[1968]

 

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A.C.

 

 

 

[HOUSE OF LORDS]

 

BESWICK

APPELLANT

 

AND

 

BESWICK

RESPONDENT

 

1967 Apl. 18, 19, 20, 24, 25; June 29

LORD REID, LORD HODSON, LORD GUEST, LORD PEARCE and LORD UPJOHN.

 

Contract - Parties - Third party, enforcement by - Procedure - Agreement for transfer of business - Consideration from transferee including promise to pay annuity to widow of transferor - Repudiation by transferee after death of transferor - Whether promise enforceable by widow as administratrix for recovery of all arrears and continuing payments for herself in personal capacity - Whether action maintainable at law for benefit of third party - Whether remedy of specific performance of agreement for payment of money available - Whether third person not named in agreement may sue for "benefit of agreement ... respecting ... property" - Law of Property Act, 1925 (15 & 16 Geo. 5, c. 20), ss. 205 (1) (xx).

Specific Performance - Contract to pay money - Enforcement by third party - R.S.C., Ord. 42, r. 26.

 

By section 56 (1) of the Law of Property Act, 1925:

 

"A person may take an immediate or other interest in land or other property, or the benefit of any condition, right of entry, covenant or agreement over or respecting land or other property, although he may not be named as a party to the conveyance or other instrument ..."

 

By section 205 (1):

 

"In this Act unless the context otherwise requires, the following expressions have the meanings hereby assigned to them respectively, that is to say:- ... (xx) 'Property' includes


 

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any thing in action, and any interest in real or personal property: ..."

 

By an agreement in writing made in March, 1962, P. B., then aged over 70 and in poor health, agreed with his nephew, the defendant, that he would transfer to the nephew the goodwill and trade utensils of his coal round business in consideration of the nephew's employing him as consultant at 6 10s. a week for the rest of his life; and by clause 2 the nephew agreed for the same consideration to pay to P. B.'s wife after his death an annuity charged on the business at the rate of 5 a week for life. P. B.'s wife was not a party to the agreement. The nephew took over the business and in November, 1963, P. B. died. The nephew paid one sum of 5 to the widow, then aged 74 and in poor health, but refused to pay any further sum. The widow, having taken out letters of administration to her late husband's estate, brought an action against his nephew in her capacity as administratrix and also in her personal capacity asking (inter alia) for specific performance of the agreement.

Held, that the widow, as administratrix of a party to the contract was entitled to an order for specific performance of the promise made by the nephew and was not limited to recovering merely nominal damages on the basis of the loss to the estate.

Held, further, that the widow was not entitled to enforce the obligation in her personal capacity, since section 56 of the Act of 1925, which was a consolidation Act, did not effect a fundamental change in the law so as to allow a third party, not a party to a contract, to enforce it, and the context of the section excluded the application of the definition of "property" in section 205 (1).

Per Lord Upjohn: I find it difficult to dissent from the proposition that section 56 should be limited in its application to real property, but equally difficult to agree with it. It may be that Parliament inadvertently altered the law by abrogating the old common law rule in respect of contracts affecting personal property as well as real property, but it never intended to alter the fundamental rule laid down in Tweddle v. Atkinson (1861) 1 B. & S. 393 (post, p. 105E-G).

Tweddle v. Atkinson (1861) 1 B. & S. 393;  Dunlop Pneumatic  Tyre Co. Ltd. v. Selfridge & Co. Ltd. [1915] A.C. 847; 31 T.L.R. 399 H.L.(E.);  White v. Bijou Mansions Ltd. [1937] Ch. 610; 53 T.L.R. 88; [1937] 3 All E.R. 269; [1938] Ch. 351; 54 T.L.R. 458; [1938] 1 All E.R. 546 C.A.;  In re Schebsman [1944] Ch. 83; 60 T.L.R. 128; [1943] 2 All E.R. 768 C.A.;  In re Miller's  Agreement [1947] Ch. 615; [1947] 2 All E.R. 78 applied.

In re Engelbach's Estate [1924] 2 Ch. 348 doubted.

Decision of the Court of Appeal [1966] Ch. 538; [1966] 3 W.L.R. 396; [1966] 3 All E.R. 1, C.A. affirmed in part.

 

APPEAL from the Court of Appeal (Lord Denning M.R., Danckwerts and Salmon L.JJ.).

This was an an appeal, by leave of the House of Lords, by the


 

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Beswick v. Beswick (H.L.(E.))

 

 

appellant John Joseph Beswick, who was the defendant in this action, from an order of the Court of Appeal dated June 22, 1966, whereby the judgment of Burgess V.-C. made in the Chancery of the County Palatine of Lancaster (Manchester District) dated October 11, 1965, was discharged and it was declared that an agreement dated March 14, 1962, made between the appellant and Peter Beswick, the deceased husband of the respondent Ruth Beswick, the plaintiff in the action (suing personally and as administratrix of the estate of Peter Beswick), ought to be specifically performed and carried into execution and it was ordered and adjudged accordingly, and it was ordered that the appellant do pay to the respondent 175 being the arrears of the annuity mentioned in clause 2 of the agreement accrued due at the date of the issue of the writ in the action, namely, July 15, 1964, and it was also ordered that the appellant do pay to the respondent for the remainder of her life from July 15, 1964, an annuity at the rate of 5 a week in accordance with the agreement.

On March 14, 1962, Peter Beswick entered into a written agreement with his nephew John Joseph Beswick, the appellant. The agreement was prepared by a solicitor.

The first two clauses of the agreement were as follows:

 

"(1) Peter Beswick to assign to John Joseph Beswick the goodwill, motor lorry, scales, weights and other trade utensils of the business of a coal merchant hitherto carried on by him in consideration of the transferee employing the transferor as consultant to the said business for the remainder of the transferor's life at a weekly salary of 6 10s. 0d. (2) For the like consideration the transferee, in the event of the death of the transferor, to pay the transferor's widow an annuity to be charged on the said business at the rate of 5 0s. 0d. per week."

 

By clause 6 the transferee also agreed to take over the transferor's liability to certain named creditors of the transferor.

The appellant duly paid the salary during the life of Peter Beswick, who died intestate on November 3, 1963. Thereafter he made one payment of 5 to the respondent and then repudiated his liability to do so. The respondent took out letters of administration to his estate on June 30, 1964, and commenced this action, claiming 175 arrears of the annuity, an order for specific performance of the continuing obligation to pay the annuity and a declaration that the appellant was liable to pay the plaintiff the annuity.

 

C.A. Settle Q.C. and James FitzHugh for the appellant. This


 

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order of the Court of Appeal gives the respondent more than she is entitled to. In this case the administratrix and the person for whose benefit the agreement was made happen to be the same person, but they might be different persons. The cause of action is between the estate of the deceased and the other party to the contract. The plaintiff in an action should be given the appropriate remedy to compensate him. Specific performance, which is an alternative remedy to damages, is given when money is not an adequate remedy. But if a plaintiff is not entitled in law to be awarded any damages, he cannot be given specific performance. Suppose X covenants with A to make a gift to a charity, which is of no benefit to A, then A cannot get an order for specific performance, though in the case of a wedding present ordered and paid for by A for delivery to B the shop is acting as A's agent. But here the agreement gave the deceased an unenforceable promise by the appellant to pay the annuity. to the respondent, and his administratrix cannot enforce a promise which he could not have enforced himself.

To take the simple case of a sale by A to B, in consideration of which B agrees to pay the purchase price of 1,000 to X. If B is in breach of his contract the only remedy for A is to sue him for damages for the breach. Those damages will only be nominal damages of 40s., since no loss is usually caused to A by the fact that X has not received the money. The present case is not one in which the estate of the deceased suffers any loss by reason of the appellant's breach of contract. It was never entitled to receive any payment from him.

Further, if the respondent is to be entitled as administratrix to have this agreement specifically performed and carried into execution, then the whole agreement must be specifically performed and that must include the obligation to discharge the liabilities of the deceased to the named creditors, which must be performed for the benefit of the estate: Fry on Specific Performance, 6th ed. (1921), p. 383, n. 1.

The order of the Court of Appeal does not specify whether the payments were to be made to the respondent in her personal capacity or as administratrix. If the former is the case and it is enforceable by her pursuant to R.S.C., Ord. 45, r. 9, it gives her rights not contained in the agreement. If it gives her rights as administratrix to recover more than nominal damages for her benefit in her personal capacity, the effect is to create a trust which is not created by the agreement.


 

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In re Miller's Agreement1 is the latest case bearing on the present problem. It indicates that the agreement conferred on the widow (the respondent) no rights enforceable at law and that section 56 of the Law of Property Act, 1925, does not enable her to enforce the covenant. What Denning L.J. said in Smith and Snipes Hall Farm Ltd.2 was incorrect. In White v. Bijou Mansions Ltd.,3 Simonds J. and the Court of Appeal did not hold that under section 56 every person who fell within the "scope and benefit" of a contract was entitled to sue, though not a party to the contract. Section 56 replaced section 5 of the Real Property Act, 1845, which was repealed by Schedule 7 to the Act of 1925. It applied only to covenants running with the land: Forster v. Elvet Colliery Co. Ltd.,4 affirmed in the House of Lords: Dyson v. Forster.5 Section 5 was expressed to relate to "any tenements or hereditaments," that is, the land. The Act of 1925 was a consolidating Act and that indicates that section 56 was meant to have the same effect as its predecessor. There is no authority for applying section 56 to such a case as this, and it cannot apply to this type of agreement at all. The view expressed by Denning L.J. in Drive Yourself Hire Co. (London) Ltd. v. Strutt6was incorrect. From Chelsea and Walham Green Building Society v. Armstrong7 and, what Simonds J. said in White's case8 it would appear that section 5 of the Act of 1945 was concerned with persons named in the indenture as parties, and that being in fact a party to the agreement was not enough. Stromdale & Ball Ltd. v. Burden9 was very far removed from the present case and so was White v. John Warwick & Co. Ltd.10 The appellant's case is supported by Scruttons Ltd. v. Midland Silicones Ltd.11

It is not open to anyone to say that the House of Lords did not adopt the decisions relating to section 56. A consolidating statute like the Act of 1925 is assumed not to be intended to alter the law: Maxwell on the Interpretation of Statutes, 11th ed.

 

1 [1947] CH. 615; [1947] 2 All E.R. 78.

2 [1949] 2 K.B. 500, 517; 65 T.L.R. 628; [1949] 2 All E.R. 179, C.A.

3 [1937] Ch. 610; 53 T.L.R. 88; [1937] 3 All E.R. 269; [1938] Ch. 351; 54 T.L.R. 458; [1938] 1 All E.R. 546, C.A.

4 [1908] 1 K.B. 629; 24 T.L.R. 265, C.A.

5 [1909] A.C. 98; 25 T.L.R. 166, H.L.(E.).

6 [1954] 1 Q.B. 250, 269-275; [1953] 3 W.L.R. 1111; [1953] 2 All E.R. 1475, C.A.

7 [1951] Ch. 853; [1951] 2 T.L.R. 312; [1951] 2 All E.R. 250.

8 [1937] Ch. 610, 624-625.

9 [1952] Ch. 223; [1951] 2 T.L.R. 1192; [1952] 1 All E.R. 59.

10 [1953] 1 W.L.R. 1285; [1953] 2 All E.R. 1021, C.A.

11 [1962] A.C. 446, 467, 473, 494.


 

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(1962), p. 23. The best meaning for the section was found by Simonds J. in White v. Bijou Mansions Ltd.12 The result is that it has no application here and the respondent cannot recover in her personal capacity.

Therefore the only action with which the House is concerned is that of the respondent as the administratrix. In that capacity she is not entitled to specific performance: see Ryan v. Mutual Tontine Westminster Chambers Association.12a When damages are inadequate as a remedy the court may grant specific performance to the person who has the cause of action - that last point is important. But the court cannot do so in the circumstances of the present case. It cannot grant an order for specific performance for the benefit of someone who was not a party to the contract, since nominal damages are adequate to compensate the estate for the breach of contract. Here, as in In re Schebsman,13 there was no enforceable trust. Section 56 being out of consideration, the court, envisaging this as an attempt to obtain payment to someone not a party to the contract, will not grant the personal representative specific performance.

Here an order in favour of the respondent in her personal capacity would infringe the rights of the creditors of the estate. Such an order should not be made and the estate is entitled to nominal damages only. That is the strict position, because the respondent in her personal capacity is not in any position to enforce her claim, for the Court of Chancery would never grant specific performance to give the benefit of a contract to a person, whether a party or not, which he could not get for himself.

Hohler v. Aston,13a a case of an executory contract, is distinguishable from this case, and so is Keenan v. Handley,14where the mother would now be held to have been agent or trustee for her infant daughter. Brough v. Oddie15 is relied on.

The courts will not grant specific performance to enforce a contract between A and B in favour of C, although it is otherwise if the contract is partly in favour of B and partly in favour of C.

Peel v. Peel16 was an interlocutory application and decided nothing. As to the availability of damages in a Chancery action at the time of this case and of Keenan's case,17 see Fry on Specific Performance, p. 601. Adderley v. Dixon18 is distinguishable.

 

12 [1937] Ch. 610.

12a [1893] 1 Ch.. 116, 124; 9 T.L.R. 72; C.A.

