Scanlan's New Neon Limited v Tooheys Limited [1943] HCA 43

Scanlan's New Neon Limited v Tooheys Limited [1943] HCA 43 | Case summary | Zoe

as lessee and its operation as a lease; but in substance the sign was let out to hire for use by the defendant upon the terms and conditions of the contract. The hiring was expressed to begin after the sign was installed on the premises designated by the defendant. The plaintiff undertook by each contract to construct and instal the sign to which it related at its own expense. The sign was to conform to specifications. These obligations were all performed. It was a term of each contract that the sign was not to be a fixture appurtenant to the realty to which it was attached, but always the personal property of the defendant and free from any right in the plaintiff except such as arose under the contract. The right was reserved to the plaintiff to remove the sign upon the termination of the hiring or any extension of it. The plaintiff agreed to let each sign " for the term, use and rental and upon the conditions hereinafter set forth," and the defendant to pay the rental and perform the terms and conditions set out in the contract. The initial term of each contract was sixty calendar months, with the option to have the sign for an additional twenty-four months. The hiring was expressed to begin on the first day after installation, but the contract itself from its own date. The first month's rental was due upon installa- tion or from a time fixed by the plaintiff if it could not instal the sign because of the defendant's conduct. The rental for the last two-monthly period was payable at the date of the contract and for the rest of the hiring monthly in advance. The obligation to pay hire was subject to the express condition that "if the sign fails to operate " for any reason other than the defendant's fault and the plaintiff failed to repair after notice there was to be a progressive abatement of the rental while the neglect continued. There was an obligation on the plaintiff to " maintain and service" each sign at its own expense. This applied to cleaning, inspection, repainting, replacement of defective transformers and broken and defective tubes and " all other repairs necessary to keep the sign in first-class operating condition at all times during the operation of the agree- ment." In some of the contracts the plaintiff undertook to bring "feed wires " to the sign, and in these cases the defendant undertook to supply. parts of the apparatus. In every contract the defendant agreed to pay for all electrical energy " used by the sign" and to be responsible for the supply of current to it. The plaintiff assumed liability in case of any claim that a patent was infringed by "the use of the sign." In case of default, a term which was given an extensive scope, the plaintiff was entitled to repossess the sign by notice and to accelerate payment of all future hire and if paid the defendant was entitled "to the use of the sign" according to the

contract as it stands or putting an end to it altogether. There is no scope for any question of modification of a contract, it is either terminated or it remains in full force and the court does not say what the parties in the given circumstances would have been likely to have stipulated but the court does, in the personification of a reason- able man, decide whether in the given circumstances a term should be implied or the contract terminated. Once it has been found that an essential benefit has been lost by either party it follows that the court will hold that the contract is at an end. The fact that the terminating of the contract in the event works hardship on one party or the other is not a relevant consideration. The point of time at which the court considers the question of frustration is at the inception of the contract, at which time the doctrine may, according to the events that happen, work a hardship on either party. If an event happens by reason of which an essential benefit is lost to one party frustration will operate automatically unless express provision has been made in the contract as to the particular event. That the events preventing the operation of the contract, or going to the root of the contract, or preventing the obtaining of an essential benefit, might have been or were contemplated by the parties does not prevent the application of the doctrine of frustration, nor does an express provision as to delay (Metropolitan Water Board v. Dick, Kerr & Co. Ltd. (1) ; Hirji Mulji v. Cheong Yue Steamship Co. Lid. (2) ; The Penelope (3) ; Bank Line Ltd. v. Arthur Capel & Co. (4) ). The loss of an essential benefit need not be such as to make the con- tract impossible of performance or to constitute a total failure of consideration (Joseph Constantine Steamship Line Ltd. v. Imperial Smelting Corporation Ltd. (5); Fibrosa Spolka Akcyjna v. Fair- bairn Lawson Combe Barbour Ltd. (6); The Penelope (7); Bank Line Ltd. v. Arthur Capel & Co. (8)). Krell v. Henry (9) is not a case in which the contract was partly oral and partly in writing, but is a case where the contract was expressly dealt with as being a written contract; the court took into consideration what the object was that the parties had in view dehors the contract. An interruption resulting from the outbreak of war constitutes an indefinite interruption so as to bring into operation the doctrine of frustration (Fibrosa Spolka Akeyjna v. Fairbairn Lawson Combe

