Cowell v The Rosehill Racecourse Company Ltd

(1937) 56 CLR 605
[1937] HCA 17
11 ALJ 32
[1937] ALR 273

---

(Judgment by: Evatt J)

Between: Cowell - Plaintiff, Appellant
And: The Rosehill Racecourse Company Limited - Defendant, Respondent

Court:

Judges: Latham CJ
Starke J
Dixon J

Evatt JMcTiernan J

Judgment date: 22 April 1937

---

Judgment by:
Evatt J

This is an appeal from the Supreme Court of New South Wales.

The question has arisen upon a demurrer by the defendant to a replication of the plaintiff. The plaintiff in his declaration alleged an assault upon him by the defendant. The defendant, in its third plea, justified the assault, alleging that, at the material time, the plaintiff was trespassing upon certain land of which the defendant was possessed, whereupon molliter manus imposuit.

The plaintiff's replication (purporting to be on equitable grounds under sec. 97 (1) of the Common Law Procedure Act 1899 N.S.W.) made the following allegations, which must here be taken as established:

(i.)

The defendant was conducting a race meeting upon the land of which it was possessed.

(ii.)

The defendant agreed with the plaintiff (a) that, on payment of four shillings by the plaintiff, it would allow the plaintiff to enter the land, and (b) that it would allow the plaintiff to remain on the land for the purpose of attending the race meeting and viewing the races, and (c) that, until the end of the race meeting, the defendant would not revoke the plaintiff's licence to remain on the land.

(iii.)

Performance by the plaintiff of the contract upon his part, payment being followed by entry on the land pursuant to the agreement.

(iv.)

Wrongful breach of the agreement by the defendant's purporting to revoke the licence during the period of the race meeting.

The questions raised are, first, whether, in the circumstances I have summarized above, according to the law of England and of every State in Australia where law and equity are administered concurrently, the forcible ejection of the plaintiff by the defendant amounts to an actionable assault; and, second, whether in the State of New South Wales the plaintiff is deprived of his remedy for damages for assault by reason of the fact that, although equitable principles must be taken cognizance of by the Supreme Court of New South Wales on its common law side, this is subject to the requirements of sec. 97 of the Common Law Procedure Act (which allows equitable replications), and those requirements have not been observed.

Of course, the first of these two questions is of supreme importance, and the argument of the respondent to this court was a direct challenge to the correctness of the decision of the Court of Appeal in the case of Hurst v. Picture Theatres Ltd., ^[F107] which was pronounced in July 1914, nearly twenty-three years ago. No doubt that decision, or part of the reasoning for the decision, was subjected to criticism at the hands of some commentators. One writer asserted that Hurst's Case was based on a "spurious" equity, but the supposedly spurious coin has become part of the accepted currency of the law. For, though at first a little grudgingly perhaps, its accuracy has long since been recognized by the leading text writers, and works like Smith's Leading Cases and Pollock on Torts and Salmond on Torts have long declared the law of England in strict accordance with it. I shall refrain from lengthy quotation, but one observation of Professor P. H. Winfield should be referred to:-

Two minor improvements in the law of trespass may be mentioned. Until the present century, a man might possibly be liable for trespass in two instances which any layman would have considered unjust: first, if he forcibly re-entered his land in pursuance of a right to do so and with no more force than was necessary; and secondly, if he refused to comply with the arbitrary request of the occupier to leave premises (e.g. a theatre) for admission to which he had paid. The Court of Appeal has rid the law of these hereditates damnosae (Law Quarterly Review, vol. 51, p. 257).

