Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeThe Lord Chancellor,Lord Atkin,Lord Russell of Killowen,Lord Macmillan,Lord Wright,Lord Roche,Lord Porter
Judgment Date15 June 1942
Judgment citation (vLex)[1942] UKHL J0615-1

[1942] UKHL J0615-1

House of Lords

Lord Chancellor

Lord Atkin

Lord Russell of Killowen

Lord Macmillan

Lord Wright

Lord Roche

Lord Porter

Fibrosa Spolka Akcyjna
and
Fairbairn Lawson Combe Barbour, Limited.

After hearing Counsel as well on Thursday the 16th, as on Friday the 17th, Monday the 20th, Tuesday the 21st, Thursday the 23d and Friday the 24th, days of April last, upon the Petition and Appeal of Fibrosa Spolka Akcyjna, of Wilno, Poland, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal, of the 15th of May 1941, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Order might be reversed, varied, or altered, or that the Petitioners might have such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet; as also upon the printed Case of Fairbairn Lawson Combe Barbour, Limited, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of His Majesty the King assembled, That the said Order of His Majesty's Court of Appeal, of the 15th day of May 1941, complained of in the said Appeal, be, and the same is hereby, Reversed, and that Judgment be entered for the Appellants for the sum of One thousand pounds (£1,000): And it is further Ordered, That the Respondents do pay, or cause to be paid, to the said Appellants the Costs incurred by them in the Courts below, and also the Costs incurred by them in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the King's Bench Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.

The Lord Chancellor

My Lords,

1

This is the appeal of a Polish Company who were Plaintiffs in the action against the decision of the Court of Appeal composed of Lord Justice MacKinnon, Lord Justice Luxmoore, and Mr. Justice Stable, confirming the judgment of Mr. Justice Tucker at the trial in favour of the Respondents. After the Court of Appeal's judgment and before the appeal came to be argued at your Lordships' bar, the town of Vilna, where the Appellant Company had carried on its business, and indeed the whole of Poland, under the laws of which State the Appellant Company was incorporated, were occupied by our enemy Germany. The question might, therefore, arise whether the Appellant Company should now be debarred from prosecuting its appeal. (See the judgment of the Court of Appeal delivered by Lord Reading C.J. in Porter v. Freudenberg [1915] 1 K.B. 857, especially at pages 868 and 884; see also Rodriguez v. Speyer Bros. [1919] A.C. 59.) In order to obviate any difficulty on this head, the Plaintiff Company, at the suggestion of the House, applied to the Board of Trade, and the Department gave to the Appellants' solicitors a licence to proceed with the appeal, notwithstanding that their clients might be in the position of an alien enemy. The House was content to let the case proceed on this basis. It is not, therefore, necessary to consider, in dealing with the present appeal, whether the recent decision of the Court of Appeal in re an Arbitration between N. V. Gebr. van Udens Scheepvaart en Agentuur Maatschappij and Sovfracht [1941] 3 All E.R. 419, should be approved. If, as the result of the decision of the House, any payment becomes due to the Appellants, and if they were in the position of alien enemies within the meaning of the Trading with the Enemy Act, 1939, the payment would be regulated by that Act.

2

The Respondents are a limited company carrying on at Leeds the business of manufacturing textile machinery, and by a contract in writing dated the 12th July, 1939, the Respondents agreed to supply the Appellants with certain flax-hackling machines as therein specified and described, at a lump-sum price of £4,800. The machines were of a special kind, and there is no suggestion that the Respondents were not to manufacture them themselves. By the terms of the contract, delivery was to be in three to four months from the settlement of final details. The machines were to be packed and delivered by the Respondents c.i.f. Gdynia; the services of a skilled monteur to superintend erection were to be provided by the Respondents and included in the price; and payment was to be made by cheque on London, one-third of the price (£1,600) with the order and the balance (£3,200) against shipping documents.

