Maxims of Equity
Cases
Jameson v McGovern
[1934] IR 758
Murnaghan J This appeal raises in this Court the question upon which there has been a wide diversity of judicial opinion, viz, whether, in an executed declaration of trust, words and terms known to the common law must be given the same effect in equity, or whether the construction of the trust can be gathered from the intention of the settlor.
In Ireland in the case of Meyler v Meyler 11 LR Ir 522 the Vice-Chancellor, in interpreting the equitable limitations in a marriage settlement, held that children could not take more than life estates in the absence of works of inheritance. He said (at pp 529, 530):
But I have arrived at the conclusion that I am precluded by the authorities upon the subject from going into the question of intention, to be ascertained, as it must be in all cases where the technical rules applicable to deeds do not stand in the way, from a careful perusal of the whole instrument. It is admitted that if this were not the case of a trust estate, as it is, but of a legal estate, with uses executed, there could be no question as to the estates given to the children, who, for want of words of inheritance, could take no greater estates than for their respective lives. It was contended for the defendant that the technical rule on this subject does not apply to declarations of trusts where the whole legal fee is in the trustees, and that in such cases the Court is authorised to act upon the intention ascertained from the whole of the deed. For this contention there is certainly a great weight of opinion of eminent text-writers on the subject. But it appears to me that a series of cases, commencing with Holliday v Overton 14 Beav 467, settles the rule, so far at least as Courts of first instance are concerned, that even in trust estates it is not a question of intention but a technical rule in all cases of deeds executed prior to the Conveyancing and Law of Property Act 1881, and of all subsequent deeds, save so far as the 51st section of that Act alters that rule.
Chatterton VC, in thus following the cases of Holliday v Overton 14 Beav 467, Lucas v Brandreth 28 Beav 274 and Tatham v Vernon 29 Beav 604, all decided by Sir John Ronnelly MR, supported this position by citations from Lewin on Trusts, and he also directed attention to the 51st section of the Conveyancing Act which applies to future deeds of conveyance, whether of legal or equitable estates, and he observed that this Act stopped very far short of enacting that an intention deduced from the context or the actual limitation itself should be sufficient to pass by deed an estate of inheritance without technical words . It is right to point out that dicta of Deasy LJ in Lysaght v McGrath 11 LR Ir 142 in support of the contrary view were cited to the Vice-Chancellor during the argument.
The cases of Holliday v Overton 14 Beav 467 and Meyler v Meyler 11 LR Ir 522 appear to have been uniformly followed as, eg, by Chitty J in In re Whiston s Settlement [1894] 1 Ch 661, until in In re Tringham s Trusts [1904] 2 Ch 487 Joyce J, founding his judgment upon the opinions of earlier conveyances and some remarks in Pugh v Drew 17 WR 988, held that, where the intention was clear, an equitable estate could pass in a trust executed without words of inheritance. This decision of Joyce J ([1904] 2 Ch 487) has since, I think, been followed consistently in this country in preference to the ruling given by Chatterton VC in Meyler v Meyler 11 LR Ir 522, as witness In re Houston, Rogers v Houston [1909] 1 IR 319 decided by Wylie J; In re Stinston s Estate [1910] 1 IR 47 decided by Ross J; In re Murphy and Griffins s Contract [1919] 1 IR 187 decided by Powell J. In England the decision of Joyce J in In re Tringhams Trusts [1904] 2 Ch 487, although followed in several cases, was not accepted in may reported decisions, and finally the point came before the Court of Appeal in England in In re Bostock s Settlement, Norrish v Bostock [1921] 2 Ch 469 in which case the decision of Joyce J, was overruled. In the case of The Land Purchase Trustee, Northern Ireland v Beers [1925] NI 191, the Court of Appeal in Northern Ireland considered the point subsequently to the decision given in In re Bostock s Settlement [1921] 2 Ch 469 but the case was determined without the necessity of making a ruling upon the correctness of the Irish decisions given since the case of In re Tringham s Trusts [1904] 2 Ch 487.
It is desirable at this stage to state briefly the facts upon which the question before the Court has arisen.
Certain premises in the town of Manorhamilton held under a fee-farm grant made in pursuance of the Renewable Leasehold Conversion Act were agreed to be sold to the tenant in occupation and in the making of title in marriage settlement, dated 26th December 1881, was relied upon as vesting the property in fee in Emily Robinson. By this settlement William Henry Robinson conveyed to a trustee and his heirs the said premises, and the intended wife assigned to the trustee her reversionary interest in certain moneys, and trusts were declared to pay the income of all and singular the trust premises hereinbefore expressed to be hereby granted and assigned respectively . The first trust was to pay the income under a protected life estate for the husband, followed by a life estate with restraint upon anticipation in favour of the wife during her life, and thereafter a trust for the issue subject to appointment and in default of appointment in trust for all the children or any the child of the said intended marriage who, being sons or a son, shall attain the age of 21 years or, being daughters or a daughter shall attain that age or marry, and if more than one in equal shares. The settlement went on to provide that in default of failure of children (which event happened) the said trustees or trustee shall hold the trust premises hereinbefore brought into settlement by the said William Henry Robinson and the annual income thereof or so much thereof respectively as shall not have been applied under any of the trusts or powers herein contained in trust for such person or persons and for estates and interests as the said William Henry Robinson shall by deed or will appoint and in default of such appointment and so far as no such appointment shall extend then for the survivor of them, the said William Henry Robinson and Emily Abbey, absolutely . Emily Abbey, otherwise Emily Robinson was the survivor and, as the estate given was an equitable estate, the point to be determined is whether in the absence of words of inheritance, Emily Robinson became entitled to the equitable fee.
When the system of trusts came to be moulded after the Statute of Uses, the Court of Chancery had to lay down rules for the construction of gifts of these new equitable interests. In 1693 Lord Keeper Sommers in the case of Sheldon v Dormer 2 Vern 309, at p 310 stated the rule as follows:
We are here upon a construction of a trust, where the intent of the party is to govern; and the Courts of Equity have always in cases of trusts taken the same rule of expounding trusts, and of pursuing the intention of the parties therein, as in cases of wills; and that even in point of limitations of estates where the letter is to be as strictly pursued, as in any case.
Lord Hardwicke also sought to construe all trusts according to the intention of the parties and even went so far in Bagshaw v Spencer 1 Ves Sen 142 to deny the distinction between executory trusts and trusts executed. The principles of the Court of Chancery were, however, moulded gradually, and in the time of Lord Northington a definite ruling was made and the distinction between executory trusts and trusts executed became firmly established: Wright v Pearson 1 Eden 119. In Austen v Taylor 1 Eden p 369 Lord Northington said: But where the trusts and limitations are already expressly declared, the Court has no authority to interfere, and make them different from what they would be at law . Again, in White v Carter 2 Eden at p 368 Lord Northington said:
For though the court has no power, where the limitations are expressly declared, to give the words a different sense from what they would bear at law, where its assistance is required to direct the conveyance, it will give that direction according to the intent of the testator apparent upon the face of the will, if that intent is not contrary to any rule of law.
The distinction taken by Lord Northington became firmly established. I have to refer to Lord Eldon s decision in Jervoise v Duke of Northumberland 1 J & W 559. Lord Eldon decided this case in 1820 after a long judicial career in which he systematised the doctrines of equity; and, speaking of executed trusts, he said, at p 571:
But these are cases where the testator has clearly decided what the trust is to be; and as equity follows the law, here the testator has left nothing to be done, but has himself expressed it, there the effect must be the same, whether the estate is equitable or legal .
It is to be remarked that these citations deal with the construction placed by the Court of Chancery upon executed declarations of trust and are independent of other heads in equity, such as, for example, to what extent equity will aid a purchaser for value who has obtained a transfer of an equitable estate without words of limitations. It is remarkable that the opinion which is said to be supported by the eminent conveyancers in the past is dependent upon their text-books and is not supported by any citation of decisions in the Court of Chancery. It is, however, desirable to examine them in detail.
In Cruise s Digest of the Law of Real Property Title XI, Use Ch 2, s 32, is found a passage which has been relied upon:
In the alienation of uses none of those technical words which the law requires in the limitation of particular estates were deemed necessary. Thus, a use might be limited in fee simple without the word heirs: for if a sufficient consideration was given, the Court of Chancery would decree the absolute property of the use to be well vested in the purchaser, And as a use was a thing which consisted merely in confidence and privity, and was not held by any tenure, the rules of the common law were not violated.
This citation deals in terms with uses before the Statute of Uses, and I do not think the author meant it to apply to trusts. Certainly, in the 4th edition of this work published in 1835 the editor did not understand it. For, in Title XII, Trust Ch 1, two sections appear to have been added by the debtor which sum up in precise language the effect of the decisions which I have dealt with:
Section 87. [Notwithstanding the dictum of Lord Hardwicke in the case of Bagshaw v Spencer 2 Atk 246 that all trusts were in notion of law executory (and which has been controverted by Fearne with his usual ability) the distinction is now well established between trusts executed and trusts executory, in marriage articles and wills.
Section 88. Where the devise or trust is directly and wholly declared by the testator, or settlor, so as to attach on the land immediately, under the deed or will itself. It is a trust executed and complete; and must be construed strictly according to its legal import, and analogy to corresponding limitations of legal estates: but where the devise, trust, or agreement is directory or incomplete, describing the intended limitation of some future conveyance or settlement directed to be made for effectuating it, there the trust is executory; and the Court of Chancery will not construe the devise or articles strictly, but will endeavour to discover the intention, and execute the trust, according to that intention.
The next passage relied upon is Butler s note to Coke upon Littleton, 200b (Note 249), XIV, The passage occurs in what Butler describes as an Elementary outline of some leading points in the doctrine of trusts affecting real property. The passage, as cited, is given in some places as: A mere declaration of trust in favour of another has been held sufficient to transfer to him the equitable fee . So stated, the passage is cited as laying down a rule for the proper construction of executed trusts. But read in its context, Butler states:
An equitable estate is by its nature incapable of livery of seizin, and of every form of conveyance which operates by Statutes of Uses. In the transfer, therefore, of equitable estates these form of conveyance have been dispensed with a mere declaration of trust in favour of another has been held sufficient to transfer to him the equitable fee.
It seems to me that Butler is contrasting the modes of conveyance at common law with a simple declaration of trust, but that he is not at all stating what form a declaration of trust must take.
The next citation relied upon is from Mr Preston, in Vol II of his Elementary Treatise on Estates p 64. He writes:
The general rule is that limitations of trust are to be construed in like manner and by the like rules as limitations of a legal estate; and therefore in deeds the fee cannot pass by grant or transfer inter vivos without appropriate words of inheritance. But in contracts to convey, and in trusts declared in a conveyance, the fee may pass, notwithstanding the omission of a limitation to the heirs. Therefore articles to convey to AB in fee; or a conveyance to AB and his heirs, in trust, to convey to CD in fee simple, would confer a right in equity to call for a conveyance of the inheritance. So a conveyance to A and his heirs in trust, totidem verbis, for B in fee, would pass a fee .
As I understand this passage the first portion states the rule of construction applicable to trusts executed in very distinct terms while the latter portion mentions certain exceptions which are either contracts executory or conveyances for value where equity will assist in the case of a defective conveyance. Unless by the last example Mr Preston was stating the rule of equity as to conveyances for value, he states two contradictory propositions.
The last citation is the opinion of Mr. Hayes in his Introduction to Conveyancing, 5th edit., Vol I, p 91, published in 1840. He says:
Trusts like uses before the Statute pursued the course of succession appointed for legal interests of a corresponding description. They were expounded to, by analogy to the rules of legal construction. But these rules did not always govern in equity with absolute sway. The rule, for example, which required the word heirs to pass the fee in a conveyance at common law, although it was extended to uses within the Statute, was not rigidly applied to trusts. If land was limited in trust for A, without more, equity, in conformity to the rule of law, gave to A, the beneficial interest for life only; but if it could be collected from the instrument that A was meant to have the absolute interest, equity, esteeming the intention more than the rule, gave him the beneficial fee without the aid of the word heirs.
Mr Hayes in this passage was either speaking of a conveyance for value made in the form of conveyance with declaration of trust, which is, I think, more likely, or he was following the opinion of Lord Hardwicke without adverting to the fact that his opinion had been dissented from for over a century.
In his judgment in In re Tringham s Trusts [1904] 2 Ch 487 Mr Justice Joyce relied upon these passages above examined, and these and several others were relied upon in Lysaght v McGrath 11 LR Ir 142 where the limitations in a voluntary deed were ultimately to named children absolutely. In reference to these citations May CJ in Lysaght v McGrath 11 LR Ir 142 says at p 156: Practically, however, I apprehend that conveyancers deal with executed trusts just as they would with legal estates. Deasy LJ did not decide that the fee passed, although he thought the citations from text-writers might lead to that conclusion. FitzGibbon LJ appears to have held that the fee did not pass, as he said the plaintiffs were not entitled at law and had no equity upon which to found a claim. Mr Justice Joyce also relied in his judgement on Pugh v Drew 17 WR 988. The deed to be construed was one settling freeholds upon such and the same trusts as were declared and contained in a settlement of leaseholds made by another deed. Under the settlement of the leaseholds, they were held in the events which happened for A and B in equal shares, share and share alike. The objection was taken that there was no mention of the heirs of A and B James VC overruled the objection, saying that the absence of words of limitation was not absolutely fatal under all circumstances. I regard the case of Pugh v Drew 17 WR 988 as a clear case of a referential trust declared by reference to another deed and in nature executory, where the intention of the settlor can be sought out by the Court.
In the Court of Appeal in England Lord Sterndale MR in In re Bostocks Settlement [1921] 2 Ch 469, at p 480 did not deal with the authorities in detail, but stated his conclusions in the words used in Lewin on Trusts, 12th ed, p 125: But though technical terms be not absolutely necessary, yet where technical terms are employed they shall be taken in their legal and sense. Lord Hardwicke, indeed, once added the qualification: unless the intention of the testator or author of the trust plainly appeared to the contrary. But this position has since been repeatedly and expressly overruled, and at the present day it must be considered a clear and settled canon that a limitation in a trust, perfected and declared by the settlor, must have the same construction as in the case of a legal estate executed. Warrington LJ and Younger LJ agreed, and it is noticeable that Younger LJ did not find any such difference of view of older text-writers and conveyancers as has been suggested.
I have dealt at perhaps too great length with the decided cases and the opinions of conveyancers, because I find in so many recent Irish cases a welcome adhesion to the views put forward by Joyce J in In re Tringham s Trusts [1904] 2 Ch 487. It may be that Lord Hardwicke was wiser than his successors and that equitable interests would have better flourished if they had not been measured so strictly by analogy to the rules of law. But my reading of the cases and authorities is that the stricter rule has prevailed for almost two centuries, and in my opinion the grounds put forward for departing from the rule were not justified by any authority. I agree with the decision of the Court of Appeal in England in In re Bostock s Settlement [1921] 2 Ch 469, at p 480, and am of opinion that so many of the Irish authorities as are based on the authority of In re Tringham s Trusts [1904] 2 Ch 487 must be overruled.
There is, however, on the facts of the present case a special feature which requires consideration. The settlement was made before marriage and the agreement was to settle the husband s lands on the wife absolutely if she survived him. Every provision with regard to her falls directly within the consideration: Nairn v Prowse 6 Ves 752. In my opinion in this case the wife has an equity independent of the declaration of trust made by the settlor and this equity is sufficient to construe the settlement as giving her the equitable fee which it was contracted that she should have in the events which have happened, Holliday v Overton 15 Beav 480 before Sir John Romilly MR was the case of a post-nuptial settlement by a widow, and the Master of the Rolls took the distinction, saying that the children were not purchasers of the fee or of any estate of inheritance under the contract.
But as the case was argued solely upon the point which we have decided in favour of the appellant, and as the respondents do not ask us to make decree upon the terms as to costs which we would be obliged to order in case of the appellant, in the circumstances the appeal must be allowed.
The same order will be made in the appeal conversant with the promissory note, both appeals being treated as one appeal.
Lett v Lett
[1906] 1 IR 618 (Court of Appeal)
Sir Samuel Walker C: In this case the Master of the Rolls has granted an injunction restraining the defendant, who is the wife of the plaintiff, from instituting or continuing any proceedings in the Court of the Argentine Republic, or elsewhere, against the plaintiff, or his property, for the purposes of claiming alimony, or separation of goods, or any payment, from the plaintiff, or out of his property, for her support, maintenance, debts, or otherwise.
The plaintiff and defendant were married on the 3rd April, 1874, in the Anglican Church, Buenos Ayres, in the Argentine Republic. The plaintiff had an Irish domicile. They lived at Buenos Ayres for some time and the plaintiff had a school there. He appears to have formed an adulterous intercourse with a woman in his service, and in 1888 they were both in Ireland. He had become the owner of a farm and residence called Woodville, in Wexford. The adultery naturally led to unpleasantness, and on the 22nd September, 1888, the defendant presented a petition in the Irish Court for divorce a mensa et thoro on account of his adultery, which he answered. The Irish domicile of each was admitted in that suit, and a decree was pronounced in it by Judge Warren on the 17th December, 1888. In such a suit alimony pendente lite, and permanent alimony, subsequent to the decree are, of course, obtainable, and the obtaining of them was part of the object of that suit.
According to the Argentine law a woman becomes entitled to certain rights in her husband s property in the nature of a partnership, and it appears that all property acquired by them during the marriage belongs to both – everything except legacies or inheritances. The partnership is called Sociedad conjugale. This is the statement given by the plaintiff, and is the only evidence give here of Argentine law. The husband is the administrator of it, and managing partner, and that partnership remains until it is dissolved by the decree of a competent Court on divorce, or by death; and on a divorce the wife can claim a separation of goods.
There was a petition for alimony pendente lite, in which the defendant set forth, according to her estimate, all the property to which her husband was entitled, both in Ireland and the Argentine Republic, and she include Woodville, and an estate or cattle-run in the Argentine Republic, and other property. The husband filed his answer on the 22nd November, 1888, in which he dealt with the various items in the petition; and as regards the Argentine property, alleged it had been realized, and that all from this source was represented by a sum of 2,000 in cash. No alimony was in fact awarded. The suit came on for hearing; the adultery was admitted, and a decree was made for divorce on the 17th December, 1888, and on the same day a consent was entered into and made a rule of Court to settle the suit, and all relief under it, and all claims for alimony, whether pendente lite or permanent.
This consent provided that the plaintiff should pay her a sum of 480 net, and should also pay her solicitor s costs, and execute a deed assigning to her the premises of Woodville, and furniture and chattels therein, and that she should execute a deed releasing him from all claims in respect of relief in the suit and costs, and alimony, pendente lite and permanent, and all debts to be incurred by her, and all claims whatsoever, by or on account of the said Charlotte Lett, and indemnifying the said Richard Lett against the same. Two deeds were accordingly executed, each bearing date the 3rd January, 1889, by one of which he assigned to her the premises of Woodville, and the furniture and chattels therein. The lands have since had a judicial rent fixed in respect of them, and it appears to be a valuable interest, and the moneys stipulated for were paid; and, by the other deed of the same date, she released the plaintiff from all claims for alimony, pendente lite and permanent, in the terms of the consent, and from all claims whatsoever by or on account of the said Charlotte Lett against the said Richard Lett, or his estate or property, real or personal, movable or immovable, now in possession, or hereafter to be acquired by him, and from all rights and interests, claims, and demands which the said Charlotte Lett has, or may have, in, to or upon the same, or any part thereof.
Such were the contracts contained in the consent and deeds. Was she competent to enter into them? I consider it to be settled law that a married woman suing her husband in the Matrimonial Court is at arm s length: and in the absence of fraud, free to enter into a contract with him for the settlement of the litigation. Besant v Wood 12 Ch D 605 is one of many cases establishing this. The compromise of litigation would itself furnish an ample consideration; but she also obtained the assignment of Woodville and furniture, of which she went into possession.
Next, what is the construction of the contract? Was she left free to assert a claim in the Argentine Republic against the property he might acquire there, seeking a division of property under the Argentine law? This is a question of construction, for I do not think it is open to serious argument that she could not bind herself not to enforce a claim in any Court – domestic or foreign – or a claim of any nature, whether under Argentine law or English law, against his property, whether it be in the nature of alimony, or of any other kind: and the claim for division of property is of the character of alimony, which she had specifically contracted not to claim. In 1895 she went over to Buenos Ayres, and preferred a claim on account of her poverty, by reason of which he agreed by deed to give her an allowance of 100 per annum in addition to what she got under the deed of 1889. As this deed of 1895 is not relied on in the pleadings, or at the bar, I do not rest anything upon it.
Well, in 1903, she commenced proceedings in the Argentine Court, in which she claimed a divorce (though it had been already granted), and it is stated the divorce in that republic can only have the same efficacy as a divorce in Ireland, and as consequential to this divorce she claimed a separation of goods – in other words, claimed to be maintained out of the property he had acquired in the Republic subsequent to the divorce and deeds in Ireland. He has defended that suit, and relies upon the contracts and transactions and deeds of 1889 as a defence, and also on the deed of 1895; and these proceedings are still pending, and the Argentine Court is, I assume, competent to pronounce on them.
It is not disputed that in the interval since the Irish proceedings he had acquired very considerable property, and was comparatively a wealthy man, and, therefore, she was interested in trying to get out of her contract of 1889, and get further maintenance; but whether she can do so or not depends, I think, on the contract she made. It is not suggested that it was obtained by, or can be avoided for, fraud, and the suggestion in the defence that it could be reformed was not argued.
Does it make any difference that the proceeding sought to be restrained is a proceeding in a foreign Court? I think not, because the equity against her is founded not upon the tribunal to which she has resorted, but upon the personal contract binding her conscience. The jurisdiction asserted is not against the foreign tribunal, but against the person within the jurisdiction, who has made a contract not to resort to proceedings; and whether such proceedings are in a foreign Court or not, is immaterial for the purpose of the equity on which the jurisdiction rests – an equity in personam.
The rule is clearly laid down in The Carron Iron Co Case 5 HL Cas 416, and numerous other cases. I was for a time inclined to think that ascertainment of the Argentine law as to this division of property, and its limitations, and the circumstances under which it would arise, was material to the relief, and should be before the Court before we interfered; but, on further consideration, I do not think this is so. It is a claim against the husband s property covered by her contract; and if that be so, she is bound not to put it forward in any Court – just as she would be restrained according to the decision in Gandy v Gandy 7 PD 168 from prosecuting a claim for further alimony in the Irish Court. The plaintiff has, no doubt, allowed three years to go by before instituting this suit on the 3rd March 1906. He never could get an interlocutory injunction; but if he has the right under the covenant, the delay does not deprive him of the only remedy he has for its assertion.
I am of opinion that the decision of the Master of the Rolls should be affirmed, and the appeal dismissed; but having regard to the delay which has taken place, and the time he allowed the Argentine proceedings to continue before he resorted to his rights under the contract of 1889, and also to the relations between the parties, I think there should be no costs awarded against the defendant in the Court below or here.
Fitzgibbon LJ: It appears to me that the rights of the parties in this case can be best determined by considering two questions.
(1)What were the rights, if any, which the plaintiff had in the way of restraining proceedings against his person or property by his wife on the completion of the arrangement which was carried out by the two deeds of January 3, 1889 on which the action is based?
(2)If the plaintiff could have restrained the action which his wife commenced against him in the Argentine Republic on August 26 1903, has anything happened since to justify the Court, in its judicial discretion, in now refusing to give him relief?
I think it clear that the answer to the first question an in no way depend upon any question of foreign law. The law of the Argentine Republic may regulate the rights of the parties with respect to property there; but it cannot possibly affect the jurisdiction or duty of the Irish Courts, as to the enforcement of a contract made in this country when both parties were domiciled here, and which contract arose out of proceedings in the Irish Matrimonial Court, to whose jurisdiction both of them had submitted.
It seems equally clear that no conflict of laws, or question of the comity of Courts, can arise with respect to an Argentine tribunal, which would not have arisen with respect to an English or Scotch Court, or between Irish Courts of law and equity, while those departments of our judicature were assigned to different tribunals.
The transactions of 1888-9 comprise two stages – one judicial, and the other contractual; they began with an action by the wife against the husband for divorce a mensa et thoro and for judicial separation, based on the husband s misconduct, and enabling her to obtain, by prosecuting her suit, an enforceable provision by way of alimony – first pendente lite, and afterwards permanent – to be measured in just proportion to her husband s means.
The judicial proceedings in the main suit had gone to petition, answer, and decree for separation, and an interlocutory proceeding for alimony had gone to petition and answer, when the litigation was settled upon the terms that the separation decree should stand, and that the provision for the wife should be determined by contract, and should be carried out by the execution of mutual deeds of conveyance and release, on terms judicially sanctioned. The ruling instrument is the consent, which was made a rule of Court on December 17, 1888.
I am satisfied that the subsequent deed of release of January 3, 1889, must be construed by reference to this consent, and I assume that the deed cannot, by general words, deprive the wife in equity of any property or right which she had not by the consent agreed to surrender. But I can find no real difference between the terms of the two documents, and the wife s counterclaim that the deed should be reformed if it releases her husband s property in Argentina, would in my opinion, be maintainable if the deed, as distinguished from the consent, had released that property. But, on the other hand, if she bound herself by the consent to surrender any claim she had to that property, the deed must have the effect of binding her not to claim it, either here or in Argentina.
I, therefore, consider the question upon the nature and terms of the consent itself. It provided for the settlement of all proceedings in the cause in reference to alimony, whether pendente lite or permanent, and of all claims and proceedings in respect of the costs of the cause and proceedings for alimony therein. If the cause had not been settled an order for permanent alimony was the proceeding by which the wife from time to time could enforce a provision during her life proportionate to his means here or elsewhere, and either party would have had the right, from time to time, to vary the amount of that provision, if his means had increased or diminished. The provision would also have been inalienable by her.
The interlocutory petition and answer show that his property in Argentina, at that date, was the subject of discussion; she alleging that it was very large, and he, on the contrary, alleging that he had converted the whole of it into money, had left Argentina, had invested the larger part of the proceeds of his property there in buying and stocking a house and farm in Ireland, intended as a home and means of subsistence for himself and his wife, which intention was frustrated by the unhappy differences which arose between them, and culminated in the suit and in their separation.
He alleged that his only remaining property was the balance of the proceeds of the Argentine property over and above what he had spent in costs of travelling and litigation, and in the purchase of the Irish property, which balance he alleged to amount to only about 1,000. If the suit had not been settled, alimony would have been the judicial form in which the wife s claim for subsistence must have been satisfied so long as she lived, and it is utterly inconsistent with the terms of the deeds, and with the proceedings which led up to the settlement, to suggest that the Argentine property, whatever it was, was not taken into consideration, as being the husband s.
The substance of the consent was that he should pay her 500, and assign to her all his property in Ireland, house, land, furniture, stock, and chattels; and that she, in consideration of that provision, should release him from all claims, present or future, in respect of the relief sought by her in the suit, or in respect of alimony, whether pendente lite, or permanent, and in respect of her debts, present or future, and of all claims whatever on her account, and should indemnify him against the same.
I can give this arrangement no less effect than that of a final determination by and between a husband and wife, when at arm s length, contracting with each other as distinct parties each sui juris, that for better or worse, for richer or poorer, he should give and she should take the consideration fixed by agreement, in lieu and satisfaction of all claims which, then or at any future time, she could otherwise have made as his wife against him or his property, wherever situate, during their joint lives.
If there were no other answer to the wife s demand of liberty to prosecute her pending suit in Argentina, it would seem to me to be enough to say that equity can not permit her to do so, so long as she retains and enjoys this agreed consideration for the contract not to sue which the deed of 1889 imports – except upon the terms of accounting, against her present claim, for what she has received, and is receiving, under the contract which she now seeks to reprobate. An injunction which can be enforced, if necessary, by sequestration of the Irish property is the appropriate – if not the only – remedy for such a breach of contract, and it is not argument, but caricature, to describe this suit as one brought by the plaintiff to put his wife into gaol.
The arrangement of 1888-9 necessarily imported on each side that no subsequent change in their circumstances could alter the rights of the parties: neither could the husband, if he became poorer, get back any of the property he gave; nor could the wife, if he became richer, make any demand for further provision for her maintenance.
I do not understand the possibility of contending that the judicial provision for a separated wife in the form of alimony is not to be measured in proportion to the husband s means wherever situated, and in the particular case it is proved that the amount of the Argentine property was actually in controversy when the contractual substitute for permanent alimony was accepted; and this controversy was one of the claims which was settled for the consideration fixed by the deeds.
Gandy v Gandy 7 PD 168 is an authority of the Court of Appeal that a separated wife, by covenanting not to take proceedings against her husband, on his covenanting to allow her a sum fixed by a separation deed, for the maintenance of herself and her children, even in the case of his subsequent misconduct, and of his becoming subsequently wealthy, debars the Court from giving her any increased provision by way of alimony, because she is bound by deed to accept the sum fixed by the contract in satisfaction of all her claims for support.
It can make no distinction in law between that case and this, that the deed there preceded the suit, for here the final settlement of the suit itself was part of the consideration for the fixed provision which was made and accepted.
The validity and binding effect of separation deeds have varied under our law, but it was never contended that their operation in personam was in any way affected by the situation of property, or governed by any other law than the lex loci contractus.
Lord Justice Fry says, Sp Perf (4th ed), p 52, ss 126, 127:
A contract made abroad may be enforced against a defendant within the jurisdiction of this country, and, as the remedies for breach of a contract are clearly governed by the lex fori, it follows that it is no objection to the specific performance in England of a foreign contract that the foreign law might have given no such remedy.
This jurisdiction extends to cases of contracts relative to real or immovable property where the defendant is within the jurisdiction of the Court. The maxim is quitas agit in personam, and any operation of the judgment of the immovable estate abroad is not direct but indirect, and only through the medium of the person affected by the judgment.
He notices a case, Hart v Herwig LR 8 Ch 860, in which the Court of Chancery granted relief with a view to specific performance against a defendant not within the jurisdiction, and he says the decision is remarkable, but it has the authority of three unanimous judges.
These statements of the law follow the statement that:
Although the Court has no jurisdiction in matrimonial causes, yet, where there has been a contract or covenant, it may interfere to enforce the execution of a proper separation deed, or to restrain the breach of a covenant contained in it.
The personal covenant of a separated wife not to molest or sue a husband is, from its very nature, an obligation for the breach of which there is no practical remedy except a decree, in the nature of specific performance, or an injunction to restrain a suit threatened or commenced; therefore, if the covenant is lawful and proper, the decree for specific performance by injunction, being the only remedy, is ex debito justiti and not discretionary.
If a suit was not maintainable, it could be defeated on the merits; it is only where there is a legal claim, that the interference of a Court of Equity becomes necessary; therefore, proof that the suit which it is sought to restrain will, if it proceeds, result in the establishment of a claim against the defendant therein, only shows the necessity for the suit in personam, by which its prosecution is to be restrained.
That the situation of the Court in which the suit is instituted, and the extent of its jurisdiction, are immaterial to the question whether the suit is to be restrained or not, is plain on principle. A striking instance is to be found in Booth v Leycester 3 M & C 459 where Lord Cottenham restrained the prosecution of a suit in Ireland to recover annuities which had already been the subject of a suit in England, notwithstanding that the Irish suit had been prosecuted for a considerable time.
In his judgment he says:
This Court will not permit him to retain, for the purpose of suing elsewhere, securities upon which, according to the judgment of the Court, nothing remains due. Whether he would or would not have got more if he had at first proceeded in Ireland is immaterial.
This principle must apply to a case where the person suing abroad is here in conscience bound not to sue.
The Carron Case 5 HL Cas. 416 lays down the principle in even more general terms:
If the circumstances are such as would make it the duty of one Court in this country to restrain a party from instituting proceedings in another Court here, they will also warrant it in imposing on him a similar restraint with regard to proceedings in a foreign Court.
Where there is a plain equity in favour of an injunction, and those who seek it are in this country, the Court will grant it, and restrain the proceedings in the Courts of a foreign country.
For these reasons, and on the facts of this case, including the construction and effect of the release, I have no doubt that the Master of the Rolls was right in holding that the injunction against the Argentine proceeding should go, provided this suit had been brought with sufficient promptitude.
It is a further important circumstance in favour of the plaintiff that, by the second deed of January 3rd, 1889, he completed the consideration for the release by absolutely assigning to his wife the house and land, and paid her the money, and gave her the chattels, which she agreed to accept as the consideration for her covenant not to molest or sue him either personally or in respect of his property. The Irish property assigned to her was valuable, and it has increased in value since she got it, through a purchase under the Land Acts. It comprised what had been intended as the home and means of subsistence of both husband and wife, if they had not separated; and there is nothing to suggest that, as matters stood in 1889, it was not a reasonable provision for the wife alone. Therefore, after-acquired property of the husband, and nothing else, is now at stake.
The transaction of 1895 is not put in issue, and the deed of that year, though proved by the exemplification of it from the Argentine Registry, is not relied upon in pleading, and, therefore, cannot be made a ground of relief. But it is evidence, by way of admission, of the validity of the release of 1889, and it may also be referred to upon the second question – namely, whether anything has occurred since 1889 which could justify the Court, in the exercise of its discretion, in refusing relief now. We have the defendant s own representation of that transaction in the recitals contained in the protocol filed in the Argentine Court. Neither in the deed itself, nor in the protocol, is it suggested that the additional provision of 100 a year, which the husband then covenanted to give her, out of his increased means, was given otherwise than as a voluntary act of bounty. She set out and confirmed the release of 1889, and she described the occasion of the additional grant of 100 a year as being her having arrived at a state of poverty, and solicited from him some means with which to meet her requirements, and she stated that, having with that object come to Buenos Ayres, she and her husband had entered into the private arrangement expressed in the deed, for which they both solicited, and obtained, the approbation of the Argentine Court in the form of protocolization of the instrument, which appears to be an Argentine form of registration.
No injunction is sought, nor do I think could it have been given, upon the present proofs, against any proceeding on that instrument. It is not now before us in any way except as evidence of ratification of the release of 1889, which is the only foundation of this suit. The husband alleges that he regularly paid the money up to the time when she sued him in 1903, and even afterwards, and he admits his liability to pay it still, subject only to her abiding by her contract not to sue for more. If he had failed to do so, and she had sued him in Argentina upon that deed, such a suit could not be restrained under the release of seven years before.
The only remaining suggested ground of defence is that the plaintiff has pleaded in the Argentine suit, and has allowed it to proceed for three years. He could not help pleading, and he was free to defend himself. If the bringing of the suit was a breach of the contract of 1889, allowing it to go on could not disentitle him to stop it at any stage, unless his doing so amounted to laches or acquiescence, or changed the wife s position for the worse. He has proved that he was in Argentina when the suit began; that an embargo was put upon his property there, and that he could not conveniently come to this country for relief until the tedious and expensive proceedings had reached their present stage. It seems to me to be only an aggravation of the injury inflicted upon him by the breach of the contract not to molest or sue him, that he was not able to have recourse to this Court until the oppressiveness of the Argentine litigation had become intolerable.
I, therefore, concur in all respects with the judgment of the Master of the Rolls, and hold that his appeal ought to be dismissed. But, having regard to the delay, and to the relations of the parties, and to all the circumstances, including the fact that the husband s misconduct began the trouble, I think it just that he should bear all his own costs including the costs of the appeal.
Holmes LJ: The plaintiff and defendant, both British by birth, were married in 1874 in Buenos Ayres, where the plaintiff had been residing for some years. They lived there together, except for six or seven months during which the wife was on a visit to England, until 1880, when she discovered that her husband was having an adulterous intercourse with one of their female servants. She there upon left Argentina, and came to London to live with her mother. The plaintiff, having remained in Buenos Ayres until 1885, came in that year to Ireland for a short time; and before he returned to Argentina there was a reconciliation between him and his wife. It was then arranged that he should come home after he had sold his property in South America, and that they were to live together in this country. The plaintiff carried out this arrangement by realizing the greater part of his Argentine property, by coming back to his wife, and by residing with her first in London, then at Rosslare, and afterwards at Woodville, County Wexford, of which he obtained a lease, and on which he expended a considerable sum of money. If he had continued to live in Ireland, there might have been no litigation; but, unfortunately, after some time he went back to Argentina to sell some stock that remained undisposed of. I gather from what afterwards took place in the Probate and Matrimonial Division that during his absence the old temptation was too strong for him, for when he returned to Ireland his wife presented a petition to Judge Warren praying for a divorce a mensa et thoro on the ground of adultery, and she succeeded in obtaining the decree sought for. There had been previously a petition for alimony pendente lite, but an agreement was then entered into providing that all proceedings in the cause on reference to alimony, whether pendente lite or permanent, claimed by the wife, and also all claims in respect of the costs of the proceedings, should be settled on the terms of plaintiff paying the defendant the sum of 500, and assigning to her the lands of Woodville, and the chattels thereon. This consent also provided that in consideration thereof the wife should execute a deed releasing the plaintiff from all claims present and future by the defendant in respect of the relief sought against her in the action before Judge Warren and the costs thereof, and in respect of alimony and in respect of any debts or liability incurred, by her, and from all claims whatever by or on account of her, and indemnifying the plaintiff against the same.
Immediately after this litigation the plaintiff returned to Argentina, where he has since lived and prospered. He has become very wealthy; and, in 1895, his wife, finding it hard to subsist on what was provided for her by the consent, visited Buenos Ayres for the purpose of obtaining, if possible, some further provision; and, without litigation, the plaintiff agreed to give her 100 a year, which has been since regularly paid. His prosperity has apparently gone on increasing; and the defendant, in April 1903, instituted proceedings in the Court of the Argentine Republic, which, according to the statement of claim, seek for divorce division of property, and alimony, against the plaintiff.
The present action is brought: (1) for a declaration that the final decree of Judge Warren, in 1888, was a binding sentence of divorce a mensa et thoro between the plaintiff and defendant; and (2) for an injunction to restrain the defendant from instituting or continuing any proceedings for divorce, or separation of goods, in the Court of the Argentine Republic against the plaintiff. The Master of the Rolls, I need hardly say, refused to give the declaration asked for, which is too fantastic to call for comment; but he granted the injunction on terms which do not substantially differ from what was claimed by the plaintiff. From this the defendant has appealed; and I am of opinion that she is entitled to succeed.
The plaintiff s claim for the injunction is based upon the consent entered into in the Probate and Matrimonial Division, and the indenture executed in pursuance thereof on the 3rd January, 1889. A document, said to be registered in 1895 in some office in Argentina, relating to the payment of the annuity of 100 already mentioned, was produced during the trial in the Rolls Court, but it is not relied on in the pleadings or in the arguments in this Court; and I do not propose to refer to it. I deal with the case upon the only ground put forward by the plaintiff – the contents of the consent and indenture.
