word of very flexible meaning - must in this instance mean an abrogation of the covenant and condition, that is, a dissolution pro tanto of the contractual tie between the parties. In Price v. Dyer (2) Sir William Grant M.R. says of waiver in this sense ; " The waiver spoken of in the cases, is an entire abandonment and dissolution of the contract ; restoring the parties to their former situation." Of course, the restoration to former situation may be total or partial, absolute or conditional. But in considering whether waiver in this sense had taken place I should have had to bear in mind a very important principle. In Carolan v. Brabazon (3) Sugden L.C. said: "Tf one party waive a contract, it implies that the other party was previously bound by the contract ; and this Court requires as clear evidence of the waiver as of the existence of the contract itself, and will not act upon less."

The oral evidence as to what the appellant said by way, as is contended, of waiving the contract pro tanto consists, not of evidence of actual words or even of their substantial purport, but rather of the respondent's mental impressions. He says: - 'I gathered from her she wanted me to conduct the hotel decently and, so far as I could, to avoid being convicted. She practically said: 'Do anything you like so long as you are not caught." . . . Idid not

(1) (1876) 45 LJ. Q.B. 771. (2) (1810) 17 Ves. 356, at p. 364. (3) (1846) 3 Jo. & Lat. 200, at p. 209.

understand she wanted me to observe all the conditions of # Licensing Act." Later on he says: "She said not to hay convictions for 'trading' as that goes against the house." appellant gives a flat denial to any implied permission to break th law. She says: "I impressed on him that he was not to f after hours." I refer to her statement, not for the purpose | accepting her testimony in opposition to that of the respondent, bu for the purpose of showing that the respondent's evidence is not strengthened by admission or silence. It is a very serious matter to accept mental impressions such as "I did not understand she wanted me to observe all the conditions of the Licensing dct," when the actual formal instrument is most explicit on the point. And, so far as mere knowledge and standing by are concerned as element in the conclusion of fact, it must not be overlooked that the leas itself provides that re-entry for a breach may be made " although the lessor may not have taken advantage of some previous br or default of a like nature." This provision adds to the ordinary difficulty of establishing waiver of a forfeiture even when it is al breach. That is exemplified in Ward v. Day (1), a case in the Exchequer Chamber relating to waiver of forfeiture after breach. But, while adverting to these considerations to prevent misconcepti in future cases, I do not decide against the conclusion of fact. It is possible that the evidence as a whole, on full examination and havi regard to the manner in which the witnesses gave their testimony, might be held to justify the conclusion that the acts and intention of the appellant and of the respondent amounted to a mutual waiver, that is, abandonment of the covenant and condition. Therefore proceed on the assumption that it is correct. That conclusion is in these words (2) : "' There was an actual waiver extending generally to any such breach of the covenants as is now relied on, and to that extent an intention to waive the benefit of the covenants appears, at all events until notice to the contrary should be given. Accepting that finding, a very serious question arises which wi debated on the argument of this appeal. On the assumption tha before the appellant could have the benefit of the covenant she must

have given "notice to the contrary," was not the notice of 16th

(1) (1864) 33 LJ. Q.B. 254. (2) (1924) 46 A.L.T., at p. 98.

February 1924, though inoperative as a determination of the H.C. or A.

tenancy, a very significant intimation that the appellant was no longer permitting the respondent to carry on illicit trading? She was forbidding him to carry on trading at all after 19th February, and for the expressed reason (taken now to be inaccurate) that he had been refused a renewal of his licence, the cause of the alleged refusal being equally known to both parties, namely, illicit trading. If it were necessary, I should say that there was quite sufficient notice to the respondent that any previous consent to his trading in contravention of the Licensing Act, and thereby imperilling the status of the hotel itself, was withdrawn. Nevertheless, on his own admission and by the finding of the learned primary Judge, his illicit trading continued. The best he can say is: "It did not alter much." Although that may be confined for this case to 20th February, so as to escape both the acceptance of prior rent and the date of intended determination in the first notice, it is technically enough. It would be certainly hard on the respondent that, after - on the assumption of fact that has been made - he had been permitted to break the law, he should lose so heavily for (say) one day's continued transgression. But the full consideration of this case, and its true analysis, have satisfied me that there is behind it a very much larger and more important principle that deprives the respondent of the right to complain of even the practical hardship referred to. That principle is really self-suggestive the moment the elements of general waiver of a contractual obligation are considered. Anyone may relinquish a right which has been created for his sole benefit. He may do so voluntarily, of course. But he cannot be compelled to do so except ata price. He may, as in cases of which Hawksley v. Outram (1) is a type, relinquish a stipulation for his benefit as a condition of getting specific performance of the contract otherwise. But where waiver is insisted upon by an opposing party there must be a price cf some sort. Parke B. in Foster v. Dawber (2) said: " It is competent for both parties to an executory contract, by mutual agreement, without any satisfaction, to discharge the obligation of that contract." I assume that no difficulties arise such as might arise from the rules of law laid down by Viscount Haldane (3), by Lord Dunedin (4) and

