Supreme Court of Canada
Canadian
Acceptance Corporation Limited v. Fisher, [1958] S.C.R. 546
Date:
1958-06-26
Canadian Acceptance Corporation Limited (Plaintiff) Appellant;
and
Eugene W. Fisher, Liquidator of Contractors Supplies
Limited (Defendant) Respondent.
1958: February 10, 11; 1958: June 26.
Present: Kerwin C.J. and Taschereau, Rand, Locke, Cartwright,
Fauteux and Abbott JJ.
On appeal from the Court of Appeal for Saskatchewan.
Conditional sales—Assignment of seller's
interest—Remedies of assignee—Recourse against assignor—Failure of assignee to
give notice of resale—The Conditional Sales Act, R.S.S. 1953, c. 358, s.
9(2)—Whether compliance with subsection waived.
C.S. Co. sold a road-building machine under a conditional
sales contract dated April 10, 1953, which it subsequently assigned to the
plaintiff company. In the assignment it undertook to repurchase "the
paper" if the buyer made default extending over a stated period; and also
unconditionally guaranteed the buyer's payments.
The buyer made no payments under his contract. On November 26, 1953, the plaintiff repossessed the machine, and on the following day it sent
notice to the buyer and to C.S. Co. demanding payment of the balance due, and
stating that unless payment was made within a stated time the machine would be
sold and the plaintiff would look to the buyer and C.S. Co. for any deficiency.
On December 2, 1953, the plaintiff wrote to C.S. Co. demanding payment.
In April 1954 the defendant was appointed liquidator of C.S.
Co., and in the following month he held an auction sale of machinery, including
the machine bought from C.S. Co. The plaintiff agreed to this inclusion but
insisted that the machine be made subject to a reserve bid equal to the amount
owing under the contract, plus a commission.
The machine was not sold at the sale and from that time on the
defendant took the position that the plaintiff, by its conduct, had made the
machine its own and relieved the defendant of any further liability, and that
he was not concerned with any further dealings with the machine. The plaintiff,
having received and rejected several offers of which it notified the defendant,
sold the machine in April 1955 without notice to the defendant, and shortly
afterwards commenced an action for the deficiency. The trial judge was unable
to find that the sale was an improvident one.
Held (Rand and Fauteux JJ. dissenting) : The action
should be dismissed. The plaintiff's failure to give the defendant the notice
expressly required by s. 9(2) of The Conditional Sales Act was fatal to
its success. Advance-Rumely Thresher Company v. Cotton (1919), 12 Sask.
L.R. 327 at 333-4; The American Abell Engine and Threshing Company, Limited v.
Weidenwilt et al. (1911), 4 Sask. L.R. 388,
[Page 547]
approved. Nothing in the evidence justified a finding that the
defendant had waived his right to receive notice of sale. Waiver must be based
on fresh contract or estoppel. There could be no question of a fresh contract
in this case, and there was no representation by the defendant of any matter of
fact that would give rise to an estoppel by matter in pais. 8 Halsbury, 3rd ed., s. 299; 15 Halsbury, 3rd ed., s. 338,
quoted with approval. Charles Richards Ld. v. Oppenhaim, [1950] 1 K.B.
616 at 623; Plasticmoda Societa v. Davidsons (Manchester),
Ltd., [1952] 1 Lloyd, L.R. 527 at 539, distinguished.
Per Rand and Fauteux JJ., dissenting: It was
clear in the circumstances of this case that the defendant's conduct
constituted a waiver of notice of sale as a condition precedent to the
plaintiff's right to claim against the defendant for a deficiency. In the
circumstances, to give notice of the sale would have been wholly useless and
the law would not compel the doing of a useless act. The defendant's language
in conversation with the plaintiff's officers justified the plaintiff in
proceeding as it did to dispose of the property without further reference by
notice or otherwise to him, and this waiver was in no way affected by s. 22 of The
Conditional Sales Act.
Statutes—Interpretation—Effect of
re-enactment of statute after judicial interpretation—The Interpretation
Act, R.S.S. 1953, c. 1, s. 24(4).
Per Kerwin C.J. and Taschereau, Locke, Cartwright and
Abbott JJ.: The effect of s. 24(4) of the Saskatchewan Interpretation Act, which
provides that the Legislature shall not, by re-enacting a statute, be deemed to
have adopted a construction placed upon the language by judicial decision or
otherwise, is merely to remove the presumption that existed at common law. In a
proper case, it will still be held that a legislature, in re-enacting a
particular provision, did have in mind the construction that had already been
placed upon it. The Canadian Pacific Railway Company v. Albin (1919), 59 S.C.R. 151; Orpen v. Roberts et al., [1925] S.C.R. 364; Studer et al. v. Cowper et al., [1951]
S.C.R. 450 at 454, applied.
APPEAL from a judgment of the Court of Appeal for Saskatchewan, reversing a judgment of Thomson
J. Appeal dismissed, Rand
and Fauteux JJ. dissenting.
D. G. McLeod and J. D. Johnstone, for
the plaintiff, appellant.
E. C. Leslie, Q.C., for the defendant,
respondent.
W. R. Jackett, Q.C., and H. A. Chalmers, for
the Attorney General of Canada, intervenant.
Roy S. Meldrum, Q.C., for
the Attorney General for Saskatchewan, intervenant.
