Fitzgerald v Masters

95 CLR 420
1956 - 0911A - HCA

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(Judgment by: McTIERNAN J, WEBB J, TAYLOR J)

Fitzgerald
versus; Masters

Court:

Judges: Dixon CJ

McTiernan J
Webb JFullagar J

Taylor J

Subject References:
Contract
Terms
Parties
Default
Abandonment
Specific performance
Laches

Legislative References:
Moratorium Acts 1930 - the Act

Hearing date: 16 April 1956; 17 April 1956; 18 April 1956
Judgment date: 11 September 1956

SYDNEY

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Judgment by:
McTIERNAN J
WEBB J
TAYLOR J

The appellants, the executors of John Martin Fitzgerald deceased, were the unsuccessful defendants in a suit instituted by the present respondent for the purpose of obtaining a decree for the specific performance of an agreement for the sale by the deceased of a one-half interest in a homestead farm situated in the Dubbo district of New South Wales. Originally the respondent's claim to specific performance was resisted on many grounds but in this Court the appellants relied upon three grounds only. In the first place it was said that the evidence did not disclose a concluded contract between the parties, secondly, that the respondent had not, at all times, been ready and willing to complete the purchase, and, finally, that he had been guilty of unreasonable delay in seeking equitable relief.

The agreement sued upon is in writing and it purports to have been signed by the parties on 5th March 1927. It recites that the deceased was the "owner of Homestead Farm Number 21/3 Land District of Dubbo of One thousand seven hundred and seventy three acres" and that he had agreed to sell and that the respondent had agreed to purchase "one half interest of Vendor in the said homestead farm" as thereinafter mentioned. Thereafter the document witnessed the agreement of the parties to sell and purchase on the conditions thereinafter set out. Clause 1 provided that the purchase price for the one-half interest should be PD850, payable as to PD200-which had already been paid by the respondent to the appellant-by way of deposit, and, as to the balance, "in instalments of Ten pounds or more at the option of the Purchaser per month the first of such payments of Ten pounds to be made to the Vendor by the Purchaser on or before the first day of April next." Pursuant to cl. 2 the purchaser was to be entitled to possession of the homestead farm equally with the deceased and the former was to be liable for one half of all rents, rates and taxes due or accruing due as from the date of the agreement. He was also to be liable "for one half the amount of the mortgage moneys due by the said Vendor to the Commissioners of the Government Savings Bank of New South Wales" and also "for one half of all interest due or accruing due to the said Commissioners" as from the said date. The same clause also provided that the respondent should be responsible for one-half the costs of all improvements or repairs thereafter to be effected on the land. Clause 3 provided that the appellant should transfer to the purchaser the one-half interest when the respondent "has paid to the Vendor the full amount of the said purchase money of Eight hundred and fifty pounds and provided the Purchaser complies with this Agreement as regards the other payment as above mentioned for which he is liable". By cl. 4 it was agreed that the sale should be made "subject to the Minister's consent" and by cl. 5 it was provided that the consent of the Minister should be applied for when the respondent "has paid the full amount of his purchase money". Each party bound itself by this clause to do all such acts and sign and produce all such documents as might be necessary to obtain the Minister's consent and to use his best endeavours to obtain that consent. Clause 6 provided that the agreement should be binding upon the executors or administrators of the parties and by cl. 7 it was agreed that as from the date of the agreement the respondent, "provided he complies with this Agreement", should be entitled to a full half interest in all improvements "now on the said property". Clause 8, which is the final clause in the agreement and which raises questions of some difficulty, provided that the "usual conditions of sale in use or approved of by the Real Estate Institute of New South Wales relating to sales by private contract of lands held under the Crown Lands Act shall so far as they are inconsistent herewith be deemed to be embodied herein".

