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Hoyt's Pty Ltd v Spencer

Hoyt's Pty Ltd v Spencer

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Case Copied 24 November 1919 27 min read

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27 CLR 133

HOYT'S PROPRIETARY LIMITED SPENCER

ON APPEAL FROM THE SUPREME COURT OF

NEW SOUTH WALES. Contract-Validity-Collateral contract-Consideration-Agreement not to enforce

provisions of principal contract-Inconsistency.

By a memorandum of lease under the provisions of the Real Property Act 1900 the defendant leased to the plaintiff certain premises for a period of four years. The lease contained a proviso that the defendant might at any time during the currency of the term thereby created terminate the lease by giving to the lessee at least four weeks' notice in writing of his intention so to do. The plaintiff brought an action against the defendant, the plaintiff alleging by his declaration that, in consideration that the plaintiff would take a lease and become lessee of the premises from the defendant for a term of four years, the defendant promised that he would not at any time during the currency of the term give four weeks' or any notice to the plaintiff of his intention to terminate the lease in pursuance of a proviso in the lease or other- wise terminate the same unless requested and required so to do by the head lessors of the defendant, and that the plaintiff thereupon took the lease of the premises; and that the defendant, without being requested or required so to do by the head lessors, did give four weeks' notice to the plaintiff of his intention to terminate the lease, and terminated it. The plaintiff claimed damages for the alleged breach. To this declaration the defendant pleaded the lease, and the plaintiff demurred to the plea.

Held, that the agreement alleged by the plaintiff and the proviso in the lease could not consistently stand together so as to allow the proviso to remain in

27 CLR 134

full force and effect notwithstanding the agreement, that the agreement was therefore invalid and unenforceable and consequently that the plea was good.

Decision of the Supreme Court of New South Wales: Hoyt's Proprietary Ltd. v. Spencer, 19 S.R. (N.S.W.), 200, affirmed.

APPEAL from the Supreme Court of New South Wales.

An action was brought in the Supreme Court by Hoyt's Proprietary Ltd. against Cosens Spencer in which the declaration was as follows:- " Hoyt's Proprietary Limited a company duly incorporated and en- titled to sue by that name by Matthew John 'Neill its attorney sues Cosens Spencer for that at the time of the making of the agreement hereinafter alleged and at all material times the defendant was the lessee of certain premises from James Edward Carruthers, John George Morris Taylor, William George Taylor, Joseph Woodhouse, William Robson, Percy Newman Slade, Frederick Over, Robert John Lukey, Herbert Middleton Hawkins, Fred Cull, William Elliott Veitch Robson and Gustavus John Waterhouse, his head lessors, and was engaged in theatrical enterprises and the plaintiff Company was engaged in the business of displaying pictures in theatres and in consideration that the plaintiff Company would take a lease of and become lessee of the said premises from the defendant to be used…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1919] HCA 64
Decision Date: 24 November 1919

CaseChat Overview and Summary

Hoyt's Pty Ltd (the plaintiff) appealed to the High Court of Australia from a decision of the Supreme Court of New South Wales. The dispute arose from a lease agreement where the defendant, Spencer, leased premises to the plaintiff for four years. The lease contained a proviso allowing Spencer to terminate the lease by giving four weeks' notice. The plaintiff alleged that Spencer had made a collateral promise not to exercise this right to terminate unless requested by his head lessors, and that Spencer had breached this promise by terminating the lease without such a request, causing the plaintiff loss.

The central legal issue before the High Court was whether a collateral agreement, which purported to restrict the exercise of a right expressly granted in a principal written contract (the lease), could be legally enforced. Specifically, the court had to determine if the alleged collateral promise was valid and enforceable, notwithstanding its apparent inconsistency with the express terms of the lease.

The High Court, by majority, affirmed the decision of the Supreme Court, holding that the collateral agreement was invalid and unenforceable. The reasoning was that the collateral promise and the proviso in the lease could not stand together consistently. The court applied the principle that a collateral agreement is only valid if it can operate independently of the main contract without contradicting or modifying its terms. In this case, the promise not to terminate the lease except upon the request of head lessors directly conflicted with the lease's express provision allowing the lessor to terminate at will with four weeks' notice. Therefore, the collateral agreement was deemed to be legally ineffective, and the plaintiff's claim for damages for breach of that agreement failed.

The appeal was dismissed, and the plaintiff was ordered to pay the costs of the appeal.

Orders