The judgment of Kerwin C.J. and Taschereau, Locke,
Cartwright and Abbott JJ. was delivered by
[Page 548]
Cartwright J.:—This
is an appeal from a judgment of the Court of Appeal for Saskatchewan, reversing a judgment of Thomson.
J. and dismissing the appellant's
action.
On April 10, 1953, one Roger Stevenot signed a document
headed "Conditional Sale Contract" whereby he agreed to purchase from
Contractors Supplies Limited a "Model D Roadster Tournapull" and a
"Carryall Scraper", hereinafter together referred to as "the
machine", for $17,500. The unpaid balance plus a finance charge all of
which Stevenot agreed to pay amounted to $12,741. At the same time Stevenot
signed and delivered to Contractors Supplies Limited a document, which formed
part of the sheet of paper on which the conditional sale contract was written
but which was divided from that contract by a line of perforations and was
referred to throughout the proceedings as a promissory note for $12,741. As a
matter of convenience I will refer to this last-mentioned document as "the
promissory note".
On April 15, 1953, Contractors Supplies Limited accepted the
conditional sale contract, assigned it and the promissory note to the appellant
for valuable consideration and guaranteed payment of the amount payable under
the promissory note.
The appellant contends that, because of unfavourable credit
reports on Stevenot, it required an undertaking from Contractors Supplies
Limited to repurchase "the paper" (i.e., the conditional sale
contract and promissory note) in the event of default by Stevenot in making the
deferred payments, continued for 61 days, pursuant to the provisions of para. 5
of an agreement between the appellant and Contractors Supplies Limited (the
name of which was at that time Construction Equipment Limited), dated April 20,
1949.
Stevenot paid nothing under the conditional sale contract or
the promissory note. On November 26, 1953, the appellant repossessed the
machine. A notice was mailed to Stevenot and to Contractors Supplies Limited on
November 27, 1953, demanding payment of the balance due on or before December 15, 1953, and stating that unless
[Page 549]
payment was made within the time mentioned the machine would
be sold either at private sale or at public auction and that the appellant
intended to look to Steve-not and to Contractors Supplies Limited for any
deficiency in the amount realized.
On December 2, 1953, the plaintiff wrote to Contractors
Supplies Limited demanding payment of the amount owing and offering on receipt
of payment to reassign "the original covering document".
On April 26, 1954, the respondent was appointed liquidator
of Contractors Supplies Limited.
On May 21, 1954, the respondent held an auction sale of
other machinery and with the concurrence of the appellant the machine in question
was offered for sale, but, at the insistence of the appellant, it was made
subject to a reserve bid of $10,680.79 (which was the amount then owing under
the conditional sale agreement and promissory note) plus auctioneer's
commission and the machine remained unsold.
From this point on the respondent took the position that the
appellant, by repossessing the machine and insisting on its being made subject
to a reserve bid when offered for sale at auction, had made the machine its own
and had relieved the respondent from any further liability, and that what the
appellant might see fit to do with the machine
thereafter was no concern of the respondent.
In July 1954, the appellant advertised the machine, which
was then in its possession, for sale in newspapers published in Regina, Calgary
and Edmonton. It received some offers, but all of them were for much less than
the balance remaining unpaid. From time to time as these offers were received
the appellant notified the respondent, but, on each occasion, the latter
repeated his contention that he was no longer concerned. In September 1954, the
appellant wrote to the respondent demanding payment of the balance which it
claimed and in November 1954, this demand was repeated by its solicitors but
these demands were ignored.
[Page 550]
On April 22, 1955, the appellant sold the machine to one
Wengert for $4,000. A few months later the machine was sold by Wengert for
$9,000 but the learned trial judge was not satisfied that the sale to Wengert
was an improvident one. There was no counterclaim for damages for breach of the
obligation to effect a provident sale and Mr. Leslie referred to the evidence
on this branch of the matter only for the purpose of emphasizing the
desirability and importance of the requirement as to giving notice of sale
contained in s. 9(2) of The Conditional Sales Act, R.S.S. 1953, c. 358.
It is common ground that the appellant did not give to the
respondent any notice of the sale to Wengert as required by s. 9(2) mentioned
above.
On January 12, 1956, the appellant commenced this action
claiming $8,286.52, the balance remaining unpaid after crediting the proceeds
of the sale to Wengert and taking account of some other items. No question
arises as to the computation of this amount.
In the statement of claim the appellant stated three
alternative grounds of action, (i) the guarantee of payment of all sums
required to be paid by Stevenot contained in the assignment of the conditional
sale contract by Contractors Supplies Limited, (ii) the endorsement of the
promissory note and the guarantee of payment thereof signed by Contractors
Supplies Limited, and (iii) the alleged agreement by Contractors Supplies
Limited to repurchase the conditional sale contract pursuant to the agreement
of April 20, 1949, and the demand made upon it thereunder.
In the statement of defence a number of matters were pleaded
but I find it necessary to deal only with that contained in para. 16, which
reads as follows:
16. The defendant says further that on or about the 13th day
of April, A.D. 1955, the plaintiff sold the said Tournapull Scraper to one Wengert
for the sum of $4,000 in cash, and the plaintiff failed to give to the
defendant eight days notice of such intended sale, as required by The
Conditional Sales Act, R.S.S. 1953, Chapter 358, Section 9, but gave it no
notice thereof, and the defendant says that as a result thereof the plaintiff
is not entitled to recover from the defendant the amount claimed in the amended
Statement of Claim, or any part thereof.