13 [1944] Ch. 83; 60 T.L.R. 128; [1943] 2 All E.R. 768, C.A.

13a [1920] 2 Ch. 420, 424.

14 (1864) 12 W.R. 930; 2 De G.J. & Sm. 283.

15 (1829) 1 Russ. & M. 55.

16 (1869) 17 W.R. 586.

17 De G.J. & Sm. 283.

18 (1824) 1 Sim. & St. 607.


 

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The courts will not order specific performance so as to give a party to a contract greater rights than he has under it, nor will it give a third party rights which he did not previously have; nor will money due under a contract be ordered to be paid to the promisee on the basis of a trust, which did not previously exist, for the benefit of a third party.

James FitzHugh following. A promisee cannot be a trustee for himself and during his lifetime he has complete freedom to enforce a promise or not as he may think fit. On his death, a trust arises for the benefit of persons entitled to his estate. His personal representative must do his duty to that estate and enforce all rights for its benefit: In re Sinclair's Life Policy.19

Here such damages as are recovered by the administratrix for the benefit of the estate she must hold for its benefit and, if the administratrix elects to take an order for specific performance, she deprives herself of the right to get damages for the benefit of the estate. It is her duty to the estate not to deprive herself of that possibility. The persons who have an interest in the estate are the persons who are beneficially entitled to its assets; the administratrix owes no duty to third parties. In this case damages cannot be considered an inadequate remedy, because the estate cannot get more.

See also In re Engelbach20 and In re Schebsman.21

Hugh Francis Q.C. and D. G. Nowell for the respondent. The main point is whether the administratrix of the deceased in her representative capacity and therefore as a party to the contract by representation is entitled to sue on the contract and have it specifically performed. It has always been admitted that the administratrix as such has a right to sue on the agreement but it is said that the only remedy is to recover nominal damages. But she also has the common law remedy of suing for arrears of the amounts as they fall due and for a declaration of liability for future payments. She is further entitled to the equitable remedy of specific performance, and that is asked for because it is more beneficial to the respondent and will avoid a multiplicity of actions.

The Vice-Chancellor was dissuaded from finding for the respondent by Miller's case.22 It is not submitted that that case was wrongly decided, since the daughters there could neither sue nor compel the personal representative of their father to sue.

The following submissions are made: (1) This contract is one

 

19 [1938] Ch. 799, 802, 805; 54 T.L.R. 918; [1938] 3 All E.R. 124.

20 [1924] 2 Ch. 348, 355-356.

21 [1944] Ch. 83, 100.

22 [1947] Ch. 615.


 

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of a kind of which the courts of equity have habitually granted specific performance, it is a contract for the sale and purchase of a business, part of the price of which was the payment of an annuity to the vendor's widow.

(2) The appellant has received the full benefit of the contract, and in such a case a court of equity will consider itself bound to ensure that he will fulfil his part of the agreement because elementary justice requires it: see Hart v. Hart.23

(3) The appellant's refusal to pay the respondent the annuity is unconscionable and a breach of faith; it is hard to imagine a case more appropriate for the intervention of equity.

(4) The respondent is entitled to specific performance on the ground of mutuality. If the deceased vendor and the respondent had both been killed in a road accident before the business was handed over, the defendant as purchaser could have obtained specific performance of the contract: see Mortimer v. Capper24and Jackson v. Lever.25

(5) The remedies at common law are either inadequate or less convenient than the equitable remedy, since the common law remedy would entail a multiplicity of actions: see Swift v. Swift.26

The argument for the appellant confuses two questions: (a) whether the widow as administratrix has a cause of action, and (b) whether it is proper for the administratrix in a case of this sort to bring proceedings at the cost of the estate. In this case the respondent suing as administratrix is the only beneficiary of the estate. As to the duty of a legal personal representative with respect to the deceased's contracts, see Ahmed Angullia v. Estate and Trust Agencies (1927) Ltd.27 There is no question here of any right to sue which might result in a valuable asset for the estate. No question of administration arises. The annuity was not payable to the deceased or to his estate: see In re Schebsman.28The payment of the annuity to the widow in the present case is not dependent on the payment of the debts set out in the agreement. As to this see Fry on Specific Performance, 6th ed. (1921), p. 383, n. 1, and pp. 390-2, paras. 839-842. The proper order is for specific performance of the agreement to pay the annuity and, as to the rest, the court can give liberty to apply.

Drimmie v. Davies29 supports the submission that specific

 

23 (1881) 18 Ch.D. 670, 684-685.

24 (1782) 1 Bro.C.C. 156.

25 (1792) 3 Bro.C.C. 605.

26 (1841) 3 Ir.Eq.R. 267, 278.

27 [1938] A.C. 624; 54 T.L.R. 831; [1938] 3 All E.R. 106, P.C.

28 [1943] Ch. 366.

29 [1899] 1 Ir.R. 176, 186, 190.


 

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performance is the proper remedy here. Ahmed Angullia's case30shows that the prima facie duty of the administratrix is to see that the contracts entered into by the deceased are carried out, even though they may be disadvantageous to the estate.

Seton on Judgments and Orders, 7th ed. (1912), Vol. III, pp. 2212-3 contains a form of order for specific performance of an agreement to grant an annuity (Keenan v. Handley31. The order was in favour of the defendant's former mistress and her infant daughter.

Engelbach's case32 and Sinclair's case33 seem to be derived from a statement of Lord Esher M.R. in Cleaver v. Mutual Reserve Fund Life Association,34 with which Uthwatt J. disagreed in In re Schebsman.35 Those decisions turn on the construction of the particular policies and lay down no general principle.

As to the enforcement of an order for specific performance under R.S.C., Ord. 45, r. 1, the plaintiff could, if need be, take out a writ of fi. fa. and take steps to levy execution for the arrears of the annuity. Ord. 45, r. 12, applies: see the Supreme Court Practice, 1967, Vol. I, p. 612, and also R.S.C., Ord. 1, r. 9 and Form No. 53 in Appendix A in Vol. II. That form assumes that the order is one directing the plaintiff to pay the sum to the defendant. It would have to be varied to accord with an order to pay the sum to a third party: see also Vol. I, pp. 594-5, as to section 5 of the Debtors Act, 1869. As to R.S.C., Ord. 45, r. 9, there is no authority throwing light on its precise scope or purpose, but it may well have been intended to apply to a judgment obtained by a plaintiff suing in a representative capacity on behalf of several persons. After judgment the members of the class, though not parties, would be entitled to the benefit of the judgment.

As to section 56 of the Law of Property Act, 1925, it is not submitted that it "delivered a mortal blow" to Tweddle v. Atkinson,36 but rather that it cut off one of its limbs. Section 5 of the Act of 1845 eliminated a technical rule of the common law relating to indentures that a person who was not named as a party to an indenture could not take an interest under it, although he was expressed to be within it: see Forster's case37 and Grant v. Edmondson.38

Section 5 is not limited to covenants running with the land.

 

30 [1938] A.C. 624, 632-633.

31 2 De G.J. & Sm. 283.

32 [1924] 2 Ch. 348.

33 [1938] Ch. 799.

34 [1892] 1 Q.B. 147, 157; 8 T.L.R. 139, C.A.

35 [1943] Ch. 366, 372.

36 (1861) 1 B. & S. 393.

37 [1908] 1 K.B. 629, 635, 637, 639; [1909] A.C. 98.

38 [1931] 1 Ch. 1, 15, 28, C.A.


 

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For example, suppose A selling a house to C was on good terms with his neighbour B and, knowing that he greatly admired certain trees in the garden of the house, took from C a covenant with himself and with B not to cut down those trees so long as B was the owner of the adjoining land. That would not be a covenant running with the land but there is no reason why B should not be entitled to enforce it.

As to section 56 of the Act of 1925, neither the Law of Property Act, 1922, nor the Law of Property (Amendment) Act, 1924, contained any reference to section 5. These Acts which contained all the substantial enactments later incorporated in the consolidation Act of 1925 contain nothing corresponding to section 56. As to the character of the consolidation Act, see Grey v. Inland Revenue Commissioners.39 Such an Act, said Lord Simonds, is presumed not to be intended to alter the law, but the Act of 1925 was not a normal consolidation Act. It brought about radical changes in the law. One cannot ignore words in it or refuse to give them their plain meaning. At bottom the matter is one of the construction of the words.

Section 56 of the Act of 1925 applies only to covenants and agreements which satisfy four conditions. (1) They must be contained in an "instrument" and that includes any writing. (See Stroud's Judicial Dictionary, 3rd ed. (1952), Vol. II, p. 1472.) The present document is an instrument.

(2) The covenants or agreements must be "respecting land or other property." A simple covenant to pay an annuity is not such a covenant. Here the agreement was respecting property, because it was an agreement to pay an annuity as part of the price for the sale of a business. Further, the annuity was charged on the business. Section 56 is not confined to real property.

(3) Section 56 applies only to covenants or agreements made directly for the benefit of a person who is not a party to it. It is not enough that the person should incidentally derive a benefit from it. One cannot take the object of section 56 to be the same as that of section 5 of the Act of 1845.

(4) The covenant or agreement must be legally enforceable. Here there is an agreement enforceable by the deceased or his administratrix.

Subject to the fulfilment of these four conditions the third party can enforce the agreement. They are the sole conditions which can be implied or inferred from the language of section 56.

 

39 [1960] A.C. 1, 13; [1959] 3 W.L.R. 759; [1959] 3 All E.R. 603. H.L.(E.).


 

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It is said that the covenant or agreement must purport to be made with the third person: see White v. Bijou Mansions Ltd.40That view of section 56 (1) of the Act of 1925 is open to the objection that it makes everything depend on mere form and not on substance, so that the addition of a very few words to the agreement would have enabled the respondent to sue in a personal capacity. If that were so, the plaintiff in Stromdale & Ball Ltd. v. Burden41 could not have succeeded: see also Drive Yourself Hire Co. (London) Ltd. v. Strutt.42

The court can only give effect to the plain words of the section. It is hard to put any limitation on it, save for the four rules already formulated.

D. G. Nowell following. As to the insurance cases see Waters v. Monarch Fire & Life Assurance Co.,43 a case of a party to a contract securing something in addition to his own particular loss. Castellain v. Preston44 shows that a person who enters into a contract which contemplates payment may recover for breach and is not limited to his own particular loss: see also Lloyd's v. Harper45 and Kenny v. Employers' Liability Assurance Corporation.46

There is here a claim for a declaration which is a discretionary remedy: see R.S.C., Ord. 15, r. 16, and Drimmie v. Davies.47Specific performance is the appropriate remedy here.

The position with regard to the rule that a third party cannot sue was correctly stated by Lord Denning M.R. in the court below.48

Section 25 (6) of the Judicature Act, 1873, enabled the assignee of a legal chose in action to sue in his own name. Section 136 of the Law of Property Act, 1925, dealing with legal assignments of things in action does not cover every case of assignment, only absolute assignments in writing. So where there is an equitable assignment the action must be brought in the name of the assignor who must be joined by the assignee either as co-plaintiff or co-defendant.

Section 56 (1) of the Act of 1925 should be given the plain meaning which the words bear.

C. A. Settle Q.C. in reply. In section 56 of the Act of 1925 "or" is disjunctive in the phrase "the benefit of any ...

 

40 [1937] Ch. 610, 624.

41 [1952] Ch. 223.

42 [1954] 1 Q.B. 250, 264, 271-272.

43 (1856) 5 El.& Bl. 870, 880.

44 (1883) 11 Q.B.D. 380, 398-399.

45 16 Ch.D. 290, 321.

46 [1901] 1 Ir.R. 301, 334, 336, 337-338, 339-340.

47 [1899] 1 Ir.R. 176, 188.

48 [1966] Ch. 538, 557; [1966] 3 W.L.R. 396; [1966] 3 All E.R. 1, C.A.


 

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agreement over or respecting land or other property." The section relates to benefit arising out of an agreement as to existing property. It is purely a conveyancing section and appears in the part of the Act relating to conveyances. The agreement in the present case is not one respecting property. An agreement to pay part of the purchase price of a business is not such an agreement: see Miller's case.49 The widow had no rights enforceable at law. If the alleged beneficiaries cannot themselves sue on the covenant, the fact that there is a charge supporting the covenant does not help them.

The legislation did not intend that section 56 should make such a fundamental change in the law as would be effected if the respondent's very liberal construction were placed upon it. The section is dealing with conditions, rights of entry and the like and its language is very appropriate to deal with what is merely conveyancing. It is intended to enable a third party to be given a benefit, although he may not be named as a party to the conveyance or other instrument. It is purely a conveyancing section. It is not a section under which a third party can claim rights created by a document to which other persons are parties and it does not avoid the necessity for consideration.

Anything can be conveyed - realty, personalty or a chose in action and the title is perfectly good. Under section 136 of the Law of Property Act, 1925, a chose in action can be assigned to a third party, thereby creating a debt on which the assignee can sue.

If there had been such a fundamental change in the law, the effect of which was to overrule Tweddle v. Atkinson50 by statute the House of Lords in Scruttons Ltd. v. Midland Silicones Ltd.51could not have shut its eyes to such a point as this, and the only inference to be drawn from that case is that everything which Denning L.J. said in Smith and Snipes Hall Farm Ltd. v. River Douglas Catchment Board52 and in the other cases cited to the House of Lords was rejected by them. In Scruttons Ltd. v. Midland Silicones Ltd.53 the point as to section 56 of the Act of 1925 was on the pleadings (paragraph 21 of the points of defence): see the record on the appeal to the House of Lords, appendix, p. 11. See also Green v. Russell.54

The Act of 1925 was a consolidating Act which was not

 

49 [1947] Ch. 615, 623.