contains the expression that "the lessee shall continue to use the sign as contemplated " is used to support this contention. In my opinion this provision is intended to make it an essential condition of the contract that the neon sign shall not be used except in the position where it is installed in the first place or to which it is removed with the appellant's consent. I do not read the words "as contem- plated" as referring to an express or implied undertaking by the respondent to keep the sign lighted. Such an, undertaking is not expressly made and there is no ground for implying it. The term for the progressive abatement of the rent while the apparatus is out of order would, according to the respondent's calculation, relieve the respondent of any liability for rent after the expiration of thirty days. The basis of the calculation is that the neon sign was out of action for twenty-four hours each day. This term might show that the appellant is under an obligation to maintain the apparatus in a condition which would enable the respondent to get an advertising service from it for twenty-four hours every day, but the term pro- vides no ground for concluding that the intention of the contract is to impose an obligation on one party or the other to operate the neon sign for any daily or other period or at all. Extrinsic evidence was adduced at the trial showing the nature and use of a neon sign. In Burges v. Wickham (1) Blackburn J. said: "It is always per- mitted to give extrinsic evidence to apply a written contract, and show what was the subject-matter to which it refers." The trial judge made findings of fact on this evidence. First he accepted the evidence of a witness who described the " neon sign" or neon light. He was asked: "Q. Would you describe to his Honour what actually is the principle on which they operate? A. The neon light is a tube filled with a rare gas' (which the witness described) " and there is a terminal called an electrode on each end of the tube and an electric discharge takes place through the gas in the tubing and sets up luminous rays which is the source of light." To his Honour's question: "I take it that without illumination a sign with a neon installation is not visible at night ?" the witness replied: " Not at night, no." And to his Honour's further question: "It loses its visibility practically ?" he answered: " Yes, without the electrical current passing through."

other party of his express promises, or " (2) " on the other hand of pre- venting him from performing some essential promise of the contract." In the present case Jordan C.J. stated which of the questions involved in the criterion were questions of law. The majority of the Full Court differed from the conclusions of the trial judge on these questions. The reasons of the Chief Justice were : - ' In the present case, I am of opinion that the Premier's Order did prevent the defendant from getting an essential benefit - the use of the signs as illuminated signs - which, although not expressly promised by the contracts, was, by their express terms, manifestly contemplated by both parties as. obtainable by the defendant company as the result of the perform- ance by the plaintiff company of its express promises. I am unable to see any special circumstances which would prevent the application of the general rule that a party cannot be supposed to be undertaking the risk of the making of a governmental Order producing this effect. In my opinion, none of the matters relied upon by his Honour as distinguishing this case from the Consolidated Neon Case (1) con- stitutes such a special circumstance. The fact that the signs are still capable of supplying substantial benefits as daytime advertise- ments does not do so: the doctrine of frustration is not based upon total failure of consideration. Nor, in my opinion, do the greatness of the cost of installation or the smallness of the value to the plain- tiff of the material of the signs after their removal : there is nothing in the contracts to show that the parties contracted with reference to either of these matters. I venture to think that the keynote to his Honour's conclusion is to be found in his statement that he could not find that either party contemplated that the whole of the risk of the prohibition of illumination should fall on the plaintiff. If this case had fallen to be decided at the close of the nineteenth century, and the law of frustration should be treated as based upon an actual rather than ostensible application of the principle of implication, . T should find great difficulty in coming to any other conclusion than that of his Honour. But the judgments of the House of Lords leave no room for applying subjective tests where the implication involved is one of frustration. Here one must wear one's rue with a difference" (2). The dissenting justice, Davidson J., said in effect that the criterion should receive this gloss, namely that the subse- quent event "must be of such a nature as to go to the root and substance of the contract or venture" (3). As the Premier's Order did not do so, his Honour thought that the contracts were not frus-

