judy.legal

Lord Reid

my lords,

Before 1962 the Respondent's deceased husband carried on business as a coal merchant. By agreement of 14th March, 1962, he assigned to his nephew the Appellant the assets of the business and the Appellant under-took 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 has 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 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 As nominee so that he would hold the money for behoof of A and be account-able 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, e.g. Engelbach[1924] 2 Ch. 348, I would not agree with it. I think that re Schebsman[1944] Ch. 83 was rightly decided and that the reasoning of Uthwatt J. ([1943]Ch. 366) 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 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 . . . (page 31).And if one had to contemplate a farther long period of Parliamentary procrastination, this House might find it necessary to deal with this matter. But if legislation is probably at an 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 case, the Respondent in her personal capacity has no right to sue, but she has aright 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 1925 Consolidation Act, earlier Acts were passed in 1922 and 1924 in which were enacted all the substantial amendments which now appear in the 1925 Act and these amendments were then incorporated in the Bill which became the 1925 Act. 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 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 the first day of October" 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 said 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 1845 Act. But more difficulty is introduced by the definition section of the 1925 Act (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 farther 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 [1937] Ch. 610 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 shew that if the covenant were enforced it would redound to his advantage. He said—

" Just as under section 5 of the Act of 1845 only that person could" call it in aid who, although not a party, was yet 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 Appeal [1938] Ch. 351) Sir W. 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 re Miller [1947] Ch. 615 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. said:

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 shewn to exist."

I am bound to say I do not quite understand that. I had thought from what Lord Simonds said in White's case that section 5 of the 1845 Act 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 Board[1949] 2 K.B. 500 Lord Denning, after stating his view that a third person can sue on a contract to which he is not a party, referred on page 517 to section 56 as a clear statutory recognition of this principle, with the con-sequence that Miller's case (cit. sup.) was wrongly decided. I cannot agree with that. And in Drive Yourself Hire Co. v. Strutt [1954] 1 Q.B. 250 Lord Denning 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 1845 Act then this section simply continues the law as it was before the 1925 Act 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 than 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 1845 Act 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's case and from what Vaisey J. said in Chelsea Building Society v. Armstrong [1951] Ch. 853 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 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 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 12th March, 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 the 15th July, 1964, (the date of the issue of the writ) an annuity at the rate of five pounds 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 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."

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 the first day of October 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 said 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 the 1st January, 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. Neither of them touched the question raised by the language of section 56 of the 1925 Act.

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, viz. section 56 of the 1925 Act. 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 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 inept 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 property". But for the saving words " unless the" context otherwise requires " I should have left grave difficulty in resistingthe argument that Parliament, even if it acted per incuriam, had somehowallowed to be slipped into consolidating legislation, which had nothingto do with the general law of contract, an extraordinary provision which hadsuch a drastic effect.

The section has been discussed in a number of cases which were cited byWynn-Parry J. in the case of In re Miller's Agreement, Uniacke v. Attorney-General [1941] 1 Ch. 615. A useful summary of the opinions contained in thecases is contained at page 621 where Wynn-Parry cited a passage from In reFoster [1938] 159 L.T. 279, 282, which appears in the opinion of my nobleand learned friend, Lord Pearce. Like Grossman J. I am unable to believethat such an enormous change in the law has been made by section 56, as toestablish that an agreement by A with B to pay money to C gives C a rightto sue on the contract.

Section 56 has been discussed in recent common law cases e.g. Green v.Russell [1959] 2 Q.B.226 where the argument was rejected by the Court ofAppeal. Before the Court of Appeal in Midland Silicones Ltd. v. ScruttonsLtd. [1961] 1 Q.B.106 to the best of my recollection the argument based onsection 56 was not pressed. The case came before your Lordships and isreported in [1962] AC 446. If the section was mentioned it is not easyto see from the report that it played a great part in the case. ViscountSimonds who at first instance had given consideration to the section (seeWhite v. Bijou Mansions [1937] Ch. 610) can scarcely have been unconsciousof the section when he said in the Midland Silicones case at page 468:

" 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 LawRevision Committee presided over by Lord Wright, then Master of the Rolls,and containing a number of illustrious lawyers. The Committee was calledupon to report specially on consideration including the attitude of the commonlaw towards the jus quaesitum tertio. It had available to it and consideredthe decision of Luxmoore J. in Ecclesiastical Commissioner's Conveyance[1936] 1 Ch. 438 which gave the orthodox view of the section. By its Report(Cmd. 5449) it impliedly rejected the revolutionary view, for it recommendedthat—

" 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 hadthe opportunity of reading, I am of opinion that section 56, one of 25sections in the Act appearing under the cross heading " Conveyances andother instruments " does not have the revolutionary effect claimed for it,appearing as it does in a consolidation Act. I think, as he does, that thecontext does otherwise require a limited meaning to be given to the word" property " in the section.