The first difficulty in the matter arises from the curious form of cl. 8. For that clause purports to incorporate in the agreement "usual conditions" which are inconsistent with the terms expressly declared by the parties. It should be said at once that the evidence in the case disclosed that there were no "usual conditions" of sale in use or approved of by the Real Estate Institute of New South Wales relating to sales by private contract of lands held under the Crown Lands Act and this state of affairs was relied upon by the appellants to found the contention that the parties could not be said to have concluded an enforcable agreement. In these circumstances the true construction of cl. 8 becomes a matter of some importance for if, as the appellants argue, it should be read literally, there would be much to support the contention advanced on their behalf. Acceptance of the view that the clause should be read literally would, of course, mean attributing to the parties an intention that the terms which they appear to have agreed upon expressly should not be the final measure of their contractual rights and obligations with respect to the matters covered by those terms. It would involve the notion that the declared terms should be regarded as tentative or provisional only and subject to displacement in the event of "usual conditions" being inconsistent with them. Such inconsistent "usual conditions" only would be incorporated; these "usual conditions" which were not inconsistent would play no part in their agreement. The adoption of this view would, it seems to us, make it difficult to say that, in the circumstances, the parties had reached agreement at all. For if the terms of the written instrument must be regarded as intended to express only tentative or provisional agreement upon the matters with which they deal and if the parties really intended that with respect to each of these matters their relationship might ultimately be determined by reference to some other instrument concerning the existence of which they appear to have been mistaken, it would seem that they had not finally agreed in any particular. But we are satisfied that this view should not be adopted. It is trite law that an instrument must be construed as a whole. Indeed it is the only method by which inconsistencies of expression may be reconciled and it is in this natural and common sense approach to problems of construction that justification is to be found for the rejection of repugnant words, the transposition of words and the supplying of omitted words (cf. Norton on Deeds, 2nd. ed. (1928), p. 91). Many illustrations may be given of the circumstances in which these processes have been followed but to do so would add nothing to the rule that the intention of the parties is to be ascertained from the instrument as a whole and that this intention when ascertained will govern its construction. In the present case the instrument clearly evidenced an agreement for the sale and purchase of an interest in the specified farming property. The price is agreed upon and provision is made for the manner in which it shall be paid. Detailed provision is made for the purchaser to share possession with the vendor and comprehensive provision is made with respect to rents, rates and taxes, mortgage money and interest and the cost of making improvements. It is unnecessary, however, to traverse the whole of the agreement; it is, perhaps, sufficient to say that it is beyond question that each term of the agreement, other than the final clause, was designed to deal with particular incidents of a somewhat special kind of sale and it would, we should think, be strange to expect to find in any form of "usual conditions" any provision dealing with these matters. Moreover, it may be said, it would be extremely curious-to say the least-if, having directed their minds to these particular matters and having reached agreement upon them and having expressed their agreement in a formal document, the parties further intended that, if by some chance, a form of "usual conditions" should contain any inconsistent provisions those provisions should prevail. One might well think that if the parties had intended that the "usual conditions" should govern their relationship in all matters to which their minds had been directed they would have been sufficiently interested to have ascertained what the usual terms, if any, were and that they would have modelled their agreement accordingly. It is, we think, abundantly clear that they had no such intention. So far as their minds were directed to matters associated with the sale and purchase of the property they declared the substance of their agreement in unequivocal terms and it would be quite inconsistent with this declaration to read cl. 8 literally. There is no doubt in our minds that the only way in which the provisions of that clause can be reconciled with the intention of the parties as disclosed by the agreement is to supply the word "not" before the word "inconsistent". The clause so read would be in a form not infrequently used by parties to an agreement to supplement express terms and that is what the parties clearly intended. The provision of the word "not" in such circumstances is by no means foreign to the process of construction (cf. Butler v Wigge ^[F12] ).

Upon this view of cl. 8 its terms assume a lesser significance. In the circumstances of the case it must be regarded simply as a compendious provision inserted by way of more abundant caution to cover such incidental matters as did not obtrude themselves for the consideration of the parties. But their intention that they should be bound by the declared terms is clear. And it is equally clear that they intended their agreement to subsist even if the provisions of cl. 8 should fail to incorporate some term or terms from an identifiable form containing "usual conditions". But it is said that if the provisions of cl. 8 prove to be nugatory, not because of a failure to find not inconsistent terms in an identifiable form, but because of the non-existence of any such form, the conclusion should be reached that the parties failed to agree. The suggestion does not carry conviction to our minds. Clause 8 was merely an appendage to the parties' declared agreement and there is nothing to show that it was intended to serve any purpose beyond providing for possible contingencies the nature of which they do not appear even to have contemplated. That they did not contract by reference to the provisions of any known form speaks eloquently and that they mistakenly assumed the existence of some form of contract such as that described in cl. 8 does not affect the matter. The nature of the mistake in this case is such that its consequences are quite unlike those which arose in the circumstances related in Stimson v Gray ^[F13] to which we were referred by counsel for the appellant.

