Fitzgerald v Masters

95 CLR 420
1956 - 0911A - HCA

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(Judgment by: DIXON CJ, FULLAGAR J)

Fitzgerald
versus; Masters

Court:

Judges:
Dixon CJMcTiernan J
Webb J

Fullagar JTaylor 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:
DIXON CJ
FULLAGAR J

This is an appeal from a decree of the Supreme Court of New South Wales (McLelland J.) in a suit for the specific performance of a contract in writing for the sale of an interest in land. A remarkable feature of the case is that the instrument was executed more than twenty-six years before the commencement of the suit. It was executed in 1927: the suit was commenced in 1953.

The appellants, who were the defendants in the suit, are the executors of the will of John Martin Fitzgerald, who died on or about 30th March 1951, and to whom we will refer as the deceased. The respondent and the deceased were cousins. In 1927 the deceased held certain Crown land in the Land District of Dubbo, comprising 1,773 acres, as a homestead farm. On 5th March 1927 a document was executed by which he purported to sell, and the respondent purported to buy, a one-half interest in this homestead farm. The price was PD850. It was recited that a deposit of PD200 had been paid, and the balance of purchase money was to be paid "in instalments of PD10 or more, at the option of the purchaser, per month", the first of such payments to be made on or before 1st of April 1927. Clause 2 provided: "From the date hereof the Purchaser shall be entitled to possession of the said Homestead Farm equally with the said Vendor and the Purchaser shall be liable for one half of all rents rates and taxes due or accruing due as from the date hereof and the Purchaser shall also 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 the Purchaser shall also be liable for one half of all interest due or accruing due to the said Commissioners of the Government Savings Bank of New South Wales as from the date hereof and the Purchaser shall also be responsible for one half the costs of any improvements or repairs thereafter to be effected on the said land." Clause 3 provided:"The Vendor shall transfer to the Purchaser one half interest in the said Homestead Farm when the Purchaser 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." Clause 4 provided that the sale was made "subject to the Minister's consent", and cl. 5 provided that the consent of the Minister should be applied for when the purchaser had paid the full amount of the purchase money, and that each party should use his best endeavours to obtain that consent. Clause 8 provided: "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 (sic.) herewith be deemed to be embodied herein."

It is convenient to consider at this stage an argument for the appellants which, if it were accepted, would make it unnecessary to consider anything that happened after 5th March 1927. The appellants say that the document extracted above was not effectual to bring a contract into existence-that its contents show that the parties were not agreed as to the terms of their supposed contract, or (what amounts practically to the same thing) that the terms were so uncertain that the "sale" could not be enforced. The argument was based on cl. 8.

There is a superficial difficulty in cl. 8, because it purports to incorporate a set of conditions so far as they are inconsistent with what has been specifically agreed upon. No real difficulty, however, is created. Words may generally be supplied, omitted or corrected, in an instrument, where it is clearly necessary in order to avoid absurdity or inconsistency. Here it would be indeed absurd to suppose that the parties, having expressed their agreement on a number of special and essential matters, should intend to incorporate by reference terms inconsistent with what they had specially agreed upon. What they must clearly have intended is to incorporate a set of general conditions except so far as they were inconsistent with what they had specially agreed upon, and cl. 8 must be read as if it said "consistent" or "not inconsistent"

The appellants' main argument on the contract, however, is not affected by this construction of cl. 8. It rests on this-that there was not in fact in existence any set of conditions of sale "in use or approved of by the Real Estate Institute of New South Wales relating to sales of lands held under the Crown Lands Act". There was in existence a set of conditions of sale of land approved by the Real Estate Institute of New South Wales, and this was put in evidence and marked "Exhibit G". But this form is concerned only with ordinary private sales of land. It does not relate to, and is inappropriate to, a sale of an interest in land held under the Crown Lands Acts. The appellants accordingly contend that there is no effective contract. The parties, they say, intended to agree on certain terms which they believed to be ascertainable by reference to a document. No such document exists. Therefore the terms upon which the parties intended to buy and sell are not ascertainable, and it follows that there is no contract.