Why should this court not follow Hurst's Case? ^[F108] So far as I can ascertain, it has always been regarded as declaring the law of England by the Courts of the Dominions and of Ireland before the establishment of the Irish Free State. For instance, in Heller v. Niagara Racing Association, ^[F109] Hodgins J.A., of the Ontario Appellate Division said:-

It appears to be settled law in England that a licence granted by the sale of a ticket includes a contract not to revoke the licence arbitrarily, which contract entitles the purchaser to stay and witness the whole performance, provided he behaves properly and complies with the rules of the management, and that this licence and agreement, if given for value, is an enforceable right (Hurst v. Picture Theatres Ltd.). ^[F110] There is no reason why this court should not adopt what seems to be a most reasonable view, having regard to modern conditions.

Later, Ferguson J.A. said that Hurst's Case had been followed in numerous cases in England and in this country (See Cox v. Coulson; ^[F111] British Actors Film Co. Ltd. v. Glover; ^[F112] Said v. Butt; ^[F113] Hubbs v. Black. ^{[F114] [F115]}

In the case of Sexton v. Horton, ^[F116] decided by this court ten years ago, it was stated by Knox C.J. and Starke J. that unless some manifest error is apparent in a decision of the Court of Appeal, this court will render the most abiding service to the community if it accepts that court's decisions, particularly in relation to such subjects as the law of property, the law of contracts, and the mercantile law, as a correct statement of the law of England until some superior authority has spoken.

If this court declines to follow Hurst's Case on the present occasion the legal situation created will be most confusing. Hurst's Case has been regarded as a binding authority by those courts in the several States of Australia where equity and law are administered concurrently. In future, they will be placed in the dilemma of deciding between a decision of this Court, and a long-established decision of the Court of Appeal. If they follow the decision of this court, an appeal to the Judicial Committee may be brought direct from any of the Supreme Courts of the various States. In England, moreover, Hurst's Case ^[F117] would certainly be followed, only the House of Lords being at liberty to overrule it. Sec. 74 of the Commonwealth Constitution was devised to preclude or restrict appeals to the Judicial Committee in constitutional cases of Australian concern only. But the prerogative to allow an appeal by special leave was left remaining, so that there might be no contradictory ruling of Empire courts as to the general principles of the common law or of equity. I feel strongly that it is a mistake on the part of this court to proceed to an independent review of the correctness of Hurst's Case, and, with all respect, I think the Supreme Court of New South Wales should not have taken liberty to re-examine that decision as it did very recently in Naylor's Case. ^[F118] As a result of that action, it is Naylor's Case ^[F119] which is really under review on the present appeal.

But, if Hurst's Case is to be reviewed, I am unable to agree that it was "manifestly erroneous," to use the expression of this court in Sexton v. Horton. ^[F120] In his judgment, Buckley L.J. emphasized that the patron of the entertainment had expressly bargained for "the right ... to attend a performance from its beginning to its end". ^[F121] That being so, it was a very inadequate legal description of the relationship between the parties to say simply that the patron was a licensee upon the theatre proprietor's ground; it was an essential feature of the relationship that, during the currency of the performance, the occupier of the land was bound to refrain from exercising his legal rights as occupier for the purpose of ejecting the patron from the place of entertainment. And it is to be noted that, in the present case, the pleadings specifically allege that it was a definite part of the contract between the parties that the defendant should not exercise its legal power or right to revoke the plaintiff's licence to remain on the racecourse throughout the period of the race meeting.

But, before proceeding to examine certain aspects of the decision in Hurst's Case, it is convenient to dispose at once of the second part of the present appeal, and determine whether the Common Law Procedure Act, although it allows equitable pleas and replications, does not enable the Supreme Court on its common law side to give effect to Hurst's Case. ^[F122] I am clearly of opinion that the New South Wales statute can be applied so that, if Hurst's Case is to be regarded as good law in England, the plaintiff would be entitled to judgment on the present demurrer. That opinion is, I gather, shared by other members of this court.