His Lordship made a statement of the principle based mainly on the decisions reviewed in Horlock v. Beal (1), and referred especially to Lord Atkinson's review of the cases. Lord Atkinson said that the principle in Taylor v. Caldwell (2) was applied to the case of Krell y. Henry (3). He said of this case: " The contract of hiring did not contain any express reference to the procession, but it was held that the proper inference to be drawn from the surrounding cireum- stances was that both parties to the contract contemplated the taking place of the procession along the proclaimed route as the foundation of the contract" (4). The following statement of the principle made by Lord Loreburn shows the development which had taken place in the principle applied in Taylor v. Caldwell (2): "When a lawful contract has been made and there is no default, a court of law has no power to discharge either party from the performance of it unless either the rights of someone else or some Act of Parlia- ment give the necessary jurisdiction. But a court can and ought to examine the contract and the circumstances in which it was made, not of course to vary, but only to explain it, in order to see whether or not from the nature of it the parties must have made their bargain on the footing that a particular thing or state of things would continue to exist. And if they must have done so, then a term to that effect will be implied, though it be not expressed in the contract. In applying this rule it is manifest that such a term can rarely be implied except where the discontinuance is such as to upset altogether the purpose of the contract. Some delay or some change is very common in all human affairs, and it cannot be supposed that any bargain has been made on the tacit condition that such a thing will not happen in any degree. . . . In most of the cases it is said that there was an implied condition in the contract which operated to release the parties from performing it. . . . It is in my opinion the true principle, for no court has an absolving power, but it can infer from the nature of the contract and the surrounding circumstances that a condition which is not expressed was a founda- tion on which the parties contracted" (Tamplin's Case (5) ). His Lordship added that this principle was applicable to commercial contracts and was applied in such cases under the name " frustration of the adventure." Lord Loreburn's statement closely adheres to the statement of the principle made by Blackburn J. What it' adds is that the law applies the principle to a contract where it is apparent from its nature that the parties when entering into it must have

Lord Shaw's judgment in Horlock v. Beal (1) as placing Jackson v. Marine Insurance Co. Ltd. (2) and Krell vy. Henry (3) on a common ratio, his Honour asks the question : " But by what tests and subject to what limitations is the Krell vy. Henry (3) rule to be applied ? " He thought that the destruction of a state of peace or the supervening difficulty which a vendor encountered in procuring goods to fulfil a con- tract would not be in itself "a destruction of any specific state of facts within the Krell v. Henry (3) rule." For the purpose of answering the question his Honour classified the cases which he thought were true exemplifications of the rule. It is important to compare this classification with the criterion applied by the Full Court of New South Wales in the present case. Such cases were (a) when the actual and specific subject matter of the contract has ceased to exist apart from British State intervention (Taylor v. Caldwell (4) and Horlock-v. Beal (5)); (b) where a specific set of facts directly affecting a specific subject matter has ceased to exist, e.g., a ship (Jackson v. Union Marine Insurance Co. Ltd. (2)); (c) where a specific set of facts collaterally only affecting a specific subject matter but yet constituting the basis of the contract has ceased to exist (Nickoll & Knight v. Ashton, Edridge & Co. (6) and Krell v. Henry (3) itself) ; (@) where British administrative intervention has so directly operated upon the fulfilment of a contract for a specific work as to transform the contemplated condition of performance (Metropolitan Water Board v. Dick, Kerr & Co. Ltd. (7)). In setting out these categories I have mainly used the language of the learned judge. The criterion adopted by the Full Court of New South Wales in the present case is obviously wider than these categories. If the present case does not come within class b it stands outside all of these classes. The point decided by McCardie J. was that "in the absence of any question as to trading with the enemy, and in the absence also of any administrative intervention by the British Government authorities, a baresand unqualified contract for the sale of unascertained goods will not (unless some special facts compel an opposite implication) be dissolved by the operation of the principle of Krell v. Henry (3), even though there has been so grave and unforeseen a change of circumstance as to render it impossible for the vendor to fulfil his bargain" (8).