The argument cannot, in our opinion, be sustained. It depends, in the last analysis, on an inference that the parties did not intend to contract otherwise than by reference to the terms of a document which they mistakenly believed to exist. It is only putting the same thing in another way if we say that the question is whether cl. 8 is severable from the rest of the instrument. No effect can be given to cl. 8, but there is good reason, in our opinion, for saying that cl. 8 is severable. No inference can be drawn that the parties did not intend to contract unless effect could be given to cl. 8. It seems indeed almost absurd to say that the parties, having agreed on everything essential, intended that that agreement should be nullified if effect could not be given to cl. 8. Authority is not needed to support this view, but reference may be made to Nicolene Ltd v Simmonds. ^[F1] It is to be observed that the headnote to the report of this case is inaccurate. The acceptance was not expressed to be "subject to" the "usual conditions". If it had been so expressed, the position might well have been different: cf. Bishop & Baxter Ltd v Anglo-Eastern Trading and Industrial Co Ltd ^[F2] and British Electrical and Associated Industries (Cardiff) Ltd v Patley Pressings Ltd. ^[F3] Electrical and Associated Industries (Cardiff) Ltd v Patley Pressings Ltd. ^[F4] The present case is quite different from Stimson v Gray. ^[F5] In that case Maugham J. said:"... if the Court is unable to determine all the material terms of the alleged contract, either by interpretation of the language used, or by holding that the missing details are such as the law will supply, I do not think it is possible to say that there is a binding contract. In the present case, with every wish to assist the plaintiff, I cannot escape from the conclusion that the reservations, exceptions, restrictions, stipulations, and conditions referred to in condition 2 are material terms of the agreement which cannot be supplied by mere interpretation". ^[F6] Here there is no difficulty whatever in giving full effect to what the parties have clearly agreed upon, the "details", which cl. 8 was supposed to provide, being "such as the law will supply."

Apart from their denial that any contract was ever made, the appellants raised before McLelland J. a considerable number of defences. Some of these were not pressed before us. As to others, it is obvious that they were rightly rejected by McLelland J. The Real Property Limitation Act 1833 (Imp.), which is in force in New South Wales, has clearly no application to the case. Nor is the case one in which a court of equity would, or indeed could, "apply by analogy", or have any regard to, any statute of limitation governing legal remedies. The substantial questions which remain in the case are (1) whether the conduct of the parties does not compel the inference that the contract was abandoned, with the result that it should be treated as discharged by mutual consent, and (2) whether in any case the delay in seeking to enforce the contract is such that the remedy of specific performance should, as a matter of discretion, be refused. These questions require reference to events which happened after the making of the contract. These may be stated shortly: it is only, we think, at one point that details may be of importance.

In addition to the sum of PD200 mentioned in the contract as a deposit the respondent had before the making of the contract paid to the deceased a further sum of PD150, and, as McLelland J. found, he paid shortly after the making of the contract further sums amounting to PD130. He thus paid a total amount of PD480 on account of a total purchase price of PD850. In 1931 he told the deceased that he had some PD350 in hand, and offered to make further payments, but the deceased requested him not to do so, giving it as his reason that he had increased his overdraft at his bank without informing the bank that he had sold a half-interest in his property. There is a letter in evidence (Exhibit D), dated 24th April 1948, in which the deceased gives another reason for wishing to keep the transaction with the respondent secret, viz. that he had applied to the Lands Department for another piece of land. McLelland J. was satisfied that it was at the request of the deceased that further payments were not made in 1931 and 1932.

