[1968] A.C.

58
Beswick Appellant v. Beswick Respondent
House of Lords
1967 Apl. 18, 19, 20, 24, 25; June 29

*58 Beswick Appellant v. Beswick Respondent

House of Lords

HL

Lord Reid, Lord Hodson, Lord Guest, Lord Pearce and Lord Upjohn.

1967 Apl. 18, 19, 20, 24, 25; June 29

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"--Law of Property Act, 1925 (15 &
16 Geo. 5, c. 20), ss. 205 (1) (xx).

Specific Performance--Contract to pay money--Enforcement by third party-- R.S.C.,

Ord. 42, r. 26.

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 *59 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 << PoundsSterling>>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
<<PoundsSterling>>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 << PoundsSterling>>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 (1861) 1 B. & S. 393 ( post, p. 105E-G).
Tweddle v. Atkinson (1861) 1 B. & S. 393; Dunlop Pneumatic Tyre Co. Ltd. v.
Selfridge & Co. Ltd. [1915] A.C. 847; 31 T.L.R. 399 H.L.(E.) ; White v. Bijou Mansions
Ltd. [1937] Ch. 610; 53 T.L.R. 88; [1937] 3 All E.R. 269; [1938] Ch. 351; 54 T.L.R.
458; [1938] 1 All E.R. 546 C.A.; In re Schebsman [1944] Ch. 83; 60 T.L.R. 128;
[1943] 2 All E.R. 768 C.A.; In re Miller's Agreement [1947] Ch. 615; [1947] 2 All E.R.
78 applied.
In re Engelbach's Estate [1924] 2 Ch. 348 doubted.
Decision of the Court of Appeal [1966] Ch. 538; [1966] 3 W.L.R. 396; [1966] 3 All
E.R. 1, C.A. affirmed in part.
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 *60 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 <<PoundsSterling>>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 <<PoundsSterling>>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
<<PoundsSterling>>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 <<PoundsSterling>>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 << PoundsSterling>>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 <<PoundsSterling>>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 *61 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 <<PoundsSterling>>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.
*62 In re Miller's Agreement [FN1] 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. [FN2] was incorrect. In White v. Bijou Mansions Ltd., [FN3] Simonds J. and
the Court of Appeal did not hold that under section 56 every person who fell within
the "scope and benefit" of a contract was entitled to sue, though not a party to the
contract. Section 56 replaced section 5 of the Real Property Act, 1845, which was
repealed by Schedule 7 to the Act of 1925. It applied only to covenants running with
the land: Forster v. Elvet Colliery Co. Ltd., [FN4] affirmed in the House of Lords:
Dyson v. Forster. [FN5] Section 5 was expressed to relate to "any tenements or
hereditaments," that is, the land. The Act of 1925 was a consolidating Act and that
indicates that section 56 was meant to have the same effect as its predecessor. There
is no authority for applying section 56 to such a case as this, and it cannot apply to
this type of agreement at all. The view expressed by Denning L.J. in Drive Yourself
Hire Co. (London) Ltd. v. Strutt [FN6] was incorrect. From Chelsea and Walham Green
Building Society v. Armstrong [FN7] and, what Simonds J. said in White's case [FN8]
it would appear that section 5 of the Act of 1945 was concerned with persons named
in the indenture as parties, and that being in fact a party to the agreement was not
enough. Stromdale & Ball Ltd. v. Burden [FN9] was very far removed from the
present case and so was White v. John Warwick & Co. Ltd. [FN10] The appellant's
case is supported by Scruttons Ltd. v. Midland Silicones Ltd. [FN11]

FN1 [1947] CH. 615; [1947] 2 All E.R. 78.

FN2 [1949] 2 K.B. 500, 517; 65 T.L.R. 628; [1949] 2 All E.R. 179, C.A.

FN3 [1937] Ch. 610; 53 T.L.R. 88; [1937] 3 All E.R. 269; [1938] Ch. 351; 54 T.L.R.
458; [1938] 1 All E.R. 546, C.A.

FN4 [1908] 1 K.B. 629; 24 T.L.R. 265, C.A.

FN5 [1909] A.C. 98; 25 T.L.R. 166, H.L.(E.).

FN6 [1954] 1 Q.B. 250, 269-275; [1953] 3 W.L.R. 1111; [1953] 2 All E.R. 1475, C.A.

FN7 [1951] Ch. 853; [1951] 2 T.L.R. 312; [1951] 2 All E.R. 250.

FN8 [1937] Ch. 610, 624-625.

FN9 [1952] Ch. 223; [1951] 2 T.L.R. 1192; [1952] 1 All E.R. 59.

FN10 [1953] 1 W.L.R. 1285; [1953] 2 All E.R. 1021, C.A.

FN11 [1962] A.C. 446, 467, 473, 494.

It is not open to anyone to say that the House of Lords did not adopt the decisions
relating to section 56. A consolidating statute like the Act of 1925 is assumed not to
be intended to alter the law: Maxwell on the Interpretation of Statutes, 11th ed. *63
(1962), p. 23. The best meaning for the section was found by Simonds J. in White v.
Bijou Mansions Ltd. [FN12] The result is that it has no application here and the
respondent cannot recover in her personal capacity.

FN12 [1937] Ch. 610.

Therefore the only action with which the House is concerned is that of the respondent
as the administratrix. In that capacity she is not entitled to specific performance: see
Ryan v. Mutual Tontine Westminster Chambers Association. [FN13] When damages
are inadequate as a remedy the court may grant specific performance to the person
who has the cause of action - that last point is important. But the court cannot do so
in the circumstances of the present case. It cannot grant an order for specific
performance for the benefit of someone who was not a party to the contract, since
nominal damages are adequate to compensate the estate for the breach of contract.
Here, as in In re Schebsman, [FN14] there was no enforceable trust. Section 56 being
out of consideration, the court, envisaging this as an attempt to obtain payment to
someone not a party to the contract, will not grant the personal representative
specific performance.

FN13 [1893] 1 Ch.. 116, 124; 9 T.L.R. 72; C.A.

FN14 [1944] Ch. 83; 60 T.L.R. 128; [1943] 2 All E.R. 768, C.A.

Here an order in favour of the respondent in her personal capacity would infringe the
rights of the creditors of the estate. Such an order should not be made and the estate
is entitled to nominal damages only. That is the strict position, because the
respondent in her personal capacity is not in any position to enforce her claim, for the
Court of Chancery would never grant specific performance to give the benefit of a
contract to a person, whether a party or not, which he could not get for himself.
Hohler v. Aston, [FN15] a case of an executory contract, is distinguishable from this
case, and so is Keenan v. Handley, [FN16] where the mother would now be held to
have been agent or trustee for her infant daughter. Brough v. Oddie [FN17] is relied
on.

FN15 [1920] 2 Ch. 420, 424.

FN16 (1864) 12 W.R. 930; 2 De G.J. & Sm. 283.

FN17 (1829) 1 Russ. & M. 55.

The courts will not grant specific performance to enforce a contract between A and B
in favour of C, although it is otherwise if the contract is partly in favour of B and
partly in favour of C.
Peel v. Peel [FN18] was an interlocutory application and decided nothing. As to the
availability of damages in a Chancery action at the time of this case and of Keenan's
case, [FN19] see Fry on Specific Performance, p. 601. Adderley v. Dixon [FN20] is
distinguishable.

FN18 (1869) 17 W.R. 586.

FN19 De G.J. & Sm. 283.

FN20 (1824) 1 Sim. & St. 607.

*64 The courts will not order specific performance so as to give a party to a contract
greater rights than he has under it, nor will it give a third party rights which he did
not previously have; nor will money due under a contract be ordered to be paid to the
promisee on the basis of a trust, which did not previously exist, for the benefit of a
third party.
James FitzHugh following. A promisee cannot be a trustee for himself and during his
lifetime he has complete freedom to enforce a promise or not as he may think fit. On
his death, a trust arises for the benefit of persons entitled to his estate. His personal
representative must do his duty to that estate and enforce all rights for its benefit: In
re Sinclair's Life Policy. [FN21]

FN21 [1938] Ch. 799, 802, 805; 54 T.L.R. 918; [1938] 3 All E.R. 124.

Here such damages as are recovered by the administratrix for the benefit of the
estate she must hold for its benefit and, if the administratrix elects to take an order
for specific performance, she deprives herself of the right to get damages for the
benefit of the estate. It is her duty to the estate not to deprive herself of that
possibility. The persons who have an interest in the estate are the persons who are
beneficially entitled to its assets; the administratrix owes no duty to third parties. In
this case damages cannot be considered an inadequate remedy, because the estate
cannot get more.
See also In re Engelbach [FN22] and In re Schebsman. [FN23]

FN22 [1924] 2 Ch. 348, 355-356.

FN23 [1944] Ch. 83, 100.

Hugh Francis Q.C. and D. G. Nowell for the respondent. The main point is whether the
administratrix of the deceased in her representative capacity and therefore as a party
to the contract by representation is entitled to sue on the contract and have it
specifically performed. It has always been admitted that the administratrix as such
has a right to sue on the agreement but it is said that the only remedy is to recover
nominal damages. But she also has the common law remedy of suing for arrears of
the amounts as they fall due and for a declaration of liability for future payments. She
is further entitled to the equitable remedy of specific performance, and that is asked
for because it is more beneficial to the respondent and will avoid a multiplicity of
actions.
The Vice-Chancellor was dissuaded from finding for the respondent by Miller's case.
[FN24] It is not submitted that that case was wrongly decided, since the daughters
there could neither sue nor compel the personal representative of their father to sue.

FN24 [1947] Ch. 615.

The following submissions are made:

(1) This contract is one *65 of a kind of which the courts of equity have habitually
granted specific performance, it is a contract for the sale and purchase of a business,
part of the price of which was the payment of an annuity to the vendor's widow.
(2) The appellant has received the full benefit of the contract, and in such a case a
court of equity will consider itself bound to ensure that he will fulfil his part of the
agreement because elementary justice requires it: see Hart v. Hart. [FN25]

FN25 (1881) 18 Ch.D. 670, 684-685.

(3) The appellant's refusal to pay the respondent the annuity is unconscionable and a
breach of faith; it is hard to imagine a case more appropriate for the intervention of
equity.
(4) The respondent is entitled to specific performance on the ground of mutuality. If
the deceased vendor and the respondent had both been killed in a road accident
before the business was handed over, the defendant as purchaser could have
obtained specific performance of the contract: see Mortimer v. Capper [FN26] and
Jackson v. Lever. [FN27]

FN26 (1782) 1 Bro.C.C. 156.

FN27 (1792) 3 Bro.C.C. 605.

(5) The remedies at common law are either inadequate or less convenient than the
equitable remedy, since the common law remedy would entail a multiplicity of
actions: see Swift v. Swift. [FN28]

FN28 (1841) 3 Ir.Eq.R. 267, 278.

The argument for the appellant confuses two questions: (a) whether the widow as
administratrix has a cause of action, and (b) whether it is proper for the
administratrix in a case of this sort to bring proceedings at the cost of the estate. In
this case the respondent suing as administratrix is the only beneficiary of the estate.
As to the duty of a legal personal representative with respect to the deceased's
contracts, see Ahmed Angullia v. Estate and Trust Agencies (1927) Ltd. [FN29] There
is no question here of any right to sue which might result in a valuable asset for the
estate. No question of administration arises. The annuity was not payable to the
deceased or to his estate: see In re Schebsman. [FN30] The payment of the annuity
to the widow in the present case is not dependent on the payment of the debts set
out in the agreement. As to this see Fry on Specific Performance, 6th ed. (1921), p.
383, n. 1, and pp. 390-2, paras. 839-842. The proper order is for specific
performance of the agreement to pay the annuity and, as to the rest, the court can
give liberty to apply.

FN29 [1938] A.C. 624; 54 T.L.R. 831; [1938] 3 All E.R. 106, P.C.

FN30 [1943] Ch. 366.

Drimmie v. Davies [FN31] supports the submission that specific *66 performance is
the proper remedy here. Ahmed Angullia's case [FN32] shows that the prima facie
duty of the administratrix is to see that the contracts entered into by the deceased
are carried out, even though they may be disadvantageous to the estate.

FN31 [1899] 1 Ir.R. 176, 186, 190.

FN32 [1938] A.C. 624, 632-633.

Seton on Judgments and Orders, 7th ed. (1912), Vol. III, pp. 2212-3 contains a form
of order for specific performance of an agreement to grant an annuity (Keenan v.
Handley [FN33]. The order was in favour of the defendant's former mistress and her
infant daughter.

FN33 2 De G.J. & Sm. 283.

Engelbach's case [FN34] and Sinclair's case [FN35] seem to be derived from a
statement of Lord Esher M.R. in Cleaver v. Mutual Reserve Fund Life Association,
[FN36] with which Uthwatt J. disagreed in In re Schebsman. [FN37] Those decisions
turn on the construction of the particular policies and lay down no general principle.