In the Joseph Constantine Steamship Line Case (1) Viscount Maugham affirmed that the principle in Taylor v. Caldwell (2) applied both to contracts de certo corpore and to contracts in which the exist- ence or non-existence of some specific thing is not involved and divided the cases in which frustration may occur into four classes. The present case does not fit into any one of those classes. His Lord- ship added: "There may be other categories, and I have not for- gotten the coronation and the review cases, of which Krell v. Henry (3) is the leading example, but they do not come within the same principle of impossibility, and I do not desire to express any opinion about them " (4), Lord Wright said that the phrase " impossibility of performance " used by Blackburn J. has been replaced by the phrase "frustration of the contract" and this means " frustration of the adventure or of the commercial or practical purpose of the contract " (5). He said that under that name the principle stated by Black- burn J. has a wider application than to contracts de certo corpore and added: "If the question is still open in English law, I should prefer to rest the principle simply on the true meaning of the contract as it appears to the court. The essential feature of the rule is that the court construes the contract, having regard both to its language, its nature and the circumstances, as meaning that it depended for its operation on the existence or occurrence of a particular object or state of things, as its basis or foundation. If that is gone, the life of the contract in law goes with it, at least as regards future perform- ance" (6). Blackburn J., it may be added, said in Taylor v. Cald- well (7): "There seems little doubt that this implication tends to further the great object of making the legal construction such as to fulfil the intention of those who entered into the contract. For in the course of affairs men in making such contracts in. general would, if it were brought to their minds, say that there should be such a condition." Lord Porter said that "frustration is the term now in common use in cases in which the performance of a contract becomes impossible because its subject-matter has ceased to be available for the purpose for which both parties intended it to be used " (8). The destruction of the subject matter or its requisition by the State are given as instances. None of these cases is typical of the present one. His Lordship said that such cases as Krell v. Henry (3) are also within the principle. He described them as cases where the subject matter of the contract could have been used and paid for,

term of this agreement shall be sixty calendar months commencing upon the first day immediately following the installation of the sign ; provided the terms of this agreement shall be effective from the date hereof. (d) Payment of rentals: Rental for the first month or - balance thereof shall be due and payable upon installation of the sign. All rental thereafter shall be due and payable in advance upon the first day of each calendar month. The rental shall be payable, except as herein otherwise provided, whether or not the sign shall be used or operated by the lessee. (e) Maintenance : The lessor at its expense agrees to maintain and service the sign including such services as inspection, cleaning, repainting, replace- ment of defective transformers, replacement of any broken or defec- tive tubes and all other repairs necessary to keep the sign in first- class operating condition at all times during the period of this agree- ment. If the sign fails to operate for any reason except through the fault of the lessee or his agents upon notice by the lessee the lessor shall repair the sign within thirty-six hours. If the lessor fails to do so the lessee shall receive credit of one 720th of the calendar monthly rental for every hour the sign fails to operate in whole or in part in excess of the thirty-six hours period, but shall be entitled to no other claim for damages. (f) Wiring and Electrical Current : The lessor shall at his own cost bring feed wires of suitable capacity to the sign; in the case of outlining, to the individual transformer. The lessee shall instal rotary converter where necessary whether rotary is the property of lessee or leased from lessor. The lessee shall pay for all electrical energy used by the said sign, and the lessee shall be responsible for the supply of current to the sign. (N.B. - In certain of the contracts only the last clause of this condition is included.) (i) Breach of Agreement: Under this clause is included the following : - It is understood and agreed that the sign is specially constructed for the lessee and for use only at the premises above designated and that it is a material consideration to the lessor in entering into this agreement that the lessee shall continue to use the sign as contemplated. The sign shall not be removed from the above-designated location without the consent in writing of the lessor first had and obtained. (0) Delivery: The lessor shall promptly commence the construction of the sign and prosecute the work thereon with all due diligence until completion, provided that performance by the lessor shall be subject to delay by strikes, breakages, fires, unforeseen commercial delays, acts of God or permission of public authorities. (j) Removal or Alterations of Sign: The sign shall at all times be deemed personal property and shall not by reason of attachment or connection to any realty become or be deemed a

