Measures v McFadyen

In *Measures v. McFadyen*, the High Court of Australia considered an appeal from the Supreme Court of New South Wales concerning a lessee's breach of a covenant to undertake alterations and additions to leased premises. The dispute arose after the lessor transferred their interest in the land to the plaintiff, who then sued the lessee for breaches of covenants contained in the original lease, including a covenant to complete specified building works "forthwith."

The central legal issues before the High Court were whether a right to sue for damages for a breach of covenant, which was complete before the transfer of the land, passed to the transferee under sections 51 and 52 of the *Real Property Act 1900* (NSW), and the interpretation of the word "forthwith" in the context of a building covenant. The court also considered the implications of a general damages award made upon both a good and a bad count in the declaration, and the effect of a defendant's admission of liability at trial.

The Court held that sections 51 and 52 of the *Real Property Act 1900* were not intended to transfer to a transferee mere choses in action arising from past and completed breaches of covenant. The object of these sections was to transfer the estate or interest in the land along with rights incidental to present and future possession. The court found that the covenant to erect and complete alterations "forthwith" could not reasonably be interpreted to allow a period of 21 months for performance, meaning the breach was complete before the transfer of the reversion. Consequently, the plaintiff, as the transferee, could not sue for this past breach.

Given that damages were assessed generally upon both a valid and an invalid count, the High Court ordered a trial de novo, consistent with common law practice. This meant that neither party was awarded the costs of the first trial. The court also noted that where a defect appears on the record rendering a claim untenable, a defendant is not precluded from raising this objection, even if liability was mistakenly admitted at trial.