Oferentes académicos 1. Oferentes mayores

The consequence of executing a deed is that it constitutes an agreement enforceable at common law, notwithstanding the absence of consideration. A claim may exist for damages for breach of contract, at common law, even though the claimant (party to the deed) did not furnish consideration for the promise.

Equity, on the other hand, adopts a different approach to deeds and refuses to recognise the special nature of such agreements. Courts of equity require the claimants to establish the existence of consideration before becoming entitled to their assistance by claiming the equitable remedy of specific performance or any other equitable remedy: ‘Equity would not assist a volunteer.’ See In Re Plumptre’s Marriage Settlement (see p 68 above).

Moreover, a party to a deed (the covenantee or intended trustee) may not be compelled by a volunteer to bring a claim for damages against the covenantor for breach of a deed to create a trust. The volunteer, not being a party to the deed, requires equitable assistance to claim an interest under the deed. But the court will not assist the volunteer by such circuitous device. The reason being that a volunteer should not be placed in a position where he may obtain, by indirect means, a remedy which he may not enjoy by direct procedure.

For example, S, by deed, agrees with T, an intended trustee, that future property to be acquired by S will be transferred to T to hold on trust for B, a beneficiary (volunteer), absolutely. S acquires property but fails to transfer the same to T. It is clear that B may not directly claim damages for he is not a party to the contract. B may not directly claim an equitable remedy for he is a volunteer. In addition, B may not force T to sue S for damages on his behalf because he is a volunteer. Hence, B may not obtain a remedy indirectly by enlisting equitable support.

In Re Pryce the intended beneficiary (volunteer and third party) under an imperfect trust, e.g., a covenant to transfer future property, applied to the court for directions seeking to force the intended trustees (covenantees) to sue the settlor/covenantor for damages for breach of contract. Eve J dismissed the application on the ground that the volunteer third party might not obtain a remedy indirectly when the same remedy was not available to him directly. The effect of this decision is that a court of equity will not grant assistance to a volunteer when he cannot obtain assistance directly for ‘equity will not assist a volunteer’. The court assumed that if the directions were granted, the intended trustees would be allowed to exercise their common law right to bring an action for damages. If substantial damages were awarded to the intended trustees, the imperfect trust might be converted into a perfect trust.

Re Pryce, Nevill v Pryce [1917] 1 Ch 234, HC

Facts

In 1887, a marriage settlement contained a covenant to settle the wife’s after-acquired property upon trust as to income for the wife for life with remainder to her husband for life if he should survive her, with an ultimate remainder as to capital and income on trust for the issue of the marriage, but failing issue on trust for the wife’s next of kin. In 1906, the husband gave his wife £4,700. The husband died in 1907 and there was no issue of the marriage. The trustees issued a summons for the court to determine whether they ought to take any steps to enforce the covenant. Held

The trustees ought not to take any steps to enforce the covenant. The trust was imperfect. The wife’s next of kin were volunteers who could not maintain an action to enforce the covenant. Likewise, the next of kin might not obtain a remedy indirectly, namely damages, through the directions of the court requiring the trustees to enforce the covenant:

Eve J: Seeing that the next of kin could neither maintain an action to enforce the covenant nor for damages for breach of it, and that the settlement is not a declaration of trust constituting the relationship of trustee and cestui

que trust between the defendant and the next of kin, in which case effect could be given to the trusts even in

favour of volunteers, but is a mere voluntary contract to create a trust, ought the court now for the sole benefit of these volunteers to direct the trustees to take proceedings to enforce the defendant’s covenant? I think it

ought not; to do so would be to give the next of kin by indirect means relief they cannot obtain by any direct procedure, and

would in effect be enforcing the settlement as against the defendant’s legal right to payment and transfer from the trustees of the parents’ marriage settlement. The circumstances are not unlike those which existed in the case of Re D’Angibau (1880) 15 Ch D 228, and I think the position here is covered by the judgments of the Lords Justices in that case [emphasis added].

Accordingly, I declare that the trustees ought not to take any steps to compel the transfer or payment to them of the premises assured to the wife by the deed of 12 December 1904.

This principle has been extended even further in Re Kay’s Settlement in order to prevent T, by his own volition, from pursuing his common law remedy for damages for breach of contract. The assumption is that the damages which would have been awarded to the claimant (T) may be held on trust for the volunteer (B), thus allowing the volunteer indirect access to the courts.

In Re Kay’s Settlement [1939] Ch 329, the intended trustee under the imperfect trust brought an action for damages for breach of contract, of his own accord, against the intended settlor. The court dismissed the claim for the same reasons as stated in Re Pryce.

Note

The decision in Re Kay involved an extension of the principle in Re Pryce, in the sense that the court was actively prepared to prevent the intended trustees/covenantees pursuing their com- mon law right to sue for damages for breach of contract. The underlying assumption was that substantial damages would otherwise have been held on trust for the volunteer third party.