50 1 B.& S. 393.

51 [1962] A.C. 446.

52 [1949] 2 K.B. 500.

53 [1962] A.C. 446.

54 [1959] 2 Q.B. 226, 233, 239-240; [1959] 3 W.L.R. 17; [1959] 2 All E.R. 525, C.A.


 

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making changes in the previous law. The alteration in the law suggested would have far reaching implications. The law as laid down in Miller's case55 has been taken as the basis of innumerable agreements. For 42 years the Act of 1925 has been construed as having the meaning for which the appellant contends and that should not be departed from now, especially as to do so would have wide ramifications over a large area.

If the courts will not make an order for specific performance giving a third party rights which he did not have before the making of the order, neither will they do so in the case of a contracting party. Nor will they constitute a trust where a trust did not previously exist, if the contract cannot be specifically performed without so doing. What Danckwerts L.J. said in the Court of Appeal56 in the present case cannot stand. The cause of action in the administratrix arose out of the breach of contract by the appellant in not paying the annuity to the widow. The widow had no right to sue and there is no trust in her favour. For the circumstances in which specific performance will be granted see Fry on Specific Performance, 6th ed., pp. 21-22, para. 48. In this case the cause of action is in the administratrix, who can claim damages, which afford the estate an adequate remedy, so that there is no room for specific performance. Keenan's case,57the case of a mother acting as agent for her illegitimate daughter, is distinguishable from the present case.

 

Their Lordships took time for consideration.

 

June 29. LORD REID. My Lords, before 1962 the respondent's deceased husband carried on business as a coal merchant. By agreement of March 14, 1962, he assigned to his nephew, the appellant, the assets of the business and the appellant undertook first to pay to him 6 10s. per week for the remainder of his life and then to pay to the respondent an annuity of 5 per week in the event of her husband's death. The husband died in November, 1963. Thereupon, the appellant made one payment of 5 to the respondent but he refused to make any further payment to her. The respondent now sues for 175 arrears of the annuity and for an order for specific performance of the continuing obligation to pay the annuity. The Vice-Chancellor of the County Palatine of Lancaster decided against the respondent but the Court of Appeal

 

55 [1947] Ch. 615.

56 [1966] Ch. 538, 561.

57 2 De G.J. & Sm. 283.


 

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reversed this decision and, besides ordering payment of the arrears, ordered the appellant to pay to the respondent for the remainder of her life an annuity of 5 per week in accordance with the agreement.

It so happens that the respondent is administratrix of the estate of her deceased husband and she sues both in that capacity and in her personal capacity. So it is necessary to consider her rights in each capacity.

For clarity I think it best to begin by considering a simple case where, in consideration of a sale by A to B, B agrees to pay the price of 1,000 to a third party X. Then the first question appears to me to be whether the parties intended that X should receive the money simply as A's nominee so that he would hold the money for behoof of A and be accountable to him for it, or whether the parties intended that X should receive the money for his own behoof and be entitled to keep it. That appears to me to be a question of construction of the agreement read in light of all the circumstances which were known to the parties. There have been several decisions involving this question. I am not sure that any conflicts with the view which I have expressed: but if any does, for example, In re Engelbach's Estate,1 I would not agree with it. I think that In re Schebsman2 was rightly decided and that the reasoning of Uthwatt J.3 and the Court of Appeal supports what I have just said. In the present case I think it clear that the parties to the agreement intended that the respondent should receive the weekly sums of 5 in her own behoof and should not be accountable to her deceased husband's estate for them. Indeed the contrary was not argued.

Reverting to my simple example the next question appears to me to be: Where the intention was that X should keep the 1,000 as his own, what is the nature of B's obligation and who is entitled to enforce it? It was not argued that the law of England regards B's obligation as a nullity, and I have not observed in any of the authorities any suggestion that it would be a nullity. There may have been a time when the existence of a right depended on whether there was any means of enforcing it, but today the law would be sadly deficient if one found that, although there is a right, the law provides no means for enforcing it. So this obligation of B must be enforceable either by X or by A. I shall leave aside for the moment the question whether section 56 (1) of the Law of Property Act,

 

1 [1924] 2 Ch. 348.

2 [1944] Ch. 83; 60 T.L.R. 128; [1943] 2 All E.R. 768, C.A.

3 [1943] Ch. 366; 59 T.L.R. 443; [1943] 2 All E.R. 387.


 

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1925, has any application to such a case, and consider the position at common law.

Lord Denning's view, expressed in this case not for the first time, is that X could enforce this obligation. But the view more commonly held in recent times has been that such a contract confers no right on X and that X could not sue for the 1,000. Leading counsel for the respondent based his case on other grounds, and as I agree that the respondent succeeds on other grounds, this would not be an appropriate case in which to solve this question. It is true that a strong Law Revision Committee recommended so long ago as 1937 (Cmd. 5449):

 

"That where a contract by its express terms purports to confer a benefit directly on a third party it shall be enforceable by the third party in his own name ..." (p. 31).

 

And, if one had to contemplate a further long period of Parliamentary procrastination, this House might find it necessary to deal with this matter. But if legislation is probable at any early date I would not deal with it in a case where that is not essential. So for the purposes of this case I shall proceed on the footing that the commonly accepted view is right.

What then is A's position? I assume that A has not made himself a trustee for X, because it was not argued in this appeal that any trust had been created. So, if X has no right, A can at any time grant a discharge to B or make some new contract with B. If there were a trust the position would be different. X would have an equitable right and A would be entitled and, indeed, bound to recover the money and account for it to X. And A would have no right to grant a discharge to B. If there is no trust and A wishes to enforce the obligation, how does he set about it? He cannot sue B for the 1,000 because under the contract the money is not payable to him, and, if the contract were performed according to its terms, he would never have any right to get the money. So he must seek to make B pay X.

The argument for the appellant is that A's only remedy is to sue B for damages for B's breach of contract in failing to pay the 1,000 to X. Then the appellant says that A can only recover nominal damages of 40s. because the fact that X has not received the money will generally cause no loss to A: he admits that there may be cases where A would suffer damage if X did not receive the money but says that the present is not such a case.

Applying what I have said to the circumstances of the present


 

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case, the respondent in her personal capacity has no right to sue, but she has a right as administratrix of her husband's estate to require the appellant to perform his obligation under the agreement. He has refused to do so and he maintains that the respondent's only right is to sue him for damages for breach of his contract. If that were so, I shall assume that he is right in maintaining that the administratrix could then only recover nominal damages because his breach of contract has caused no loss to the estate of her deceased husband.

If that were the only remedy available the result would be grossly unjust. It would mean that the appellant keeps the business which he bought and for which he has only paid a small part of the price which he agreed to pay. He would avoid paying the rest of the price, the annuity to the respondent, by paying a mere 40s. damages.

The respondent's first answer is that the common law has been radically altered by section 56 (1) of the Law of Property Act, 1925, and that that section entitles her to sue in her personal capacity and recover the benefit provided for her in the agreement although she was not a party to it. Extensive alterations of the law were made at that time but it is necessary to examine with some care the way in which this was done. That Act was a consolidation Act and it is the invariable practice of Parliament to require from those who have prepared a consolidation Bill an assurance that it will make no substantial change in the law and to have that checked by a committee. On this assurance the Bill is then passed into law, no amendment being permissible. So, in order to pave the way for the consolidation Act of 1925, earlier Acts were passed in 1922 and 1924 in which were enacted all the substantial amendments which now appear in the Act of 1925 and these amendments were then incorporated in the Bill which became the Act of 1925. Those earlier Acts contain nothing corresponding to section 56 and it is therefore quite certain that those responsible for the preparation of this legislation must have believed and intended that section 56 would make no substantial change in the earlier law, and equally certain that Parliament passed section 56 in reliance on an assurance that it did make no substantial change.

In construing any Act of Parliament we are seeking the intention of Parliament and it is quite true that we must deduce that intention from the words of the Act. If the words of the Act are only capable of one meaning we must give them that meaning no matter how they got there. But if they are capable of having more than one meaning we are, in my view, well entitled to see how


 

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they got there. For purely practical reasons we do not permit debates in either House to be cited: it would add greatly to the time and expense involved in preparing cases involving the construction of a statute if counsel were expected to read all the debates in Hansard, and it would often be impracticable for counsel to get access to at least the older reports of debates in Select Committees of the House of Commons, moreover, in a very large proportion of cases such a search, even if practicable, would throw no light on the question before the court. But I can see no objection to investigating in the present case the antecedents of section 56.

Section 56 was obviously intended to replace section 5 of the Real Property Act, 1845 (8 and 9 Vict. c. 106). That section provided:

 

"That, under an indenture, executed after October 1, 1845, an immediate estate or interest, in any tenements or hereditaments, and the benefit of a condition or covenant, respecting any tenements or hereditaments, may be taken, although the taker thereof be not named a party to the same indenture. ..."

 

Section 56 (1) now provides:

 

"A person may take an immediate or other interest in land or other property, or the benefit of any condition, right of entry covenant or agreement over or respecting land or other property, although he may not be named as a party to the conveyance or other instrument: ..."

 

If the matter stopped there it would not be difficult to hold that section 56 does not substantially extend or alter the provisions of section 5 of the Act of 1845. But more difficulty is introduced by the definition section of the Act of 1925 (section 205) which provides:

 

"(1) In this Act unless the context otherwise requires, the following expressions have the meanings hereby assigned to them respectively, that is to say:- ... (xx) 'Property' includes any thing in action, and any interest in real or personal property."

 

Before further considering the meaning of section 56 (1) I must set out briefly the views which have been expressed about it in earlier cases. White v. Bijou Mansions Ltd.4 dealt with a covenant relating to land. The interpretation of section 56 was not the main issue. Simonds J. rejected an argument that section 56 enabled anyone to take advantage of a covenant if he could show

 

4 [1937] Ch. 610; 53 T.L.R. 88; [1937] 3  All E.R. 269.


 

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that if the covenant were enforced it would redound to his advantage. He said5:

 

"Just as under section 5 of the Act of 1845 only that person could call it in aid who, although not a party, yet was a grantee or covenantee, so under section 56 of this Act only that person can call it in aid who, although not named as a party to the conveyance or other instrument, is yet a person to whom that conveyance or other instrument purports to grant something or with which some agreement or covenant is purported to be made."

 

He was not concerned to consider whether or in what way the section could be applied to personal property. In the Court of Appeal6 Sir Wilfrid Greene M.R. said, in rejecting the same argument as Simonds J. had rejected:

 

"Before he can enforce it he must be a person who falls within the scope and benefit of the covenant according to the true construction of the document in question."

 

Again he was not considering an ordinary contract and I do not think that he can be held to have meant that every person who falls within the "scope and benefit" of any contract is entitled to sue, though not a party to the contract.

In In re Miller's Agreement7 two partners covenanted with a retiring partner that on his death they would pay certain annuities to his daughters. The Revenue's claim for estate duty was rejected. The decision was clearly right. The daughters, not being parties to the agreement, had no right to sue for their annuities. Whether they received them or not depended on whether the other partners were willing to pay or, if they did not pay, whether the deceased partner's executor was willing to enforce the contract. After citing the earlier cases Wynn-Parry J. said8

 

"I think it emerges from these cases that the section has not the effect of creating rights, but only of assisting the protection of rights shown to exist."

 

I am bound to say I do not quite understand that. I had thought from what Lord Simonds said in White's case9 that section 5 of the Act of 1845 did enable certain persons to take benefits which they could not have taken without it. If so, it must have given them rights which they did not have without it. And, if that is so, section 56 must now have the same effect. In Smith and Snipes Hall Farm Ltd. v. River Douglas Catchment Board10 Denning

 

5 [1937] Ch. 610, 625.

6 [1938] Ch. 351, 365; 54 T.L.R. 458; [1938] 1 All E.R. 546, C.A.

7 [1947] Ch. 615; [1947] 2 All E.R. 78.

8 [1947] Ch. 615, 622.

9 [1937] Ch. 610.

10 [1949] 2 K.B. 500, 517; 65 T.L.R. 628; [1949] 2 All E.R. 179, C.A.


 

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L.J., after stating his view that a third person can sue on a contract to which he is not a party, referred to section 56 as a clear statutory recognition of this principle, with the consequence that Miller's case11 was wrongly decided. I cannot agree with that. And in Drive Yourself Hire Co. (London) Ltd. v. Strutt12 Denning L.J. again expressed similar views about section 56.

I can now return to consider the meaning and scope of section 56. It refers to any "agreement over or respecting land or other property." If "land or other property" means the same thing as "tenements or hereditaments" in the Act of 1845 then this section simply continues the law as it was before the Act of 1925 was passed, for I do not think that the other differences in phraseology can be regarded as making any substantial change. So any obscurities in section 56 are obscurities which originated in 1845. But if its scope is wider, then two points must be considered. The section refers to agreements "over or respecting land or other property." The land is something which existed before and independently of the agreement and the same must apply to the other property. So an agreement between A and B that A will use certain personal property for the benefit of X would be within the scope of the section, but an agreement that if A performs certain services for B, B will pay a sum to X would not be within the scope of the section. Such a capricious distinction would alone throw doubt on this interpretation.