Although, therefore, the Appellant would succeed if the Respondentrelied only upon section 56 of the Act of 1925 I see no answer to theRespondent's claim for specific performance and no possible objection to theorder 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'sdefences were down before the case reached your Lordships' House. Forexample, it was argued at one time that the equitable remedy of specificperformance of a contract to make a money payment was not available. Thisuntenable contention was not proceeded with. Further, it was arguedthat specific performance would not be granted where the remedy at lawwas adequate and so should not be ordered. The remedy at law is plainlyinadequate, as was pointed out by the Court of Appeal, as (1) only nominaldamages can be recovered (2) in order to enforce a continuing obligation itmay be necessary to bring a series of actions whereas specific performanceavoids multiplicity of action. Again, it was said that the Courts will notmake an order which cannot be enforced. This argument also fell by thewayside for plainly the order can be enforced by the ordinary methods ofexecution (see Order 45 rule 1 and Order 45 rule 9).

The peculiar feature of this case is that the plaintiff is not only the personalrepresentative of the deceased but also his widow and the person beneficiallyentitled to the money claimed. Although the widow cannot claim specificperformance in her personal capacity there is no objection to her doing soin her capacity as administratrix and when the moneys are recovered they willbe in this instance held for the benefit of herself as the person for whom theyare intended.

The authorities where the remedy of specific performance has been appliedin such circumstances as these are numerous. Examples are mentioned in thejudgments of the Court of Appeal which have dealt fully with this matter and

there is no need to elaborate the topic. Keenan v. Handley 1864 12 W.R.1021 is a very striking example which appears to be exactly in point. It isto be noticed that the learned counsel engaged in this and other cases nevertook the point now relied on that the personal representative of the contractingparty could not enforce a contract such as this. As I understood the argumentfor the Appellant it was contended that the personal representative could notobtain specific performance as the estate had nothing to gain, having sufferedno loss. There is no authority which supports this proposition and I do notthink it has any validity. In Hohler v. Aston [1920] 2 Ch. 420 a decision ofSargant J. is good authority to the contrary. A Mrs. Aston agreed with hernephew 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. andMrs. Rollo sued the executors of Mrs. Aston for specific performance andsucceeded. Sargant J. said:

" 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 nobenefit under the contract but was rightly allowed to recover. It is no partof the law that in order to sue on a contract one must establish that it is inone's interest to do so. Absurd results would follow if a defendant wereentitled to lead evidence to show that it would pay the plaintiff better notto sue for specific performance of, say, the sale of a house because the plaintiffcould sell it for a higher price to someone else. It is true that specific perform-ance would not be ordered so as to disregard the fiduciary position which theAppellant occupies as administratrix. Situations might arise in the admini-stration of an estate when there might be conflicting claims between creditorsand persons entitled beneficially otherwise, but this is not such a case. Therewas in the agreement reference to creditors but there was no evidence directedto this matter and no reason to assume the existence of conflicting claims atthe present day.

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 benefitof the contract and the Court will be ready to see that he performs his part(see the judgment of Kay J. in Hart v. Han 18 Ch. D. 670).

I would dismiss the appeal.

Lord Guest

MY LORDS,

By agreement, dated 14th March, 1962, the late Peter Beswick assignedto Joseph Beswick his business as coal merchant in consideration of Josephemploying Peter as a consultant for the remainder of his life at a weeklysalary of £6 10s. 0d. For the like consideration Joseph, in the event of Peter'sdeath, agreed to pay his widow an annuity charged on the business at the rateof £5 per week. Peter Beswick died on 30th November, 1963, and theRespondent is the administratrix of his estate. She claims in these pro-ceedings personally and as administratrix of her late husband against JosephBeswick the Appellant for specific performance of the agreement and forpayment of the annuity.

Her case before the Vice Chancellor of the Chancery Court of the CountyPalatine of Lancaster failed but she succeeded before the Court of Appeal inobtaining an order for specific performance of the agreement of 14th March,

Although the Court of Appeal were only unanimous upon one point insustaining the Respondent's claim there only now remain two outstandingquestions for this House.

The first question is whether the Respondent as administratrix of theestate of the late Peter Beswick is entitled to specific performance of theagreement of the 14th March. 1962. Upon this matter I have had the

opportunity of reading the speech of my noble and learned friend, LordReid. I agree with him in thinking that the Respondent is entitled to succeedon this branch of the case.

The second question is whether the Respondent as an individual isentitled to the relief which she claims. Although Lord Denning M.R., in theCourt of Appeal alone took the view that she was entitled to sue at commonlaw, no question was raised in this House as to the Respondent's right atcommon law in her personal capacity as beneficiary to sue. The decisionin Tweddle v. Atkinson 1 B. and S.393 was not challenged in this House bythe Respondent. The question remains, however, whether such a right isconferred on her by section 56 (1) of the Law of Property Act, 1925. Thisquestion does not strictly arise in view of the decision of the House onspecific performance but, as the Court of Appeal decided by a majority in theRespondent'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:

" (1) 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 (l)(xx) " unless the context otherwise requires"..."' property' includes anything in action and any interest in real or" personal property ". Mr. Francis for the Respondent argued that for section56(1) to apply, only four conditions were necessary: (1) the covenant mustbe contained in an instrument in writing; (2) the covenant must be in respectof land or other property as defined; (3) the covenant must be directly forthe benefit of a person not a party to the deed ; and (4) the covenant mustbe legally enforceable i.e. supported by consideration or under seal. As thecovenant to pay an annuity in the deed of 14th March, 1962, complied withthese four conditions, the Respondent, he argued, was entitled to claimher annuity. Before considering section 56(1) it is necessary to recall theterms of section 5 of the Law of Property Act, 1845, which is said to be thepredecessor of section 56(1) of the 1925 Act. The earlier section was in thefollowing terms:

" That under an Indenture executed after the first day of October," 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 said indenture . . ."