Now, I have no doubt that the High Court in this country has jurisdiction to restrain the defendant from commencing or continuing a suit before a foreign tribunal, the object of which is to enforce against her husband a right from which she has released him by these documents. But whether this jurisdiction will be exercised, depends upon all the circumstances of the case. The injunction, although it only binds the defendant, has the effect of preventing a foreign Court from entering on or proceeding with litigation within its jurisdiction; and this is a step which British Courts are, and ought to be, slow to take. Justice may require it to be taken in some cases; but is the present one of them? Argentina has been the home of the plaintiff for almost forty years; and all his property is in that State. It is, therefore, the natural place in which a person, who claims a legal right against him, would take steps to enforce it. The defendant s suit was begun in April 1903 and had been proceeding for two years and eleven months before the writ in this action was issued. During this period the parties were not idle, as the plaintiff say that the record of the proceedings has attained to great dimensions; and I gather from his evidence that he has himself contributed considerably to its bulk. All the documents are in Argentina, and the defendant was examined there in November last. We are told that the case would have been ripe for trial next month; but the plaintiff, having been defeated in an interlocutory appeal, came to Ireland, and brought this action. A plaintiff seeking an injunction, which will have the effect of putting a stop to a suit long pending, and soon to be tried, in a foreign country, ought at least to give some evidence of the nature of such suit, and the steps that have been taken in it, and also offer some reasonable explanation of why, after much expense and trouble have been incurred, he seeks to transfer the litigation to a country thousands of miles from his own residence, and from where all his property is situated. He has not done this. The only document produced by him from the Argentine Court is what is called the petition of the defendant, but which seems to me to be more like a speech of counsel. He proves that he has pleaded as a defence the deed of 1889; and it is not suggested by his counsel that this would not be a good answer to the action in the foreign Court, if it has the effect of releasing him from what his wife now claims. If the circumstances of this case were reversed, if the parties were natives of Argentina, and the judicial separation followed by the consent and deed had been obtained and executed there, an English or Irish Court would allow the husband to show if he could do so, that an action therein brought against him by his wife was a violation of what was then agreed to. I do not know the law of Argentina; but I presume it to be a scientific system, and that it does not differ from our own in recognizing an elementary principle of jurisprudence.
For all these reasons, I should be prepared to hold, even if there was no other ground for doing so, that the injunction ought not to be granted. The Court is entitled, in a case like this, to consider whether the plaintiff is to put a summary stop to legal proceedings which he has allowed to go on for so long without objection, and whether, having failed to change the venue of the action from one province of Argentina to another, he should now be permitted to bring it to Ireland. I can find no precedent resembling even remotely in its circumstances the present case; and I think one ought not now to be made.
There is, however, another ground for dismissing this action. It appears from the statement of claim therein that one of the objects of the foreign suit is to obtain division of property. We have no expert evidence as to what this means in Argentine law; but the plaintiff himself gave some answers, which can we used for the purpose of showing what it is. He said: All the property that was gained during the marriage, gamancia, belongs to both, and the partnership is called Sociedad conjugale, … everything except legacies or inheritance. The husband is the administrator of the property, and he is the managing partner. He afterwards said that the partnership remains until it is dissolved by a competent Court, and added that the Sociedad is dissolved by a decree for divorce; but after stating that then is no absolute divorce as in England, he went on to say: I think the divorce only affects the personal separation of the couple. The Sociedad, I believe, ends with it. I cannot remember that I have taken the opinion of a lawyer on the point. He says a little later that his wife claimed in the pending action a separation of goods, and the ascertainment of her share in the property. Now it is to be noted that the witness stated without doubt or hesitation that all the property gained during the marriage, except by legacies or inheritance, belongs to both husband and wife, the husband being the managing partner. In this case all the property of which the plaintiff is now in possession in Argentina was gained during the marriage, and after the deed of 1889. Therefore, unless the judicial separation makes a difference, this property belongs to the husband and wife jointly; but the plaintiff was in doubt as to the effect of the divorce. He cannot say whether it puts an end to the wife s right or not – nor, in the absence of all other evidence of Argentine law on the subject, can this Court say. But suppose that in the words of the plaintiff the divorce only affects the personal separation of the couple, the wife is entitled to an undivided share of the property, which is as much her own as if the property had been conveyed to her and her husband as joint tenants.
Now, turning to the consent of 1888, I think that it is clear that it only relates to alimony, the costs of suit, and the claims arising in, or connected with, the action. I agree that it substitutes for alimony the benefits conferred on the wife by its terms, and the wife could not afterwards claim from her husband alimony, or anything in the nature of alimony – in other words, money for her subsistence. As the deed purports in its recitals to be the deed stipulated for in the consent, I am disposed to think that it goes no farther; but, even if I were to accept Mr Samuels construction that it releases all her rights in her husband s property, including the rights she would have therein if he were to die intestate, it certainly does not give him anything that is her own. But if I am to accept the plaintiff s evidence, the property acquired during coverture belongs to the two jointly. Her share thereof belongs to her just as his share belongs to him; and what she seeks for in her suit is a separation of goods, and an ascertainment of her share of the acquired property. I am satisfied that this right, if it exists under the law of Argentina, has not been affected by the consent or deed; and if, in ignorance of that law, I were to prevent the matter from being decided by a Court that is acquainted with it, I might be doing serious injustice to a lady who, as far as I can see, has done nothing calculated in law or morals to forfeit her rights, whatever they may be.
Conlon v Murray
[1958] NI 17
Lord Macdermott LCJ: I have read the judgment which Black LJ is about to deliver and I am in agreement with him.
Black LJ: This is an appeal by the plaintiff Patrick Conlon from the dismissal by Curran J on July 30 1956, of an action in which the plaintiff claimed specific performance of an agreement in writing dated May 26 1954, by which one Mary Sheridan agreed to sell to the plaintiff for the sum of 2,000 the farm on which she lived situated at Ballinarea in the southern part of Co Armagh. Mary Sheridan died on September 22 1955, and the action was continued against James Murray and Peter Murray her executors.
At the time of signing the agreement Mary Sheridan was about 69 years of age. According to the evidence of her medical attendant, Dr O Reilly, which was not challenged, her eyesight had been troubling her. She had had an operation on her left eye which necessitated the use of glasses and in her right eye she had no sight at all owing to glaucoma which is associated with increasing pressure of fluid in the eye. This condition was acute and according to Dr O Reilly was probably quite painful. Dr O Reilly saw her on May 24, 1954. She then also complained of bleeding from the womb. That suggested to Dr O Reilly the probability of something malignant and he arranged for her to be treated by a specialist gynaecologist She was seen by the specialist at Newry Hospital on June 1, she was admitted to the hospital on June 7, and her womb was removed on June 18. She was discharged from hospital on July 14, and readmitted on July 18, with an acute urinary infection. She was allowed home on the 1 or 2 August, but entered a nursing home on August 6, where she remained until her death on September 22 1955. Dr O Reilly says that in May 1954 her uterus trouble was fairly advanced and that it would be distressing with constant bleeding and general weakness due to carcinoma. She was ill and was generally weak but was mentally alert at any time he saw her apart from the effect of drugs given to relieve her pain.
Mrs Sheridan had a brother called Patrick Toner who had sold his own farm in 1953 and had come to live with her in the house on her farm. He was a man somewhat addicted to drink and had become rather a trial to Mrs Sheridan. It appears that on May 24 1954, the same day as she had been seen by Dr O Reilly, Mrs Sheridan arrived sometime between 4.30 p m. and 6 p m. at the house of a Mr Michael Sheridan. She had had a row that day with her brother and according to Michael Sheridan s daughter Miss Mary Sheridan, a trained nurse, she was not terribly distressed, but when she arrived she was slightly distressed but settled down. Mrs Sheridan asked Miss Mary Sheridan would she go when it got dark to Cullyhanna and get her brother s car and take Mrs Sheridan to the house of her sister Mrs Murray. Miss Mary Sheridan cycled over to Cullyhanna but was unable to get her brother s car as he had the engine down cleaning it. She then went to Mrs Murray s house and they both came over to Mr Michael Sheridan s house on their bicycles. When they arrived there about 10.30 pm. Mrs Sheridan was missing and Mrs Murray went out to look for her. Mrs Murray found Mrs Sheridan in one of her own fields going in the direction of her own home with no coat or hat. They came up to the road where they met a man called Bernard Collins who plays a not unimportant part in the case and had a conversation with him. Eventually Mrs Sheridan agreed to go back home to Mrs Murray s house – a distance of 3 miles away – where they arrived about 1.30 a.m. Collins agreed that Mrs Sheridan was worried that night and that although it was late she had no coat on.
The details of the conversation with Collins on the road on the night of Monday, May 24, are in dispute. According to Collins own story Mrs Sheridan said that she had had a dispute with her brother Paddy and that he had thrown a bucket of water round her. Collins then, according to his story, advised her to go and live with Mrs Murray and to put up the farm for sale and asked her if she would be willing to take 2,000 for the farm, and if so, he would try to get her a customer. Mrs Sheridan, according to Collins, said that she would indeed be willing to take 2,000 and would give Collins a good shakehand and the purchaser a good luckpenny. Collins said that he himself meant to be the customer for the farm but when he saw his wife he decided not to buy and then thought of the plaintiff Patrick Conlon as a possible purchaser. Accordingly, Collins sought to get in touch with the plaintiff next day (Tuesday, May 25). The plaintiff, however, was at Ardee Fair but Collins left a message for him and the plaintiff went over to the Collins house about 7 p m. As a result they went over to Mrs Murray s house to interview Mrs Sheridan. This was quite late at night. Collins says about 11 pm. Collins apparently got there first and went up to see Mrs Sheridan who was in bed. According to his account Mrs Sheridan was at first averse to selling to Conlon on personal grounds but ultimately said that Conlon s money was as good as any other man s, that she was getting a good price and it was no odds who got it. Conlon was then brought up to the bedroom and according to him Mrs Sheridan and he agreed to the sale of the farm for 2,000. There was then some discussion about getting a solicitor to draw up the agreement. Mrs Sheridan stipulated that she wanted her own solicitor Mr O Connor of Crossmaglen. It is agreed that on the night of May 25 there was no talk of Conlon getting vacant possession of the lands or what was to be done about Mrs Sheridan s brother being in the house.
No time was wasted about getting the agreement reduced to writing. On the morning of Wednesday, May 26, Gerard Conlon a brother of the plaintiff, went into Crossmaglen for Mr O Connor. Unfortunately Mr O Connor was in Dublin that day but his managing clerk Mr Carahar was in the office and was apprised that his services were required for the purpose of drawing an agreement for the sale of a farm. Apparently there was no question of waiting until Mr O Connor himself should be available. Gerard Conlon got a taxi and drove out with Mr Carahar to Mrs Murray s at Cullyhanna, stopping by arrangement about 20 yards past the house. The plaintiff was already there in the kitchen of Mrs Murray s house. Mr Carahar was shown up to Mrs Sheridan s bedroom. Up till then Mr Carahar had not seen the plaintiff although apparently even up to the trial he was under the impression that the man who had called for him and had taken him out in the taxi was not a brother of the plaintiff but the plaintiff himself. At Mrs Sheridan s bedside Mr Carahar proceeded to draft the agreement upon the information given to him by Mrs Sheridan who was sitting up in bed propped up by pillows. Carahar says that he pointed out to Mrs Sheridan what was to happen to her when she had disposed of her home and she replied that she could live anywhere. Mr Carahar did not appear clear for whom he was supposed to be acting when he was drafting the agreement. He had been brought out to Mrs Murray s house by an emissary of the plaintiff s and although Mrs Sheridan in the past had been a client of Mr O Connor s Mr Carahar had not been informed that he was to be regarded as acting on her behalf. There would seem little doubt, however, but that Mrs Sheridan regarded Mr O Connor as her solicitor and had asked for him for that reason and accordingly would consider Carahar as looking after her interests in the matter. Mr Carahar says that Mrs Sheridan did not ask for any advice, that he pointed out she was disposing of her home, that she told him she had got a good price for it and that he did not suggest that an auction might bring a better price. Mr Carahar says his state of mind was that he might be acting for both parties and thought it his duty to look after both Conlon s and Mrs Sheridan s interests. Conlon conveyed to Mr Carahar that he wanted the contract signed there and then. And Conlon paid for the taxi.
The real difficulty in drafting the agreement was in regard to giving possession of the farm. What was to be done about Toner? Mr Carahar says that he told Mrs Sheridan that she should get her brother to leave as it was her duty to give clear possession and that she did not dispute that but said that she had rather not take proceedings against him. Mr Carahar says she meant that she would rather the purchaser did it and that she said there would be no trouble with her brother. She believed he would leave when asked and she instructed Mr Carahar to write him immediately informing him of the sale and asking him to leave. Mr Carahar then apparently added Clause 9 of the agreement which reads: The said Mary Sheridan agrees to take all steps necessary to evict said Patrick Toner if he refuses to leave said dwellinghouse and to pay costs of same. Mr Carahar says that he did not speak to Conlon before he put in this clause and that he put it in to protect Conlon. In so doing Mr Carahar was, of course, acting in Conlon s interest though it is tolerably clear that Mrs Sheridan was looking upon him as acting on her behalf. In view of the circumstances and of what were obviously Mrs Sheridan s strong feelings in the matter I think that if an independent solicitor had been acting upon behalf of Mrs Sheridan he would have struggled hard to negotiate a modification of this clause. Mr O Connor himself frankly says that he would agree that in this aspect of the matter she would require independent legal advice and says that he would have taken proper instructions and advised her and such advice would be independent of any obligation to the purchaser.
Mr Carahar says that he read the agreement to Mrs Sheridan and she approved it. He then brought Conlon into the room and read it over again in his presence and he approved and said he was paying 500 deposit which he paid then and there in cash.
Conlon s account of the transaction is substantially different. He says that Mr Carahar called him up to Mrs Sheridan s bedroom after he had part of an agreement drawn up, that the clause about possession had not yet been inserted, that next they talked about possession of the house and Carahar asked him would he take it on him to put Toner out of the house. Conlon says he said No as he earned the first shilling he ever earned with Paddy Toner and he would not be the man to put him out, that Mr Carahar then said to Mrs Sheridan You see the situation now? and that he, Conlon, then said he wasn t putting him out and the deal was off. Conlon says that Mrs Sheridan then said: Seeing you won t put him out Paddy, I ll have to put him out, and she proposed that if Conlon put him out she would bear the expenses. Conlon says he would not agree, so she agreed she would put him out in her own name.
Whether Carahar s account of this matter or the plaintiff s is the true one I have no means of knowing. Both were called as witnesses for the plaintiff. On another point, where the plaintiff s evidence differed from Carahar s, Curran J, who had the advantage of seeing the witnesses, roundly held that he was satisfied that the plaintiff was not telling the truth. But he did not find it necessary in his judgment to assess where the truth lies on any other particular point.
It is obvious from Mr O Connor s evidence as regards his visit to Mrs Sheridan on May 31 that Mrs Sheridan fully appreciated that she had entered into an agreement to sell the farm to Conlon and that she was to put her brother out. This was apparently the term of the agreement that she particularly objected to and the term which on May 31 she felt to impose particular hardship on her.
The remedy of specific performance still retains the character of an equitable remedy. It is not granted as of right but is a discretionary remedy which may be withheld in cases of a type where the court, having regard to the conduct of the parties and all the circumstances of the case, considers in its discretion that the remedy ought not to be granted. This discretion is not, of course, the arbitrary discretion of the individual judge but is a discretion to be exercised on the principles which have been worked out in a multitude of decided cases. And it is well established that there is a class of cases in which a contract nay be such and entered into in such conditions that the court will not order it to be rescinded but, at the same time, looking to the substantial justice of the case, will not order it to be specifically performed. It follows naturally, as observed in Kerr on Fraud and Mistake, 7th ed (1952) p 568, that when the aid of a court is sought by way of specific performance of a contract the principles of ethics have a more extensive sway than when a contract is sought to be rescinded.
In the present case Mrs Sheridan was 69 years of age and, although admitted to be mentally alert and vigorous, was suffering from two painful and weakening ailments. It is not surprising that after the trouble with her brother she should have an impulse to get rid of the responsibility of the house and the farm and express a readiness to sell it. This might prove a mere transitory mood or it might not. But the idea of selling the farm raised questions requiring deliberation and reflection. If the treatment which she might have to undergo was successful (and for all that she then knew it might have been) where was she to go to live when she came out of hospital? And what was to happen to her brother? Where was he to go to live if the farm was sold? Both of these were matters which required thoughtful and anxious consideration. But neither seems to have been mentioned or considered when the bargain was made in Mrs Sheridan s bedroom on the night of May 25 and, whether one accepts Carahar s evidence or Conlon s, the question of what was to happen to the brother was not even raised until the agreement was actually being drafted by Carahar on the morning of May 26. The truth of the matter seems to be that in her plight on the night of May 24 the plaintiff impulsively accepted Collins suggestion that she should sell her farm and that Collins and Conlon both recognised that this mood night well prove to be a transitory one and that if Conlon was to get the farm it behoved them to obtain Mrs Sheridan s signature to a document without delay. Conlon seems to have first heard of the opportunity from Collins about 7 o clock on the evening of May 25, and at 11 pm on the same evening – a peculiar hour for legitimate business – they visit Mrs Sheridan in her bedroom and the bargain is made for the sale of the farm to Conlon at 2,000 – the figure mentioned by Collins the previous night – without any haggling or negotiation and without any mention of when possession would be given or that it would be necessary to put Toner out. Then on the next morning Mr Carahar is brought out in a taxi paid for by Mr Conlon to draft the necessary agreement. The reason why Mr Carahar is brought is because Mrs Sheridan regards Mr O Connor as her solicitor. But conceiving himself as being there as much in the interests of Mr Conlon as of Mrs Sheridan he inserts on his own volition (if his evidence on this point is to be accepted) a special clause in the agreement for the benefit of Conlon. I quite appreciate that specific performance of a contract will not be refused on the sole ground that one of the parties had not legal advice. A man can enter into a binding contract without having his solicitor at his elbow. But as Mr O Connor observed in his evidence, Mrs Sheridan should have had independent legal advice in a transaction of this kind. And quite apart from any other consideration the way in which Mrs Sheridan s expression of her willingness to sell the farm was jumped at by Collins and Conlon and the extraordinary and unexplained haste with which the transaction was rushed through raise of themselves such a degree of suspicion as would lead a court of Equity to be hesitant about granting specific performance of a contract concluded in such circumstances.
It was argued on behalf of the plaintiff that cases in which equity refuses the remedy of specific performance fall within one or other of certain defined categories. I cannot accept this view. Certainly equity acts on certain broad and ascertained principles but it has always refused to be forced into rigid categories. This is, I think, well stated in Story s Equity Jurisprudence 10th ed (1870), Vol 1, p 739: In truth the exercise of this whole branch of equity jurisprudence respecting the rescission and specific performance of contracts is not a matter of right in either party; but it is a matter in the discretion of the Court, not indeed of arbitrary or capricious discretion, dependent upon the mere pleasure of the judge, but of that sound and reasonable discretion which governs itself so far as it may by general principles; but at the same time which withholds or grants relief according to the circumstances of each particular case, when these rules and principles will not furnish any exact measure of justice between the parties. On this account it is not possible to lay down any rules and principles which are of absolute obligation and authority in all cases; and, therefore, it would be a waste of time to attempt to limit the principles, or the exceptions, which the complicated transactions of the parties and the everchanging habits of society may at different times and under different circumstances require the Court to recognise or consider. A good instance of a case which it would be found difficult to fit into any of the suggested categories in which specific performance will be refused is the case Twining v Morrice (1788) 2 Bro CC 326 referred to in the course of the hearing.
I am accordingly of opinion that Curran J s judgment refusing the plaintiff s claim for specific performance should be affirmed.
Sheil J: I have found this case a very difficult one, one which is very near the border line, but after full consideration I am not prepared to differ from the conclusions at which my Lords have arrived.
McCausland v Young
[1949] NI 49 (Court of Appeal)
The facts are set out in the judgments.
Andrews LCJ: The facts of this case and the circumstances under which proceedings were instituted have been so fully dealt with in the exhaustive judgment of Black J, from whose order the appeal has been brought to this court, that I propose to dispense with any general recital of facts and shall confine my introductory words to a brief reference to the terms of that order and of the notice of appeal and cross-notice which are before us.
That order, dated the 8th March 1948, declared that in the events which have happened the plaintiff, Connolly Robert McCausland (to whom, for the sake of brevity, I shall hereinafter refer as Connolly McCausland ) is precluded from contending that the provisions of clause 15 contained in the indenture of re-settlement of the 4th August 1927, do not apply to or affect his life estate in the properties comprised in that settlement, and that in so far as the said provisions purport to affect his life estate in the said properties, they are to be regarded as valid and effective. By the said order it is further declared that as from the 3rd May 1940, the hereditaments and premises and capital monies comprised in the said re-settlement are to be treated during the remainder of the life of Connolly McCausland as being held to the uses and upon the trusts and subject to the powers and provisions to and upon and subject to which the same would have stood limited and settled by virtue of the said re-settlement if Connolly McCausland were dead without issue. A further declaration provided that the said clause 15 is not binding on the plaintiff Marcus Edgcumbe McCausland (the eldest son of Connolly McCausland) or any person entitled in remainder to him under the limitations contained in the said re-settlement. The order also provided that the re-settlement be rectified in accordance with the foregoing declarations; and further declared that the provisions of clause 15 do not apply to the jointure rent-charge appointed to the plaintiff Margaret Louisa McCausland (in the event of her surviving her husband Connolly McCausland) by the marriage settlement of the 6th June 1932.
The first notice of appeal from this order, bearing date the 8th June 1948, was served on behalf of the defendant, Charles Norman Stronge (surviving trustee of the said indenture of re-settlement) for an order that the judgment and declarations be varied in so far as they fail to adjudge and declare that Connolly McCausland was and is in all events bound by clause 15, and that the foregoing declaration as to how the hereditaments, premises and moneys should be treated during the remainder of the life of Connolly McCausland be varied by expunging therefrom the words limiting such declaration to such period; that the declaration that clause 15 is not binding on the plaintiff Marcus Edgcumbe McCausland or any person entitled in remainder to him be reversed, and that in lieu thereof it be declared that the said plaintiff and any such persons so entitled in remainder are bound by the said clause 15; that the order that the said re-settlement be rectified be set aside; that the declaration in reference to the jointure rent-charge be reversed and set aside; that it be declared that clause 15 is valid, effective and binding upon the plaintiffs and each of them; and that the learned judge s direction as to costs be varied as in said notice mentioned. The grounds of appeal expressed briefly were that the declarations were against evidence and the weight of evidence, and were wrong in law.
A fortnight later than the said notice of appeal, a cross-notice of appeal, dated the 23rd June 1948, was served, in which Connolly McCausland sought a variation of the learned judge s order:
(1)by striking out the declarations
(a)as to Connolly McCausland being precluded from contending that the provisions of clause 15 did not apply to or affect his life estate; and
(b)that in so far as the said provisions purport to affect his life estate they are to be regarded as valid; and
(c)as to how the hereditaments, premises and moneys were to be treated during the remainder of Connolly McCausland s life, and
(2)by deleting the order that the re-settlement be rectified in accordance with such declarations.
The said notice of appeal further asked that it might be declared that notwithstanding clause 15 Connolly McCausland is now and has always been entitled to the estate for his life limited to him, and that said clause 15 is not binding on him; and for an order that the said re-settlement be rectified accordingly. The said notice of appeal also contained an intimation on behalf of Connolly McCausland and his said son Marcus that they would contend that clause 15 is – (a) void for uncertainty; (b) void as contrary to public policy; and (c) not binding on them or either of them or on any person entitled in remainder. There followed in this notice of appeal an alternative prayer in the following terms: That, otherwise as aforesaid, the respondents will contend that the order appealed from is correct and should stand affirmed, including the rectification ordered in accordance with the declaration that the said clause 15 is not binding on the respondent Marcus Edgcumbe McCausland or any person entitled in remainder to him under the limitations contained in the said re-settlement. Though nothing was heard of this alternative prayer in the notice of appeal during the course of the arguments which occupied eleven days in our court, its presence in the notice was not without significance. In this connection I would add that all the other parties served with the notices of appeal, with the exception of the trustee, expressed through their counsel, at the opening of the appeal, their willingness to abide by the order of Black J, and took no part in the hearing in this court.
The first submission which was pressed upon us by Connolly McCausland s counsel was that the so-called religion or forfeiture clause (No 15) of the re-settlement of the 4th August 1927, is void for uncertainty; and, secondly, it was contended that it is void as being contrary to public policy. Whilst these are separate and distinct issues, yet are they somewhat analogous; and for that reason it appears to me that they may be conveniently grouped, and to a certain limited extent considered together.
The material words of the forfeiture clause are as follows: If any person hereby made tenant for life or tenant in tail by purchase of the settled freeholds shall become a Roman Catholic or profess that he or she is of the Roman Catholic religion then and so often as the same shall happen the settled freeholds shall go and remain to the uses upon the trusts and subject to the powers and provisions upon and subject to which the same would have stood limited and settled by virtue of these presents if such person were dead without issue.
It was upon the words shall become a Roman Catholic or profess that he or she is of the Roman Catholic religion that the attack on this branch of the case was directed. It was argued that the meaning of these words is so uncertain that it cannot be ascertained with the requisite degree of definiteness. Some standard, it was said, must be available and applied in order to determine if any person has become a Roman Catholic. To be legally binding, it was argued, the clause which defeats on a contingency a vested estate must be such that the court may be able to appreciate from the beginning its meaning and significance: see the speech of Lord Cranworth in Clavering v Ellison (1859) 7 HLC 707, 725. Reliance was also placed on the words to the like effect of Parker J in In re Sandbrook [1912] 2 Ch 471, 477, that conditions subsequent, in order to defeat vested estates, or cause a forfeiture, must be such that from the moment of their creation the court can say with reasonable certainty in what events the forfeiture will occur. In other words, the court must be able to say with certainty when and in what circumstances the clause will become operative and the forfeiture will be worked. The test, it was submitted, is not what Connolly McCausland or his father thought was the meaning of Roman Catholic. Is it to be the meaning which would be assigned to it by a member of the general public or by a canonist? The settlor has failed to provide the test Again, it was asked, may a beneficiary under the trust become a Roman Catholic by gradual process, or can he only become such by a ceremony of reception into the Church? Further, what is meant by the word profess – a word which, it was contended, is most ambiguous. No limits of profession it was argued are prescribed by the settlor. What must its degree be? Must it be by words, or may it be by conduct? And, if by words, to whom must the profession or affirmation of adherence to the Roman Catholic religion be made?
Such are the doubts and difficulties which, it was contended in argument, render clause 15 of the deed uncertain and unenforceable; and in support of these contentions the plaintiffs produced as witnesses two eminent Doctors of Divinity and authorities on the canon law, Dr. William Conway, of Maynooth, and Dr. Arthur Ryan, of The Queen s University of Belfast, the submission being that the issues of fact raised in the forfeiture clause could only be determined by the law and practice of the Roman Catholic church They were, indeed, able exponents of the case which they were presenting; but, having given it my most careful consideration, I am forced to the conclusion that their evidence is not of any real assistance to the plaintiffs case. In expressing this opinion I am not unmindful of the admission made by Dr Ryan to the learned Attorney-General in cross-examination that when you find in a document a phrase Roman Catholic or Roman Catholic religion it is not a phrase taken from the canon law of the Church; and in searching for a meaning you will not get any assistance from the canon law. If this be so, one naturally asks why have recourse to them or seek their aid? Why not interpret the words as, what Black J calls, an ordinary English phrase ? Why should they not bear the meaning in which they would naturally be used by the settlor – the meaning assigned to them in ordinary every-day speech? It is evidence such as that given by Dr Conway and Dr Ryan which, if accepted, would be calculated, as was doubtless intended, to create doubts where in my opinion there were really none. It is the words of the settlor, not of the canonist, which we are called upon to construe; and in my opinion it would be entirely wrong of us if we were to interpret the words of the settlor by reference to criteria of the canon law with which he was in all probability quite unfamiliar. In this connection I may say that I am impressed by the words of Gavan Duffy P in In re McKenna [1947] IR 277, that a Protestant farmer testator knew what he meant, and practically every citizen in every walk of life, be he Catholic or Protestant, knew the meaning conveyed, by the words marry a Roman Catholic ; and the learned President added that he had only to construe the plain words used by a plain man in a sense plain to all of us. This, in my view, is common sense, which I am not prepared to hold in the present case to be in conflict with any settled principles of law.
The clause, when examined, is found to contain two alternatives, in either of which event the forfeiture operates. I entirely agree with Black J when he says that the first of these shall become a Roman Catholic must be taken as referring to a person who had previously not been a Roman Catholic, but had come to embrace that religion; and that the second profess that he or she is of the Roman Catholic religion was intended to cover a case where a person had always been a Roman Catholic, or where there was a doubt whether the person so professing had been formally accepted into the Roman Catholic Church. Greater width of meaning must be given to the words of this composite clause, with its two limbs thus disjunctively expressed, than would be possible had they been, as in Clayton v Ramsden [1943] AC 320, expressed in conjunctive form. The clause was in my opinion designedly drafted in this wide form so as to embrace within its scope everyone of the character mentioned in it, who, whether by formal or ceremonial admission to the Roman Catholic Church or otherwise, accepted the authority of the Roman Catholic Church.
Black J has referred to several cases in which it does not appear to have been even suggested that conditions working a forfeiture in the event of a legatee becoming a Roman Catholic were void. I need not repeat them here. Suffice it to say that it is only recently, as it appears to me, that such an argument could be advanced with any hope of success. One might also refer to statutory enactments such as the Act of Settlement, 1701 (12 & 13 W 3, c 2), in which similar, if not in all cases, identical, language has been employed by Parliament, and is thus part of the accepted public law of our country. How, I ask, can it be said that such words have no defined meaning?
In these circumstances the plaintiffs mainly based their case on the issue in its legal aspect upon two recent authoritative decisions. The first is Sifton v Sifton [1938] AC 656, in which the provision that payments were to be made only so long as the testator s daughter should continue to reside in Canada was held to be a condition subsequent which was void for uncertainty upon Lord Cranworth s principle in Clavering v Ellison (1859) 7 HLC 707, the words to reside in Canada being regarded as uncertain and ambiguous in meaning owing to the elasticity of the word residence, and the fact that the testator had clearly intended that his daughter should be at liberty to leave Canada for some purposes and periods undefined. To attempt to define precisely or distinctly the events that would constitute a ceasing to reside in Canada would necessarily end in failure. This case, so different in its facts from the present, is, as it appears to me, only of importance in the present case because of its approval and application of Lord Cranworth s principle, with the addition that the events referred to in the condition should be apparent not only to the court but also to the parties concerned: (see the opinion of Lord Romer) [1938] AC at 675.
The second case, so strongly relied upon by the plaintiffs, is Clayton v Ramsden [1943] AC 320, which bears a closer resemblance on its facts to the present, yet in my opinion there are important and vital differences. In it a condition of forfeiture applied if the testator s daughter should at any time after his death marry a person not of Jewish parentage and of the Jewish faith . The House of Lords held that this was one composite clause, and accordingly, that there was only one condition of forfeiture and not two alternative conditions, so that the condition would be void as a whole if one limb of it were void. They further held that the first limb of the condition (as to Jewish parentage) was void for uncertainty, doubts clearly existing as to whether the words referred to race or religion or to both; and, if they referred to race, as the House thought more probable, as to what proportion of Jewish blood in the husband would satisfy the requirement that he should be of Jewish parentage. The House further considered that the second limb (as to Jewish faith) was also void for want of sufficient indication by the testator as to the requisite degree of attachment or adherence to the faith which he required on the part of his daughter s husband.
I do not regard these cases as authorities which govern the present case. The clause which we are considering is not composite in the sense of constituting only one single condition of defeasance. Forfeiture arises if the party concerned either becomes a Roman Catholic or professes that he or she is of the Roman Catholic religion. I do not regard the first limb of this condition as in any way more uncertain than was the condition in In re Evans [1940] Ch 629, in which the relevant words were become a convert to the Roman Catholic religion, where it was held that the baptism into the Roman Catholic Church of a person becoming a convert to the Roman Catholic religion was an act which the court could ascertain with certainty and which would, in a proper case, create a forfeiture. In this connection, I may say, it was not surprising to find that the plaintiff Connolly McCausland admitted in cross-examination that he thought both he and his father knew in 1927 what was meant by the words Roman Catholic.
But, even if I am wrong in the view which I have expressed, I am quite unable to appreciate the existence of any element of doubt or uncertainty in whether a person professes that he or she is of the Roman Catholic religion. It is a question of fact – a purely subjective act or pronouncement – as to which, I may say again, it is admitted that no doubt exists in the mind of the plaintiff Connolly McCausland. I fully appreciate that the test as to the validity and binding character of the clause does not rest on the knowledge and appreciation of its meaning by the individual; but, when the individual is one so vitally interested as Connolly McCausland, I cannot think that such considerations are wholly irrelevant. However this may be, I am clearly of opinion that the forfeiture clause in the re-settlement of the 4th August 1927, satisfies the most exacting requirements of Fry J in In re Viscount Exmouth (1883) 23 Ch D 158, 164, as to clarity and certainty of expression in the creation of the limitation, and also in its operation; and that it is also consonant with judicial dicta in the later cases to which I have referred. The argument contra is that the term profess may have many degrees; and that it may not always be possible to state with accuracy and certainty what words or deeds would clearly amount to a profession. In my clear opinion, any one who openly accepts the authority of the Roman Catholic Church in religious matters may reasonably and properly be said to profess that he is of the Roman Catholic religion. The possibility of a difficulty of proof arising in an individual case will not render a condition void if it is clear, distinct and certain in itself. This second limb of the clause is of greater width and scope than the first, and so embraces a larger class, to which, in my opinion, the tests, conditions and requirements imposed by the canon law have no application.
I pass now to the contention that clause 15 is void as being against public policy. I hope I am doing the plaintiffs counsel no injustice when I say that I did not understand this submission to be strongly pressed in our court. Thus, whilst In re Borwick [1933] Ch 657 was cited, In re Tegg [1936] 2 All ER 878, which was apparently relied upon before Black J, was not opened. I am in full agreement with Black J in all that he says on this issue. The principle underlying these decisions was that the condition which was held to be void operated to interfere with the free exercise of the parent s duty in regard to the religious instruction or upbringing of his children, or that it was a fetter upon the beneficiary s free discretion as to what was best for the welfare and education of the beneficiary s children. This principle was referred to by Parker J in In re Sandbrook [1912] 2 Ch 471, 476, 477, in which he cited a passage from Sheppard s Touchstone at p 132, that a condition is bad which operates to restrain or forbid a man from doing his duty. In Borwick s case [1933] Ch 657 the condition against any of the settlor s grandchildren becoming a Roman Catholic was intended to operate during minority, ie, before the attainment of a vested interest at twenty-one. In In re Tegg [1936] 2 All ER 878 the condition was to operate during the infancy of the children of the testator s daughter. The present case is entirely different in this respect; for, as Black J points out, the condition is only to operate if the individual does a certain positive act, namely, becomes a Roman Catholic or professes the Roman Catholic religion; and such cases as In re May [1917] 2 Ch 126, In re May [1932] 1 Ch 99, and Patton v Toronto General Trusts Corporation [1930] AC 629 clearly establish that in such circumstances the court, unless compelled by the express terms of the clause, will not hold the doing of the act by the beneficiary to work a forfeiture until he has reached an age, namely twenty-one years, when he can exercise a free and a real choice of his own. It is not unimportant to note that in the second of the two reported cases of In re May [1932] 1 Ch 99 above cited, the contention that the condition was contrary to public policy was abandoned in the Court of Appeal; and, further, that in neither of the cases was the argument advanced that the words shall not be a Roman Catholic or shall cease to be a Roman Catholic were so uncertain or indefinite in meaning as in themselves to render the condition void. For the reasons above stated I hold that clause 15 in the re-settlement of the 4th August 1927, cannot be declared void on the ground that it is contrary to public policy.
My next enquiry in this difficult case passes to a consideration of the submission made on behalf of the plaintiffs, which is collected from several paragraphs of the statement of claim, that clause 15 was inserted in the re-settlement without the knowledge or approval of Connolly McCausland, and without his having independent advice; and that the deed was executed by him under a misrepresentation as to its contents. This submission of fact is followed by the further submission of law that in such circumstances the deed of re-settlement must be rectified by the striking out or omission of the clause from the deed.
I shall first consider the question of fact, though not in every relevant detail, for that would be impracticable if this judgment is to be confined to reasonable limits. But certain facts of paramount importance appear to me to stand out as either admitted or as clearly established in evidence. To these I must refer.
The plaintiff, Connolly McCausland, came of age on the 11th July 1927. Educated at Eton, he went to Sandhurst in the autumn of 1925, and from there obtained a commission in the Irish Guards on the 29th January 1927. Joining his regiment a fortnight later, he was not at home until some months after his twenty-first birthday. He states in his evidence that his father had not discussed the family property with him, and that he did not know how it was held; that his father was a Low-Churchman, but a strong and convinced supporter of the Church of Ireland; and that he, Connolly, was gradually becoming a Higher and Higher Churchman, and his father knew it. He sums up the position in the words we were never in agreement on these matters.
The proposal for a re-settlement of the family property (which was at the time held under a deed of re-settlement of the 9th August, 1897, by which Connolly McCausland s father, Maurice Marcus McCausland, was tenant for life and Connolly McCausland was tenant in tail male in remainder) was first made in a letter written by the father to the son about the month of March or April 1927. Unfortunately, the letter is not forthcoming, and we know nothing of its contents save as stated by Connolly McCausland, in his evidence – that it would be necessary to re-settle the property when he, Connolly McCausland, came of age; and that he, the father, would go over to England and talk about it which he, in fact, did in July 1927. Connolly McCausland fixes the date of the visit by saying that his father was in London on his twenty-first birthday, ie, the 11th July 1927; and this is fully confirmed by Mr Ingram s letter to Mr Longfield of the 5th July, from which it appears that he left on the 4th July and would not return till after the 12th. Connolly McCausland s account of the interview (and unfortunately owing to his father s death on the 14th January 1938, we have no other account of it) is that his father told him of the necessity for a deed of re-settlement and for a disentailing deed, and that Mr Ingram, the family solicitor, and a cousin by marriage of the father, would send the necessary deeds and instructions. Connolly McCausland further states that his father said that he had settled with his father in the same way; and, accordingly, he, Connolly McCausland, gathered it was a thing which was done between most fathers and sons when a son came of age. He declares that he did not know what his rights were under the previous settlement, and that his father did not convey to him what the effect would be. He adds that his father emphasised the importance of signing the deed when it was sent across without delay, because, as he puts it, of some stamp duty which would expire fairly soon.
Such is Connolly McCausland s recollection of this all-important interview as detailed in his evidence. Its accuracy and sufficiency are, of course, challenged by the learned Attorney-General on behalf of Sir Norman Stronge, the sole surviving trustee of the re-settlement of the 4th August 1927. The Attorney-General rests his contention on this point in a large measure upon the fact that when Mr Ingram stated in his letter of 3rd October 1940, to Connolly McCausland that he had at the time concurred with his father s intentions and wishes, Connolly McCausland left this letter unanswered. To me it is a complete answer to this omission that on receipt of the letter he immediately got leave and went to Londonderry to see Mr Ingram, with whom he had an interview on the 9th October, when he asserted, as appears in Mr Ingram s office entry, that he had never heard of the religion clause in the re-settlement of 1927 till the terms of his own marriage settlement were being discussed in 1932, and that he did not realise then that a forfeiture would affect his family.