[Page 551]
The appellant delivered a reply paras. 2, 4 and 5 of
which are as follows:
2. Alternatively, in so far as the claim of the Plaintiff
based upon the Equipment Plan Retail Agreement [i.e., the agreement
dated April 20, 1949, referred to above] is concerned the Plaintiff was not
obliged or required to give any notice to the Defendant and is not precluded by
any failure to give notice.
* * *
4. In the further alternative the Defendant having on divers
occasions advised the Plaintiff that the Defendant had no further interest in
the Tournapull Scraper, the Defendant is now precluded from asserting that the
Defendant was entitled to notice of sale and is estopped.
5. In the further alternative, the Defendant consented to
the sale or waived any right which the Defendant might have had to receive
notice of the intended sale.
The learned trial judge was of opinion that the appellant's
failure to give notice to the respondent of the sale to Wengert would have been
a complete answer to the appellant's action but held that the respondent had
waived the right to receive notice, and gave judgment for the appellant.
The Court of Appeal were unanimous in holding that there had
been no waiver by the respondent of his right to receive notice of the sale to
Wengert and that the appellant's failure to give that notice was fatal to its success.
They accordingly allowed the appeal and dismissed the action.
The guarantee of payment contained in the assignment of the
conditional sale contract reads as follows:
In consideration of your purchase of the within contract,
the undersigned hereby unconditionally guarantees, jointly and severally with
the Purchaser, payment of all deferred payments as specified therein, and
covenants in default of payment of any instalment or performance of any
requirement thereof by Purchaser, to pay to Canadian Acceptance Corporation
Limited, upon demand, the full amount remaining unpaid. The undersigned further
specially represents and warrants that the title to the said property was at
the time of the sale, and is now vested in the undersigned, free of all taxes,
encumbrances, charges, privileges, pledges and liens, and that the undersigned
has the right to assign such title, and further warrants that the full amount
of the cash payment and/or trade-in as represented, has actually been made by
the Purchaser. The liability of the undersigned shall not be affected by any
settlement, extension of credit, or variation of terms of the within contract
effected with the Purchaser or any other person interested, nor by any act or
omission of Canadian Acceptance Corporation Limited in relation to any security
held to secure this debt including the lien herein, or in making collections,
insurance adjustments, repossession or resales, or in effecting filing or
[Page 552]
recording of the documents or any renewals thereof and the
undersigned shall remain liable even if the security and/or right of action
against the principal debtor has ceased to exist or be available. The
undersigned agrees to be bound by each and every clause contained in the said
contract as if it were recited at full length in this assignment.
The contract itself, by every clause of which the assignor
agrees to be bound, contains terms which, on their face, appear to waive the
notice of sale required by ss. 8 and 9 of The Conditional Sales Act, but,
if that is their effect, those terms are rendered null and void by s. 22 of the
Act which reads as follows:
22. Subject to subsection (2) of section 20 [which has no
application in the case at bar], every agreement or bargain, verbal or written,
express or implied, that this Act or any provision thereof shall not apply or
that any benefit or remedy provided by it shall not be available, or which in
any way limits, modifies or abrogates or in effect limits, modifies or
abrogates any such benefit or remedy, shall be null and void.
It may also be observed that the contract itself
provides:
… it is understood and agreed that any provision of this
contract prohibited by law of any Province shall, as to that Province, be
ineffective to the extent of such prohibition without invalidating the
remaining provisions of the contract.
Sections 7, 8, and 9 of The Conditional Sales Act read
as follows:
7. If the seller or bailor or his assignee retakes
possession of the goods, he shall retain the same in his possession for at
least twenty days and the buyer, bailee or any one claiming by or through or
under the buyer or bailee, may redeem the same upon payment of the amount
actually due thereon and the actual necessary expenses of taking possession.
8. The goods shall not be sold without eight days' notice of
the intended sale being first given to the buyer or bailee or his successor in
interest. The notice may be personally served or may, in the absence of such
buyer, bailee or his successor in interest, be left at his residence or last,
place of abode or may be sent by registered letter deposited in the post office
at least ten days before the time when the said eight days will elapse,
addressed to the buyer or bailee or his successor in interest at his last known
post office address in Canada. The said eight day's or ten days may be part of
the twenty days mentioned in section 7.
9. (1) Where the seller or bailor assigns his interest in
the contract of sale or bailment and agrees with the assignee to be liable for
any sums due under the contract in default of payment thereof by the buyer or
bailee, and the assignee retakes possession of the goods, he shall, within
forty-eight hours thereafter, give notice thereof to the assignor. The notice
may be personally served or may, in the absence of the assignor, be left at his
residence or last place of abode or may be sent by registered letter deposited
in the post office within the said forty-eight hours addressed to the assignor
at his last known post office address in Canada.
[Page 553]
(2) The assignee shall not sell the goods without first
having given eight days' notice of the intended sale to the assignor. The
notice may be given in the same manner as the notice provided for by section 8
and the said eight days may be part of the twenty days mentioned in section 7.
I agree with the conclusion of the Court of Appeal that the
action of the appellant in selling the machine without giving to the respondent
the notice required by s. 9(2) destroyed the right of the former to recover
from the latter the balance remaining unpaid under the terms of the contract.