As the preamble to the 1925 Act 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 isnot intended to alter the law, but this prima facie view must yield to plainwords to the contrary (Gray v. Inland Revenue Commissioners [1960] A.C.1.Viscount Simonds page 13). As appears from the Speech of Viscount Simondsthe 1925 Act was preceded by two Law of Property Acts, one in 1922 and onein 1924 which by amendments paved the way for the consolidation of thelaw of property in the 1925 Act. Section 5 of the 1845 Act does not appealamong the amendments made either in the 1922 or the 1924 Acts, but isrepealed nominating by the 1925 Act. The law prior to the passing of the1925 Act was not in doubt. Section 5 of the 1845 Act applied only tocovenants relating to land and did not extend to personalty. The purposeof section 5 was clearly expressed by Simonds J. (as he then was) in White v.Bijou Mansions Ltd. [19371 Ch. 610 at page 623. In Forster v. ElverColliery Company Ltd. [1908] I K.B. 629 the Court of Appeal decided thatthe section only applied to covenants " running with the lands " (HarwellL.J. at page 639). It is true that when the case reached the House of Lords(sub. nom. Dyson v. Forster [1909] A.C. 98) Lord MacNaghten (page 102)doubted whether the section was confined to covenants running with thelands, but the case was decided on other grounds. Therefore, Mr. Francis'ssuggestion that section 56(1) was introduced to resolve the doubt as to the

application of section 5 of the 1845 Act to covenants running with the landscannot carry weight; the law as decided by the Court of Appeal in Forsterwas clear. And, indeed, this was confirmed subsequently in Grant v.Edmondson [1931] 1 Ch. 1. Moreover, this suggestion as to the purposeof section 56(1) does not accord with the Respondent's main submissionthat 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 funda-mental change in the law had been effected in a consolidating statute. It wouldsubvert the law as set out in Tweddle v. Atkinson (1861) 1 B. and S. 393 ;121 ER 762, affirmed in Dunlop Pneumatic Tyre Co. v. Selfridge and Co.Ltd. [1915] AC 847 and confirmed in Scruttons Ltd. v. Midland SiliconesLtd. [1962] AC 446 that a person who is not a party to a contract cannotsue on it, even if it purports to be made for his benefit. I cannot believethat Parliament intended to make so fundamental a change in a consolidatingAct with the history of the 1922 and 1924 Acts before them. It is saidthat one of the purposes of the 1925 Act was to assimilate the law ofreal and personal property. If that had been the intention of Parliament theamendment would surely have been made in the earlier 1922 or 1924amending Acts.

The impact of section 56(1) of the 1925 Act has been the subject ofjudicial consideration in several cases. Apart from Lord Denning andDanckwerts L.J. in this case in the Court of Appeal and dicta of LordDenning in other cases, it has never been held to have the far-reachingeffects contended for by the Respondent. In re Ecclesiastical CommissionersFor England's Conveyance [1936] Ch. 430, the first case where section 56was considered, Luxmoore J. did express the view that section 56 had enlargedthe scope of section 5, but this opinion was obiter. In White v. BijouMansions Ltd. [1937] Ch. 610 Simonds J. as he then was, took the view thatsection 56 did not effect the fundamental change in the law suggested butthat " 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 " (at page 625). Sir Wilfred Greene M.R. in the Court of Appeal[1938] Ch. 351 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 enforceit he must be within the scope and benefit of the covenant according to thetrue construction of the document in question (page 365). In Miller'sAgreement in re [1947] Ch. 615 Wynn-Parry J. took the view that section56 had not the effect of creating rights, but only of effecting the protectionof rights shown to exist (at page 622).

Lord Denning's views as to the effect of section 56, as expressed in theCourt of Appeal in this case, were preceded by similar observations in pre-vious cases. Thus in Smith and Snipes Hall Farm Ltd. v. River DouglasCatchment Board [1949] 2 K.B. 500 he expressed the view orbiter that section56 was a statutory recognition of the principle that a third party may takethe benefit of a covenant although he may not be named as a party to theinstrument. This was followed by Drive Yourself Hire Co. v. Strutt [1954]1 Q.B. 250 where Denning L.J. (as he then was) expressed the view thatsection 56 did away with the rule in Tweddle v. Atkinson (sup. cit.) in casesrespecting property, but he was alone in that view. Somervell and RomerL.JJ. do not refer to section 56.

In the present case in the Court of Appeal Lord Denning M.R. andDanckwerts L.J. considered that section 56 had abrogated the rule in Tweddlev. Atkinson (sup. cit.)—" received the mortal wound which it well deserved "as Danckwerts L.J. put it. Salmon L.J. doubted if the decision in ScruttonsLtd. v. Midland Silicones Ltd. (sup. cit.) left him free to do so.

Having regard to the law previous to 1925 and to the expressions of judicialopinion since, I cannot think that Parliament intended to make such a clean-sweep of the previous law as the Respondent's construction of section 56would involve. There is, in my view, no half-way house between this extremeconstruction which would apply section 56 to a covenant or agreementrelating to property in the wide sense of the definition section or limiting theconstruction to the law as previously existing. I am not satisfied that the

limitations suggested by Wynn-Parry J. in Miller's Agreement (sup. cit.),Simonds J. and Greene M.R. in White v. Bijou Mansions Ltd. (sup. cit.) canbe satisfactorily justified upon a construction of the section 56.