FN34 [1924] 2 Ch. 348.

FN35 [1938] Ch. 799.

FN36 [1892] 1 Q.B. 147, 157; 8 T.L.R. 139, C.A.

FN37 [1943] Ch. 366, 372.

As to the enforcement of an order for specific performance under R.S.C., Ord. 45, r.
1, the plaintiff could, if need be, take out a writ of fi. fa. and take steps to levy
execution for the arrears of the annuity. Ord. 45, r. 12, applies: see the Supreme
Court Practice, 1967, Vol. I, p. 612, and also R.S.C., Ord. 1, r. 9 and Form No. 53 in
Appendix A in Vol. II. That form assumes that the order is one directing the plaintiff to
pay the sum to the defendant. It would have to be varied to accord with an order to
pay the sum to a third party: see also Vol. I, pp. 594-5, as to section 5 of the Debtors
Act, 1869. As to R.S.C., Ord. 45, r. 9, there is no authority throwing light on its
precise scope or purpose, but it may well have been intended to apply to a judgment
obtained by a plaintiff suing in a representative capacity on behalf of several persons.
After judgment the members of the class, though not parties, would be entitled to the
benefit of the judgment.
As to section 56 of the Law of Property Act, 1925, it is not submitted that it "delivered
a mortal blow" to Tweddle v. Atkinson, [FN38] but rather that it cut off one of its
limbs. Section 5 of the Act of 1845 eliminated a technical rule of the common law
relating to indentures that a person who was not named as a party to an indenture
could not take an interest under it, although he was expressed to be within it: see
Forster's case [FN39] and Grant v. Edmondson. [FN40]

FN38 (1861) 1 B. & S. 393.

FN39 [1908] 1 K.B. 629, 635, 637, 639; [1909] A.C. 98.

FN40 [1931] 1 Ch. 1, 15, 28, C.A.

Section 5 is not limited to covenants running with the land. *67 For example,
suppose A selling a house to C was on good terms with his neighbour B and, knowing
that he greatly admired certain trees in the garden of the house, took from C a
covenant with himself and with B not to cut down those trees so long as B was the
owner of the adjoining land. That would not be a covenant running with the land but
there is no reason why B should not be entitled to enforce it.
As to section 56 of the Act of 1925, neither the Law of Property Act, 1922, nor the
Law of Property (Amendment) Act, 1924, contained any reference to section 5. These
Acts which contained all the substantial enactments later incorporated in the
consolidation Act of 1925 contain nothing corresponding to section 56. As to the
character of the consolidation Act, see Grey v. Inland Revenue Commissioners.
[FN41] Such an Act, said Lord Simonds, is presumed not to be intended to alter the
law, but the Act of 1925 was not a normal consolidation Act. It brought about radical
changes in the law. One cannot ignore words in it or refuse to give them their plain
meaning. At bottom the matter is one of the construction of the words.

FN41 [1960] A.C. 1, 13; [1959] 3 W.L.R. 759; [1959] 3 All E.R. 603. H.L. (E.).

Section 56 of the Act of 1925 applies only to covenants and agreements which satisfy
four conditions.
(1) They must be contained in an "instrument" and that includes any writing. (See
Stroud's Judicial Dictionary, 3rd ed. (1952), Vol. II, p. 1472.) The present document
is an instrument.
(2) The covenants or agreements must be "respecting land or other property. " A
simple covenant to pay an annuity is not such a covenant. Here the agreement was
respecting property, because it was an agreement to pay an annuity as part of the
price for the sale of a business. Further, the annuity was charged on the business.
Section 56 is not confined to real property.
(3) Section 56 applies only to covenants or agreements made directly for the benefit
of a person who is not a party to it. It is not enough that the person should
incidentally derive a benefit from it. One cannot take the object of section 56 to be
the same as that of section 5 of the Act of 1845.
(4) The covenant or agreement must be legally enforceable. Here there is an
agreement enforceable by the deceased or his administratrix.
Subject to the fulfilment of these four conditions the third party can enforce the
agreement. They are the sole conditions which can be implied or inferred from the
language of section 56.
*68 It is said that the covenant or agreement must purport to be made with the third
person: see White v. Bijou Mansions Ltd. [FN42] That view of section 56 (1) of the Act
of 1925 is open to the objection that it makes everything depend on mere form and
not on substance, so that the addition of a very few words to the agreement would
have enabled the respondent to sue in a personal capacity. If that were so, the
plaintiff in Stromdale & Ball Ltd. v. Burden [FN43] could not have succeeded: see also
Drive Yourself Hire Co. (London) Ltd. v. Strutt. [FN44]

FN42 [1937] Ch. 610, 624.

FN43 [1952] Ch. 223.

FN44 [1954] 1 Q.B. 250, 264, 271-272.

The court can only give effect to the plain words of the section. It is hard to put any
limitation on it, save for the four rules already formulated.
D. G. Nowell following. As to the insurance cases see Waters v. Monarch Fire & Life
Assurance Co., [FN45] a case of a party to a contract securing something in addition
to his own particular loss. Castellain v. Preston [FN46] shows that a person who
enters into a contract which contemplates payment may recover for breach and is not
limited to his own particular loss: see also Lloyd's v. Harper [FN47] and Kenny v.
Employers' Liability Assurance Corporation. [FN48]

FN45 (1856) 5 El.& Bl. 870, 880.

FN46 (1883) 11 Q.B.D. 380, 398-399.

FN47 16 Ch.D. 290, 321.

FN48 [1901] 1 Ir.R. 301, 334, 336, 337-338, 339-340.

There is here a claim for a declaration which is a discretionary remedy: see R.S.C.,
Ord. 15, r. 16, and Drimmie v. Davies. [FN49] Specific performance is the appropriate
remedy here.

FN49 [1899] 1 Ir.R. 176, 188.

The position with regard to the rule that a third party cannot sue was correctly stated
by Lord Denning M.R. in the court below. [FN50]

FN50 [1966] Ch. 538, 557; [1966] 3 W.L.R. 396; [1966] 3 All E.R. 1, C.A.

Section 25 (6) of the Judicature Act, 1873, enabled the assignee of a legal chose in
action to sue in his own name. Section 136 of the Law of Property Act, 1925, dealing
with legal assignments of things in action does not cover every case of assignment,
only absolute assignments in writing. So where there is an equitable assignment the
action must be brought in the name of the assignor who must be joined by the
assignee either as co-plaintiff or co- defendant.
Section 56 (1) of the Act of 1925 should be given the plain meaning which the words
bear.
C. A. Settle Q.C. in reply. In section 56 of the Act of 1925 "or" is disjunctive in the
phrase "the benefit of any ... *69 agreement over or respecting land or other
property." The section relates to benefit arising out of an agreement as to existing
property. It is purely a conveyancing section and appears in the part of the Act
relating to conveyances. The agreement in the present case is not one respecting
property. An agreement to pay part of the purchase price of a business is not such an
agreement: see Miller's case. [FN51] The widow had no rights enforceable at law. If
the alleged beneficiaries cannot themselves sue on the covenant, the fact that there is
a charge supporting the covenant does not help them.

FN51 [1947] Ch. 615, 623.

The legislation did not intend that section 56 should make such a fundamental change
in the law as would be effected if the respondent's very liberal construction were
placed upon it. The section is dealing with conditions, rights of entry and the like and
its language is very appropriate to deal with what is merely conveyancing. It is
intended to enable a third party to be given a benefit, although he may not be named
as a party to the conveyance or other instrument. It is purely a conveyancing section.
It is not a section under which a third party can claim rights created by a document to
which other persons are parties and it does not avoid the necessity for consideration.
Anything can be conveyed - realty, personalty or a chose in action and the title is
perfectly good. Under section 136 of the Law of Property Act, 1925, a chose in action
can be assigned to a third party, thereby creating a debt on which the assignee can
sue.
If there had been such a fundamental change in the law, the effect of which was to
overrule Tweddle v. Atkinson [FN52] by statute the House of Lords in Scruttons Ltd.
v. Midland Silicones Ltd. [FN53] could not have shut its eyes to such a point as this,
and the only inference to be drawn from that case is that everything which Denning
L.J. said in Smith and Snipes Hall Farm Ltd. v. River Douglas Catchment Board [FN54]
and in the other cases cited to the House of Lords was rejected by them. In Scruttons
Ltd. v. Midland Silicones Ltd. [FN55] the point as to section 56 of the Act of 1925 was
on the pleadings (paragraph 21 of the points of defence): see the record on the
appeal to the House of Lords, appendix, p. 11. See also Green v. Russell. [FN56]

FN52 1 B.& S. 393.

FN53 [1962] A.C. 446.

FN54 [1949] 2 K.B. 500.

FN55 [1962] A.C. 446.

FN56 [1959] 2 Q.B. 226, 233, 239-240; [1959] 3 W.L.R. 17; [1959] 2 All E.R. 525,
C.A.

The Act of 1925 was a consolidating Act which was not *70 making changes in the
previous law. The alteration in the law suggested would have far reaching
implications. The law as laid down in Miller's case [FN57] has been taken as the basis
of innumerable agreements. For 42 years the Act of 1925 has been construed as
having the meaning for which the appellant contends and that should not be departed
from now, especially as to do so would have wide ramifications over a large area.

FN57 [1947] Ch. 615.

If the courts will not make an order for specific performance giving a third party rights
which he did not have before the making of the order, neither will they do so in the
case of a contracting party. Nor will they constitute a trust where a trust did not
previously exist, if the contract cannot be specifically performed without so doing.
What Danckwerts L.J. said in the Court of Appeal [FN58] in the present case cannot
stand. The cause of action in the administratrix arose out of the breach of contract by
the appellant in not paying the annuity to the widow. The widow had no right to sue
and there is no trust in her favour. For the circumstances in which specific
performance will be granted see Fry on Specific Performance, 6th ed., pp. 21-22,
para. 48. In this case the cause of action is in the administratrix, who can claim
damages, which afford the estate an adequate remedy, so that there is no room for
specific performance. Keenan's case, [FN59] the case of a mother acting as agent for
her illegitimate daughter, is distinguishable from the present case.

FN58 [1966] Ch. 538, 561.

FN59 2 De G.J. & Sm. 283.

Their Lordships took time for consideration.

June 29.

LORD REID.
My Lords, before 1962 the respondent's deceased husband carried on business as a
coal merchant. By agreement of March 14, 1962, he assigned to his nephew, the
appellant, the assets of the business and the appellant undertook first to pay to him
<<PoundsSterling>>6 10s. per week for the remainder of his life and then to pay to
the respondent an annuity of <<PoundsSterling>>5 per week in the event of her
husband's death. The husband died in November, 1963. Thereupon, the appellant
made one payment of <<PoundsSterling>>5 to the respondent but he refused to
make any further payment to her. The respondent now sues for
<<PoundsSterling>>175 arrears of the annuity and for an order for specific
performance of the continuing obligation to pay the annuity. The Vice- Chancellor of
the County Palatine of Lancaster decided against the respondent but the Court of
Appeal *71 reversed this decision and, besides ordering payment of the arrears,
ordered the appellant to pay to the respondent for the remainder of her life an
annuity of <<PoundsSterling>>5 per week in accordance with the agreement.
It so happens that the respondent is administratrix of the estate of her deceased
husband and she sues both in that capacity and in her personal capacity. So it is
necessary to consider her rights in each capacity.
For clarity I think it best to begin by considering a simple case where, in consideration
of a sale by A to B, B agrees to pay the price of << PoundsSterling>>1,000 to a third
party X. Then the first question appears to me to be whether the parties intended that
X should receive the money simply as A's nominee so that he would hold the money
for behoof of A and be accountable to him for it, or whether the parties intended that
X should receive the money for his own behoof and be entitled to keep it. That
appears to me to be a question of construction of the agreement read in light of all
the circumstances which were known to the parties. There have been several
decisions involving this question. I am not sure that any conflicts with the view which
I have expressed: but if any does, for example, In re Engelbach's Estate, [FN60] I
would not agree with it. I think that In re Schebsman [FN61] was rightly decided and
that the reasoning of Uthwatt J. [FN62] and the Court of Appeal supports what I have
just said. In the present case I think it clear that the parties to the agreement
intended that the respondent should receive the weekly sums of
<<PoundsSterling>>5 in her own behoof and should not be accountable to her
deceased husband's estate for them. Indeed the contrary was not argued.

FN60 [1924] 2 Ch. 348.

FN61 [1944] Ch. 83; 60 T.L.R. 128; [1943] 2 All E.R. 768, C.A.

FN62 [1943] Ch. 366; 59 T.L.R. 443; [1943] 2 All E.R. 387.