The other grounds taken by the appellants may, in the circumstances of this case, be considered together. The agreement, as already mentioned, was signed on 27th March 1927, but it was not until about October 1929 that the respondent entered into possession jointly with the deceased. The purchase had been made at the suggestion of the deceased, who was a cousin of the respondent, and in 1929, they commenced to work the property in partnership. But before the signing of the contract the respondent had paid to the deceased two sums of PD200 and PD150. These payments were made in November 1926, and February 1927, respectively and they were made after it had been orally agreed that the respondent should purchase a one-half interest in the property. Later, between April 1927 and February 1928, further payments, totalling PD130, were made by the respondent. These payments were, apparently, treated as payments on account of the stipulated deposit-PD200-and monthly payments of PD10. On this basis the respondent paid the equivalent of twenty-eight monthly payments. All of the payments were made before the respondent came to live on the property and shortly after that event the deceased asked him not to make any further payments for the time being. None were in fact made thereafter. The evidence concerning the partnership arrangement between the deceased and the respondent is meagre and there is little information in the evidence concerning the partnership activities or income. Perhaps it may be said that this was not the fault of the respondent for the deceased appears to have handled the financial dealings of the partnership and no part of the proceeds received from the working of the property was paid by him to the respondent. Nor, it appears, was any information concerning the partnership accounts given to the latter notwithstanding the fact that from an early stage he sought information from the deceased concerning these matters. No doubt these unsatisfactory features contributed, even if they did not lead, to their relationship becoming strained and in the latter part of 1932 the respondent left the property. There is sufficient in the evidence to suggest that the partnership was not prospering and it appears that the respondent left the property after the deceased had said that there was not "enough in it for the two of them" and he acceded to the deceased's suggestion that he should accept a position at Tumut which was then offering. Whether or not the partnership arrangement was then terminated is a matter of some doubt and there is no evidence to lead either to the conclusion that it was or was not. But from the terms of the conversation briefly referred to it is probable that it was. After leaving the property the respondent did not return to it nor, indeed, did he see it again until after 1951 when the deceased died. Upon the evidence there can be no suggestion that the respondent intended to abandon his rights under the contract at the time when he left the property for the deceased undertook to work the property during his absence and, as we understand the evidence and the finding of the learned trial judge, to protect the respondent's interest in the property. That the respondent had no thought of abandoning his rights under the agreement is borne out by an incident that occurred shortly before he left the property. The difficulties already referred to had arisen between the respondent and the deceased and some question arose between them concerning the registration of the agreement for sale. This occurred early in 1932 and the respondent, as a result of his discussions with the deceased, thought it wise to consult a solicitor. After receiving advice he had the agreement registered with the Department of Lands and this he did after notice to the deceased and in spite of the latter's requests that he should forbear from doing so for the time being.

In July 1933, the respondent received a communication from a firm of solicitors acting on behalf of the deceased but it is unnecessary to refer to the terms of this communication. It is sufficient to say that there is nothing to suggest that at this stage the parties did not regard the agreement as still being on foot. Nothing more passed between the parties until 1937 and thereafter there was silence until September 1948. We forbear to discuss the correspondence which passed between the parties at this later stage but it continued sporadically until the death of the deceased in 1951. Subsequently letters passed between the solicitors for the parties to this appeal and on 12th June 1953, the suit which has lead to this appeal was commenced.