It was so held in the judgment of the Court of Appeal in Advance Rumely
Threshing Company v. Cotton,
which approved and followed the judgment of Lamont J. in The American
Abell Engine and Threshing Company, Limited v. Weidenwilt et al.. While these cases arose under s. 8 the reasoning on
which they proceeded is equally applicable to s. 9(2). In my opinion, the law
is accurately stated in the following passage from the reasons of Lamont J.A.
in the. Advance-Rumely case, concurred in by Haultain C.J.S. and Elwood
J.A., which appears at pp. 333-4:
The plaintiffs are suing for the balance of the price of the
two machines which were purchased under two separate contracts. To be entitled
to the purchase-price a vendor must, generally speaking be prepared to hand
over the articles purchased on payment thereof. Here, the plaintiffs admit that
they are not in a position to hand over to the defendants the machinery purchased,
these being now the property of third persons. To be entitled to judgment for
the balance of the purchase-money, therefore, the plaintiffs must show that,
notwithstanding their inability to hand over the purchased articles, they are
entitled to the purchase-price. This they can do by showing that the defendants
agreed that under certain circumstances they could retake possession of the
purchased machines and resell them, and that the defendants would be liable for
the balance. If they establish such an agreement and the existence of the
circumstances giving them the right to retain possession and to resell, and
establish that the resale, which was in fact made, was the one they were
empowered by the agreement to make, they would be entitled to recover the purchase-money
still unpaid.
* * *
By failing to prove compliance with the Statute, the
plaintiffs have failed to prove that they are entitled to the balance of the
purchase-money.
Had I been doubtful of the correctness of these decisions I
would have thought that we should follow them in view of the circumstances that
they have for many years been treated as stating the law of Saskatchewan on
this matter
[Page 554]
and that since they were decided s. 8 has been re-enacted
without any material alteration in R.S.S. 1930, c. 243, R.S.S. 1940, c. 291,
and R.S.S. 1953, c. 358. In this connection I have not overlooked s. 24(4) of The
Interpretation Act, R.S.S. 1953, c. 1, which provides:
(4) The Legislature shall not, by re-enacting an Act or
enactment, or by revising, consolidating or amending the same, be deemed to
have adopted the construction which has by judicial decision or otherwise been
placed upon the language used in such Act or enactment or upon similar
language.
The effect of this subsection was considered by Kerwin J.,
as he then was, in Studer et al. v. Cowper et al. After referring to The Canadian Pacific Railway
Company v. Albin and
Orpen v. Roberts et al., he
continued at p. 454:
In view of these decisions, it must now be taken that
subsection 4 of s. 24 of the Saskatchewan Interpretation Act, 1943, c. 2, which
is the same as the ones referred to in the two cases mentioned, merely removes
the presumption that existed at common law and, in a proper case, it will be
held that a legislature did have in mind the construction that had been placed
upon a certain enactment when re-enacting it.
It has already been pointed out that the learned trial judge
took the same view of the law on this point as did the Court of Appeal but
differed from them as to whether the respondent had waived the right to receive
notice.
I agree with the conclusions of the Court of Appeal that, on
the facts disclosed in the evidence, there was no waiver by the respondent of
his right to receive the notice of the sale to Wengert, and that consequently
it is unnecessary to consider whether had there been such a waiver in fact its
effect would have been nullified by s. 22 of The Conditional Sales Act.
Taking the view of the evidence most favourable to the
appellant, it appears that on each occasion when the appellant communicated
with the respondent with regard to the offers received in 1954 for the machine,
the latter took the position that the former, by its conduct in repossessing
the machine and insisting on its being made subject to a reserve bid when
offered for sale, had made
[Page 555]
the machine its own and lost its right to recover the
balance of the price from the respondent and that, consequently, the machine
had become the appellant's "baby" and was no longer any concern of
the respondent.
I agree with the statement in 8 Halsbury, 3rd ed. 1954, s.
299, p. 175, that waiver is based on fresh contract or estoppel and that
compliance with a particular stipulation in a contract may be waived by
agreement or conduct. In the case at bar there is no question of a fresh
contract.
The general rule as to estoppel by matter in pais is
satisfactorily stated in 15 Halsbury, 3rd ed. 1956, s. 338, p. 169, as follows:
Where one has either by words or conduct made to another a
representation of fact, either with knowledge of its falsehood or with the intention
that it should be acted upon, or has so conducted himself that another would,
as a reasonable man, understand that a certain representation of fact was
intended to be acted on, and that the other has acted on the representation and
thereby altered his position to his prejudice, an estoppel arises against the
party who made the representation, and he is not allowed to aver that the fact
is otherwise than he represented it to be.
The conduct of the respondent relied on as creating an
estoppel did not amount to a representation of any matter of fact. It was an
assertion of the opinion of the respondent that the legal result flowing from
the undisputed facts known to both parties was that the respondent was released
from further liability under the contract in question. I incline to the view
that the respondent's opinion was erroneous and it is clear that the appellant
so regarded it. There seems to be no ground for the suggestion that the
appellant was misled.
For the appellant reliance was placed on the following
statement of Denning L.J., as he then was, in Charles Richards Ld. v.
Oppenhaim:
If the defendant, as he did, led the plaintiffs to believe
that he would not insist on the stipulation as to time, and that, if they
carried out the work, he would accept it, and they did it, he could not
afterwards set up the stipulation as to the time against them. Whether it be
called waiver or forbearance on his part, or an agreed variation or substituted
performance, does not matter. It is a kind of estoppel. By his conduct he
evinced an intention to affect their legal relations. He made, in effect, a
promise not to insist on his strict legal rights. That promise was intended to
be acted on, and was in fact acted on. He cannot afterwards go back on it.