I find that illumination is a feature of neon signs and that capability of illumination is an essential feature. The witness referred to admitted that certain neon signs in particular locations had a sub- stantial value as advertising media during the daytime. Defendant's counsel put in evidence certain Orders under the National Security Regulations ; the result of these was the prohibition of illumination whether by day or night of any of the signs in question in this case and it is common ground that none of the signs about which the dispute arises has been illuminated since the date of the final Order on 19th January 1942. Up to that date, however, I find that they served as signs both by day and by night, some of them certainly and apparently all of them are still in position and have varying degrees of value as daylight signs. I find : - (1) That capability of illumina- tion is the essential and distinguishing feature of neon signs. (2) That illumination is possible only when electrical current can be turned on to the sign. (3) That the signs are designed and used for advertising purposes. (4) That they have a value for daylight as well as night-time advertising, but that this value varies, in some cases the value for daylight advertising being substantial. It is obvious, however, that they are not so noticeable by day as when illuminated by night. (5) Since the prohibition Order the defendant company has lost the whole of the benefit of the night advertising by means of the neon signs. (6) Since the prohibition the defendant company has had the benefit of advertising by the signs during the whole of the daylight hours. It is not possible to establish a propor- tion between the benefits lost and the benefits retained but on a review of the evidence, an examination of the photographs, and an examination of some of the actual signs im situ I find as I have indicated that the benefit retained is substantial. (7) On dismantling the only value of the sign is as scrap. (8) The costs of erection in all cases exceed fifty per cent of the total rental over the period of letting and in some cases amounted to eighty per cent or more. (9) The prohibition of illumination occurred without the default of either party. (10) Night advertising was the most important benefit which the parties contemplated that the defendant would get under the contract. It was an essential benefit in the sense that the plaintiffs were letting and the defendants were hiring signs capable of use for night advertising and intended for such use. (11) Neither party is, by reason of the prohibition, prevented from performing any essential promise under the contract."

becomes impossible by the cessation of existence of the thing which is the subject matter of the contract, but also to cases where the event which renders the contract incapable of performance is the cessation or non-existence of an express condition or state of things, going to the root of the contract, and essential to its performance" (1). In these articles the question has been raised whether the Court of Appeal was right in admitting oral evidence of the surrounding circumstances to show that the rooms were let and taken for the particular underlying purpose of viewing the Royal procession. To the layman at least it would seem a strange result if those contracts relating to rooms to view the coronation which expressly referred to the event were held to have been frustrated by the King's illness, while the contract in Krell v. Henry (2) which did not contain such a reference was held to be still enforceable although entered into solely for the same purpose. It is difficult to see why evidence of the surrounding circumstances with respect to which a contract was entered into should not be just as admissible as the evidence of the supervening circumstances in order to place the court in as advantageous a position as possible to judge whether, upon the whole of the relevant material, it is apparent that the parties con- tracted on the basis that "its validity shall depend on the continued existence of some thing, or state of facts or law" (per Scrutton L.J. in Kursell v. Timber Operators and Contractors Ltd. (3)) so that it can be predicated with certainty that the subsequent change of circumstances has been of so vital and unexpected a nature as to make it impossible to perform the contract in the manner in which performance would have taken place if those things or state of facts or law had, as contemplated by the parties, continued to exist. The supervening event must frustrate the performance in fact (Krell v. Henry (4); Countess of Warwick Steamship Co. v. Le Nickel Societe Anonyme (5); Blackburn Bobbin Co. v.T. W. Allen & Sons Ltd. (6) ; Bank Line Ltd. v. Arthur Capel & Co. (7) ; Kursell v. Timber Operators and Contractors Ltd. (8) ; First Russian Insurance Co. v. London and Lancashire Insurance Co. Ltd. (9); Fibrosa Spolka Akcyjna v._ Fairbairn Lawson Combe Barbour Ltd. (10); Scrutton on Charter Parties and Bills of Lading, 9th ed. (1919), p. 96). Generally there is no contest as to the facts, but, if there is a contest, and the case is tried before a judge and jury, the jury must find the facts