The Attorney-General s argument, however, necessitates a closer examination of the contemporaneous entries in Mr Ingram s records as the only evidence, other than Connolly McCausland s, which is available; for unfortunately Mr Ingram died in May 1943. These records show that on the 15th June 1927, Mr Ingram had an attendance on the father, Maurice Marcus McCausland, and had discussed with him the terms of the proposed re-settlement, a copy of which he sent to him later on the same day, together with a covering letter in which he called attention to the fact that certain matters, including the proposed condition as to religion, were not dealt with in the draft, as he proposed instructing counsel to draw the additional clauses which would be necessary to give effect to his, Maurice Marcus McCausland s intentions. There was a further attendance by Mr Ingram on Maurice Marcus McCausland on the following day, going through the draft re-settlement and advising; and on the same day instructions were sent by Mr Ingram to the well-known conveyancing counsel, Mr Longfield – then in semi-retirement – to settle draft disentailing deeds and re-settlement. These instructions purported to have been sent on behalf of both the father, Maurice Marcus, and the plaintiff Connolly McCausland, though there is not a particle of evidence to show that at the time Connolly McCausland had ever been consulted about or informed as to the contents of the draft deeds. The instructions contained an intimation that it was desired that certain clauses should be drafted by counsel and inserted in the re-settlement. One of these (No 3) was expressed in the following terms: It is suggested that a clause might be inserted in the re-settlement providing that if any person benefiting under the limitations in the re-settlement shall become a Roman Catholic such benefit shall cease and the property go over to the next in remainder. Counsel will please draft such a clause for the consideration of querists.
It was the 21st July before Mr Ingram received back the draft deed from Mr Longfield, with a covering letter of the 19th July, in a postscript to which he said that a clause shifting the investments if one of the takers changes his or her religion, etc., is very difficult to draw, but I will attempt it of course while you are having the drafts copied. This was followed by a further letter from Mr Longfield of the 26th July, in the course of which he wrote: I have settled as you requested a draft of a shifting clause, designed to prevent a person who is or becomes a Roman Catholic from enjoying the settled property. These provisions are unusual, and I am rather against their insertion as they often lead to costly litigation. The next day, on receipt of the draft, Mr Ingram wrote to Mr Maurice Marcus McCausland asking for a call on the following day, and requesting him, if unable to do so, to let him know whether he approved of the clause of which he sent a copy, and if he wished to have it inserted in the deed. It does not appear that Mr Ingram ever conveyed to Mr McCausland counsel s opinion against the insertion of the clause in the deed, or his prophetic words as to these clauses often leading to costly litigation.
On the same day Mr McCausland replied directing the insertion of clause 15(1). He was obviously troubled with the meaning of clauses 15(2) and 15(3), but said he concluded that all these three clauses, having been drawn up by Mr Longfield, were necessary and correct to carry out the instructions which he, Mr McCausland, had given; for this view is confirmed by the further paragraph in Mr McCausland s letter: If you approve of them (ie, the clauses) I am satisfied, as what I desire is that a RC cannot succeed to the lands or to the Trust money. Here I would observe that, if Mr McCausland ever intended that the Protestant issue of a Roman Catholic father or grandfather should be deprived of his right of succession to the property under the re-settlement, he certainly never so expressed himself. In my opinion his instructions on the matter to counsel clearly indicated otherwise.
And so these three clauses 15(1), 15(2) and 15(3) were inserted in the deed apparently without Mr McCausland ever being informed of counsel s opinion in regard to them, and further, and of still greater importance, without it being appreciated apparently by any one that by the inclusion of the last two words in sub-clause (1) – without issue – a tenant for life or in tail who brought himself within its provisions by becoming a Roman Catholic, or by professing that he or she was of that religion, not merely defeated his own interest, but also that of his issue, though such issue might themselves be Protestants. It was a much wider and more far-reaching clause than counsel had been instructed to draft, or, indeed, than counsel had himself indicated its effect to be in his letter of the 26th July; yet this, I repeat, was apparently not appreciated by either Mr McCausland or Mr Ingram at the time. The correspondence and office entries to which I have referred are, in my opinion, conclusive as to this.
If such be the position of the matter so far as Mr Maurice Marcus McCausland is concerned, how much stronger is the position of the plaintiff, Connolly McCausland? Wholly apart from this last point to which I have referred, namely, the defeasance of the interests of the issue of a Roman Catholic – Connolly McCausland s evidence is to the effect that he neither heard nor knew anything about this religious clause in 1927, and that he would not have signed the deed if he had known what he knew after Mr Ingram had explained it to him in August 1940. The Attorney-General has asked us not to accept Connolly McCausland s evidence as to his ignorance of the clause, submitting that, as Black J rejected his evidence in so far as it was in conflict with that of his brother-in-law Lucius Thompson, it should not be accepted on the important issue which I am now considering. I am unable to accept the Attorney-General s submission, as all the probabilities of the case appear to me to support Connolly McCausland s evidence as to his ignorance of the existence of the clause. It was not, as I have already mentioned, until the 27th July that the draft of the clause reached Mr Ingram, and that it was decided by Mr McCausland that it should be inserted in the deed. Prior to that the instructions to counsel, the correspondence with counsel, and the office entries had merely contained such expressions as it is suggested that a clause might be inserted in the re-settlement etc, or the proposed condition as to religion. Nothing definite was decided upon until the 27th July. How then could Connolly McCausland have been informed when his father visited him in London two or three weeks earlier that the re-settlement would contain such a clause? Yet this was the only personal contact which he, Connolly McCausland, had at this time with his father about the deed. Admittedly, he never saw Mr Ingram; and in my opinion the strongest evidence in Connolly McCausland s favour on this point is the latter s letter to him of the 4th August, addressed to him at the camp at Woking, Surrey, where he was stationed with his regiment. This letter was written at a later hour on the day upon which his father had already signed the re-settlement and the other necessary documents. This letter is referred to in Mr Ingram s office entry as a very long letter to Mr CR McCausland informing him and explaining effect of re-settlement. It well merits the reference in the entry to its length, but I cannot say the same of the rest of the entry. It commences with words which were definitely misleading (I have no doubt unintentionally so), in which Mr Ingram states that the re-settlement had been prepared following the general lines of the re-settlement which was executed in 1897 after his father attained age. The rest of the letter contains reference to the 400 annuity which Connolly McCausland was to receive during his father s lifetime, and to the life estate which he would receive after his father s death with remainders over. So also is mentioned the power to charge a jointure for his wife and sums for his younger children. The lands comprised in the re-settlement are referred to specifically, including those mentioned as having been purchased by his father out of his private means; and, as against this, reference is also made to the withdrawal of substantial settlement moneys. The names of the trustees are stated; the disentailing deeds and memorials are mentioned; the name of London solicitors is given at whose office the deeds could be signed; and an urgent request is made that there should no delay as the time for stamping the documents was limited. All this is detailed and explicit. On the other hand, from beginning to end of this long letter there is not a single word about the religion clause, though such a clause was a clear departure, in a way that Connolly McCausland s father considered most material, from the general lines of the re-settlement of 1897. Further, there is no reference to Mr Longfield s opinion against the insertion of such a clause. One wonders why this silence, Connolly McCausland s father was obviously concerned about the religious outlook of his son. For this very reason it was doubly important that both the existence and the legal effect of this clause should be mentioned and explained; but this was not done. With no more legal instruction in reference to the terms of the re-settlement deed than is contained in Mr Ingram s letter, Connolly McCausland complied with the request that he should attend at the office of the London solicitors, who had still less information than Connolly McCausland had in regard to the contents of the re-settlement, the two disentailing deeds and the four memorials, which, according to Mr Ingram s letter of the 29th July, were being sent to them in order that they might be duly witnessed and verified. With such limited authority and instructions I am not surprised that, as Connolly McCausland stated in his evidence, no explanations were given to him by the solicitor, though he was asked if wanted to read the several documents. He tells us that he endeavoured to do so, trying to understand them but he couldn t make very much of it. After two pages or so he abandoned the task and signed the deed, not knowing that such a clause was in the deed. Black J, who heard the witness give his evidence, says that he has no reason to disbelieve his account of what happened.
Whilst the instructions to counsel purported to have been sent on behalf of both Mr Maurice Marcus McCausland and Connolly McCausland it is obvious, as Black J has held, that they were given to Mr Ingram by the father alone. Connolly McCausland, as I have stated, was never informed as to counsel s opinion, nor of course of the fact that the clause was so much more drastic than that which counsel had been instructed to draft. Connolly McCausland was never sent a draft of the deed, or, in particular, of the religion clause for his consideration or approval. He was not even afforded an opportunity – much less was he advised – to obtain the services of an independent solicitor. The London solicitors were named by Mr Ingram, apparently because a partner in the firm – a Mr Borrer – was a personal friend of his own; and the letter and subsequent wire to Connolly McCausland emphasised the urgency of the matter, and the importance of there being no delay. It is quite clear that the necessity for expedition in the matter at the outset was due to the desire on the part of Mr Maurice Marcus McCausland to have the documents completed and executed by him before he left for Evian-les-Bains in France, and at a later stage to the limited time available for stamping them without penalty.
Is it the law that in such circumstances as I have mentioned a young man, who had just been emancipated from the legal disability of minority, who had no knowledge or prior experience of legal matters and no independent advice, who had just embarked upon his military career and undertaken the responsibilities of a commissioned officer, must be held bound by all the terms of a lengthy and complicated deed of re-settlement solely because of his having appended his signature to the deed, though it contained a clause, admittedly of an unusual or unreasonable character, of which he was never informed, and to which his attention was never directed, notwithstanding the adverse opinion of counsel as to the wisdom and propriety of including it in the deed? If this were the law I should, indeed, deplore it; but in my opinion it is not. I consider that Black J has stated the law on this branch of the case with complete accuracy. It is to be found in the judgment of Sir John Romilly MR, in Hoghton v Hoghton (1852) 15 Beav 278, and has been re-affirmed or adopted by Lord Campbell LC in Jenner v Jenner (1860) 2 De GF & J 359, by Lord Hatherley LC in Turner v Collins (1871) LR 7 Ch 329, 339, and by Kekewich J in Hoblyn v Hoblyn (1889) 41 Ch D 200, 207.
It must be admitted that the principles which are applied to family arrangements, such as a deed of re-settlement, are different to those applicable to transactions between strangers. The court takes a wider view of the matter and considers the interests of the family generally, the reasonable and natural desire for the preservation in the family of the family property, the upholding of the family honour, and the maintenance of family peace and security. These it will, when possible, endeavour to uphold. Thus, the exercise of parental influence, if not undue or improper, or the mere absence of independent advice, where there is nothing unusual in the transaction, or where proper precautions are taken to explain it with adequate clearness and fullness to the son as tenant in tail, will not justify the court in making an order for the rescission or rectification of the deed. From the very nature of the transaction a re-settlement is, as Kekewich J says generally the father s work, and his is necessarily the guiding hand. Such parental influence is both natural and good – that species of influence which springs from kindness and affection, not from terror, coercion or fear.
At the same time, the court, in exercising this salutary and beneficent jurisdiction, acts within well-defined limits. Thus one circumstance which the court has always recognised as warranting, though not necessarily compelling, a departure from the law or practice as stated above, is the acquisition of a benefit by the father to the detriment or prejudice of the son, for this changes the character of the re-settlement. The court will inquire jealously in such cases in order to ascertain if the bargain involving this benefit resulted from the exercise of undue influence by the father, without due regard to the necessity for the provision of adequate protection for the son. Lord Romilly expressed the opinion in Chambers v Crabbe (1865) 34 Beav 457 that the slightest personal advantage to the parent who induced the transaction is sufficient unless it can be proved that the child knew the nature and effect of the transaction, and was not influenced by the relations in which they stood to one another. In the case of a direct benefit of this character the law properly imposes upon the father the burden of proving that the bargain was a fair one and was fairly made. There is no difference between the confidential relationship of solicitor and client on the one hand, and of parent and child on the other. See judgment of Lord Selborne LC in Mitchell v Homfray (1881) 8 QBD 587, 592.
The same principle, in my opinion, clearly applies where a clause of substance and importance is inserted in the re-settlement of which the son was not informed and of which he had no knowledge. Hoblyn v Hoblyn (1889) 41 Ch D 200 in one of its issues was a case of this character. It does not appear to me to be really material whether the defect be styled ignorance, non-disclosure, suppression or misrepresentation, if the responsibility for it lay with the father and the son is misled. The binding character of family arrangements, such as re-settlements, is dependent upon parties being on an equal footing as regards all material information, and this involves full disclosure and, where necessary, full explanation. The absence of such precautions involves risk. This is so even though there be no dishonest motive or intention. If parties are not on equal terms, and one of them stands in a fiduciary relationship to the other, the court requires a fuller and more explicit account of the matter than would otherwise be necessary.
Wright v Vanderplank (1856) 8 De GM & G 133 is the only other case to which I propose to refer in this connection – a case of high authority in which the judgments of Knight-Bruce and Turner LJJ contain many well accepted principles. It was the case of a daughter executing a deed of gift of a life estate to her father soon after she attained twenty-one. Knight-Bruce LJ conveniently sets out various grounds upon which such transactions might be impeached – that it was immoderate or irrational, that the solicitor had failed in his duty to the lady, that the deed was induced by suppression, misrepresentation, coercion, fraud or deceit, or that the lady executed it under mistake, misapprehension or ignorance. Ibid, 136, 137. None of these he held, on the evidence before him, to be established; but had it not been for acquiescence, to which I shall refer later, the learned judge would have held the plaintiff, who was the husband of the daughter and the person to whom her rights had devolved, entitled to relief on the ground of the close attention, the strictness, and the jealousy with which, upon principles of natural justice, and upon considerations important to the interests of society, the law of this country examines, scrutinizes, and if I may borrow and old expression, weighs in golden scales every transaction between a guardian and his ward, or between a parent and his child, which, including or consisting of a gift from the younger to the elder, takes place so soon after the termination of the legal authority, as that the ward or child may, in consequence, probably be – not, in the largest and amplest sense of the term – not, in mind as well as person – an entirely free agent. Turner LJ, after expressing the opinion that such questions depend more on fact than law, stated his view of the law to be that a child may make a gift to a parent, and such a gift is good if it is not tainted by parental influence. A child is presumed to be under the exercise of parental influence as long as the dominion of the parent lasts. Whilst that dominion lasts, it lies on the parent maintaining the gift to disprove the exercise of parental influence, by showing that the child had independent advice, or in some other way. When the parental influence is disproved, or that influence has ceased, a gift from a child stands on the same footing as any other gift; and the question to be determined is, whether there was a deliberate, unbiased intention on the part of the child to give to the parent. Ibid. 146. Whilst the present case is not one of a gift by a son to his parent in the strict sense of that term, yet the principles above enunciated would appear to me to be equally applicable to the present case in which the father obtained from his son an advantage or benefit in the nature of this forfeiture clause which he obviously regarded as of the utmost importance, but which he never brought to the notice of the son.
In the present case the failure, as I hold on the part of both the father, Mr Maurice Marcus McCausland, and the solicitor, Mr Ingram, to furnish any information to the son Connolly in regard to the inclusion of the religion clause in the deed would, even if there were nothing more, have been a grave omission; it was doubly so when one remembers Mr Longfield s obvious reluctance to prepare a draft of the clause which, when he did forward it, he advised was unusual and often led to costly litigation. Mr Maurice Marcus McCausland s relationship to his son had not wholly ceased to be of a fiduciary character on the day that the son attained the age of twenty-one years. Parental influence, so inseparable from most cases of family arrangement, was still present. In any event, from the dates of his visit to London, it is most probable that such conversation as he had with his son about the re-settlement was prior to the 11th July 1927 – the day upon which he came of age. In the matter of age, knowledge of legal matters, experience of the world and family relationship these parties did not stand to one another on equal terms; and this in itself made it incumbent on the father to make a full disclosure. The knowledge which should be imparted must be exact and complete, 23 Hailsham 84. Relief in such a case is not, in my opinion, dependent on the existence of intentional fraud.
But, it is argued, Connolly McCausland had a full opportunity of reading the re-settlement as well as the disentailing deeds for himself, if he so desired, in the office of the London solicitors before he executed them, and that he ought therefore to be bound by them. Here again the judgment of Romilly MR, in Hoghton v Hoghton (1852) 15 Beav 278, 311, comes to our aid in a passage cited by Black J, but which I must here repeat:
The mere reading over of a deed would not be sufficient to satisfy me that the person hearing it read understood it. To an unprofessional person, however intelligent, and exerting the closest attention, the long and involved sentences and technical language of a deed render it frequently unintelligible; and even the Court not infrequently misapprehends the limitations and effect of the provisions of a deed read in open Court, where the greatest pains are exerted to read it clearly and intelligibly. In my opinion, unless it is accompanied with an explanation of the contents of a deed, the reading over to an unprofessional person is more likely to confuse than to enlighten him.
In my opinion it is almost an a fortiori case when a young man with no legal training or experience was left entirely to his own resources to endeavour to fathom what must have been to him the gloomy and confused depths of legal phraseology. It is not surprising that he soon tired in the struggle, and signed the deeds without any explanation, and without knowing that this religion clause was contained in the re-settlement. In a word the general nature of this re-settlement deed, with its many and complicated provisions including, in particular, clause 15, was such as to demand the most careful explanation by a duly qualified legal adviser; and this, in my opinion upon the evidence, Connolly McCausland never received.
In my opinion, therefore, apart from any question of acquiescence, laches or subsequent ratification of the deed, Connolly McCausland was entitled to relief from a forfeiture clause, so unusual in its character, and so drastic in both its conception and its form, that its full effect – the disentitling of the issue of a Roman Catholic was never understood or appreciated by either the father or his son.
The next question – and the one which, perhaps, presents the greatest difficulty in the case – is whether the plaintiff, Connolly McCausland, has been deprived of his right to relief by his subsequent conduct. Did he, with knowledge of the existence of the forfeiture clause and of his rights, so acquiesce in it, or so accept its terms, that he must be taken to have confirmed or ratified it, and to have abandoned any legal or equitable claim which he may have been possessed of in respect thereof?
For a proper appreciation of this issue it is necessary in the first place to consider the material facts, and, in particular, the somewhat lengthy correspondence which is in evidence; and, subsequently, to apply the law as it appears in settled authority.
The first date upon which we have any evidence of Connolly McCausland having been brought into contact with the re-settlement of 1927 subsequent to its execution is 1932, when, shortly before his marriage, the terms of his marriage settlement were under consideration. Nothing of importance arises in any discussions which took place prior to March of that year when, according to Mr Ingram s office entry, he, Mr Ingram, attended both Connolly McCausland and his father, and the former read and approved of the proposals for the settlement, and was given a copy of same. Connolly McCausland admits that he received this document, took it away with him, and kept it for quite a long time. He admits that he read it later, in the summer after his marriage, but he denies that he read it at the meeting. The materiality of this part of the evidence is that the first paragraph of these proposals, in a brief reference to the terms of the re-settlement of 1927, ends with the words, All such limitations being subject to certain clauses as to bearing the name and arms of McCausland and change of religion which are contained in the deed. On his direct examination Connolly McCausland admitted that the words change of religion brought to his mind Roman Catholic, and he felt that it might be his change of religion, or that he was not to marry a Roman Catholic. He added: I felt that as long as my father was alive, and I changed my religion, and he disapproved of the change, he could cut me off from all things in which I hoped to follow him. I didn t think it had anything to do with my wife and children, certainly not my children.
I shall not, however, examine this evidence further; for I agree entirely with Black J that there is nothing in it which, taken alone, would justify a finding that Connolly McCausland understood or had explained to him at the time of this marriage settlement the precise terms or the effect of the religion clause; and, if it be said that he had at least sufficient notice to make it reasonable that he should have enquired further into the matter, it may fairly be urged in reply not only that he was under no legal compulsion to make such enquiry, but also that the clause had no direct relevance to the matter which he then had in hand – his marriage settlement – more especially as he tells us that at the time of his marriage he had no intention of joining the Roman Catholic church The matter would, therefore, at that time have had for him at most an academic interest; and, whilst this evidence relating to the year 1932 cannot be wholly ignored, one would not in my opinion be justified in holding that Connolly McCausland had acquiesced in or confirmed the re-settlement merely because, with insufficient knowledge of the facts, he did not consider it desirable to prosecute any further enquiry into a matter which, as we now know it, might have brought him into serious conflict with his father.
Next in point of time comes the interview which took place at the Bank of England in November 1939, between Connolly McCausland and his brother-in-law, Lucius Thompson. There is some discrepancy in the evidence of these two parties as to what precisely passed between them on that occasion. This is not altogether to be wondered at when one remembers that several years had passed before they were called upon to state their recollections in court. Black J prefers the evidence of Lucius Thompson where, as here, it is in conflict with that of Connolly McCausland. He had the advantage of seeing and hearing the witnesses, and I have no hesitation in accepting his conclusion upon that point. Indeed, from a very careful perusal of the evidence and correspondence, I have not the slightest doubt that, had I been the trial judge, I should have formed the same opinion. Never was I more impressed with correspondence in any case that has come before me than I have been with the tone and Christian spirit of Lucius Thompson s letters. They are, indeed, the letters of a high-minded, honourable English gentleman, who evidently preferred the happiness of his family home to all the McCausland property, with the material advantages, but also with the serious responsibilities which its possession would necessarily entail.
Strangely enough, however, it is this very friendly, responsive spirit which adds to our difficulty in the present case; for it seemed to be wholly foreign to his nature to turn a deaf ear to any proposal that was made to him or his wife by Connolly McCausland. The issue which I am at the moment considering would have been much simplified had the parties been at arm s length.
However, to revert to the interview of November 1939, which, it is said, lasted about two hours, Connolly McCausland unburdened himself to Lucius Thompson on the religious matter; and, as the latter said in his evidence, he had always recollected the mention in the conversation of the religion clause in the settlement. This clause had been read out to him when his own marriage settlement was signed about April 1930; and he, accordingly, advised Connolly McCausland to look into it before he took any action. Lucius Thompson was, however, himself labouring under a misapprehension at that time. He thought that if Connolly McCausland was dispossessed of the property by the clause it would pass to his (Connolly McCausland s) son. It never occurred to him that it would go his way ie, to his wife or family. For this reason I am clearly of opinion that it is impossible from that interview alone to fix Connolly McCausland with full knowledge of the meaning and scope of the religion clause. It might certainly, as Black J says, have put him on enquiry as to its contents and provisions; but, further than that, it is only material as undoubtedly fixing Connolly McCausland for the second time at least with knowledge of the existence of a religion clause. For this reason it is a circumstance which cannot be ignored.
It was in these circumstances, and to this extent alive to the danger from the material standpoint of the step which he was taking, that Connolly McCausland was admitted to the Roman Catholic Church six months later, namely, on the 3rd May 1940. It is not irrelevant to note that for some reason or other he kept the news of the important step which he had taken to himself, possibly because he thought it would not meet with family favour, possibly because he was apprehensive of the consequences which might ensue to his interest under the settlement in the family estates. However this may be, it appears clear from an attendance which Mr Ingram had upon Connolly McCausland s mother on the 19th July following that even she was unaware at that time of his admission to the Roman Catholic Church; she merely feared that he might be induced to join it. When she had read to her by Mr Ingram the religion clause in the re-settlement, and appreciated that, if her son came within its provisions, not only he but his children would forfeit their claim to Drenagh and the settled property, she said that she would write to him; but she had not done so when, on the following day, Mr Ingram further informed her that, if any such change of religion occurred, it would be the duty of the trustees to hold the property in trust for his sister, Mrs Helen Thompson, and her sons; and that, even if Connolly McCausland should later revert to his original religion, the lost property could not be recovered. She said she would write to him to that effect. Connolly McCausland admits that she did write to him and he fixes the date of the receipt of her letter as the 24th or 25th July; but, unfortunately, this letter, which would have been most important as to the knowledge which it imparted, is not forthcoming. It is for this reason that I have referred, with some particularity, to the office entries of Mr Ingram s attendances upon Mrs McCausland (who, not unnaturally, was not called as a witness) as affording the best evidence available of the probable contents of the letter. In passing I may say that, in view of the matters to which I have referred above, I have difficulty in accepting without considerable qualification Connolly McCausland s testimony that he first knew that there was something in the deed which affected him in regard to religion when he received this letter from his mother.
However, all doubt as to Connolly McCausland s knowledge of the nature and scope of this religion clause appears to me to be set at rest by an office entry of Mr Ingram s of the 18th August 1940, when he attended Connolly McCausland and advised him fully as to the results which would follow under the provisions of the re-settlement in the event of his becoming or professing to be a Roman Catholic, and when Connolly McCausland read some sentences from an opinion which he had obtained from Mr Arthur Cole, a member of the English Bar. At a further attendance on the following day Mr Ingram again advised caution against taking any action without further serious and careful consideration of the religious question, and, if necessary, obtaining further legal advice, as Mr Ingram thought that Hoblyn v Hoblyn (1889) 41 Ch D 200 which had been referred to by Mr Cole, did not support the view that the re-settlement would be altered by the court. The accuracy of these entries is not challenged in any material respect by Connolly McCausland. Immediately after that interview Connolly McCausland consulted Mr Currie who has since remained his solicitor in Northern Ireland, and who appears for him in this action.
It will have been observed that at neither of these important interviews, which followed and were doubtless consequent upon his mother s letter, did Connolly McCausland disclose to Mr Ingram that he had been actually received into the Roman Catholic Church some three and a half months previously. This was a strange omission; and it certainly displayed a very remarkable want of candour on the part of one who came to the family solicitor seeking information, and receiving from him legal advice. One naturally asks oneself, even at this stage, what was the reason for this reticence. It is suggestive of a greater, and, perhaps, an earlier knowledge of his legal position than he would wish us to accept, and of the consequences which might naturally result from full and candid disclosure.
In the circumstances it was left for Mr Ingram to write to Connolly McCausland on the 19th September 1940, stating that, in view of the persistent rumours that he had already changed his religion, he (Mr Ingram) thought it his duty, as a trustee of the settlement of 1927, to ask whether he had in fact become a Roman Catholic. To this letter Connolly McCausland replied on the 27th September that he was a Roman Catholic, having been received into the Church on May 3rd last, adding to this admission the very pregnant words; I had always hoped that you would not ask me this question, but I realise that you have acted as your own conscience dictated. In a subsequent paragraph in his letter Connolly McCausland wrote: You will realise that more is at stake than the disinheriting of one individual, for there are other people involved who have no more thoughts of embracing Catholicism than you have, and these would be made to suffer, and will in fact suffer now, unless this forfeiture clause can be set aside. He added that he had decided to take the advice of a London counsel, and that he had already seen Mr Currie.
Mr Ingram acted promptly in his reply of the 3rd October 1940, expressing his distress at the news; and stating that he had written to Mrs Helen Thompson, to whose credit all dividends and rents would be placed, an apportionment being made up to the 3rd May. Mr Ingram also decided on the same day to get the opinion of an eminent counsel, Mr Hewitt Poole, as to the duties and responsibilities of the trustees. Connolly McCausland was, not unnaturally, so concerned with the contents of Mr Ingram s letter, that he immediately came across, and had an interview with Mr Ingram on the 9th October, to discuss the possibility of a compromise; but Mr Ingram held out no hope of the trustees having power to enter into any negotiations for a settlement. Connolly McCausland then stated, according to Mr Ingram s entry – and this is a very important matter as showing his then attitude of mind – that he would be willing to forgo any personal claim if the succession of his son Marcus could be assured. He added that he had never heard of the religion clause till the terms of his own marriage settlement were being discussed in 1932, and that he did not realise (ie, that he did not realise at that time) that a forfeiture would affect his family. If the accuracy of this entry be accepted – and there is no reason to doubt it – it would be a reasonable inference that as long ago as 1932 he did know that the religion clause would affect himself if he became a Roman Catholic.
In January 1941, Connolly McCausland also sought the legal advice of the well-known firm of solicitors, Messrs. Charles Russell & Co, of London, who wrote to Mr Ingram for certain documents which their counsel wished to see, and which were immediately forwarded. Months passed without any definite decision; and, accordingly, on the 3rd May 1941, Mr Ingram wrote to Messrs Charles Russell & Co that his firm presumed that the contemplated application for alteration of the re-settlement had been abandoned. He asked, accordingly, for the return of the documents. To this letter Mr Ingram received a reply that the matter was still under consideration. A further letter of the 8th August 1941, from Mr Ingram, requesting the return of the documents, was answered by Messrs Russell on the 11th August in a letter which stated that they were writing to their client to obtain his instruction as to whether he desired to take any further steps in the matter; if not, the documents would be immediately returned. The importance of this letter lies in the fact that on the 5th September 1941, the documents were returned. The legitimate inference from this action would naturally be that all thought of court proceedings by Connolly McCausland had been abandoned. However, when Mr Ingram so expressed himself in his letter of the 8th September 1941, Messrs. Russell replied on the 18th September that they were afraid they could not give an answer to that; but that they did not think that Connolly McCausland had come to a final decision in the matter.
On the 9th September 1941, Lucius Thompson wrote to Connolly McCausland a very long letter in the course of which he pointed out his wife s inability to do anything which disregarded the interests of her sons, who were minors, in the succession, and also her own personal limitation of action by reason of the proviso against anticipation. There was, he continued, no middle way between accepting the settlement of 1927 and going to the court to have it set aside; that if he (Connolly) decided to go to the court his (Lucius Thompson s) wife and he would do nothing to defend the settlement beyond the minimum which they were apparently compelled to do as guardian of their children s interest under it; and that Mr Ingram had said that if he did decide to go to the court he should do it soon; otherwise he might prejudice his case by apparent acquiescence. Connolly McCausland s reply of the 14th September shows a distinct reluctance to proceed, apart at any rate from a quiet family arrangement. Life in the altered circumstances would not be easy for him at Drenagh. There would be a lot of difficulties and misunderstandings to contend with. As to bringing a case, he wrote, I am not keen to do so since I have taken the best legal opinion which I could get on the subject, and this opinion is, on the whole, against it … If I brought a case I might so easily lose it and have heavy costs to pay as well. So you see the law apparently upholds the settlement as we all realise now. These words, followed, by an acceptance of Lucius Thompson s attitude that there was no middle way between accepting the settlement and fighting to get it set aside, fairly represent the general tenor of the whole letter, with the exception of portion of one paragraph near its close in which he wrote: You must never think that I hold anything against you, either of you, over Drenagh whatever may happen in the future; but I would be a hypocrite and worse if I did let (sic) you understand that, if ever the law changes or the administration of it in that part of our country ceases to lie in the hands of those who now control such matters, I would appeal the case supposing it to go against me (a foregone conclusion) in the present issue. Let me say at once that I attach no importance whatever to this unmeaning reservation, if it be intended as such – an attempt, if it means anything, to keep the matter open indefinitely, or as he says, for ever until there might be a change in the law or its administration.
Connolly McCausland left the witness-box without assigning any meaning to these qualifying words in his letter; and in his argument before us Mr Nicholson could only explain them by attributing them to the presence of those midges in his hair to which he had referred in an earlier part of his letter. Whatever the words meant, or were intended to mean, and whatever the event may have been which Connolly McCausland had in mind when he wrote them, it is not argued that that event has ever occurred.
On the 17th November 1941, Lucius Thompson, in the course of a further friendly letter to Connolly McCausland, said: So would you write as soon as you can to Ingrams (if you still think fit) and say that you are not going to bring an action, but accept the settlement. This was, in my opinion, a reasonable request. A year and a half had elapsed since Connolly McCausland had become a Roman Catholic, and yet, by the introduction of those ambiguous – I might say unmeaning – words in Connolly McCausland s letter of the 14th September, Lucius Thompson felt there was, perhaps, some room, however small, for uncertainty which must be removed, not only for his own and his wife s peace of mind, but also in the interests of the estates. In reply to Lucius Thompson s request Mr Ingram received from Connolly McCausland a letter, dated the 18th November 1941, which in my opinion, properly understood, is the most important letter in the case upon this issue.
The material part of the letter is contained in the first two paragraphs, and reads as follows:
I am writing to tell you that I no longer feel myself in a position to bring an action in the courts against the re-settlement of 1927.
I do wish, however, to make it perfectly clear that by accepting the settlement I hope to make things easier for you and the other trustees; and I do not wish to prejudice any re-opening of the case by me or my descendants at some future and more favourable time.
This letter, read in conjunction with the earlier correspondence and with the statement in Lucius Thompson s evidence that on the 1st November 1941, Connolly McCausland had told him that he was not going to take proceedings, leaves no doubt in my mind that Connolly McCausland, acting on the advice which he had received both in England and in Northern Ireland that legal opinion was against him, had definitely, to quote his own words, accepted the settlement, and abandoned any idea of instituting contentious proceedings, or, as he expressed it, an action … against the re-settlement – to have the re-settlement set aside in whole or in part; but that he still harboured the hope that, although the settlement stood, and must stand, yet at some future indefinite date, possibly, as Lucius Thompson had himself indicated, when his (Lucius s) son Mark had come of age and could act for himself, it might be possible, wholly apart from legal rights, to effect an amicable arrangement, by re-settlement or otherwise, under which he or his descendants might be restored to the inheritance. In this way, and in this way only, as it seems to me, can the two paragraphs in the letter be reconciled with one another, and the letter be made into one consistent whole. Any other interpretation would involve a claim on the part of Connolly McCausland to an indefinite postponement of decision – a claim which the law would not recognise. Further, any other interpretation would not make things easier, as Connolly McCausland had expressed the hope that he could do, for Lucius Thompson and the trustees; he would only make them more difficult. In my opinion, accordingly, Mr Ingram was perfectly justified in replying to Connolly McCausland on the 25th November 1941, to the effect that he was glad that Connolly would not proceed with the suggested application to the courts for the alteration of the settlement, which he had always felt sure could not be successful. A few days later – the 1st December 1941 – Mr Ingram, in writing to Helen Thompson again clearly showed the interpretation he had put upon Connolly s letter when he used the words: Now that you are in undisputed possession.
If Mr Ingram was wrong in placing this – to my mind the obvious – meaning on Connolly McCausland s words the latter should at once have so informed him. However, he did not do so; and then there follows a series of acts either on his part, or, to his knowledge, on the part of the trustees, which in my opinion are consistent, and consistent only, with Connolly McCausland s complete acquiescence in and acceptance of the settlement. I shall only briefly summarize them:
(1)The payment as from the 1st November 1940, of rents and profits by the trustees to his sister Helen Thompson, who had succeeded to the estates. Strictly speaking, there should have been an apportionment of these rents and profits as of the 3rd May 1940; but by the direction of Lucius and Helen Thompson the later date was substituted in Connolly s case.
(2)The sum of 6,000, payable under clause 13 of the re-settlement to Eileen McCausland (Eila) in the event of her sister Helen becoming entitled in actual possession, was raised by the trustees by an indenture of sub-demise of the 25th June 1942, as Connolly was informed and well knew they were proceeding to do.
(3)Succession Duty in the sums of 131 16s 4d and 333 11s 9d was paid by Helen Thompson on her succession to the property real and personal respectively.
(4)Repayment of the greater part of the Succession Duty paid by Connolly McCausland on his succession after his father s death was applied for and obtained, to the amount of 454 5s 9d on the basis of his interest having determined after two years and four months from the date of his entry into possession, instead of after the number of years when it had been estimated that his death would occur. The claim for repayment of this duty was grounded on an affidavit by Connolly McCausland to the effect that he had forfeited his estate, and that his succession had extended only to the 3rd May 1940. Please do all that you can, he wrote to Mr Ingram, to recover what you consider a fair and just amount. Here is an unambiguous affirmative act, and a statement on oath by Connolly McCausland in unqualified terms, which admit of no meaning or explanation save one – his estate had been determined by reason of the forfeiture effected by the religion clause contained in the re-settlement.
(5)An agreement was entered into for the sale by Connolly McCausland to his sister of stock, crop, agricultural implements and certain pictures and furniture, etc., for the sum of upwards of 9,000. Connolly s own suggestion contained in his letter to Mr Ingram of the 24th January 1942 – a letter, which I may say parenthetically, is consistent only with finality in regard to legal rights – was that these goods and chattels should be leased to his sister for ten years from the 17th February 1942, at the end of which time, as he stated, Mark, his sister s eldest son, would be of age and the mother and son would presumably have to re-settle. This was a proposal absolutely inconsistent with the institution of proceedings to rescind or to rectify the settlement. It was an express recognition of his sister s and her son s rights, but the visualising at the same time of the possibility of him or his son being restored to the inheritance as the result of a new re-settlement which would omit the religion clause. I regard the proposal also as strongly corroborative of my interpretation of Connolly McCausland s letter of the 18th November as to what might be effected by friendly negotiation after Mark came of age. The proposal that there should be a re-sale at the same valuation (or, if less, at the market value) in the event of Connolly McCausland becoming life tenant, does not affect my conclusion as to legal finality. It only illustrates what might result from friendly negotiation at some indefinite date in the future. Ultimately a sale was agreed to, Connolly McCausland writing to Lucius Thompson on the 25th March 1942; I think it is better for all concerned, you, us, the Lowdens (Land Agent) and Drenagh itself, if we do sell out and depart (in peace).
(6)Next there was a proposal for the granting to Connolly McCausland by his sister of an agricultural lease for a period of ten years, subject to the right of either side to break on one year s previous notice at the end of five years in case the arrangement did not prove to be a success. Such proposal was obviously based upon a transfer of interest consequent upon the forfeiture of Connolly McCausland s estate.
(7)The sale by Connolly McCausland to the trustees in October and November 1942, of his own unsettled lands for the sum of 2,688, when it appeared that the proposed dual control of the lands might lead to trouble and difficulty, and that all the lands could be worked more conveniently together.
On a somewhat different basis, but not irrelevant to the issue into which we are enquiring, rests the assumption by Thompson of the name of Thompson-McCausland, in reference to which Lucius wrote to Connolly McCausland on the 14th June 1942: I am only one of those concerned. Helen, who has now succeeded to the McCausland Estates, is a McCausland.
All these several acts are, in my opinion, properly relied upon by the trustees as either indicating Connolly McCausland s state of mind in regard to his acceptance of the re-settlement and abandonment of any claim, or as involving a loss or detriment to his sister directly resulting from the change in her position. Taken collectively they unequivocally treat the religion clause as a subsisting part of the re-settlement which had already worked a forfeiture. They are deeds which speak stronger than words, and deeds which are in my opinion not only inconsistent with a mere temporary arrangement, but are strongly confirmatory of the interpretation which I have placed on Connolly McCausland s letters in the foregoing pages.
What, then, is the law of acquiescence and laches? Acquiescence may arise whilst an infringement of legal rights is actually taking place, or it may result from the failure to seek redress or remedy when a violation of his rights, unknown to a party at the time, is brought to his notice. It is acquiescence in this second sense which is relied upon in the present case – an element in laches operating by way of estoppel. The principle underlying the doctrine of laches, as I understand it, is that in a court of equity, assuming there to be no statutory bar, a person is bound to prosecute his claim with reasonable diligence and without undue delay. The mere assertion of a claim will not suffice. The special circumstances of each case must, of course, be considered, especially the plaintiff s acquiescence as a free agent after he has acquired knowledge of the facts and of his rights. A change in the position of the party alleging acquiescence as a consequence of the other party s conduct is also always a most material and relevant circumstance. Acquiescence. said Turner LJ in Life Association of Scotland v Siddal (1861) 3 De GF & J 58, 74, imports knowledge, for I do not see how a man can be said to have acquiesced in what he did not know, and in cases of this sort I think that acquiescence imports full knowledge for I take the rule to be quite settled that a cestui que trust cannot be bound by acquiescence unless he has been fully informed of his rights and of all the material facts and circumstances of the case.