In 1929 the respondent went to live with the deceased in a cottage in Tumut, and went out daily to the property and worked on it. In 1931 he went with his wife and children to live on the property in a log cabin, which he had built. Most of the work on the property was done by him and by one of the sons of the deceased. About fifty acres were put under lucerne, and about two hundred acres under wheat. About four hundred sheep were grazed, and poultry and pigs were kept. There is no evidence of any definite agreement or understanding as to the terms on which the property was run. The respondent seems to have thought that there was a partnership. At any rate (apart from some trifling amounts for eggs) he did not in 1931 or subsequently receive any part of the proceeds of the working of the farm, though he retained, when he left in 1932, the proceeds of the poultry and pigs, which were then sold.

Early in 1932 the respondent, after consulting a solicitor, informed the deceased that he intended to have the contract stamped and registered. The deceased asked him not to do this, mentioning again that he had not informed his bank of the transaction. The respondent, however, in fact had the contract stamped and registered, and informed the deceased that this had been done. The date of registration was 25th February 1932.

In or about October 1932 the respondent with his wife and family left the property and went to live in Tumut. Some importance attaches to two conversations which took place about this time. Shortly before he left, the respondent told the deceased that he had an offer of a job in Tumut, and said:"There isn't enough on the property for two of us. I will take the job at Tumut, and leave you to carry on. I will still retain my equity in the place, but you carry on with the place." The deceased replied:"That is the best thing to do. There isn't enough for two of us here at the present time." The other conversation-a very remarkable conversation-took place on the day the respondent left. The deceased said:"You put your money into the property, Rupe. You own half of it, and I won't let you down. You will get your money back some day." The respondent replied:"It will be a long time, Jack, but I will probably have to take you through the Equity Court to do it."

Before he left the property, the respondent had, on a number of occasions, asked the deceased to give him a statement of accounts so that they would "know where they stood". Shortly after he left, a firm of solicitors on his behalf wrote to the deceased, making the same request. No accounts, however, were ever furnished by the deceased. One is disposed to doubt whether he ever kept any accounts.

In 1937, after a storekeeper named Bailey had written to the respondent about an account, the respondent wrote to the deceased, asking him whether the debt was a private debt or a partnership debt. No reply was received.

On 2nd September 1948 the respondent's then solicitors wrote a letter to the deceased in the following terms:"Mr. R. C. Masters has consulted us with reference to the Agreement dated the 5th March 1927 for the purchase of one half share or interest in your Homestead Farm 21/3 Dubbo. The position as it is at present is most unsatisfactory from our client's point of view and we shall be glad to hear from you as to any suggestions you have to make regarding the matter at your earliest convenience." No reply was received to this letter. On 30th March 1951, shortly after the death of the deceased, the respondent's solicitors wrote a letter to the defendants' solicitors. This letter, however, only asked for "an accounting of the working of the property since the beginning of 1931". Some further correspondence passed, but it was not until 16th April 1953, that a claim for performance of the contract of sale of March 1927, was made on behalf of the respondent. The suit was commenced on 12th June 1953.

The above recital shows that the respondent in 1933, 1937 and 1948, disclosed, or purported to disclose, a belief that a partnership existed between himself and the deceased, in respect of which he was entitled to accounts, but that, apart from that, neither the respondent nor the deceased at any time before the death of the deceased did or said anything at all after 1932 in relation to the contract of March 1927, by which the deceased had sold, and the respondent had bought, a one-half interest in the deceased's homestead farm. The inactivity of either party may or may not have been masterly, but certainly each was inactive. The respondent took no step to enforce the contract of sale, and the deceased took no step towards rescinding it. The respondent, when he commenced his suit, claimed only specific performance of the contract of sale with consequential relief. He did not claim partnership accounts or any other relief based on the existence of a partnership.