[Page 556]
In Plasticmoda Societa per Azioni v. Davidsons (Manchester),
Ltd., the
same learned lord justice said:
If one party, by his conduct, leads another to believe that
the strict rights arising under the contract will not be insisted upon,
intending that the other should act on that belief, and he does act on it, then
the first party will not afterwards be allowed to insist on the strict rights
when it would be inequitable for him so to do.
It may be, as suggested in 15 Halsbury at p. 175, that the
doctrine set out in these passages has been too widely stated ; but if it is
applied as stated to the facts of the case at bar it does not appear to me to
assist the appellant. I can find nothing in the evidence to indicate that the
respondent gave any promise or assurance or made any representation to the
appellant that he, the respondent, would regard himself as continuing to be
bound by the term of the contract requiring him to pay the balance of the
purchase-price remaining unpaid after credit had been given for the proceeds of
a sale of the repossessed machine even if the appellant should make a sale
without giving the notice required by the statute. The respondent made it clear
to the appellant that he was taking the position that any obligation which
would otherwise have rested upon him to pay that balance had been brought to an
end by the appellant's conduct. The appellant rejected this view and continued
to assert its right to be paid any balance remaining unpaid after a sale. If it
wished to maintain this position it was, in my opinion, bound to fulfil the
statutory condition precedent of giving notice.
It was suggested during the argument that to hold that the
appellant was bound to give the statutory notice would be contrary to the
principle which is stated in the following terms in Williston on Contracts,
rev. ed. (1936), vol. 3, s. 698A, pp. 2008-9:
It is an old maxim of the law that it compels no man to do a
useless act, and this principle was applied in the time of Coke, if not before,
to the case of a conditional promise. If the promisor is not going to keep his
promise in any event, it is useless to perform the condition and the promisor
becomes liable without such performance. So if before the time for the
performance of a condition by a promisee, the promisor leads the promisee to
stop performance by himself manifesting an intention not to perform on his
part, even though the condition is complied with, "it is not necessary for
the first to go further and do the nugatory act."
[Page 557]
In my opinion the passage cited does not assist the
appellant in the circumstances of the case at bar. When the respondent made
default in payment of the purchase-price the appellant no doubt became entitled
to treat the respondent as having broken the contract and to pursue the
remedies to which it was entitled thereunder. One of these was to repossess and
sell the machine and, having done so, to enforce payment by the respondent of
the balance of the price remaining unpaid. It was upon the exercise of this
particular remedy, the right to which could arise only after breach of the
contract by the respondent, that the statute imposed the duty of giving notice.
I cannot assent to the proposition that the definite repudiation of a contract
by one party enables the other not merely to proceed immediately to enforce the
remedies to which he becomes entitled upon breach, but also to disregard in the
pursuit of those remedies the conditions which the law imposes on their
exercise. I have proceeded throughout on the assumption that the right to
notice might be waived by the respondent, but, for the reasons I have endeavoured
to state above, I am of opinion that his statements did not amount to a waiver
of notice. While the analogy may not be complete, it would, I think, be a
surprising doctrine that the unequivocal refusal by a mortgagor to pay the
mortgage moneys should transform a power of sale with notice contained in the
mortgage into a power of sale without notice.
In so far as the appellant's claim is based on the
promissory note, it is clear that it took the note with full knowledge of the
terms of the contract in pursuance of which it was given and that, as between
the parties, the appellant having by its conduct lost its right to sue for the
balance of the price under the contract is in no higher position by reason of
holding the note. Indeed during the argument it was conceded that, in the
circumstances of this case, the promissory note was bound up with the other
dealings between the parties in regard to the machine. For these reasons it
becomes unnecessary to decide whether the document to which I have referred throughout
these reasons as "the promissory note" was
indeed a promissory note, and the questions as to the interpretation and
constitutionality of The Limitation of Civil Rights Act, R.S.S. 1953, c.
95,
[Page 558]
which counsel for the Attorney General of Canada and the
Attorney General for Saskatchewan were prepared to argue do not require
decision.
The term of the agreement of April 20, 1949, upon which the appellant relies reads as follows:
5. As to the paper which you [i.e., the appellant]
purchase from us [i.e., Contractors Supplies Limited] on the basis of
our agreeing to repurchase in event of default by the obligor, our obligation
shall be to repurchase any such paper on your request made at any time after default
by the obligor in the payment of any instalment continuing uncured for 61 days
or more or if we breach any warranty herein or in the paper, assignment,
endorsement, or any provision of any other agreement as to such paper, and we
will pay you an amount equal to your original investment plus uncollected
accrued interest and any expenses of collection incurred by you after default
by us, less all payments received by you on said paper on account of principal.
The evidence as to whether this agreement of April 20, 1949
was made applicable to the purchase by the appellant of the conditional sale
contract and promissory note with which we are concerned is conflicting. On the
assumption that it was made applicable, it does not appear to me to assist the
appellant. I agree with the view of Procter J.A., that the appellant's right of
action on the failure of the respondent to perform this agreement would have
been for specific performance or damages in lieu thereof, that the appellant as
a condition of its right of recovery would have had to show that it was in a
position to assign "paper" evidencing some valid and enforceable
right and that as the appellant had parted with the machine and, as a result of
its own acts, no longer had any enforceable rights under the contract against
either Stevenot or the respondent it ceased to have any "paper",
within the meaning of the agreement, to assign.