Reverting to my simple example the next question appears to me to be: Where the
intention was that X should keep the <<PoundsSterling>>1,000 as his own, what is
the nature of B's obligation and who is entitled to enforce it? It was not argued that
the law of England regards B's obligation as a nullity, and I have not observed in any
of the authorities any suggestion that it would be a nullity. There may have been a
time when the existence of a right depended on whether there was any means of
enforcing it, but today the law would be sadly deficient if one found that, although
there is a right, the law provides no means for enforcing it. So this obligation of B
must be enforceable either by X or by A. I shall leave aside for the moment the
question whether *72 section 56 (1) of the Law of Property Act,1925, has any
application to such a case, and consider the position at common law.
Lord Denning's view, expressed in this case not for the first time, is that X could
enforce this obligation. But the view more commonly held in recent times has been
that such a contract confers no right on X and that X could not sue for the
<<PoundsSterling>>1,000. Leading counsel for the respondent based his case on
other grounds, and as I agree that the respondent succeeds on other grounds, this
would not be an appropriate case in which to solve this question. It is true that a
strong Law Revision Committee recommended so long ago as 1937 (Cmd. 5449):
"That where a contract by its express terms purports to confer a benefit directly on a
third party it shall be enforceable by the third party in his own name ..." (p. 31).
And, if one had to contemplate a further long period of Parliamentary procrastination,
this House might find it necessary to deal with this matter. But if legislation is
probable at any early date I would not deal with it in a case where that is not
essential. So for the purposes of this case I shall proceed on the footing that the
commonly accepted view is right.
What then is A's position? I assume that A has not made himself a trustee for X,
because it was not argued in this appeal that any trust had been created. So, if X has
no right, A can at any time grant a discharge to B or make some new contract with B.
If there were a trust the position would be different. X would have an equitable right
and A would be entitled and, indeed, bound to recover the money and account for it
to X. and A would have no right to grant a discharge to B. If there is no trust and A
wishes to enforce the obligation, how does he set about it? He cannot sue B for the
<<PoundsSterling>>1,000 because under the contract the money is not payable to
him, and, if the contract were performed according to its terms, he would never have
any right to get the money. So he must seek to make B pay X.
The argument for the appellant is that A's only remedy is to sue B for damages for B's
breach of contract in failing to pay the <<PoundsSterling>> 1,000 to X. Then the
appellant says that A can only recover nominal damages of 40s. because the fact that
X has not received the money will generally cause no loss to A: he admits that there
may be cases where A would suffer damage if X did not receive the money but says
that the present is not such a case.
Applying what I have said to the circumstances of the present *73 case, the
respondent in her personal capacity has no right to sue, but she has a right as
administratrix of her husband's estate to require the appellant to perform his
obligation under the agreement. He has refused to do so and he maintains that the
respondent's only right is to sue him for damages for breach of his contract. If that
were so, I shall assume that he is right in maintaining that the administratrix could
then only recover nominal damages because his breach of contract has caused no loss
to the estate of her deceased husband.
If that were the only remedy available the result would be grossly unjust. It would
mean that the appellant keeps the business which he bought and for which he has
only paid a small part of the price which he agreed to pay. He would avoid paying the
rest of the price, the annuity to the respondent, by paying a mere 40s. damages.
The respondent's first answer is that the common law has been radically altered by
section 56 (1) of the Law of Property Act, 1925, and that that section entitles her to
sue in her personal capacity and recover the benefit provided for her in the
agreement although she was not a party to it. Extensive alterations of the law were
made at that time but it is necessary to examine with some care the way in which this
was done. That Act was a consolidation Act and it is the invariable practice of
Parliament to require from those who have prepared a consolidation Bill an assurance
that it will make no substantial change in the law and to have that checked by a
committee. On this assurance the Bill is then passed into law, no amendment being
permissible. So, in order to pave the way for the consolidation Act of 1925, earlier
Acts were passed in 1922 and 1924 in which were enacted all the substantial
amendments which now appear in the Act of 1925 and these amendments were then
incorporated in the Bill which became the Act of 1925. Those earlier Acts contain
nothing corresponding to section 56 and it is therefore quite certain that those
responsible for the preparation of this legislation must have believed and intended
that section 56 would make no substantial change in the earlier law, and equally
certain that Parliament passed section 56 in reliance on an assurance that it did make
no substantial change.
In construing any Act of Parliament we are seeking the intention of Parliament and it
is quite true that we must deduce that intention from the words of the Act. If the
words of the Act are only capable of one meaning we must give them that meaning no
matter how they got there. But if they are capable of having more than one meaning
we are, in my view, well entitled to see how *74 they got there. For purely practical
reasons we do not permit debates in either House to be cited: it would add greatly to
the time and expense involved in preparing cases involving the construction of a
statute if counsel were expected to read all the debates in Hansard, and it would often
be impracticable for counsel to get access to at least the older reports of debates in
Select Committees of the House of Commons, moreover, in a very large proportion of
cases such a search, even if practicable, would throw no light on the question before
the court. But I can see no objection to investigating in the present case the
antecedents of section 56.
Section 56 was obviously intended to replace section 5 of the Real Property Act, 1845
(8 and 9 Vict. c. 106). That section provided:
"That, under an indenture, executed after October 1, 1845, an immediate estate or
interest, in any tenements or hereditaments, and the benefit of a condition or
covenant, respecting any tenements or hereditaments, may be taken, although the
taker thereof be not named a party to the same indenture. ..."
Section 56 (1) now provides:
"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: ..."
If the matter stopped there it would not be difficult to hold that section 56 does not
substantially extend or alter the provisions of section 5 of the Act of 1845. But more
difficulty is introduced by the definition section of the Act of 1925 (section 205) which
provides:
"(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."
Before further considering the meaning of section 56 (1) I must set out briefly the
views which have been expressed about it in earlier cases. White v. Bijou Mansions
Ltd. [FN63] dealt with a covenant relating to land. The interpretation of section 56
was not the main issue. Simonds J. rejected an argument that section 56 enabled
anyone to take advantage of a covenant if he could show *75 that if the covenant
were enforced it would redound to his advantage. He said [FN64]:
"Just as under section 5 of the Act of 1845 only that person could call it in aid who,
although not a party, yet was a grantee or covenantee, so under section 56 of this Act
only that person can call it in aid who, although not named as a party to the
conveyance or other instrument, is yet a person to whom that conveyance or other
instrument purports to grant something or with which some agreement or covenant is
purported to be made."

FN63 [1937] Ch. 610; 53 T.L.R. 88; [1937] 3 All E.R. 269.

FN64 [1937] Ch. 610, 625.

He was not concerned to consider whether or in what way the section could be applied
to personal property. In the Court of Appeal [FN65] Sir Wilfrid Greene M.R. said, in
rejecting the same argument as Simonds J. had rejected:
"Before he can enforce it he must be a person who falls within the scope and benefit
of the covenant according to the true construction of the document in question."

FN65 [1938] Ch. 351, 365; 54 T.L.R. 458; [1938] 1 All E.R. 546, C.A.

Again he was not considering an ordinary contract and I do not think that he can be
held to have meant that every person who falls within the "scope and benefit" of any
contract is entitled to sue, though not a party to the contract.
In In re Miller's Agreement [FN66] two partners covenanted with a retiring partner
that on his death they would pay certain annuities to his daughters. The Revenue's
claim for estate duty was rejected. The decision was clearly right. The daughters, not
being parties to the agreement, had no right to sue for their annuities. Whether they
received them or not depended on whether the other partners were willing to pay or,
if they did not pay, whether the deceased partner's executor was willing to enforce
the contract. After citing the earlier cases Wynn-Parry J. said [FN67]
"I think it emerges from these cases that the section has not the effect of creating
rights, but only of assisting the protection of rights shown to exist."

FN66 [1947] Ch. 615; [1947] 2 All E.R. 78.

FN67 [1947] Ch. 615, 622.

I am bound to say I do not quite understand that. I had thought from what Lord
Simonds said in White's case [FN68] that section 5 of the Act of 1845 did enable
certain persons to take benefits which they could not have taken without it. If so, it
must have given them rights which they did not have without it. And, if that is so,
section 56 must now have the same effect. In Smith and Snipes Hall Farm Ltd. v.
River Douglas Catchment Board [FN69] Denning *76 L.J., after stating his view that a
third person can sue on a contract to which he is not a party, referred to section 56 as
a clear statutory recognition of this principle, with the consequence that Miller's case
[FN70] was wrongly decided. I cannot agree with that. and in Drive Yourself Hire Co.
(London) Ltd. v. Strutt [FN71] Denning L.J. again expressed similar views about
section 56.

FN68 [1937] Ch. 610.

FN69 [1949] 2 K.B. 500, 517; 65 T.L.R. 628; [1949] 2 All E.R. 179, C.A.

FN70 [1947] Ch. 615.

FN71 [1954] 1 Q.B. 250; [1953] 3 W.L.R. 1111; [1953] 2 All E.R. 1475, C.A.

I can now return to consider the meaning and scope of section 56. It refers to any
"agreement over or respecting land or other property." If "land or other property"
means the same thing as "tenements or hereditaments" in the Act of 1845 then this
section simply continues the law as it was before the Act of 1925 was passed, for I do
not think that the other differences in phraseology can be regarded as making any
substantial change. So any obscurities in section 56 are obscurities which originated
in 1845. But if its scope is wider, then two points must be considered. The section
refers to agreements "over or respecting land or other property." The land is
something which existed before and independently of the agreement and the same
must apply to the other property. So an agreement between A and B that A will use
certain personal property for the benefit of X would be within the scope of the section,
but an agreement that if A performs certain services for B, B will pay a sum to X
would not be within the scope of the section. Such a capricious distinction would alone
throw doubt on this interpretation.
Perhaps more important is the fact that the section does not say that a person may
take the benefit of an agreement although he was not a party to it: it says that he
may do so although he was not named as a party in the instrument which embodied
the agreement. It is true that section 56 says " although he may not be named "; but
section 5 of the Act of 1845 says although he "be not named a party." Such a change
of phraseology in a consolidation Act cannot involve a change of meaning. I do not
profess to have a full understanding of the old English law regarding deeds. But it
appears from what Lord Simonds said in White's case [FN72] and from what Vaisey J.
said in Chelsea and Walham Green Building Society v. Armstrong [FN73] that being in
fact a party to an agreement might not be enough; the person claiming a benefit had
to be named a party in the indenture. I have read the explanation of the old law given
by my noble and learned friend, Lord Upjohn. I would not venture to criticise it, but I
*77 do not think it necessary for me to consider it if it leads to the conclusion that
section 56 taken by itself would not assist the present respondent.

FN72 [1937] Ch. 610.

FN73 [1951] Ch. 853; [1951] 2 T.L.R. 312; [1951] 2 All E.R. 250.

But it may be that additional difficulties would arise from the application to section 56
of the definition of property in the definition section. If so, it becomes necessary to
consider whether that definition can be applied to section 56. By express provision in
the definition section a definition contained in it is not to be applied to the word
defined if in the particular case the context otherwise requires. If application of that
definition would result in giving to section 56 a meaning going beyond that of the old
section, then, in my opinion, the context does require that the definition of "property "
shall not be applied to that word in section 56. The context in which this section
occurs is a consolidation Act. If the definition is not applied the section is a proper one
to appear in such an Act because it can properly be regarded as not substantially
altering the pre-existing law. But if the definition is applied the result is to make
section 56 go far beyond the pre- existing law. Holding that the section has such an
effect would involve holding that the invariable practice of Parliament has been
departed from per incuriam so that something has got into this consolidation Act
which neither the draftsman nor Parliament can have intended to be there. I am
reinforced in this view by two facts. The language of section 56 is not at all what one
would have expected if the intention had been to bring in all that the application of
the definition would bring in. And, secondly, section 56 is one of 25 sections which
appear in the Act under the cross-heading "Conveyances and other Instruments." The
other twenty-four sections come appropriately under that heading and so does section
56 if it has a limited meaning: but, if its scope is extended by the definition of
property, it would be quite inappropriately placed in this part of the Act. For these
reasons I am of opinion that section 56 has no application to the present case.
The respondent's second argument is that she is entitled in her capacity of
administratrix of her deceased husband's estate to enforce the provision of the
agreement for the benefit of herself in her personal capacity, and that a proper way of
enforcing that provision is to order specific performance. That would produce a just
result, and, unless there is some technical objection, I am of opinion that specific
performance ought to be ordered. For the reasons given by your Lordships I would
reject the arguments submitted for the appellant that specific performance is not a
*78 possible remedy in this case. I am therefore of opinion that the Court of Appeal
reached a correct decision and that this appeal should be dismissed.

LORD HODSON.