viewed. In In re Comptoir Commercial Anversois v. Power, Son & Co. (1) Bailhache J. in a judgment (with which Serutton L.J. (2) stated that, with one or two small exceptions, he entirely agreed) said: "I notice that the arbitrators do not find that the commercial purpose of the adventure was frustrated, but limit themselves to saying 'so far as the sellers were concerned.' I do not see how they ° could do otherwise, but a finding so limited does not go far enough ; it is necessary that there should be frustration of the common purpose ofthe adventure. I know of no case where the doctrine of frustration has been applied where the event relied on as frustration has related to a purpose or object which one of the contracting parties had in mind as necessary to the fulfilment of his contract to the knowledge of the other, but whose attainment was no part of the contract to the performance of which both parties had expressly bound them- selves; and the attainment or non-attainment of which purpose would not in any material respect alter any of the obligations which the parties had ander se mutually undertaken, but would leave the performance of the contract as between the parties to it essentially unchanged." Once a specific chattel has been delivered into the possession of one party to a contract for his sole use, it would be difficult to hold that the other party could have a common interest with him in that use whether the delivery was by way of sale or bailment. In the case of bailments common purposes under the contract which could be frustrated would include the performance of the mutual promises to deliver and accept delivery of the chattel at the commencement of the bailment and to give and accept redelivery on its determination. It would generally (though not. invariably : Kursell v. Timber Operators and Contractors Ltd. (3) ) be the case that the purchaser or bailee as an incident of his ownership or possession of the chattel would have to take the risk that for some reason he might be unable to exploit the advantages he expected to derive from his bargain. In this connection it must be remembered in considering the charter party cases that the modern time charter, although often expressed to be a "lease" of the ship, does not. provide for the transfer of the possession of the ship to a charterer who engages his own crew to navigate her, but for the placing of the ship complete with officers and crew at his disposal, so that the owner retains throughout the possession of the vessel through the officers and crew (per Viscount Haldane in Tamplin's Case (4) ; Herne Bay Steam Boat Co. v. Hutton (5)). This is made clear in Sea &

the nature and express terms of the contracts, it is apparent that the parties have expressed a clear intention, so far as it lies in their power, to assimilate their contractual relationship with respect to the signs to that of landlord and tenant. The plaintiff, described as lessor, is obliged to construct and instal the sign and to maintain it in first-class operating condition at all times during the period of the agreement ; while the defendant, described as lessee, is obliged to instal a rotary converter where necessary, to be responsible for the supply of current to the sign, and to pay for all electric energy which it uses. Clause d provides that the rentals shall be payable whether or not the sign shall be used or operated by the lessee ; clause 7 that the sign is specially constructed for the lessee and for use only at the premises demised, and that it is a material consideration to the lessor in entering into the agreement that the lessee shall con- tinue to use the sign as contemplated, and that the sign shall not be removed from the premises without the consent in writing of the lessor first had and obtained. The " use " of the sign in this colloca- tion refers, I think, to the use contemplated by the contract, that is to say, to its installation and abidance in the position agreed upon, while the " operation" of the sign refers to the right of the lessee to connect it to the electrical supply and to operate it as an illuminated sign. The contracts do not place any obligation upon the lessee to consume any electric current in illuminating the signs. The defendant company has an absolute discretion as to the extent to which it will operate the sign in this way; but, whether it illuminates the sign or not, the company will still be liable to pay the rent, except where it is excused from doing so by the contract. The Order against illuminating the signs is of a general undiscrimina- tory application and is not aimed at neon signs in particular. It affects many other kinds of lights in addition to the illumination of advertisements. It undoubtedly deprives the defendant of the right to make an important use of the chattel he has leased, but it does not make the installation or abidance of the sign in the positions contemplated by the contracts or the performance of any obligation in the contracts impossible or illegal. The defendant leased the sign in order to use it for advertising purposes. The danger that restrictions might be placed upon that use during the period of the lease is a risk which the defendant must be deemed to have assumed as an incident of his lease of the chattel. Restrictions on illuminating advertisements at night might well be imposed by government or civic authorities in times of peace, or the lighting might prove to be a nuisance to a neighbour and be restrained by an injunction. 'The risk is of the same quality in times of war or peace.