I would dismiss the appeal with costs. There should be no
order as to costs for or against the intervenants.
The judgment of Rand and Fauteux JJ. was delivered by
Rand J. (dissenting):—The
facts in this appeal have been stated by my brother Cartwright. On the
guarantee of payments under the lien note agreement, I find the respondent
liable subject to the point of waiver of the notice of sale on which I differ
from his conclusion, and it becomes necessary to examine the law applicable to
that matter in some detail.
[Page 559]
Repudiation by one party to a contract is a declaration that
he will not thereafter perform any part of what he has promised to do. That
promise may include not only substantive acts which make up the material
consideration of the bargain but also what may be called "procedural"
acts such as provision for arbitration or the giving of a notice as in the
present case, and the question may arise of what has or has not been
repudiated. A repudiation may be accepted and the promisee may elect any one of
three courses of action. He may, for example, rescind the agreement, that is,
declare it dissolved ab initio and if in that situation there is a basis
for a claim on a quantum meruit that action lies ; or he may elect to
treat the contract as terminated or determined as to all further performance
and bring action at once for damages; or he may await the time for fulfilment
and claim damages as for default of actual performance. In the last case the
repudiation in turn furnishes to the promisee an excuse for not proceeding with
his performance while the repudiation continues and this applies to any part of
a performance, whether a condition precedent to or concurrent with performance
by the promisor. In this the distinction must be taken between furnishing such
an excuse and creating a cause of action against the repudiating promisor. The
excuse from performance may be related to the duty of the innocent party to
mitigate damages, immediate or prospective; if the promisee should proceed with
his performance he would, in many if not most cases, violate that rule. But
situations might occur when an immediate stoppage in performance would, on the
other hand, augment damages and in that case the completion of what was
undertaken may be called for.
That an individual intended to be benefited by a notice or
other procedural act can waive it is affirmed by Great Eastern Railway
Company v. Goldsmid et al., in
which at pp. 936-7 the Earl of Selborne L.C. states the principle thus:
It [a royal grant] is a jus introductum for the particular
benefit of the city of London, and it falls within the general principle of
law, "Unusquis-que potest renunciare juri pro se introducto;"
a principle not only of ancient but also of modern
application, applicable even where Acts of Parliament have been passed of a
much more public character. In such cases, when the rights given have been only
private rights, unless there
[Page 560]
has been also in the Act of Parliament a clause excluding a
power of contract, it has been held that by contract or by voluntary
renunciation such rights, as far as they are personal rights, may be parted
with and renounced.
In Selwyn v. Garfit, Bowen
L.J. at pp. 284-5 deals with "waiver":
What is waiver? Delay is not waiver. Inaction is not waiver,
though it may be evidence of waiver. Waiver is consent to dispense with the
notice. If it could be shewn that the mortgagor had power to waive the notice,
and that he knew that the notice had not been served, but said nothing before
the sale and nothing after it, although this would not be conclusive, there
would be a case which required to be answered.
In The City of Toronto v. Russell, the Judicial Committee dealt
with the failure to give notice to the owner of the sale of land for taxes as
required by The Assessment Act and at p. 500 it is dealt with:
But the notice, by warning the owner of what is about to
take place, can only serve the purpose of enabling him either (1.) to oppose
the sale as illegal or improper; or (2.) to attend the sale and bid at it, and
see that it is regularly conducted; or (3.) to redeem his land by payment of
the taxes due. These being things entirely for his own benefit, he can
undoubtedly waive the notice: Great Eastern Ry. Co. v. Goldsmid (1884),
9 App. Cas. 927, at p. 936. The question is, Has he
waived it? In other words, is there evidence from which it may fairly be
inferred that he consented to dispense with the notice?
Following this he adds the language of Bowen L.J. which
I have quoted.
The ground for this legal precept is
the futility, in the circumstances, of requiring performance. In the face of
repudiation it would be a useless act and the Courts have universally accepted
the dictate of common sense that an act that will have no consequence or
significance is not to be required of any person.
The distinction between the waiver of a condition precedent
and the giving rise to a cause of action is strikingly exemplified in Ripley
v. M'Clure. The
plaintiff, a merchant of Liverpool, agreed to sell to the defendant, a merchant
in Belfast, who agreed to buy, on arrival, a one-third interest in a cargo of
tea. Before its arrival the defendant repudiated and in the result the tea was
not tendered at Belfast. It was held that an anticipatory repudiation was not a
breach of contract but that, unretracted, it evidenced a continuing refusal, which
[Page 561]
waived the condition precedent of delivery and created a
liability in the defendant for damages. The judgment was delivered in 1849
which was prior to the rule now accepted that an anticipatory repudiation may
be treated as an immediate breach, but that fact serves to emphasize the
distinction here made between that and a waiver. At pp. 359-60 Parke B. uses
this language:
By an express refusal to comply with the conditions of the
contract of purchase, the defendant must be understood to have said to the
plaintiff, "You need not take the trouble to deliver the cargo to me, when
it arrives at Belfast, as purchaser, for I never will become such;"
and this would be a waiver, at that time, of the delivery, and, if
unretracted, would dispense with the actual delivery after arrival.