My Lords, the question is whether the respondent, who is the personal representative
of her late husband, is entitled in that capacity or personally to enforce payment of an
annuity of <<PoundsSterling>>5 a week which on March 14, 1962, the appellant
agreed to pay to her. This arose from an agreement by the husband to sell his coal
merchant's business to the appellant for a consideration. Part of the consideration was
to pay the annuity to the respondent.
The respondent as administratrix and therefore a party by representation to the
agreement has a cause of action to sue on the agreement, as, indeed, is admitted in
the defence. The only question is, "What is the appropriate remedy? " It would be
strange if the only remedy were nominal damages recoverable at common law or a
series of actions at law to enforce the performance of a continuing obligation.
Although the point was discussed during the course of the case, it is not now
contended that at common law (apart from statute), since the contract by its express
terms purports to confer a benefit on a third party, the third party can be entitled to
enforce the provision in his own name. Similarly, it is not now argued that the claim
can be enforced as a trust. The respondent is no longer making any claim in her
personal capacity, save under a statute.
The surviving issues in the case are two: first, whether the Court of Appeal were
justified in making an order for specific performance by directing that the appellant do
pay to the respondent during the remainder of her life from July 15, 1964 (the date of
the issue of the writ), an annuity at the rate of <<PoundsSterling>>5 per week in
accordance with the agreement; second, whether or not the common law rule that a
contract such as this one, which purports to confer a benefit on a stranger to the
contract, cannot be enforced by the stranger has been to all intents and purposes
(with a few exceptions) destroyed by the operation of section 56 (1) of the Law of
Property Act, 1925. I will deal with this section first. It provides:
"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."
*79 The definition section, 205, provides:
"(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."
Section 56 replaced section 5 of the Real Property Act, 1845, which provided:
"That, under an indenture, executed after October 1, 1845, an immediate estate or
interest, in any tenements or hereditaments, and the benefit of a condition or
covenant, respecting any tenements or hereditaments, may be taken, although the
taker thereof be not named a party to the same indenture. ..."
One effect of section 56 was to make clear that which may not have been plain in the
authorities, that those matters dealt with were not confined to covenants, etc.,
running with the land.
The Law of Property Act, 1925, was a consolidating Act and came into force on
January 1, 1926, at the same time as two other Acts, namely, the Law of Property
Act, 1922, and the Law of Property (Amendment) Act, 1924. These last two Acts were
to be construed as one Act cited together as the Property Acts, 1922 and 1924 (see
section 12 (2) of the Act of 1924). Neither of them touched the question raised by the
language of section 56 of the Act of 1925.
One cannot deny that the view of Lord Denning M.R. expressed so forcibly, not for the
first time, in his judgment in this case, reinforced by the opinion of Danckwerts L.J. in
this case, is of great weight notwithstanding that it runs counter to the opinion of all
the other judges who have been faced by the task of interpreting this remarkable
section, namely, section 56 of the Act of 1925. Contained, as it is, in a consolidation
Act, an Act, moreover, dealing with real property, is it to be believed that by a side
wind, as it were, Parliament has slipped in a provision which has revolutionised the
law of contract? Although the presumption is against such an Act altering the law, the
presumption must yield to plain words to the contrary.
Apart from the definition in section 205, I doubt whether many would have been
disposed to the view that the general law which declares who can sue upon a contract
had received the mortal blow which section 56 is said to have inflicted on it. The use
of the word "agreement" is inapt to describe a unilateral promise. However, the
definition section, if it is to be applied expressly, refers to property as including "any
interest in real or personal *80 property." But for the saving words "unless the
context otherwise requires" I should have felt grave difficulty in resisting the
argument that Parliament, even if it acted per incuriam, had somehow allowed to be
slipped into consolidating legislation, which had nothing to do with the general law of
contract, an extraordinary provision which had such a drastic effect.
The section has been discussed in a number of cases which were cited by Wynn- Parry
J. in the case of In re Miller's Agreement. [FN74] A useful summary of the opinions
contained in the cases is to be found [FN75] where Wynn-Parry J. cited a passage
from In re Foster, [FN76] which appears in the opinion of my noble and learned
friend, Lord Pearce. Like Crossman J. I am unable to believe that such an enormous
change in the law has been made by section 56 as to establish that an agreement by
A with B to pay money to C gives C a right to sue on the contract.

FN74 [1947] Ch. 615.

FN75 Ibid. 621.

FN76 (1938) 54 T.L.R. 993; [1938] 3 All E.R. 357.

Section 56 has been discussed in recent common law cases, for example, Green v.
Russell [FN77] where the argument was rejected by the Court of Appeal. Before the
Court of Appeal in Midland Silicones Ltd. v. Scruttons Ltd. [FN78] to the best of my
recollection the argument based on section 56 was not pressed. The case came before
your Lordships. [FN79] If the section was mentioned it is not easy to see from the
report that it played a great part in the case. Viscount Simonds who at first instance
had given consideration to the section (see White v. Bijou Mansions Ltd. [FN80] can
scarcely have been unconscious of the section when he said in the Midland Silicones
case [FN81]:
"If the principle of jus quaesitum tertio is to be introduced into our law, it must be by
Parliament after a due consideration of its merits and demerits. I should not be
prepared to give it my support without a greater knowledge than I at present possess
of its operation in other systems of law."

FN77 [1959] 2 Q.B. 226; [1959] 3 W.L.R. 17; [1959] 2 All E.R. 525, C.A.

FN78 [1961] 1 Q.B. 106; [1960] 3 W.L.R. 372; [1960] 2 All E.R. 737, C.A.

FN79 [1962] A.C. 446; [1962] 2 W.L.R. 186; [1962] 1 All E.R. 1, H.L.(E.).

FN80 [1937] Ch. 610.

FN81 [1962] A.C. 446, 468.

Section 56 had as long ago as 1937 received consideration by the Law Revision
Committee presided over by Lord Wright, then Master of the Rolls, and containing a
number of illustrious lawyers. The committee was called upon to report specially on
consideration, including the attitude of the common law towards the jus quaesitum
tertio. It had available to it and considered the *81 decision of Luxmoore J. in In re
Ecclesiastical Commissioners for England's Conveyance, [FN82] which gave the
orthodox view of the section. By its Report (Cmd. 5449) it impliedly rejected the
revolutionary view, for it recommended (para. 50 (a), pp. 31-32):
"That where a contract by its express terms purports to confer a benefit directly on a
third party, it shall be enforceable by the third party in his own name."

FN82 [1936] Ch. 430.

Like my noble and learned friend, Lord Reid, whose opinion I have had the
opportunity of reading, I am of opinion that section 56, one of 25 sections in the Act
appearing under the cross-heading "Conveyances and other Instruments, " does not
have the revolutionary effect claimed for it, appearing as it does in a consolidation
Act. I think, as he does, that the context does otherwise require a limited meaning to
be given to the word "property" in the section.
Although, therefore, the appellant would succeed if the respondent relied only upon
section 56 of the Act of 1925, I see no answer to the respondent's claim for specific
performance and no possible objection to the order made by the Court of Appeal on
the facts of this case.
Indeed, on this aspect of the case it seems that most of the appellant's defences were
down before the case reached your Lordships' House. For example, it was argued at
one time that the equitable remedy of specific performance of a contract to make a
money payment was not available. This untenable contention was not proceeded with.
Further, it was argued that specific performance would not be granted where the
remedy at law was adequate and so should not be ordered. The remedy at law is
plainly inadequate, as was pointed out by the Court of Appeal, as (1) only nominal
damages can be recovered; (2) in order to enforce a continuing obligation it may be
necessary to bring a series of actions whereas specific performance avoids multiplicity
of action. Again, it was said that the courts will not make an order which cannot be
enforced. This argument also fell by the wayside for plainly the order can be enforced
by the ordinary methods of execution (see R.S.C., Ord. 45, r. 1, and Ord. 45, r. 9).
The peculiar feature of this case is that the plaintiff is not only the personal
representative of the deceased but also his widow and the person beneficially entitled
to the money claimed. Although the widow cannot claim specific performance in her
personal capacity, there is no objection to her doing so in her *82 capacity as
administratrix, and when the moneys are recovered they will be in this instance held
for the benefit of herself as the person for whom they are intended.
The authorities where the remedy of specific performance has been applied in such
circumstances as these are numerous. Examples are mentioned in the judgments of
the Court of Appeal which have dealt fully with this matter and there is no need to
elaborate the topic. Keenan v. Handley [FN83] is a very striking example which
appears to be exactly in point. It is to be noticed that the learned counsel engaged in
this and other cases never took the point now relied on that the personal
representative of the contracting party could not enforce a contract such as this. As I
understood the argument, for the appellant it was contended that the personal
representative could not obtain specific performance as the estate had nothing to
gain, having suffered no loss. There is no authority which supports this proposition
and I do not think it has any validity. In Hohler v. Aston [FN84] a decision of Sargant
J. is good authority to the contrary. A Mrs. Aston agreed with her nephew Mr. Hohler
to make provision for her niece and her husband, Mr. and Mrs. Rollo. Mrs. Aston died
before doing so. Mr. Hohler and Mr. and Mrs. Rollo sued the executors of Mrs. Aston
for specific performance and succeeded. Sargant J. said [FN85]:
"The third parties, of course, cannot themselves enforce a contract made for their
benefit, but the person with whom the contract is made is entitled to enforce the
contract."

FN83 (1864) 2 De G.J. & Sm. 283.

FN84 [1920] 2 Ch. 420.

FN85 Ibid. 425.

Mr. Hohler, like the respondent in her capacity as administratrix, took no benefit
under the contract but was rightly allowed to recover. It is no part of the law that in
order to sue on a contract one must establish that it is in one's interest to do so.
Absurd results would follow if a defendant were entitled to lead evidence to show that
it would pay the plaintiff better not to sue for specific performance of, say, the sale of
a house because the plaintiff could sell it for a higher price to someone else. It is true
that specific performance would not be ordered so as to disregard the fiduciary
position which the appellant occupies as administratrix. Situations might arise in the
administration of an estate when there might be conflicting claims between creditors
and persons entitled beneficially otherwise, but this is not such a case. There was in
the agreement reference to creditors but there was no evidence directed to this
matter and no reason to assume the existence of conflicting claims at the present
day.
*83 In such a case as this, there having been an unconscionable breach of faith, the
equitable remedy sought is apt. The appellant has had the full benefit of the contract
and the court will be ready to see that he performs his part (see the judgment of Kay
J. in Hart v. Hart [FN86].

FN86 (1881) 18 Ch.D. 670.

I would dismiss the appeal.

LORD GUEST.

My Lords, by agreement, dated March 14, 1962, the late Peter Beswick assigned to
Joseph Beswick his business as coal merchant in consideration of Joseph employing
Peter as a consultant for the remainder of his life at a weekly salary of
<<PoundsSterling>>6 10s. 0d. For the like consideration Joseph, in the event of
Peter's death, agreed to pay his widow an annuity charged on the business at the rate
of <<PoundsSterling>>5 per week. Peter Beswick died on November 3, 1963, and
the respondent is the administratrix of his estate. She claims in these proceedings
personally and as administratrix of her late husband against Joseph Beswick the
appellant for specific performance of the agreement and for payment of the annuity.
Her case before the Vice-Chancellor of the Chancery Court of the County Palatine of
Lancaster failed but she succeeded before the Court of Appeal in obtaining an order
for specific performance of the agreement of March 14, 1962.
Although the Court of Appeal were only unanimous upon one point in sustaining the
respondent's claim there only now remain two outstanding questions for this House.
The first question is whether the respondent as administratrix of the estate of the late
Peter Beswick is entitled to specific performance of the agreement of March 14, 1962.
Upon this matter I have had the opportunity of reading the speech of my noble and
learned friend, Lord Reid. I agree with him in thinking that the respondent is entitled
to succeed on this branch of the case.
The second question is whether the respondent as an individual is entitled to the relief
which she claims. Although Lord Denning M.R. in the Court of Appeal alone took the
view that she was entitled to sue at common law, no question was raised in this
House as to the respondent's right at common law in her personal capacity as
beneficiary to sue. The decision in Tweddle v. Atkinson [FN87] was not challenged in
this House by the respondent. The question remains, however, whether such a right is
conferred on her by section 56 (1) of the Law of Property Act, 1925. This question
does not strictly arise in view of the decision of the House *84 on specific
performance but, as the Court of Appeal decided by a majority in the respondent's
favour and as the matter was widely canvassed in argument, it is proper to deal with
it.

FN87 (1861) 1 B. & S. 393.