Perhaps more important is the fact that the section does not say that a person may take the benefit of an agreement although he was not a party to it: it says that he may do so although he was not named as a party in the instrument which embodied the agreement. It is true that section 56 says " although he may not be named "; but section 5 of the Act of 1845 says although he "be not named a party." Such a change of phraseology in a consolidation Act cannot involve a change of meaning. I do not profess to have a full understanding of the old English law regarding deeds. But it appears from what Lord Simonds said in White'scase13 and from what Vaisey J. said in Chelsea and Walham Green Building Society v. Armstrong14 that being in fact a party to an agreement might not be enough; the person claiming a benefit had to be named a party in the indenture. I have read the explanation of the old law given by my noble and learned friend, Lord Upjohn. I would not venture to criticise it, but I

 

11 [1947] Ch. 615.

12 [1954] 1 Q.B. 250; [1953] 3 W.L.R. 1111; [1953] 2 All E.R. 1475, C.A.

13 [1937] Ch. 610.

14 [1951] Ch. 853; [1951] 2 T.L.R. 312; [1951] 2 All E.R. 250.


 

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do not think it necessary for me to consider it if it leads to the conclusion that section 56 taken by itself would not assist the present respondent.

But it may be that additional difficulties would arise from the application to section 56 of the definition of property in the definition section. If so, it becomes necessary to consider whether that definition can be applied to section 56. By express provision in the definition section a definition contained in it is not to be applied to the word defined if in the particular case the context otherwise requires. If application of that definition would result in giving to section 56 a meaning going beyond that of the old section, then, in my opinion, the context does require that the definition of "property" shall not be applied to that word in section 56. The context in which this section occurs is a consolidation Act. If the definition is not applied the section is a proper one to appear in such an Act because it can properly be regarded as not substantially altering the pre-existing law. But if the definition is applied the result is to make section 56 go far beyond the pre-existing law. Holding that the section has such an effect would involve holding that the invariable practice of Parliament has been departed from per incuriam so that something has got into this consolidation Act which neither the draftsman nor Parliament can have intended to be there. I am reinforced in this view by two facts. The language of section 56 is not at all what one would have expected if the intention had been to bring in all that the application of the definition would bring in. And, secondly, section 56 is one of 25 sections which appear in the Act under the cross-heading "Conveyances and other Instruments." The other twenty-four sections come appropriately under that heading and so does section 56 if it has a limited meaning: but, if its scope is extended by the definition of property, it would be quite inappropriately placed in this part of the Act. For these reasons I am of opinion that section 56 has no application to the present case.

The respondent's second argument is that she is entitled in her capacity of administratrix of her deceased husband's estate to enforce the provision of the agreement for the benefit of herself in her personal capacity, and that a proper way of enforcing that provision is to order specific performance. That would produce a just result, and, unless there is some technical objection, I am of opinion that specific performance ought to be ordered. For the reasons given by your Lordships I would reject the arguments submitted for the appellant that specific performance is not a


 

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possible remedy in this case. I am therefore of opinion that the Court of Appeal reached a correct decision and that this appeal should be dismissed.

 

LORD HODSON. My Lords, the question is whether the respondent, who is the personal representative of her late husband, is entitled in that capacity or personally to enforce payment of an annuity of 5 a week which on March 14, 1962, the appellant agreed to pay to her. This arose from an agreement by the husband to sell his coal merchant's business to the appellant for a consideration. Part of the consideration was to pay the annuity to the respondent.

The respondent as administratrix and therefore a party by representation to the agreement has a cause of action to sue on the agreement, as, indeed, is admitted in the defence. The only question is, "What is the appropriate remedy?" It would be strange if the only remedy were nominal damages recoverable at common law or a series of actions at law to enforce the performance of a continuing obligation.

Although the point was discussed during the course of the case, it is not now contended that at common law (apart from statute), since the contract by its express terms purports to confer a benefit on a third party, the third party can be entitled to enforce the provision in his own name. Similarly, it is not now argued that the claim can be enforced as a trust. The respondent is no longer making any claim in her personal capacity, save under a statute.

The surviving issues in the case are two: first, whether the Court of Appeal were justified in making an order for specific performance by directing that the appellant do pay to the respondent during the remainder of her life from July 15, 1964 (the date of the issue of the writ), an annuity at the rate of 5 per week in accordance with the agreement; second, whether or not the common law rule that a contract such as this one, which purports to confer a benefit on a stranger to the contract, cannot be enforced by the stranger has been to all intents and purposes (with a few exceptions) destroyed by the operation of section 56 (1) of the Law of Property Act, 1925. I will deal with this section first. It provides:

 

"A person may take an immediate or other interest in land or other property, or the benefit of any condition, right of entry, covenant or agreement over or respecting land or other property, although he may not be named as a party to the conveyance or other instrument."


 

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The definition section, 205, provides:

 

"(1) In this Act unless the context otherwise requires, the following expressions have the meanings hereby assigned to them respectively, that is to say:- ... (xx) 'Property' includes any thing in action, and any interest in real or personal property."

 

Section 56 replaced section 5 of the Real Property Act, 1845, which provided:

 

"That, under an indenture, executed after October 1, 1845, an immediate estate or interest, in any tenements or hereditaments, and the benefit of a condition or covenant, respecting any tenements or hereditaments, may be taken, although the taker thereof be not named a party to the same indenture. ..."

 

One effect of section 56 was to make clear that which may not have been plain in the authorities, that those matters dealt with were not confined to covenants, etc., running with the land.

The Law of Property Act, 1925, was a consolidating Act and came into force on January 1, 1926, at the same time as two other Acts, namely, the Law of Property Act, 1922, and the Law of Property (Amendment) Act, 1924. These last two Acts were to be construed as one Act cited together as the Property Acts, 1922 and 1924 (see section 12 (2) of the Act of 1924). Neither of them touched the question raised by the language of section 56 of the Act of 1925.

One cannot deny that the view of Lord Denning M.R. expressed so forcibly, not for the first time, in his judgment in this case, reinforced by the opinion of Danckwerts L.J. in this case, is of great weight notwithstanding that it runs counter to the opinion of all the other judges who have been faced by the task of interpreting this remarkable section, namely, section 56 of the Act of 1925. Contained, as it is, in a consolidation Act, an Act, moreover, dealing with real property, is it to be believed that by a side wind, as it were, Parliament has slipped in a provision which has revolutionised the law of contract? Although the presumption is against such an Act altering the law, the presumption must yield to plain words to the contrary.

Apart from the definition in section 205, I doubt whether many would have been disposed to the view that the general law which declares who can sue upon a contract had received the mortal blow which section 56 is said to have inflicted on it. The use of the word "agreement" is inapt to describe a unilateral promise. However, the definition section, if it is to be applied expressly, refers to property as including "any interest in real or personal


 

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property." But for the saving words "unless the context otherwise requires" I should have felt grave difficulty in resisting the argument that Parliament, even if it acted per incuriam, had somehow allowed to be slipped into consolidating legislation, which had nothing to do with the general law of contract, an extraordinary provision which had such a drastic effect.

The section has been discussed in a number of cases which were cited by Wynn-Parry J. in the case of In re Miller's Agreement.15 A useful summary of the opinions contained in the cases is to be found16 where Wynn-Parry J. cited a passage from In re Foster,17 which appears in the opinion of my noble and learned friend, Lord Pearce. Like Crossman J. I am unable to believe that such an enormous change in the law has been made by section 56 as to establish that an agreement by A with B to pay money to C gives C a right to sue on the contract.

Section 56 has been discussed in recent common law cases, for example, Green v. Russell18 where the argument was rejected by the Court of Appeal. Before the Court of Appeal in Midland Silicones Ltd. v. Scruttons Ltd.19 to the best of my recollection the argument based on section 56 was not pressed. The case came before your Lordships.20 If the section was mentioned it is not easy to see from the report that it played a great part in the case. Viscount Simonds who at first instance had given consideration to the section (see White v. Bijou Mansions Ltd.21 can scarcely have been unconscious of the section when he said in the Midland Silicones case22:

 

"If the principle of jus quaesitum tertio is to be introduced into our law, it must be by Parliament after a due consideration of its merits and demerits. I should not be prepared to give it my support without a greater knowledge than I at present possess of its operation in other systems of law."

 

Section 56 had as long ago as 1937 received consideration by the Law Revision Committee presided over by Lord Wright, then Master of the Rolls, and containing a number of illustrious lawyers. The committee was called upon to report specially on consideration, including the attitude of the common law towards the jus quaesitum tertio. It had available to it and considered the

 

15 [1947] Ch. 615.

16 Ibid. 621.

17 (1938) 54 T.L.R. 993; [1938] 3 All E.R. 357.

18 [1959] 2 Q.B. 226; [1959] 3 W.L.R. 17; [1959] 2 All E.R. 525, C.A.

19 [1961] 1 Q.B. 106; [1960] 3 W.L.R. 372; [1960] 2 All E.R. 737, C.A.

20 [1962] A.C. 446; [1962] 2 W.L.R. 186; [1962] 1 All E.R. 1, H.L.(E.).

21 [1937] Ch. 610.

22 [1962] A.C. 446, 468.


 

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decision of Luxmoore J. in In re Ecclesiastical Commissioners for England's Conveyance,23 which gave the orthodox view of the section. By its Report (Cmd. 5449) it impliedly rejected the revolutionary view, for it recommended (para. 50 (a), pp. 31-32):

 

"That where a contract by its express terms purports to confer a benefit directly on a third party, it shall be enforceable by the third party in his own name."

 

Like my noble and learned friend, Lord Reid, whose opinion I have had the opportunity of reading, I am of opinion that section 56, one of 25 sections in the Act appearing under the cross-heading "Conveyances and other Instruments," does not have the revolutionary effect claimed for it, appearing as it does in a consolidation Act. I think, as he does, that the context does otherwise require a limited meaning to be given to the word "property" in the section.

Although, therefore, the appellant would succeed if the respondent relied only upon section 56 of the Act of 1925, I see no answer to the respondent's claim for specific performance and no possible objection to the order made by the Court of Appeal on the facts of this case.

Indeed, on this aspect of the case it seems that most of the appellant's defences were down before the case reached your Lordships' House. For example, it was argued at one time that the equitable remedy of specific performance of a contract to make a money payment was not available. This untenable contention was not proceeded with. Further, it was argued that specific performance would not be granted where the remedy at law was adequate and so should not be ordered. The remedy at law is plainly inadequate, as was pointed out by the Court of Appeal, as (1) only nominal damages can be recovered; (2) in order to enforce a continuing obligation it may be necessary to bring a series of actions whereas specific performance avoids multiplicity of action. Again, it was said that the courts will not make an order which cannot be enforced. This argument also fell by the wayside for plainly the order can be enforced by the ordinary methods of execution (see R.S.C., Ord. 45, r. 1, and Ord. 45, r. 9).

The peculiar feature of this case is that the plaintiff is not only the personal representative of the deceased but also his widow and the person beneficially entitled to the money claimed. Although the widow cannot claim specific performance in her personal capacity, there is no objection to her doing so in her

 

23 [1936] Ch. 430.


 

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capacity as administratrix, and when the moneys are recovered they will be in this instance held for the benefit of herself as the person for whom they are intended.

The authorities where the remedy of specific performance has been applied in such circumstances as these are numerous. Examples are mentioned in the judgments of the Court of Appeal which have dealt fully with this matter and there is no need to elaborate the topic. Keenan v. Handley24 is a very striking example which appears to be exactly in point. It is to be noticed that the learned counsel engaged in this and other cases never took the point now relied on that the personal representative of the contracting party could not enforce a contract such as this. As I understood the argument, for the appellant it was contended that the personal representative could not obtain specific performance as the estate had nothing to gain, having suffered no loss. There is no authority which supports this proposition and I do not think it has any validity. In Hohler v. Aston25 a decision of Sargant J. is good authority to the contrary. A Mrs. Aston agreed with her nephew Mr. Hohler to make provision for her niece and her husband, Mr. and Mrs. Rollo. Mrs. Aston died before doing so. Mr. Hohler and Mr. and Mrs. Rollo sued the executors of Mrs. Aston for specific performance and succeeded. Sargant J. said26:

 

"The third parties, of course, cannot themselves enforce a contract made for their benefit, but the person with whom the contract is made is entitled to enforce the contract."

 

Mr. Hohler, like the respondent in her capacity as administratrix, took no benefit under the contract but was rightly allowed to recover. It is no part of the law that in order to sue on a contract one must establish that it is in one's interest to do so. Absurd results would follow if a defendant were entitled to lead evidence to show that it would pay the plaintiff better not to sue for specific performance of, say, the sale of a house because the plaintiff could sell it for a higher price to someone else. It is true that specific performance would not be ordered so as to disregard the fiduciary position which the appellant occupies as administratrix. Situations might arise in the administration of an estate when there might be conflicting claims between creditors and persons entitled beneficially otherwise, but this is not such a case. There was in the agreement reference to creditors but there was no evidence directed to this matter and no reason to assume the existence of conflicting claims at the present day.

 

24 (1864) 2 De G.J. & Sm. 283.

25 [1920] 2 Ch. 420.