If, of course, the words of section 56 are susceptible of only one con-struction, then the Court must give effect to that construction. But, as thisis 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 thelaw. Section 205 of the 1925 Act—the definition section—commences withthe expression in common form " unless the context otherwise requires".In my view, the context requires that section 56 should not extend the pro-visions of section 5 of the 1845 Act, which were limited to land, to personality.If section 56 was designed to replace section 5, it does not replace it byextending its scope to personality. On referring to section 56 it will be seenthat the definition section 205 is the section which creates the difficulty.Apart from this section it would have been proper, according to the ejusdemgeneris rule, to construe " or other property " in section 56 as referring toreal property to which its predecessor in section 5 of the 1845 Act 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 haveon 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 1845 Act, this can only be done by limitingthe word " property " in section 56 to real property and thereby excludingthe wide definition of " property " contained in section 205(l)(xx). The resultis that the Respondent has, in my view, no right to sue on the Agreementof 14th March, 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 default, he could have sued in respect of thebreach. His administratrix is now entitled to stand in his shoes and to sue inrespect of the breach which has occurred since his death.

It is argued that the estate can only recover nominal damages and that noother remedy is open, either to the estate or to the personal Plaintiff. Such aresult would be wholly repugnant to justice and commonsense. And if theargument 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. Harper 16 C.D. 290 said :

" The next question which, no doubt, is a very important and substantial" one, is, that Lloyds, 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 [1899] I.R. 176.) I agree with the comment ofWindeyer J. in the case of Bagot's Executor and Trustee Co. Ltd. v. Coulls inthe High Court of Australia that the words of Lush L.J. cannot be acceptedwithout 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 substan-" tial. 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 closelysince this is a case in which, as the Court of Appeal rightly decided, themore appropriate remedy is that of specific performance.

The administratrix is entitled, if she so prefers, to enforce the agreementrather than accept its repudiation, and specific performance is more con-venient than an action for arrears of payment followed by separate actions aseach sum falls due. Moreover, damages for breach would be a less appropriateremedy since the parties to the agreement were intending an annuity for awidow ; and a lump sum of damages does not accord with this. And if(contrary to my view) the argument that a derisory sum of damages is allthat can be obtained be right, the remedy of damages in this case is manifestlyuseless.

The present case presents all the features which led the Equity courts toapply their remedy of specific performance. The contract was for the saleof a business. The defendant could on his part clearly have obtained specificperformance 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 thecontract and it is a matter of conscience for the Court to see that he nowperforms his part of it. Kay J. said in Hart v. Hart 18 C.D. 670 at 685 :

"... 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 shepersonally could enforce the Court will not make an order which will havethe effect of enforcing those rights. I can find no principle to this effect. Thecondition as to payment of an annunity to the widow personally was valid.The estate (though not the widow personally) can enforce it. Why shouldthe estate be barred from exercising its full contractual rights merely becausein doing so it secures justice for the widow who, by a mechanical defect of ourlaw, is unable to assert her own rights? Such a principle would be repugnantto justice and fulfil no other object than that of aiding the wrongdoer. I canfind no ground on which such a principle should exist.

In Hohler v. Aston [1920] Ch. 420 Sargant J. enforced a contract relatingto the purchase of a house for the benefit of third parties. The third partieswere joined as Plaintiffs, but the relief was given to the Plaintiff who hadmade the contract for their benefit:

" 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." (at page 425).

In Keenan v. Handley the Court enforced an agreement providing thebenefit of an annuity in favour of a mother who was a party to the agreementand, after her death, to her child, who was not a party to it.

And in Drimmie v. Davies [1898] I Ir. Rep. the Court of Appeal in Irelandordered specific performance of an agreement whereby annuities wereprovided for third parties. Holmes L.J. there said (at page 190):

" 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 Bagot's case (supra) the learned Chief Justice of Australia.

Sir Garfield Berwick, 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 Selborne, ' 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. [1874] L.R. 9 Ch. App. 279 at p. 284." Lord Erskine in Alley v. Deschamps [1806], 13 Ves. Jun. 225 at p. 227," 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'. More-" over we are concerned with what Fullagar J. once called ' a system" ' which has never regarded strict logic as its sole inspiration '. Tatham" v. Huxtable [1950] 81 C.L.R. 639 at 649."

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 makingan order which justice requires. But I do not find this difficult.

Order 45 Rule 9 provides under the heading. " Execution by or against" a person not being a party ": —

"9 (1) 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 whosebenefit the annuity is ordered to enforce its payment by the appointment ofa receiver, by writ of fi fa, or even by judgment summons. I see no reasonto limit the apparent meaning of the words of the rule, which would appear

to achieve a sensible purpose. Moreover, I see no objection in principleto the estate enforcing the judgment, receiving the fruits on behalf of thewidow and paying them over to the widow, just as a bailee of goods doeswhen he recovers damages which should properly belong to the true ownerof the goods.

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

In my opinion, the Plaintiff as administratrix is entitled to a decree ofspecific performance.