Section 56 (1) is in the following terms:
"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) (xx) "unless the context otherwise requires 'property' includes any
thing in action and any interest in real or personal property. " Mr. Francis for the
respondent argued that for section 56 (1) to apply, only four conditions were
necessary: (1) the covenant must be contained in an instrument in writing; (2) the
covenant must be in respect of land or other property as defined; (3) the covenant
must be directly for the benefit of a person not a party to the deed; and (4) the
covenant must be legally enforceable, i.e., supported by consideration or under seal.
As the covenant to pay an annuity in the deed of March 14, 1962, complied with these
four conditions, the respondent, he argued, was entitled to claim her annuity. Before
considering section 56 (1) it is necessary to recall the terms of section 5 of the Real
Property Act, 1845, which is said to be the predecessor of section 56 (1) of the Act of
1925. The earlier section was in the following terms:
"That, under an indenture, executed after October 1, 1845, an immediate estate or
interest, in any tenements or hereditaments, and the benefit of a condition or
covenant, respecting any tenements or hereditaments, may be taken, although the
taker thereof be not named a party to the same indenture. ..."
As the preamble to the Act of 1925 shows, it was an Act "to consolidate the
enactments relating to conveyancing and the law of property in England and Wales."
In these circumstances the presumption is that such an Act is not intended to alter
the law, but this prima facie view must yield to plain words to the contrary (Grey v.
Inland Revenue Commissioners. [FN88] Viscount Simonds). As appears from the
speech of Viscount Simonds, the 1925 Act was preceded by two Law of Property Acts,
one in 1922 and one in 1924, which by amendments paved the way for the
consolidation of the law of property in the Act of 1925. Section 5 of the Act of 1845
does not appear among the amendments made either in the Acts of 1922 or 1924,
but is repealed nominatim *85 by the Act of 1925. The law prior to the passing of the
Act of 1925 was not in doubt. Section 5 of the Act of 1845 applied only to covenants
relating to land and did not extend to personalty. The purpose of section 5 was clearly
expressed by Simonds J. (as he then was) in White v. Bijou Mansions Ltd. [FN89] In
Forster v. Elvet Colliery Co. Ltd. [FN90] the Court of Appeal decided that the section
only applied to covenants "running with the lands " (Farwell L.J. [FN91] It is true that
when the case reached the House of Lords (sub nom. Dyson v. Forster [FN92] Lord
Macnaghten [FN93] doubted whether the section was confined to covenants running
with the lands, but the case was decided on other grounds. Therefore, Mr. Francis's
suggestion that section 56 (1) was introduced to resolve the doubt as to the
application of section 5 of the Act of 1845 to covenants running with the lands cannot
carry weight; the law as decided by the Court of Appeal in Forster [FN94] was clear.
And, indeed, this was confirmed subsequently in Grant v. Edmondson. [FN95]
Moreover, this suggestion as to the purpose of section 56 (1) does not accord with the
respondent's main submission that section 56 (1) applies to all covenants affecting
land and personalty. If this contention were sound, it would mean that by a side wind
a fundamental change in the law had been effected in a consolidating statute. It
would subvert the law as set out in Tweddle v. Atkinson [FN96] affirmed in Dunlop
Pneumatic Tyre Co. v. Selfridge & Co. Ltd. [FN97] and confirmed in Scruttons Ltd. v.
Midland Silicones Ltd. [FN98] that a person who is not a party to a contract cannot
sue on it, even if it purports to be made for his benefit. I cannot believe that
Parliament intended to make so fundamental a change in a consolidating Act with the
history of the Acts of 1922 and 1924 before them. It is said that one of the purposes
of the Act of 1925 was to assimilate the law of real and personal property. If that had
been the intention of Parliament the amendment would surely have been made in the
earlier amending Acts of 1922 or 1924.

FN88 [1960] A.C. 1, 14; [1959] 3 W.L.R. 759; [1959] 3 All E.R. 603, H.L. (E.).

FN89 [1937] Ch. 610, 623.

FN90 [1908] 1 K.B. 629; 24 T.L.R. 265, C.A.

FN91 [1908] 1 K.B. 629, 632.

FN92 [1909] A.C. 98; 25 T.L.R. 166, H.L.(E.).

FN93 [1909] A.C. 98, 102.

FN94 [1908] 1 K.B. 629.

FN95 [1931] 1 Ch. 1, C.A.

FN96 1 B. & S. 393.

FN97 [1915] A,C, 847; 31 T.L.R. 399, H.L.(E.).

FN98 [1962] A.C. 446.

The impact of section 56 (1) of the Act of 1925 has been the subject of judicial
consideration in several cases. Apart from Lord Denning and Danckwerts L.J. in this
case in the Court of Appeal and dicta of Lord Denning in other cases, it has never
been held to have the far-reaching effects contended for by the *86 respondent. In In
re Ecclesiastical Commissioners For England's Conveyance, [FN99] the first case
where section 56 was considered, Luxmoore J. did express the view that section 56
had enlarged the scope of section 5, but this opinion was obiter. In White v. Bijou
Mansions Ltd. [FN100] Simonds J. (as he then was) took the view that section 56 did
not effect the fundamental change in the law suggested but that it
"can be called in aid only by a person in whose favour the grant purports to be made
or with whom the covenant or agreement purports to be made."

FN99 [1936] Ch. 430.

FN100 [1937] Ch. 610, 625.

Sir Wilfrid Greene M.R. in the Court of Appeal in the same case took the same broad
view as Simonds J. but for the reason that before a person not a party to the contract
can enforce it he must be within the scope and benefit of the covenant according to
the true construction of the document in question. [FN101] In In re Miller's
Agreement [FN102] Wynn-Parry J. took the view that section 56 had not the effect of
creating rights, but only of effecting the protection of rights shown to exist.

FN101 [1938] Ch. 351, 365.

FN102 [1947] Ch. 615, 622.

Lord Denning's views as to the effect of section 56, as expressed in the Court of
Appeal case, were preceded by similar observations in previous cases. Thus in Smith
and Snipes Hall Farm Ltd. v. River Douglas Catchment Board [FN103] he expressed
the view obiter that section 56 was a statutory recognition of the principle that a third
party may take the benefit of a covenant although he may not be named as a party to
the instrument. This was followed by Drive Yourself Hire Co. (London) Ltd. v. Strutt
[FN104] where Denning L.J. (as he then was) expressed the view that section 56 did
away with the rule in Tweddle v. Atkinson [FN105] in cases respecting property, but
he was alone in that view. Somervell and Romer L.JJ. do not refer to section 56.

FN103 [1949] 2 K.B. 500.

FN104 [1954] 1 Q.B. 250.

FN105 1 B. & S. 393.

In the present case in the Court of Appeal Lord Denning M.R. and Danckwerts L.J.
considered that section 56 had abrogated the rule in Tweddle v. Atkinson [FN106] -
"received the mortal wound which it well deserved" as Danckwerts L.J. put it. [FN107]
Salmon L.J. doubted if the decision in Scruttons Ltd. v. Midland Silicones Ltd. [FN108]
left him free to do so.

FN106 1 B. & S. 393.

FN107 [1966] Ch. 538, 563; [1966] 3 W.L.R. 396; [1966] 3 All E.R. 1, C.A.

FN108 [1962] A.C. 446.

Having regard to the law previous to 1925 and to the expressions of judicial opinion
since, I cannot think that Parliament *87 intended to make such a clean sweep of the
previous law as the respondent's construction of section 56 would involve. There is, in
my view, no half-way house between this extreme construction which would apply
section 56 to a covenant or agreement relating to property in the wide sense of the
definition section or limiting the construction to the law as previously existing. I am
not satisfied that the limitations suggested by Wynn-Parry J. in In re Miller's
Agreement, [FN109] Simonds J. and Greene M.R. in White v. Bijou Mansions Ltd.
[FN110] can be satisfactorily justified upon a construction of section 56.

FN109 [1947] Ch. 615, 622.

FN110 [1937] Ch. 610, 625; [1938] Ch. 351, 365.

If, of course, the words of section 56 are susceptible of only one construction, then
the court must give effect to that construction. But, as this is a consolidating Act, if
the words are capable of more than one construction, then the court will give effect to
that construction which does not change the law. Section 205 (1) of the 1925 Act -
the definition section - commences with the expression in common form "unless the
context otherwise requires." In my view, the context requires that section 56 should
not extend the provisions of section 5 of the Act of 1845, which were limited to land,
to personalty. If section 56 was designed to replace section 5, it does not replace it by
extending its scope to personalty. On referring to section 56 it will be seen that the
definition section 205 is the section which creates the difficulty. Apart from this
section it would be proper to construe "or other property" in section 56 as referring to
real property to which its predecessor in section 5 of the Act of 1845 was limited. It
may be that the draftsman in incorporating the wide definition of "property" into
section 56 had overlooked the result which it would have on the effect of this section
by extending it beyond its predecessor. I am constrained to hold that if section 56 is
to replace the previous law in section 5 of the Act of 1845, this can only be done by
limiting the word "property" in section 56 to real property and thereby excluding the
wide definition of "property" contained in section 205 (1) (xx). The result is that the
respondent has, in my view, no right to sue on the agreement of March 14, 1962, in
her individual capacity.
However, for the reasons already given, I would dismiss the appeal.

LORD PEARCE.

My Lords, if the annuity had been payable to a third party in the lifetime of Beswick
senior and there had been *88 default, he could have sued in respect of the breach.
His administratrix is now entitled to stand in his shoes and to sue in respect of the
breach which has occurred since his death.
It is argued that the estate can only recover nominal damages and that no other
remedy is open, either to the estate or to the personal plaintiff. Such a result would
be wholly repugnant to justice and commonsense. and if the argument were right it
would show a very serious defect in the law.
In the first place, I do not accept the view that damages must be nominal. Lush L.J. in
Lloyd's v. Harper [FN111] said:
"Then the next question which, no doubt, is a very important and substantial one, is,
that Lloyd's, having sustained no damage themselves, could not recover for the losses
sustained by third parties by reason of the default of Robert Henry Harper as an
underwriter. That, to my mind, is a startling and alarming doctrine, and a novelty,
because I consider it to be an established rule of law that where a contract is made
with A for the benefit of B, A can sue on the contract for the benefit of B, and recover
all that B could have recovered if the contract had been made with B himself."

FN111 (1880) 16 Ch.D. 290, 321, C.A.

(See also Drimmie v. Davies. [FN112] I agree with the comment of Windeyer J. in the
case of Coulls v. Bagot's Executor and Trustee Co. Ltd. [FN113] in the High Court of
Australia that the words of Lush L.J. cannot be accepted without qualification and
regardless of context and also with his statement:
"I can see no reason why in such cases the damages which A would suffer upon B's
breach of his contract to pay C $500 would be merely nominal: I think that in
accordance with the ordinary rules for the assessment of damages for breach of
contract they could be substantial. They would not necessarily be $500; they could I
think be less or more."

FN112 [1899] 1 Ir.R. 176.

FN113 (1967) 40 A.L.J.R. 471, 486.

In the present case I think that the damages, if assessed, must be substantial. It is
not necessary, however, to consider the amount of damages more closely since this is
a case in which, as the Court of Appeal rightly decided, the more appropriate remedy
is that of specific performance.
The administratrix is entitled, if she so prefers, to enforce the agreement rather than
accept its repudiation, and specific performance is more convenient than an action for
arrears of payment followed by separate actions as each sum falls due. Moreover,
damages for breach would be a less appropriate remedy since the parties to the
agreement were intending an annuity for a widow; and a lump sum of damages does
not accord with this. and if *89 (contrary to my view) the argument that a derisory
sum of damages is all that can be obtained be right, the remedy of damages in this
case is manifestly useless.
The present case presents all the features which led the equity courts to apply their
remedy of specific performance. The contract was for the sale of a business. The
defendant could on his part clearly have obtained specific performance of it if Beswick
senior or his administratrix had defaulted. Mutuality is a ground in favour of specific
performance.
Moreover, the defendant on his side has received the whole benefit of the contract
and it is a matter of conscience for the court to see that he now performs his part of
it. Kay J. said in Hart v. Hart [FN114]:
"... when an agreement for valuable consideration ... has been partially performed,
the court ought to do its utmost to carry out that agreement by a decree for specific
performance."

FN114 18 Ch.D. 670, 685.

What, then, is the obstacle to granting specific performance?
It is argued that since the widow personally had no rights which she personally could
enforce the court will not make an order which will have the effect of enforcing those
rights. I can find no principle to this effect. The condition as to payment of an annuity
to the widow personally was valid. The estate (though not the widow personally) can
enforce it. Why should the estate be barred from exercising its full contractual rights
merely because in doing so it secures justice for the widow who, by a mechanical
defect of our law, is unable to assert her own rights? Such a principle would be
repugnant to justice and fulfil no other object than that of aiding the wrongdoer. I can
find no ground on which such a principle should exist.
In Hohler v. Aston [FN115] Sargant J. enforced a contract relating to the purchase of
a house for the benefit of third parties. The third parties were joined as plaintiffs, but
the relief was given to the plaintiff who had made the contract for their benefit
[FN116]:
"The third parties, of course, cannot themselves enforce a contract made for their
benefit, but the person with whom the contract is made is entitled to enforce the
contract."