26 Ibid. 425.


 

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Beswick v. Beswick (H.L.(E.))

 

 

In such a case as this, there having been an unconscionable breach of faith, the equitable remedy sought is apt. The appellant has had the full benefit of the contract and the court will be ready to see that he performs his part (see the judgment of Kay J. in Hart v. Hart27.

I would dismiss the appeal.

 

LORD GUEST. My Lords, by agreement, dated March 14, 1962, the late Peter Beswick assigned to Joseph Beswick his business as coal merchant in consideration of Joseph employing Peter as a consultant for the remainder of his life at a weekly salary of 6 10s. 0d. For the like consideration Joseph, in the event of Peter's death, agreed to pay his widow an annuity charged on the business at the rate of 5 per week. Peter Beswick died on November 3, 1963, and the respondent is the administratrix of his estate. She claims in these proceedings personally and as administratrix of her late husband against Joseph Beswick the appellant for specific performance of the agreement and for payment of the annuity.

Her case before the Vice-Chancellor of the Chancery Court of the County Palatine of Lancaster failed but she succeeded before the Court of Appeal in obtaining an order for specific performance of the agreement of March 14, 1962.

Although the Court of Appeal were only unanimous upon one point in sustaining the respondent's claim there only now remain two outstanding questions for this House.

The first question is whether the respondent as administratrix of the estate of the late Peter Beswick is entitled to specific performance of the agreement of March 14, 1962. Upon this matter I have had the opportunity of reading the speech of my noble and learned friend, Lord Reid. I agree with him in thinking that the respondent is entitled to succeed on this branch of the case.

The second question is whether the respondent as an individual is entitled to the relief which she claims. Although Lord Denning M.R. in the Court of Appeal alone took the view that she was entitled to sue at common law, no question was raised in this House as to the respondent's right at common law in her personal capacity as beneficiary to sue. The decision in Tweddle v. Atkinson28 was not challenged in this House by the respondent. The question remains, however, whether such a right is conferred on her by section 56 (1) of the Law of Property Act, 1925. This question does not strictly arise in view of the decision of the House

 

27 (1881) 18 Ch.D. 670.

28 (1861) 1 B. & S. 393.


 

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on specific performance but, as the Court of Appeal decided by a majority in the respondent's favour and as the matter was widely canvassed in argument, it is proper to deal with it.

Section 56 (1) is in the following terms:

 

"A person may take an immediate or other interest in land or other property, or the benefit of any condition, right of entry, covenant or agreement over or respecting land or other property although he may not be named as a party to the conveyance or other instrument."

 

By section 205 (1) (xx) "unless the context otherwise requires 'property' includes any thing in action and any interest in real or personal property." Mr. Francis for the respondent argued that for section 56 (1) to apply, only four conditions were necessary: (1) the covenant must be contained in an instrument in writing; (2) the covenant must be in respect of land or other property as defined; (3) the covenant must be directly for the benefit of a person not a party to the deed; and (4) the covenant must be legally enforceable, i.e., supported by consideration or under seal. As the covenant to pay an annuity in the deed of March 14, 1962, complied with these four conditions, the respondent, he argued, was entitled to claim her annuity. Before considering section 56 (1) it is necessary to recall the terms of section 5 of the Real Property Act, 1845, which is said to be the predecessor of section 56 (1) of the Act of 1925. The earlier section was in the following terms:

 

"That, under an indenture, executed after October 1, 1845, an immediate estate or interest, in any tenements or hereditaments, and the benefit of a condition or covenant, respecting any tenements or hereditaments, may be taken, although the taker thereof be not named a party to the same indenture. ..."

 

As the preamble to the Act of 1925 shows, it was an Act "to consolidate the enactments relating to conveyancing and the law of property in England and Wales." In these circumstances the presumption is that such an Act is not intended to alter the law, but this prima facie view must yield to plain words to the contrary (Grey v. Inland Revenue Commissioners.29 Viscount Simonds). As appears from the speech of Viscount Simonds, the 1925 Act was preceded by two Law of Property Acts, one in 1922 and one in 1924, which by amendments paved the way for the consolidation of the law of property in the Act of 1925. Section 5 of the Act of 1845 does not appear among the amendments made either in the Acts of 1922 or 1924, but is repealed nominatim

 

29 [1960] A.C. 1, 14; [1959] 3 W.L.R. 759; [1959] 3 All E.R. 603, H.L.(E.).


 

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by the Act of 1925. The law prior to the passing of the Act of 1925 was not in doubt. Section 5 of the Act of 1845 applied only to covenants relating to land and did not extend to personalty. The purpose of section 5 was clearly expressed by Simonds J. (as he then was) in White v. Bijou Mansions Ltd.30 In Forster v. Elvet Colliery Co. Ltd.31 the Court of Appeal decided that the section only applied to covenants "running with the lands" (Farwell L.J.32 It is true that when the case reached the House of Lords (sub nom. Dyson v. Forster33 Lord Macnaghten34doubted whether the section was confined to covenants running with the lands, but the case was decided on other grounds. Therefore, Mr. Francis's suggestion that section 56 (1) was introduced to resolve the doubt as to the application of section 5 of the Act of 1845 to covenants running with the lands cannot carry weight; the law as decided by the Court of Appeal in Forster35 was clear. And, indeed, this was confirmed subsequently in Grant v. Edmondson.36 Moreover, this suggestion as to the purpose of section 56 (1) does not accord with the respondent's main submission that section 56 (1) applies to all covenants affecting land and personalty. If this contention were sound, it would mean that by a side wind a fundamental change in the law had been effected in a consolidating statute. It would subvert the law as set out in Tweddle v. Atkinson37 affirmed in Dunlop Pneumatic Tyre Co. v. Selfridge & Co. Ltd.38 and confirmed in Scruttons Ltd. v. Midland Silicones Ltd.39 that a person who is not a party to a contract cannot sue on it, even if it purports to be made for his benefit. I cannot believe that Parliament intended to make so fundamental a change in a consolidating Act with the history of the Acts of 1922 and 1924 before them. It is said that one of the purposes of the Act of 1925 was to assimilate the law of real and personal property. If that had been the intention of Parliament the amendment would surely have been made in the earlier amending Acts of 1922 or 1924.

The impact of section 56 (1) of the Act of 1925 has been the subject of judicial consideration in several cases. Apart from Lord Denning and Danckwerts L.J. in this case in the Court of Appeal and dicta of Lord Denning in other cases, it has never been held to have the far-reaching effects contended for by the

 

30 [1937] Ch. 610, 623.

31 [1908] 1 K.B. 629; 24 T.L.R. 265, C.A.

32 [1908] 1 K.B. 629, 632.

33 [1909] A.C. 98; 25 T.L.R. 166, H.L.(E.).

34 [1909] A.C. 98, 102.

35 [1908] 1 K.B. 629.

36 [1931] 1 Ch. 1, C.A.

37 1 B. & S. 393.

38 [1915] A,C, 847; 31 T.L.R. 399, H.L.(E.).

39 [1962] A.C. 446.


 

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Beswick v. Beswick (H.L.(E.))

LORD GUEST

 

respondent. In In re Ecclesiastical Commissioners For England's Conveyance,40 the first case where section 56 was considered, Luxmoore J. did express the view that section 56 had enlarged the scope of section 5, but this opinion was obiter. In White v. Bijou Mansions Ltd.41 Simonds J. (as he then was) took the view that section 56 did not effect the fundamental change in the law suggested but that it

 

"can be called in aid only by a person in whose favour the grant purports to be made or with whom the covenant or agreement purports to be made."

 

Sir Wilfrid Greene M.R. in the Court of Appeal in the same case took the same broad view as Simonds J. but for the reason that before a person not a party to the contract can enforce it he must be within the scope and benefit of the covenant according to the true construction of the document in question.42 In In re Miller's Agreement43 Wynn-Parry J. took the view that section 56 had not the effect of creating rights, but only of effecting the protection of rights shown to exist.

Lord Denning's views as to the effect of section 56, as expressed in the Court of Appeal case, were preceded by similar observations in previous cases. Thus in Smith and Snipes Hall Farm Ltd. v. River Douglas Catchment Board44 he expressed the view obiter that section 56 was a statutory recognition of the principle that a third party may take the benefit of a covenant although he may not be named as a party to the instrument. This was followed by Drive Yourself Hire Co. (London) Ltd. v. Strutt45 where Denning L.J. (as he then was) expressed the view that section 56 did away with the rule in Tweddle v. Atkinson46 in cases respecting property, but he was alone in that view. Somervell and Romer L.JJ. do not refer to section 56.

In the present case in the Court of Appeal Lord Denning M.R. and Danckwerts L.J. considered that section 56 had abrogated the rule in Tweddle v. Atkinson46 - "received the mortal wound which it well deserved" as Danckwerts L.J. put it.47 Salmon L.J. doubted if the decision in Scruttons Ltd. v. Midland Silicones Ltd.48 left him free to do so.

Having regard to the law previous to 1925 and to the expressions of judicial opinion since, I cannot think that Parliament

 

40 [1936] Ch. 430.

41 [1937] Ch. 610, 625.

42 [1938] Ch. 351, 365.

43 [1947] Ch. 615, 622.

44 [1949] 2 K.B. 500.

45 [1954] 1 Q.B. 250.

46 1 B. & S. 393.

47 [1966] Ch. 538, 563; [1966] 3 W.L.R. 396; [1966] 3 All E.R. 1, C.A.

48 [1962] A.C. 446.


 

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Beswick v. Beswick (H.L.(E.))

LORD GUEST

 

intended to make such a clean sweep of the previous law as the respondent's construction of section 56 would involve. There is, in my view, no half-way house between this extreme construction which would apply section 56 to a covenant or agreement relating to property in the wide sense of the definition section or limiting the construction to the law as previously existing. I am not satisfied that the limitations suggested by Wynn-Parry J. in In re Miller's Agreement,49 Simonds J. and Greene M.R. in White v. Bijou Mansions Ltd.50 can be satisfactorily justified upon a construction of section 56.

If, of course, the words of section 56 are susceptible of only one construction, then the court must give effect to that construction. But, as this is a consolidating Act, if the words are capable of more than one construction, then the court will give effect to that construction which does not change the law. Section 205 (1) of the 1925 Act - the definition section - commences with the expression in common form "unless the context otherwise requires." In my view, the context requires that section 56 should not extend the provisions of section 5 of the Act of 1845, which were limited to land, to personalty. If section 56 was designed to replace section 5, it does not replace it by extending its scope to personalty. On referring to section 56 it will be seen that the definition section 205 is the section which creates the difficulty. Apart from this section it would be proper to construe "or other property" in section 56 as referring to real property to which its predecessor in section 5 of the Act of 1845 was limited. It may be that the draftsman in incorporating the wide definition of "property" into section 56 had overlooked the result which it would have on the effect of this section by extending it beyond its predecessor. I am constrained to hold that if section 56 is to replace the previous law in section 5 of the Act of 1845, this can only be done by limiting the word "property" in section 56 to real property and thereby excluding the wide definition of "property" contained in section 205 (1) (xx). The result is that the respondent has, in my view, no right to sue on the agreement of March 14, 1962, in her individual capacity.

However, for the reasons already given, I would dismiss the appeal.

 

LORD PEARCE. My Lords, if the annuity had been payable to a third party in the lifetime of Beswick senior and there had been

 

49 [1947] Ch. 615, 622.

50 [1937] Ch. 610, 625; [1938] Ch. 351, 365.


 

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88

A.C.

Beswick v. Beswick (H.L.(E.))

LORD PEARCE

 

default, he could have sued in respect of the breach. His administratrix is now entitled to stand in his shoes and to sue in respect of the breach which has occurred since his death.

It is argued that the estate can only recover nominal damages and that no other remedy is open, either to the estate or to the personal plaintiff. Such a result would be wholly repugnant to justice and commonsense. And if the argument were right it would show a very serious defect in the law.

In the first place, I do not accept the view that damages must be nominal. Lush L.J. in Lloyd's v. Harper51 said:

 

"Then the next question which, no doubt, is a very important and substantial one, is, that Lloyd's, having sustained no damage themselves, could not recover for the losses sustained by third parties by reason of the default of Robert Henry Harper as an underwriter. That, to my mind, is a startling and alarming doctrine, and a novelty, because I consider it to be an established rule of law that where a contract is made with A for the benefit of B, A can sue on the contract for the benefit of B, and recover all that B could have recovered if the contract had been made with B himself."

 

(See also Drimmie v. Davies.52 I agree with the comment of Windeyer J. in the case of Coulls v. Bagot's Executor and Trustee Co. Ltd.53 in the High Court of Australia that the words of Lush L.J. cannot be accepted without qualification and regardless of context and also with his statement:

 

"I can see no reason why in such cases the damages which A would suffer upon B's breach of his contract to pay C $500 would be merely nominal: I think that in accordance with the ordinary rules for the assessment of damages for breach of contract they could be substantial. They would not necessarily be $500; they could I think be less or more."

 

In the present case I think that the damages, if assessed, must be substantial. It is not necessary, however, to consider the amount of damages more closely since this is a case in which, as the Court of Appeal rightly decided, the more appropriate remedy is that of specific performance.

