Bridge v Campbell Discount Co Ltd
[1962] 1 All ER 385(Judgment by: VISCOUNT SIMONDS)
Bridge
vCampbell Discount Co Ltd
Judges:
VISCOUNT SIMONDSLORD MORTON OF HENRYTON
LORD RADCLIFFE
LORD DENNING
LORD DEVLIN
Judgment date: 25 January 1962
UK
Judgment by:
VISCOUNT SIMONDS
My Lords, the facts in this case are fully stated in the opinion of my noble and learned friend, Lord Morton Of Henryton, and I will not state them myself. On the basis of those facts, I am of opinion that the only question of law that arises for your Lordships' consideration is whether a hirer, exercising the option given to him by cl 6 of the agreement, is entitled to escape from the bargain that he has made by pleading that the price he has agreed to pay for its exercise is in the nature of a penalty. I say that this is the only question that, in my opinion, arises, because, in agreement with the unanimous view of the Court of Appeal, I cannot think that the pleadings can fairly be said to give rise to any other question. In their particulars of claim, the respondents refer to cl 6 which alone gives the appellant the right to terminate the hiring, allege that he purported so to terminate it and claim relief accordingly. By his defence, the appellant admits that he terminated the agreement. The letter, by which he terminated (or purported to terminate) it, is imprecise and there is a confusion about the date of termination. But I find it impossible to treat the issue between the parties as one in which the respondents alleged a breach by the appellant of the agreement and an acceptance by them of the breach as a repudiation of it. Nor can the admission by the appellant that he terminated the agreement be easily translated into an allegation that he committed a breach of it and that the respondents themselves put an end to it and were suing him for damages for the breach. Your Lordships, however, take a different view of the case, with the result that the important question on which I assume that leave to appeal to this House was given does not arise. That question was, however, fully argued and, after some hesitation, I have come to the conclusion that I ought to express my opinion on it, if only in order that hirers may be warned of the possibility that they may be worse off if they exercise such a right as is given to them by such a clause as cl 6 of this agreement than if they commit a breach of the agreement and are sued under such a clause as cl 9 of this agreement.
I state my opinion very shortly, for I agree with the judgments given by Holroyd Pearce LJ and Harman LJ in the Court of Appeal. Clause 6 is not a penal clause. It confers on the hirer a right for which he agrees to pay a price. He need not exercise it if he does not want to. It is a right which is sedulously preserved for the hirer by Act of Parliament and, though the amount here involved takes it out of the ambit of the Act, the principle is the same. I must dissent, as
Harman LJ/ did ([1961] 2 All ER at p 103; [1961] 1 QB at p 458), from the suggestion that there is a general principle of equity which justifies the court in relieving a party to any bargain if, in the event, it operates hardly against him. In particular cases, eg, of expectant heirs or of fiduciary relationship, a court of equity (and now any court) will, if the circumstances justify it, grant relief. So, also, if there is duress or fraud "which unravels all". In the present case, there is nothing which would justify the court in granting relief to a hirer who exercised his rights under cl 6.
As, however, this case has, in your Lordships' House, become a claim under cl 9 for a breach by the appellant of his contractual obligations, the question arises whether the amount allegedly due under that clause is a penalty or liquidated damages. On this question, I have had the privilege of reading in print what your Lordships propose to say and agree that it is the former. On that subject, I cannot usefully add anything. In the result, the proper course appears to be to allow the appeal and to remit the case to the county court to assess the damage, if any, which the respondents suffered by reason of the appellant's breach of contract. The order as to costs will recognise that this is a legal aid case.