There can be no question that Hurst's Case decided that, under circumstances closely corresponding to those admitted to exist in the present case, the person forcibly removed from the place of entertainment became entitled to recover damages for assault. In other words, by virtue of the Court of Appeal's application, concurrently, of the principles of common law and of equity, the plaintiff succeeded in an action at law. In New South Wales, sec. 97 (1) of the Common Law Procedure Act entitled the present plaintiff to answer the defendant's plea by alleging facts "avoiding such plea upon equitable grounds." Similarly, under sec. 95 (1) of the Act, a defendant at law who would have become entitled to obtain equitable relief against a judgment at common law is given a statutory right to plead the facts showing that he has a right to obtain equitable relief against the enforcement of the common law judgment and to plead such facts at law by way of equitable defence. It is true that, in England, between the passing of the Common Law Procedure Act in 1854 and the introduction of the Judicature system some twenty years later, a rule was established in accordance with which equitable pleas and replications were allowed by the courts of common law only where, on the facts there pleaded, a court of equity would have decreed an absolute, unconditional and perpetual injunction (Bullen and Leake's Precedents of Pleading, 3rd ed. (1868), p. 568). In the case of Wood v. Copper Miners' Co., ^[F123] Jervis C.J. suggested (in the year 1856) that the rule as to "perpetual, unqualified and continued injunction" was not necessarily applicable to every case of an equitable pleading. But the general rule was applied until the passing of the Judicature Act, and it has always been recognized in New South Wales in administering the equitable pleading provisions of the Common Law Procedure Act. Of course, the reason for the rule lay in the practical necessities of the case, the common law courts possessing no machinery for doing more than pronouncing judgment either for the plaintiff or for the defendant on specific issues. But, as Ferguson J. pointed out of equitable pleas in Rance v. Kensett, ^[F124] "where the issue raised can be effectively dealt with by such a judgment, there is no reason why the plea should not be pleaded."

The present defendant's argument is that the facts admitted by the demurrer do not enable the plaintiff to recover damages for assault, because if, at the time of the plaintiff's ejection from the racecourse, he had applied to the Supreme Court in equity to restrain the revocation of his licence, the Supreme Court would not have granted him an injunction which was "absolute, unconditional and perpetual." This is the gist of the Supreme Court's decision in Naylor's Case. ^[F125] The argument is that, under the contract between the parties, there was an implied obligation upon the plaintiff to behave himself properly during the progress of the race meeting; therefore an injunction restraining the revocation of the licence would have been subject to the condition that the plaintiff should behave himself properly during the race meeting.

In my opinion this method of argument quite misunderstands the purpose of secs. 95 and 97 of the Common Law Procedure Act. Those sections look to the situation as it exists when the proceedings at law are being taken. If at that time the Supreme Court in equity would give relief (a) to a defendant at law against the enforcement of a common law judgment which was being sought by the plaintiff at law in respect of a good common law claim, or (b) to a plaintiff at law against a defendant at law who was setting up a plea contrary to the equities then existing between the parties, then the defendant or plaintiff in the common law court was entitled, by the statute, to allege and prove before the court of common law the facts which would have justified the Supreme Court in equity in interposing its jurisdiction to restrain the defendant or plaintiff in the common law action from enforcing mere legal rights. In other words, the "absolute, perpetual and unconditional injunction" to which the established rule refers is an injunction restraining the bringing of a claim or the setting up of a defence contrary to equitable principles, not restraining some act as at some earlier point of time. Stephen points out that an equitable pleading should disclose facts entitling the party pleading to an absolute and unconditional injunction "against the judgment which the other party might otherwise have obtained at law" (Principles of Pleading, 6th ed. (1860), p. 197; italics are mine). It is clear that the relevant time is the time when the common law action is proceeding.

No doubt, in determining the present existence of an equity to relief against the inequitable use of the common law courts, the court of equity would necessarily have to pay regard to the antecedent transaction between the parties which was entered into prior to the commencement of the action at law. But, none the less, the Supreme Court on its common law side, once seized of the issues raised by equitable pleadings, has to look at the matter from the point of view which the Supreme Court in equity would take if it was hearing the case simultaneously with the common law action, and was placed in possession of all the facts pleaded and proved at common law.