The administratrix is entitled, if she so prefers, to enforce the agreement rather than accept its repudiation, and specific performance is more convenient than an action for arrears of payment followed by separate actions as each sum falls due. Moreover, damages for breach would be a less appropriate remedy since the parties to the agreement were intending an annuity for a widow; and a lump sum of damages does not accord with this. And if

 

51 (1880) 16 Ch.D. 290, 321, C.A.

52 [1899] 1 Ir.R. 176.

53 (1967) 40 A.L.J.R. 471, 486.


 

[1968]

 

89

A.C.

Beswick v. Beswick (H.L.(E.))

LORD PEARCE

 

(contrary to my view) the argument that a derisory sum of damages is all that can be obtained be right, the remedy of damages in this case is manifestly useless.

The present case presents all the features which led the equity courts to apply their remedy of specific performance. The contract was for the sale of a business. The defendant could on his part clearly have obtained specific performance of it if Beswick senior or his administratrix had defaulted. Mutuality is a ground in favour of specific performance.

Moreover, the defendant on his side has received the whole benefit of the contract and it is a matter of conscience for the court to see that he now performs his part of it. Kay J. said in Hart v. Hart54:

 

"... when an agreement for valuable consideration ... has been partially performed, the court ought to do its utmost to carry out that agreement by a decree for specific performance."

 

What, then, is the obstacle to granting specific performance?

It is argued that since the widow personally had no rights which she personally could enforce the court will not make an order which will have the effect of enforcing those rights. I can find no principle to this effect. The condition as to payment of an annuity to the widow personally was valid. The estate (though not the widow personally) can enforce it. Why should the estate be barred from exercising its full contractual rights merely because in doing so it secures justice for the widow who, by a mechanical defect of our law, is unable to assert her own rights? Such a principle would be repugnant to justice and fulfil no other object than that of aiding the wrongdoer. I can find no ground on which such a principle should exist.

In Hohler v. Aston55 Sargant J. enforced a contract relating to the purchase of a house for the benefit of third parties. The third parties were joined as plaintiffs, but the relief was given to the plaintiff who had made the contract for their benefit56:

 

"The third parties, of course, cannot themselves enforce a contract made for their benefit, but the person with whom the contract is made is entitled to enforce the contract."

 

In Keenan v. Handley57 the court enforced an agreement providing the benefit of an annuity in favour of a mother who was a party to the agreement and, after her death, to her child, who was not a party to it.

 

54 18 Ch.D. 670, 685.

55 [1920] 2 Ch. 420.

56 Ibid. 425.

57 2 De G. J. & Sm. 283.


 

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90

A.C.

Beswick v. Beswick (H.L.(E.))

LORD PEARCE

 

And in Drimmie v. Davies58 the Court of Appeal in Ireland ordered specific performance of an agreement whereby annuities were provided for third parties. Holmes L.J. there said59:

 

"In this case Davies, junior, covenanted for valuable consideration with Davies, senior, that in certain events he would pay certain annuities to the children of the latter. If such annuities had become payable in the life of the covenantee, and they were not paid, what legal obstacle would there be to his suing the covenantor? Indeed, I believe that it is admitted that such an action would lie, but that it would only result in nominal damages. A result more repugnant to justice, as well as to legal principle, I can hardly imagine. The defendant would thereby escape from paying what he had undertaken to pay by making an illusory payment never contemplated by either party. Well, if Davies, senior, would have been entitled to sue in his lifetime if the annuities were then payable, his executors would have the same right of action after his death. As I have already said, the question is elementary."

 

Recently in Coulls v. Bagot's Executor and Trustee Co. Ltd.60the learned Chief Justice of Australia, Sir Garfield Barwick, in commenting on the report of the Court of Appeal's decision in the present case, said:

 

"I would myself, with great respect, agree with the conclusion that where A promises B for a consideration supplied by B to pay C that B may obtain specific performance of A's promise, at least where the nature of the consideration given would have allowed the debtor to have obtained specific performance. I can see no reason whatever why A in those circumstances should not be bound to perform his promise. That C provided no part of the consideration seems to me irrelevant."

 

Windeyer J. in that case said:

 

"It seems to me that contracts to pay money or transfer property to a third person are always, or at all events very often, contracts for breach of which damages would be an inadequate remedy - all the more so if it be right (I do not think it is) that damages recoverable by the promisee are only nominal. Nominal or substantial, the question seems to be the same, for when specific relief is given in lieu of damages it is because the remedy, damages, cannot satisfy the demands of justice. 'The court,' said Lord Selbourne 'gives specific performance instead of damages, only when it can by that means do more perfect and complete justice': Wilson v. Northampton and Banbury Junction Railway Co.61

 

58 [1899] 1 Ir.R. 176.

59 Ibid. 190.

60 40 A.L.J.R. 471, 477, 487.

1 (1874) 9 Ch.App. 279, 284.


 

[1968]

 

91

A.C.

Beswick v. Beswick (H.L.(E.))

LORD PEARCE

 

Lord Erskine in Alley v. Deschamps62 said of the doctrine of specific performance: 'This court assumed the jurisdiction upon this simple principle; that the party had a legal right to the performance of the contract; to which right the courts of law whose jurisdiction did not extend beyond damages, had not the means of giving effect.' Complete and perfect justice to a promisee may well require that a promisor perform his promise to pay money or transfer property to a third party. I see no reason why specific performance should not be had in such cases - but of course not where the promise was to render some personal service. There is no reason to-day for limiting by particular categories, rather than by general principle, the cases in which orders for specific performance will be made. The days are long past when the common law courts looked with jealousy upon what they thought was a usurpation by the Chancery court of their jurisdiction."

 

He continued later:

 

"It is, I think, a faulty analysis of legal obligations to say that the law treats the promisor as having a right to elect either to perform his promise or to pay damages. Rather, using one sentence from the passage from Lord Erskine's judgment which I have quoted above, the promisee has 'a legal right to the performance of the contract.' Moreover we are concerned with what Fullagar J. once called 'a system which has never regarded strict logic as its sole inspiration.' Tatham v. Huxtable."63

 

I respectfully agree with these observations.

It is argued that the court should be deterred from making the order because there will be technical difficulties in enforcing it. In my opinion, the court should not lightly be deterred by such a consideration from making an order which justice requires. But I do not find this difficulty.

R.S.C., Ord. 45, r. 9 (1), provides under the heading "Execution by or against a person not being a party":

 

"Any person, not being a party to a cause or matter, who obtains any order or in whose favour any order is made, shall be entitled to enforce obedience to the order by the same process as if he were not a party."

 

This would appear by its wide terms to enable the widow for whose benefit the annuity is ordered to enforce its payment by the appointment of a receiver, by writ of fi. fa., or even by judgment summons. I see no reason to limit the apparent meaning of the words of the rule, which would appear to achieve a sensible purpose. Moreover, I see no objection in principle to the estate

 

62 (1806) 13 Ves. 225, 227-228.

63 (1950) 81 C.L.R. 639, 649.


 

[1968]

 

92

A.C.

Beswick v. Beswick (H.L.(E.))

LORD PEARCE

 

enforcing the judgment, receiving the fruits on behalf of the widow and paying them over to the widow, just as a bailee of goods does when he recovers damages which should properly belong to the true owner of the goods.

It is contended that the order of the Court of Appeal is wrong and there should be no specific performance, because the condition that the defendant should pay off two named creditors has been omitted, and there can be no enforcement of part of the contract. But the assumption, since we have no evidence on the matter, is that the creditors have both already been paid off. And even if they have not, a party is entitled to waive a condition which is wholly in his favour; and its omission cannot be used by the defendant as a ground for not performing his other parts of the contract. It is unnecessary, therefore, to consider in what circumstances a contract may be enforced in part.

In my opinion, the plaintiff as administratrix is entitled to a decree of specific performance.

It is not, therefore, strictly necessary to deal with the respondent's argument that the plaintiff is entitled at common law or, by reason of section 56 of the Law of Property Act, 1925, to sue in her personal capacity. The learned Master of the Rolls expressed the view that at common law the widow was entitled to sue personally; but this view was not argued before your Lordships. He distinguished Tweddle v. Atkinson.64 In Smith and Snipers Hall Farm Ltd. v. River Douglas Catchment Board65and White v. John Warwick & Co. Ltd.66 the same learned judge had given his reasons for thinking that Tweddle v. Atkinson67 was wrongly decided and was out of line with the law as it had been settled in previous centuries. On the other hand, in Coulls v. Bagot's Executor and Trustee Co. Ltd.68 a survey of the cases from Tudor times led Windeyer J. to a different conclusion, namely that:

 

"The law was not in fact 'settled' either way during the two hundred years before 1861. But it was, on the whole, moving towards the doctrine that was to be then and thereafter taken as settled."

 

But the greatest difficulty in the way of the widow's right to sue personally is that two cases in this House, Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co. Ltd.69 and Midland Silicones Ltd.

 

64 1 B. & S. 393.

65 [1949] 2 K.B. 500, 514.

66 [1953] 1 W.L.R. 1285; [1953] 2 All E.R. 1021, C.A.

67 1 B. &. S. 393.

68 40 A.L.J.R. 471, 485.

69 [1915] A.C. 847.


 

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93

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LORD PEARCE

 

v. Scruttons Ltd.,70 clearly accepted the principle that a third party cannot sue on a contract to which he was not a party.

The majority of the Court of Appeal expressed the view that this principle had been abolished by section 56 of the Law of Property Act. If, however, a far reaching and substantial alteration had been intended by Parliament, one would expect it to be expressed in clear terms. Yet the terms of section 56 (1) are far from clear and appear to be simply an enlargement of a section passed 80 years before. Further, section 56 is to be found in a part of the Act devoted to the technicalities of conveyancing rather than the creation of rights. The cross heading of that part of the Act is "Conveyances and other Instruments." And the second part of the section deals with a small question of formality. The important innovations in the law of property were contained in the two Acts of 1922 and 1924, but this alleged innovation was not among them. It first appears in the 1925 Law of Property Act. That was a consolidation Act and, therefore, one should not find a substantial innovation in it. It is of interest that the notes in Sir Benjamin Cherry's book (Wolstenholme and Cherry's Conveyancing Statutes 1925-27, 11th edition) contain no suggestion that the section has these far-reaching effects. Nor can I find any trace of this in his Lectures on the New Property Acts published in 1926 with a preface by Viscount Haldane who gives an account of the genesis and birth of the Bill. Nor did Luxmoore J. so find in In re Ecclesiastical Commissioners for England's Conveyance.71

The distinguished committee which in 1937 considered the whole subject and recommended the suggested innovation in terms which have unfortunately not yet been adopted, cannot have thought that it had already been achieved by section 56. Since then learned judges in various cases have considered the section. The history of these cases was summed up by Crossman J. in In re Foster72 in the following passage which Wynn-Parry J. quoted in arriving at the conclusion that the section did not produce the suggested innovation (In re Miller's Agreement73:

 

"In my judgment, section 56 does not have this effect. I think Mr. Stone's contention really amounts to this, that an agreement by A. with B. to pay money to C. gives C. a right to sue on the contract; I think it must go as far as that, and I am not prepared to hold that section 56 has created such an enormous change in the law of contract as would be involved in that proposition, because that would be, no doubt

 

70 [1962] A.C. 446.

71 [1936] Ch. 430.

72 54 T.L.R. 993, 995.

73 [1947] Ch. 615, 621.


 

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94

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Beswick v. Beswick (H.L.(E.))

LORD PEARCE

 

apart from the section, that nobody could have ever suggested that a contract by A. with B. to pay C. a sum of money enabled C. to sue A. on that contract. I hold following what I understand to have been the view that Luxmoore J. expressed in the case of In re Ecclesiastical Commissioners for England's Conveyance74 and the view that Simonds J. expressed in White v. Bijou Mansions Ltd.,75 and the view of the present Master of the Rolls expressed in the same case on appeal and of Farwell J. as expressed in In re Sinclair's Life Policy,76 that section 56 of the Law of Property Act, 1925, can only be called in aid by a person who, although not a party to the conveyance or other instrument in question is yet a person to whom that conveyance or other instrument purports to grant something or with whom some agreement or covenant is thereby purported to be made.'"

 

I am compelled to the conclusion that Parliament certainly did not intend to effect the suggested innovation. But has it achieved it per incuriam? I should be reluctant to give to the section an effect which Parliament so clearly did not intend, if the words are capable of another meaning. Unsatisfactory as I find the limited meaning given to the words by the above cases, it is a possible meaning. Moreover, I incline to the view of the section expressed by my noble and learned friend, Lord Upjohn, and its historical aspect as set out by him. Accordingly, in my view, section 56 does not have any relevance in this case. I also agree with his observations on the cases of In re Engelbach77 and In re Sinclair's Life Policy.78

I would dismiss the appeal.

 

LORD UPJOHN. My Lords, by a very informal written agreement, though prepared by a solicitor, Peter Beswick (the deceased) agreed with the appellant to assign to him the goodwill and assets of the business of a coal merchant carried on by him in consideration of the appellant employing the deceased as consultant to the business for the remainder of his life at a weekly rate of 6 10s. 0d. This agreement, set out in full in the judgment of Lord Denning M.R. in the Court of Appeal, was not expressed to be "inter partes" in any strict sense, a matter of fundamental importance when I come to consider the impact of section 56 of the Law of Property Act, 1925, upon this appeal.

For the like consideration the appellant agreed to pay to the

 

74 [1936] Ch. 430.