But when one speaks of knowledge of rights it is not in my opinion to be understood that a party must know the full and precise relief to which he is entitled. That is something which, in a difficult and intricate case such as the present, would only be known with certainty after the termination of proceedings in the highest court. He must, however, have sufficient knowledge of the facts which constitute his title to relief : see the judgment of Sir Barnes Peacock in Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221, 241; and, generally speaking, when the facts are known from which a right arises, the right is presumed to be known: Stafford v Stafford (1857) 1 De G & J 193, 202. No doubt it has been held that, if mistaken as to his rights, a person is not guilty of laches until he has discovered the mistake, or had reasonable means of doing so. In this respect the law as to laches in courts of equity differs from that at law where a claim is barred by the Statute of Limitations: see the judgments of Alderson B in Brooksbank v Smith (1836) 2 Y & C Ex 58, and of Hamilton J in Baker v Courage & Co (1910) 1 KB 56, 63. In my opinion in the present case Connolly McCausland, with all papers furnished to his legal advisers which they required, and with such competent lawyers both in London and in Northern Ireland to advise him, had not only reasonable means, but the most ample opportunity of inquiring into and of ascertaining his rights.
Wright v Vanderplank (1856) 8 De GM & G 133 to which I have already referred for another purpose, is also an illuminating authority on this branch of the case. The court there held acquiescence to be established on facts not, of course, identical with the present, but which, taken in their entirety, do not appear to me to be appreciably, if indeed, at all stronger than those with which we have to deal. It, accordingly, refused to set aside a transaction in the nature of a deed of gift by a daughter, who had recently attained the age of twenty-one years, to her father, which otherwise would have been impeachable. What the court looked at was the acts and conduct of the parties, including the intention to treat and deal with the property as bound by the life estate which the deed conferred on the defendant. Turner LJ expressed the clear opinion that a positive act (such as, in my opinion, we have in the present case) was not necessary to render the transaction unimpeachable by acquiescence; and that all that was required was proof of a fixed deliberate and unbiased determination that the transaction should not be impeached. I fully appreciate, as was pressed upon us by plaintiff s counsel, that the words of the learned Lord Justice are strong; but in my opinion the present case is brought within them not only by Connolly McCausland s letters and conduct immediately subsequent to his admission that he had become a Roman Catholic, but also by his consenting to his sister Helen entering into receipt of the rents and profits, and by his several other acts and submissions to which I have referred. In my opinion such conduct on Connolly McCausland s part constitutes not merely an unequivocal act, but a series of unequivocal acts, which are consistent only with a fixed and final determination on his part to abandon any claim as of right to the property comprised in the re-settlement.
The statements of the law in regard to acquiescence and laches which I have made have not only a general application, but they appear to have a special application to a case of this nature in which rescission or rectification is sought, and which is one of a well recognised class of cases in which the law required special promptitude in the advancement of a claim to relief because of the probability of the other party to the contract altering his position on the faith of the contract standing. Turner v Collins (1871) LR 7 Ch 329, 338, 341 affords a good illustration of the danger of delay in such a case. Lord Hatherley LC there speaks of the importance of the court watching over and protecting those who are placed in a situation to require protection as against the acts of those who have influence over them, by which acts the person having such influence obtains any benefit to himself; but he adds that Wright v Vanderplank (1856) 8 De GM & G 133 goes a long way to show that, if the intention to set aside such a deed exists, it should at once be put into execution. When the facts are known and the influence has ceased, the court, in fairness to other parties affected, expects promptness in the assertion of rights and in proceedings for their enforcement. To the like effect are the words of Lord Blackburn in Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218, 1279: A Court of Equity requires that those who come to it to ask its active interposition to give them relief, should use due diligence, after there has been such notice or knowledge as to make it inequitable to lie by. And any change which occurs in the position of the parties or the state of the property after such notice or knowledge should tell much more against the party in mora than a similar change before he was in mora should do.
Delay has, to my mind, a special significance in the present case, in which Connolly McCausland had been informed that there was no middle way between accepting the re-settlement and going to the court to have it set aside, and in which he had been told of Mr Ingram s view that if he did not go to the court soon he might prejudice his case by apparent acquiescence. With such a warning Connolly McCausland had, in my opinion, no right to assume that the indulgent attitude of his sister and brother-in-law would continue indefinitely, wholly irrespective of any trouble and expense which they might incur. It would be monstrously unjust to them in the circumstances to say that their actions were consequent upon a mere temporary arrangement, yet one of indefinite duration, of which there is no evidence. When it is urged that the institution of the present proceedings is evidence that Connolly McCausland at least understood any arrangement to be of a merely temporary character, I can only say that this argument is, to me, quite unconvincing. There was, in fact, no such arrangement, and in my own mind I much more directly connect the issue of the writ in June 1944, when the war, be it remembered, was still at its height, with the report in the Appeal Cases of 1943, of the case of Clayton v Ramsden [1943] AC 320, which was so strongly relied upon by Connolly McCausland s counsel in the earlier branch of the case.
For the reasons stated I am of opinion that acquiescence in the deed on Connolly McCausland s part is fully established; and that it would be a grave injustice to permit him now to change his whole attitude in the matter; and in an action, instituted a year after Mr Ingram s death, to assert rights against the re-settlement which, on my interpretation of the facts, he had definitely abandoned both by his own word and deed, and by acquiescence, without protest, in the word and deed of others.
The next matter which remains to be considered is the extent, if at all, to which Connolly McCausland s son and co-plaintiff is affected by his father s acquiescence. No conclusive authority was cited on either side during the argument, and accordingly the question must be determined on principle. The learned Attorney-General contended strenuously on behalf of the trustee that the issue does not properly arise on the pleadings, and that it was merely as an afterthought that Mr Nicholson, towards the close of his argument in reply before Black J, sought to differentiate between the positions of Connolly McCausland and his son on the question of acquiescence, with the result that it did not receive, as he submitted, sufficient argument and consideration. I am not prepared to say that the issue is not open on paragraphs 29, 38, 39 and 40 of the trustee s defence, in which I regard the varied use of the words plaintiff and plaintiffs as not accidental, but as the deliberate act of the pleaders amply justifying a submission of differentiation of rights. The provisions of Order xix, rule 14, excepting admissions as against infants, and of Order xix, rule 26, rendering it unnecessary for a party to allege matters which the law presumes in his favour, or as to which the burden lies on the other side, also support the minor plaintiffs right to have the matter determined; and, fully argued, as it had been in this court, its determination cannot be evaded by any member of the court who holds the view, as I do, that Connolly McCausland s rights were barred by his acquiescence and laches.
My view on this issue may be briefly stated. Connolly McCausland s right to a rectification of the deed, apart from his acquiescence, I have held to be established. Such rectification would have enured for the benefit of his eldest son and others having interests in remainder. Such eldest son, who was and is an infant, had, in my opinion, his own independent right of action which he could have maintained either alone or, as in the present case, jointly with his father. No doubt such eldest son must be regarded as only a volunteer, and authority is lacking in regard to a volunteer s right of action for rectification in a case of this nature; but Black J has referred to several cases, which I need not occupy time in examining closely here, in which the volunteer s right to institute proceedings has been recognised. It is said that they are all cases of breaches of trust, but I know of no reason why the appropriate remedy should not be applied to a case of this character. Black J has illustrated the injustice which might result, were the law otherwise, to a remainder man, if a settlor in the position of Connolly McCausland dies shortly after a settlement, containing an unauthorised or otherwise unwarranted provision, had been executed, and before it could be rectified. Another illustration of a like injustice would be provided if such a settlor, to the prejudice of a remainder man who was a pure volunteer, accepted a personal benefit or advantage financial or otherwise, as a consideration for his not seeking the rectification to which he was entitled.
Now, on the assumption that Connolly McCausland s son possessed such a right it could not be lost or prejudiced in any way by his personal acquiescence, both because, presumably, he had no knowledge of the facts or of his rights, and also because, as a matter of law, there can be no acquiescence by an infant, and laches will not be imputed to a party whilst under such disability: March v Russell (1837) 3 My & Cr 31 and Young v Harris (1891) 65 LT 45. If this be so, it would, indeed, seem to me to be incomprehensible that such infant should be so adversely affected, as to be deprived of his rights by the acquiescence of another, namely, his father. Acquiescence operates by way of estoppel. It is a personal bar to relief. In Butler v Carter (1868) LR 5 Eq 276, acquiescence in a breach of trust by a tenant for life, who had brought the funds into settlement, did not bind a remainder man. Acquiescence is dependent in each case on knowledge, capacity and freedom; and, as these vary from one individual to another, it would in my opinion be impossible in law to impute the acquiescence of one party to another, especially when that other was under legal disability. The importance of this view is well illustrated in the facts of the present case, in which the infant son might well be regarded on the merits of the case as having even a stronger case of rectification than his father by reason of the introduction into clause 15 of those two concluding words – without issue – which so directly affected his legal rights. I think it must have been the view of Mr Poole that Connolly McCausland s son had a right to maintain suit when, before any question of acquiescence had arisen, he expressed the opinion that Connolly McCausland and his infant son might make a strong case for modification of the re-settlement.
One last question remains – the issue raised in argument as to whether the plaintiffs remedy, if any, lies in rescission or rectification of the re-settlement. I do not propose at the end of this already too lengthy judgment to refer to all the cases cited. Suffice it to say, that I find in the case of Hoblyn v Hoblyn (1889) 41 Ch D 200 ample authority for remedy by rectification: see the judgment of Kekewich J at pp 207 and 213. Lovesy v Smith (1880) 15 Ch D 655, 659 – a marriage settlement case – would afford an earlier illustration, if such were needed, of the court s power to rectify a deed, where the plaintiff did not rely on any mutual mistake, but rather on a violation by her husband of the agreement or understanding which had been come to between her and him prior to the execution of the deed: see the interlocutory observation of Denman J.
In the present case to set aside the deed in toto would be as in Bentley v Mackay (1862) 4 De GF & J 279, 286, 287, to undo what had been acted upon for many years. The allegation of mistake, misrepresentation or equitable fraud, by whatever name it be called, has been entirely directed to the forfeiture clause. This was a clause super-imposed, as it were, on the contract by Connolly McCausland s father, without, as I have held, Connolly s knowledge or consent; and, from its very character, and from the manner in which it was introduced into the re-settlement, it is, in my opinion, severable from the real contract contained in the rest of the deed. This is in my opinion the complete answer to the argument that this forfeiture clause was only part of the bargain, and that, if that part went, the whole should go. To rescind the whole deed after it had been in operation for twenty years, would produce a state little short of chaos, and an injustice far greater than that which exists with the deed as it stands; for it must be borne in mind that the disentailing deeds were part of the same transaction with the re-settlement, and that the principal settlor, Connolly McCausland s father, is long since dead. The judgment of Turner LJ, in Bentley v Mackay (1862) 4 De GF & J 279, 286, 287, in my opinion fully supports the view which I have expressed – a conclusion which is, indeed, irresistible as providing the only possible solution of our difficulties, if I am right in holding that Connolly McCausland has lost or waived his rights by acquiescence, and that he is, accordingly, himself bound by the terms of the deed.
For the reasons stated I am of opinion that clause 15 is not binding on the plaintiff, Marcus Edgcumbe McCausland, or on any person entitled in remainder to him under the limitations contained in the re-settlement, and that the said re-settlement should be rectified accordingly.
In my opinion the order of Black J should be affirmed in all respects, including the declaration that the provisions of clause 15 do not apply to the jointure rent charge appointed to the plaintiff, Margaret Louisa McCausland (in the event of her surviving her husband Connolly McCausland) by the marriage settlement of the 6th June 1932. The appeal against this declaration was unsustainable, and was expressly abandoned in this court.
Babington LJ: [dealt with the facts of the case and continued] It was contended that the forfeiture clause (numbered 15 in the deed of re-settlement) was void for uncertainty, but Black J rejected this argument and I agree with his decision. He admitted the evidence of two Roman Catholic canonists who were called to prove the various ways in which a person can become a Roman Catholic according to the law of the Church, and the difficulty of averring with certainty that a person either is a Roman Catholic or that he professes the Roman Catholic religion. This evidence was objected to and I have considerable doubt as to whether it was properly admitted.
Most of it deals with matters with which the court is not concerned and should have been rejected, but as the trial judge has held that neither the words professing the Roman Catholic religion nor the words shall become a Roman Catholic are void for uncertainty, and that the forfeiture clause as a whole is not void on this ground it is unnecessary to go into their evidence to see whether some of it may have been relevant to the issue of uncertainty. This evidence was produced to establish that the event prescribed in the forfeiture clause which might determine the vested interest is uncertain within the rule laid down by the House of Lords in Clavering v Ellison (1859) 7 HLC 707.
We were pressed with the opinion of Lord Cranworth where he said: And I consider that, from the earliest times one of the cardinal rules on the subject has been this: that where a vested estate is to be defeated by a condition on a contingency that is to happen afterwards, that condition must be such that the Court can see from the beginning, precisely and distinctly upon the happening of what event it was that the preceding vested estate was to determine Ibid 725. Lord Campbell L.C. states the rule from the point of view of the parties and not of the court. He says: Even as conditions subsequent, to defeat vested estates they must be construed strictly, and to work a forfeiture there must be shown a breach of a defined line of conduct which the parties concerned must reasonably have known would work a forfeiture Ibid 721.
In In re Sandbrook [1912] 2 Ch 471, 477 Parker J accepts but qualifies the passage from Lord Cranworth s judgment and says: Conditions subsequent, in order to defeat vested estates, or cause a forfeiture, must be such that from the moment of their creation the Court can say with reasonable certainty in what events the forfeiture will occur. The test must be the same for the court as for the parties and the court has to be satisfied in this case that the parties concerned must reasonably have known what acts of theirs would amount to a breach of the defined line of conduct so as to work a forfeiture under clause 15.
As the parties concerned cannot be members of the Roman Catholic church when they elect to join it they must decide whether their action in becoming members of or professing the Roman Catholic religion will be a breach of the line of conduct prescribed for them by the clause, according to the accepted meaning of the words used, as reasonably understood by persons who are not Roman Catholics. Interpreted in this way I agree with the learned judge that there is no uncertainty as to the acts which will work a forfeiture though there may be a failure of proof as to whether or not these acts have taken place.
In the present case, however, the plaintiff, Connolly Robert McCausland, wrote to Mr Ingram, one of the trustees, on the 27th September 1940, saying: I am a Roman Catholic having been received into the Church on May 3rd last at Ascot Priory, Berks. , so that the breach is here admitted, and assuming that he is bound by the clause his estate has been forfeited.
In In re Evans [1940] Ch 629 Farwell J held that the question whether a person has become a convert to the Roman Catholic religion can be ascertained with certainty, but he appears to have had some doubt as to whether the fact that a person professes the Roman Catholic religion can be similarly ascertained. Viewing the matter as one depending on evidence I think the court is as competent to ascertain whether a person professes that he or she is of the Roman Catholic religion as to ascertain whether he or she has become a Roman Catholic, and to use Lord Cranworth s words, can see from the beginning precisely or distinctly upon the happening of what event it was that the preceding vested estate was to determine. But even if this be not so the two contingencies are disjunctive and the decision of the House of Lords in Clayton v Ramsden [1943] AC 320, 325 does not apply, so that if either event can be ascertained the forfeiture will operate.
Black J has pointed out that the word profess has been used in connection with the Roman Catholic religion in many statutes. The Bill of Rights (1 W & M sess 2, c 2) enacts that every person who shall profess the Popish Religion shall be excluded from the Crown and this is re-enacted by s 2 of the Act of Settlement (12 & 13 W 3, c 2). The legislature must, therefore, have considered that the fact as to whether a person does or does not profess the popish religion is an event capable of being understood with certainty and of being ascertained by evidence. The clause in this case appears to have been adopted from the precedent in Key and Elphinstone s Conveyancing and it is probable that the learned editors had regard to these statutory enactments when they drafted it.
It was further urged that this forfeiture clause is void as being against public policy.
This was not advanced with any great confidence and is not borne out by the authorities cited.
These authorities have been fully considered by Black J and I will not deal with them again but be content to say that I agree in the conclusion he arrived at that this clause is not void as being contrary to public policy. If it were I cannot see how any condition subsequent which provides for forfeiture on the ground of a change of religion or adherence to any creed or sect or to any body professing ideas or principles, however objectionable in the opinion of the settlors, could be supported even though it be worded with the greatest precision and distinctness and the event which creates the forfeiture be clear and certain. Such provisions have, however been severely criticised from time to time and in Clayton v Ramsden [1943] AC 320, 325 Lord Atkin said: I view with disfavour the power of testators to control from their grave the choice in marriage of their beneficiaries, and should not be dismayed if the power were to disappear, but he did not suggest that the condition then being considered was void on the grounds of public policy and no authority for this proposition was cited to us.
[The Lord Justice then examined the evidence relating to the circumstances in which the re-settlement was drafted and executed, and concluded that neither the father nor the family solicitor, Mr Ingram, disclosed to the son the presence of the forfeiture clause; and that the son did not at any time before execution receive separate or, indeed, any advice on the matter. His Lordship then continued]:
The most charitable view of this fatality is that the father left all explanations to Mr Ingram and Mr Ingram assumed that they had been given by the father. Mr Ingram knew that when Maurice M McCausland went over to see his son in July 1927, the forfeiture clause was not in draft and could not, therefore, have been explained to him by his father, at any rate in its final form, so that Mr Ingram s duty to communicate it to the son was clear, more especially since the clause which disinherits the issue of any person in possession of the settled estates who becomes a Roman Catholic as well as the offending person, does not follow the original instructions, which only suggest that on the happening of the event the property should go over to the next in remainder who might be his issue, nor does it carry out the expressed wishes of Maurice M. McCausland who says in his letter of the 27th July 1927, approving of the clause, that what he desired was that a Roman Catholic cannot succeed to the lands or to the trust money.
Moreover, it is apparent from Mr Longfield s letter of the 26th July 1927, returning the re-settlement, as approved by him, together with the draft clause, that he did not appreciate the fact that the clause as drawn by him, which he says is designed to prevent a person who may become a Roman Catholic from enjoying the settled property, operates to exclude not only such offending person but also his possibly unoffending issue. This shows that Maurice M. McCausland did not himself realize how the clause would operate and that he probably executed the re-settlement under a misapprehension as to its effect. There may, therefore, have been mutual error, the father having executed a deed which would cut out the offending person s issue, which was not his intention, and the son having executed it without knowledge or advice as to its contents. Apart, however, from this consideration which by itself may be sufficient to render clause 15 invalid, the other facts bring the case within the decision of Lord Romilly in Hoghton v Hoghton (1852) 15 Beav 278. The circumstances of the two cases are very similar in their general outline, except that in Hoghton v Hoghton (1852) 15 Beav 278 the father obtained a benefit for himself in the resettlement. There Maurice McCausland obtained no direct benefit for himself, but he procured this forfeiture clause to be inserted in the re-settlement. This was his own wish, the instructions for it came from him and he approved of the clause, and it must be treated as a benefit to him requiring the same care to ensure that his son was consulted about it and advised either independently or by the family solicitor, as was required in Hoghton v Hoghton (1852) 15 Beav 278. In the words of Lord Romilly: In addition also to its being a case of a re-settlement containing some material provisions which are of an unreasonable – in this case unusual – character, it is, in my opinion, proved that the contents of it were not properly made known to the son and that he was left without the assistance and information which are indispensable to enable this Court to sustain such a transaction Ibid 314.
In that case, as here, the property was disentailed prior to re-settlement. Father and son were then free agents and the re-settlement was read over to the son before he signed it, but Lord Romilly held that transactions between parent and child, prior to the complete emancipation of the latter, must be watched with great jealousy, and that the mere reading over of a deed is not sufficient to satisfy the court that the person hearing it read understood it. He says: In my opinion, unless it is accompanied with an explanation of the contents of a deed, the reading over to an unprofessional person is more likely to confuse than to enlighten him Ibid 311.
In the present case the documents were sent to the London solicitors without any instructions beyond securing their due execution. The re-settlement was not read over to Connolly McCausland, but he was asked if he wanted to read it himself. He says he started to do so but could not make very much of it and eventually turned to the schedules to see how much money there was, and he signed it without seeing the forfeiture clause and in ignorance of the fact that it was in the deed.
A great number of authorities were cited to us but I do not find it necessary to go through them all. Independent advice is not always necessary in cases of family settlements and re-settlements but when one of the parties is a young man who has just come of age, the court will treat him as being still subject to the influence of his father whose fiduciary relationship imposes on him the obligation of showing that the son knew and understood the contents of the re-settlement and more especially of such provisions in the deed as are unusual and which the court would not sanction if it had to decide the matter. In Turner v Collins (1871) LR 7 Ch 329, 339 Lord Hatherley LC approved of the observations of Lord Romilly in Hoghton v Hoghton (1852) 15 Beav 278, and Kekewich J in Hoblyn v Hoblyn (1889) 41 Ch D 200 considered them again and came to the conclusion that they apply to re-settlements generally and not exclusively to those in which the father gains a benefit. In my opinion they apply to cases where some unusual clause is introduced into the settlement which has not got the sanction of long usage and which, therefore, requires explanation to ensure that it is the conscious and voluntary act of the son and not one of those well settled provisions which he may fairly be allowed to take on trust In my experience solicitors are usually well acquainted with the steps which the law requires to be taken in such cases. It was well put by Kekewich J in Hoblyn v Hoblyn (1889) 41 Ch D 200, 205:
On what does this presumption in favour of the propriety and reasonableness of a re-settlement rest? Take the frequent case illustrated here of such a settlement made by father tenant for life in possession and son tenant in tail in remainder shortly after the latter attains his majority. Does the Court presume that the son has had independent advice or insist that he ought to have had it? I think not. Where proper precautions are taken the position of the son as tenant in tail is fully explained to him, as are also the proposed limitations and burdens on property which would otherwise in the ordinary course of nature become absolutely his own. And if this duty is often, and in simple cases sufficiently, discharged by the father s solicitor, it is sometimes with advantage handed over to another solicitor called in for the particular purpose, or, according to a commendable practice familiar to me through an eminent conveyancer referred to counsel instructed to advise the young man independently. To omit all these precautions is to incur risk.
The italics are mine. No precautions were taken in this case. The proposed limitation was not explained to the son or brought to his notice by the father s solicitor, and the warning signs given by counsel both before and after he had drawn the clause, were disregarded.
And there can be no doubt as to what precautions should have been taken in this case. In Tucker v Bennet (1887) 38 Ch D 1, 17, Lopes LJ says:
A father living on affectionate terms with his daughter is the proper person to recommend and advise her, and her natural agent in matters relating to the preparation of her marriage settlement, and in my opinion there is no occasion for any independent legal advice beyond that of the family solicitor.
This is good sense as well as good law. If independent advice is not sought the family solicitor should in a case like the present satisfy himself that the father has recommended and advised the son, he should form an independent judgment as to the propriety of such advice, and if he does not approve of it should give the son such other advice as he considers necessary, and he must see to it that the son knows his rights and understands what he is doing and finally he should keep a record of these matters to provide against such contingencies as those that have arisen in this case.
I think Mr Ingram must have considered that the father was in a position to force this clause on his son because he was bringing in free property without realizing that this would have been equally fatal, for the decision to adopt the clause was one requiring the assent of both, irrespective of whether there was anything in the scales to balance it or not.
The Attorney-General said that it is to be assumed that the clause was discussed by Maurice M. McCausland with his son and that he therefore executed the re-settlement with full knowledge, but when the facts relating to the preparation of this clause and to its insertion in the re-settlement, together with the evidence of Connolly McCausland that when he executed the deed he was unaware that the clause was in it, placed the onus on the parties upholding the re-settlement to show that this was untrue and that he was fully informed and instructed prior to execution. The burden of proof was, therefore, on the parties trying to uphold the forfeiture clause, as Denman J held it to be in Lovesy v Smith (1880) 15 Ch D 655, and they have failed to discharge it.
The Attorney-General further claimed that the long period of time which was allowed to elapse before clause 15 was definitely challenged had greatly prejudiced the trustees, since both Maurice M McCausland and Mr Ingram had died before action and their evidence was lost. Unless the delay can be relied on as a defence to the action under the circumstances of the case this complaint has no substance, nor can it be charged against Connolly McCausland as something unfair for which he is responsible because if he was informed about clause 15 by any one, a record of the source and nature of such information should have been kept by Mr Ingram for the protection of himself and his client Mr Maurice M. McCausland, and no such record is forthcoming.
On all the foregoing evidence and arguments I am satisfied that the recital in the re-settlement to the effect that father and son had agreed to make the settlement therein contained is erroneous and untrue and that clause 15 was improperly inserted in the re-settlement. It follows that if it had been challenged before Connolly McCausland committed himself to the acts which are now relied on as acquiescence by him in the re-settlement and the consequent forfeiture it would have been struck out or the settlement would have been set aside, and I think it is necessary to point out in this connection that the case of Turner v Collins (1871) LR 7 Ch 329 where it was held that a minor who had made a voluntary gift to his father must challenge it within a reasonable time after attaining full age belongs to a different line of authorities which have no application here.
The only difficulty which presented itself to me during the arguments on this branch of the case was whether Connolly McCausland, being of full age when he executed this re-settlement, should not be treated as knowing its contents, as Lord Macnaghten said in Edwards v Carter [1893] AC 360, 367. In that case a minor after coming of age repudiated a settlement executed by him on his marriage. This settlement contained a covenant to settle after-acquired property. He could have avoided it within a reasonable time after coming of age but did not do so until nearly five years later, which the House of Lords held was too late, the settlement being merely voidable and not void. But no question arose as to the clause being unusual or as to the matters in issue in Hoghton v Hoghton (1852) 15 Beav 278 or in this case, it being assumed or admitted that the deed must stand unless it could be repudiated on the ground that the settlor was a minor when he executed it.
Edwards v Carter [1893] AC 360, 367 is an entirely different class of case from Hoghton v Hoghton (1852) 15 Beav 278 and other cases like the present in which settlements have been executed by persons of full age and afterwards set aside or rectified on equitable grounds as Kay LJ points out in Carter v Silber [1892] 2 Ch 278, 288.
Connolly McCausland having therefore substantiated his plea that clause 15 was introduced into the re-settlement of 1927 under such circumstances as not to be binding on him, the further questions then arise as to whether his subsequent acts are a confirmation of, or acquiescence in the settlement, or are of such a nature as to make it impossible for the court to grant him relief. These matters are in issue on the facts and it is upon the facts that they must primarily be determined.
(The Lord Justice then examined the evidence relating to the events between the execution of the re-settlement of 1927 and 1940, and concluded that though Connolly McCausland knew, or ought to have known, as a result of his interview with Lucius Thompson in 1939 that there was some provision in the re-settlement relating to change of religion, it was not until his interviews with Mr Ingram on the 18th and 19th August 1940, that he was for the first time acquainted with the full and precise terms and effect of the forfeiture clause. His Lordship continued):
Black J has held that Connolly McCausland, by his acts subsequent to the interview with Mr Ingram on the 18th and 19th August 1940, when he was informed of the provisions of the re-settlement, has acquiesced in the forfeiture of his estates. These acts must, therefore, be carefully scrutinised to see whether this conclusion is a just and proper one.
The principles governing acquiescence are not in doubt. In Wright v Vanderplank (1856) 8 De GM & G 133 a daughter conferred a life estate in property belonging to her on her father which would have been set aside if she had not subsequently confirmed the gift by a post nuptial settlement. Turner LJ says: The question to be determined is, whether there was a deliberate, unbiased intention on the part of the child to give to the parent Ibid 146, and again: I am not of opinion that a positive act is necessary to render the transaction unimpeachable. All that is required is proof of a fixed, deliberate and unbiased determination that the act should not be impeached Ibid 147. The case was treated in the head-note as one of acquiescence and it illustrated the final and irrevocable nature of the acts required by law to defeat prior legal rights, but when Turner LJ refers to a deliberate intention not to impeach the gift he is saying in effect that the daughter confirmed or acknowledged the gift and thereby set it up. This was not therefore a case of acquiescence but of confirmation and in De Busche v Alt (1878) 8 Ch D 286, 314 Thesiger LJ (1878) 8 Ch D 286, 314 says: The term acquiescence … is one which was said by Lord Cottenham in Duke of Leeds v Earl Amherst (1846) 2 PH 117, 123 ought not to be used; in other words, it does not accurately express any known legal defence : and he goes on to point out the difference between acquiescence which occurs while the act acquiesced in is in progress and acquiescence after it has been completed.
In the former case a person who stands by while another infringes his rights and thereby induces such other person to believe that he assents to the infringement cannot be heard to complain. This is no more than an instance of the law of estoppel by words or conduct and may reasonably be called acquiescence. But says Thesiger LJ, when once the act is completed without any knowledge or assent upon the part of the person whose right is infringed – which is the present case – the matter is to be determined on very different legal considerations. A right of action has then vested in him which, at all events as a general rule, cannot be divested without accord and satisfaction or release under seal. Mere submission to the injury for any time short of the period limited by statute for the enforcement of the right of action cannot take away such right, although under the name of laches it may afford a ground for refusing relief under some particular circumstances: and it is clear that even an express promise by the person injured that he would not take any legal proceedings to redress the injury done to him could not by itself constitute a bar to such proceedings, for the promise would be without consideration, and therefore not binding (1878) 8 Ch D 286, 314.
Having regard to the authorities the delay in this case is not, in my opinion, of such a duration and nature as to compel the court to refuse the relief sought. This delay is explained by the way in which the forfeiture was dealt with by all the parties interested and the answer to Connolly McCausland s claim to avoid the forfeiture must be either that he has by his acts shown a fixed deliberate and unbiased determination to abide by it, or that he has so dealt with the property as to make it impossible for the court to grant him relief. An intention to confirm the re-settlement or an intention to abandon the claim to impeach it must be proved. This is established by the authorities and is well settled. The reality of the act of confirmation or abandonment depends on the intention of the party against whom it is alleged, whether it be the confirmation of a substantive gift as in Wright v Vanderplank (1856) 8 De GM & G 133 or the abandonment of a right of action as in this case, and when the facts are complicated and the inferences to be drawn from them are in doubt, the determination must largely depend on the turn of mind of those who have to decide and must therefore be subject to uncertainty : see Lord Blackburn in Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218, 1279. I, therefore, approach this issue of confirmation in an endeavour to ascertain from the facts whether Connolly McCausland has shown an intention to confirm the re-settlement or has estopped himself from challenging it.
Connolly McCausland obtained knowledge of the clause to which he had committed himself in August 1940, but he could have had no knowledge of the circumstances under which it came to be in the re-settlement until he got discovery of the contemporaneous documents. Messrs. Charles Russell wrote to Mr Ingram for the original instructions and draft deed of re-settlement on the 30th January 1941, and these were sent to them along with the entries in his firm s books and copies of all letters relating to clause 15 under cover of the letter of the 6th February 1941; and on May 3rd 1941, Mr Ingram s firm wrote to Messrs. Charles Russell saying: As we have not heard further from you we presume that the contemplated application for alteration of the re-settlement has been abandoned and we shall therefore be obliged if you will return the original documents.
There was some further correspondence and Mr Ingram s firm wrote again on the 8th September 1941, thanking Messrs. Russell for returning the documents and saying: May we assume that Major McCausland has decided not to institute the proceedings that he was at one time contemplating. To which they replied that they did not think that Major McCausland had come to a final decision on the matter.
A parallel correspondence was proceeding at this time between Connolly McCausland and his brother-in-law, who says in a long letter of the 9th September 1941: So far as the settlement is concerned therefore we conclude that there is no way between accepting it and going to the court to have it set aside. If you decide to got to the court Helen and I will do nothing to defend the settlement beyond the minimum which we are apparently compelled to do as guardian of our children s interests under it. And later in the same letter: I think we should get the main point settled one way or the other as soon as may be. Ingram says that if you do decide to go to the court you should do it soon, otherwise you might prejudice your case by apparent acquiescence. I do not know how far that would apply to a serving officer but on all counts an early settlement is desirable.
Connolly McCausland answered this on the 14th September 1941, and after referring to his hopes of a family arrangement says: But Drenagh is morally mine and my children s after I am dead, no matter what the law as it now stands may say to the contrary. You agree with this I know and so we need not discuss it. As to bringing a case I am not keen to do so since I have taken the best legal opinion I could get on the subject and this opinion is on the whole against it. If I brought a case I might easily lose it and have heavy costs to pay as well. It kills me without issue, deprives Peggy of her jointure and my children of their portions. The same law prevents Helen from doing anything to help though she wants to do so – the whole having been conceived in a brain which has now no interest in the affairs of men.
There was some further correspondence between the solicitors and between Connolly McCausland and his brother-in-law who was trying to force him to come to a decision whether to prosecute his claim in the courts or accept some settlement that the parties were trying to arrive at among themselves
Finally, Connolly McCausland wrote to Mr Ingram on the 18th November 1941, as follows: Dear Cousin Alex., I am writing to tell you that I no longer feel myself in a position to bring an action in the courts against the re-settlement of 1927. I do wish, however, to make it perfectly clear that by accepting the settlement I hope to make things easier for you and the other trustees and I do not wish to prejudice any re-opening of the case by me or by my descendants at some future or more favourable time. Yours affectionately, Connolly McCausland.
Mr Ingram accepted this so-called abandonment by a letter written to Connolly McCausland on the 25th November 1941, saying: I am glad you will not proceed with the suggested application to the courts for the alteration of the settlement which I always felt sure could not be successful and would necessarily have led to the expenditure of very large sums in legal costs. Mr Ingram wrote to his partner and co-trustee, Mr Young, on the same day quoting Connolly McCausland s letter and saying: It would seem sufficiently clear from this that he has abandoned the proceedings which he contemplated taking to have the settlement amended and I should like to know whether you agree in this view.
The war was then at its most critical stage. Connolly McCausland had been overseas in action in May 1940, first in Holland and then in France, where he was awarded the Military Cross; and when his regiment came back from France they were preparing to resist invasion. He said that towards the end of 1941 he was very busy tank training and was very busily engaged with other things. It does not, therefore, require a great deal of imagination to realize that there must have been considerable foundation for the statement in his letter of the 14th September 1941, to his brother-in-law; The whole thing could not have boiled up again at a worse time for me when I have to concentrate with every atom of my will on the intricacies of epicylic gears and the behaviour of electrons under varying conditions. The whole thing is like a bee buzzing to distract me or like midges in the hair when one s hands are occupied. I condemn it to the bottomist pit very frequently which is the mentality of the weak minded and the slow witted. In my view of the evidence these were compelling considerations inducing him to write the letter of the 18th November 1941, saying that he no longer felt himself in a position to bring an action and that the abandonment was largely dictated by his military commitments and was in his view temporary only, submitted to without any deliberate intention to give up his rights and the rights of his issue once and for all.
In this letter of 18th November 1941, he accepts the settlement to make things easier for the trustees, but without prejudice to any reopening of the case by him or his descendants at some more favourable time.
This is not an irrevocable acceptance of the forfeiture clause or an abandonment of his right to impeach it. It is not a lawyer s letter and its terms are inconsistent, but Connolly McCausland denied, on cross-examination, that he had come to a final conclusion not to take proceedings, and I cannot read this letter in the light of all the other facts in the case as being a fixed deliberate and unbiased determination that the settlement should not be impeached.
Black J says that after Mr Ingram s reply it appears to have been assumed by all parties that after having been fully advised by his own solicitors and counsel as to his chance of success in proceedings to have the re-settlement set aside or rectified, Colonel McCausland had abandoned the idea of instituting such proceedings. I find myself in disagreement with this finding, as I believe that the true inference to be drawn from this letter, and from the subsequent correspondence between Connolly McCausland and Lucius Thompson, is that both of them looked on the matter as being open at least down to 8th April 1944, when Lucius Thompson wrote the letter of that date dealing with a proposed application to the court to have the forfeiture clause cancelled and setting out the terms on which he thought this could be done.
This letter was written less than two months from the service of the writ and I cannot reconcile it with the trial judge s finding that all parties thought that Connolly McCausland had abandoned the idea of instituting proceedings, and I am satisfied that so far as the parties, other than the trustees, were concerned they all took the view that proceedings might be instituted.
Black J seems to have attached some importance to the fact that Connolly McCausland did not answer Mr Ingram s letter of the 25th November 1941, in which he assumed that Connolly s letter of the 18th November was a final abandonment of his right of action, but I do not attach any importance to this having regard to the relationship between them – the failure of Mr Ingram to follow up his doubts as to the meaning of the letter with Connolly himself and the general circumstances in which the latter was then placed, more especially his military commitments to which he refers in his letter to Lucius Thompson of the 14th September 1941.
The letter of the 18th November was relied on as a clear abandonment, but Mr Ingram was himself dubious as to its meaning and asked for his partner s views. It does not appear what reply he got from Mr Young, if any, but it may well be asked why did he not express the doubts he communicated to his partner and co-trustee in the letter of the 25th November 1941, to Connolly McCausland himself and ask him to say definitely whether he was on or off. He still owed this young man a duty. As trustee of the settlement and as the solicitor in charge of the trust he should not have accepted this conditional abandonment as final and absolute, and his failure to clear the matter up with Connolly McCausland directly contributed to the subsequent difficulties.
He further conveyed his construction of this letter to Helen Thompson in a letter of the 1st December 1941, in which he says: I have heard from Connolly that he will not proceed with his contemplated application to the court for modification of the settlement of 1927. This misrepresents the import of the letter which on its face is without prejudice and conditional, and Mr Ingram s acceptance of it as a final and unconditional abandonment of Connolly McCausland s right is open to very grave exception, especially in the light of his letter to Mr Young and the doubts therein expressed which are not repeated in this letter to Helen Thompson. He assumed that Connelly McCausland had closed the matter and left himself no loophole, but the loophole was there in the letter of the 18th November 1941, and, though Mr Ingram turned a blind eye towards it, the Thompsons, notwithstanding Mr Ingram s letter of the 1st December, in my opinion fully understood that the abandonment was not final.
Connolly McCausland was cross-examined with reference to his letter of the 25th March 1942, to Lucius Thompson, in which he wrote: However I think it is better for all concerned, you, us, the Lowdens and Drenagh itself, if we do sell out and depart (in peace) ; and he said: I was still referring to a temporary leaving of Drenagh. The paragraph would not deceive anyone who knew what was in my mind and my sister s and her husband s. It was subject always to a case being brought. I intended to come back if I possibly could. Lucius Thompson apparently appreciated this when he said: It was always clearly understood between us that my brother-in-law was free to go to the courts if there were a change in the law or a change in the government and also that when the minors had ceased to be minors a new situation would come into existence. What the brother-in-law understood is by no means clear beyond this, that the understanding expressed by Lucius Thompson was one which recognized that Connolly McCausland s failure to challenge the entry of the Thompsons under the forfeiture was not based on a fixed determination not to impeach the forfeiture clause, but that it was, as he said in his letter of the 18th November 1941, without prejudice to his reopening the case at some future and more favourable time. And the subsequent correspondence between the brothers-in-law dealing with the business aspect of handing over the demesne and settled property to the Thompsons recognizes this.
