[specific performance, defences – equitable remedies – laches – equity]

Norton and Hughes v. Johnstone

Supreme Court of New South Wales

Willis J., 8 March 1840

Source: Sydney Herald, 9 March 1840

Previously to the commencement of the ordinary business of the Court, Mr. Justice Willis delivered the following judgment in a case heard on a previous day.

            In Equity. – Norton and Hughes v. Johnstone.

            This is one of two suits, now pending in this Court, brought by the complainant, Norton, against the defendant, Johnstone, for the specific performance [?????].  The first suit, if deemed incomplete in consequence of Hughes not being a party, might have been amended in that respect, for the assignment to Hughes by Norton took place prior to that bill being filed, and any subsequent matter might, if requisite, have been brought under the notice of the Court by supplemental bill.  To doubly harrass and oppress the defendant, and to swell costs by two separate suits, under such circumstances, is a practice which I feel it my duty strongly to reprobate whenever it may fall under my observation, although the point may not come before me in the more regular shape of a plea, or the defendant claiming the benefit of a plea of a former suit depending for the same matter.  In the present case, this is a feature which, coupled with other matters, might easily induce a prejudice with regard to its real merits, without the due exercise of that caution which I trust will enable me to decide this, and every other case that may come before me, on the main points actually in issue, and on those alone, without reference to extrinsic circumstances.  It is an established rule in equity, that he who demands the execution of an agreement, ought to show that there has been no default in him in performing all that was to be done on his part; for if either he will not, or through his own negligence cannot perform the whole on his side, he has no title in equity to the performance of the other party, since such performance could not be mutual.  The plaintiff, in equity, should he not have actually performed his part of the agreement, must not only show that he was in no default in not having performed it, but must also allege that he is still ready to perform it.  At law, however, if the covenants be not precedent, but distinct and independent, the plaintiff need not allege, nor offer a performance of his covenants to entitle him to recover against the defendant for a breach of his.  But although a plaintiff in equity allege willingness to perform the agreement on his part in every respect, (which is not done in this case), yet if there have been gross laches on the part of the plaintiff, a specific performance of an agreement for the purchase of an estate will not be decreed.  Thus, where no step was taken from the day of sale, and six months had elapsed after the expiration of the time at which the contract was to be completed, such conduct was considered evidence of an abandonment of the contract.  In the case before us, it appears that the agreement was made and signed on the 2nd of December 1831, - that the plaintiff, Norton, has never paid the £250 cash, or given bills for the remainder of the purchase money, according to the terms of the contract as set out in the bill, - that although he knew a good title could be made in 1834, he took no steps to perform the agreement on his part by payment of the purchase money, with such interest thereon, as if paid according to the terms of the contract it would necessarily have borne; but holding the defendant at defiance, continued in possession of the property without payment of rent, or taking any step to enforce the contract till the 12th of July 1836, when he filed his first bill against the defendant for a specific performance, and then resting quietly until after the defendant had obtained a verdict in ejectment, Norton, in conjunction with Hughes, on the 9th of August 1839, commenced this suit.  There is no offer in this bill on the part of the plaintiffs specifically to perform the agreement, but merely an offer to pay into Court £500, without any mention of interest, (which it is now admitted at the Bar the defendant is entitled to), on the defendant executing a valid conveyance.  I am aware that a very mistaken and injurious practice long prevailed, from Courts of Equity having formerly considered time as of no consequence, and delay as affording no impediment to decreeing the specific performance of agreements.  This was supposed to have originated in a dictum attributed to Lord Hardwicke in the case of Gibson v. Patterson, 1 Atk., 12, which is now proved to have been erroneously reported.  The case of Lloyd v. Collett seems to have been one of the first in which the practice began to be corrected, and the benefit is attributable, in a great degree perhaps, to Lord Loughborough having detected the error in Gibson v. Patterson.  The Lord Chancellor’s judgment in Lloyd v. Collett establishes an important principle, which has since been recognized, and seems peculiarly applicable to the present case.  It is as follows:-  “There is nothing,” said his Lordship, “of more importance than that the ordinary contracts between man and man, which are so necessary in intercourse with each other, should be certain and fixed; and that it should be certainly known when a man is bound and when not.  There is a difficulty to comprehend how the essentials of a contract should be different in equity and at law.  It is one thing to say the time is not so essential, that in no case in which the day has by any means been suffered to elapse, the Court would relieve against it, and decree performance; - the conduct of the parties, inevitable accident, &c., might induce the Court to relieve.  But it is a different thing to say the appointment of a day is to have no effect at all, and that it is not in the power of the parties to the contract, that if the agreement be not executed at a particular time, the parties shall be at liberty to rescind it.  In most of the cases there have been steps taken.  Is there any case in which, without any previous communication at all between the parties, the time has been suffered to elapse?  I want a case to prove, that where nothing has been done by the parties, this Court will hold, in a contract of buying and selling, a rule, that certainly is not the rule at law, that the time is not an essential part of the contract.  Here no step has been taken from the day of sale, for six months after the expiration of the time at which the contract was to be completed.  