The first matter to be considered is, we think, the effect of what happened when the respondent left the property in 1932. The evidence, of course, cannot be regarded as very reliable: It comes solely from the respondent himself, who is speaking of conversations which took place over twenty years ago. McLelland J., however, appears to have regarded the respondent's evidence as true in substance. There can be no doubt that the sale and purchase of the one-half interest was made with a view to a joint working of the property. The parties were probably not very clear as to its terms, but it is to be inferred that they intended a partnership in which each had an equal share. We would think it clear, however, that the partnership was dissolved when the respondent left. He left because there was "not enough in it" for two. The deceased was to "carry on with the place". This implies that the land is to be worked henceforth by the deceased in his own interests, and it is in fact henceforth worked by the deceased without reference to the respondent. It is true that the respondent seems to have thought that the partnership continued to subsist until the death of the deceased. But he could have no clear idea about its terms, and it is very unlikely that he had any clear idea of the distinction between an interest in the land and an interest in the business carried on upon the land.

But, while we think it clear that any partnership ceased to exist, we do not think that the contract for the sale of a half interest in the land was affected in any way by what was said at the time of the parting in 1932. What was said is, as recounted, ambiguous, and contains what may be thought to be inconsistencies. It might be said that the words of the deceased-"you will get your money back some day" and "I won't let you down"-import that the contract is off, and the sum of PD480, which has been paid by the respondent, is to be repaid to him, though he may have to wait some time for it. But something much clearer is required to justify holding that the contract was discharged. The respondent said:"I will still retain my equity in the place". And the deceased said:"You put your money into the property, Rupe. You own half of it." In the light of these statements, no more significance can be attached to the reference to the respondent's "getting his money back" than as meaning, in a general way, that he will not lose in the long run. We will only add that the view that no partnership existed after 1932 seems to be much more favourable to the respondent than the view which he appears himself to have entertained. For, if the partnership continued, as he seems to have thought, until the death of the deceased, it might well be held that it would not be equitable to grant specific performance of the contract of sale except upon the taking of partnership accounts-an obvious impossibility.

Is abandonment, then, to be inferred from the long silence and inactivity that followed? In considering this question, we think that the period to be regarded is a period of about sixteen years-from 1932 to 1948. For, although the respondent's solicitors, when they wrote to the deceased in 1948, made no reference to the contract of sale, we agree with McLelland J. that their letter should be regarded as an intimation that the respondent intended to assert his rights, whatever they might be.

There can be no doubt that, where what has been called an "inordinate" length of time has been allowed to elapse, during which neither party has attempted to perform, or called upon the other to perform, a contract made between them, it may be inferred that the contract has been abandoned. A good example is to be found in Pearl Mill Co Ltd v Ivy Tannery Co Ltd. ^[F7] See also Mathews v Mathews ^[F8] at p. 255 and G. W. Fisher Ltd v Eastwoods Ltd ^[F9] at p. 426, per Branson J. What is really inferred in such a case is that the contract has been discharged by agreement, each party being entitled to assume from a long-continued ignoring of the contract on both sides that (in the words of Rowlatt J.) "the matter is off altogether".

It is impossible, in our opinion, to infer a discharge of the contract in the present case. In each of the cases cited above the contract was an executory contract, under which neither party had acquired any proprietary right or interest. The position was simply that each party had promised to do something, and for a long period no act was done in performance of the contract, and no step was taken to require any act to be done in performance of the contract. Here the contract had been partly performed by the respondent. Before he left the property, he had paid more than half of the purchase price, and he had an equitable interest in the land. He had registered his contract. It is impossible to suppose, nor can the deceased have supposed, that he ever intended simply to allow the deceased to keep both the money and the land, and no suggestion that the money should be repaid to him was ever made. As Taylor J. observed during argument, if he had at any time regarded the contract as at an end, the first thing one would have expected him to do was to demand repayment of his money. The truth is, we think, that the equitable interest in the land, which the respondent had acquired, could not be lost or destroyed by mere inaction on his part. It could only be lost or destroyed by release or express agreement on his part, or if the deceased lawfully rescinded the contract. Any release or agreement could be expected to provide for adjustments taking into account the part of the price already paid, and, in the event of rescission by the deceased, the rules of law and equity would take care of the position.