If we apply the principle just elaborated to the present case, it is plain that the argument suggesting that any injunction granted would be conditional upon the plaintiff's behaving himself properly during the race meeting, merely confuses the issue. The relevant time to define the attitude of a court of equity is the time of the proceedings for assault, i.e., here and now. The facts material to the question of intervention by a court of equity have all been pleaded, and they are now before us. It must be assumed that, throughout the race meeting, the plaintiff was not guilty of any such improper behaviour or conduct as would have justified the defendant in rescinding the contract between the parties. And the question is whether, by the operation of equitable principles, the equitable replication pleaded avoids the plea. It does avoid the plea if, on the facts, a court of equity should restrain the defendant from pleading that the plaintiff was a trespasser at a time when, according to Hurst's Case, ^[F111] in the eyes of a court of equity he was not a trespasser but the holder of an irrevocable licence to remain on the property. Assuming Hurst's Case to be good law, it seems equitable that a court of equity should restrain the defendant at law from pleading that, by effectively revoking what he could not in equity revoke, and by deliberately repudiating his negative undertaking not to exercise his legal right to revoke, he became entitled to treat the plaintiff as a trespasser. Such an injunction, if granted at all, would be, not a conditional, qualified or temporary injunction, but an absolute, perpetual and unconditional injunction, restraining the defendant at law from setting up an obviously inequitable defence (Cf. Professor Geldart's note, Law Quarterly Review, vol. 31, p. 219, note (i)).

Such an injunction would not only be perpetual, absolute and unconditional according to its terms, but it would leave the present plaintiff in the position at law established by Hurst's Case, viz., the position of being successful in his action for damages for assault, for the only defence relied on would be avoided. As an illustration of the fact that no outstanding equities remain between the parties as at the time of the common law action, Hurst's Case itself is conclusive. There the judgment was for the plaintiff for the damages caused by an unjustified assault. Nothing else was ordered to be done except that the defendant pay such damages.

Further, even if the court had to consider the question as to the character of the injunction as at the time of the original revocation of the licence, the injunction ordered would still, I suggest, be "absolute, perpetual and unconditional." It would have addressed itself to the contract between the parties and restrained the defendant from "revoking the licence in breach of the contract." It is nothing to the point that the defendant could have lawfully revoked the licence or rescinded the contract on and by reason of the plaintiff's breach of his own obligation to behave himself properly. For such revocation or rescission would not be "in breach of the contract," but would be permissible under the contract. So far as I know, it is not the practice of the equity court, when granting an injunction to restrain a particular breach of a contract containing a series of mutual promises and forbearances, to make the grant of the injunction conditional upon the continued performance by the plaintiff of his contractual obligations or to so express its order. For instance, when the court grants an injunction based upon the lessor's covenant for quiet enjoyment, it is not necessary to state that the injunction is only to operate so long as the plaintiff, the lessee, continues to pay rent and otherwise perform the covenants on his part. As Lord St. Leonards said in relation to covenants as between landlord and tenant,

With respect to the negative covenants, if the tenant, for example, has stipulated not to cut or lop timber, or any other given act of forbearance, the court does not ask how many of the affirmative covenants on either side remain to be performed under the lease, but acts at once by giving effect to the negative covenant, specifically executing it by prohibiting the commission of acts which have been stipulated not to be done (Lumley v. Wagner). ^[F127]

Therefore, I think it is plain that despite the continued separation of the common law and equitable jurisdictions of the Supreme Court of New South Wales, the introduction of equitable principles into the former jurisdiction by the Common Law Procedure Act enables the present plaintiff to succeed in his action at law. The plaintiff in Hurst's Case was able to succeed by virtue of equitable principles according to which the defendant's attempt to set up the fact of trespass on land was defeated.