It is not, therefore, strictly necessary to deal with the Respondent'sargument that the Plaintiff is entitled at Common Law or, by reason ofsection 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 thewidow was entitled to sue personally ; but this view was not argued beforeyour Lordships. He distinguished Tweddle v. Atkinson [1861] 1 B. and S.393. In Smith and Snipes Hall Farm Ltd. v. River Douglas CatchmentBoard [1949] 2 K.B. 500 at 514 and White v. John Warwick and Co. [1953]1 W.L.R. 1285 the same learned judge had given his reasons for thinking thatTweddle v. Atkinson was wrongly decided and was out of line with the lawas it had been settled in previous centuries. On the other hand in Bagot'scase (supra) a survey of the cases from Tudor times led Windeyer J. to adifferent 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 personallyis that two cases in this House, Dunlop Pneumatic Tyre Co. v. Selfridgeand Co. [1915] AC 847 and Midland Silicones Ltd. v. Scruttons Ltd. [1962]A.C. 446 clearly accepted the principle that a third party cannot sue ona contract to which he was not a party.

The majority of the Court of Appeal expressed the view that this prin-ciple had been abolished by section 56 of the Law of Property Act. If,however, a far reaching and substantial alteration had been intended byParliament, one would expect it to be expressed in clear terms. Yet theterms of section 56 (1) are far from clear and appear to be simply an enlarge-ment of a section passed 80 years before. Further, section 56 is to be foundin a part of the Act devoted to the technicalities of conveyancing ratherthan the creation of rights. The cross heading of that part of the Act is" Conveyances and other Instruments ". And the second part of the sectiondeals with a small question of formality. The important innovations in thelaw of property were contained in the two Acts of 1922 and 1924, but thisalleged innovation was not among them. It first appears in the 1925 Lawof Property Act. That was a consolidation act and, therefore, one shouldnot find a substantial innovation in it. It is of interest that the notes in SirBenjamin Cherry's book (Wolstenholme and Cherry's Conveyancing Statutes1925-7 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 theNew Property Acts " published in 1926 with a preface by Viscount Haldanewho gives an account of the genesis and birth of the bill. Nor didLuxmoore J. so find in Re Ecclesiastical Commissioners for England'sConveyance [1936] 2 Ch. 430.

The distinguished Committee which in 1937 considered the whole subjectand recommended the suggested innovation in terms which have unfortunatelynot yet been adopted, cannot have thought that it had already been achieved

by section 56. Since then learned judges in various cases have consideredthe section. The history of these cases was summed up by Grossman J. inRe Foster 159 L.T. 279 at 282 in the following passage which Wynn-Parry J.quoted in arriving at the conclusion that the section did not produce thesuggested innovation (re Miller's Agreement [1947] 1 Ch. 615 at 621):

" 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 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 the

" Ecclesiastical Commissioners for England's Conveyance and the view" that Simonds J. expressed in White v. Bijou Mansions Ltd., and the

" view of the present Master of the Rolls expressed in the same case

" on appeal and of Harwell J. as expressed in In re Sinclair's Life

" Policy, 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 convey-

" ance 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 intendto effect the suggested innovation. But has it achieved it per incuriam? Ishould be reluctant to give to the section an effect which Parliament so clearlydid not intend, if the words are capable of another meaning. Unsatisfactoryas I find the limited meaning given to the words by the above cases, it isa possible meaning. Moreover, I incline to the view of the section expressedby my noble and learned friend, Lord Upjohn, and its historical aspect asset out by him. Accordingly, in my view, section 56 does not have anyrelevance in this case. I also agree with his observations on the cases of reEngelbach [1924] 2 Ch. 348 and Re Sinclair [1938] Ch. 351.

I would dismiss the appeal.

Lord Upjohn

MY LORDS,

By a very informal agreement, though prepared by a solicitor, Peter Beswick(the deceased) agreed with the Appellant to assign to him the goodwill andassets of the business of a coal merchant carried on by him in considerationof the Appellant employing the deceased as consultant to the business forthe 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 funda-mental importance when I come to consider the impact of section 56 of theLaw of Property Act, 1925, upon this appeal.

For the like consideration the Appellant agreed to pay to the deceased'swidow (the Respondent to this appeal) an annuity to be charged on thebusiness at the rate of £5 Os. Od. per week.

The deceased died intestate on 3rd November. 1963. and his widow tookout Letters of Administration to his estate on 30th June. 1964. The Appellantduly 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 todo so. Hence these High Court proceedings initiated by the widow, suingboth personally and as administratrix of her husband, and soon transferred tothe Chancery Court of the County Palatine of Lancaster.

Her suit was dismissed by Burgess V.C. but her appeal to the Court ofAppeal 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 asadministratrix of her husband and personally, I think it will be convenientto use letters: letter A represents the deceased and Al the widow, as personalrepresentative, 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 theagreement; (2) A did not enter into the agreement as trustee for B in relationto the annuity to be paid to her ; (3) Al stands for all relevant purposes in theshoes of A and is entitled to sue C for breach of his admitted repudiation ofthe agreement (see paragraph 5 of the defence) but the parties differ fundamen-tally 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, expressedby Lord Denning M.R., that apart from section 56 of the Law of PropertyAct, 1925, B is entitled to sue C at Common Law. I think that he was rightto make this concession, for whatever may have been the state of the lawbefore Tweddle v. Atkinson 1 B and S. 393 it is difficult to see how your Lord-ships can go back over 100 years in view of the decisions in this House ofDunlop Pneumatic Tyre Co. Ltd. v. Selfridge and Co. Ltd. [1915] AC 847 andScruttons v. Midland Silicones Ltd. [11962] A.C. 496.