We have said that the second question of substance in the case is whether the very long delay of the respondent in seeking to enforce his contract is such as ought to induce a court of equity, in the exercise of its discretion, to refuse specific performance. This is, of course, a separate and distinct question, but what has already been said goes a long way towards answering it. There appear to be no circumstances, apart from delay as such, which would make it inequitable to decree specific performance. The land is said to have increased greatly in value over the years, but that cannot be a material consideration. Improvements may have been effected, but, if so, these can be provided for in any ultimate decree. There has been no prejudicing alteration in the position of the vendor or his estate: delay may indeed be said to have been to the advantage of the vendor, who enjoyed all the benefit to be derived from sole possession from 1932 to his death. There are no third parties whose interests may be affected. In these circumstances equity does not, we think, refuse specific performance unless it thinks that the plaintiff ought to be regarded as having abandoned any rights he ever had. And reasons have been given for saying that no abandonment can be inferred here.

We were referred to cases, of which Southcomb v Bishop of Exeter ^[F10] is an example, in which specific performance has been refused after a delay of even a few months. But special circumstances have existed in such cases as these. The typical case is the case where the vendor has purported to rescind for breach of contract or under a special condition as to title. In such cases the purchaser who wishes to attack the validity of the rescission must always come very promptly to a court of equity. It is natural and reasonable that this should be required of him, for the vendor is not to be placed indefinitely in the position of not knowing whether he can safely deal with the property in question on the footing that the contract has ceased to exist. In the present case the vendor could, if he had wished to bring matters to a head, have taken steps to rescind at any time. But he took no such step.

One other point raised by the appellants should be noticed in conclusion. They said that the respondent had not shown that he was at all times ready and willing to perform the contract on his part. He came into court, of course, himself in breach of contract. For, if he had performed his part, he would have paid the whole of the purchase money by August 1932. It is, of course, necessary for a plaintiff, who seeks specific performance, to show "first that he has performed, or been ready and willing to perform, the terms of the contract to be then performed; and secondly, that he is ready and willing to do all matters and things on his part thereafter to be done": Fry on Specific Performance, 6th ed. (1921), p. 435; Walker v Jeffreys. ^[F11] It is in the first requirement that the respondent is said to have failed. But he seems to us to have a complete answer in the fact that, as McLelland J. found, he was requested by the deceased in 1931 not to make any further payments. The request was no doubt only intended to operate for the time being. But, until it was countermanded, he could not be said to be so in default as to be disentitled to an equitable remedy on the contract. In this connection McLelland J. referred in his judgment to the Moratorium Acts of New South Wales as assisting the case of the respondent. With respect, we do not think that the respondent has any need to invoke those Acts. We would not indeed attach any importance to those Acts. They would or might have afforded protection to the respondent, if the deceased had at any time sued for an instalment or instalments, or taken steps towards rescinding the contract. But the deceased never at any time sought to recover any money under the contract, or took any step towards rescinding it.

The only decree actually made by McLelland J. in the suit ordered that the appellants, in effect, should use their best endeavours to procure the consent of the Minister to the sale of one-half of the deceased's interest in the land. For the reasons given, we are of opinion that the appeal against this decree should be dismissed. We think, however, that we should add one observation. If the Minister's consent is refused, that will be the end of the matter. If it is granted, the question will arise of what must be done by the respondent in order to entitle him to a conveyance. McLelland J. has stated, towards the end of his reasons for judgment, the sums which, in his opinion, ought to be paid by the respondent in exchange for a conveyance. We are by no means satisfied that his Honour's view is in all respects correct. The question seems to turn on the effect of cl. 2 of the contract in the events which happened in 1932. It is not a question which arises on the appeal, and there was not, and could not have been, a cross-appeal with regard to it. No argument, therefore, was addressed to it. If the Minister's consent is forthcoming, it will no doubt be argued and reconsidered.