Repudiation giving rise to the analogous suspension of
performance by the promisee is illustrated in Cort and Gee v. The Amber
gate, Nottingham and Boston and Eastern Junction Railway Company. The contract was for the
manufacture and supply of goods from time to time to be delivered, and the
purchaser, having accepted and paid for a portion of them, gave notice to the
vendor not to manufacture any more as he would not accept them ; the vendor,
without manufacturing and tendering, was held entitled to maintain proceedings
for damages. On the allegation that the vendor was at all times ready and
willing to perform his part, Lord Campbell at pp. 143-4 had the following to
say:
The defendants contend that, as the plaintiffs did not make
and tender the residue of the chairs, they cannot be said to have been ready
and willing to perform the contract … We are of opinion, however, that the jury
were fully justified upon the evidence in finding that the plaintiffs were
ready and willing to perform the contract, although they never made and
tendered the residue of the chairs. In common sense the meaning of such an
averment of readiness and willingness must be that the noncompletion of the
contract was not the fault of the plaintiffs, and that they were disposed and
able to complete it if it had not been renounced by the defendants.
And on the extent of the repudiation:
If they had said, "make no more for us for we will have
nothing to do with them," was not that refusing to accept or receive even
according to the contract?
The same rule was applied in Braithwaite v. Foreign
Hardwood Company. There
the purchasers of rosewood to be delivered in two lots repudiated and declared
their refusal to accept delivery. Tender of both lots was later
[Page 562]
made and refused. Subsequently it appeared that the first
lot was in part Of defective material, which would have justified a rejection.
At trial Kennedy J. made an allowance in the damages for this deficiency in
quality but held the repudiation to have dispensed with the condition of
quality otherwise attaching to the tender, and this conclusion was affirmed on
appeal. At pp. 551-2 Collins M.R. observes:
In the present case, after there had been a general
repudiation of the contract by the defendants, the plaintiff's agent informed
them that he had received the bill of lading for the first instalment; but the
defendants again wrote refusing to take the bill of lading on the ground that
they had previously repudiated the whole contract and refused to be bound by
it. In my opinion that act of the defendants amounted in fact to a waiver by
them of the performance by the plaintiff of the conditions precedent which
would otherwise have been necessary to the enforcement by him of the contract
which I am assuming he had. elected to keep alive against the defendants
notwithstanding their prior repudiation, and it is not competent for the
defendants now to hark back and say that the plaintiff was not ready and
willing to perform the conditions precedent devolving upon him, and that if
they had known the facts they might have rejected the instalment when tendered
to them. One answer to such a contention on the part of the defendants is that,
tested by the old form of pleadings, it would have been a good replication by
the plaintiff to aver that the defendants had waived performance by him of the
conditions precedent by adhering to their original repudiation of the whole
contract, and would not accept any instalment if tendered to them.
In Jureidini v. National British and Irish Millers
Insurance Company, Limited, an
insurance company repudiated a fire policy in toto on the ground of
fraud and arson, and it was held that the denunciation of the claim "on a
ground going to the root of the contract" precluded the company from
pleading an arbitration clause expressly made a condition precedent to any
right of action on the policy. Viscount Haldane L.C. expressed himself at p.
505 in these words:
Now, my Lords, speaking for myself, when there is a
repudiation which goes to the substance of the whole contract I do not see how
the person setting up that repudiation can be entitled to insist on a
subordinate term of the contract still being enforced.
Lord Dunedin, at p. 507, qualified his reasons:
Personally I should rather like to reserve my opinion as to
what would have been the effect if the respondents, instead of pleading as they
did, had pled in this way: "We will allow this question to be disposed of
at law by a jury as to whether there was fraud and arson or not," and had
gone on to say, "but in the event of that being negatived we wish this
ascertainment of actual damage to be ascertained by arbitration". I should
like to reserve my opinion on whether they might have said so with effect.
[Page 563]
Lord Atkinson considered the arbitration clause, which
went only to the amount of loss sustained, as not having application when a
repudiation was made on the grounds taken. Lord Parker of Waddington concurred
without reasons and Lord Parmoor, on the point that the respondents had raised
an issue on which, if they had succeeded, the claimants would have forfeited
all benefit under the policy.
This decision, with two others, was considered in Heyman et al. v. Darwins Limited, in which also an arbitration
clause was involved. Its terms were, however, wider than in Jureidini and
were held to include the dispute which had arisen. The various reasons dealt
with questions of the extent generally of repudiation, whether it went merely
to substantive performance or whether it embraced every promise to which the
promisor had bound himself. In the latter case, with such a clause as was then
being considered, the special characteristic is that we have the only specific
performance of a contract enforced at law as distinguished from equity; that
is, the plaintiff, in the discretion of the Court, will have his action
suspended pending his resort to arbitration for a precedent determination. But
such a remedy is obviously inapplicable to a provision for notice and the
judgment does not in any manner or degree affect the waiver of a condition
precedent other than that of an arbitration clause. The distinction between the
Heyman case and that of Jureidini lies in the fact, pointed out
by Viscount Simon, that there was no such repudiation as in the latter case,
that repudiation was denied. If the denunciation embraces the entirety of the
contract it is difficult to see on what ground the defendants can, in any
event, insist on the arbitration clause; the innocent party would be entitled
to have it enforced in his favour, but why, after the acceptance of a
repudiation including the arbitration clause, a defendant can, after action
brought, revoke it as to that clause but not others would seem to call for more
justification than the dicta in the case furnish.