After discussing the question of the respondent's delay with as much particularity as the meagre evidence permitted the learned trial judge expressed the view that if no other factor remained for consideration the equitable relief sought by the respondent should be refused. With this view we agree. The suit was instituted some twenty-six years after the date when the contract was made and some twenty years after the date when, if the instalments of purchase money had been paid in accordance with the terms of the agreement, the full amount of the purchase money would have been paid. And, notwithstanding the unusual circumstances in which the respondent left the property, the delay was of such a character as to justify entirely the conclusion that equitable relief sought should be refused. Indeed, in our view, it is doubtful whether any other conclusion would fairly have been open. But in December 1930, the Moratorium Act of that year came into force and it was common ground upon the argument of this appeal that the dates fixed by the agreement for payment of instalments of purchase money were postponed until "prescribed dates" in 1933. By successive Moratorium Acts, the provisions of which it is unnecessary to set out, the contractual dates for the payment of instalments were further postponed on a number of occasions and ultimately the time for payment was extended until "prescribed dates" in the year 1952. The result was that except, perhaps, for a very short period in 1930 the respondent was not in default in payments of any instalment during the lifetime of the deceased. Indeed, after December 1930 no further instalments became due and payable until some time in 1952 and before this-in March 1951 - the respondent was moving to assert his rights. It is true that the letter of 30th March 1951 written by the respondent's solicitor did not, in terms, claim specific performance of the agreement but if the appellants did not then appreciate that the respondent wished to have the agreement carried into effect-which we doubt-it became abundantly clear to them shortly afterwards and certainly, at the latest, during the following year after further correspondence had passed. It was, as already appears, only in this year that the outstanding instalments began to fall due and it is only too plain that the appellants were not then prepared to recognize the respondent's claim. In these circumstances we fail to see how it can be said that a case of unreasonable delay was made out. The respondent was not entitled to a transfer of an interest in the land until he had paid the balance of the purchase money and he was under no obligation to pay it until 1952. And at that stage the appellants refused and thereafter continued to refuse to perform the agreement on their part. There was not, as was suggested on behalf of the appellants, a delay on the part of the respondent of something like twenty years in seeking to enforce his right to a transfer; on the contrary as long as the balance of purchase money remained outstanding he had no such right and as long as his obligation to pay such balance was postponed by the operation of the Moratorium Acts there was no delay of which the deceased, in his lifetime, or the appellants, thereafter, could take advantage.

But two other contentions were advanced to assist both this defence and the defence that the respondent was not at all material times a ready and willing purchaser. The first was concerned with the obligation of the respondent to make payments in accordance with cl. 2 of the agreement. But whether or not these payments were wholly or in part paid out of partnership income does not appear. Moreover the suggestion is open upon the evidence that the deceased waived his rights to periodical payments pursuant to this clause when the respondent, at the suggestion of the former, left the property in 1932. It is, however, unnecessary to pursue these matters for it is clear that if the provisions of cl. 2 required the respondent to make payments from time to time-and do not merely prescribe the extent of his liability to make one "other payment as above mentioned" prior to completion (see cl. 3)-the payments were to be made to the deceased and it is equally clear that, without knowledge of the amounts falling due, it was impossible for the respondent to make them. Yet the deceased refused consistently to furnish the respondent with information concerning the affairs of the partnership in the early stages and there is some evidence that the refusal was continued at a later stage. In any event the evidence makes it clear that at no time did the deceased furnish the respondent with information which would have enabled the latter to discharge his obligations under cl. 2 and, in these circumstances, it does not lie in the mouth of the appellants to assert that the respondent was guilty of unreasonable delay in making such payments or that his failure to make such payments establishes that he was not a ready and willing purchaser.

Finally it was suggested that the defence of delay might be supported by the respondent's failure to assert his right to possession. He was, it was said, entitled to possession as from the date of the contract and his failure to assert, or re-assert, this right after 1932 was sufficient to constitute a bar to the relief sought. But the respondent's suit was not a suit to enforce a right to possession; it was a suit to obtain a decree for the specific performance of an agreement which, in the circumstances of the case, did not bind the respondent to perform the conditions precedent to his right to a transfer until 1952. This being so there is no substance in this contention.

For the reasons given the appeal should be dismissed.