Leaving section 56 out of account, there was no real dispute between theparties as to their respective rights (as distinct from remedies) under theagreement, (a) B has no rights thereunder. But as it was clear from the wholetenor of the agreement that the annuity was to be paid to her for her ownbeneficial enjoyment, if C paid it to her she could keep it and did not holdit as a constructive trustee for Al ; (b) C would completely perform his obliga-tion under the contract by continuing to pay the annuity to B during her life.neither A or Al could not compel C to A or Al, but (c) A or Al and C could, if theypleased, agree to modify, compromise or even discharge further performanceof the contract by C, and B would have no right to complain. If authoritybe wanted for these fundamental propositions it is to be found In re Shebsman[1944] Ch. 83 and Stapleton v. Bretherton [19411 Ch. 482.

My Lords, if I may pause there for a moment, I have the greatest difficultyin seeing how re Englebach [1924] 2 Ch. 348, to which we were referred,can have been rightly decided. In that case a man took out a policy payableto his daughter on attaining 21 ; she was then one month old. He died. Sheattained 21 and the policy monies were paid to her but she was persuadedto pay them into the hands of a stakeholder pending a decision as to thelegal 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 monieswere paid to her as provided by the terms of the contract; for her own useand benefit, I should have thought plain. In In re Shebsman (supra) both atfirst instance before Uthwatt J. (as he then was) and in the Court of Appeal itis clear that this case occasioned some difficulty. I find the explanation givenby Luxmoore L.J. at 1944 Ch. page 100 and of Uthwatt J. at [1943] Ch.366 unsatisfactory. Why should the Insurance company merely be regardedas a mandatory to pay the policy monies due to the assurer to his daughter,presumably as his agent. This seems to me unrealistic. Re Sinclair [1938]Ch 199 is perhaps distinguishable on its facts for the insurance company paidthe money into Court and it was therefore difficult for the infant to showany title thereto but in so far as Sir Christopher Farwell held at the endof his judgment that if the money had been paid to the infant he wouldhold it as constructive trustee for the estate of the godfather, I disagree withhim.

My Lords, to return to this case. Admittedly Al can sue from time totime for damages at common law on failure to pay each instalment of theannuity. But surely on a number of grounds this is a case for specificperformance.

First, here is the sale of a business for full consideration wholly executed onA's part who has put C into possession of all the assets. C is repudiating theobligations to be performed by him. To such a case the words of Kay J.in Hart v. Hart 18 Ch. D. 670 at 684 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 consultantas he might find, convenient or at his own absolute discretion should decidemay be ignored as de minimis and the contrary was not argued. In anyevent the fact that there is a small element of personal service in a contractof this nature does not destroy that quality of mutuality (otherwise plainlypresent) want of which may in general terms properly be a ground for refusinga decree of specific performance. See, for example, Fortescue v. Lostwithieland Fowey Railway Coy. [1894] 3 Ch. 621.

In the Courts below, though not before your Lordships, it was arguedthat the remedy of specific performance was not available when all thatremained was the obligation to make a money payment. Danckwerts L.J.rightly demolished this contention as untenable for the reasons he givesin [1966] 3 W.L.R. 710 C-E.

But when the money payment is not made once and for all but in thenature of an annuity there is an even greater need for equity to come to theassistance of the Common Law. It is to do true justice to enforce the truecontract that the parties have made and to prevent the trouble and expenseof a multiplicity of actions. This has been well settled for over a century :Swift v. Swift 3 I Eq. R. 267. In that case an annuity of £40 p.a. was payableto a lady quarterly and Lord Plunket L.C. enforced specific performance of it.He said at the foot of page 275 :

" 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 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 administra-" tion 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, he continued:

" 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 theaid of the Common Law and it is sufficiently flexible to meet and satisfythe justice of the case in the many different circumstances that arise from timeto time.

To sum up this matter: had C repudiated the contract in the lifetime ofA the latter would have had a cast iron case for specific performance. Canit make any difference that by the terms of the agreement C is obliged topay the annuity no longer to A but to B? Of course not. On the principle

I have just stated it is clear that there can be nothing to prevent Equitymaking an appropriate decree for specific performance directing paymentof the annuity not to A but to B.

There is abundant authority to support that proposition. The first isKeenan v. Handley 12 W.R. 930 and on appeal 2 De G.J. and Sm. 283, thefacts of which are sufficiently set out in the judgment of Denning M.R. Thatcase seems to me dead in point and I do not accept the argument that themother was contracting as trustee for her son; such a relationship cannotbe spelt out of Captain Hundley's letter. She was, in effect, suing as her son'snext friend. True it is that no point was taken either at first instance or inthe Court of Appeal that the infant could not sue but, as Tweddle v. Atkinsonhad only been decided some three years before, that point cannot havebeen overlooked. I draw the inference that it never occurred to thosedistinguished equity judges who tried that case that there could be anydifficulty in making an order upon C at the instance of A to pay B. Theorder in that case is to be found in that great Book of Authority, Seton onJudgments and Orders (see 7th edition volume 3 page 2212). That wasfollowed by Peel v. Peel 17 W.R. 586 also discussed by Denning M.R. Then,came the Irish case of Drimmie v. Davies [1898] 1 Ir. Rep. 176 a very familiartype of case where the parties in a firm agreed together to pay annuitiesto the dependents of a partner when he should die. The executors of adeceased partner brought an action to enforce payment of the annuitiesand succeeded. Although my noble and learned friend, Lord Pearce, hasset out the observations of Holmes L.J. in that case in his speech, it soexactly expresses my own view that I set it out again. Holmes L.J. at page190 said:

" 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. Aston [1920] 2 Ch.420 also mentioned by Denning M.R. who quotes the relevant passage fromthe judgment of Sargant J. (as he then was). This again shews the extent ofthe power of equity to assist the Common Law, limited only by canons ofcommon sense and the practical limitations on the power to oversee andadminister specific performance decrees. So the power and indeed duty, inproper cases, of the Court of Equity to make specific performance ordersin favour of third parties at the instance of one of the contracting parties isnot in doubt.

But when A dies and his rights pass to A1, it is said that the remedy ofspecific performance is no longer appropriate against C. The argument wasfirst that the estate of A suffered no damage by reason of C's failure to pay-B ; so Al is entitled to nominal damages but as she is not otherwise interestedin the agreement as such it would be wrong to grant specific performance;for that remedy is available only where damages be an inadequate remedy.Here nominal damages are adequate. Further, it was argued, to do so wouldreally be to confer upon B a right which she does not have in law or equityto receive the annuity. Then, secondly, it was said that if the remedy ofspecific performance is granted it might prejudice creditors of A so thatthe 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 specificperformance in favour of a third party. I will deal with these points thoughin reverse order.

As to procedural difficulties, I fear I do not understand the argument. Thepoint if valid applies to an action for specific performance by A just as muchas by A1 yet in the authorities I have quoted no such point was ever taken;in Drimmie v. Davies (supra) indeed the action was by executors. Further,it seems to me that if C fails to obey a four-day order obtained by Al, Bcould enforce it under the clear and express provisions of 0.45 r. 9 (formerly0.42 r. 26). Alternatively Al could move for and obtain the appointmentof a receiver of the business upon which the annuity is charged and thereceiver would then be directed by the Court to pay the annuity to B out ofthe profits of the business. Finally Al could issue a writ of fi fa under 0.45r. 1. but as Al would then be enforcing the contract and not modifying orcompromising it the Court would obviously in executing its order compelher to carry out the contract in toto and hand the proceeds of execution toB. This point is entirely without substance.

Then as to the second point. Let me assume (contrary to the fact) thatA died with substantial assets but also many creditors. The legal position isthat prima facie the duty of Al is to carry out her intestate's contracts andcompel C to pay B; but the creditors may be pressing and the agreementmay be considered onerous; so it may be her duty to try and compromisethe agreement with C and save something for the estate even at the expenseof B. See Ahmed v. Estate and Trust Agency [1938] AC 624 per LordRomer at foot of 632. So be it, but how can C conceivably rely upon thiscircumstance as a defence by him to an action for specific performance byAl? Of course not; he, C, has no interest in the estate; he cannot plead apossible jus tertii which is no concern of his. It is his duty to fulfil hiscontract by paying C. Al alone is concerned with the creditors, beneficiariesor next of kin of A and this point therefore can never be a defence by Cif Al in fact chooses to sue for specific performance rather than to attempta compromise in the interest of the estate. This point seems to me miscon-ceived. In any event on the facts of this case there is no suggestion thatthere are any unpaid creditors and B is sole next of kin, so the point isacademic.

Then as to the first point. On this question we were referred to thewell known dictum of Lush L.J. in Lloyds v. Harper 16 Ch. D. 290 at 321:

" ... 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 concludedopinion thereon, if the learned Lord Justice was expressing a view on thepurely common law remedy of damages I have some difficulty in going allthe way with him. If A sues for damages for breach of contract by reasonof the failure to pay B he must prove his loss; that may be great ornominal according to circumstances.

I do not see how A can in conformity with clearly settled principle inassessing 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 case ofCoulls v. Bagots Executor and Trustee Company in the High Court ofAustralia. But I note, however, that in Lloyds v. Harper (supra) James andCotton L.JJ. treated A as trustee for B (see pages 315, 317) and I doubtwhether Lush L.J. thought otherwise.

However, I incline to the view that on the facts of this case damages arenominal for it appears that A died without any assets save and except theagreement which he hoped would keep him and then his widow for theirlives. At all events let me assume that damages are nominal. So it is saidnominal damages are adequate and the remedy of specific performance oughtnot to be granted. That is with all respect wholly to misunderstandthat principle Equity will grant specific performance when

damages are inadequate to meet the justice of the case. I have alreadyquoted the observations of Plunket L.C. on this point which completelycover it.

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

In this case the Court ought to grant a specific performance order all themore because damages are nominal. C has received all the property;justice demands that he pay the price and this can only be done in thecircumstances by equitable relief. It is a fallacy to suppose that B is therebyobtaining additional rights; Al is entitled to compel C to carry out the termsof the agreement.

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

Section 56 of the Law of Property Act, 1925, has a long history behindit. Section 56 replaced section 5 of the Real Property Act, 1845, whichamended some very ancient law relating to indentures inter partes, so I shallstart by stating the common law on the subject.

