Coulls v Bagot's Executor and Trustee Co Ltd
(1967) 119 CLR 460(Judgment by: McTiernan J)
Between: Coulls
And: Bagot's Executor and Trustee Co Ltd
Judges:
Barwick CJ
McTiernan JTaylor J
Windeyer J
Owen J
Subject References:
Contract
Indemnity and Contribution
Equity
Judgment date: 21 March 1967
Sydney
Judgment by:
McTiernan J
1. The testator's estate includes an area of land which is the subject of a right to quarry which he gave some months before his death to O'Neil Construction Pty. Ltd. An agreement for the grant of the right and payment of royalties was composed by the testator and the company's representative L. O'Neil. This was done without professional assistance and an inartistic writing was made by the testator's wife at their dictation to record the transaction into which they entered. A. L. Coulls, the testator, L. O'Neil and D. S. Coulls, wife of A. L. Coulls, signed the document. The wording of the document is meagre. All it states about the grant of the right to quarry is that it is exclusive, and about the royalties that O'Neil Construction Pty. Ltd. agrees to pay stipulated amounts for a period of ten years, reserving an option to exercise the right for a further period. The grant of the right itself includes no stipulation as to its duration. It appears from a mandate of A. L. Coulls on the company which concludes the document written out by Mrs. Coulls that the testator desired that she and he would share the proceeds of the agreement as joint owners and the reversion in royalties should go to the survivor. The testator's wife is the survivor. Previous to his death the company paid the royalties as they fell due to them jointly and A. L. Coulls who received the cheques divided the proceeds equally between his wife and himself. The death of A. L. Coulls does not terminate the company's right to quarry or the obligation imposed on the company by the agreement to pay royalties. (at p482)
2. Questions have arisen in connexion with the administration of the estate of A. L. Coulls whether (1) the agreement imposes on the company a contractual obligation to pay the royalties to the testator's widow and (2) whether the mandate is binding on the executor. (at p482)
3. The document in question divides itself into two parts. The first consists of four memoranda of the agreements which constitute the contract between A. L. Coulls and the company for the right to quarry. The second part is a memorandum of the mandate. The third memorandum in the document contains the agreement on the part of the company to pay royalties. It is not stated expressly with whom the agreement is made or to whom the company agrees to pay the royalties. This is an instance of the meagreness that characterizes the wording of the agreement. Other examples are the incompleteness of the second and fourth memoranda in it. (at p482)
4. Because Mrs. Coulls signed the document it is argued that she, as well as her husband, are parties to the agreement evidenced by the third memorandum and that the agreement by the company is to pay the royalties to them jointly till one dies and then to pay them to the survivor, the manner of payment being according to the mandate. I am of opinion that this argument is contrary to the whole tenor of the document. The first part of it purports to be a transaction only between A. L. Coulls and the company. The words of the document including its heading "Agreement between Arthur Leopold Coulls and O'Neil Construction Proprietary Limited" countervail against the inference that Mrs. Coulls is a party, sought to be drawn from the fact that she signed it. It seems to me that the third memorandum evidences an agreement between the company and A. L. Coulls on the amount of the royalties and the period of the right to quarry. (at p483)
5. I am of opinion that the correct view of the first part of the document is that it is a contract to which the only parties are A. L. Coulls and the company; and it is implied in the contract that the company is liable to pay to A. L. Coulls the royalties stipulated by the third and fourth memoranda in the document. Accordingly, I hold that the provisions of the document do not impose on the company a contractual obligation to pay to Mrs. Coulls any royalty which accrues due from it after the death of the testator or at all. (at p483)
6. The words of the mandate are as follows: "I authorise the above Company to pay all money connected with this agreement to my wife Doris Sophia Coulls and myself, Arthur Leopold Coulls as joint tenants (or tenants in common?)." I would interpret the words "all money connected with the agreement" as meaning money debts to accrue due under the agreement. (at p483)
7. It was decided by Mayo J. that the mandate operated as an immediate assignment by A. L. Coulls of an interest concurrent with his interest in the royalties during their joint lives and Mrs. D. S. Coulls would become entitled by survivorship to the royalties falling due as from her husband's death. With respect I do not agree that the mandate is a good assignment. I think that it is not a good statutory assignment because it is not an immediate transfer of the entire interest of A. L. Coulls in any of the royalties and Mrs. Coull's right to the entire interest is conditional on her husband predeceasing her. The mandate is of the nature of a direction by a creditor to a debtor to pay his debt to himself and a third party - communicated to such party. An equitable assignment of a legal chose in action could take that form. The mandate in the instant case is not a completely constituted trust. As already stated the interest purported to be assigned is a part interest in future debts, not being specific funds. The mandate is not effective to transfer such interest because Mrs. Coulls is a volunteer and as has been said the mandate is not a completely constituted trust. (at p483)
8. I am of opinion that the company was merely acting as mandatory of A. L. Coulls during the period it paid the royalties to him and his wife. The mandate was therefore revocable by him and it lapsed by reason of his death. There is no ground for holding that it is binding on the executor. I am of opinion that the first appeal should be allowed. (at p484)
9. The second and third appeals should, in my opinion, be dismissed. I agree with the reasons of the Chief Justice in each of those appeals. (at p484)
10. As regards the fourth appeal I think that, because I reach the conclusion that Mrs. Coulls is not entitled to the royalties under the document in question, the judgment and order of the Supreme Court of South Australia should be set aside and a new trial of the matter be had. (at p484)