In a long letter of 22nd February 1942, Lucius Thompson dealing with the sale of furniture in Drenagh says: I would suggest agreeing on a price based on a mean between the valuations for Probate and for insurance subject to an understanding that we would re-sell any or all to you at the same value in the event of your becoming life tenant. As Connolly could only become life tenant if the forfeiture clause was successfully challenged, this recognises that the Thompson s entry was not necessarily final and that proceedings might be taken by Connolly to challenge clause 15.
Again in a letter of 13th March 1942, Lucius Thompson says with reference to a farm at Drenagh: It has occurred to me that a possible arrangement would be that we should agree that if the place should revert to you we would re-sell to you the stock and implements at the same valuation as we paid or at the market value, whichever was the less ; and again in the same letter he says: I needn t set out the reasons why we think a clear cut settlement best since they all amount to this that barring an annulment of the settlement (which my suggestion above tries to provide for) Helen has no choice but to become a life tenant ; and the depart in peace letter of the 25th March 1942, which was put to Connolly McCausland as an irrevocable decision by him never to challenge the settlement, appears to have had reference, as he said in evidence, to a suggestion in the letter of the 18th March that he should continue in Drenagh as a farming tenant. On this evidence I am satisfied that the letter of the 18th November 1941, was based on the idea that in some way he could effect a settlement or compromise with his sister and her husband without reference to the courts.
On the 12th February he wrote to Lucius Thompson saying: I need not say that I have always hoped for an amicable settlement of the whole of this tragic business and that it would take the form of an understanding or gentleman s agreement by which the property would be made over to Marcus at the next re-settlement in 1952. This suggestion was, of course, impracticable while the re-settlement stood and Lucius Thompson rejected it. Connolly wrote again on the 14th March 1944, and suggested a friendly application to the courts to restore the status quo by striking the clause out of the re-settlement on terms that all parties would agree to.
In answer to this proposal Lucius wrote on the 8th April 1944, and said: I am wondering whether the trustees will feel obliged to oppose a plea whether joint or otherwise for the cancellation of the forfeiture clause. If so I imagine it will be a thing that you will want to take into consideration as we shall too. I have asked Brown (the solicitor then acting for the trustees, Mr Ingram having died on 3rd May 1943) to let me know the trustees attitude as soon as he can. It may interest you to know the suggestion I made to Brown though it cannot be considered as any final or formal decision that I am communicating to you. I suggested that we should join you in an appeal to have the RC forfeiture clause deleted as being a proven cause of bitterness and strife. If the court agreed to that and you wished to proceed with a plea that the deletion should be made retrospective Helen would not join formally in the plea but would offer no opposition to it provided that:
(a)If the court were to accept your plea:
(i)no compensation should be paid to Helen from any source;
(ii)no compensation should be paid to the minors out of or be a charge on the settled estate and investments;
(iii)a subscription of 10 per annum should be paid to the general parochial funds of Drumachose and of 5 per annum to the general parochial funds of Balteagh;
(iv)a title of undoubted soundness be conferred on you and your heirs; or
(b)If the court were to refuse your plea and your heirs and representatives should regard the question as finally settled.
This is a very strange correspondence if the Thompsons held the view that Connolly McCausland had irrevocably abandoned his intention to challenge clause 15 in 1941. Both parties treated the matter as being still open, and though Connolly McCausland s mind fluctuated from time to time and was not at any time clear, I cannot find any satisfactory evidence that he ever abandoned his rights. Indeed the evidence is all the other way and I am satisfied that he never acquiesced in the forfeiture, and that though often at his wits end to know what he should do he still held on to the life-line which alone could save him, namely, his right to appeal to the courts.
He was eventually driven to take this course and Messrs. Currie wrote to the trustees solicitors on 30th May 1944, while Connolly McCausland and his brother-in-law were discussing what they were going to do saying: As you are aware Major McCausland has been on active service since 1939 and had determined to allow the matter to be shelved until a more favourable time. It has recently been brought home to him, which of course he does not admit, it may be necessary to go into evidence and that his evidence would die with him in the event of his being killed in action. For this reason it is essential that the action to determine his rights should be launched at once.
Messrs. Martin King French & Ingram replied on the 5th June 1944, saying that they would oppose any application to alter the terms of the re-settlement on the grounds that it would be contrary to the intention of the deed and that it prejudices persons whose interests the trustees consider they are bound to protect.
The writ was accordingly issued on the 19th June 1944.
When considering this plea of acquiescence it is impossible to dismiss from one s mind the fact that the forfeiture clause must be held not to be binding on Connolly McCausland which, as I said earlier in this judgment, colours all the subsequent evidence for if acquiescence or non-acquiescence have to be judged upon the balance of justice or injustice, (see Lindsay Petroleum Company v Hurd (1874) LR 5 PC 221, 239 adopted by Lawrence LJ in Weld v Petre (1929) 1 Ch 33, 52), I cannot help feeling that it would be unjust to bind Connolly McCausland to submit to the forfeiture upon the ground of acquiescence except on the very clearest evidence not only that he did acquiesce but also that he was in possession of the facts necessary to inform him of the strength or weakness of his claim to be relieved from it. This raises the question as to what knowledge Connolly McCausland had of his rights.
In Life Association of Scotland v Siddal (1861) 3 De GF & J 58, 74, Turner LJ says: Acquiescence, as I conceive, imports knowledge, for I do not see how a man can be said to have acquiesced in what he did not know, and in cases of this sort I think that acquiescence imports full knowledge, for I take the rule to be quite settled that a cestui que trust cannot be bound by acquiescence unless he has been fully informed of his rights and of all the material facts and circumstances of the case.
Messrs Charles Russell received certain documents on his behalf early in 1941. What exactly these documents were is not in evidence and we do not know what information they had before them or upon what question their advice was taken. I am not satisfied that they were fully informed. If they had known or appreciated the discrepancy between the intentions of Maurice M. McCausland and the final form in which clause 15 emerged, I think they would have advised immediate proceedings, but this is mere speculation, and I do not attach the importance which Black J appears to have done to the fact that Connolly McCausland consulted them before writing the letter of the 18th November 1941.
This was put forward to show that he acquiesced with full knowledge of his right, but I am satisfied that he never had such knowledge and that the forfeiture clause, which has now been held not to be binding on him, had a coercive effect on his mind which cannot be lost sight of when examining his acts and correspondence.
In my view, though he submitted under pressure to the surrender of his estate, he never adopted the forfeiture or confirmed it or expressed a fixed deliberate and unbiased determination not to challenge it in the courts, and he was, in fact, in a somewhat similar position to the plaintiff in De Busche v Alt (1878) 8 Ch D 286, of whom Thesiger LJ says that he grumblingly submitted to the transaction as something he could not help.
He was never a free agent. He was in the toils of this clause which had been forced on him, and this must be borne in mind when considering this issue of acquiescence. The onus of establishing Connolly s intention to abandon his rights was on the defendants, and as the war was in a critical stage in the autumn of 1941 and Connolly McCausland was on active service and had compelling reasons for getting rid of this dispute, temporarily at any rate, I do not think the court should draw inferences against him or spell out an intention on his part to abandon his claim to his estates and property unless it is compelled to do so by evidence which is conclusive.
Helen and Lucius Thompson were under no misapprehension as to his intentions. They were doing their best to assist him in getting rid of the forfeiture. They went into possession under directions from the trustees protesting that they did not want to do so. They consulted with him as to possible ways of escaping from the forfeiture and alternatively as to how the property might be managed as a joint concern or whether Connolly could be made a tenant of Drenagh, and when they took over possession the letters written by Lucius Thompson to Connolly McCausland on the 22nd February 1942, and 13th March 1942, show that even then they thought the matter might be re-opened, which is further borne out by the fact that neither they nor any other persons who take in the remainder have appeared on this appeal to uphold the plea of acquiescence.
The Thompsons were in a very individous and distasteful position and agreed to take over the property and estates with obvious reluctance. Neither side knew whether the settlement could be successfully challenged and until this was done the forfeiture had to be accepted.
After the trustees had put the forfeiture in operation in October 1940, a number of acts were done which are pleaded in paragraphs 30 to 37 of the defence filed by the trustees as a confirmation and acceptance of the re-settlement, including the forfeiture clause.
The first, of course, is that Connolly McCausland gave up possession of his estates and property to his sister. This is obviously the most significant of the acts done by him and is alleged to be evidence of his intention not to challenge the forfeiture, but though he submitted to it the act was not his, for the forfeiture was put in operation by the trustees against his will and in spite of his protests. This yielding up of possession, however, is not such a bar as to raise a counter equity in favour of Helen Thompson, and it is not of itself evidence of an intention not to challenge the forfeiture clause under which his property was taken from him.
The next is that Mr Ingram recovered 454 5s 9d succession duty on behalf of Connolly McCausland, being a refund due to him on the cesser of his life estates. This was, no doubt, in law a confirmation of the re-settlement and of the forfeiture clause but in equity it should, I think, be treated as conditional if the act on which it was based was itself conditional and as being consequential on that act and as capable of re-adjustment if it turns out that the surrender of the property cannot be supported.
Then Connolly McCausland agreed to transfer the stock, crops and farming implements in Drenagh to the Thompsons and conveyed to the trustees certain lands of which he was owner. It is only necessary to say with reference to this that Lucius Thompson s letters of the 22nd February 1942, and 13th March 1942, show that it was an arrangement which might only be a temporary one and liable to be reversed.
The trustees raised a sum of 6,000 by a mortgage of the settled estates for Eileen Mary McCausland, Connolly McCausland s sister, which became due to her as a result of the forfeiture and the succession of her sister Helen Thompson. Here again the act was the act of the trustee and not of Connolly McCausland and it should in equity be regarded as consequential only and subject to confirmation by him or to revision by the court if the basis on which the money was raised turns out to be erroneous.
Lastly, the Thompsons adopted the McCausland name and arms in 1942 and this was put forward as an act by Connolly McCausland confirming the re-settlement but not only was this not his act but he actively dissented from it and said in a letter to Lucius Thompson that he found it the only distasteful action in the whole affair, possibly to challenge its appearance of finality.
In my opinion all these acts were consequential on the handing over of the property and estates and were understood to be so by the parties other than the trustees, and to be always subject to Connolly McCausland s right to re-open the question of forfeiture in the courts. Under other circumstances these acts might be regarded as corroborative of an intention by Connolly McCausland to abandon his right to challenge the forfeiture or as being themselves evidence of such intention, but the evidence displaces this inference and establishes that when he accepted the re-settlement he did so conditionally and without prejudice, and that no one thought or assumed that he had done so irrevocably except the trustees, until at the earliest the spring of 1944, when the impossibility of reaching finality otherwise than through the courts became apparent to everyone.
If this issue of acquiescence is examined as one arising between Connolly McCausland and the trustees alone I cannot understand what equity the latter can have to insist that Connolly McCausland has acquiesced in the forfeiture of his estate. The right of action vested in him could not be divested at their suit without accord and satisfaction or release under seal and if the letter of the 18th November 1941, be regarded as an express promise that he would not take any proceedings it was without consideration and not binding as Thesiger LJ points out in De Busche v Alt (1878) 8 Ch D 286, 314.
As between Connolly McCausland and his sister and brother-in-law on the other hand the equitable question remains. Has he within the decision of the Privy Council in Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221 placed them in a situation in which it would be unreasonable to place them if the remedy is to be asserted?
The answer to this question is decisive, and in determining on which side the balance of justice or injustice falls I am strongly influenced by the fact that this forfeiture clause was not his own disposition as in Allcard v Skinner (1887) 36 Ch D 145 and is not binding on him, and by the further consideration that those on whose behalf the plea of acquiescence is advanced objected to the forfeiture almost as strongly as Connolly McCausland himself and throughout the whole transaction were aiding and assisting him in his endeavours to escape from its results.
These parties have not appeared to substantiate their equitable claim to hold Connolly McCausland to the forfeiture, and I am satisfied that by granting him the relief he claims this court will not be placing them in any unreasonable situation or in any situation which they have not already assented to in principle; and that the forfeiture clause being out of the way their minor son can have no interest in the settled estates except through the alleged estoppel with respect to which he can be in no stronger position than his parents.
The only question remaining arises in connection with these consequential acts and dealings with the settled property, namely, whether other people have so altered their position as a result of Connolly McCausland s action as to make it impossible to restore the parties to their original positions, and therefore inequitable for the court to grant the relief of Connolly McCausland s action as to make it impossible to restore the parties to their original positions, and therefore inequitable for the court to grant the relief he asks. This is a question of estoppel properly so called.
On the correspondence and the evidence it cannot be maintained that Helen and Lucius Thompson-McCausland have been losers by what has happened or that their position has been altered to their detriment. On the contrary, they have received benefits, and unless their adoption of the name and arms of McCausland must be held to be a bar, there can be little difficulty in restoring them to the position they occupied prior to November 1941. There is a long argument as to the change of name in a letter from Lucius Thompson-McCausland to Connolly McCausland justifying the change. He treats it as an open question and not as a provision with which they were bound to comply, and though the result of a decision in Connolly McCausland s favour may be embarrassing to the Thompson-McCauslands, I do not feel that this is a matter that should be allowed to weigh very heavily in the balance against Connolly McCausland s right to challenge the forfeiture.
I therefore hold that none of the foregoing acts were final or conclusive and that they can be readjusted either by agreement between the parties or by the court. More difficult questions are dealt with satisfactorily almost every day in the Chancery Court; and Lucius Thompson-McCausland s letter of the 8th April 1944, does not suggest that any insuperable barrier exists in the case.
The solution of this intricate and protracted argument, therefore, is that Connolly McCausland is not bound by the forfeiture clause in the re-settlement, that he did not at any time before action either confirm it or abandon his claim to challenge it or acknowledge it to be binding on him. He is, therefore, entitled to such relief as the court can grant him under the circumstances.
The Attorney-General maintained that even if Connolly McCausland has succeeded in establishing that the forfeiture clause is not binding on him and that he has not acquiesced in it, nevertheless this is not a case of mutual mistake and the court cannot, therefore, reform the instrument but must either allow it to stand or set it aside altogether. I will not deal with this argument at length. Black J has rightly rejected it and I agree with him that the power of the court to rectify a settlement is not limited to cases where there has been mutual mistake.
As I have said, I am not sure that there was a mutual mistake in the present case, and though it is unnecessary to decide whether there was or not, but the way in which the final forms of the forfeiture clause came about and its adoption by Maurice McCausland are facts which we are bound to have regard to when deciding whether rectification should be ordered.
This is an unusual clause. It was included in the re-settlement without the knowledge of Connolly McCausland, who was not advised independently or at all, and appears in a form which is not in conformity with the expressed wishes of his father so far as they can be gathered from the evidence. It stands completely alone, as was said in Hoblyn v Hoblyn (1889) 41 Ch D 200, 213, and can be expunged without upsetting any of the other provisions of the deed.
But above all, the case is one which is coloured throughout by the fiduciary relationship which the father owned to his son and which the family solicitors should have made certain was adequately discharged, and as this was not done the authorities cited by Black J and especially the cases of Bentley v Mackay (1862) 4 De GF & J 279, Clark v Girdwood (1877) 7 Ch D 9, Lovesy v Smith (1880) 15 Ch D 655 and James v Couchman (1885) 29 Ch D 212 show that a settlement can be rectified under the circumstances here established, even though there was no mutual mistake.
The conclusion at which I have arrived makes it unnecessary to consider whether, if Connolly McCausland were to be held bound by acquiescence or any form of estoppel, his son could challenge the forfeiture clause.
If a forfeiture clause in this form is included in a re-settlement with the knowledge and approval of a settlor it binds him and his issue. If such knowledge and approval is disputed by a settlor who subsequently acknowledges the re-settlement with the forfeiture clause in it or confirms it or does acts which estop him from challenging it, I have some difficulty in understanding how a volunteer taking under him can be in any better position. If it were so it would lead to endless confusion and uncertainty with no limit of time within which the claim must be made. No authority was cited for this proposition and I will only say that as at present advised, the deed must stand or fall by the acts of the settlors. If Connolly McCausland had bound himself by acquiescence this would have set up the deed with the forfeiture clause included and would have been binding on his issue, because being one of the settlors the alleged estoppel would operate through him as a confirmation of the settlement.
The case is one of very great importance and it is a calamity for the parties that this Court is not fully constituted.
They are thereby deprived of a clear decision and this is a result which I need hardly say the Court as constituted has tried to avoid. But for my own part having arrived at a conclusion satisfactory to myself I feel bound to express it though I do so with great embarrassment, since my opinion differs from that of the trial judge and the Lord Chief Justice and this difference of finding makes the appeal abortive.
In my view the appeal of the trustees should be dismissed and Connolly McCausland s cross-appeal allowed, but as the judgment of Black J must stand in the circumstances it is unnecessary for me to discuss the form of order which I think should be made.
JH v WJH
Unreported (High Court, 20 December 1979) (1977 No 5831P)
The facts are set out in Keane J s judgment.
Keane J: The plaintiff is the surviving spouse of PH late of County Waterford who died on the 18th December 1968. He was also survived by four children, of whom the defendant is one. By his last will, dated the 19th November 1967, he left his principle asset, ie, a farm of 93 acres with the dwellinghouse thereon, to the defendant. The devise was subject to and charged with the following rights in favour of the plaintiff:
to reside in the said dwellinghouse, farm and lands for her life, to be supported and maintained in such manner as she is accustomed, to have the exclusive right to occupy the room that she has always lived in and to be paid the sum of thirty shillings weekly by my said son WJ.
He appointed the defendant to be sole executor. He had been in poor health for some years prior to his death and the farm had been worked by the defendant.
Very soon after the death of the testator, ie on the 27th January 1969, the plaintiff and the defendant went to the offices of Messrs Anthony Carroll and Company Solicitors in Fermoy, County Cork and signed a document which had been prepared by Mr George Eason, a member of that firm, which was in the following, terms:
I, JH widow of PH deceased hereby agree with my son to compromise my statutory rights arising on the death of my husband by accepting payment of the sum of 1,000 in addition to the rights of residence and maintenance bequeathed to me under my husband s will and a cash payment of 1.10.0 per week for my lifetime, the said sum of 1,000 to be payable as to 300 on the signing hereof and the sum of 100 payable on the 1st day of July in each of the years 1970 1971 1972 1973 1974 1975 and 1976 and I acknowledge receipt of 300 from the said WH this day as referred to in this agreement. And I WH hereby agree with my mother the said JH to permit her to reside in the family home and there to maintain her as heretofore and to pay her the sum of 30s per week as provided in my father s will and in addition to pay her the sum of 1,000 as above set forth by payment of 300 as hereinbefore acknowledged and payments of 100 on the 1st day of July for seven years commencing on the 14 day of July 1970.
In witness whereof the said JH and WH have hereunto signed their names this 27th day of January 1969.
The signatures of the plaintiff and the defendant are witnessed by Mr Eason.
After the signing of this agreement, relations between the plaintiff and the defendant deteriorated to such an extent the plaintiff ultimately consulted solicitors, Messrs Murphy, Murray and O Shea of Middleton, who wrote on the 14th November 1973 to Messrs Carroll and Company as follows:
Dear Sirs,
We have been consulted by Mrs JH in connection with the Will of her late husband PH dated 19th November 1965. From our instructions it appears quite clear that the widow of the deceased was never informed by the personal representative in writing, of her right of election conferred by s 115 of the Succession Act 1965.
We are now, accordingly, instructed to give you notice that out client, Mrs JH elects to take her legal right in the Estate of her husband, which is one half of the actua1 Estate itself. Accordingly, we must now ask you to send us detailed particulars of the Estate of the deceased as at date of death together with your suggestions for payment to our client of one half of the amount thereof.
Yours faithfully,
Murphy, Murray and O Shea
The reference to the plaintiff being entitled to one-half of the estate was, of course, an error: the reference should have been to the plaintiff being entitled to one-third.
Messrs Carroll and Company wrote a letter which is dated the 13th November 1973, but which appears to have been a reply to the letter to which reference has just been made.
It says:
Re: PH Deceased.
Dear Sirs,
We were rather surprised to receive your letter this morning re the above matter. We enclose Copy of an Agreement dated 27th January 1969 in which your client, JH agreed to compromise her statutory rights arising on the death of her husband, the above named deceased, under the Succession Act by accepting payment of 1,000 in addition to the rights of residence and maintenance and the payment of 1.50 per week during her lifetime by her son W. As far as we are aware, although we have not had the opportunity of consulting with our client, this Agreement has been honoured by him and we can confirm that the rights of residence, maintenance and the payment of 1.50 have been duly registered as charges on Folio 2698 Co. Waterford in respect thereof. We trust this clarifies matters for your client.
Yours faithfully,
Anthony Carroll and Company.
There the matter rests in so for as the correspondence is concerned until 27th September 1976 when the plaintiff s solicitors wrote to the defendant as follows:
I have been consulted by your mother, Mrs JH under the terms of your father s will your mother is entitled to thirty shillings per week, weekly payment and also to be supported and maintained out of her husband s lands in the same manner as she has been accustomed to, in addition to having the exclusive right to occupy a room in the dwellinghouse.
My client informs me that due to the extraordinary behaviour of both your wife and yourself since her husband s death she has now found it impossible to continue in residence in the dwellinghouse and, for the moment at any rate, has decided to seek accommodation elsewhere.
In these circumstances, I would suggest that the weekly payment should for the moment be sent to this Office together with a sum to cover your mother s maintenance, in accordance with the terms of the will. I would estimate a fair figure for this would be 15 per week. Would you please let me hear from you by return as in the event of your failing to comply with the terms of the will of your father I shall have no other option but to institute proceedings against you forthwith.
Your mother also informs me that she has a considerable amount of personal property including clothing, furniture and effects still in the house and I will be notifying you in due course as to what arrangements are being made by her to remove these items.
Messrs O Carroll and Company wrote on the 29th September to the plaintiff s solicitors rejecting the allegations made in the letter of 27th September and indicating that their client was not prepared to make any further payment over and above the sum of 1.50 per week.
Again the matter remained dormant for a further period until 1st September 1977 when the plaintiff s solicitors wrote to Messrs Carroll and Company stating:
My client has had to take rented accommodation in Lismore and I have been instructed to bring her claim to Court at the earliest possible date for the purpose of protecting my client s rights.
On the 7th September 1977, the plaintiff s solicitors wrote again as follows to Messrs Carroll and Company:
My Counsel has now considered my client s position afresh herein and has advised that the Agreement entered into in 1969 is not good in law and cannot be upheld.
As you will appreciate Mrs H is entitled to her right of election as prescribed by sub-section 4 of section 115 of the Succession Act. The time for Mrs H to make her election does not commence to run until the Personal Representative has notified her in writing of her right to elect. She then has six months from the date of such notice or one year from the taking out of a representation whichever is the later. Mrs H never received any notice in writing from you of her rights under the Succession Act and in addition the Agreement of 1969 does not say that she has exercised her right of election so that the provisions of s 4 of the Succession Act were carried out.
Mrs R had no independent legal advice at the time this document was signed and, of course, was not, apparently, advised of her rights under the Succession Act.
In the circumstances I must now ask you to forward to me if in existence, copies of any letters to Mrs H notifying her of her rights under the Succession Act, prior to execution of the Agreement in 1969 .
This letter was followed on the 23rd November 1977 by the institution of the present proceedings in the form of a plenary summons claiming a declaration that the agreement of 27th January was invalid and a further declaration that the plaintiff was entitled to one-third share in the estate.
The Statement of Claim delivered on the 1st March 1978 pleaded that the agreement in question was procured by the undue influence of the defendant, that the plaintiff when executing it did not know and appreciate her rights and than in executing the agreement the plaintiff acted without independent legal advice. The defendant in his defence denies the allegations of the plaintiff in respect of the agreement of 27th January 1969 and further pleads that the plaintiff s claim is barred by the Statute of Limitations 1957, that the plaintiff has been guilty of laches and that the defendant has fully administered the estate.
The plaintiff in evidence said that the defendant behaved in a cross and aggressive manner after the death of the testator and said that he wanted the farm. She said that she expressed disappointment with the terms of the will and told him that he would have to give her some money. She said that he agreed to give her 1,000, made up of an initial payment of 300 and subsequent payments of 100. She said that she went into Messrs Carrolls office in Fermoy and signed the agreement there on the 27th January. She said that there was no discussion about the agreement; the solicitor dealing, with the matter (Mr Eason) wrote out the agreement then and there and said to the plaintiff put your name there . She said the transaction was conducted at a counter in the office. She said that Mr Eason did not explain anything about the agreement to her.
The plaintiff said that she went to Mr O Shea, the solicitor, because her son was not very nice to her. He told her what rights she had and she said that she did not know until he told her that she had such rights. She said that she was afraid to bring any proceedings because the defendant used to get very cross and she was on her own. She said that the defendant had got married about five years ago and that things disimproved substantially after that.
In cross-examination, the plaintiff agreed that she spent some time after the testator s death with one of her daughters, who is married in England. She said that her husband had been ill for eight years prior to his death. She said that she thought, during her husband s lifetime that, after his death, she would still be able to go on living on the farm. She recalled somebody having said at some stage that widows now had a greater measure of protection from the law, but she could not recall who had said this. She said that it was after her husband s death, but within a few months of it. She agreed that she was disappointed by the will; and she thought she should have got some money. She did not recall having read anything about the new rights of widows before her husband s death. She said that Mr Eason read the will to her just before Christmas 1968, in the Lismore office of the defendant s solicitors. She said that she did not know the terms of the will before then. She said that she said to him: Why did you make that will – I do not get anything . She said that on her way home from the office, her son became annoyed and that for her part, she complained about the terms of the will. She agreed that between that visit and her next visit to the office of the defendant s solicitors, she had discussions about cash with her son, but she did not agree that she told him that she had rights. The conversation with the person who told her that new rights had been given to widows took place a few months after her husband s death. She thought it was after she had signed the agreement.
Mrs C, one of the plaintiff s daughters, gave evidence as to the unhappy family disagreements that had arisen. She said that, while there was always a hassle about the land, things seemed to become much worse after the death of the testator and had reached a particularly bad stage in 1974.
Mr O Shea, the plaintiff s solicitor, said that the plaintiff came to see him on the 14th November 1973, about her rights under the will. She said that she thought she was not getting what she was entitled to under the will. He said that he read the will and advised her that she had rights under the Succession Act. This completed the evidence for the plaintiff.
Mr Carroll, the defendant s solicitor, gave evidence that Mr Eason had been in charge of the Lismore office of the firm at all relevant times. He produced the diary kept at the relevant time by Mr Eason of the dealings with clients at the Lismore branch. The first entry relevant to this case is on the 20th December 1968. It reads:
Mrs JH Re: PH deceased. Informed me that Mr H had died on Monday last 16th January aged 66 and enquired about his will. I undertook to look it up and let her know.
The next entry was dated the 17th January 1969 and read:
WH Re: PH deceased. Can see nothing for it but to sell out. We are to get the place valued by Sean O Farrell. We are to write Mrs H now informing her of her statutory rights under the Succession Act to bring matters to a head.
He also produced an attendance docket in the late Mr Eason s handwriting dated 20th December 1968. This was a record of the occasion on which the plaintiff and the defendant attended at the office in Lismore and the will was read to them. After setting out the assets of the deceased the attendance goes on:
I gave Mrs H a copy of the will. She was rather dissatisfied at first primarily because there was no provision for her to get back the 200 she had brought into the place, although the three children were left 150 each, but when she realised she was getting full keep and 30/- a week she was reasonably satisfied. We are to proceed to take out a grant.
NB: Mrs H must be notified in writing of her right of election under Succession Act 1965 s 115.
There was then a further attendance again in Mr Eason s handwriting dated the 27th January 1969. This was the day on which the agreement was signed and the attendance reads as follows:
Attendance on Mrs and Mr H when they announced that they had come to an arrangement which would not require the farm to be sold. Arrangement is to pay Mrs H 300 down and 100 per year for the next seven years till 1,000 has been paid in addition to the right of residence, maintenance and payment of 1.10.0 per week bequeathed by the will.
We discussed the question of interest on overdue payments and they said not to include any.
We also discussed the registration of these payments as a charge on the folio. I pointed out that if this debt of 700 was registered on the folio it would make the Bank of Agricultural Credit Corporation less keen to make advances to W and even if either did so it would certainly be only conditionally on Mrs H formally consenting to this debt to her being postponed to theirs. They both appreciated this point and Mrs H was completely satisfied that this agreement should not be registered as a burden on the folio.
Mr. H then handed over 300 as a first payment which Mrs H acknowledged.
After some discussion it was decided that the other seven annual payments of 100 be made on 1st July each year commencing 1st July 1970.
I wrote out an agreement which each of them signed.
There was no evidence of any notice in writing having being given by Mr Eason on the defendant s behalf to the plaintiff of her right of election.
The defendant in evidence said that he got married in 1974 and had three children. At the date of his father s death he was unmarried and living at home. His father had been ill for a very long time. He did not know what the terms of his father s will were, but he remembered his mother s telling him that the farm would not be his because she said: There s a new Act in . He said that his mother made the arrangements about going to the Lismore branch to hear the contents of the will. He said that his brother N was present on that occasion. He said that the plaintiff said, when Mr Eason had read the will: you know what you can do with that will . He said that Mr Eason told her that there was an Act in under which she was entitled to claim. He said that they had a heated discussion on the way home, but that she eventually cooled down. He said that after some time she raised the subject of the will again and asked him (the defendant) what they were going to do. He said that there was some discussion of a possible fifty/fifty division and that she eventually asked would you buy my share out? . She eventually said that if she got 1500, she would be happy. The defendant said that he made enquiries about her entitlement with Mr Eason and then went to the National Bank in Lismore, but could not borrow the 1500. He said that eventually they agreed on the payment of 1,000 with an initial payment of 300 and the remainder in instalments. He said that when they went to the office of the defendant s solicitor in Fermoy, they both explained the agreement that they had come to and both said that they were happy with it. He said that Mr Eason again explained to the plaintiff that she was entitled to a third of the farm under the Act.
Cross-examined, the defendant said that the first he knew of the Succession Act was when its relevant provisions were explained to him by Mr Eason. He reiterated that the plaintiff was aware of her rights under that Act and agreed that his evidence amounted to an allegation that the plaintiff was deceiving the Court when she claimed that she did not know about the Act. He said that on the way home from the reading of the will, he said to the plaintiff I have to give you 30/- a week for your life . He said that during the conversation in the solicitors office in Lismore, the plaintiff said to Mr. Eason I don t get my 200 that I brought in . He said that three or four days afterwards she had the idea of a fifty/fifty division. This concluded the oral evidence.
The defendant contends that the proceedings are barred by virtue of s 45 of the Statute of Limitations 1957, as substituted by s 126 of the Succession Act 1965.
Sub-section (1) provides that:
Subject to s 71, no action in respect of any claim to the estate of a deceased person or to any share or interest in such estate, whether under a will, on intestacy, under s 111 of the Succession Act 1965 shall be brought after the expiration of six years from the date when the right to receive the share or interest accrued.
The plaintiff in reply says that, since the defendant has failed to perform the duty imposed on him by s 115(4) of the Succession Act 1965, of notifying the plaintiff in writing of the right of election conferred by that section, the period of limitation prescribed by s 45 has never begun to run against her. Alternatively, she says that since her claim is founded on the fraudulent conduct of the defendant, the period of limitation prescribed by s 45 does not apply to the proceedings.
Section 115(4) of the Succession Act 1965, provides that:
It shall be the duty of the personnel representative to notify the spouse in writing of the right of election conferred by this section. The right shall not be exercisable after the expiration of six months from the receipt by the spouse of such notification or one year from the first talking out of representation of the deceased s estate, whichever is the later.
This is the only time limitation imposed by s 115 on the exercise by the spouse of the right of election conferred by the section. It is clear that the right cannot be exercised after the expiration of the specified period; and it is also clear that that period does not begin to run until such time as a notice has been served by the personal representative in compliance with the duty imposed on him.
But it is also clear that there is nothing in the wording of the sub-section – or indeed in any other part of the section which precludes the spouse from exercising the right of election before the service of any such notice. It is certainly not expressly prohibited by the section; and there seems no reason why such a prohibition should be implied. If the spouse elects to take either his or her devise or bequest or the share to which he or she is entitled as a legal right prior to the service of any notice by the personal representative, it would seem quite unnecessary to treat that election as of no effect. It is clearly to the benefit of the spouse that he or she should be entitled to elect without waiting for the service of notice; and it is also to the benefit of the other persons entitled to the estate of the deceased that he or she should be entitled so to elect, since it facilitates the speedy distribution of that estate to all those entitled in law to share in it. The object of sub-section (4) is clear: it is to ensure that, where necessary, the personal representative can compel the spouse to elect, thereby ensuring the speedier distribution of the estate. Quoad the personal representative, the section is not merely enabling, but emphatically mandatory; and this is clearly as much in ease of the other persons entitled to the estate as it is in ease of the spouse. It is in no sense a necessary feature of the statutory scheme under s 115 that the spouse should be precluded from exercising her right of election prior to the service of the notice under sub-section (4) by the personal representative.
The right of election in this case was exercised on behalf of the plaintiff by the letter of 14th November 1973 from her solicitors. Since there is no evidence that any notice in writing pursuant to sub-section (4) had been served by or on behalf of the defendant, it follows that, in terms of s 115, the exercise of the right of election by that letter was unaffected by any time limitation. It was not affected by subsection (4), since there was no evidence that notice in writing had been given; And, for the reasons I have given, the plaintiff was not precluded from making her election notwithstanding the failure of the personal representative to notify her in writing of her right to do so.
The next question that arises is as to whether the exercise of the right of election was affected by the period of limitation fixed by s 45 of the Act of 1957. That section is expressly confined to actions:
In respect of any claim to the estate of the deceased person or to any share or interest in such estate, whether under a will, on intestacy or under s 111 of the Succession Act 1965 .
It contains no reference to the right of election conferred by s 115. Section 111 of the Act of 1965 is the section which confers on the surviving spouse a right to one-half or one-third of the estate, as the case may be; it is not the section which confers the right of election. It is clear that proceedings brought more than six years after the right conferred by s 111 has accrued are statute barred; but the only period of limitation fixed by either Act in respect of the right of election is that contained in s 115(4).
It follows that the present proceedings are statute barred if, and only if, they were commenced more than six years after the date when the right to receive the share under s 111 accrued.
It is clear that what this section envisages is a present right to receive and that this is not equivalent to a present right to enforce payment: see Waddel v Harshaw [1905] 1 IR 416 in which the Court of Appeal disapproved a dictum of Romilly, MR in Earle v Bellingham (24 Beav 445) and followed Hornsey Local Board v Monarch Investment Building Society 24 QBD 1. But in that case the payment in issue was a legacy; and it was held that, while the legatee is precluded from instituting proceeding, for the payment of legacy within the period of the so-called executor s year his right to receive the legacy dates from the death of the testator. The position of a spouse under s 111 of Act of 1965 is entirely different. Manifestly, he or she cannot enforce payment of the share until such time as he or she has made his or her election under s 115. But it is also clear – and this is the essential distinction between a legacy and a share by way of legal right under s 111 that the personal representative has no power to transfer the share under s 111 until such time as the spouse has made an election under s 115. In default of election, the spouse may only take under the will. It follows that not merely is the right to enforce payment postponed until a valid election has been made; the right of the personal representative to transfer and the spouse to receive the share is also postponed.
It was submitted on behalf of the defendant that such a construction of the sections was anomalous and places the spouse for whom provision is made in the will in a more favourable position than the spouse for whom no provision is made or whose spouse has died intestate. That might appear at first sight to be so; but it can only be so if the personal representative neglects the express statutory duty imposed on him of serving the notice under sub-section (4).
Once he has discharged that duty, the spouse cannot be regarded as having any privileged position in contrast to a spouse for whom no provision has been made, since he or she has a period of six months only within which to elect. It is true, of course, that a personal representative may neglect to carry out the statutory duty of serving the notice under sub-section (4); but the law normally presumes that persons will comply with the law and, in any event, there seems no reason why, in the case of a dilatory personal representative, the other beneficiaries affected should not be able to institute proceedings claiming administration of the estate and; if necessary, an order requiring the personal representative to fulfil his statutory duty. Whether that be so or not, it is sufficient for the purposes of the present case to say that the fact that the Statute of Limitations does not begin running against a spouse until such time as he or she has actually elected or been notified of her right of election does not seem to me to involve any invidious or arbitrary discrimination in favour of such spouse. It follows that the defence under the Statute of Limitations 1957, in my view, fails .
In these circumstances, it is not necessary that I should consider in any detail the alternative submission that the defendant had, in any event, acted in fraud of the plaintiff. I think I should say something, however, in relation to the various sections intentioned in the very full and helpful argument of Counsel on this topic. Section 46 of the 1957 Act has no application, since it was repealed by s 8 of the Act of 1965. It would also appear that neither s 44 or s 71 could have any application. The references to actions based on any fraud or founded on any fraud in the section would appear to be properly confined to actions where fraud is a necessary ingredient of the cause of action (see Beamen v ARTS Limited [1949] 1 All ER 465 at p 467); and, in the present case, the plaintiff s claim is based or founded on her statutory entitlement under the Act of 1965 and not to any common law cause of action in respect of which fraud would have been a necessary ingredient. So far as s 44 is concerned, it application would also appear to be precluded by the fact that a trustee is defined by s 2(a) of the Act of 1957 as not including, in effect, constructive trustees and persona1 representatives in their capacity as personal representatives. Mr Gogarty also relied on s 71(1)(b) which applies where the right of action is concealed by the frauds by the defendant. He made it clear that the fraud which he was alleging was not the species of common law fraud in which deceit is a necessary ingredient, but rather the species of equitable fraud which arises where a person occupying a fiduciary position uses that position for his own advantage and thereby, in effect, acts in fraud of his beneficiary. In fairness to the defendant, I think it right to say that, in my view, the evidence in the present case did not establish that the defendant had acted fraudulently even in this more confined technical sense. I am satisfied that he took no steps to conceal her legal rights from the plaintiff: and the failure to notify her in writing of her rights was not due to any default on his part which could properly be described as fraudulent.
The next question that arises as to whether the plaintiff is precluded from asserting her right to a share of the estate under the Act of 1965 by virtue of the agreement of the 27th January 1969. That agreement is attacked in paragraph 6 of the Statement of Claim on six grounds which, however, I think can be broadly reduced to three: first, that the agreement was procured or induced by the undue influence of the defendant, secondly, that the plaintiff did not know or was not given an opportunity of understanding the contents or the effect of the agreement and, thirdly, that, in any event, the plaintiff in executing the agreement acted without independent legal advice. Although it was not expressly pleaded, I think it was also inherent in these pleadings and the submissions advanced on behalf of the plaintiff that the agreement was also an improvident one which should be set aside by the Court in the exercise of its equitable jurisdiction.