had to be paid before it would be recouped for its initial expenditure. At the date of the contracts the risk of restrictions was a fair business tisk, so that it is possible to hold that reasonable men could have contemplated the circumstances as they existed and yet have entered into the bargain. In fact I find it impossible to believe that the plaintiff would have agreed to take the risk that all its contracts should be terminated in the event of the illumination of the signs being prohibited or restricted, when the other party to each separate contract only took the risk of the use of a particular sign being affected so that, having regard to the amount of the pecuniary risk, the plaintiff would have to carry in respect of all its contracts com- pared to the small amount of rent involved in each individual con- tract, it would not be reasonable, in my opinion, for the lessees as "fair dealers" to expect the plaintiff to make such a contract. In short, in so far as the signs, while in the possession of the defendant, become liable to disabilities in their use due to the exigencies of the war, they are in the same position as the houses in the cases referred to in Swift v. Macbean (1), the land in the Winslow Hall Estates Case (2) and Cook v. Taylor (3), the goods in McMaster & Co. v. Cox, McEuen & Co. (4), and the neon sign in Williams v. Mercer (5). In its facts, so far as cases can be alike on their facts, the present case is in line with such cases as Herne Bay Steam Boat Co. v. Hutton (6) (stated in Scrutton on, Charter Parties and Bills of Lading, 9th ed. (1919), at p. 101, to differ from Krell v. Henry (7), not as to the principle but as to its application to the facts); Leiston Gas Oo. v. Leiston-cum-Sizewell Urban District Council (8); Tam- plin's Case (9); Walton Harvey Ltd. v. Walker & Homfrays Ltd. (10); New System Private Telephones (London) Ltd. v. Hughes & Co. (11); and Egham & Staines Electricity Oo. Ltd. v. Egham Urban District Council (12) (in which the correctness of the decision in the Leiston Case (8) was not questioned).

I have assumed for the purpose of this judgment that the signs can be considered as chattels. A hire of a chattel does not create any proprietary interest in the chattel (Broad v. Parish (1)). But if, as appears to be likely, in spite of the intention of the parties, the signs became attached to and formed part of the realty during the lease (Australian Provincial Assurance Co. Itd. v. Coroneo (2); North Shore Gas Co. Ltd. v. Commissioner of Stamp Duties (N.S.W.) (3); Commissioner of Stamps (W.A.) v. L. Whiteman Ltd. (4)), the contracts would then create equitable interests in the land (In re Samuel Allen & Sons Ltd. (5); In re Morrison, Jones & Taylor Ltd.; Cookes v. Morrison, Jones & Taylor Ltd. (6); Hamer v. London City and Midland Bank Ltd. (7)). The desire on the part of the parties to preserve the signs as chattels would not pre- vent the creation of the equitable interests if the contracts on their true construction had that effect in law (In re Gillott's Settlement ; Chattock v. Reid (8); Inve F. B. Warren; Ex parte A. M. Wheeler v. Trustee in Bankruptcy (9); Perpetual Trustee Co. Ltd. v. Smith (10) ). If the contracts were registered under the Regis- tration of Deeds Act 1897 where the land is held under common law title, these equitable interests would acquire the priority pro- vided by sec. 12 of that Act. Where the land is held under the Real Property Act, they could be protected by lodging a caveat on the certificate of title. If the order restricting illumination could cause a contract to dissolve, and, "like this insubstantial pageant faded, leave not a rack behind," the plaintiff. would be thereby deprived of this equitable interest so that, supposing a mortgagee under a mortgage given subsequently to the contract had entered into possession of the land, or the land had been subse- quently sold and conveyed to a purchaser, the plaintiff would be deprived of its equitable right to enter upon the land and remove the sign. If, therefore, the signs are fixtures, this is an additional reason for concluding that the defendant's obligations became absolute on their installation. In many cases the owner could, no doubt, upon the discharge of the contract by frustration, simply retake possession of his goods (Scruton on Charter Parties and Bills of Lading, 9th ed. (1919), at p. 95, note a), but it would not be possible, in my opinion, to imply or impose by law a new proprietary interest upon the dissolution of the equitable interest created by the

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