The rule was that a grantee or covenantee, though named as such in anIndenture under seal expressed to be made inter partes, could not take animmediate interest as grantee nor the benefit of a covenant as covenanteeunless named as a party to the Indenture. This rule, as the authorities I shallquote shew, applied not only to real estate but to personal grants andcovenants.

But how narrow this rule was, but equally, how well understood, willalso be shewn by those authorities.

The first is Scudamore and Others v. Vandenstene [1579] 2 Co. Inst.673. By an indenture of Charter Party, 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 covenantedwith Pitman and the plaintiffs Scundamore and others for the performance ofcertain covenants in the sum of £600. Pitman, though not named as a party,signed sealed and delivered the deed. The plaintiffs sued Vandenslene onthe deed who pleaded a release of Pitman (who had entered into othercovenants). Held this was no defence to the action for Pitman was no partyto the deed—for no bond, covenant or grant can be made to or withanyone not party to the deed.

But this ancient doctrine that you must be named as party to the indentureto take an immediate benefit by grant, or as a covenantee, was by the 17thcentury regarded as archaic for in 1673 we find it being very strictlyconstrued ; the rule was held only to apply to indenture inter partes. Soin Cooker v. Child 2 Levinz 74, another case of a Charter Party, we findthat Bentley, Master and part owner of the ship, with the consent of Cooker,the other part owner, entered into a charter party with Child the defendant.By its terms Child covenanted to pay £300 to Cooker who was not namedas a party to the Deed. Held that the Charter Party, though indented, wasnot 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 aDeed Poll to which the rule had never applied, and Cooker successfully suedChild in covenant and obtained judgment.

But this rule, narrowly construed in its application as it was, neverthelesswas recognised as part of the common law to which full effect must be givenSo in 1826 in the case of Berkeley v. Hardy 5 B. and C. 353 there was an

Indenture of Lease made by A on behalf of W. F. Berkeley (the paintiff)of the one part and the Defendant of the other party whereby the plaintiffagreed to let to the defendant certain premises, the lease containing the usualcovenants. A was duly authorised by the plaintiff to enter into the leaseon his behalf but not by a power of attorney under seal. The plaintiff suedthe defendant upon the latter's covenants in the lease. He failed. AbbottC.J. on this point felt constrained to say:

" 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 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 Limited [1908] 1 K.B. 630 Farwell LJ.at 639 pointed out that the old rule of law still holds good that no onecan sue on a covenant in an indenture who is not mentioned as a party toit, 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, Isuppose, is still true.

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

" 11. 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 toall covenants whether relating to realty or personal grants or covenants, neverhad any operation for it was repealed by the Real Property Act, 1845, andreplaced by section 5 of that Act in these terms:

" That under an Indenture executed after the first day of October" 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 said indenture. . . ."

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

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

" a person may taken 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 thelaw. In practice both Houses of Parliament send consolidation bills to theJoint Committee of both Houses on Consolidation Bills who consider andreport upon them to both Houses.

The Joint Committee call the draftsmen of the Bill before them to giveevidence and sometimes they have to resolve doubts whether a clause in theBill is pure consolidation or not.

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

The Report of the Joint Committee for 1925 discloses that when the Lawof Property Consolidation Bill was before it. Sir Frederick Liddell, SirBenjamin Cherry and Sir Claud Schuster gave evidence. Clause 56 waspassed without comment. See the Proceedings of Select Committees 1925/6March, 1925.

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

I find it difficult to dissent from this proposition but equally difficult toagree with it because, ignoring altogether the definition in section 205 of theLaw of Property Act, 1925, section 56 defines as the subject matter of thesection 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 tolimit that word to an interest in real property. Without expressing any con-cluded view I think it may be that the true answer is that Parliament (as some-times happens in consolidation statutes) inadvertently did alter the law insection 56 by abrogating the old common law rule in respect of contracts affect-ing 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 of1844 but I am convinced it never intended to alter the fundamental rule laiddown in Tweddle v. Atkinson (supra).

The real difficulty is as to the true scope and ambit of the section. Mypresent views, though obiter and tentative, are these. Section 56, like its pre-decessors, was only intended to sweep away the old common law rule thatin an indenture inter partes the covenantee must be named as a party to theindenture to take the benefit of an immediate grant or the benefit of a coven-ant ; it intended no more. So that for the section to have any application itmust be to relieve from the consequences of the common law, and in myopinion three conditions must be satisfied. If all of them are not satisfied thenthe section has no application and the parties are left to their remedies atcommon law.

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

The narrow view which I take of section 56 is, I think supported by theobservations of Simonds J. (as he then was) in White v. Bijou Mansions [19371]Ch. 610 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 Re Miller's Agreement [1947] Ch. 615.That was another example of the familiar case where, upon the dissolution ofa partnership, the continuing partners covenanted with the retiring partner topay as from his death annuities to his three daughters. The learned Judgesaid:

" 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 underseal. This does no violence to the definitions of " conveyance" or" instrument" in section 205 of the Law of Property Act.

The third condition is that, in my opinion, the section refers only to docu-ments strictly inter panes (Cooker v. Child (supra)).

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.

(324507) Dd. 196999 100 6/67 St.S./P.A./19

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BESWICK V. BESWICK

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