75 [1937] Ch. 610; [1938] Ch. 351.

76 [1938] Ch. 799; 54 T.L.R. 918; [1938] 3 All E.R. 124.

77 [1924] 2 Ch. 348.

78 [1938] Ch. 799.


 

[1968]

 

95

A.C.

Beswick v. Beswick (H.L.(E.))

LORD UPJOHN

 

deceased's widow (the respondent to this appeal) an annuity to be charged on the business at the rate of 5 0s. 0d. per week.

The deceased died intestate on November 3, 1963, and his widow took out letters of administration to his estate on June 30, 1964. The appellant duly discharged the salary of 6 10s. 0d. during the lifetime of the deceased. He made one payment to the widow and thereafter repudiated his liability to do so. Hence these High Court proceedings initiated by the widow, suing both personally and as administratrix of her husband, and soon transferred to the Chancery Court of the County Palatine of Lancaster.

Her suit was dismissed by Burgess V.-C. but her appeal to the Court of Appeal was allowed and an order for specific performance of the agreement, together with payment of arrears of the annuity, made against the appellant.

As it is necessary to keep clear and distinct the rights of the widow as administratrix of her husband and personally, I think it will be convenient to use letters: letter A represents the deceased and A1 the widow, as personal representative, B the widow in her personal capacity and C the appellant. And in other examples I shall give, these letters will serve the same purpose.

Much is common ground between the parties: (1) B was not a party to the agreement; (2) A did not enter into the agreement as trustee for B in relation to the annuity to be paid to her, (3) A1 stands for all relevant purposes in the shoes of A and is entitled to sue C for breach of his admitted repudiation of the agreement (see paragraph 5 of the defence), but the parties differ fundamentally as to the remedy to which A1 is entitled in such an action.

Counsel for the respondent has not felt able to support the view, expressed by Lord Denning M.R., that apart from section 56 of the Law of Property Act, 1925, B is entitled to sue C at common law. I think that he was right to make this concession, for whatever may have been the state of the law before Tweddle v. Atkinson79 it is difficult to see how your Lordships can go back over 100 years in view of the decisions in this House of Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co. Ltd.80 and Scruttons Ltd. v. Midland Silicones Ltd.81

Leaving section 56 out of account, there was no real dispute between the parties as to their respective rights (as distinct from remedies) under the agreement. (a) B has no rights thereunder.

 

79 1 B. & S. 393.

80 [1915] A.C. 847.

81 [1962] A.C. 496.


 

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But it was clear from the whole tenor of the agreement that the annuity was to be paid to her for her own beneficial enjoyment, so if C paid it to her she could keep it and did not hold it as a constructive trustee for A1; (b) C would completely perform his obligation under the contract by continuing to pay the annuity to B during her life. Neither A not A1 could compel C to pay it to A or A1, but (c) A or A1 and C could, if they pleased, agree to modify, compromise or even discharge further performance of the contract by C, and B would have no right to complain. If authority be wanted for these fundamental propositions, it is to be found in In re Schebsman82 and In re Stapleton-Bretherton.83

My Lords, if I may pause there for a moment, I have the greatest difficulty in seeing how In re Englebach,84 to which we were referred, can have been rightly decided. In that case a man took out a policy payable to his daughter on attaining 21; she was then one month old. He died. She attained 21 and the policy moneys were paid to her, but she was persuaded to pay them into the hands of a stakeholder pending a decision as to the legal rights of the parties and it was held that the estate of the father was entitled thereto. In my view, she was badly advised. The moneys were paid to her as provided by the terms of the contract; for her own use and benefit, I should have thought plain. In In re Schebsman85 both at first instance before Uthwatt J. (as he then was) and in the Court of Appeal it is clear that this case occasioned some difficulty. I find the explanation given by Luxmoore L.J.86 and of Uthwatt J,87 unsatisfactory. Why should the insurance company merely be regarded as a mandatory to pay the policy moneys due to the assurer to his daughter presumably as his agent. This seems to me unrealistic. In re Sinclair's Life Policy88 is perhaps distinguishable on its facts for the insurance company paid the money into court and it was therefore difficult for the infant to show any title thereto but in so far as Farwell J. held at the end of his judgment that if the money had been paid to the infant, he would hold it as constructive trustee for the estate of the godfather, I disagree with him.

My Lords, to return to this case. Admittedly A1 can sue from time to time for damages at common law on failure to pay each instalment of the annuity. But surely on a number of grounds this is a case for specific performance.

 

82 [1944] Ch. 83.

83 [1941] Ch. 482; [1941] 3 All E.R. 5.

84 [1924] 2 Ch. 348.

85 [1943] Ch. 366; [1944] Ch. 83.

86 [1944] Ch. 83, 100.

87 [1943] Ch. 366.

88 [1938] Ch. 799.


 

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97

A.C.

Beswick v. Beswick (H.L.(E.))

LORD UPJOHN

 

First, here is the sale of a business for full consideration wholly executed on A's part who has put C into possession of all the assets. C is repudiating the obligations to be performed by him. To such a case the words of Kay J. in Hart v. Hart89 are particularly appropriate:

 

"... when an agreement for valuable consideration between two parties has been partially performed, the court ought to do its utmost to carry out that agreement by a decree for specific performance."

 

The fact that A by the agreement was to render such services as consultant as he might find convenient or at his own absolute discretion should decide may be ignored as de minimis and the contrary was not argued. In any event the fact that there is a small element of personal service in a contract of this nature does not destroy that quality of mutuality (otherwise plainly present) want of which may in general terms properly be a ground for refusing a decree of specific performance. See, for example, Fortescue v. Lostwithiel and Fowey Railway Co.90

In the courts below, though not before your Lordships, it was argued that the remedy of specific performance was not available when all that remained was the obligation to make a money payment. Danckwerts L.J. rightly demolished this contention as untenable for the reasons he gives.91

But when the money payment is not made once and for all but in the nature of an annuity there is an even greater need for equity to come to the assistance of the common law. Equity is to do true justice to enforce the true contract that the parties have made and to prevent the trouble and expense of a multiplicity of actions. This has been well settled for over a century: Swift v. Swift.92In that case an annuity of 40 p.a. was payable to a lady quarterly and Lord Plunket L.C. enforced specific performance of it. He said93:

 

"It is said she has a complete remedy at law for the breach of this contract, and that, therefore, this court should not interfere. Now, the remedy at law could only be obtained in one of two ways, either by at once recovering damages for all the breaches that might occur during the joint lives of herself and the defendant, or by bringing four actions in each year, and recovering in each the amount of a quarterly payment of the annuity. Those are the two modes of redress open to the plaintiff at Law. And I am called on to refuse relief here on the ground that such remedies are equally beneficial

 

89 18 Ch.D. 670, 685.

90 [1894] 3 Ch. 621.

91 [1967] Ch. 538, 560-561.

92 (1841) 3 Ir.Eq.R. 267.

93 Ibid. 275-276.


 

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and effectual for the plaintiff as that which this court could afford. To refuse relief on such a ground would not, in my opinion, be a rational administration of justice. I do not see that there is any authority for refusing relief, and certainly there is no foundation in reason for doing so."

 

Then, after referring to the case of Adderley v. Dixon,94 he continued95:

 

"Applying this to the present case, leaving the plaintiff to proceed at law and to get damages at once for all the breaches that might occur during the joint lives of her and the defendant, would, in effect, be altering the entire nature of the contract that she entered into: it would be compelling her to accept a certain sum, a sum to be ascertained by the conjecture of a jury as to what was the value of the annuity. This would be most unreasonable and unjust: her contract was for the periodical payment of certain sums during an uncertain period; she was entitled to a certain sum of money, and she agreed to give up that for an annuity for her own and the defendant's lives, and to insist on her now accepting a certain sum of money in the shape of damages for it, would be in effect to make her convert into money, what she, having in money, exchanged for an annuity. As to her resorting four times every year to a Court of Law for each quarterly payment of this annuity, it is a manifest absurdity to call that a beneficial or effectual remedy for the plaintiff; and resting the case on that ground alone, I think I am warranted by the highest authority in granting the relief sought."

 

It is in such common sense and practical ways that equity comes to the aid of the common law and it is sufficiently flexible to meet and satisfy the justice of the ease in the many different circumstances that arise from time to time.

 

To sum up this matter: had C repudiated the contract in the lifetime of A the latter would have had a east iron ease for specific performance. Can it make any difference that by the terms of the agreement C is obliged to pay the annuity after A's death to B? Of course not. On the principle I have just stated it is clear that there can be nothing to prevent equity in A's specific performance action making an appropriate decree for specific performance directing payment of the annuity to A but during his life and thereafter to B for her life.

There is abundant authority to support that proposition. The first is Keenan v. Handley96 and on appeal,97 the facts of which are sufficiently set out in the judgment of Lord Denning M.R. That ease seems to me dead in point and I do not accept the

 

94 (1824) 1 Sim. & St. 607.

95 3 Ir.Eq.R. 267, 276-277.

96 (1864) 12 W.R. 930.

97 2 De G.J. & Sm. 283.


 

[1968]

 

99

A.C.

Beswick v. Beswick (H.L.(E.))

LORD UPJOHN

 

argument that the mother, Ellen Keenan, was contracting as trustee for her child; such a relationship cannot be spelt out of Captain Handley's letter. As one of the contracting parties she was suing to enforce her rights under the letter, as later modified by agreement for payment of 100 a year to herself for her life and 50 a year to the child and after Ellen Keenan's death 150 a year to the child for her life. True it is that no point was taken either at first instance or in the Court of Appeal that the infant could not sue but, as Tweddle v. Atkinson98 had only been decided some three years before, that point cannot have been overlooked. I draw the inference that it never occurred to those distinguished equity judges who tried that case that there could be any difficulty in making an order upon C at the instance of A to pay B. That is made clear by the order in that case which is to be found in that great book of authority, Seton on Judgments and Orders (see 7th edition (1912), vol. 3, p. 2212). That was followed by Peel v. Peel99 also discussed by Lord Denning M.R. Then came the Irish case of Drimmie v. Davies,100 a very familiar type of case where the parties in a firm agreed together to pay annuities to the dependants of a partner when he should die. The executors of a deceased partner brought an action to enforce payment of the annuities and succeeded. Although my noble and learned friend, Lord Pearce, has set out the observations of Holmes L.J. in that case in his speech, it so exactly expresses my own view that I set it out again. Holmes L.J. said101:

 

"In this case Davies, junior, covenanted for valuable consideration with Davies, senior, that in certain events he would pay certain annuities to the children of the latter. If such annuities had become payable in the life of the covenantee and they were not paid, what legal obstacle would there be to his suing the covenantor? Indeed, I believe that it is admitted that such an action would lie, but that it would only result in nominal damages. A result more repugnant to justice, as well as to legal principle, I can hardly imagine. The defendant would thereby escape from paying what he had undertaken to pay by making an illusory payment never contemplated by either party. Well, if Davies, senior, would have been entitled to sue in his lifetime if the annuities were then payable, his executors would have the same right of action after his death. As I have already said, the question is elementary."

 

Finally there was the rather unusual case of Hohler v. Aston102also mentioned by Lord Denning M.R. who quotes the relevant

 

98 1 B. & S. 393.

99 (1869) 17 W.R. 586.

100 [1899] 1 Ir.R. 176.

101 [1899] 1 Ir.R. 176, 190.

102 [1920] 2 Ch. 420.


 

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100

A.C.

Beswick v. Beswick (H.L.(E.))

LORD UPJOHN

 

passage from the judgment of Sargant J. (as he then was). This again shows the extent of the power of equity to assist the common law, limited only by canons of common sense and the practical limitations on the power to oversee and administer specific performance decrees. So the power and indeed duty, in proper cases, of the court of equity to make specific performance orders in favour of third parties at the instance of one of the contracting parties is not in doubt.

But when A dies and his rights pass to A1, it is said that the remedy of specific performance is no longer appropriate against C. The argument was first that the estate of A suffered no damage by reason of C's failure to pay B; so A1 is entitled to nominal damages but as she is not otherwise interested in the agreement as such it would be wrong to grant specific performance; for that remedy is available only where damages will be an inadequate remedy. Here nominal damages are adequate. Further, it was argued, to do so would really be to confer upon B a right which she does not have in law or equity to receive the annuity. Then, secondly, it was said that if the remedy of specific performance is granted it might prejudice creditors of A so that the parties ought to be left to their strict rights at law. Thirdly, it is said that there are procedural difficulties in the way of enforcing an order for specific performance in favour of a third party. I will deal with these points, though in reverse order.

As to procedural difficulties, I fear I do not understand the argument. The point if valid applies to an action for specific performance by A just as much as by A1 yet in the authorities I have quoted no such point was ever taken; in Drimmie v. Davies103 indeed the action was by executors. Further, it seems to me that if C fails to obey a four-day order obtained by A1, could enforce it under the clear and express provisions of R.S.C., Ord. 45, r. 9 (formerly Ord. 42, r. 26). Alternatively A1 could move for and obtain the appointment of a receiver of the business upon which the annuity is charged and the receiver would then be directed by the Court to pay the annuity to B out of the profits of the business. Finally, A1 could issue a writ of fi. fa. under Ord. 45, r. 1, but as A1 would then be enforcing the contract and not modifying or compromising it the court would obviously in executing its order compel her to carry out the contract in toto and hand the proceeds of execution to B. This point is entirely without substance.