The rule of excuse from performance by repudiation is
further illustrated by British and Benningtons, Limited v. North Western
Cachar Tea Company, Limited et al.;
[Page 564]
and it is well summed up in Salmond & Winfield, Law of
Contracts, 1927, at p. 273:
The meaning of a repudiation is:
"I do not intend to perform my part of the contract and therefore I do not
require you to perform your part either, even though performance of your part
is a condition precedent to my obligation to perform mine."
The. same result would follow in the case of notice under
the Bills of Exchange Act. In Chalmers Bills of Exchange, 12th ed. 1952,
at p. 156, among the examples given is this:
(2) The drawer of a bill informs the holder that it will not
be paid on presentment. This (probably) waives notice.
The authority given is Brett v. Levett, where evidence was admitted
to show an intimation by the drawer that the bill would not be paid at
maturity, even though the waiver took place after an act of bankruptcy had been
committed.
The question has been given its fullest examination by
Professor Williston in his work on Contracts. In vol. 3, rev. ed. 1936, s. 698A, pp. 2008-9, he gives the general statement :
It is an old maxim of the law that it compels no man to do a
useless act, and this principle was applied in the time of Coke, if not before,
to the case of a conditional promise. If the promisor is not going to keep his
promise in any event, it is useless to perform the condition and the promisor
becomes liable without such performance. So if before the time for the
performance of a condition by a promisee, the promisor leads the promisee to
stop performance by himself manifesting an intention not to perform on his
part, even though the condition is complied with, "it is not necessary for
the first to go further and do the nugatory act". The principle finds
application in a great variety of contracts. It applies to conditions, the
performance of which is not the real exchange for the thing-promised. For
instance, if an insurance company indicates that it is not going to pay an
insurance loss in any event, the insured is excused from compliance with a condition
requiring proofs of loss or arbitration or other preliminary acts.
He proceeds to deal with the excuse for continuance of
performance of substantive matter and in the course of a number of sections
touches upon many aspects of waiver, excuse from performance, breach of
contract and other analogous matters exhibited in a multiplicity of cases in
the American Courts. The statement is supported by the overwhelming weight of
judicial opinion in them to the degree that makes it unnecessary to cite
particular authorities.
What, then, was the extent of the repudiation here? That, to
me, . is established beyond any doubt by the evidence of the respondent:
[Page 565]
A. I told him, after he' said the machine could be repaired,
he had, the information that the machine could be repaired for $3,000 and sold
for $2,000 more than they had against it, I told him I thought it was very good
business to do that, that it would be much better for us to be quarrelling over
$1,000 than over $10,600.
Q. Yes, and did you go further than that and say—was there
any discussion about who would pay for the repairs? A. Well, I think he may
have asked me to pay for these repairs but I said …
Q. You refused? A. I said the machine was "your
baby", that is the words I used.
Q. And I would take it, Mr. Fisher, that a fair
interpretation of the words "it is your baby" is that as far as you
were concerned you had nothing further to do with that machine? A. It was out
of my possession then, I had nothing to do with it, no.
Q. Well, that was the stand you were taking? A. That is
right.
Q. You were taking the position that you had nothing more to
do with the Stevenot machine or the Stevenot account?
By the Court: Q.
What is your answer to that question? A. Yes. I had nothing more to do with it;
I wanted nothing more to do with it.
By Mr. McLeod: Q.
And you made it perfectly clear to Mr. Hillis … A. Yes.
* * *
Q. And then Mr. Hillis in July got in touch with you again
and you again told him you weren't interested in any way? A. That is right,
July or August, in there some time.
* * *
Q. And you took again the same position as you had
previously taken? A. That is right.
Q. That is to say, that you weren't in any way concerned
about the-matter at all? A. That is right.
* * *
Q. And what did they do with it, do you know? A. I don't
know.
Q. Well, did you have anything more to do with this piece of
equipment? A. I have never seen the equipment again.
Q. But that isn't what I asked you. A. No, I had nothing
more to do. with it. I might inject this: At one time Mr. Hillis phoned me
subsequent to that July conversation that he had a bid of $7,000 on the
machine. I told him, "Well, it is your baby; do what you like."
Q. What did you mean by that? A. Well, he owned it.
Q. And he could do with it as he pleased? A. Yes.
Q. That was your stand on that? A. Yes, that was my stand.
Q. In any event, can you answer this question : Did the fact
that there was a $4,500 bid come to your attention at that time? A. I heard of
that, yes.
Q. What did you do about that? A. I didn't do anything.
I cannot agree that a waiver in its widest sense is not
declared by these statements, language which justified the appellant in
proceeding as it did to dispose of the property without further reference, by
notice or otherwise, to the respondent; and the waiver was in no way affected
by s. 22 of The Conditional Sales Act, R.S.S. 1953, c. 358. What that
section prohibits is, by agreement, excluding
[Page 566]
or purporting to exclude any provision of the Act from
application to the contract; there was no such agreement here; waiver is not,
in that sense, agreement; it is unilateral renunciation made by the party
protected by the statute.
I would, therefore, allow the appeal and restore the trial
judgment with costs in the Court of Appeal and in this Court.
Appeal dismissed with costs, Rand and Fauteux JJ. dissenting.
Solicitors for the plaintiff, appellant: Pedersen,
Norman & McLeod, Regina.
Solicitors for the defendant, respondent:
MacPherson, Leslie & Tyerman, Regina.
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