But the question remains, was Hurst's Case ^[F128] correctly decided? There are several aspects from which the decision may be regarded. First, it is critical of the strictly legal position laid down in Wood v. Leadbitter. ^[F129] And certainly the judgment of Dodderidge J. in Webb v. Paternoster ^[F130] (quoted Holdsworth's History of English Law, vol. vii., p. 328) contains a far more valuable analysis of licences than was given in Wood v. Leadbitter. The Court of Appeal in 1915 thought it somewhat extraordinary that the rights and liabilities created by a contract to admit to an entertainment conducted publicly and for the profit of the entrepreneur, and perhaps the education or pleasure of the patron, could be treated, even by a court of law, as assimilable to a mere dispensation to the theatre patron to commit what otherwise would be a trespass on land. In actual fact, the rights and liabilities are not so assimilable and, in its modern developments, even the common law has recognized the inadequacy of the "bare licence" theory as a description of the relationship between the parties (Cox v. Coulson). ^[F131]

The main part of the reasoning in Wood v. Leadbitter ^[F132] was based on the well-known judgment of Vaughan C.J. in Thomas v. Sorrell, ^[F133] distinguishing there between licences or "dispensations" (e.g., to come into a man's house), and licences coupled with a grant of property (e.g., a licence to hunt and carry away the deer). It must be conceded that the "grants" intended to be referred to in Wood v. Leadbitter (a licence "coupled with a grant") was a grant of some ascertainable property which is capable of being granted (Holdsworth's History of English Law, vol. vii., p. 328). It may therefore be admitted that Lord Wrenbury went too far in assimilating the right to view an entertainment with the grant of a proprietary right in or over land or chattels.

But, in my opinion, as an application of equitable principles to the complex relationship between entrepreneur and patron, Hurst's Case ^[F134] is a convincing decision. As early as 1901, Cozens Hardy M.R. suggested that Wood v. Leadbitter might be of "very doubtful" validity if equitable principles were to be applied to its facts (Lowe v. Adams). ^[F135] From the point of view of equitable principles, the essence of the judgment of Buckley L.J. is to be found in his references to Lord Parker's judgment in James Jones & Sons Ltd. v. Tankerville (Earl), ^[F136] and to the passage on page 10 commencing: "There is another way in which the matter may be put." Buckley L.J.'s view was (a) that a contract giving a licence to enter and remain on land solely for the purpose of viewing an entertainment should be regarded by a court of equity as not subject to arbitrary revocation during the entertainment by a party to the contract in his capacity as occupier of the land, and (b) that a court of equity should give efficacy to a contract not to exercise the legal right of revocation of the licence, by restraining the occupier, either from exercising such legal right, or, at any rate, from subsequently setting up to his own advantage his own breach of contract and his own attempted revocation of the licence.

It is true that the observations of Lord Parker quoted by Buckley L.J. were not made in a case precisely analogous to that of Hurst's Case, ^[F137] because a recognized proprietary right, i.e., a "grant" was under consideration in James Jones & Sons Ltd. v. Tankerville (Earl). ^[F138] But Buckley L.J. clearly thought that a court of equity should intervene in a case like Hurst's Case by restraining the revocation of a licence in breach of contract. No doubt, Buckley L.J. dwelt upon that part of the judgment in Wood v. Leadbitter ^[F139] which emphasized the absence of an instrument under seal; and he indicated that pending the bringing into existence of the necessary deed a court of equity would make short work of such an objection. But, in so doing, Buckley L.J. was answering the reasoning of Alderson B. so far as it asserted or assumed that the plaintiff in Wood v. Leadbitter would have succeeded if he had possessed an instrument under seal giving him the right to view the race. It is a fair comment that the critics of Hurst's Case can hardly be allowed to set up as against Buckley L.J. any error of pure law to be discovered in Wood v. Leadbitter.

But a broad and just principle of equity appears from the judgments of Buckley L.J. and Kennedy L.J. to the effect that, although a court of law will still treat the transaction between entertainment proprietor and patron as creating only a revocable licence, a court of equity should regard the licence as irrevocable in all proceedings in which equitable principles have to be recognized. A consequential rule is that a defence to an action of assault that the licence had been duly revoked by the proprietor, though good at law, would be contrary to the equitable principle of irrevocability of licence and the equitable principle should prevail so as to avoid the defence.