FN115 [1920] 2 Ch. 420.

FN116 Ibid. 425.

In Keenan v. Handley [FN117] the court enforced an agreement providing the benefit
of an annuity in favour of a mother who was a party to the agreement and, after her
death, to her child, who was not a party to it.

FN117 2 De G. J. & Sm. 283.

*90 And in Drimmie v. Davies [FN118] the Court of Appeal in Ireland ordered specific
performance of an agreement whereby annuities were provided for third parties.
Holmes L.J. there said [FN119]:
"In this case Davies, junior, covenanted for valuable consideration with Davies,
senior, that in certain events he would pay certain annuities to the children of the
latter. If such annuities had become payable in the life of the covenantee, and they
were not paid, what legal obstacle would there be to his suing the covenantor?
Indeed, I believe that it is admitted that such an action would lie, but that it would
only result in nominal damages. A result more repugnant to justice, as well as to legal
principle, I can hardly imagine. The defendant would thereby escape from paying
what he had undertaken to pay by making an illusory payment never contemplated by
either party. Well, if Davies, senior, would have been entitled to sue in his lifetime if
the annuities were then payable, his executors would have the same right of action
after his death. As I have already said, the question is elementary."

FN118 [1899] 1 Ir.R. 176.

FN119 Ibid. 190.

Recently in Coulls v. Bagot's Executor and Trustee Co. Ltd. [FN120] the learned Chief
Justice of Australia, Sir Garfield Barwick, in commenting on the report of the Court of
Appeal's decision in the present case, said:
"I would myself, with great respect, agree with the conclusion that where A promises
B for a consideration supplied by B to pay C that B may obtain specific performance of
A's promise, at least where the nature of the consideration given would have allowed
the debtor to have obtained specific performance. I can see no reason whatever why
A in those circumstances should not be bound to perform his promise. That C
provided no part of the consideration seems to me irrelevant."

FN120 40 A.L.J.R. 471, 477, 487.

Windeyer J. in that case said:
"It seems to me that contracts to pay money or transfer property to a third person
are always, or at all events very often, contracts for breach of which damages would
be an inadequate remedy - all the more so if it be right (I do not think it is) that
damages recoverable by the promisee are only nominal. Nominal or substantial, the
question seems to be the same, for when specific relief is given in lieu of damages it
is because the remedy, damages, cannot satisfy the demands of justice. 'The court,'
said Lord Selbourne 'gives specific performance instead of damages, only when it can
by that means do more perfect and complete justice': Wilson v. Northampton and
Banbury Junction Railway Co. [FN121] *91 Lord Erskine in Alley v. Deschamps
[FN122] said of the doctrine of specific performance: 'This court assumed the
jurisdiction upon this simple principle; that the party had a legal right to the
performance of the contract; to which right the courts of law whose jurisdiction did
not extend beyond damages, had not the means of giving effect.' Complete and
perfect justice to a promisee may well require that a promisor perform his promise to
pay money or transfer property to a third party. I see no reason why specific
performance should not be had in such cases - but of course not where the promise
was to render some personal service. There is no reason to-day for limiting by
particular categories, rather than by general principle, the cases in which orders for
specific performance will be made. The days are long past when the common law
courts looked with jealousy upon what they thought was a usurpation by the
Chancery court of their jurisdiction."

FN121 (1874) 9 Ch.App. 279, 284.

FN122 (1806) 13 Ves. 225, 227-228.

He continued later:
"It is, I think, a faulty analysis of legal obligations to say that the law treats the
promisor as having a right to elect either to perform his promise or to pay damages.
Rather, using one sentence from the passage from Lord Erskine's judgment which I
have quoted above, the promisee has 'a legal right to the performance of the
contract.' Moreover we are concerned with what Fullagar J. once called 'a system
which has never regarded strict logic as its sole inspiration.' Tatham v. Huxtable."
[FN123]

FN123 (1950) 81 C.L.R. 639, 649.

I respectfully agree with these observations.
It is argued that the court should be deterred from making the order because there
will be technical difficulties in enforcing it. In my opinion, the court should not lightly
be deterred by such a consideration from making an order which justice requires. But
I do not find this difficulty.
R.S.C., Ord. 45, r. 9 (1), provides under the heading "Execution by or against a
person not being a party":
"Any person, not being a party to a cause or matter, who obtains any order or in
whose favour any order is made, shall be entitled to enforce obedience to the order
by the same process as if he were not a party."
This would appear by its wide terms to enable the widow for whose benefit the
annuity is ordered to enforce its payment by the appointment of a receiver, by writ of
fi. fa., or even by judgment summons. I see no reason to limit the apparent meaning
of the words of the rule, which would appear to achieve a sensible purpose. Moreover,
I see no objection in principle to the estate *92 enforcing the judgment, receiving the
fruits on behalf of the widow and paying them over to the widow, just as a bailee of
goods does when he recovers damages which should properly belong to the true
owner of the goods.
It is contended that the order of the Court of Appeal is wrong and there should be no
specific performance, because the condition that the defendant should pay off two
named creditors has been omitted, and there can be no enforcement of part of the
contract. But the assumption, since we have no evidence on the matter, is that the
creditors have both already been paid off. and even if they have not, a party is
entitled to waive a condition which is wholly in his favour; and its omission cannot be
used by the defendant as a ground for not performing his other parts of the contract.
It is unnecessary, therefore, to consider in what circumstances a contract may be
enforced in part.
In my opinion, the plaintiff as administratrix is entitled to a decree of specific
performance.
It is not, therefore, strictly necessary to deal with the respondent's argument that the
plaintiff is entitled at common law or, by reason of section 56 of the Law of Property
Act, 1925, to sue in her personal capacity. The learned Master of the Rolls expressed
the view that at common law the widow was entitled to sue personally; but this view
was not argued before your Lordships. He distinguished Tweddle v. Atkinson. [FN124]
In Smith and Snipers Hall Farm Ltd. v. River Douglas Catchment Board [FN125] and
White v. John Warwick & Co. Ltd. [FN126] the same learned judge had given his
reasons for thinking that Tweddle v. Atkinson [FN127] was wrongly decided and was
out of line with the law as it had been settled in previous centuries. On the other
hand, in Coulls v. Bagot's Executor and Trustee Co. Ltd. [FN128] a survey of the
cases from Tudor times led Windeyer J. to a different conclusion, namely that:
"The law was not in fact 'settled' either way during the two hundred years before
1861. But it was, on the whole, moving towards the doctrine that was to be then and
thereafter taken as settled."

FN124 1 B. & S. 393.

FN125 [1949] 2 K.B. 500, 514.

FN126 [1953] 1 W.L.R. 1285; [1953] 2 All E.R. 1021, C.A.

FN127 1 B. &. S. 393.

FN128 40 A.L.J.R. 471, 485.

But the greatest difficulty in the way of the widow's right to sue personally is that two
cases in this House, Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co. Ltd. [FN129]
and *93 Midland Silicones Ltd.v. Scruttons Ltd., [FN130] clearly accepted the
principle that a third party cannot sue on a contract to which he was not a party.

FN129 [1915] A.C. 847.

FN130 [1962] A.C. 446.

The majority of the Court of Appeal expressed the view that this principle had been
abolished by section 56 of the Law of Property Act. If, however, a far reaching and
substantial alteration had been intended by Parliament, one would expect it to be
expressed in clear terms. Yet the terms of section 56 (1) are far from clear and
appear to be simply an enlargement of a section passed 80 years before. Further,
section 56 is to be found in a part of the Act devoted to the technicalities of
conveyancing rather than the creation of rights. The cross heading of that part of the
Act is "Conveyances and other Instruments. " and the second part of the section deals
with a small question of formality. The important innovations in the law of property
were contained in the two Acts of 1922 and 1924, but this alleged innovation was not
among them. It first appears in the 1925 Law of Property Act. That was a
consolidation Act and, therefore, one should not find a substantial innovation in it. It
is of interest that the notes in Sir Benjamin Cherry's book (Wolstenholme and
Cherry's Conveyancing Statutes 1925-27, 11th edition) contain no suggestion that the
section has these far-reaching effects. Nor can I find any trace of this in his Lectures
on the New Property Acts published in 1926 with a preface by Viscount Haldane who
gives an account of the genesis and birth of the Bill. Nor did Luxmoore J. so find in In
re Ecclesiastical Commissioners for England's Conveyance. [FN131]

FN131 [1936] Ch. 430.

The distinguished committee which in 1937 considered the whole subject and
recommended the suggested innovation in terms which have unfortunately not yet
been adopted, cannot have thought that it had already been achieved by section 56.
Since then learned judges in various cases have considered the section. The history of
these cases was summed up by Crossman J. in In re Foster [FN132] in the following
passage which Wynn-Parry J. quoted in arriving at the conclusion that the section did
not produce the suggested innovation (In re Miller's Agreement [FN133]:
"In my judgment, section 56 does not have this effect. I think Mr. Stone's contention
really amounts to this, that an agreement by A. with B. to pay money to C. gives C. a
right to sue on the contract; I think it must go as far as that, and I am not prepared
to hold that section 56 has created such an enormous change in the law of contract as
would be involved in that proposition, because that would be, no doubt *94 apart
from the section, that nobody could have ever suggested that a contract by A. with B.
to pay C. a sum of money enabled C. to sue A. on that contract. I hold following what
I understand to have been the view that Luxmoore J. expressed in the case of In re
Ecclesiastical Commissioners for England's Conveyance [FN134] and the view that
Simonds J. expressed in White v. Bijou Mansions Ltd., [FN135] and the view of the
present Master of the Rolls expressed in the same case on appeal and of Farwell J. as
expressed in In re Sinclair's Life Policy, [FN136] that section 56 of the Law of Property
Act, 1925, can only be called in aid by a person who, although not a party to the
conveyance or other instrument in question is yet a person to whom that conveyance
or other instrument purports to grant something or with whom some agreement or
covenant is thereby purported to be made.'"

FN132 54 T.L.R. 993, 995.

FN133 [1947] Ch. 615, 621.

FN134 [1936] Ch. 430.

FN135 [1937] Ch. 610; [1938] Ch. 351.

FN136 [1938] Ch. 799; 54 T.L.R. 918; [1938] 3 All E.R. 124.
I am compelled to the conclusion that Parliament certainly did not intend to effect the
suggested innovation. But has it achieved it per incuriam? I should be reluctant to
give to the section an effect which Parliament so clearly did not intend, if the words
are capable of another meaning. Unsatisfactory as I find the limited meaning given to
the words by the above cases, it is a possible meaning. Moreover, I incline to the view
of the section expressed by my noble and learned friend, Lord Upjohn, and its
historical aspect as set out by him. Accordingly, in my view, section 56 does not have
any relevance in this case. I also agree with his observations on the cases of In re
Engelbach [FN137] and In re Sinclair's Life Policy. [FN138]

FN137 [1924] 2 Ch. 348.

FN138 [1938] Ch. 799.

I would dismiss the appeal.

LORD UPJOHN.

My Lords, by a very informal written agreement, though prepared by a solicitor, Peter

Beswick (the deceased) agreed with the appellant to assign to him the goodwill and
assets of the business of a coal merchant carried on by him in consideration of the
appellant employing the deceased as consultant to the business for the remainder of
his life at a weekly rate of << PoundsSterling>>6 10s. 0d. This agreement, set out in
full in the judgment of Lord Denning M.R. in the Court of Appeal, was not expressed
to be "inter partes " in any strict sense, a matter of fundamental importance when I
come to consider the impact of section 56 of the Law of Property Act, 1925, upon this
appeal.
For the like consideration the appellant agreed to pay to the *95 deceased's widow
(the respondent to this appeal) an annuity to be charged on the business at the rate
of <<PoundsSterling>>5 0s. 0d. per week.
The deceased died intestate on November 3, 1963, and his widow took out letters of
administration to his estate on June 30, 1964. The appellant duly discharged the
salary of <<PoundsSterling>>6 10s. 0d. during the lifetime of the deceased. He
made one payment to the widow and thereafter repudiated his liability to do so.
Hence these High Court proceedings initiated by the widow, suing both personally and
as administratrix of her husband, and soon transferred to the Chancery Court of the
County Palatine of Lancaster.
Her suit was dismissed by Burgess V.-C. but her appeal to the Court of Appeal was
allowed and an order for specific performance of the agreement, together with
payment of arrears of the annuity, made against the appellant.
As it is necessary to keep clear and distinct the rights of the widow as administratrix
of her husband and personally, I think it will be convenient to use letters: letter A
represents the deceased and A1 the widow, as personal representative, B the widow
in her personal capacity and C the appellant. and in other examples I shall give, these
letters will serve the same purpose.
Much is common ground between the parties: (1) B was not a party to the
agreement; (2) A did not enter into the agreement as trustee for B in relation to the
annuity to be paid to her, (3) A1 stands for all relevant purposes in the shoes of A and
is entitled to sue C for breach of his admitted repudiation of the agreement (see
paragraph 5 of the defence), but the parties differ fundamentally as to the remedy to
which A1 is entitled in such an action.
Counsel for the respondent has not felt able to support the view, expressed by Lord
Denning M.R., that apart from section 56 of the Law of Property Act, 1925, B is
entitled to sue C at common law. I think that he was right to make this concession,
for whatever may have been the state of the law before Tweddle v. Atkinson [FN139]
it is difficult to see how your Lordships can go back over 100 years in view of the
decisions in this House of Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co. Ltd.
[FN140] and Scruttons Ltd. v. Midland Silicones Ltd. [FN141]

FN139 1 B. & S. 393.