I am satisfied that the plaintiff has failed to discharge the onus of proof which lies on her of establishing that the agreement was procured by the undue influence of the defendant. There is no presumption in this case in favour of the plaintiff arising from their relationship; the fact that he happened to be the persona1 representative does not appear to me to constitute the confidential or fiduciary relationship with the plaintiff which is necessary if the presumption is to operate in her favour. The evidence, in my view falls short of establishing that the transaction was the result of undue influence brought to bear by the defendant on the plaintiff.
But if I was mistaken in that view, the plaintiff still could not succeed, in my opinion, on the plea of undue influence having regard to the time which elapsed before proceedings were instituted. It is clear that once the influence has ceased, the person seeking to set aside the transaction on that ground must commence the proceedings within a reasonable time or he or she will be taken to abide by the transaction and confirm it (see Allcard v Skinner 36 Ch D 145). In this case, the undue influence must have ceased at the time that the letter of 14th November 1973, was written, and, of course, at that stage the plaintiff would have been advised of the remedies open to her. She none the less delayed for a period of four years before instituting the present proceedings and, apart from all other considerations, this appears to me to be fatal to the plea of undue influence.
So for as the plaintiff s knowledge and approval of the contents of the agreement is concerned, I think that the probabilities are that she was at least to some extent aware of her rights. It seems improbable to me that any farmer s wife living in this country during the late 1960 s could hardly fail to have become aware, even in the most general way of the valuable new rights conferred on them. She may indeed have failed fully to appreciate the precise legal nature of those rights and their significance in financial terms and for this she is hardly to blame since she had no independent advice whatever before executing an agreement which was of fundimental importance to her. I think it is also clear that, had she received the independent advice she was entitled to, it would have been made very clear to her that, at the very least, she should stipulate for some review of the weekly payment of 30/- a week provided for. While inflation was undoubtedly not the factor in 1969 which it subsequently became, it was sufficiently present to the minds of all solicitors to have rendered it probable that a solicitor acting in protection of the plaintiff s interests would have required some provision to ensure that the payments were reviewed with increases in the cost of living.
It follows that, in these circumstances, while the evidence falls short of establishing that the plaintiff did not know or approve of the contents of the agreement, it was none the less an improvident transaction which would normally be set aside by the Court exercising the equitable jurisdiction defined by Gavan Duffy J, as he then was, in Grealish v Murphy [1946] IR 35; provided, and it is a most important proviso, that the plaintiff has acted with the promptitude which a Court of equity is entitled to expect and has not unduly slept on her rights.
In this case, the plaintiff, on her own admission, became aware of her rights under the Succession Act, within a few months of the testator s death, although she claims that she was not so aware prior to the execution of the agreement of 27th January 1969. In November 1973, she was not merely aware of those rights, but had gone to a solicitor, obtained independent advice and threatened proceedings. She none the less delayed until the 23rd November 1977 before issuing the present proceedings. She accordingly allowed a period of nearly eight years to elapse before she sought to set aside the agreement and for at least half that time she was fully aware of all her rights and was being independently advised in relation to them.
In these circumstances, the defendant says that the claim is barred by laches. It is clear that s 11 of the Statute of Limitations 1957, which fixes a period of limitation in respect of actions in contract and tort has no application, as sub-section (9)(a) provides that:
This section shall not apply to any claim for specific performance of a contract or for an injunction or for other equitable relief.
The circumstances in which laches will normally constitute a defence to a claim of this nature are thus defined in Snell s Principles of Equity (27th edition) at p 35:
Laches essentially consists of a substantial lapse of time coupled with the existence of circumstances which make it inevitable to enforce a claim. Delay will accordingly be fatal to a claim for equitable relief if it is evidence of an agreement by the plaintiff to abandon or release his right, or if it has resulted in the destruction or loss of evidence by which the claim might have been rebutted, or if the claim is to a business (for the plaintiff should not be allowed to wait and see if it prospers) or if the plaintiff has so acted as to induce the defendant to alter his position the reasonable faith that the claim has been released or abandoned.
I have no doubt that the interval of time which elapsed before the proceedings were issued in the present case could properly be described as substantial. That, however, is not sufficient; it is clear from the passage cited, which is amply supported by authority, that there must also be circumstances which would render it inequitable to enforce the claim after such a lapse of time. I must accordingly consider the circumstances in which the defendant will now find himself if the plaintiff s claim is allowed, as contrasted with the circumstances in which he would have found himself if the plaintiff had successfully prosecuted proceedings in 1973 or earlier.
If the plaintiff succeeds in her present claim, it will mean that the defendant will either have to sell the farm or raise the necessary money by way of a loan. The evidence as to the value of the farm is unsatisfactory but using one s common sense it seems not improbable that the defendant, in order to pay the plaintiff s one-third, would have to try to raise a sum well in excess of 50,000. I cannot say what the value of the farm was in 1973 or in 1969 when the agreement was signed; and while it would be admittedly somewhat ingenuous to suppose that its value then was necessarily correctly reflected by the Inland Revenue Affidavit, again using one s common sense, it is obvious that the land must have shared in the enormous increase in the value of agricultural land which has taken place in recent years. During the period which has elapsed since the agreement was signed, there has, moreover, been a steady increase in interest rates. I accept the defendant s evidence that he was unable in 1969 to raise the sum of 1,000; and it may be that he would not have succeeded in raising the necessary money to pay the plaintiff at that stage. But if the plaintiff has instituted the necessary proceedings when she first became aware some months later of her rights under the Succession Act 1965, or, at the very least, in November 1973, I think the probabilities are that the financial burden which would have resulted to the defendant would have been significantly less.
Even if I were wrong in that conclusion, however, there is a further fact which I feel would render it unjust and inequitable to enforce the plaintiff s claim against the defendant at this late stage. It is not in dispute that since the testator s death, the defendant has worked this farm to the best of his ability. He has, in effect, invested ten years of his life s work in it. If the plaintiff s claim succeeds, he will be faced with the alternative of either selling the farm in which he has invested those ten years of work or of incurring a very substantia1 financial liability indeed. In a very real sense, I think that he can be said to have altered his position in the reasonable belief that the plaintiff was not making any claim of the nature now asserted. The plaintiff, for her part, would obtain a significant financial windfall as a result of her dilatoriness in prosecuting her claim. I fully appreciate that, in unfortunate family disputes of this nature, persons are sometimes more reluctant to prosecute their claims in the form of litigation than in ordinary commercial circumstances. I also appreciate that the plaintiff was prepared to acquiesce in the situation because she thought that her son would make whatever provision was proper for her. But these circumstances, in my view, are not sufficient to outweigh the injustice and inequity which would follow from the granting of the relief to which the plaintiff claims to be entitled at so late a stage vigilantibus non dormientibus jura subveniunt.
It follows that the plaintiff s claim must be dismissed.
hern Ireland Court of Appeal decision in Lombank Ltd v Kennedy infra.
Lombank Ltd v Kennedy
(1961) NI 192 (
Lord MacDermott LCJ : We have no memorandum from the officer who dealt with the application, but it is clear that the decision not to enter judgment was taken after a scrutiny of the special endorsements and of the contracts to which they referred, and was based on two conclusions – (1) that the stipulation in clause 6 for the payment of agreed depreciation was subject to the rule of law which distinguishes between penalties and liquidated damages; and (2) that, so regarded, this stipulation was in the nature of a penalty and could not therefore be considered as founding a liquidated demand which would make Order 13, rule 3 applicable.
Before going further it will be appropriate to say something about the scope and purpose of the rule of law to which I have just referred and which I shall speak of, for brevity, as the penalty rule . Its precise origins are difficult to trace. It was a rule of equity and was regarded by Lord Thurlow, when Lord Chancellor, as well settled in 1783. That was in Sloman v Walter (1783) 1 Bro CC 418, a case concerned with the penalty stated in a bond, in which Lord Thurlow said: … the only question was whether this was to be considered as a penalty, or as assessed damages. The rule, that where a penalty is inserted merely to secure the enjoyment of a collateral object, the enjoyment of the object is considered as the principal intent of the deed, and the penalty only as accessional, and, therefore, only to secure the damage really incurred, is too strongly established in equity to be shaken.
In Story s Equity Jurisprudence, 10th ed (1870) the learned author, in s 1314, states the rule in terms which closely follow the language used by Lord Thurlow in Sloman v Walter (1783) 1 Bro CC 418. Then, in s 1316 he says: The true foundation of the relief in equity in all these cases is, that, as the penalty is designed as a mere security, if the party obtains his money, or his damages, he gets all that he expected, and all that, in justice, he is entitled to. And later, in s 1318, we find this passage:
But we are careful to distinguish between cases of penalties strictly so called, and cases of liquidated damages. The latter properly occur, when the parties have agreed that, in case one party shall do a stipulated act, or omit to do it, the other party shall receive a certain sum, as the just, appropriate and conventional amount of the damages sustained by such act or omission. In cases of this sort, courts of equity will not interfere to grant relief; but will deem the parties entitled to fix their own measure of damages; provided always that the damages do not assume the character of gross extravagance, or of wanton and unreasonable disproportion to the nature or extent of the injury. But, on the other hand, courts of equity will not suffer their jurisdiction to be evaded merely by the fact, that the parties have called a sum damages, which is, in fact and in intent, a penalty; or because they have designedly used language and inserted provisions, which are in their nature penal, and yet have endeavoured to cover up their objects under other disguises.
A recent statement of the rule will be found in Cheshire and Fifoot on Contract, 5th ed (1960) at pp 512-3. In describing the distinction between liquidated damages and penalties, the learned authors say this of the latter class: Secondly, it may be in the nature of a threat held over the other party in terrorem – a security to the promisee that the contract will be performed. A sum of this nature is called a penalty, and it has long been subject to equitable jurisdiction. Courts of Equity have taken the view that, since a penalty is designed as mere security for the performance of the contract, the promisee is sufficiently compensated by being indemnified for his actual loss, and that he acts unconscionably if he demands a sum which, though certainly fixed by agreement, may well be disproportionate to the injury .
That I would respectfully adopt as a correct statement of the law in so far as it goes. But text-writers and the courts have had more to say on how to distinguish between penalties and liquidated damages than on the scope or ambit of the penalty rule itself, and it is the latter question – which for ease of reference I shall refer to as the preliminary question – that seems to me to present the main problem in these appeals. The final conclusion on this problem calls for a consideration of the authorities, but the broad purpose of the rule is, I think, sufficiently clear to depict, in general terms, the nature of the field to which it relates, even if it does not fix the bounds thereof with precision. Thus, it may be said that to attract the rule – (a) there must have been a failure on the part of the promisor the perform some one or more of his contractual obligations; (b) the relevant stipulation, that is to say, the stipulation for payment of the sum alleged to be a penalty, must be referable to such non-performance, and (c) the relevant stipulation must also be of a nature capable of acting in terrorem, that is to say, of deterring the promisor from the relevant non-performance. A stipulation, for instance, that operated only on the occurrence of some event quite outside the control of the promisor would seem, at any rate at first blush, to lie beyond the scope of the penalty rule.
But this general description of the scope of the rule leaves a number of difficulties unnoticed. For example – must the promisor s non-performance be such as of itself to constitute an actionable breach of contract? And can the rule apply if the relevant stipulation purports to fix the sum which is to be paid, not only in the case of non-performance, but also on the happening of other events which do not amount to non-performance? As will appear, these and other aspects of the matter have been the subject of decision, though the difficulties involved are, unfortunately, reflected in the conflicting state of the authorities. Before coming to these, however, it will be convenient to say a little more about the facts in the cases before us.
In Kennedy s case the contract was made on March 10 1959, in respect of the hire-purchase of a second-hand Hillman Minx Saloon which was valued or priced at the sum of 560. Kennedy made an initial payment of 119, leaving a balance of 441 due. The hire charges were agreed at 112 13s 0d and this sum, together with a purchase fee of 1, when added to the balance price, produced a figure of 554 13s. 0d. as the balance which Kennedy agreed to pay off in monthly hire rentals. The first rental payment was due on April 10 1959. It and the thirty-four succeeding monthly rentals were fixed at 15 7s 7d and the final rental payment was to be 16 7s. 7d. Kennedy paid none of the instalments and the hiring was terminated by the owners on August 22 1959, under clause 4 of the contract which became applicable on the hirer s default. The writ was issued on April 22 1960, claiming 340 3s 0d under the contract. The particulars state that the agreed depreciation under clause 6 is 505 4s 9d being 75 per cent of the total hire-purchase price which is given as 673 13s 0d. This latter figure is made up of the price of 560, plus the hire charges of 112 13s 0d plus the purchase fee of 1. Whether the purchase fee should be in this total I am not quite clear, but clause 6(c) makes it plain that the expression total hire-purchase price , of which a percentage is to be taken, includes the initial payment and the hire charges. Then, from the 75 per cent figure of 505 4s 9d is deducted the amount of the initial payment or deposit of 119. This leaves a balance of 386 4s 9d and the owners abandon 46 1s 9d of this (for reasons which are not explained in the statement of claim) and so arrive at the sum sued for. Kennedy s case is therefore one in which the hirer failed to perform his obligations to pay the hire rentals, as promised under clause 2, and in which the non-performance was a breach of contract directly connected with the termination of the contract and the demand for agreed depreciation under clause 6(c).
Crossan s case is different and Mr Brown, for the owners, submits that the difference is material. There, the hirer, one Arthur Jukes, was a serving soldier when the contract was made on March 24 1959. He was posted away from this jurisdiction after this date and did not pay any of the monthly hire rentals. But in the month of July 1959, the owners say that he voluntarily determined the hiring in exercise of the powers conferred by clause 3(a). In these circumstances, the owners, having regained possession of the vehicle, issued their writ on April 28 1960, claiming, as already mentioned, four months hire rental and 181 1s 4d for agreed depreciation under clause 6(c), which clause, it will be remembered, applies in the event of the determination of the hiring by the hirer as well as by the owners, and also in the other events already listed. The contract in this case related to a second-hand Vauxhall Saloon, the price or value of which was given as 385. An initial payment of 85 was made, leaving a balance price of 300. This, plus a hire charge of 90 and a purchaser fee of 1, produces the sum of 391 as the amount to be paid off by monthly instalments. The first of these was due on April 28 1959, and amounted to 10 16s 8d. Thirty-four other monthly payments of the like amount were the payable, followed by a last monthly payment of 11 16s 8d. The particulars in the statement of claim relating to the item of 181 1s 4d are based on a retention of the vehicle for a period of four months, the gross amount of agreed depreciation being shown as 309 8s. 0d. or 65 per cent of the total hire-purchase price of 476 which, as in the last case, is made up by adding to the price or value of 385 the hire charges and purchase fee of 90 and 1 respectively. From the 65 per cent sum of 309 8s. 0d. is deducted the amount of the deposit, 85, and the four months arrears of hire rentals as provided for by clause 6(c), leaving 181 1s 4d, the sum claimed under this head. While, as in Kennedy s case, the hirer failed to perform his obligations to pay the hire rentals as promised under clause 2, it was he, and not the owners, who terminated the contract. For this reason it was said, on behalf of the owners, that there had been no breach by the hirer in respect of which a claim for damages would lie.
The next step must be to consider what I have called the preliminary question – to inquire whether either of these cases falls within the scope of the penalty rule. That takes me to the authorities, but before examining them I must observe that the further issue, namely, whether clause 6(c) provides for liquidated damages or for a penal sum, is relevant to this preliminary question. It will be convenient to discuss this further issue later in this judgment, but because of its present relevance I will now state my conclusion thereon which is that clause 6(c) provides for a penal sum and not for liquidated damages.
The first of the authorities to which I would refer on the preliminary question is the case of Elsey & Co Ltd v Hyde (1926) (Unreported) (see Jones and Proudfoot s Notes on Hire Purchase Law, 2nd ed, at p 107) decided by a Divisional Court, consisting of Salter and Fraser JJ. There, the claim was to recover money under certain hire-purchase contracts in respect of tricycles. These contracts were in many ways similar to those now before us. The hirer having got into arrears with the instalments due, the owners terminated the hiring and then sued to recover, in addition to certain other amounts, the sum of 25 by way of compensation for depreciation. Despite the contention that the penalty rule applied and that this was a penalty and not liquidated damages, the court held that the sum sued for was recoverable. The leading judgment was that of Salter J, Fraser J agreeing in general terms and also holding that the sum was not a penalty but a genuine pre-estimate of damage. The importance of the case, however, lies in the fact that Salter J went further than this, and held, in effect, that the case was not within the scope of the penalty rule. Salter J seems to base his conclusion on three grounds. He takes first the case of a hirer exercising the right (such as he has in these contracts) to terminate the hiring and says: Supposing the hirer exercises his right to terminate this hiring, how can it be said that this sum of money, which it is agreed shall be paid, is a penalty or that it is a case in which either the agreed sum or liquidated damages must be paid? If the hirer terminates this agreement, what right does that give the owner to recover any damages against him? He has done him no wrong, he has broken no contract, and I am quite unable to see that this sum would or could give a penalty if it were claimable in those circumstances , Salter J then applies this view to the cases he had to decide, saying: I think, therefore, as it is to my mind not a penalty where it is payable on the return of the article by the hirer, it ought not to be regarded as a penalty where it was payable on the retaking of the article by the owner . Secondly, he takes the case where there is a determination by the owner, not because the hirer has made default, but because of the happening of an event which is not a breach of contract, the example given being the levying of execution against the hirer, an event, which in that case, as in the present contracts, would justify, according to the terms of the documents, the same demand against the hirer as the termination of the hiring by either hirer or owners. Of such an event Salter J says:
There is no wrong done by the hirer to the owner, and it is no breach of any contract which the hirer has made with the owner. How could that event give to the owner of the goods any right to recover damages against the hirer, liquidated or unliquidated? And applying that to the instance before him, the learned judge then adds: It appears to me that no question of penalty could arise in such a case, and if this sum is not a penalty where it is payable on the determination of the hiring by the owner, by reason of the levy of execution, it seems to me it would be a strange result if it were to be held a penalty where it is payable on the termination of the hiring by the owner on the ground of non-payment of rent by the hirer .
The third ground is related directly to the case with which Salter J was dealing, where the hiring was determined by the owner because the hirer was in arrear with his payments. Salter J says of this: It is proved that this is a breach of contract, and it is proved that that breach, apart from any termination of the hirer, would give the owner a right to damages against the hirer. But what would those damages be? They would be interest on the amount unpaid and nothing more. The fact that the hirer is in arrear with his payment will not entitle the owner to any damages for depreciation of these things. The reason that they have suffered is that they have second-hand goods put on their hands before they have received very much money in respect of them. That is not the result of the hirer s breach of contract, in being late in his payments, it is the result of their own election to determine the hiring, and it appears to me, even in this case, there is no question of penalty at all, and there is no question whether the sum paid shall be regarded as liquidated damages or a penalty .
That was in 1926. Three years later, in 1929, in Chester & Cole Ltd v Avon op cit 124, Hawke J followed the case which I have just cited. Then, in 1930, a Divisional Court (Lord Hanworth MR and Greer LJ) in Chester & Cole Ltd v Wright op cit 115 had to consider a claim under a hire-purchase contract, relating to a motor car, which had been brought against the administratix of a deceased hirer. Both members of the court appear to have reached a decision by finding that the sum sued for was not a penalty but liquidated damages, having regard to the tests laid down by Lord Dunedin in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79. To that extent the decision does not involve the preliminary question now under consideration, but while this is so, the views of Salter J in Elsey s case (1926) op cit 107 are certainly not questioned, and Greer LJ says ibid 130: … and it may very well be that the view which is, I think, the view of Mr Justice Salter in Elsey s case (1926) op cit 107, which was cited before us, is the right way to look at this clause, namely, that it is not either liquidated damages or a penalty, but it is a sum payable in respect of one event, namely, the determination and end of the hiring agreement, whether that end of the hiring agreement arises from the hirer delivering the car back again, or whether it arises from the owner taking it out of the possession of the hirer in the events in which he is entitled to take it out .
In Associated Distributors Ltd v Hall [1938] 2 KB 83 the Court of Appeal (Slesser, Scott and Clauson LJJ) had to deal with a claim arising out of a hire-purchase contract relating to a tandem bicycle. By the terms of the contract the hirer was given the option of terminating the hiring at any time by returning the bicycle, but in the event of his doing so it was further agreed that the hirer should pay a certain sum by way of compensation for depreciation. The hirer having exercised this option after paying only one instalment, the owners claimed under the contract for arrears of rental and for depreciation. The county court judge held that this latter amount was a penalty. The Court of Appeal reversed this decision holding that no question as to liquidated damages or a penalty arose – in other words, that the case did not fall within the ambit of what I have called the penalty rule. Slesser LJ stressed the option given to the hirer to terminate the hiring and said (1938) 2 KB at 88 that it followed that no question of penalty or liquidated damage arises at all . His reasoning did not go further, and the other members of the court concurred. This decision, it should be noted, did not deal with the position arising where the contract is terminated, not by the hirer, but by the owners. That, as I read the judgments, was meant to be left open.
The next case to which I would refer is In re Apex Supply Co Ltd (1942) Ch 108, a decision of Simonds J, as he then was. There, the contract was for the hire-purchase of certain articles of second-hand machinery. The hiring company agreed that if it should go into liquidation and the owner company should retake possession of the goods before the expiration of nine months from the date of the contract, the hiring company would pay a further sum which, together with the payments already made, should equal a stated figure by way of compensation for the depreciation of the said goods . The hiring company went into liquidation and the owner company retook possession of the goods within the nine month period. The owner company then claimed under the contract for the sum fixed for depreciation. In the circumstances Simonds J held that the question whether the sum in dispute was a penalty or liquidated damages did not arise since it was a sum to become payable in a certain event, namely, the termination of the contract as thereby provided, and not by way of damages for breach In the course of his judgment the learned judge referred to the judgment of Salter J in Elsey s case (1926) op cit 107 at considerable length, and he also quoted extensively from the judgment of Greer LJ in Chester & Cole Ltd v Wright ibid 124. He then came to the conclusion that he was bound to follow the reasoning of Salter J in Elsey s case (1926) op cit 107 and reached his conclusion accordingly. While he refrained from stating his own view on the point I cannot but think it would have been to the same effect. He had certainly no criticism to offer of the decision of the Divisional Court in Elsey s case (1926) op cit 107.
Then, on this important preliminary question, we come to the decision of the court of Appeal (Somervell, Jenkins and Hodson LJJ) in Cooden Engineering Co Ltd v Stanford [1953] 1 QB 86. That case related to a contract of hire-purchase in respect of a motor car whereby the defendant agreed to hire the said motor car and to pay a hiring rental over a period of thirty months. The hirer could at any time return the car and determine the contract on payment of the instalments in arrear and a sum fixed in lieu of compensation for agreed depreciation. By another clause, clause 11, the owners were entitled to determine the hiring and retake possession should the hirer have made any incorrect statement, or suppressed any information in the proposal. Or have failed to make the payments due under the contract, or have died. The hirer fell into arrears and the owners thereupon terminated the contract, retook possession and sued the hirer, as provided by clause 11, for the unpaid balance of the hiring instalments. The hirer contended that clause 11 constituted a penalty and that the sum was not recoverable. The court was unanimously of opinion that if the sum sued for could be regarded as a penalty that is, if the preliminary question were to be decided in favour of the hirer – it was a penalty rather than liquidated damages. Jenkins LJ took the view that the penalty rule did not apply, but the majority held otherwise and, accordingly, ruled that the sum claimed was a penalty and not recoverable.
This decision, in effect, reverses Elsey s case (1926) op cit 107 and it will be helpful to note what was said on the main point of divergence. The opinion of Somervell LJ, on the reasoning which underlies the first two of the grounds that Salter J relied upon, is thus expressed (1953) 1 QB at 96: But it cannot, I think, follow as a matter of law that a sum exigible for a breach or breaches cannot in law be a penalty because it is made payable in the happening of some other event which is not a breach . Hodson LJ deals with the same matter, and after stating the argument, says ibid 116: I am unable to accept this contention, which seems to involve that a draftsman of a written contract can always draw his document in such a way as to defeat the common law by incorporating in the same clause provisions dealing with the right to determine the contract on the occurrence of an infinite number of events only one of which is a breach of contract .
On the other hand Jenkins LJ founds his dissent on the view expressed in the following passage of his judgment ibid. 110.
Supposing the sum prescribed by clause 11 became payable upon a determination by notice founded on the death of the hirer, or on an automatic determination due to the presentation of a winding-up petition against the hirer (being a company), no question, so far as I can see, of the sum being a penalty in the relevant sense could arise, and that being so its seems to me impossible to invest the same sum with the character of a penalty where the determination by reason of which it becomes payable happens to be brought about by notice founded on or automatically by some breach of contract on the part of the hirer .
Opinions may well differ on various aspects of the law of hire-purchase, but on this point I would respectfully adhere to the view of the majority in the Court of Appeal. I see no sound answer to the reasoning of Somervell and Hodson LJJ and I think it should prevail.
Somervell LJ then deals with a further line of argument which is really that adopted by Salter J in what I have described as his third ground. Somervell LJ states this argument and answers it in the following passage of his judgment (1953) 1 QB at 96: It is that the law as to penalties is inapplicable if the owner under the agreement is entitled to determine the agreement as the result of any breach If in a contract of this kind, without the special provisions of clause 11, the hirer committed a breach going to the root of the contract, the owner would be entitled to treat this as a repudiation, to retake possession of the car, to be free from all further obligations to let the hirer have possession of the car and to sue for damages: in other words, to determine the contract and claim damages. The effect of the words we are considering is, I think, to give the same rights in the event of any failure to make punctual payment. The effect of this clause is first to make punctual payment a condition of the contract, and then to provide for the financial consequences to the hirer if the owner treats that breach as a repudiation giving him the right to free himself from all further obligations and claim money. No objection can be taken to the former, but as it seems to me the law as laid down in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79 is applicable to the financial consequences, which are plainly a sum to he paid in consequence of the breach .
On this point Hodson LJ observes [1953] 1 QB at 116:
My difficulty is to see the validity of the distinction between a claim to receive payment of a sum of money because of a right to determine arising from breach of contract and a claim to receive payment of the same sum by reason of breach of contract giving a right to determine. The latter situation arises in cases of breach of condition amounting to a repudiation of the contract giving the opposite party the right to accept the repudiation and sue for damages. In so acting he determines the contract. Clause 11 purports to produce exactly this situation in respect of any breach referred to therein, and it seems to me unreal to speak of a remedy arising from the right to determine as opposed to a remedy arising from the breach .
These views have my respectful concurrence. To hold otherwise would be to divorce the rule of equity from the realities of the situation and place it at the mercy of the form in which the contract is expressed.
I cannot distinguish, as respects the preliminary question, between the Cooden case [1953] 1 QB 86 and Kennedy s case. On this issue the relevant considerations are similar and clause 6 (c) is certainly of a nature capable of acting in terrorem as respects non-performance. I would therefore hold that Kennedy s case comes within the ambit of the rule.
In Crossan s case the material distinction has already been noted. The hirer terminated the contract under clause 3 (a) after breach of his promise to pay the rental instalments punctually. This would appear to bring the case within the decision of the Court of Appeal in Associated Distributors Ltd v Hall [1938] 2 KB 83, but, if so, it can only be distinguished from the Cooden case [1953] 1 QB 86 on the merest technicality, for the only material difference is that in Crossan s case the hirer gave the terminating notice when the owners might equally well have done so. It is clear that the penalty rule, as a rule of equity, is not to be circumvented by drafting devices and it would be strange to the point of absurdity if, other considerations being the same, the rule protected the hirer when the owners terminated the contract by notice, but not when he did so himself. In the Cooden case [1953] 1 QB 86 the majority looked beyond the formal termination by notice to the antecedent breach and I do not see why this should not also be done where it is a defaulting hirer who gives the notice. In either case there is the same non-performance and the same stipulation for payment of compensation. In my opinion, therefore, Crossan s case is also within the scope of the penalty rule.
The same conclusion may, I think, be supported by another related, but rather broader, line of reasoning. The penalty rule has often been spoken of as applying where there has been a breach of contract. See, for a recent example, Tool Metal Co v Tungsten Electric Co [1955] 2 All ER 657, 622, where Lord Simonds says: No case was cited where the doctrine was invoked otherwise than for a penalty payable on the breach of a contractual obligation . The typical instance may be of such a breach when actionable per se; but, in my view, the nature and purpose of the rule do not necessarily call for more than a breach by way of non-performance by the promisor, be that non-performance actionable in itself or otherwise. The kind of stipulation struck at by the rule is one which seeks to enforce performance by a sanction out of proportion to the loss suffered by the promisee through non-performance. If the contract is so drawn as to make the non-performance not in itself an actionable breach the mischief which the rule seeks to control may not be any less. Take, for example, an instance that could arise under the form of contract with which we are dealing. The initial payment has been made and delivery of the vehicle has been taken by the hirer who then changes his mind about the hiring before the date on which the first instalment is due. Without waiting for that date the hirer terminates the contract under clause 3(a) by giving notice and returning the vehicle. So far he has committed no actionable breach for, though he has turned his back on his promise to pay the instalments as provided by clause 2(b), he has lawfully ended the hiring before any default in payment has occurred. If clause 6(c), the relevant stipulation, is to be taken at its face value he is, nevertheless, liable – it may be within a few days of the contract – to pay 45 per cent of the vehicle s price plus 45 per cent of the hire charges, less the initial payment which the owners already have. It would be strange if this were so when he could have the protection of the rule (as I would hold) by making default in his payments before the contract was terminated. I do not, however, rest merely on the anomalous character of this situation. A provision which is aimed at keeping the hiring alive throughout the stipulated hire period seems to me as capable of coming within the purpose and spirit of the penalty rule when non-performance is not actionable in itself as when it is. In either case the essential question is surely the same – is the relevant stipulation calculated to secure the performance of the hiring? If it is, I do not see why another provision, such as we have here, which allows the hirer to end the hiring prematurely and brings the relevant stipulation into operation if he does so, should have the effect of ousting the rule or of abating the mischief it is designed to meet. To hold otherwise would be to entertain a device for keeping the rule at bay while purporting to confer a privilege on the promisor. The facts in the Tool Metal Co case [1955] 2 All ER 657 were not concerned with any kind of non-performance; they have nothing in common with the position under discussion, and the decision of the House of Lords does not, in my opinion, run contrary to the view I have just expressed. Lord Simonds, it is true, associates the penalty rule clearly with a breach of contractual obligation, but the question whether such breach must always be actionable per se did not arise and was not decided. In the case of an actionable breach, the promisee may recover his actual loss as damages even though the penalty rule prevents his recovery of the sum agreed upon as the amount of compensation payable. It has been suggested that if the rule were applied to a case of non-actionable breach – as, for example, where a hirer, having promised to pay the hire instalments throughout the hire period, exercises a right to terminate the hiring prematurely – the promisee could recover neither his actual loss nor the agreed amount, and that this would be at variance with equitable principles. I do not see why such a distinction should have to be made in the application of an equitable doctrine. In the case of the breach or non-performance which is actionable what equity says to the parties is, in effect this – You have agreed that a measured sum for compensation will be payable. That is really a penalty to secure performance and will not be enforced. But notwithstanding what you have agreed, the loss actually suffered will, as a matter of fairness, be recoverable instead . There seems to be no good reason why equity should not speak in the same terms where the non-performance is not actionable, and all the more so where the difference between what is actionable and what is not depends on a provision which does not really affect the equities of the situation. To judge from the reports, the courts do not seem to have been called upon to apply the penalty rule to non-actionable breaches. But, while that may be so, equitable principles which aim at the promotion of fair dealing have a way of outlasting the particular forms of conduct that begot them, and the question here, as I see it, is not one of extending the principles of the rule but of applying them to a modern form of contract dealing with a modern form of transaction. There is certainly no ground for thinking that the march of events has outmoded the rule, particularly in these days when the desires and needs of the individual so often put him at the mercy of documents devised to suit the interests of some powerful corporation.
For the reasons stated I would hold that the rule is not ousted by these contracts and that both Kennedy s case and Crossan s are within its scope. Like Somervell LJ in the Cooden case [1953] 1 QB 86, 98, 1 express no opinion as to the applicability of the rule, or some analogous equity, to cases within clause 6(c) which like death or liquidation, are outside the control of the hirer.
The next question is whether clause 6(c) provides for liquidated damages or a penal sum. Depreciation is a difficult form of loss to measure in advance and I see no reason why it should not be the subject of a genuine pre-estimate of loss which would be liquidated damages and recoverable on a liquidated demand. On this branch of the case however, Sheil J, following the decision of Denning LJ in Landom Trust Ltd v Hurrell [1955] 1 All ER 839, held that this was a penalty clause and refused the application accordingly. Applying the tests laid down by Lord Dunedin in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79. I am of opinion that this conclusion was right. I do not think it can be said that clause 6(c) operates with anything like uniform severity, for it would seem that its capacity to act in terrorem gets less as the hiring continues and more instalments are paid. But it is clear from the Dunlop case [1915] AC 79 that the crucial date in this connection is the date of the contract and not a later date. So regarded, the provision for depreciation at the rate of 45 per cent of the total hire-purchase price , if the hiring is determined within a month, seems to me like anything but a genuine pre-estimate of loss under this head in the event of the vehicle being returned within that period. Whether the goods were second-hand or new, this percentage is in marked contrast with the subsequent monthly increase of 5 per cent and seems far more than might reasonably be expected as the loss in value in such a short time. This view becomes all the stronger when it is observed – (i) that the 45 per cent is taken not only on the agreed value at the date of the contract but on a figure which includes that and the hire charges as well, and (ii) that the hirer is also chargeable with the cost of all necessary repairs and replacements. To my mind this agreed depreciation for the first month is plainly in terrorem and a penal sum. If that is so the whole of clause 6(c) is penal and it is unnecessary to go further.
For these reasons I conclude that the demand was not a liquidated demand in either of the cases before us, and I would, therefore, dismiss the appeals.
The sum of 43 6s 8d claimed in Crossan s case as arrears of hire rental, is a liquidated demand and there is no suggestion that the penalty rule applies to it. I have not dealt with it, however, as the owners sought to have judgment entered for the entire sum claimed and we have not been asked for any special direction as respects this particular item.
Black LJ]: It appears that in the first of the cases before us (the case relating to the Hillman car) the defendant Kennedy fell behind in his payments and the plaintiffs retook possession of the car in exercise of their rights under clause 4 of the agreement whereas in the second of the cases (the case relating to the Vauxhall car) the hirer Jukes, though in arrear in his payment of the hire rentals, exercised his right under clause 3 of the agreement and voluntarily terminated the hiring.
The problem for the court in these cases seems to fall naturally under two heads: first, whether the plaintiffs are entitled as of right to have the payments agreed to be made for agreed depreciation under clause 6(c) treated as liquidated damages or whether on the other hand they are of the type which equity will scrutinize and relieve against as not being liquidated damages but penalties; and second, if the payments are held to be of this type, whether they are so excessive in the present case that they should be regarded as penal.
It may be convenient to consider the second of these questions first.
As stated in the third of Lord Dunedin s propositions in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79, 86-87, the question whether a sum stipulated is a penalty or liquidated damages is a question of construction to be decided upon the terms and inherent circumstances of each particular contract, judged of as at the time of the making of the contract, not as at the time of the breach.
I would emphasize the words the terms and inherent circumstances of each particular contract . What will be a reasonable pre-estimate of the depreciation of a motor car, kept and maintained in good order, repair and condition in accordance with the provisions of clause 2 of the plaintiff s printed form of agreement will in any individual case depend on a number of factors: the make of the car; the type of the car, whether it is new or second-hand; if second-hand, its age and the mileage it has done; and for aught I know, various other considerations which a dealer in motor cars would take into account. In order to make a genuine pre-estimate of probable depreciation the circumstances of the particular vehicle must be taken into consideration. I appreciate that in contracts of this nature hire-purchase companies may desire to have a clause providing for a pre-estimate of depreciation if the motor car or other chattel is thrown back on their hands. But it seems to me ex facie a weakness of clause 6(c) is that the agreement is obviously designed to apply to motor cars of all makes and types and whether new or old (and indeed from the wording of clause 6(c) to other goods as well) and that exactly the same rigid calculation is applied to determine the depreciation of every individual car whatever its age, condition or quality.
I do not propose to encumber this judgment with figures and calculations, but if we address ourselves to the particular cases of the two agreements which are sued upon in these actions and judge clause 6(c) as at the time of the making of the contracts in accordance with the principle enunciated by Lord Dunedin, it will readily appear that in certain circumstances at any rate it would be impossible to regard the amount calculated under clause 6(c) as a genuine pre-estimate of damage. This will appear to be especially the case if the plaintiffs retake the car by reason of a breach of contract in the early days of the hiring. In such an event clause 6(c) would provide for the payment by the hirer on foot of depreciation of an amount which, save perhaps in some very exceptional cases, would be totally disproportionate to the actual depreciation and much in excess of what could possibly be recovered by the plaintiffs in the absence of clause 6(c) in an action for damages for breach of contract. Accordingly, I would hold that in each of the two cases before the court the amounts provided for by clause 6(c) are penal sums and are such that in actions at the suit of the plaintiffs claiming to recover them as liquidated damages for breach of contract, the court should hold that they were not genuine liquidated but arbitrary amounts fixed in terrorem with the object of deterring the hirers from breaking their contracts, and were in fact penalties against which the courts in actions claiming to recover them on foot of breaches of contract would grant relief.
Having come to the conclusion that the sums calculated in accordance with clause 6(c) are penal sums I turn to consider the effect of this finding in the present cases.
In Kennedy s case, the case of the Hillman car, the hirer by falling behind in his payments was guilty of a breach of contract and the plaintiffs retook the car in reliance on clause 4 of the agreement. If the plaintiffs can establish that they sustained damages arising from the hirer s breach of contract, eg by having thrown back on their hands a car depreciated in value, they can sue the hirer and his guarantor for these damages, but it has now been decided by the English Court of Appeal in Cooden Engineering Co Ltd v Stanford (1953) 1 QB 86, a decision followed and welcomed by Denning LJ in Landom Trust Ltd v Hurrell [1955] 1 All ER 839, that the rule of equity regarding relief against penalties applies to clauses in hire-purchase agreements such as clause 6(c) in the agreements now before us. I would express my respectful agreement with the judgments of Somervell LJ and Hodson LJ in the former case and with that of Denning LJ in the latter case, and I would accordingly hold that in the case of the Hillman car the plaintiffs were not entitled to recover under clause 6(c) a liquidated sum by way of depreciation of the car against the hirer or his guarantor and accordingly were not entitled to mark judgment on foot of the specially indorsed writ which they issued.
I have dealt with the position in this first case on the point of principle, but I think it is right to notice that in any event the endorsement on the writ must be wrong. According to the endorsement the basis of the calculation of the agreed depreciation under clause 6 is 75 per cent of the total hire-purchase price. This 75 per cent could not be arrived at under clause 6(c) until six months had elapsed since the commencement of the hiring: and according to the terms of the clause at least six months hire rentals (whether paid or unpaid) amounting at least to over 92 would then fall to be deducted from this 75 per cent. No such deduction is made in computing the amount alleged to be due in the endorsement of the writ.