If a given default will not do, what length of time will do?  It is true the plaintiff must have considered himself bound after the day : so he was : he could take no advantage of his own neglect.  He says, ‘by my own default this contract is void in law : I cannot succeed at law : on the contrary, the other party is entitled to recover back the money he has paid in expectation of the execution of his contract, therefore an equity arises to me – an equity out of his own neglect:’  It is a singular head of equity.  The consequences of this idea, which I know has prevailed, have been extremely inconvenient.  The hardship generally falls upon the other party.  The utmost extent of relief, where a party is discharged at law, would be on making him full compensation.  Is the interest of the purchase money compensation?  The time may go on for years.  Suppose the subject was an estate sold for payment of debts – debts and legacies carry interest at 5 per cent – the purchase money may carry interest at 4 per cent from the time the contract ought to have been completed.  Where it is with a view to a resale, as in this case, what is the consequence?  Here a man has purchased ground rents on a speculation which is totally defeated.  I see no reason to enjoin the action.”  I need hardly repeat that although this judgment was given where the vendor was plaintiff, that the same principle of mutuality equally applies to the case before us, and indeed instances are adduced where in cases like the present, the hardship on the other party is the most extreme.  It was held much more than a century ago, that where one party has trifled or shewn a backwardness in performing his part of the agreement, a specific performance would not be decreed in his favor, especially if circumstances were altered; and the established doctrine now is, that a party cannot call upon a Court of Equity for a specific performance, unless he has shewn himself ready, prompt, and eager.  “If in particular there be an agreement for the sale of a reversion, and part of the terms, is, that the purchase-money be paid at a certain time, if it be not then paid by the default of the vendee, the vendor is discharged from his contract, for no man sells a reversion who is not distressed for money, and it is ridiculous to talk of making him compensation by giving him interest on the purchase-money during the delay.”  In this observation of the Lord Chancellor, in Newman v. Rogers, (4 Br. c. c. 393,) I certainly agree; and although in the present case the sale was not of a reversion, yet it is in evidence that it took place under circumstances of immediate necessity for the purchase-money.  It seems indeed to be established by the case of Crofton v. Ormsly, (2 Sch. and Lef. 604,) that whenever the object of one of the parties contracting would be defeated by delay in the execution of it, if the other party delay, he will not be allowed to insist on performance.  As where a party having entered into a contract to purchase an estate, the estate being sold for the purpose of disincumbering the vendor, and the purchaser had laid by for a year only, a specific performance was refused – a case I think precisely in point.  Is then the tender of the cheque for £500 without interest, under the circumstances detailed in this case, or the offer in the bill to pay £500 only into Court on the execution of a valid conveyance, in a case like this, where the defendant would clearly be entitled to interest also, (if interest could be deemed sufficient compensation,) enough to authorize the plaintiff in 1840 to call for the specific execution of an agreement made in 1831, and which, (if not abandoned,) the defendant could have performed in 1834; -- an agreement not made the subject of a suit until 1836, a suit which if proceeded in, might have then decided the question, quite as well as the present, which was not instituted till August 1839?  I shall abstain from entering into the question respecting the express reversion of the contract by Captain Weston on the part of the defendant; and from doing more than mention the repugnant statement in the bill, of Norton being allowed to remain in undisturbed possession, with that which immediately follows, of the notice of the 13th of September, 1834, (two years before the bill was filed) demanding possession, and accompanied with a declaration of ejectment.  But I may here say that it is a well known rule, that equity will not decree the specific performance of an agreement, which appears to have been discharged by parol, though the original agreement was in writing.  If in this case there were in fact any such valid parol discharge, there seems to me to have been no new written agreement, nor any act of part performance on which a Court [of equity could get.]  I shall abstain also from ad [?????] the alleged transfer of interest to Hughes from Norton took place; merely remarking that although a subcontract of an equitable interest, is not within the doctrine of champerty and maintenance; it might possibly be contended in this instance, that Norton had no equitable interest in him to dispose of when he sold to Hughes, but had merely a “pretended title.”  Champerty and maintenance are offences at common law, as well as by statute.  Neither shall I dwell on the fact, according to the statement in the bill, of Hughes having actually paid to Norton in part of his purchase-money £250, the precise sum that Norton agreed to pay in cash to the defendant, but which, with all interest and rent, has hitherto been totally withheld.  The buildings are shown to have been erected by Hughes after sufficient legal notice of the defendant’s claim, whether therefore the defendant would be benefitted beyond all reasonable measure is not the question.  The question, and the only one which I think it necessary to determine, is this; has there been such performance or promptitude on the part of the plaintiffs, as to enable the Court, consistently with the nature of this case, and the principles I have stated, now to decree a specific performance of the agreement of 1831, against the defendant?  Without reference to the other points in this case, (though none of them are in themselves unworthy of serious consideration,) I am of opinion that such a decree should not be made, but on the contrary bearing in mind the whole matter, and especially that this is the second suit pending for the same purpose, that the bill should be dismissed; and I hereby order it to be dismissed with costs.