(1) (1892) 3 Ch. 359. (3) (1918) A. (2) (1851) 6 Ex. 839, at p. 851. (4) (1918)

Co. (3). But, putting aside all other difficulties, the doctrine of Parke B. connotes the release of mutual obligations, which in itself is a good consideration, because, as Grant M.R. said in Price Dyer (4), it is "restoring the parties to their former situation." Where the obligations are merely unilateral and are ex hypothes created for valuable consideration, there must be some consideration other than mere agreement to abandon. This is as true in equity as at law (per Lindley L.J. in Edwards v. Walters (5) and per Kay L.J. (6) ). There may be conduct creating an estoppel, and estoppel is relied on. A covenant not to build except in stone may be effectually waived by an encouragement to build in brick followed by actually so building. But, adhering for the moment to general waiver in the sense of rescission of a contract or part of it, there must be some consideration recognized by the law of contract.

That analysis automatically raises what T have referred to as the solid difficulty in the respondent's way. How conceivably could the consideration for the appellant's waiver be phrased in this case? There was none that I can perceive, except the actual illicit trading or the liability incurred of a determination of the lease and of punishment by the law. That cannot be accepted as valid consideration by a Court, whether the parties raise it or not. respondent's carrying on illicit trade as a licensed victualler was i

to keep the law. But that is only saying it is sheer illegality in strict sense, because the trading assumed to be condoned is prohibited and punishable. Illegality in that sense can never be recogniz by the law as sufficient to support a waiver ; it is fatal to the claim. Tt is equally fatal to any notion of estoppel, which, though distinct from waiver (in any sense) as a principle (see Craine v. Colonial Mutual Fire Insurance Co.(7); Yorkshire Insurance Co. v. Craine (8)

(1) (1918) A.C, at p. 38. (5) (1896) 2 Ch. 157, at_p. 168. (2) (1918) A.C. 1. (6) (1896) 2 Ch. at p. 172. (3) (1923) A.C. 48, at pp. 68, 69. (7) (1920) 28 C.L.R. 305.

(4) (1810) 17 Ves., at p. 364, (8) (1922) 2 A.C. 541; 31 O.LR. 2%

frequently runs parallel with waiver, and is sometimes used H.C. or A.

as an exchangeable term for waiver in relation tc what is known as "approbating and reprobating." If the case be approached from this standpoint, still the same difficulty meets the respondent. All he can rely on is his breach of the positive law in reliance on the permission or representation of the appellant that he might do so.

The principle applying to both aspects of the case is one of high public policy and cannot be defeated by the private convention of the parties (see Davies v. Davies (1) ).

This ends the matter on broad grounds, because it is not now contested that there was an actual breach of the covenant which, apart from waiver or estoppel, would have justified the appellant in determining the lease and ejecting the respondent.

The appeal should, in my opinion, be allowed and judgment entered for the appellant, but, in view of all the circumstances, including her undoubted want of vigilance in respect of the licensing law, without costs.