Crossan s case, the case relating to the Vauxhall car, appears to me to stand on a different footing from the first. Though the hirer in this second case was in arrear in payment of the rentals it appears that the plaintiffs did not exercise their right to retake the car under the provisions of clause 4 of the agreement, but that the defendant voluntarily terminated the hiring as he was entitled to do under clause 3(a) of the agreement. If this is so, the plaintiffs could not claim to be compensated on foot of breach of contract for the depreciation of the car so thrown back on their hands, for the car did not come back to them by reason of any breach of contract on the part of the hirer, but by reason of the exercise by the hirer of the option to terminate the hiring conferred on him by clause 3(a) of the agreement. Accordingly in such case the plaintiffs could not recover compensation for the depreciation of the car in an action for breach of contract: they could only recover such compensation if it was provided for by some specific provision in the hiring agreement. Such a provision in the present case is clause 6(c) of the agreement. Where the hirer voluntarily terminates the hiring in exercise of the right conferred on him by clause 3(a) of the agreement and the car is returned to the plaintiffs, the amount expressed to be payable to the plaintiffs under clause 6(c) does not represent damages for the breach of any contract. It is not an amount payable on foot of any default on the part of a hirer. It is an amount agreed to be paid by the hirer upon the exercise by him of the privilege of termination of the hiring conferred by clause 3(a).
There is high authority for the proposition that the only cases in which the doctrine that equity relieves against penalties applies are cases where the penalty is imposed for breach of a contractual obligation. In Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd [1955] 2 All ER 657 the appellant company entered into an agreement with the respondent company licensing the latter in consideration of a royalty of 10 per cent to deal in certain hard metal alloys (called contract material ) produced under patents owned by the appellant company. By clause 5 of the agreement it was provided that if in any month during the continuance of the licence the aggregate quantity of contract material sold or used by the respondent company should exceed a quota of fifty kilograms, it should pay to the appellant company compensation equal to 30 per cent of the net value of the excess contract material. This compensation provision turned out to be a very burdensome one for the respondent company, especially after the outbreak of the war when production of the contract material greatly increased. Somewhat complicated litigation ensued between the parties which was ultimately carried to the House of Lords. One of the contentions raised by the respondent company was that the compensation provision contained in clause 5 was a penalty provision against which equity would grant relief. This contention was rejected successively by Pearson J the Court of Appeal in a judgment of Romer LJ [1955] 2 All ER at 686, (with whom Somervell LJ and Birkett LJ concurred) and by the House of Lords, all on the ground that the penalties against which the relief will be granted according to the equitable doctrine are penalties designed as a punishment or a deterrent against a breach of contract, and that a production in excess of the fifty kilogram quota was not a breach of contract. In delivering his opinion in the House of Lords, Viscount Simonds says: The plea that the provisions of the deed are unenforceable because they impose a penalty clearly cannot be maintained. It is, perhaps, enough to say that they do not impose, or purport to impose, a penalty. No doubt the consequences of certain actions by TECO may be detrimental to them, but that does not involve that a penalty is imposed in the sense in which that word is used in the equitable doctrine that equity relieves against penalties. No case was cited where the doctrine was invoked otherwise than for a penalty payable on the breach of a contractual obligation .
The case to which I have just referred was not, of course, a case arising out of a hire-purchase agreement, nevertheless what was said by Pearson J, Romer LJ and Viscount Simonds was expressed sufficiently widely to cover the present case relating to the Vauxhall car. Moreover, the precise point arose for decision upon a hire-purchase agreement in the English Court of Appeal in Associated Distributors Ltd v Hall [1938] 2 KB 83. In that case the agreement was for the hire-purchase of a bicycle. Under clause 5 of the agreement the hirer could at any time terminate the hiring by returning the bicycle to the plaintiffs, and clause 6 entitled the plaintiffs to determine the hiring and resume possession of the bicycle if the hirer committed any breach of any terms or conditions of the agreement. Clause 7 provided that in the event of the hiring being determined for any cause whatsoever the hirer would pay the plaintiffs by way of compensation for depreciation such sums as with the amount previously paid for rent would make up a sum equivalent to not less than one-half of the total amount payable under the agreement. The hirer terminated the hiring under clause 5 and the plaintiffs sued for arrears of rent plus the sum due under clause 7. The county court judge held that the sum claimed under clause 7 was a penalty and therefore irrecoverable. The Court of Appeal, reversing the county court judge s decision, held that as it was the hirer who had terminated the hiring no question as to the plaintiff s claim under clause 7 being liquidated damages or in the nature of a penalty arose, and that the hirer was bound to pay the sum for which he had made himself liable under clause 7. Slesser LJ, after referring to certain previous decisions only reported in a text-book, continues ibid 87 … it is not necessary in the present instance for us to express any opinion upon those decisions, because they have nothing to do with the particular case which we are here to determine, for here the hirer, not the owner, terminated the hiring. He has exercised an option and the terms on which he may exercise the option are those set out in clause 7. The question therefore whether these payments constitute liquidated damages or a penalty in the instances mentioned does not arise in the present case . Scott LJ and Clauson LJ agreed.
Even if we had not had the assistance of what was said in the Tool Metal Manufacturing Company s case [1955] 2 All ER 657, I would be of opinion that even if we thought the matter doubtful we ought to follow the decision of the English Court of Appeal in this case of Associated Distributors Ltd v Hall [1938] 2 KB 83 on the ground stated by Holmes LJ in a passage in McCartan v Belfast Harbour Commissioners [1910] 2 IR 470, 494, which has been quoted with approval more than once in this court, that uniformity of decision is so desirable that it is better to accept the authority of the English Court and leave error, if there be error, to be corrected by the tribunal whose judgment is the same on both sides of the Channel.
In the result, I would hold in Kennedy s case (the case of the Hillman car) that the officials were justified in refusing to enter judgment, but that in Crossan s case (the case of the Vauxhall) the plaintiffs were entitled to have judgment upon filing the necessary affidavits.
I fully appreciate that it may appear to the ordinary layman not only anomalous but unjust if, while on the one hand the law will relieve a defaulting hirer against the payment of the penal sum stipulated for by clause 6(c) when the finance company retake the car, yet on the other hand it will not give any such relief to a hirer who, without being guilty of any breach whatever of his agreement, decides to determine the hiring and return the car under the provisions of clause 3(a), but will in this case leave the finance company to extract from such a man the full toll of the sum fixed by clause 6(c). This, however, is the legal position as I understand it. And if this view is correct, the anomaly and any injustice which may involve can, I fear, only be corrected – if it is thought that they ought to be corrected – by the legislature.
Curran LJ: Each of these two actions was brought about by the plaintiffs on a specially indorsed writ. Neither defendant entered an appearance and thereupon the plaintiffs applied to the proper officer to enter final judgment in each case by reason of such default. The officer refused to enter final judgment, on the ground that the claim, in each case, was for a penalty and not for a liquidated demand. The question for determination is whether the officer was right.
The terms of the hire-purchase agreements, so far as they are relevant to the issue, are identical. In each case the amount in question is described as a sum by way of agreed depreciation of the goods . It is a well known fact that motor cars do depreciate in value, and it is reasonable to assume that when a car which is the subject of a hire-purchase agreement is returned to, or is repossessed by, the owners its value will be less than its true value at the time the hire-purchase agreement was made. The rate of depreciation, or its extent at any particular time, would be difficult to pre-estimate. At the time, however, when the car is returned to or repossessed by the owners its then value can be assessed with reasonable accuracy and the resultant loss to the owners ascertained. Of course there is nothing to prevent the parties agreeing upon a pre-estimate of depreciation. But the fact that a reasonably accurate assessment can be made when the car comes back into the possession of the owners is, in my view a factor to be taken into account when considering whether the purported pre-estimate of depreciation is genuine or whether it is in reality a penalty.
In each of the present cases the purported pre-estimate of depreciation is 45 per cent plus 5 per cent per month of the total hire-purchase price, (including initial payment and hire charges) with a limit of 75 per cent and a reduction in respect of the total paid by the hirer and the monies due to the owners for hire rentals up to the time the cars are returned to or repossessed by the owners. If the price of the cars as stated in the agreements is to be taken as their true value the hire charge appears to be a strange element to introduce in pre-estimating depreciation. It would be otherwise if the true value of each car is the total amount the hirer has to pay, but this cannot be so. Each car is being purchased at the price stipulated (including the final nominal purchase fee) and the facilities provided by the owners are paid for by the hire charge. There is, therefore, an element introduced which has nothing to do with depreciation and which tends to point to the purported pre-estimate of depreciation being a penalty rather than liquidated damages. The purported pre-estimate of 75 per cent provides for such total depreciation taking place in six months from the date of the contract. That is only one-sixth of the total period of the hiring. This rapid rate of depreciation is heavily weighted at the outset by the figure of 45 per cent, plus 5 per cent immediately on the hirer signing the agreement. I cannot believe that the owners were pre-estimating such a sudden depreciation, and when I find that the hirer is, in addition, liable to maintain the car in good condition. I am satisfied that the purported pre-estimate of depreciation is nothing of the sort, but that it is in terrorem, that it is, in other words, a penalty, and not liquidated damages.
I accordingly agree that in the case of Lombank Ltd v Kennedy and Whitelaw the officer was right in refusing to enter final judgment for the plaintiffs on the ground that the claim is not a liquidated demand.
As to the case of Lombank Ltd v Crossan, if the contract was duly terminated by the hirer under clause 3(a) of the agreement and if the hirer duly returned the car to the owners, the owners in my opinion, cannot claim in respect of the purported agreed amount for depreciation on any other basis. They could only claim such amount in respect of the hirer s default in paying hire rentals if they retook possession of the car under clause 4(i) of the agreement. I find paragraphs 3 and 4 of the statement of claim somewhat vague. They are as follows: 3. The Hirer defaulted in the payment of the hire rentals and voluntarily terminated the hiring on the 28th July 1959, and the vehicle came into possession of the plaintiff on the 20th August 1959. 4. Under clause 6 of the aforesaid agreement, it was provided that in this event then the plaintiff would be entitled to the following … . Paragraph 4 then goes on to quote clause 6(a) which refers to arrears of rent and 6(c) which refers to the depreciation of the vehicle.
When the words in this event are used in paragraph 4 of the statement of claim it is not clear what the event is to which it refers. It must I think refer to some event recited in paragraph 3, but in that paragraph there appear to be three events – the hirer s default in paying hire rentals, the voluntary termination of the hiring by the hirer on July 28 1959, and, thirdly, the vehicle coming into possession of the plaintiff on August 20 1959. As possession can only be retaken by the owners after they have terminated the hiring, and as paragraph 3 of the statement of claim does not allege a termination of the hiring by the owners, I am of opinion that the paragraph must be read as meaning that the hirer voluntarily terminated the hiring and returned the car to the owners.
In these circumstances the plaintiffs, in my opinion, can only claim for depreciation on the basis that the hirer has duly terminated the hiring and duly returned the car.
This raises the point that, inasmuch as the claim in respect of depreciation arises from the due termination of the hiring, and the due return of the car by the hirer, it does not arise from any breach of contract by the hirer. Accordingly, it is contended, the question of penalty does not arise.
There is strong support for this contention in Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd [1955] 2 All ER 657, 662 where Lord Simonds says:. … but that does not involve that a penalty is imposed in the sense in which that word is used in the equitable doctrine that equity relieves against penalties. No case was cited where the doctrine was invoked otherwise than for a penalty payable on the breach of a contractual obligation . Lord Cohen ibid. 686 agrees with what Romer LJ had said in the Court of Appeal. The relevant portion of the judgment of Romer LJ is appended to the report of the case in the House of Lords. In that judgment he says ibid. 688: For my part, I cannot see any remote resemblance between these sums, which became payable in pursuance of TECO S contractual obligations, and sums which are only payable on a breach of contractual obligations .
In my opinion it is important to observe that, in applying the doctrine, equity has never intervened to deprive the plaintiff of a remedy; he could always recover what he was justly entitled to by way of damages for breach of contract. In the present case, if my foregoing opinion is right, if it be declared that the amount in question is irrecoverable on the ground that it is a penalty, the plaintiff would have no remedy for any loss due to depreciation, although it was clearly the intention of the parties to the hiring that the hirer should be liable therefor.
If the defendant, who is sued as the hirer s guarantor, has to pay an unreasonable sum for depreciation, he has the hirer to blame and, no doubt, has a remedy against him.
I would hold that the officer was wrong in refusing to enter final judgment in the action Lombank Ltd v Crossan.
Parkes v Parkes
[1980] ILRM 137
Costello J: Mr and Mrs Parkes were married on the 28th June 1957. Mr Parkes is a British subject; Mrs Parkes is an Irish citizen. They were husband and wife in the year 1965 when 222 acres of land situated behind the strand at Tramore in the County of Waterford were purchased with money provided by Mr Parkes. The land was registered land and the transfer was taken in Mrs Parkes name and she was duly registered as full owner. The consideration for the sale was 2,500. Some four years later Mr and Mrs Parkes were divorced by a decree of an English Court which was made absolute on the 24th September 1969. No reference to the Tramore land was made by either party on an application for maintenance made in the divorce proceedings and both would appear to have largely ignored its existence until the year 1977. In that year Mr Parkes caused an Inhibition to be registered on the Folio which reads no registration under a disposition by a transmission from the registered owner is to be made without prior notice to David Parkes and in the affidavit grounding his application for registration of the Inhibition he swore that the lands were purchased by Mrs Parkes in trust for him. Mrs Parkes instituted these proceedings early in the year 1978 claiming a declaration that the Inhibition was wrongly registered and an order directing its removal from the Folio. Her reasons for doing so became apparent in the course of her evidence – she had received an offer to purchase the lands for the sum of 130,000 in the previous year. Although the sale did not in fact go through it is clear that the lands have now become extremely valuable and, not surprisingly, Mr Parkes has counterclaimed a declaration that he is entitled to the entire beneficial ownership in the lands and that the plaintiff holds them in trust for him. The resolution of the conflict between the parties would involve no legal issues if I could have decided that Mrs Parkes was expressly given the lands as a gift by her husband as she claimed in her evidence. But for reasons which I will develop later I cannot accept that this is what happened. This does not mean, however, that her claim fails and that of her husband succeeds because the transfer to her contained a certificate as follows:
It is hereby certified by Roberta OP Parkes being the person becoming entitled to the entire beneficial interest in the property conveyed or assigned that she is an Irish citizen .
This certificate was a false one. It was included in the instrument of transfer at Mr Parkes direction. The evidence (which I will consider in greater detail later) was to the effect that at the suggestion of his solicitor he directed that the transfer be taken in his wife s name in order to avoid the necessity of applying to the Land Commission for its consent to the transfer – an application which would have been necessary by virtue of s 45 of the Land Act 1965 had he taken the property in his own name as he was not an Irish citizen. And so the effect on the transaction of that false certificate falls for consideration and indeed is the crucial issue in this case. Before turning to it and to the findings of facts which I must make I think it would be helpful if I first outlined the relevant provisions of the Finance Acts and the Land Act 1965 which it is clear had a decisive influence on Mr Parkes actions in this case.
When Mr Parkes first became interested in the lands at Tramore the stamp duty provisions relating to the sale of land to non-Irish nationals contained in the Finance (No 2) Act 1947 were still in force. Section 13(1) of that Act provided:
The stamp duties chargeable on conveyance or transfers of lands tenements and hereditaments under the heading Conveyance or transfer on sale of any property in the First Schedule to the Stamp Act 1891, as amended by subsequent enactments shall, on and after the 1st day of December 1947, be at the rate of 2/10s for every 50 or fractional part of 50 of the amount or value of the consideration in lieu of the rates immediately theretofore chargeable .
The rate of 2/10/0 for every 50 of the consideration was amended by s 17 of the Finance Act 1951, to 1/10/0 for every 50 of the consideration.
But this rate of duty did not apply in every case. The exception to it with which this case is concerned is that which arises from the operation of sub-sections (4) and (5). Sub-section (4) of the section provided:
The foregoing provisions of this section shall have effect if, but only if, the instrument contains a statement by the party to whom the property is being conveyed or transferred certifying that the person who becomes entitled to the entire beneficial in the property … is some specified one of the following:
(a) An Irish citizen
If the instrument of transfer did not contain a certificate as required by sub-section (4) then a much higher rate of duty became payable by virtue of sub-section (5) which provided:
In any case in which by virtue of sub-section (4) of this section the provisions of sub-section (1), (2) and (3) of the section have no effect the stamp duties chargeable on conveyances or transfers of lands tenements and hereditaments under the heading Conveyance or transfer on sale of any property in the First Schedule to the Stamp Act 1891 as amended by subsequent enactments shall, on and after the 1st day of December 1947 be at the rate (in this section referred to as the higher rate) of 25 per cent of the amount or value of the consideration in lieu of the rates immediately theretofore chargeable.
As will later appear Mr Parkes solicitor was well aware of these provisions and advised him on them. However, in the year 1965 the Oireachtas enacted two measures which considerably altered the rates of duty payable on transfers of land to non-Irish citizens and the law relating to the transfer of such land. By virtue of s 66(6) of the Finance Act 1965 (enacted on the 30th July 1965) sub-sections (4) and (5) of s 13 of the Finance Act 1947 were repealed. This meant that the certifying provisions of the 1947 Act no longer applied and that non-Irish citizens were no longer required to pay stamp duties at the rate of 25% of the amount of the consideration on a purchase of land. But prior to these repeals the Oireachtas had enacted on the 9th March 1965 the Land Act of 1965 which by s 45 had placed restrictions on the vesting of interests in agricultural land in non-Irish nationals. As the effect of this section is of considerable importance on the issues that arise in this case I must refer to it in some detail.
The section commences with definition provisions which provide that the term qualified person when used in the section means, inter alia, an Irish citizen and that the phrase land to which this section applies means land not situated in a county borough, borough, urban district or town. Sub-section 2(a) of the section provides as follows:
Notwithstanding any other enactment or any rule of law but subject to sub-paragraph (b) of this sub-section and to sub-section (3) of this section, no interest in land to which this section applies shall become vested in a person who is not a qualified person except with the written consent (whether general or written) of the Land Commission and subject to any conditions having been complied with …
The provisions of paragraph (b) of the sub-section are not of relevance in this case but those of sub-section (3) are. These read as follows:
Subject to paragraph (b) of this sub-section, an instrument by which an interest to which this section applies purports to become vested (being an instrument which, apart from this section, would affect such vesting) shall effect such vesting provided that it contains a certificate by the person in whom the interest is purported to be vested –
(2)That the person who becomes entitled to the entire beneficial interest … is a qualified person by reference to the special category of definition of qualified person contained in sub-section (1) of this section.
The section goes on to make it a criminal offence to make a false statement in a certificate given for the purpose of sub-section (3) by providing in sub-section (6) as follows:
Where a person:
(a)makes any statement which to his knowledge is false or misleading
(iii)in a certificate under sub-section (3) of this section he shall be guilty of an offence triable at the election of the prosecution either summarily or on indictment …
The legal effects of these provisions have been subject to some debate in this case but their meaning and effect on the facts as now established seem to me to be perfectly clear. Firstly Mrs Parkes, being an Irish citizen, was a qualified person within the meaning of the section. There was nothing in s 45 which prevented the vesting of the land in her and as the transfer to her contained the certificate referred to in sub-section (3) of the section the legal estate in the land vested in her. What has to be determined in this case is whether the Court will permit Mr Parkes to claim an equitable interest to the lands and give effect to such a claim. In this connection it is relevant to underline the fact that it is illegal for a person to make a statement in the certificate referred to in sub-section (3) which to his knowledge is false.
I come now to my findings of fact. It would seem that the defendant first became interested in the purchase of the lands at Tramore in the year 1964. These lands had formerly been used as a racecourse and golf links but the encroaching tides had long ago caused them to be abandoned and at the time of their purchase they were regularly flooded at high tide. The defendant, however, had since the year 1960 been actively associated with a large public company engaged in the business of land development and his experience and knowledge of this business caused him to consider that the lands behind the strand at Tramore – which to others might appear a picturesque but valueless wasteland – might have a development potential. He set about acquiring them and in addition two other parcels of adjoining land. At this time he and his wife were living in London and he employed a solicitor (who has since died) in Waterford as well as a local auctioneer to negotiate the purchases on his behalf. He failed to acquire any adjoining land but his solicitor was successful in agreeing a price with the owner of the land behind the strand which is contained in Folio No. 1405 of the County of Waterford. Having obtained acceptance of Mr Parkes offer of 2,500 for the land his solicitor wrote to him explaining certain aspects of the purchase and added a significant postscript to his letter as follows:
As you recollect for stamp duty reasons you cannot be named as the purchaser, but Roberta, being an Irish citizen, can be so named.
Mr Parkes replied to this letter on the 5th July and stated:
As you state in your PS. the property should be put in Roberta s name .
The contract for sale was signed in trust by Mr Parkes solicitor on the 6th July 1965 and a deposit paid and a draft transfer sent on the 20th July for the approval of the vendor s solicitor. On the 28th July the vendor s solicitor wrote asking for Roberta s full name for insertion in the transfer deed and on the 6th September Mr Parkes solicitor wrote to Mr Parkes a letter in which he stated:
I am now sending you for Roberta s signature the transfer deed of the above property .
What may well illustrate a somewhat casual approach to this transaction on the part of the solicitor is to be seen from the fact that he asked that Mrs Parkes signature on the deed should not be witnessed and added:
I can do that when you send back the transfer deed to me, as it saves complications if a solicitor is the witness .
The instrument of transfer is dated the 21st October 1965 and was sent to the Land Registry on the 26th October 1965. The exact date on which Mrs Parkes executed it cannot now be established with precision – but it would appear that it was sometime not long before the 21st October.
It can clearly be inferred from the postscript to the letter of the 29th June 1965 which I have just quoted that sometime prior to that time Mr Parkes had been informed by his solicitor of the fact that a higher rate of stamp duty would be payable if the purchase was taken in his name than would be paid if the transfer was taken in his wife s name. In the course of his evidence Mr Parkes accepted that he may have obtained this advice but he stated that the reason why the land was put in his wife s name was not to avoid a high rate of stamp duty but to avoid having to apply to the Land Commission for its consent to the sale. He stated that he had been told by his solicitor that if he took the land in his own name such an application would be necessary because he was not an Irish citizen and he was informed that the application would take a long time to be processed and that it was very likely that it would become public knowledge that he was trying to buy land in the area. As he was still negotiating the purchase of adjoining land Mr Parkes said that he did not want it known that he was the purchaser of the old racecourse. He was quite positive that he had no intention of giving the land to his wife as a gift and he claimed that the land was put in her name merely for the purpose of avoiding having to apply to the Land Commission for its consent to a sale to him.
Mrs Parkes evidence was to a different effect. She could not remember actually signing the transfer but she claimed that she was given the land as a present by her husband. She knew the land was of little value and she regarded the whole thing as a bit of a joke. She agreed that she did not disclose this asset in her maintenance application in the English divorce proceedings and that she did not swear in an affidavit filed in the Land Registry and sworn on the 12th August 1977 that the lands had been given to her as a gift.
I have little difficulty in preferring Mr Parkes recollection of the transaction to that of his wife s. Not only is his memory of the matter clearer than his wife s but I am satisfied that he had decided to purchase the land with a view to its possible future development with other land in the area and that in such circumstances it is extremely improbable that he would have parted with the beneficial ownership in the old racecourse in favour of his wife. Whilst the contemporary correspondence makes no reference to the matter, I am satisfied that his solicitor was aware in the summer of 1965 (as most solicitors in the country were) of the changes effected by the Finance Act 1965 and the Land Acts 1965 and that Mr Parkes was told some time before the transaction was completed that if the transfer was taken in his name he would have to apply to the Land Commission for its consent to the transfer. To avoid such an application he decided that the transfer should be taken in his wife s name. I am also satisfied that he must have read the Deed of Transfer sent by his solicitor to him and that he must have been aware that the certificate which was contained in it and which he requested his wife to sign was a false one. It is likely, however, that Mrs Parkes did not bother to read it and that even had she done so I think it is unlikely that she appreciated that she was knowingly giving a false or misleading certificate. In the light of these findings of fact how should the Court determine the issue between the parties?
There are, it seems to me, four general principles of law which are relevant to the facts which I have just outlined. The first is that where a person buys property and pays the purchase money but takes the purchase in the name of another, who is neither his child, adopted child or his wife, there is prima facie no gift, but a resulting trust in favour of the person paying the money. The second principle is that where a person in whose name a purchase is taken is the wife, child, or adopted child of the person paying the purchase money there is a presumption that a gift was intended. Thirdly, however, the presumption in favour of a wife, child or adopted child may be rebutted by evidence which establishes that a gift was not intended. The defendant relies on these principles and claims that as his intention was that no gift was to be effected the plaintiff holds the land as trustee for him. But the plaintiff s counsel ripostes with a fourth principle which it is claimed a court applying equitable principles should apply in this case. Put shortly, it is that a purchaser will not obtain relief in equity by setting up his own illegality or fraud. This is the crucial point of law in this dispute, and I will now consider the cases which it is claimed illustrate it and justify its application to the facts I am now considering.
The first case to which I was referred by the plaintiff s counsel was that of Gascoigne v Gascoigne [1918] 1 KB 223. This was a case in which a husband took a lease of land in his wife s name and built a house on it with his own money. He used his wife s name with her knowledge and connivance because he was in debt and wished to protect the property from his creditors. He brought proceedings against his wife in which he sought a declaration that she held the property as trustee for him. His claim failed. In the course of the Court s judgment reference was made to the findings of fact in the lower Court and then went on (p.226):
These findings of fact must be taken to mean that the plaintiff, with his wife s knowledge and connivance concocted the scheme of putting his property in her name, while retaining the beneficial interest, for the purpose of misleading, defeating and delaying present or future creditors. This was the whole basis of the plaintiff s case and it could not be put in any other way consistently with his claim to the ownership of the property. It was the reason he himself gave for his conduct. Now, assuming that there was evidence to support the finding that the defendant was a party to the scheme which the plaintiff admitted, but without deciding it, what the learned Judge has done is this: he has permitted the plaintiff to rebut the presumption which the law raises by setting up his own illegality and fraud, and to obtain relief in equity because he has succeeded in proving it. The plaintiff cannot do this: and whether the point was taken or not in the county Court this Court cannot allow a judgment to stand which has given relief under such circumstances as that.
The principle in Gascoigne was applied in somewhat different circumstances In re Emery s Investment Trusts [1959] 1 Ch 410. In that case the plaintiff (who was a British subject) was married to an American citizen. American savings bonds were purchased with the plaintiff s money (the defendant s husband) and were registered in the name of the wife with the husband expressly named as a beneficiary with her. Later the bonds were changed for common stock in American securities. These were registered in the name of the wife but with the intention that the beneficial interest in the securities should be as to one half in the wife and one half in the husband. But in order to avoid the payment of American withholding tax to which as an alien the plaintiff was liable under American Federal Law, no mention was made of his beneficial interest After the wife had sold the securities the husband applied to the Courts in England for a declaration that at the date of the removal and sale of the securities his wife held them as to one half for him. His claim failed. Wynn-Parry, J pointed out that had the tax involved in the case been United Kingdom tax the case would have been covered by Gascoigne s Case and would have been concluded against the plaintiff. Having considered the facts of Gascoigne s Case and the decision in it he went on as follows (p 419):
In the analysis it will be found that there were two relevant intentions in Gascoigne v Gascoigne. The first was the intention of the husband that the house and land should, so far as the beneficial interest was concerned, be and remain his. The second intention was that he put the land and house into his wife s name with a view to protecting it from his creditors in case he should get into financial difficulties. In this case the first intention, corresponding to that in Gascoigne v Gascoigne, is the intention that the husband had throughout that the beneficial interest in the security should be shared between himself and his wife. The second intention, which corresponds with the second intention in Gascoigne v Gascoigne is the intention which the husband had in putting the securities in his wife s name, without any reference being made to the retention by him of any beneficial interest, namely to avoid payment of withholding tax on his beneficial interest.
The Court held that it should apply the principle in Gascoigne s Case even though the tax involved in the transaction was an American tax. The judge pointed out that there was a clear breach of the federal law in the way the transactions were carried out by the husband s non-disclosure of his beneficial interest in the security and he concluded that the plaintiff could not seek the aid of equity in such circumstances.
More recently the principle to which I have referred was considered in the Court of Appeal in England in Tinker v Tinker [1970] P 136. This was a case in which a husband intended to buy a house in his own name but was advised by his solicitors that if the new business venture he was then undertaking failed the house could be taken by his creditors as part of his business assets and his solicitors recommended that it should be put in his wife s name. This was done and the house was conveyed to her. The marriage broke down and the wife claimed the house as her own. It was held that on the evidence the husband had an honest intention at the time of the conveyance that the house would belong to his wife and accordingly the wife s claim to the property succeeded. In the course of his judgment Salmon LJ said:
It is trite law that anyone coming to equity to be relieved against his own act must come with clean hands. If, in a case such as the present, he were to put forward, as a reason for being relieved against his own act, a dishonest plot on his part, for example, to defraud his creditors, the Court would refuse him relief and would say: let the estate lie where it falls. But, of course, that is not this case … (p 143)
Finally, I was referred to a decision of the Court of Appeal in Northern Ireland [ie McEvoy v Belfast Banking Co [1934] NI 67, on appeal to House of Lords, [1935] AC 24, see Wylie, Irish Land Law, (3rd ed 1997), para 9.044 – Ed) in which the principle in Gascoigne s Case was applied in relation to a deposit of 10,000 made by a father in the joint names of himself and his son. It was established that the object of the deposit was to avoid death duties. Although there was no intention on the father s part to benefit his son the Court took the view that it could not have regard to the evidence which established this fact because of its illegal taint (see: p 99).
In my opinion the fourth principle to which I have referred and which is illustrated in the cases quoted above should be applied in this case. Just as the Courts will not grant relief to a person who has allowed property to be placed in a wife s or son s name for the fraudulent purpose of defeating creditors (Gascoigne) or for the illegal purpose of evading liability to tax (Emery and McEvoy) so it seems to me the Court should not grant relief to a purchaser who has placed property in his wife s name dishonestly and by means of an illegal act performed for the purpose of evading the law relating to the transfer of land. This is what the defendant has done in this case. The defendant claimed that he acted on his solicitor s advice – but I am sure that his solicitor did not advise him to commit a criminal offence and by suggesting that the property could be taken in his wife s name he did not advise him to procure a false certificate in the deed of transfer. The defendant said that he thought the certificate was a mere formality – but he is an experienced man of affairs and no neophyte in the business of buying and selling land and he knew he was asking his wife to execute a transfer which contained a certificate which was false. I am not obliged to reach a conclusion as to whether or not Mr Parkes committed a criminal offence under the section. It suffices in this case that he knowingly authorised the commission of an act which was prohibited by the section for the purpose of evading the statute. As a result the whole transaction is tainted with illegality. Mr Parkes is in the same inescapable dilemma in which the plaintiff in Tinker s Case found himself: if he acted honestly, and the certificate was a true one, then the property belongs to his wife; if he acted dishonestly, and the certificate was a false one, the Court will not allow him to take advantage of his own dishonesty. What the defendant asks is that the Court should apply its equitable principles and hold that a resulting trust exists and that the plaintiff holds the land in trust for him. But the very equitable principles which the defendant calls in aid prevents the Court making a declaration in his favour. The estate must lie where it falls; the plaintiff s claim succeeds; the defendant s counterclaim fails.
In conclusion, I should add that my decision has been based on the equitable principles applicable when a husband purchases land and transfers it into his wife s name. The result would have been the same had I applied another well known principle which seems to me to be relevant to the facts of this case, ex dolo malo non oritur actio, and which was applied in a case where it was established that a purchaser had practised a deceit on the public administration (see: Chettiar v Chettiar (1962) 2 WLR 548).
Curust Financial Services Ltd v Loewe-Lack-Werk Otto Loewe GmbH & Co KG
[1994] 1 IR 450; [1993] ILRM 723 (Supreme Court)
Finlay CJ: These are two appeals brought by the first and second defendants against an order made in the High Court by Barron J on the 3 June 1992, by way of interlocutory injunction.
The proceedings arise out of a dispute originating between the plaintiffs (to whom I will jointly refer as Curust), and the first defendant (to which I will refer as Loewe) concerning what Curust alleges to be a breach by Loewe of an agreement dated the 27 November 1986, made between it and Loewe, whereby Loewe granted to Curust the sole and exclusive licence to manufacture, market, sell and distribute the goods manufactured or distributed by it from time to time, in certain areas, including Ireland. The second defendant (to which I will refer to as Sales Ltd) became involved in the action by reason of accepting appointment as a distributor from Loewe. The particular product with which this case is concerned is a product known as Loewe Rust Primer, a paint sold under the trademark of Loewe in Ireland, being a paint for application to prevent rust on objects to which it is applied. It is stated by all the parties to this action to be the major rust primer sold on the Irish market in the retail shops and in what is described as the DIY trade.
The commercial relationship between Curust and Loewe has existed for over thirty years, and prior to November 1986, it is agreed that Curust manufactured and distributed Loewe Rust Primer in Ireland, using the trade mark of Loewe under a series of licences or agreements.
The plenary summons was issued on the 17 June 1992, and claimed a declaration that Loewe was bound by the terms of the agreement of the 27 November 1986, and a series of injunctions restraining Loewe, its servants and agents from what were claimed were breaches of that agreement. Further injunctions were sought restraining Sales Ltd from carrying out activities which would, in effect, constitute a breach of the agreement and an invasion of what is alleged to be the sole right of Curust to manufacture, sell and distribute these products. The hearing of the application for an interlocutory injunction was on affidavit, and by his order, Barron J restrained Loewe, pending the trial of the action, from appointing or purporting to appoint Sales Ltd or any other person as a licensee for the manufacture, distribution or sale in Ireland and in other territories of all or any of the products manufactured by Loewe, and from supplying Loewe Rust Primer or any other product manufactured or distributed by it to Sales Ltd, or to any other person for distribution or sale within the territory. The order further restrained Sales Ltd, pending the trial of the action, without the permission of Curust, from manufacturing, distributing, selling or offering for sale in Ireland or in the United Kingdom all or any of the products manufactured or distributed by Loewe, including Loewe Rust Primer.
In the order it was provided that the relief granted to Curust was subject to its applying for the consent of Loewe, in accordance with the exclusive manufacturing and distribution agreement of the 27 November 1986, in relation to the manufacture of the product the subject matter of the proceedings, by an agent on behalf of Curust. This condition and the issues arising in it do not form part of the subject matter of this appeal.
Whilst on the affidavits filed and on the submissions made both in the High Court and on this appeal there are a number of disputed issues of both law and fact, it is possible to trace an uncontroversial broad history of the matters arising in this appeal.
From the early 1960s Curust had a sole manufacturing and distribution agreement from Loewe which covered Loewe Rust Primer.
Up to the end of the year 1988, Curust manufactured and put into tins the Loewe Rust Primer in Ireland from formulae provided to it and in accordance with processes of which it was informed and instructed by Loewe, with a raw material sold to it by Loewe at cost price. Curust then paid to Loewe a commission on the products sold by it. At the end of 1988 Curust ceased the manufacture of the primer by reason of the fact that a change in the specification required different methods of production, and it was necessary for it to reorganise its manufacturing process in order to comply with that.
An agreement was then entered into for the supply by Loewe to Curust of the finished product of Loewe rust primer to be put into tins and sold and distributed in Ireland. This agreement contained terms with regard to price and with regard to credit, and disputes have arisen with regard to those precise terms. It was expressed, or appears to have been expressed, to conclude at the end of the year 1991, when it was anticipated that Curust would have returned to manufacture of the Loewe rust primer.
During the currency of that agreement and in the years 1990 and 1991, disputes arose between the parties concerning the payments, the amount of credit to be allowed and the date of payments, and eventually Loewe purported to repudiate all agreements, including the agreement of November 1986, and stated that all agreements were at an end between the parties, and that it would, after the expiry of the agreement for the supply of the finished product at the conclusion of 1991, cease to supply any further products or raw materials to Curust.
At some time which is not identified in the affidavits Loewe entered into an agreement with Sales Ltd for the sale and distribution by it of Loewe s product in Ireland, and this was put on the market at the end of May and beginning of June of this year by Sales Ltd, under the name Durabond, in a tin similar to that used by Curust. What is in that tin is, undoubtedly, the Loewe Rust Primer and, on the evidence, it is being sold as such by the retailers to whom it has been distributed.
It was provided by clause 9 of the agreement of November 1986, that either party might assign, sub-licence or sub-contract all or part of its obligations or benefits under the agreement, subject to the prior written consent of the other party. In addition, Curust undertook by virtue of the agreement that it would not, at any time otherwise than for the purpose of the rights given to them, including, of course, the right of sub-contracting, divulge any information in relation to the goods, methods of manufacture, price structure or affairs, business or methods of carrying on business of Loewe without written consent of Loewe.
On the evidence before the learned trial judge, which he accepted and which is not disputed on the affidavits, in March 1992, at an interview between Mr Brocklesby representing Curust and Mr Schoening representing Loewe, Mr Brocklesby informed Mr Schoening that it was the intention of Curust, if possible, to enter into an arrangement with a third party involving the resumption of the manufacture in Ireland of the Loewe rust primer product, and he asked (according to his affidavit) Mr Schoening to give him an assurance that if he informed him of the identity of that party, he, Mr Schoening, and his company, would not try and intimidate that person from entering into an arrangement. This conversation was in the light of an assertion then being made, and still being made, by Loewe that all contractual relationships between the two companies had ceased, and that Curust had no right to sell, distribute or manufacture the product of Loewe. Mr Schoening refused to give any such assurance, and, accordingly, he was not informed of the identity of the third party. Apparently, subsequent to that, an arrangement was entered into between Curust and a company known as International Coating Ltd for the manufacture of the product Loewe Rust Primer in Ireland, and that has been done and Curust has put that on the market in tins clearly marked Loewe Rust Primer.
On these broad facts, Loewe sought in the High Court to resist the making of an interlocutory injunction on a number of grounds.
1.It asserted that an agreement had not been concluded between the parties in November 1986, and in the absence of the production by Curust of the original of that agreement which it says has been mislaid, it challenged the validity of a produced copy of it.
2.It asserted that if the agreement was concluded it was void having regard to the provisions of art 85(1) of the Treaty of Rome, and, in the alternative, that Curust had not established a triable issue that the agreement did not have an appreciable effect upon trade and competition in the product the subject matter of the agreement so as to bring it outside the invalidity arising from the said article of the Treaty.
3.That damages would be an adequate remedy for Curust, and that, therefore, it should not be entitled to an injunction.
4.That Curust, by reason of its delay in seeking relief, was disentitled to an injunction.
5.That the admitted breach by Curust of the agreement of 1986, consisting of its entering into arrangements with a third for the manufacture and supply of Loewe Rust Primer in Ireland without the prior written consent of Loewe, disentitled it to an injunction.
6.That if damages were not an adequate remedy, then the balance of convenience did not favour the granting of relief.
Judgment of the High Court
In deciding to grant the injunction Barron J reached the following conclusions concerning the issues which have been raised before him.
Dealing with the question of the conclusion of the agreement in November 1986, he held that, on the facts, there was a triable issue concerning that. Although in the notice of appeal filed by Loewe a ground was inserted appealing against that decision, this was not pursued on the hearing of the appeal before us.
