Beswick v Beswick
| Jurisdiction | England & Wales |
| Judgment Date | 1965 |
| Date | 1965 |
| Court | Chancery Division |
Contract - Parties - Third party, enforcement by - Procedure - Agreement for transfer of business - Consideration from transferee including promise to pay annuity to widow of transferor - Repudiation by transferee after death of transferor - Whether promise enforceable by widow as administratrix for recovery of all arrears and continuing payments for herself in personal capacity - Whether action maintainable at law for benefit of third party - Whether remedy of specific performance of agreement for payment of money available - Whether third person not named in agreement may sue for “benefit of agreement … respecting … property” -
By section 56 (1) of the Law of Property Act, 1925:
“A person may take an immediate or other interest in land or other property, or the benefit of any condition, right of entry, covenant or agreement over or respecting land or other property, although he may not be named as a party to the conveyance or other instrument …”
By section 205 (1):
“In this Act unless the context otherwise requires, the following expressions have the meanings hereby assigned to them respectively, that is to say:- … (xx) ‘Property’ includes any thing in action, and any interest in real or personal property: …”
By an agreement in writing made in March, 1962, P. B., then aged over 70 and in poor health, agreed with his nephew, the defendant, that he would transfer to the nephew the goodwill and trade utensils of his coal round business in consideration of the nephew's employing him as consultant at £6 10s. a week for the rest of his life; and by clause 2 the nephew agreed for the same consideration to pay to P. B.'s wife after his death an annuity charged on the business at the rate of £5 a week for life. P. B.'s wife was not a party to the agreement. The nephew took over the business and in November, 1963, P. B. died. The nephew paid one sum of £5 to the widow, then aged 74 and in poor health, but refused to pay any further sum. The widow, having taken out letters of administration to her late husband's estate, brought an action against his nephew in her capacity as administratrix and also in her personal capacity asking (inter alia) for specific performance of the agreement.
Held, that the widow, as administratrix of a party to the contract was entitled to an order for specific performance of the promise made by the nephew and was not limited to recovering merely nominal damages on the basis of the loss to the estate.
Held, further, that the widow was not entitled to enforce the obligation in her personal capacity, since section 56 of the Act of 1925, which was a consolidation Act, did not effect a fundamental change in the law so as to allow a third party, not a party to a contract, to enforce it, and the context of the section excluded the application of the definition of “property” in section 205 (1).
Per Lord Upjohn: I find it difficult to dissent from the proposition that section 56 should be limited in its application to real property, but equally difficult to agree with it. It may be that Parliament inadvertently altered the law by abrogating the old common law rule in respect of contracts affecting personal property as well as real property, but it never intended to alter the fundamental rule laid down in Tweddle v. Atkinson (
APPEAL from the Court of Appeal (Lord Denning M.R., Danckwerts and Salmon L.JJ.).
This was an an appeal, by leave of the House of Lords, by the appellant John Joseph Beswick, who was the defendant in this action, from an order of the Court of Appeal dated June 22, 1966, whereby the judgment of Burgess V.-C. made in the Chancery of the County Palatine of Lancaster (Manchester District) dated October 11, 1965, was discharged and it was declared that an agreement dated March 14, 1962, made between the appellant and Peter Beswick, the deceased husband of the respondent Ruth Beswick, the plaintiff in the action (suing personally and as administratrix of the estate of Peter Beswick), ought to be specifically performed and carried into execution and it was ordered and adjudged accordingly, and it was ordered that the appellant do pay to the respondent £175 being the arrears of the annuity mentioned in clause 2 of the agreement accrued due at the date of the issue of the writ in the action, namely, July 15, 1964, and it was also ordered that the appellant do pay to the respondent for the remainder of her life from July 15, 1964, an annuity at the rate of £5 a week in accordance with the agreement.
On March 14, 1962, Peter Beswick entered into a written agreement with his nephew John Joseph Beswick, the appellant. The agreement was prepared by a solicitor.
The first two clauses of the agreement were as follows:
“(1) Peter Beswick to assign to John Joseph Beswick the goodwill, motor lorry, scales, weights and other trade utensils of the business of a coal merchant hitherto carried on by him in consideration of the transferee employing the transferor as consultant to the said business for the remainder of the transferor's life at a weekly salary of £6 10s. 0d. (2) For the like consideration the transferee, in the event of the death of the transferor, to pay the transferor's widow an annuity to be charged on the said business at the rate of £5 0s. 0d. per week.”
By clause 6 the transferee also agreed to take over the transferor's liability to certain named creditors of the transferor.
The appellant duly paid the salary during the life of Peter Beswick, who died intestate on November 3, 1963. Thereafter he made one payment of £5 to the respondent and then repudiated his liability to do so. The respondent took out letters of administration to his estate on June 30, 1964, and commenced this action, claiming £175 arrears of the annuity, an order for specific performance of the continuing obligation to pay the annuity and a declaration that the appellant was liable to pay the plaintiff the annuity.
C.A. Settle Q.C. and James FitzHugh for the appellant. This order of the Court of Appeal gives the respondent more than she is entitled to. In this case the administratrix and the person for whose benefit the agreement was made happen to be the same person, but they might be different persons. The cause of action is between the estate of the deceased and the other party to the contract. The plaintiff in an action should be given the appropriate remedy to compensate him. Specific performance, which is an alternative remedy to damages, is given when money is not an adequate remedy. But if a plaintiff is not entitled in law to be awarded any damages, he cannot be given specific performance. Suppose X covenants with A to make a gift to a charity, which is of no benefit to A, then A cannot get an order for specific performance, though in the case of a wedding present ordered and paid for by A for delivery to B the shop is acting as A's agent. But here the agreement gave the deceased an unenforceable promise by the appellant to pay the annuity. to the respondent, and his administratrix cannot enforce a promise which he could not have enforced himself.
To take the simple case of a sale by A to B, in consideration of which B agrees to pay the purchase price of £1,000 to X. If B is in breach of his contract the only remedy for A is to sue him for damages for the breach. Those damages will only be nominal damages of 40s., since no loss is usually caused to A by the fact that X has not received the money. The present case is not one in which the estate of the deceased suffers any loss by reason of the appellant's breach of contract. It was never entitled to receive any payment from him.
Further, if the respondent is to be entitled as administratrix to have this agreement specifically performed and carried into execution, then the whole agreement must be specifically performed and that must include the obligation to discharge the liabilities of the deceased to the named creditors, which must be performed for the benefit of the estate: Fry on Specific Performance, 6th ed. (1921), p. 383, n. 1.
The order of the Court of Appeal does not specify whether the payments were to be made to the respondent in her personal capacity or as administratrix. If the former is the case and it is enforceable by her pursuant to R.S.C., Ord. 45, r. 9, it gives her rights not contained in the agreement. If it gives her rights as administratrix to recover more than nominal damages for her benefit in her personal capacity, the effect is to create a trust which is not created by the agreement.
In re Miller's AgreementF1 is the latest case bearing on the present problem. It indicates that the agreement conferred on the widow (the respondent) no rights enforceable at law and that section 56 of the Law of Property Act, 1925, does not enable her to enforce the covenant. What Denning L.J. said in Smith and Snipes Hall Farm Ltd.F2 was incorrect. In White v. Bijou Mansions Ltd.,F3 Simonds J. and the Court of Appeal did not hold that under section 56 every person who fell within the...
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