In Re Cavendish Browne’s Settlement Trusts, the court allowed the intended trustees’ claim for damages for breach of contract and awarded substantial damages to the claimant. The second issue, namely, whether these damages were to be held on trust for the volunteer beneficiary, was not considered by the court.

Re Cavendish Browne’s Settlement Trusts, Horner v Rawle [1916] WN 341, HC

Facts

By a voluntary covenant, dated 19 September 1911, made between the settlor and the trustees, the settlor covenanted that she would transfer to the trustees property to which she was entitled under the will of two others. The transfer was expressed to be subject to the terms of a trust. The covenant included a power of revocation.

revocation. Her administrators applied by summons to determine whether damages were pay- able for breach of the covenant.

Held

The trustees were entitled to recover substantial damages from the administrators for breach of covenant. The measure of such damages was the value of the property that would have come into the hands of the trustees if the covenant had been duly performed.

Note

A possible reconciliation of this case with Re Pryce and Re Kay is that in Re Cavendish Browne’s Settlement Trusts, the property covenanted to be transferred was in existence on the date of the covenant. This, however, is a rather precarious means of reconciling the decisions.

If the volunteer is a party to the deed, he will be entitled to bring a claim at law for damages for breach of the agreement, and equity will not interfere with his power to bring such a claim. In this situation, as illustrated in Cannon v Hartley, the claimant will be seeking to give effect directly to his common law rights by bringing a claim for damages. His rights will not be dependent on a third party taking proceedings to represent his interest.

Cannon v Hartley [1949] Ch 213, HC

Facts

By a deed of separation executed on 23 January 1941 between the defendant (H) of the first part, his wife (W) of the second part and the plaintiff, their daughter, of the third part, H covenanted, inter alia, as follows:

If and whenever during the lifetime of W or daughter, H shall become entitled to any money or property exceeding £1,000 he will forthwith settle one half of such money upon trust for himself for life, then to W for life with remainder to the daughter absolutely.

In 1944, H became entitled to £12,500. W died in 1946. H refused to execute the settlement in accordance with the covenant. The daughter brought an action claiming damages for breach of covenant.

Held

In favour of the claimant on the ground that she was a party to the deed and was seeking a common law remedy to enforce her claim for breach of covenant:

Romer J: [The learned judge considered the judgments of Eve J in Re Pryce [1917] Ch 329 and Simonds J in Re Kay [1939] Ch 329 and continued:] Now it appears to me that neither Re Pryce nor Re Kay’s Settlement is any

authority for the proposition which has been submitted to me on behalf of the defendant. In neither case were the claimants parties to the settlement in question, nor were they within the consideration of the deed. When volunteers were referred to in Re Pryce it seems to me that what Eve J intended to say was that they were not within the class of non-parties, if I may use that expression, to whom Cotton LJ recognised in Re D’Angibau (1880) 15 Ch D 228 that the court would afford assistance. In the present case the plaintiff, although a volunteer, is not only a party to the deed of separation but is also a direct covenantee under the very covenant upon which she is suing. She does not require the assistance of the court to enforce the covenant for she has a legal right herself to enforce it. She is not asking for equitable relief for damages at common law for breach of covenant. Furthermore, a non-volunteer may bring a claim at law or in equity against the other party to the deed. This claim may be brought for his own benefit (see Pullan v Koe, p 67 above) or apparently for the benefit of others, including volunteers. This appears to represent the view taken by the Law Lords in Beswick v Beswick.

Beswick v Beswick [1968] AC 58, HL

Facts

Peter Beswick was assisted in his business as a coal merchant by his nephew, the defendant. Peter entered into a contract, by deed, with the defendant for the transfer of the business. The material terms were that Peter would assign the business to the defendant in consideration of the

defendant employing him as a consultant for the remainder of his life at £6, 10s a week and paying an annuity of £5 a week to his widow after his death. Peter subsequently died. The defendant paid the widow the first £5 but thereafter refused to pay any more. The widow sued the defendant as administratrix of her husband’s estate and in her personal capacity for arrears of the annuity and for specific performance of the agreement. The High Court dismissed the action. The Court of Appeal allowed her appeal on the ground that, as administratrix, the plaintiff was entitled to specific performance. The defendant appealed to the House of Lords. It was not argued that the plaintiff was entitled to pursue her claim in her personal capacity. The question in issue was whether the plaintiff was entitled to claim specific performance of the agreement.

Held

The plaintiff was entitled, as administratrix of her husband’s estate, to specific performance of the agreement. In short, her deceased husband could have enforced the agreement on behalf of his volunteer wife and, since an award of damages was an inadequate remedy, the rights under the agreement were adequately protected by an order of specific performance:

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

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

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

Note

On the question of whether parties to a contract may succeed in claims for damages on behalf of third parties, see also Coulls v Bagot’s Executor and Trustee Co Ltd (1967) ALR 385; Jackson v Horizon Holidays Ltd [1975] 1 WLR 1468, CA; Jarvis v Swan Tours Ltd [1973] QB 233.