FN140 [1915] A.C. 847.

FN141 [1962] A.C. 496.

Leaving section 56 out of account, there was no real dispute between the parties as to
their respective rights (as distinct from remedies) under the agreement. (a) B has no
rights thereunder. *96 But it was clear from the whole tenor of the agreement that
the annuity was to be paid to her for her own beneficial enjoyment, so if C paid it to
her she could keep it and did not hold it as a constructive trustee for A1; (b) C would
completely perform his obligation under the contract by continuing to pay the annuity
to B during her life. Neither A not A1 could compel C to pay it to A or A1, but (c) A or
A1 and C could, if they pleased, agree to modify, compromise or even discharge
further performance of the contract by C, and B would have no right to complain. If
authority be wanted for these fundamental propositions, it is to be found in In re
Schebsman [FN142] and In re Stapleton-Bretherton. [FN143]

FN142 [1944] Ch. 83.

FN143 [1941] Ch. 482; [1941] 3 All E.R. 5.

My Lords, if I may pause there for a moment, I have the greatest difficulty in seeing
how In re Englebach, [FN144] to which we were referred, can have been rightly
decided. In that case a man took out a policy payable to his daughter on attaining 21;
she was then one month old. He died. She attained 21 and the policy moneys were
paid to her, but she was persuaded to pay them into the hands of a stakeholder
pending a decision as to the legal rights of the parties and it was held that the estate
of the father was entitled thereto. In my view, she was badly advised. The moneys
were paid to her as provided by the terms of the contract; for her own use and
benefit, I should have thought plain. In In re Schebsman [FN145] both at first
instance before Uthwatt J. (as he then was) and in the Court of Appeal it is clear that
this case occasioned some difficulty. I find the explanation given by Luxmoore L.J.
[FN146] and of Uthwatt J, [FN147] unsatisfactory. Why should the insurance company
merely be regarded as a mandatory to pay the policy moneys due to the assurer to
his daughter presumably as his agent. This seems to me unrealistic. In re Sinclair's
Life Policy [FN148] is perhaps distinguishable on its facts for the insurance company
paid the money into court and it was therefore difficult for the infant to show any title
thereto but in so far as Farwell J. held at the end of his judgment that if the money
had been paid to the infant, he would hold it as constructive trustee for the estate of
the godfather, I disagree with him.

FN144 [1924] 2 Ch. 348.

FN145 [1943] Ch. 366; [1944] Ch. 83.

FN146 [1944] Ch. 83, 100.

FN147 [1943] Ch. 366.

FN148 [1938] Ch. 799.

My Lords, to return to this case. Admittedly A1 can sue from time to time for damages
at common law on failure to pay each instalment of the annuity. But surely on a
number of grounds this is a case for specific performance.
*97 First, here is the sale of a business for full consideration wholly executed on A's
part who has put C into possession of all the assets. C is repudiating the obligations to
be performed by him. To such a case the words of Kay J. in Hart v. Hart [FN149] are
particularly appropriate:
"... when an agreement for valuable consideration between two parties has been
partially performed, the court ought to do its utmost to carry out that agreement by a
decree for specific performance."

FN149 18 Ch.D. 670, 685.

The fact that A by the agreement was to render such services as consultant as he
might find convenient or at his own absolute discretion should decide may be ignored
as de minimis and the contrary was not argued. In any event the fact that there is a
small element of personal service in a contract of this nature does not destroy that
quality of mutuality (otherwise plainly present) want of which may in general terms
properly be a ground for refusing a decree of specific performance. See, for example,
Fortescue v. Lostwithiel and Fowey Railway Co. [FN150]

FN150 [1894] 3 Ch. 621.

In the courts below, though not before your Lordships, it was argued that the remedy
of specific performance was not available when all that remained was the obligation to
make a money payment. Danckwerts L.J. rightly demolished this contention as
untenable for the reasons he gives. [FN151]

FN151 [1967] Ch. 538, 560-561.

But when the money payment is not made once and for all but in the nature of an
annuity there is an even greater need for equity to come to the assistance of the
common law. Equity is to do true justice to enforce the true contract that the parties
have made and to prevent the trouble and expense of a multiplicity of actions. This
has been well settled for over a century: Swift v. Swift. [FN152] In that case an
annuity of <<PoundsSterling>>40 p.a. was payable to a lady quarterly and Lord
Plunket L.C. enforced specific performance of it. He said [FN153]:
"It is said she has a complete remedy at law for the breach of this contract, and that,
therefore, this court should not interfere. Now, the remedy at law could only be
obtained in one of two ways, either by at once recovering damages for all the
breaches that might occur during the joint lives of herself and the defendant, or by
bringing four actions in each year, and recovering in each the amount of a quarterly
payment of the annuity. Those are the two modes of redress open to the plaintiff at
Law. and I am called on to refuse relief here on the ground that such remedies are
equally beneficial *98 and effectual for the plaintiff as that which this court could
afford. To refuse relief on such a ground would not, in my opinion, be a rational
administration of justice. I do not see that there is any authority for refusing relief,
and certainly there is no foundation in reason for doing so."

FN152 (1841) 3 Ir.Eq.R. 267.

FN153 Ibid. 275-276.

Then, after referring to the case of Adderley v. Dixon, [FN154] he continued [FN155]:
"Applying this to the present case, leaving the plaintiff to proceed at law and to get
damages at once for all the breaches that might occur during the joint lives of her and
the defendant, would, in effect, be altering the entire nature of the contract that she
entered into: it would be compelling her to accept a certain sum, a sum to be
ascertained by the conjecture of a jury as to what was the value of the annuity. This
would be most unreasonable and unjust: her contract was for the periodical payment
of certain sums during an uncertain period; she was entitled to a certain sum of
money, and she agreed to give up that for an annuity for her own and the defendant's
lives, and to insist on her now accepting a certain sum of money in the shape of
damages for it, would be in effect to make her convert into money, what she, having
in money, exchanged for an annuity. As to her resorting four times every year to a
Court of Law for each quarterly payment of this annuity, it is a manifest absurdity to
call that a beneficial or effectual remedy for the plaintiff; and resting the case on that
ground alone, I think I am warranted by the highest authority in granting the relief
sought."

FN154 (1824) 1 Sim. & St. 607.

FN155 3 Ir.Eq.R. 267, 276-277.

It is in such common sense and practical ways that equity comes to the aid of the
common law and it is sufficiently flexible to meet and satisfy the justice of the ease in
the many different circumstances that arise from time to time.
To sum up this matter: had C repudiated the contract in the lifetime of A the latter
would have had a east iron ease for specific performance. Can it make any difference
that by the terms of the agreement C is obliged to pay the annuity after A's death to
B? Of course not. On the principle I have just stated it is clear that there can be
nothing to prevent equity in A's specific performance action making an appropriate
decree for specific performance directing payment of the annuity to A but during his
life and thereafter to B for her life.
There is abundant authority to support that proposition. The first is Keenan v. Handley
[FN156] and on appeal, [FN157] the facts of which are sufficiently set out in the
judgment of Lord Denning M.R. That ease seems to me dead in point and I do not
accept the *99 argument that the mother, Ellen Keenan, was contracting as trustee
for her child; such a relationship cannot be spelt out of Captain Handley's letter. As
one of the contracting parties she was suing to enforce her rights under the letter, as
later modified by agreement for payment of <<PoundsSterling>>100 a year to
herself for her life and << PoundsSterling>>50 a year to the child and after Ellen
Keenan's death << PoundsSterling>>150 a year to the child for her life. True it is
that no point was taken either at first instance or in the Court of Appeal that the
infant could not sue but, as Tweddle v. Atkinson [FN158] had only been decided some
three years before, that point cannot have been overlooked. I draw the inference that
it never occurred to those distinguished equity judges who tried that case that there
could be any difficulty in making an order upon C at the instance of A to pay B. That
is made clear by the order in that case which is to be found in that great book of
authority, Seton on Judgments and Orders (see 7th edition (1912), vol. 3, p. 2212).
That was followed by Peel v. Peel [FN159] also discussed by Lord Denning M.R. Then
came the Irish case of Drimmie v. Davies, [FN160] a very familiar type of case where
the parties in a firm agreed together to pay annuities to the dependants of a partner
when he should die. The executors of a deceased partner brought an action to enforce
payment of the annuities and succeeded. Although my noble and learned friend, Lord
Pearce, has set out the observations of Holmes L.J. in that case in his speech, it so
exactly expresses my own view that I set it out again. Holmes L.J. said [FN161]:
"In this case Davies, junior, covenanted for valuable consideration with Davies,
senior, that in certain events he would pay certain annuities to the children of the
latter. If such annuities had become payable in the life of the covenantee and they
were not paid, what legal obstacle would there be to his suing the covenantor?
Indeed, I believe that it is admitted that such an action would lie, but that it would
only result in nominal damages. A result more repugnant to justice, as well as to legal
principle, I can hardly imagine. The defendant would thereby escape from paying
what he had undertaken to pay by making an illusory payment never contemplated by
either party. Well, if Davies, senior, would have been entitled to sue in his lifetime if
the annuities were then payable, his executors would have the same right of action
after his death. As I have already said, the question is elementary."

FN156 (1864) 12 W.R. 930.

FN157 2 De G.J. & Sm. 283.

FN158 1 B. & S. 393.

FN159 (1869) 17 W.R. 586.

FN160 [1899] 1 Ir.R. 176.

FN161 [1899] 1 Ir.R. 176, 190.

Finally there was the rather unusual case of Hohler v. Aston [FN162] also mentioned
by Lord Denning M.R. who quotes the relevant *100 passage from the judgment of
Sargant J. (as he then was). This again shows the extent of the power of equity to
assist the common law, limited only by canons of common sense and the practical
limitations on the power to oversee and administer specific performance decrees. So
the power and indeed duty, in proper cases, of the court of equity to make specific
performance orders in favour of third parties at the instance of one of the contracting
parties is not in doubt.

FN162 [1920] 2 Ch. 420.

But when A dies and his rights pass to A1, it is said that the remedy of specific
performance is no longer appropriate against C. The argument was first that the
estate of A suffered no damage by reason of C's failure to pay B; so A1 is entitled to
nominal damages but as she is not otherwise interested in the agreement as such it
would be wrong to grant specific performance; for that remedy is available only where
damages will be an inadequate remedy. Here nominal damages are adequate.
Further, it was argued, to do so would really be to confer upon B a right which she
does not have in law or equity to receive the annuity. Then, secondly, it was said that
if the remedy of specific performance is granted it might prejudice creditors of A so
that the parties ought to be left to their strict rights at law. Thirdly, it is said that
there are procedural difficulties in the way of enforcing an order for specific
performance in favour of a third party. I will deal with these points, though in reverse
order.
As to procedural difficulties, I fear I do not understand the argument. The point if
valid applies to an action for specific performance by A just as much as by A1 yet in
the authorities I have quoted no such point was ever taken; in Drimmie v. Davies
[FN163] indeed the action was by executors. Further, it seems to me that if C fails to
obey a four-day order obtained by A1, could enforce it under the clear and express
provisions of R.S.C., Ord. 45, r. 9 (formerly Ord. 42, r. 26). Alternatively A1 could
move for and obtain the appointment of a receiver of the business upon which the
annuity is charged and the receiver would then be directed by the Court to pay the
annuity to B out of the profits of the business. Finally, A1 could issue a writ of fi. fa.
under Ord. 45, r. 1, but as A1 would then be enforcing the contract and not modifying
or compromising it the court would obviously in executing its order compel her to
carry out the contract in toto and hand the proceeds of execution to B. This point is
entirely without substance.

FN163 [1899] 1 Ir.R. 176.