Srarke J. I do not recapitulate the facts: they have been fully stated in the judgment under appeal and by the Chief Justice and my brother Isaacs. Cussen A.C.J. has found that the plaintiff Hoyne systematically engaged in a trade in liquor during prohibited hours and on Sundays, contrary to the provisions of the Licensing Act in force in Victoria. All this was in breach of the covenants of the lease under which he held his licensed premises, and prima facie the defendant Mulcahy was entitled to re-enter and to determine the lease pursuant to its terms. But on 18th February 1921 the defendant, with full knowledge of the facts, accepted the usual fortnightly payments of rent under the lease. That act unequivocally recognized the tenancy as still subsisting, and operated as a waiver of the forfeiture down to that time (R. v. Paulson (2)). But the unlawful trading still went on, and on 21st February the defendant served on the plaintiff a notice in writing determining the lease and retook possession on the 23rd day of the same month. Cussen A.C.J. found that the defendant knew of and acquiesced in unlawful trading, and, referring to sec. 17 of the Landlord and Tenant Act 1915,

(1) (1919) 26 C.L.R. 348, at p. 355. (2) (1921) 1 A.C. 271.

he added (1): "{ think there was here much more than a wai in particular instances, and that there was an actual waiver extendi generally to any such breach of the covenants as is now relied on, an that to that extent an intention to waive the benefit of the covenant appears, at all events until notice to the contrary should be given. Accepting unreservedly, as I do, the findings of the learned Judge, the question is: What is the proper conclusion of the case in point of law ? :

Under the old law, according to Williams (Real Property, 23rd ed., p. 564) and Elphinstone (Introduction to Conveyancing, 7th ed., p. 310), an actual waiver of a breach of covenant destroyed the right o entry for any subsequent breach. But the provisions of see. 1 declared, among other things, that an actual waiver should not assumed or deemed to be a general waiver of the benefit of any such covenant or condition unless an intention to that effect appears. Now, the learned Judge found, as I understand his judgment, thai such an intention did appear, and therefore the case falls to be determined under the old law.

It is a case, then, in which a tenant has been given parol leay beforehand to commit a breach of the covenant. The lease is in fact under seal, and in any event, as an instrument under the T'ransfer of Land Act 1915 (Viet.), sec. 124, has the same efficacy as if under seal. At common law parties to a deed could only discharge their obligations by deed. A breach of covenant could not be justified by a parol licence to break it (Doe d. Muston v. Gladwin (2)). But the Court of Chancery would restrain a landlord who had given permission to commit a breach of the covenant from taking advantage of it, and, since the Judicature Act, that principle now prevails (Elphinstone, Introduction to Conveyancing, 7th ed., p. 310). The Courts of Chancery did not, however, any more than did the Courts of common law, enforce voluntary contracts or forbearances (Colman v. Sarrel (3); Ellison v. Ellison (4)). And it is clear, I think, that at Jaw rights of action arising from breach of contract could only be waived by a release or by accord and satisfaction, which, as Anson - says (Contracts, 15th ed., p. 392), " brings us back to the elementary 4 rule of contract, that a promise made without consideration must, 4

(1) (1924) 46 A.L.T., at p. 98. (3) (1789) 1 Ves. Jun. 49. (2) (1845) 6 Q.B., at p. 962. (4) (1802) 6 Ves. 656.

in order to be binding, be made under seal." Otherwise, the promise H- C. or A.

is a voluntary forbearance which does not preclude a party from relying upon the provisions of his contract (cf. Ogle v. Earl Vane (1) ; Morris v. Baron & Co. (2)). So in this case, a parol licence or permission to break the contract cannot justify its breach, for it was without consideration, and indeed involved the doing of unlawful acts, namely, the contravention of the Licensing Act.

The doctrine of estoppel was also relied upon. A passage in the speech of the Lord Chancellor (Lord Cairns) in Hughes v. Metropolitan Railway Co. (3) puts the argument strongly and lucidly ; " It is the first principle upon which all Courts of equity proceed, that if parties who have entered into definite and distinct terms involving certain legal results - certain penalties or . . . forfeitures - afterwards by their own act or with their own consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties." But can a party be allowed to say that he was led to suppose that the strict rights of the contract would not be enforced if he broke the law ? Such a doctrine would be inimical to the interests of the State, and contrary to the policy of the law. Yet that, in truth, is the position which the plaintiff takes up in this case. It cannot, in my opinion, be supported.

T concur in the opinion of Cussen A.C.J. wpon the Conveyancing Act, but, for the reasons already stated, my opinion is that this appeal must be allowed and judgment entered for the defendant.

Appeal allowed with costs. Judgment entered for the defendant on the plaintiff's claim. Otherwise judgment affirmed.

Solicitors for the appellant, 4. G. Hall & Wilcor. Solicitors for the respondent, McInerney, McInerney & Williams. B.L.