It was the contrary view which, according to Kennedy L.J., led to "an astonishing conclusion" (at p. 12). He also regarded the contract as creating "an irrevocable right to remain until the conclusion of the performance" (at p. 13). I hope it is superfluous to add that neither Buckley L.J., nor Kennedy L.J., was unaware of the fact that the right to see a theatrical performance was not a proprietary right in the nature of an easement. Indeed, Kennedy L.J. said that the plaintiff's "interest," "whether you call it an easement or not, is an interest which I can now acquire in equity by parol" (at p. 14). And he referred to an important passage in Pollock on Torts, 9th ed. (1912), at p. 390, which I mention below.

Further, the dissenting judgment of Phillimore L.J. is of great significance, for he is not unwilling to concede (at p. 18) that equity would give specific performance of the contract to see the entertainment. The main difficulty of Phillimore L.J. was that, assuming that equity would intervene, the plaintiff in equity could not necessarily be regarded as having already occupied the legal position which springs into existence only after he obtains specific performance. In other words, although the licence would be regarded in equity as irrevocable, still, until a court of equity actually pronounced its order, the existing legal relationship between the parties should be deemed to continue. In support of this view Phillimore L.J. adopted Pollock's suggestion in the passage mentioned above, that the plaintiff might have obtained an injunction, and so have been restored to the enjoyment of his licence, but that, in the meantime, he should be deemed a trespasser. With respect, it is difficult to appreciate the force of the difficulty which alone seemed to prevent Phillimore L.J. from concurring. The plaintiff in Hurst's Case ^[F140] did not need to invoke the principle of Walsh v. Lonsdale, ^[F141] for the assumption of Hurst's Case was that no estate or interest in land was intended to be created by the contract. But equity's intervention in order to prevent a party from exercising his legal rights in breach of a contractual obligation is based on broader grounds than the principle of Walsh v. Lonsdale. ^[F142] If, as Phillimore L.J. was prepared to admit, a court of equity would have restrained the revocation of Hurst's licence, it could hardly treat the defendant as having improved his position at law solely because, in the nature of things, Hurst was unable to approach a court of equity before his forcible removal from the theatre. In other words, if a court of equity regarded the licence as irrevocable, why should it allow the wrongdoer, by subsequently saying "I revoked it," to obtain an advantage at law. This view subsequently seemed to commend itself to Sir F. Pollock, who said:

And is it now possible for a court having equitable as well as legal jurisdiction to treat as rightful in any sense an expulsion which a court of equity would have restrained if a motion could have been made in time? (Law Quarterly Review, vol. 31, p. 9; cf. p. 221).

I think the fallacy in the criticism of Hurst's Case ^[F143] lies in the continuous insistence upon discovering a proprietary right as a condition of equitable intervention. Sir J. C. Miles, whose criticisms of the decision in Hurst's Case have been little more than re-echoed by the later commentators, seemed mainly concerned with "the purely legal grounds of the decision" (Law Quarterly Review (1915), vol. 31, pp. 219-221), and was not so ready to deny its validity as an extension of equitable principles; nor did he seem to consider the equitable question as affected in any way by the supposed difficulty upon which Phillimore, L.J. really based his dissent. As a Canadian commentator has recently said, in relation to the theory that a strict "property" interest must be the foundation of the intervention of equitable jurisdiction, the danger in the application of the limitation lies in the circumstance that unenlightened courts are apt to apply it as a limitation of their jurisdiction, except in orthodox property interest cases, even though the situation is one to which the injunctive method is peculiarly appropriate (Canadian Bar Review, vol. 10, p. 175).

In my opinion, the appeal should be allowed, and judgment entered for the plaintiff on the demurrer.