Then as to the second point. Let me assume (contrary to the *101 fact) that A died
with substantial assets but also many creditors. The legal position is that prima facie
the duty of A1 is to carry out her intestate's contracts and compel C to pay B; but the
creditors may be pressing and the agreement may be considered onerous; so it may
be her duty to try and compromise the agreement with C and save something for the
estate even at the expense of B. See Ahmed Angullia v. Estate & Trust Agencies
(1927) Ltd. [FN164] per Lord Romer. So be it, but how can C conceivably rely upon
this circumstance as a defence by him to an action for specific performance by A1? Of
course not; he, C, has no interest in the estate; he cannot plead a possible jus tertii
which is no concern of his. It is his duty to fulfil his contract by paying C. A1 alone is
concerned with the creditors, beneficiaries or next of kin of A and this point therefore
can never be a defence by C if A1 in fact chooses to sue for specific performance
rather than to attempt a compromise in the interest of the estate. This point seems to
me misconceived. In any event, on the facts of this case there is no suggestion that
there are any unpaid creditors and is sole next of kin, so the point is academic.

FN164 [1938] A.C. 624, 632; 54 T.L.R. 831; [1938] 3 All E.R. 106, P.C.
Then, as to the first point. On this question we were referred to the well- known
dictum of Lush L.J. in Lloyd's v. Harper: [FN165]
"I consider it to be an established rule of law that where a contract is made with A for
the benefit of B, A can sue on the contract for the benefit of B and recover all that B
could have recovered if the contract had been made with B himself."

FN165 16 Ch.D. 290, 321.

While in the circumstances it is not necessary to express any concluded opinion
thereon, if the learned Lord Justice was expressing a view on the purely common law
remedy of damages, I have some difficulty in going all the way with him. If A sues for
damages for breach of contract by reason of the failure to pay he must prove his loss;
that may be great or nominal according to circumstances.
I do not see how A can, in conformity with clearly settled principle in assessing
damages for breach of contract, rely at common law on B's loss. I agree with the
observations of Windeyer J. in the as yet unreported ease of Coulls v. Bagot's
Executor and Trustee Co. Ltd. [FN166] in the High Court of Australia. But I note,
however, that in Lloyd's v. Harper [FN167] James and Cotton L.JJ. treated A as
trustee for B and I doubt whether Lush L.J. thought otherwise.

FN166 40 A.L.J.R. 471.

FN167 16 Ch.D. 290, 315, 317.

*102 However, I incline to the view that on the facts of this case damages are
nominal for it appears that A died without any assets save and except the agreement
which he hoped would keep him and then his widow for their lives. At all events let
me assume that damages are nominal. So it is said nominal damages are adequate
and the remedy of specific performance ought not to be granted. That is, with all
respect, wholly to misunderstand that principle. Equity will grant specific performance
when damages are inadequate to meet the justice of the case.
But in any event quantum of damages seldom affects the right to specific
performance. If X contracts with Y to buy Blackacre or a rare chattel for a fancy price
because the property or chattel has caught his fancy he is entitled to enforce his
bargain and it matters not that he could not prove any damage.
In this case the court ought to grant a specific performance order all the more
because damages are nominal. C has received all the property; justice demands that
he pay the price and this can only be done in the circumstances by equitable relief. It
is a fallacy to suppose that B is thereby obtaining additional rights; A1 is entitled to
compel C to carry out the terms of the agreement. The observations of Holmes L.J.
already quoted are very much in point.
My Lords, in my opinion the Court of Appeal were clearly right to grant a decree of
specific performance. That is sufficient to dispose of the appeal but as your Lordships
have heard much argument on the true scope and ambit of section 56 of the Law of
Property Act, 1925, I propose to express some views thereon, though necessarily
obiter.
Section 56 of the Law of Property Act, 1925, has a long history behind it. Section 56
replaced section 5 of the Real Property Act, 1845, which amended some very ancient
law relating to indentures inter partes, so I shall start by stating the common law on
the subject.
The rule was that a grantee or covenantee, though named as such in an indenture
under seal expressed to be made inter partes, could not take an immediate interest
as grantee nor the benefit of a covenant as covenantee unless named as a party to
the indenture. This rule, as the authorities I shall quote show, applied not only to real
estate but to personal grants and covenants.
But how narrow this rule was, but equally, how well understood, will also be shown by
those authorities.
The first is Scudamore v. Vandenstene [FN168] decided in 1587. By *103 an
indenture of charterparty, made between Scudamore and others, owners "of the good
ship called B" (whereof R. Pitman was the master) of the one part and Vandenstene of
the other part, Vandenstene covenanted with Pitman and the plaintiffs Scudamore
and others for the performance of certain covenants in the sum of
<<PoundsSterling>>600. Pitman, though not named as a party, signed, sealed and
delivered the deed. The plaintiffs sued Vandenstene on the deed, who pleaded a
release of Pitman (who had entered into other covenants). Held, this was no defence
to the action for Pitman was no party to the deed - for no bond, covenant or grant can
be made to or with anyone not party to the deed.

FN168 (1587) 2 Co.Inst. 673.

But this ancient doctrine that you must be named as party to the indenture to take an
immediate benefit by grant, or as a covenantee, was by the 17th century regarded as
archaic for in 1673 we find it being very strictly construed; the rule was held only to
apply to indenture inter partes. So in Cooker v. Child, [FN169] another case of a
charterparty. we find that Bentley, master and part-owner of the ship, with the
consent of Cooker, the other part-owner, entered into a charterparty with Child, the
defendant. By its terms Child covenanted to pay <<PoundsSterling>>300 to Cooker,
who was not named as a party to the deed. Held, that the charterparty, though
indented, was not subject to this ancient rule for it was not expressed to be between
Bentley "of the one part" and Child "of the other part." It was equivalent to a deed
poll to which the rule had never applied, and Cooker successfully sued Child in
covenant and obtained judgment.

FN169 (1673) 2 Lev. 74.

But this rule, narrowly construed in its application as it was, nevertheless was
recognised as part of the common law to which full effect must be given. So in 1826
in the case of Berkeley v. Hardy [FN170] there was an indenture of lease made by A
on behalf of W. F. Berkeley (the plaintiff) of the one part and the defendant of the
other part whereby the plaintiff agreed to let to the defendant certain premises, the
lease containing the usual covenants. A was duly authorised by the plaintiff to enter
into the lease on his behalf but not by a power of attorney under seal. The plaintiff
sued the defendant upon the latter's covenants in the lease. He failed. Abbott C.J. on
this point felt constrained to say [FN171]:
"We are left, then, to decide upon those strict technical rules of law applicable to
deeds under seal, which, I believe, are peculiar to the law of England. These rules
have been laid *104 down and recognised in so many cases, that I think we are
bound to say no action can be maintained by W. F. Berkeley upon the deed in
question."

FN170 (1826) 5 B. & C. 355.

FN171 Ibid. 359.

In Forster v. Elvet Colliery Co. Ltd. [FN172] Farwell L.J. pointed out that the old rule
of law still holds good that no one can sue on a covenant in an indenture who is not
mentioned as a party to it, except so far as it had been altered by the Real Property
Act, 1845. Substituting a reference to section 56 for the Act of 1845 that statement, I
suppose, is still true.

FN172 [1908] 1 K.B. 629, 639.

In 1844 Parliament abrogated this rule by section 11 of the Transfer of Property Act,
1844, which enacted:
"That it shall not be necessary in any case to have a deed indented; and that any
person, not being a party to any deed, may take an immediate benefit under it in the
same manner as he might under a deed poll."
For whatever reason, this short workmanlike section, which plainly applied to all
covenants whether relating to realty or personal grants or covenants, never had any
operation, for it was repealed by the Real Property Act, 1845, and replaced by section
5 of that Act in these terms:
"That, under an indenture, executed after October 1, 1845, an immediate estate or
interest, in any tenements or hereditaments, and the benefit of a condition or
covenant, respecting any tenements or hereditaments, may be taken, although the
taker thereof be not named a party to the same indenture; ..."
No one has ever suggested that that section was intended to do more than supplant
the old common law rule relating to indentures inter partes in relation to realty.
Then came the great changes in the law of real property; the Law of Property Act,
1922, and the Law of Property (Amendment) Act, 1924. The researches of counsel
have not revealed any amendment in those Acts to section 5 of the Act of 1845. The
Law of Property Act, 1925, was a consolidation Act consolidating those and many
earlier Acts. It repealed section 5 of the Act of 1845 and replaced it by section 56 (1)
in these terms:
"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."
There is a presumption that consolidation Acts are not intended to alter the law. In
practice both Houses of Parliament *105 send consolidation Bills to the joint
committee of both Houses on consolidation Bills who consider and report upon them
to both Houses.
The joint committee call the draftsmen of the Bill before them to give evidence and
sometimes they have to resolve doubts whether a clause in the Bill is pure
consolidation or not.
For my part, I see no objection to considering those proceedings, not with a view to
construing the Act, that is of course not permissible, but to see whether the weight of
the presumption as to the effect of consolidation Acts is weakened by anything that
took place in those proceedings.
The report of the joint committee for 1925 discloses that when the Law of Property
Consolidation Bill was before it, Sir Frederick Liddell, Sir Benjamin Cherry and Sir
Claud Schuster gave evidence. Clause 56 was passed without comment. See the
Proceedings of Select Committees 1925/6 March, 1925.
So the presumption that section 56 was not intended to alter the law remains. But it
remains only a presumption. Nevertheless, some of your Lordships have felt able to
come to the conclusion that, in these circumstances, section 56 should be construed
as limited in its application to real property as was the old section 5.
I find it difficult to dissent from this proposition but equally difficult to agree with it
because, ignoring altogether the definition in section 205 of the Law of Property Act,
1925, section 56 defines as the subject-matter of the section one who takes "an
immediate or other interest in land or other property or the benefit of any ... covenant
or agreement over or respecting land or other property." Bearing in mind the wide
import of the word "property " apart from any definition, I find it difficult in the
context to limit that word to an interest in real property. Without expressing any
concluded view, I think it may be that the true answer is that Parliament (as
sometimes happens in consolidation statutes) inadvertently did alter the law in
section 56 by abrogating the old common law rule in respect of contracts affecting
personal property as well as real property. But it cannot have done more. Parliament,
per incuriam it may be, went back to the position under the Act of 1844 but I am
convinced it never intended to alter the fundamental rule laid down in Tweddle v.
Atkinson. [FN173]

FN173 1 B. & S. 393.

The real difficulty is as to the true scope and ambit of the section. My present views,
though obiter and tentative, are these. *106 Section 56, like its predecessors, was
only intended to sweep away the old common law rule that in an indenture inter
partes the covenantee must be named as a party to the indenture to take the benefit
of an immediate grant or the benefit of a covenant; it intended no more. So that for
the section to have any application it must be to relieve from the consequences of the
common law, and in my opinion three conditions must be satisfied. If all of them are
not satisfied then the section has no application and the parties are left to their
remedies at common law.
First, let me assume for a moment that the agreement in this case is an indenture
inter partes under seal does section 56 help B? Plainly not. C did not purport to
covenant with or make any grant to B; he only covenanted with A. Had C purported to
covenant with B to pay the annuity to B, though B was not a party, then any difficulty
B might have had in suing might be saved by section 56.
The narrow view which I take of section 56 is, I think, supported by the observations
of Simonds J. (as he then was) in White v. Bijou Mansions [FN174] when he said at
page 625:
"Just as under section 5 of the Act of 1845 only that person could call it in aid who,
although not a party, was a grantee or covenantee, so under section 56 of this Act
only that person can call it in aid who, although not named as a party to the
conveyance or other instrument, purports to grant something or with which some
agreement or covenant is purported to be made."

FN174 [1937] Ch. 610, 625. So to the same effect Wynn-Parry J. in In re Miller's
Agreement. [FN175] That was another example of the familiar case where, upon the
dissolution of a partnership, the continuing partners covenanted with the retiring
partner to pay as from his death annuities to his three daughters. The learned judge
said [FN176]:
"In my view, the plaintiffs [the daughters] are not persons to whom the deed purports
to grant something, or with whom some agreement or covenant is purported to be
made. ..."

FN175 [1947] Ch. 615.

FN176 Ibid. 623.

So B does not satisfy this condition.
The second condition is that the reference to the "conveyance or other instrument" in
the section is, in my opinion, limited to documents under seal. This does no violence
to the definitions of "conveyance" or "instrument" in section 205 of the Law of
Property Act.
*107 The third condition is that, in my opinion, the section refers only to documents
strictly inter partes (Cooker v. Child). [FN177]

FN177 2 Lev. 74.

The agreement satisfies none of these conditions.
Section 56 does not help the appellant, but, for the reasons given earlier, I would
dismiss this appeal.

Representation

Solicitors: Bower, Cotton & Bower for Slater, Heelis & Co., Manchester; J. Hampson
Fogg & Co. for Ogden, Lyles & Fox, Manchester.

Appeal dismissed. (F. C. )

(c) Incorporated Council of Law Reporting For England & Wales
[1968] A.C. 58