Then as to the second point. Let me assume (contrary to the

 

103 [1899] 1 Ir.R. 176.


 

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101

A.C.

Beswick v. Beswick (H.L.(E.))

LORD UPJOHN

 

fact) that A died with substantial assets but also many creditors. The legal position is that prima facie the duty of A1 is to carry out her intestate's contracts and compel C to pay B; but the creditors may be pressing and the agreement may be considered onerous; so it may be her duty to try and compromise the agreement with C and save something for the estate even at the expense of B. See Ahmed Angullia v. Estate & Trust Agencies (1927) Ltd.104 per Lord Romer. So be it, but how can C conceivably rely upon this circumstance as a defence by him to an action for specific performance by A1? Of course not; he, C, has no interest in the estate; he cannot plead a possible jus tertii which is no concern of his. It is his duty to fulfil his contract by paying C. A1 alone is concerned with the creditors, beneficiaries or next of kin of A and this point therefore can never be a defence by C if A1 in fact chooses to sue for specific performance rather than to attempt a compromise in the interest of the estate. This point seems to me misconceived. In any event, on the facts of this case there is no suggestion that there are any unpaid creditors and is sole next of kin, so the point is academic.

Then, as to the first point. On this question we were referred to the well-known dictum of Lush L.J. in Lloyd's v. Harper:105

 

"I consider it to be an established rule of law that where a contract is made with A for the benefit of B, A can sue on the contract for the benefit of B and recover all that B could have recovered if the contract had been made with B himself."

 

While in the circumstances it is not necessary to express any concluded opinion thereon, if the learned Lord Justice was expressing a view on the purely common law remedy of damages, I have some difficulty in going all the way with him. If A sues for damages for breach of contract by reason of the failure to pay he must prove his loss; that may be great or nominal according to circumstances.

I do not see how A can, in conformity with clearly settled principle in assessing damages for breach of contract, rely at common law on B's loss. I agree with the observations of Windeyer J. in the as yet unreported ease of Coulls v. Bagot's Executor and Trustee Co. Ltd.106 in the High Court of Australia. But I note, however, that in Lloyd's v. Harper107 James and Cotton L.JJ. treated A as trustee for B and I doubt whether Lush L.J. thought otherwise.

 

104 [1938] A.C. 624, 632; 54 T.L.R. 831; [1938] 3 All E.R. 106, P.C.

105 16 Ch.D. 290, 321.

106 40 A.L.J.R. 471.

107 16 Ch.D. 290, 315, 317.


 

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102

A.C.

Beswick v. Beswick (H.L.(E.))

LORD UPJOHN

 

However, I incline to the view that on the facts of this case damages are nominal for it appears that A died without any assets save and except the agreement which he hoped would keep him and then his widow for their lives. At all events let me assume that damages are nominal. So it is said nominal damages are adequate and the remedy of specific performance ought not to be granted. That is, with all respect, wholly to misunderstand that principle. Equity will grant specific performance when damages are inadequate to meet the justice of the case.

But in any event quantum of damages seldom affects the right to specific performance. If X contracts with Y to buy Blackacre or a rare chattel for a fancy price because the property or chattel has caught his fancy he is entitled to enforce his bargain and it matters not that he could not prove any damage.

In this case the court ought to grant a specific performance order all the more because damages are nominal. C has received all the property; justice demands that he pay the price and this can only be done in the circumstances by equitable relief. It is a fallacy to suppose that B is thereby obtaining additional rights; A1 is entitled to compel C to carry out the terms of the agreement. The observations of Holmes L.J. already quoted are very much in point.

My Lords, in my opinion the Court of Appeal were clearly right to grant a decree of specific performance. That is sufficient to dispose of the appeal but as your Lordships have heard much argument on the true scope and ambit of section 56 of the Law of Property Act, 1925, I propose to express some views thereon, though necessarily obiter.

Section 56 of the Law of Property Act, 1925, has a long history behind it. Section 56 replaced section 5 of the Real Property Act, 1845, which amended some very ancient law relating to indentures inter partes, so I shall start by stating the common law on the subject.

The rule was that a grantee or covenantee, though named as such in an indenture under seal expressed to be made inter partes, could not take an immediate interest as grantee nor the benefit of a covenant as covenantee unless named as a party to the indenture. This rule, as the authorities I shall quote show, applied not only to real estate but to personal grants and covenants.

But how narrow this rule was, but equally, how well understood, will also be shown by those authorities.

The first is Scudamore v. Vandenstene108 decided in 1587. By

 

108 (1587) 2 Co.Inst. 673.


 

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103

A.C.

Beswick v. Beswick (H.L.(E.))

LORD UPJOHN

 

an indenture of charterparty, made between Scudamore and others, owners "of the good ship called B" (whereof R. Pitman was the master) of the one part and Vandenstene of the other part, Vandenstene covenanted with Pitman and the plaintiffs Scudamore and others for the performance of certain covenants in the sum of 600. Pitman, though not named as a party, signed, sealed and delivered the deed. The plaintiffs sued Vandenstene on the deed, who pleaded a release of Pitman (who had entered into other covenants). Held, this was no defence to the action for Pitman was no party to the deed - for no bond, covenant or grant can be made to or with anyone not party to the deed.

But this ancient doctrine that you must be named as party to the indenture to take an immediate benefit by grant, or as a covenantee, was by the 17th century regarded as archaic for in 1673 we find it being very strictly construed; the rule was held only to apply to indenture inter partes. So in Cooker v. Child,109 another case of a charterparty. we find that Bentley, master and part-owner of the ship, with the consent of Cooker, the other part-owner, entered into a charterparty with Child, the defendant. By its terms Child covenanted to pay 300 to Cooker, who was not named as a party to the deed. Held, that the charterparty, though indented, was not subject to this ancient rule for it was not expressed to be between Bentley "of the one part" and Child "of the other part." It was equivalent to a deed poll to which the rule had never applied, and Cooker successfully sued Child in covenant and obtained judgment.

But this rule, narrowly construed in its application as it was, nevertheless was recognised as part of the common law to which full effect must be given. So in 1826 in the case of Berkeley v. Hardy110 there was an indenture of lease made by A on behalf of W. F. Berkeley (the plaintiff) of the one part and the defendant of the other part whereby the plaintiff agreed to let to the defendant certain premises, the lease containing the usual covenants. A was duly authorised by the plaintiff to enter into the lease on his behalf but not by a power of attorney under seal. The plaintiff sued the defendant upon the latter's covenants in the lease. He failed. Abbott C.J. on this point felt constrained to say111:

 

"We are left, then, to decide upon those strict technical rules of law applicable to deeds under seal, which, I believe, are peculiar to the law of England. These rules have been laid

 

109 (1673) 2 Lev. 74.

110 (1826) 5 B. & C. 355.

111 Ibid. 359.


 

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104

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down and recognised in so many cases, that I think we are bound to say no action can be maintained by W. F. Berkeley upon the deed in question."

 

In Forster v. Elvet Colliery Co. Ltd.112 Farwell L.J. pointed out that the old rule of law still holds good that no one can sue on a covenant in an indenture who is not mentioned as a party to it, except so far as it had been altered by the Real Property Act, 1845. Substituting a reference to section 56 for the Act of 1845 that statement, I suppose, is still true.

In 1844 Parliament abrogated this rule by section 11 of the Transfer of Property Act, 1844, which enacted:

 

"That it shall not be necessary in any case to have a deed indented; and that any person, not being a party to any deed, may take an immediate benefit under it in the same manner as he might under a deed poll."

 

For whatever reason, this short workmanlike section, which plainly applied to all covenants whether relating to realty or personal grants or covenants, never had any operation, for it was repealed by the Real Property Act, 1845, and replaced by section 5 of that Act in these terms:

 

"That, under an indenture, executed after October 1, 1845, an immediate estate or interest, in any tenements or hereditaments, and the benefit of a condition or covenant, respecting any tenements or hereditaments, may be taken, although the taker thereof be not named a party to the same indenture; ..."

 

No one has ever suggested that that section was intended to do more than supplant the old common law rule relating to indentures inter partes in relation to realty.

Then came the great changes in the law of real property; the Law of Property Act, 1922, and the Law of Property (Amendment) Act, 1924. The researches of counsel have not revealed any amendment in those Acts to section 5 of the Act of 1845. The Law of Property Act, 1925, was a consolidation Act consolidating those and many earlier Acts. It repealed section 5 of the Act of 1845 and replaced it by section 56 (1) in these terms:

 

"A person may take an immediate or other interest in land or other property, or the benefit of any condition, right of entry, covenant or agreement over or respecting land or other property, although he may not be named as a party to the conveyance or other instrument."

 

There is a presumption that consolidation Acts are not intended to alter the law. In practice both Houses of Parliament

 

112 [1908] 1 K.B. 629, 639.


 

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105

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Beswick v. Beswick (H.L.(E.))

LORD UPJOHN

 

send consolidation Bills to the joint committee of both Houses on consolidation Bills who consider and report upon them to both Houses.

The joint committee call the draftsmen of the Bill before them to give evidence and sometimes they have to resolve doubts whether a clause in the Bill is pure consolidation or not.

For my part, I see no objection to considering those proceedings, not with a view to construing the Act, that is of course not permissible, but to see whether the weight of the presumption as to the effect of consolidation Acts is weakened by anything that took place in those proceedings.

The report of the joint committee for 1925 discloses that when the Law of Property Consolidation Bill was before it, Sir Frederick Liddell, Sir Benjamin Cherry and Sir Claud Schuster gave evidence. Clause 56 was passed without comment. See the Proceedings of Select Committees 1925/6 March, 1925.

So the presumption that section 56 was not intended to alter the law remains. But it remains only a presumption. Nevertheless, some of your Lordships have felt able to come to the conclusion that, in these circumstances, section 56 should be construed as limited in its application to real property as was the old section 5.

I find it difficult to dissent from this proposition but equally difficult to agree with it because, ignoring altogether the definition in section 205 of the Law of Property Act, 1925, section 56 defines as the subject-matter of the section one who takes "an immediate or other interest in land or other property or the benefit of any ... covenant or agreement over or respecting land or other property." Bearing in mind the wide import of the word "property" apart from any definition, I find it difficult in the context to limit that word to an interest in real property. Without expressing any concluded view, I think it may be that the true answer is that Parliament (as sometimes happens in consolidation statutes) inadvertently did alter the law in section 56 by abrogating the old common law rule in respect of contracts affecting personal property as well as real property. But it cannot have done more. Parliament, per incuriam it may be, went back to the position under the Act of 1844 but I am convinced it never intended to alter the fundamental rule laid down in Tweddle v. Atkinson.113

The real difficulty is as to the true scope and ambit of the section. My present views, though obiter and tentative, are these.

 

113 1 B. & S. 393.


 

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106

A.C.

Beswick v. Beswick (H.L.(E.))

LORD UPJOHN

 

Section 56, like its predecessors, was only intended to sweep away the old common law rule that in an indenture inter partes the covenantee must be named as a party to the indenture to take the benefit of an immediate grant or the benefit of a covenant; it intended no more. So that for the section to have any application it must be to relieve from the consequences of the common law, and in my opinion three conditions must be satisfied. If all of them are not satisfied then the section has no application and the parties are left to their remedies at common law.

First, let me assume for a moment that the agreement in this case is an indenture inter partes under seal does section 56 help B? Plainly not. C did not purport to covenant with or make any grant to B; he only covenanted with A. Had C purported to covenant with B to pay the annuity to B, though B was not a party, then any difficulty B might have had in suing might be saved by section 56.

The narrow view which I take of section 56 is, I think, supported by the observations of Simonds J. (as he then was) in White v. Bijou Mansions114 when he said at page 625:

 

"Just as under section 5 of the Act of 1845 only that person could call it in aid who, although not a party, was a grantee or covenantee, so under section 56 of this Act only that person can call it in aid who, although not named as a party to the conveyance or other instrument, purports to grant something or with which some agreement or covenant is purported to be made."

 

So to the same effect Wynn-Parry J. in In re Miller's Agreement.115That was another example of the familiar case where, upon the dissolution of a partnership, the continuing partners covenanted with the retiring partner to pay as from his death annuities to his three daughters. The learned judge said116:

 

"In my view, the plaintiffs [the daughters] are not persons to whom the deed purports to grant something, or with whom some agreement or covenant is purported to be made. ..."

 

So B does not satisfy this condition.

The second condition is that the reference to the "conveyance or other instrument" in the section is, in my opinion, limited to documents under seal. This does no violence to the definitions of "conveyance" or "instrument" in section 205 of the Law of Property Act.

 

114 [1937] Ch. 610, 625.

115 [1947] Ch. 615.

116 Ibid. 623.


 

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107

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Beswick v. Beswick (H.L.(E.))

 

 

The third condition is that, in my opinion, the section refers only to documents strictly inter partes (Cooker v. Child).117

The agreement satisfies none of these conditions.

Section 56 does not help the appellant, but, for the reasons given earlier, I would dismiss this appeal.

 

 

Appeal dismissed.

 

Solicitors: Bower, Cotton & Bower for Slater, Heelis & Co., Manchester; J. Hampson Fogg & Co. for Ogden, Lyles & Fox, Manchester.

 

F. C.

 

117 2 Lev. 74.