With regard to the issue arising under the Treaty of Rome, the learned trial judge found as follows:
In my view the provisions of the Treaty are a matter of defence but once raised as a matter of defence the onus reverts to the plaintiffs to establish that they can bring themselves outside the terms of the Treaty. On the evidence before me, which is slight, it does seem to me that the amount of trade involved is small and that accordingly the plaintiffs have established a triable issue on this point.
Loewe on the hearing of this appeal did not pursue a contention that this Court could or should at this stage hold that the agreement of November 1986, was void having regard to the provisions of art 85(1) of the Treaty, but did contend that the learned trial judge s finding that there was a triable issue as to the avoidance of that invalidity, by reason of the smallness of the trade, was not supported by the evidence.
The learned trial judge in holding that damages would not be an adequate remedy for the plaintiffs stated as follows:
The next issue is whether or not damages would be an adequate remedy. Damages are clearly an adequate remedy if they are liquidated in circumstances where there is no particular interest in the plaintiff to maintain the right save to obtain such damages. Save in the situation envisaged by Lord Cairn s Act where the damage is small, damages which are not readily susceptible to accurate measurements are not usually an appropriate remedy. A rich man has never been entitled to buy out the rights of a poor man just because he wishes to do so. For example the owner of premises which would be devalued by a readily ascertainable amount cannot be forced to accept that sum in lieu of an injunction to restrain a defendant from infringing that right. In my view that in essence is what the defendants are saying here: if there is a breach of the 1986 agreement, then the first defendant can pay the plaintiffs the value of the business which they will lose as a result. I do not accept such a proposition.
Dealing further with the question of adequacy, the learned trial judge stated as follows:
Where trade is involved, as in this case, it is always difficult to determine whether trade has been lost by reason of the failure to obtain the injunction or whether it has been lost through other causes, and equally, it is difficult if the injunction is ultimately given to establish whether or not all the trade which was lost has come back and if it has not why it has not. In such cases it is also fairly notorious that people once they change over from a product which they have been using do not always return to that product when they are free to do so. Having regard to these views and to what I regard to be the general principles as to the adequacy of damages it seems to me that damages would not be an adequate remedy in the present case.
Dealing with the position of Sales Ltd, who are also appellants and who pursue most of the grounds of appeal pursued by Loewe, the learned trial judge on this issue came to the following conclusion:
However, as I have indicated, I do not regard damages as being an adequate remedy and this would apply as much to the second defendant as to the plaintiffs. In the circumstances the issue seems to me to be as to whether or not I should preserve the status quo ante rather than to permit the second defendant and the plaintiffs to sell the product in competition. It seems to me that it would be more reasonable to require the maintenance of the status quo ante.
The learned trial judge rejected the contention made in the High Court that Curust had delayed too long and would be, therefore, disentitled to the relief claimed. This ground was not pursued as a separate ground of appeal, but it was contended that it was the date of the issue of the summons, at which date it had already placed the Loewe Rust Primer under the name of Durabond on the market, that was the material date if the court came to the question of the balance of convenience, and, in particular, if the court was viewing it in the light of trying to deal with the status quo ante.
The learned trial judge rejected the contention that Curust by its action in subcontracting the manufacture of the rust primer in March 1992, were disentitled to an injunction.
The decision
Since Sales Ltd, in essence, supported the grounds of appeal put forward by Loewe, merely adding the factual assertion that it was unaware of any difficulty or problem arising from accepting the agreement for the distribution of the rust primer concerned, and was unaware of any subsisting licence to Curust, I deal with all the issues raised by both appellants in a single series of decisions.
(1) Is there a triable issue concerning the exemption of the agreement of 1986 from the pro hibition contained in art 85(1) of the Treaty of Rome?
No cross-appeal has been entered against the ruling by the learned trial judge in the High Court that once Loewe had raised the question of the prohibition contained in art 85(1) as a defence (and presumably had shown prima facie that the article applied to the agreement) the onus of establishing an exemption or avoidance of that prohibition rested on Curust. That being so, without making any decision on the question, I proceed on the basis that the onus is on Curust to establish a triable issue as to whether, by reason of the smallness of the market in Ireland for the product concerned, the agreement relating to it is outside art 85(1). Dealing with this issue, which was raised in the affidavit of Mr Schoening, Mr Brocklesby in a supplemental affidavit, at paragraph 6, stated as follows:
With regard to paragraph 11 of Mr Schoening s affidavit, I do not accept that the 1986 agreement is void, having regard to the provisions of art 85 of the Treaty of Rome. It is my belief that the agreement is one of minor importance which does not have any material affect on inter-community trade. The plaintiffs have only a tiny share of the sales of metal primer paint and rust paint in the relevant part of the territory in the community, that is, Ireland and the United Kingdom. The plaintiffs even have a very small and minor share of that part of the patent market concerned with metal priming and rust protection, being largely confined to the DIY market, rather than the steel industry. In industry generally and in transport, there are significant sales of comparable products. I am unaware of the precise turnover of the first defendant, but even by Irish standards, and certainly by European standards, the plaintiff companies are extremely small.
I would accept the learned trial judge s classification of these averments as being slight evidence, but at the same time I would also accept his conclusion that they do establish a triable issue which, undoubtedly, at the hearing of the action would have to be gone into in much greater detail. In those circumstances I am satisfied that he was correct in rejecting that ground as a ground for refusing to grant an injunction.
(2) Does a breach by Curust of the agreement of 1986, consisting of their sub-contracting the manufacture of the product without the prior written consent of Loewe, disentitle them to an injunction?
On this issue I have come to the following conclusions. I accept that, the granting of an injunction being an equitable remedy, the court has a discretion, where it is satisfied that a person has come to the court, as it is so frequently expressed, otherwise than with clean hands , by that fact alone to refuse the equitable relief of an injunction. It seems to me, however, that this phrase must of necessity involve an element of turpitude and cannot necessarily be equated with a mere breach of contract.
If Curust is correct in the contention which it is making, Loewe in March of 1992 was still bound by the agreement of November 1986, and was prohibited by the terms of that agreement from entering into any agreement with any other supplier to manufacture or distribute these products in Ireland, and was furthermore obliged not unreasonably to withhold its consent to the sub-contracting by Curust of any part of its rights or obligations under that agreement. It must be on the basis that Curust may succeed in establishing such a case finally at the hearing that the question of an interlocutory injunction must be viewed. If it does, then obviously Loewe in March of 1992 was quite wrong in asserting that it had no obligation to Curust, and quite wrong in proceeding, as it obviously was proceeding, to enter into arrangements with another party to sell this product in Ireland. Having regard to those facts, it seems to me that it was entirely justifiable for the representative of Curust to seek an assurance from the representative of Loewe that he would not interfere with or, presumably, intimidate any person with whom Curust were negotiating in order to sub-contract the manufacturing of this product. Having regard to that view, I conclude that it would be unreasonable to say that what may be established as a breach by Curust of the agreement not to sub-contract without prior consent, which may also be established as having been provoked by a repudiation which was wrongful on the part of Loewe of the existing of contractual obligations subsisting under the 1986 agreement, and a refusal, which would also have been wrongful, to undertake not to interfere with what would appear to be almost certainly a right on the part of Curust at least to negotiate in general terms with other parties, should disentitle it to an injunction if it was otherwise entitled to it. I would, therefore agree with the view of the learned trial judge that this did not constitute a ground for rejecting the claim for an injunction.
(3) Are damages an adequate remedy for Curust?
I am satisfied the following considerations apply to this issue which, in my view, is the most difficult issue arising on this appeal.
(a)No suggestion has been made that if Curust was to obtain a decree for damages arising out of Loewe s breach of contract, Loewe would not be in a position to pay the amount of such damages.
(b)Whilst the loss likely to be sustained by Curust in the event of an injunction not being granted is purely and simply a commercial loss arising from a diminution in trade and, therefore, ostensibly capable of qualification and assessment, it asserts that there would be considerable difficulty in such quantification and a real risk that damages assessed in accordance with the evidence would not be adequate. This assertion largely consists of an assertion that whilst it might be possible to calculate, between the time of the advent into the market of Sales Ltd and the time of the successful conclusion by Curust of their action and the obtaining of a permanent injunction, the loss of trade and, therefore, the loss of profits sustained by Curust, it would be extremely difficult, if not impossible, to quantify into the future the loss of profits which would continue to be sustained until such time as Curust recovered it pre-1992 share of the market.
(c)It is asserted on behalf of Curust that if it loses the substantial market in these products, which it had up to the end of 1991, and continues to suffer that loss up to the date of the determination of the action, having regard to the proportion which the sales of this product constituted of both their turnover and gross profits, they might not survive as a solvent, trading unit.
To these issues the following general principles apply. The loss to be incurred by Curust if it succeeds in the action and no interlocutory injunction is granted to them, is clearly and exclusively a commercial loss, in what had been, apparently, a stable and well-established market. In those circumstances, prima facie, it is a loss which should be capable of being assessed in damages both under the heading of loss actually suffered up to the date when such damages would fall to be assessed and also under the heading of probable future loss. Difficulty, as distinct from complete impossibility, in the assessment of such damages should not, in my view, be a ground for characterising the awarding of damages as an inadequate remedy.
With regard to the particular question of the agreement of damages in respect of any period after the granting of a permanent injunction to Curust while its share of the market is being recovered, it does not seem to me that insuperable difficulties of quantification could arise. The extent of the market to which Curust was accustomed before an interruption in its exclusive rights of sale and distribution is ascertainable; the quantity sold by Sales from April 1992 until the conclusion of the action would also be ascertainable, as would its value. Evidence in such a situation could surely be adduced which would permit a judge to make a reasonable forecast of the period during which Curust may suffer a continued diminution of trade and the approximate extent of that. In those circumstances, I do not see, by reason of difficulties in quantification, any ground for holding that damages are not an adequate remedy. So much of the learned trial judge s judgment on this issue as refers to Lord Cairn s Act and the question of an injunction being in many ways preferable to the awarding of damages, except in cases where damages are very small, relates more correctly, in my view, to the final decision as to whether relief being claimed for a breach of contract which is continuing should be in the form of a permanent injunction or in the form of an assessment of damages, but is not strictly relevant to the issues which arise with regard to an interlocutory injunction.
There remains the question as to whether, on the evidence which was before the learned trial judge, it was open to him to conclude that damages would not constitute an adequate remedy by reason of a real risk that the postponement of their payment necessarily involved until after the determination of the action, would lead to the collapse, from a financial point of view, of Curust. Although this issue was submitted in the High Court and is the subject matter of certain averments in the affidavits, it was not decided by the learned trial judge because, for other reasons, he concluded that damages would not be an adequate remedy and proceeded on to consider the balance of convenience.
The factual information contained in the affidavits which is relevant to this issue is as follows. Mr Brocklesby in his affidavit of the 15 June 1992, stated as follows:
31.Further, although Curust sells a range of hardware products, including turpentine, brush cleaner, teak oil, penetrating oil and a range of branded locks and door catches, Curust s principal business is with Loewe Rust Primer and with white spirits. The rust primer not only gives the best margin but sales of rust primer also tend to lead to sales of all other products.
32.In the circumstances, I am extremely concerned that if RS Sales is allowed to continue sales of rust primer pending the hearing of the action, there will not only be very serious direct results as a result of loss of sales of Loewe Rust Primer, but there will be consequential reduction in turnover of other products. This would be likely to prejudice the viability of both Curust Industries and Curust Financial Services. Loewe Rust Primer has been a mainstay of Curust s business since the early 1960s and considerable advance planning would be required to build up other aspects of the business or introduce new products to replace without doing very great long-term damage to the viability of both the plaintiff companies. Further, the paint market is seasonal, and the prime selling period is April to October.
In the same affidavit Mr Brocklesby stated a turnover figure for the plaintiff companies of 650,000 per annum.
In paragraph 20 of Mr Schoening s affidavit, dated the 25 June 1992, he stated as follows:
I beg to refer to paragraph 32 of Mr Brocklesby s said affidavit wherein he avers that the loss of sale of Lowe Rust Primer would be likely to prejudice the viability of both Curust Industries and Curust Financial Services . Having regard to both the turnover figure of 650,000 per annum given at paragraph 4 of Mr Brocklesby s said affidavit and the sales figures in relation to the supply of primer by the first defendant to the plaintiffs for the past three years I am at a loss to understand this averment.
The deponent then went on, in the form of Deutschmarks converted to Irish pounds, to give the figure for supply of primer for the three years as follows:
1989
DM 104,828 =
IR 39,155.83
1990
DM 61,814 =
IR 23,089.04
1919
DM 157,920 =
IR 58,987.01.
He further explained that the figures were somewhat deceptive in that those for 1991 included both an item which would ordinarily have been costed into the 1990 year, and an item which would have been costed into 1992 year. The average for the three years would appear to be slightly more than 40,000. In the supplemental affidavit of Mr Brocklesby, dated the 26 June 1992, he dealt with this issue at paragraph 12, in the following terms:
With regard to paragraph 20, I have not had time to check the figures which are given by Mr Schoening in respect of the value to Loewe of sales for the years 1989 to 1991, but I am able to say that in 1988 Curust s turnover was 575,000 of which 145,000 was attributable to Loewe Rust Primer. In 1989 the turnover was 632,000, of which 153,700 was attributable to Loewe Rust Primer. In the same year the total gross profit of Curust was 259,000 of which 88,000 (more than a quarter) is attributable to Loewe Rust Primer. In 1990 the proportion was even higher. The total gross profit was 200,606, of which 92,000 was attributable to Loewe. In 1991 the total gross profit was 220,000, of which 99,000 was attributable to Loewe.
Considering these facts, it is necessary to add in as a relevant factor that it is anticipated that the substantive action, in which a statement of claim has been filed and in which, we are informed, the defence is almost ready, is likely to be heard, on the state of the High Court list, some time in the Spring of 1993. If the injunction were now set aside, Curust would not be deprived of access to the market in rust primer, but rather would be obliged to share it in competition with Sales Ltd.
Since this issue on affidavit and the inferences to be drawn from it was not decided in the High Court, by reason of the learned trial judge s view that damages were for other reasons not an adequate remedy, and since I find myself in disagreement with that view, it is necessary that I should reach a conclusion on the affidavit evidence as to whether it has, as a matter of probability, been established at this stage for the purpose of the interlocutory injunction that damages would not be an adequate remedy, by reason of the real risk of the financial collapse of the Curust companies. In my view, having regard to all the factors which I have outlined, there has not been established such a case as a matter of probability. No information is forthcoming about the general position of the companies with regard to their indebtedness or net assets situation. No attempt has been made to assess the probable result of competition between Curust and Sales Ltd in relation to this market for rust primer, except an averment on affidavit that Sales Ltd is underselling Curust with regard to the cost of the rust primer being offered for sale. In these circumstances, where damages can be quantified, the loss is quite clearly a commercial loss, there is no doubt about the capacity of the defendants to pay any damages awarded against them and there is no element of new or expanding business which may make quantification particularly difficult, as a matter of principle, I conclude that damages must be deemed to be an adequate remedy in this case, and I would therefore allow the appeal and set aside the order made in the High Court. In so doing, however, I have as a factor taken into consideration an estimate of the probable date on which this case will come on for hearing and, having regard to that fact, would request that all parties should inform the High Court of a request emanating from this Court that the proceedings should be given a speedy trial, and that both parties should expedite the completion of pleadings to facilitate such an event.
O Flaherty J: It was found by the learned High Court judge and not disputed before us that Curust had made out a fair case to be tried concerning the binding effect of the 1986 agreement. Further, evidence slight though the learned trial judge held it to be at this stage of the case, went to show that there was no breach of art 85 of the Treaty of Rome.
In general, the court s function at the hearing of the application for an interlocutory injunction is to determine whether there is a fair question to be tried and, if there is, where the balance of convenience lies. In my judgment, there are cases, however, where the breach of contract, which is the matter in issue in this case, is so clear or the party attempting to resist the application for an injunction so devoid of merits that the court should immediately provide a remedy by way of injunction: see Doherty v Allman [1878] 3 App Cas 709; Dublin Port & Docks Board v Brittania Dredging Co Ltd [1968] IR 136 and Irish Shell v Elm Motors [1984] IR 200 at p 225.
As I understand the submissions made to us, it is not asserted that this is such a case. It seems to be agreed by both sides that complex questions of law and fact remain outstanding. Perhaps that is so and, therefore, I must abstain from offering any view on the strength of the case for the enforcement by Curust of the 1986 agreement.
I then turn to the question of the balance of convenience. That involves as a first inquiry whether damages would be an adequate remedy for Curust should Curust ultimately succeed at the plenary hearing. I agree with the Chief Justice s reasoning that it would be in the circumstances of this case. The crucial matter, in my judgment, is that Curust is not to be deprived of access to the market in rust primer, but rather would be obliged to share it in competition with Sales Ltd Were it not for that factor I would hold that the matter was so finely balanced as to require a further inquiry as to where the balance of convenience lay. I would not, except for that circumstance, regard damages as an adequate remedy. Then I would look to the status quo ante which I would regard as comprising the long trading relationship that existed between the parties, the equilibrium of which was affected not by any direct default by Curust in relation to the 1986 agreement (on which agreement Curust relies) but on alleged tardiness in making payments in relation to a subsidiary agreement or agreements. In that situation I would have upheld the order of the High Court. However, in the conclusion that I have reached, in concurring with the Chief Justice on the matter of the adequacy of damages, I would allow the appeal and I would join with the Chief Justice in the proposal that he has made in relation to the early disposal of the substantive case.
Egan J: I agree with the judgment delivered by the Chief Justice.
McCarthy v McCartie (No 2)
[1904] 1 IR 100; 38 ILTR 3
Walker LJ: In this case we are of opinion that the appellants are entitled under the doctrine of marshalling to have the proceeds of the lands of Gortnacloghy, and houses 33 and 34, North-street, applied in payment of their mortgage, inasmuch as the proceeds of Ardagh, which was pledged to the Bank, have been applied in payment of the legacies which were charged upon both lands by the will under which the mortgagor devised the two sets of lands. But I desire to express both for myself and my colleagues our regret that the attention of the Master of the Rolls was not directed in the argument before him to the real equity upon which alone the claim of the Bank can be sustained, or to the authorities which establish the existence of such equity.
The right and duty to marshal funds constantly arise when a Court of Equity is administering those funds, but marshalling is merely an arrangement or adjustment which the Court makes for the purpose of giving effect to some existing or established equity, and the extent to which it will be applied varies according to the nature of the equity on which it is based. The circumstance that A has two funds to pay him, and B has only one, creates of itself no equity as between A and B. There must be other circumstances arising from the contract of the mortgagor, or the condition of the estate, before the equity can exist.
The most obvious case of marshalling would have been if Florence McCarthy were the owner of both Gortnacloghy and Ardagh, and had mortgaged both estates to the persons who are here legatees, and afterwards mortgaged Ardagh only to the Bank – there would be then an equity in the Bank to make the chargeants on both estates resort to Gortnacloghy in the first instance, if sufficient, in order that Ardagh might be left free and both be satisfied.
Even this right is subject to the limitation that the marshalling would not be made to the prejudice of a third party – for instance, if Florence McCarthy had created a third mortgage of both estates, the Court would not marshal in favour of the Bank against the third mortgagee, and that is the well-known principle in the case of Barnes v Rascler 1 Y & CCC 401.
The rule in this case which I have first put, and the equity creating it, are founded upon this – that both estates belonged to the same person, and the double fund in the one case, and the single fund in the other, grew out of the act and contract of the one common debtor, the mortgagor. The equity is limited by that circumstance, and, as Lord Eldon says, in Ex parte Kendall 17 Ves 520 that course takes place where both are creditors of the same person, and have demands against funds the property of the same debtor. It is to this limitation the judgment of the Master of the Rolls is mainly directed.
But a man may be the owner of two estates, both of which are subject to charges paramount to his ownership, and he may by mortgaging one them create, against himself, and those claiming under him, an equity to have the paramount charges paid out of the estate which he retains unmortgaged, and if such an equity is created the Court will give effect to it by marshalling, and I think it is established that such an equity will be created in all cases by a covenant against incumbrances being found in the mortgage which is granted of the one estate.
Such an obligation to indemnify the mortgaged estate would follow the lands retained in the hands of the mortgagor and those claiming under him.
The misfortune in the case is, that the attention of the Master of the Rolls was, in argument and citation of authority, directed only to the first of the rules which I have mentioned. Re Hartley 1 Deac 288 was relied upon before the Master of the Rolls, and no doubt the facts there raised the right of the mortgagee to marshal and throw the paramount legacies on the other lands, but the case and decision turn mainly upon the there found express contract and conduct of the bankrupt when he was about to execute each mortgage, and it was held that an equity arose out of that, which attached upon the bankrupt, and therefore upon his assignees. The decision did not go beyond that.
I shall consider now whether this rule which I have secondly mentioned exists, and what are its limits, for in the result the argument for the respondent was rested upon supposed limitations of the rule, which limitations, it was contended, existed here.
The case of Hughes v Williams 3 Mac & G 683 seems to be the first in point. I do not think it necessary to go through it in detail, as it is the same in principle as Averall v Wade L & G temp Sugden 262, which deserves special notice.
Chapple v Rees 1 De GM & G 393 arose on the same documents as Hughes v Williams 3 Mac & G 683 was decided upon, and Lord St Leonards says:
The insolvent having by the settlement covenanted to relieve the settled estates from all incumbrances created by him, could never have come into a Court of Equity to make the tenant in tail under that settlement contribute to the discharge of incumbrances subsequent to the date of settlement. The effect in equity of such a covenant, as between the settlor and the parties beneficially interested under the settlement, was to throw all the debts of the insolvent on his unsettled estates. How far such an equity would bind third parties is not now to be considered.
Finch v Shaw 19 Beav 500 is precisely like this in the circumstance that these are paramount charges, and the mortgage was made by the devisee of part of the estate, and it was held that, as between the devisee and mortgagee, the latter had an equity to throw the charges on the portion not mortgaged. I do not think the fact of the devisee being also one of the executors made any difference and no importance is attached to it; on the contrary, it is put aside as immaterial. The Master of the Rolls says:
As between himself and Mr Finch, I entertain no doubt but that Mr Finch would have been entitled to marshal the charge and say, as against Sir John K Shaw you having granted me a mortgage upon a portion of the property charged with the legacies, I am entitled to have the legacies first paid out of the other property charged with them.
It does not appear that there was a covenant against incumbrances in Finch s mortgage. The case would be stronger if that were so. That decision was affirmed (5 HL Cas 905).
Haynes v Forshaw 11 Hare 93 was a similar case, and the title of the plaintiff claiming exoneration arose on an equitable mortgage. The inquiry directed was to ascertain what legacies and charges affected the property comprised in the equitable mortgagee s security, and there was a declaration that the plaintiff was entitled to have legacies and charges thrown in the first place upon the estate of the testator, other than the property comprised in the equitable mortgage. I do not see how the position of the son, who borrowed from the plaintiff, being one of the executors created any different equity in the mortgagee.
The case of Scott s Estate 14 Ir Ch R 63 is an express authority to this extent, that it decides the right of marshalling in favour of the mortgagee of one estate, subject to prior incumbrances as against not only the mortgagor, but his judgment creditor subsequent to the mortgage.
The argument in the Court of Appeal for the judgment creditor was the same as influenced the Master of the Rolls in this case, but it did not prevail. It is not stated whether the mortgage contained a covenant against incumbrances – presumably it did.
The recent case of Re Jones [1893] 2 Ch 461 is an authority also in point. The second deed was for value, and contained a covenant for further assurance, and it was held by Mr Justice North that the unsold moiety should bear the entire mortgage debt, and then he cites and applies Averall v Wade L & G temp Sugden, 252. The case of Roche s Estate 25 LR Ir 271, before Mr Justice Monroe, is another illustration of the same principle.
Mr Bourke, in his argument for the respondent, contended that the case of Hales v Cox 32 Beav 118 was an authority in his favour. I am unable to see its application. There is a full explanation of the case in the judgment of Lord Chancellor O Hagan in his judgment in Ker v Ker IR 4 Eq 15, where he points out that there was no incumbrance when the voluntary settlement was made, and the order of proof given on the voluntary covenant is explained by the rule that such a covenant ranks in priority after simple contract debts. The main ground taken by Mr Bourke was that the rights of the simple contract creditors of Florence after his death were in a different position from equities against the mortgagor himself. I am myself unable to see how they can be in a higher position than the judgment creditor of the mortgagor in Scott s Estate 14 Ir Ch R 63. What the creditors take is the right to make assets for them the estate of the mortgagor as it stood at her death, and it passed from him as assets with the equity attached on it.
The case of Averall v Wade L & G temp Sugden 252 seems to me not only an authority on the general question, but to furnish an answer to this argument of Mr Bourke. There Samuel Wade was seized in fee of several estates, and was indebted on judgments, and on the marriage of his son in 1813 he conveyed one of the estates to the uses of the settlement. This settlement contained a covenant against incumbrances. Another judgment was obtained against him subsequently to the settlement. He died in 1826, and the judgment creditor who had obtained his judgment after the settlement filed a bill. It was held that the prior judgments should be thrown altogether on the unsettled estates, and that the subsequent judgment creditors had no right to make the settled estates contribute. The Lord Chancellor says, at p 259:
They contend that the unsettled estate is to bear both the judgments, and that the second creditor is entitled to no relief against the settled estate. Suppose there was no covenant in the settlement; a man seized of estates A and B, both subject to a judgment debt, settles A for valuable consideration without noticing the judgment, the judgment creditor would be compelled to go against estate B, and the persons claiming under the settlement would be entitled to have the settled estate exonerated at the expense of the unsettled estate; the judgment binds both, and where there is a settlement of part of an estate as if free from incumbrances, equity will throw the whole on the unsettled part which still belongs to the original owner. Here there is a covenant that the estate is free from incumbrances; assuming there was no such covenant, but a mere declaration that the estate was free from incumbrance, there can be no doubt that that declaration would throw the incumbrance on the unsettled estates. The covenant is enforced not by giving damages, because this Court does not give damages, but according to the peculiar jurisdiction of this Court by specifically doing that which ought to be done.
And further down he says:
The equity binds the land – I am not now speaking of a person who takes for valuable consideration without notice, but as against every person, unless a purchaser for valuable consideration without notice, it will be deemed a good settlement. But then it is said that the covenant cannot be specifically executed after the death of parties. I have never heard that point raised before. The covenant is this case is a continuing covenant, and of which there ought to be a specific execution, and in effect it has executed itself, and by force of that covenant the estate must be considered in equity as between the parties as discharged of the judgments which must be thrown on the unsettled estate.
Nothing can be clearer than that statement of the law. I am not to be taken as suggesting that the same right of marshalling would not arise from the mere execution of a deed for valuable consideration without an express covenant against incumbrances. But in this case there is a covenant against incumbrances in the Bank mortgage, the equity from which follows the land as against the mortgagor, and attached on the land when it became assets, and it is impossible that creditors of Florence McCarthy, who are not purchasers for valuable consideration without notice, can be treated as having higher rights than he himself had during his whole life; why should these rights be higher than those of the judgment creditor, who had a floating lien on the land, and can that judgment creditor have a new and better right as a creditor when his judgment debtor died?
If there is a right of marshalling, this is eminently a case in which it should be applied. All the sales and payments have taken place in the course of a suit for the administration of Florence McCarthy s estate, and till all funds have been parted with they are all deemed to be under the control of the Court, and, so far as the present application is concerned, the case is to be dealt with as if the Court had all the funds before it.
We are of opinion that the order of the Master of the Rolls must be discharged, and the application of the Bank granted.
The costs of the Bank should prima facie be paid with their demand; but as the fund against which their claim is made is a deficient one, they must be paid their costs here and in the Court below out of the funds representing assets applicable for the general creditors of Florence McCarthy.
The respondent who was named to represent the interests of those creditors will be paid her costs in the Court below and here out of the same fund.
Shanahan v Redmond
Unrep (High Court, 21 June 1994) (1993 No 129 Sp)
Carroll J: Martin Redmond died a bachelor without issue on the 17th August 1993 having by his will dated the 1st July 1993 appointed Michael Shanahan, the plaintiff herein, to be executor thereof. Probate has not yet issued due to difficulties in completing the Inland Revenue Affidavit. Mary Sluds, who was added as a notice party, was appointed residuary legatee under the will.
During his lifetime, Martin Redmond took out an IBI Lifetime Policy No 20263104 worth 139,397.87 at the date of his death. When he took it out, he named his cousin Joseph Redmond, the first named defendant, as sole beneficiary on his death in default of appointment of another or other beneficiaries. The trust was declared in the supplement to the application form which provided for a class of beneficiaries comprising any spouse, children or step-children and respective issue (born before the maturity of the policy) parents, brothers and sisters and their issue (born before the maturity of the policy) and the additional beneficiary or beneficiaries (if any) named in Clause 3 hereof .
Clause 3 provided:
The policy of assurance hereby applied for subject to its privileges and conditions is to be granted to and all payments thereunder are to be made to the Applicant and Investment Bank of Ireland Limited of 26 Fitzwilliam Place, Dublin 2 (hereinafter together called the Trustees which expression where the context so admits shall include the Trustee or Trustees for the time being hereof) and the Trustees shall hold the said policy and all monies which have become payable thereunder and all assets which may from time to time represent the same and all income derived therefrom (hereinafter called the Trust Fund ) for the benefit of and in trust for all such one or more exclusive of the other or others of the Beneficiaries in such shares and for such limited or other interests and with such powers of maintenance, education and advancement and in such manner as I shall from time to time or at any time before the maturity of the policy by deed or deeds revocable or irrevocable or by will or codicil without infringing the rule against perpetuities appoint and in default of such appointment or so far as no such appointment shall extend then the Trust Fund is to be held for the absolute benefit of Joseph Redmond, Ballyredmond, Clonegal, Enniscorthy, Co Wexford as to 100%.
PROVIDED THAT
(a)If any of the Beneficiaries named in this Clause shall die before the maturity of the policy, then his or her share in default of and subject to any appointment as aforesaid shall accrue to and enlarge the share or shares of the other or others of them and if more than one in proportions determined by the formula A/B X 100 where A is the share of a surviving Beneficiary and B is the sum of the shares of each surviving Beneficiary but if the Beneficiary or (if more than one) all of the Beneficiaries named in this Clause shall die before the maturity of the policy then in default of and subject to any appointment as aforesaid the Trust Fund shall be held in trust for the benefit of myself absolutely.
(b)I may at any time or from time to time before the maturity of the policy direct the Trustees in writing to surrender the policy or any part or parts thereof for cash (subject to the terms of the policy) and the Trustees shall pay the net proceeds of any such surrender or surrenders to myself for my own use and benefit and free from the trust powers and provisions contained in this Supplement.
Martin Redmond had a falling out with Joseph Redmond. He made contact with Mr Joe Murphy, Manager of the Investment Division of the Investment Bank of Ireland Limited ( IBI ), the third defendant. Mr Murphy wrote to Lifetime Assurance Company Limited ( Lifetime Assurance ), the second defendant, on the 26th March 1990 stating:
The above policy document is written under Supplementary Trust whereby the beneficiary for 100% to the fund is Mr Joseph Redmond.
Mr Martin Redmond, the life assured, has requested that Joseph Redmond be deleted as beneficiary from this investment.
For the moment Martin has not decided who to replace Joseph with and has decided instead that he himself will be the 100% beneficiary until he makes up his mind.
In the circumstances I enclose herewith a Deed of Appointment to beneficiaries for a single life trust duly signed which I trust is now in order and I look forward to confirmation that this deletion has taken place.
The Deed of Appointment is dated the 16th March 1990. It recites the power of appointment in Clause 3. It further states that the settlor is desirous of revoking every previous appointment (if any) relating to the Trust Fund and of appointing the Trust Fund in manner thereinafter appearing.
The operative part of the deed provides:
The settlor in exercise of the power conferred on him by the declaration of trust and of every other power enabling him in this behalf HEREBY REVOKES and makes void all the trust and interests appointed by every previous Deed of Appointment in relation to all or any part or parts of the Trust Fund and in lieu thereof and in exercise of the power conferred on him by the declaration of trust and of every other power enabling him in this behalf HEREBY APPOINTS that the Trust Fund shall be held by the Trustee or Trustees for the time being of the declaration of trust for the absolute benefit of Martin Redmond as to 100%.
Around this time Lifetime Assurance were in correspondence with the Revenue Commissioners.
In a letter dated the 27th March 1990 from Thomas Boland, Assistant Principal in the Capital Branch of the office of the Revenue Commissioners to Lifetime Assurance, Mr Boland refers to an earlier letter and discussions concerning difficulties encountered with regard to trust forms and policies of assurance in that the trust form previously used excluded the Applicant from the list of beneficiaries and that the problem could only be rectified by setting up a new policy to replace the old one. He confirmed that stamp duty paid in respect of an earlier inadequate policy could be used as a credit against the duty payable when a replacement was executed. In a handwritten addition (probably by Sheila Dawson of Lifetime Assurance) at the bottom of the letter there is a note dated 2nd May 1990 about confirmation that stamp duty included all duties payable. There is a further note at the bottom of that letter in the following terms:
Phoned J Murphy 2/5/1990. Advised we must have written confirmation for client to CFI old policy with trust and reset up without trust. He will call to Mr Redmond to collection (SIC) confirmation.
I am told that CFI means cancelled from inception .
Mr Joe Murphy wrote on the 15th May 1990 to Sheila Dawson of Lifetime Assurance as follows:
I refer to our recent telephone conversation in relation to my letter of the 26th March 1990.
To refresh your memory, Martin Redmond appointed his nephew Joseph Redmond as a 100% beneficiary. He has now had an argument with Joseph and he wants to delete him from this policy.
He has not made up his mind who he wants to replace Joseph with and for the moment, he requested that he himself be appointed as the beneficiary.
I understand from you that there were technical problems in the formation of the original trust documentation form and on your instruction, I called down to Martin again and got him to sign the enclosed letters.
I have got him to sign both letters and I trust you will use whichever letter is appropriate.
The main underlying point to understand is that Martin Redmond wants his nephew replaced, and does not want to incur any costs whatsoever in the event that we have to cash in the fund and replace it with a new policy. Please ensure that the new policy and all correspondence is directed initially to me here and after the policy document has been issued, all future correspondence c/o Bank of Ireland, Bunclody.
Endorsed on that letter in handwriting is a note (presumably by Sheila Dawson) as follows:
Phoned R Buckley 24/6/90 and he advised that it was in order to CFI old plan and reset up with no trust. No implications at a later date.
At the top of the letter there is a handwritten note requested policy document from Joe Murphy.
The two letters from Martin Redmond addressed to the Secretary, Lifetime Assurance Company Limited referred to in Mr Murphy s letter are both dated the 2nd May 1990 and read as follows:
I wish to formally request that the above policy no is to be replaced by a similar policy no, this time not written in trust for the moment. I understand from both you and the Investment Bank of Ireland that my original instructions to have my nephew, Joseph Redmond deleted as a beneficiary on the original policy cannot be done and I therefore request that the original policy be replaced by this new one.
The other letter read:
I now request you to replace the above policy with a similar policy, this time not written in trust. Please note, it will be my intention to form a supplementary trust on this investment and I will let you have the details in due course.
Martin Redmond also instituted proceedings in the Circuit Court on the 16th December 1992 to set aside a deed of transfer dated the 18th August 1989 between himself and Joseph Redmond whereby approximately 61 acres was transferred for voluntary consideration to Joseph Redmond. These proceedings are still in being.
In practically identical Affidavits sworn respectively on behalf of Lifetime Assurance and IBI by the Company Secretary and an associate Director, the deponents say that they have obtained legal advice to the effect that the documentation completed by the deceased, Martin Redmond, is incomplete and that in those circumstances it is inappropriate to release the funds standing to the credit of the policy pending an order of the Court. They each referred to the supplement to the application form, the Deed of Appointment and the two letters from Martin Redmond dated the 2nd May 1990. They then baldly state that there was no further correspondence between Martin Redmond and the IBI on the one hand and between Martin Redmond and Lifetime Assurance on the other. There is no affidavit from Joe Murphy on behalf of IBI or from Sheila Dawson on behalf of Lifetime Assurance to explain why nothing happened following the instructions from Martin Redmond in May 1990 or even to explain why they are unable to give evidence. It is further averred on behalf of both these defendants that Martin Redmond did not comply with the strict wording of the policy and the proviso to Clause 3 concerning the surrender of the policy, but nowhere is it specified in what way he failed to comply.
When an express trust has been completely constituted, generally speaking it is irrevocable, whether it was for valuable consideration or not, unless a power of revocation has been expressly reserved. If such a power has been reserved it must be exercised in the manner provided in order to effect a valid revocation.
In this case the trust was completely constituted. There was a power of revocation implied in the power of appointment to a class of beneficiaries which could defeat the interest given to Joseph Redmond. His interest is expressed to exist in default of such appointment or so far as such appointment shall not extend. Martin Redmond attempted to exercise the power of appointment in his own favour but this was ineffective because he did not belong to the class of beneficiaries who were the object of the power. In my opinion, in the absence of a valid appointment, the words of the trust must be given effect and therefore the trust in favour of Joseph Redmond remained. The power of revocation was not independent of the power of appointment, as was submitted on behalf of Mary Sluds.
I have no doubt as to what the intention of the deceased was. It was to remove Joseph Redmond as the named beneficiary and to get the benefit of the policy back in his own name. His first attempt to achieve this by the Deed of Appointment having failed, he gave the clearest instructions to Lifetime Assurance via the IBI to cancel the policy and replace it with a similar one under which he would be the beneficiary. These instructions were never carried out. That he did not change his attitude to Joseph Redmond is evidenced by the fact that he instituted proceedings to get his lands back on the 16th December 1992.
There was a clause in the application form containing the declaration of trust which provided that the applicant (ie, Martin Redmond) could at any time or from time to time before the maturity of the policy direct the trustees in writing to surrender the policy for cash. The policy itself provides that the policy could be surrendered at any time upon written notice being received by the company (ie, Lifetime Assurance) for cash.
Martin Redmond gave clear written instructions forwarded by IBI who were co-trustees with himself, to cancel the policy and issue another.
As I said before, while IBI and Lifetime Assurance averred that the documentation completed by Martin Redmond was incomplete and that he did not comply with the strict wording of the policy and the proviso to Clause 3 concerning surrender, they did not specify how. According to the evidence before me, all that the declaration of trust and the policy required was that written notice be given and received and this was done.
While both the declaration of trust and the policy say the surrender should be for cash, that does not, in my opinion, make any significant difference. Martin Redmond was asking for the equivalent of cash ie, another policy. In the absence of any further correspondence he could not have known or been under any apprehension that his directions had not been carried out.
In my opinion his estate is entitled to the application of the equitable principle Equity looks on that as done which ought to have been done . The contractual obligation on Lifetime Assurance under the policy following the written notice, ought to be treated as if it had been performed.
The existing policy therefore must be treated as if it were a substitute policy in which Martin Redmond was named as the sole beneficiary.
The answer to the questions in the summons are:
A.
(i)Yes.
(ii)No.
(iii)Yes.
(iv)Yes.
(v)This was not argued.
(vi)This was not argued.
(vii)No.
(viii)This was not argued.