3

On July 18th, 1939, the Appellants paid to the Respondents £1,000 on account of the initial payment of £1,600 due under the contract. On September 1st, 1939, Germany invaded Poland and on the 3rd September Great Britain declared war on Germany. On September 7th, the Appellants' agents in this country wrote to the Respondents:

"Owing to the outbreak of hostilities it is now quite evident that the delivery of the machines on order for Poland cannot take place. Under the circumstances we shall be obliged if you will kindly arrange to return our initial payment of £1,000 at your early convenience."

4

To this request, the Respondents replied on the next day refusing to return the sum and stating that "considerable work has been done upon these machines and we cannot consent to the return of this payment. After the war the matter can be reconsidered."

5

On September 23rd, by Order in Council made under the provisions of the Trading with the Enemy Act, 1939, it was declared that Poland (including that part in which the port of Gdynia is situated) was enemy territory.

6

There was further correspondence between the parties or their agents which failed to produce agreement, and on May 1st, 1940, the Appellant Company issued a writ and by its statement of claim alleged that the Respondents had broken the contract by refusing to deliver the machines, while the Appellants "are and have at all material times been ready and willing to take delivery and pay for the machines." The prayer of the claim was ( a) for damages for breach of contract, ( b) for specific performance—an obviously hopeless claim—or, alternatively, return of the £1,000 with interest, and ( c) for further or other relief. The substantial defence of the Respondents was that the contract had been frustrated by the German occupation of Gdynia on the 23rd September, 1939, and that in these circumstances the Appellants had no right to the return of the £1,000.

7

Before passing to the main question involved in the appeal, I must mention another contention of the Appellants which was based on Clause 7 of the conditions of sale attached to the contract. This Clause contained the provision that "should despatch be hindered or delayed by … any cause beyond our reasonable control including … war … a reasonable extension of time shall be granted." The Appellants argued that there could be no frustration by reason of the war which broke out during the currency of the contract because this contingency was expressly provided for in Condition 7 and, therefore, there was no room for an implied term such as has often been regarded as a suitable way in which to express and apply the doctrine of frustration. I entirely agree with the Court of Appeal that in the circumstances of the present case this is a bad point. The ambit of the express condition is limited to delay in respect of which "a reasonable extension of time" might be granted. That might mean a minor delay as distinguished from a prolonged and indefinite interruption of prompt contractual performance which the present war manifestly and inevitably brings about. A similar argument was unsuccessfully urged in Bank Line v. Capel [1919] A.C. 435 and in other cases, a recent instance of which is Tatem v. Gamboa [1939] 1 K.B. 132. The principle is that where supervening events, not due to the default of either party, render the performance of a contract indefinitely impossible, and there is no undertaking to be bound in any event, frustration ensues, even though the parties may have expressly provided for the case of a limited interruption. As Lord Justice MacKinnon points out, the unsoundness of the contrary view is implicit in Jackson v. Union Marine Insurance Co., Ltd., L.R. 10 C.P. 125, for the charter-party in that case contained an exception of perils of the sea (see L.R. 8 C.P. at p. 584), but none the less the contract was held to have been terminated and the adventure to have been frustrated by the long delay due to the stranding of the ship. The situation arising from the outbreak of the present war, so far as this country, Germany and Poland are concerned, makes applicable Mr. Justice Lush's well-known observation in Geipel v. Smith, L.R. 7 Q.B. 404 at p. 414, a state of war" (in that case the Franco-German war of 1870) "must be presumed to be likely to continue so long and so to disturb the commerce of merchants as to defeat and destroy the object of a commercial adventure like this."

8

There is a further reason for saying that this subsidiary contention of the Appellants must fail, viz., that while this country is at war with Germany and Germany is occupying Gdynia, a British subject such as the Respondents could not lawfully make arrangements to deliver c.i.f. Gdynia, and therefore the contract could not be further performed because of supervening illegality. A provision providing for a reasonable extension of time if despatch is delayed by war cannot have any application when the circumstances of the war make despatch illegal. ( Ertel Bieber & Co. v. Rio Tinto Co., Ltd. [1918] A.C. 260.)

9

Mr. Linton Thorp, in conducting the argument for the Appellants before us, admitted...

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