Home Page | Cases | JC Williamson Ltd v Lukey & Mulholland

JC Williamson Ltd v Lukey & Mulholland

(1931) 45 CLR 282

Overview

Williamson granted Lukey and Mulholland an exclusive right to sell confectionery in a theatre. Despite legislative requirements there was no note or memo recording the agreement. Although Lukey and Mulholland acted pursuant to the agreement it was subsequently repudiated by Williamson.

Lukey and Mulholland sought equitable remedies designed to enforce the agreement. Williamson relied on non-compliance with formalities.

The Court held that although the doctrine of part performance might allow parties to overcome the lack of formalities, in this case specific performance was not available as a potential remedy with the result that the claim failed; a statutory provision allowing for damages in substitution for an injunction or specific performance only operated if there was an underlying right to an equitable remedy.

Sweets

 

Facts

Williamson (lessee of theatre) agreed to grant Lukey and Mulholland (L&M) an exclusive right to sell confectionery in the theatre. Legislation required that a note or memo record the agreement - none was made. L & M acted pursuant to the agreement but the agreement was subsequently repudiated by Williamson.

L&M then sought equitable remedies designed to enforce the agreement. Williamson relied on non-compliance with formalities.

L&M were successful in their claim of ‘part performance’ at first instance - Williamson appealed.

 

High Court

Gavan Duffy CJ

Agreed with Dixon J

Justice Starke

Observed that the right to sell sweets in the theatre was not a right that could be enforced by way of specific performance. This left the respondent without a remedy:

The result is that the judgment ought to be reversed, though I sympathize with the learned Judge in his anxiety to give legal effect to what, at least, was an honourable understanding between the parties, especially when its violation involved serious loss to the respondents.

Justice Dixon

In cases of specific performance, the party is said to be charged upon the equities arising out of the acts of part performance and not merely upon the contract. The acts of part performance must be such as to be consistent only with the existence of a contract between the parties, and to have been done in actual performance of that which in fact existed. But in such a case the equity which so arises is to have the entire contract carried into execution by both sides. Because the acts done upon the faith of the contract could not have taken place if it had not been made, and the contract is of a kind which it is considered equitable to enforce in specie, a party who has so acted in partial execution of the contract obtains an equity to its complete performance. But in a case like the present which, because of the nature of the agreement, lies outside the scope of the remedy of specific performance, no equity can arise to have the contract carried into complete execution. No equity could be set up save to have a distinct negative duty separately enforced. ... It may perhaps be true that, because of the negative character of the obligations to which an injunction is appropriate, acts of part performance can seldom, if ever, directly relate to such obligations. This may be the reason why no case has been found in which acts of part performance have been relied upon as affording a title to an injunction restraining breach of a negative agreement. But, however this may be, in this case there are no acts of part performance which are referable unequivocally to the existence of anything more than some contract enabling the plaintiffs to sell confectionery and the like in the theatre. There are no acts which directly relate to the existence of a duty not to revoke the licence, or of a duty not to admit a stranger to sell confectionery. It is, therefore, unnecessary to decide whether in such a case as the present anything but a legal right enforceable at law will support the injunction. It is enough to say that no acts of part performance have taken place from which a negative equitable obligation arises.

For these reasons I am of opinion that the case was not one in which the Court would entertain an application for an injunction, and that the judgment should be reversed.

Justice Evatt

Noted that the basis of the doctrine of part performance was to prevent the Statute of Frauds (and equivalents) from being ‘used as an instrument of fraud’. This has been criticised on the basis that it undermines the legislation. However, the basis of the claim of part performance is not the contract itself but (as expressed by the Earl of Selborne) the ‘equities resulting from the acts done in execution of the contract’. If such a claim was excluded, ‘injustice of a kind which the statute cannot be thought to have had in contemplation would follow.’

In this case, however, the doctrine could not apply because specific performance was not available as a remedy. Consequently, Williamson’s appeal succeeded

Justice McTiernan

When part performance is established in a suit for specific performance, and the Court makes a decree for the specific performance of a contract, the whole contract to which the part performance is referable is ordered to be performed. It would be a remarkable result if this contract, which is beyond the scope of the equitable jurisdiction of the Court to grant specific performance, could be indirectly enforced in its entirety in specie by way of injunction against its breach, upon proof that it had been partly performed.