H Jones & Company Pty Ltd v Talbot [1948] HCA 30; (1994) 180 CLR 63 (22 October 1948)

HIGH COURT OF AUSTRALIA

H. JONES AND COMPANY PROPRIETARY LIMITED v TALBOT (1994) 180 CLR 63

Injunction

HIGH COURT OF AUSTRALIA

LATHAM CJ(1), STARKE(2), DIXON(3), McTIERNAN AND WILLIAMS(4) JJ

(NOTE: THE HONOURABLE MR. JUSTICE McTIERNAN did not sit on the second day of this appeal and did not deliver a judgment. - Ed.)

Injunction - Contract - Breach - Sale of goods by description - Specific quantity of produce of farm in any season during currency of agreement - Option to buy excess - Whether implied term not to sell to third party - Damages - Whether adequate remedy.

HEARING

1948, MELBOURNE, October 21, 22

22:10:1948

DECISION

LATHAM CJ This is an appeal from an order of the Full Court of the Supreme Court of Tasmania discharging an order of Hutchins J. whereby his Honour had refused to dissolve an injunction granted against the defendant (the respondent upon this appeal). The injunction restrained the defendant from delivering his fruit crop or any portion thereof to anyone other than the plaintiff so as to put it beyond the defendant's power to perform an agreement entered into between the plaintiff and the defendant on 5 December 1947. The agreement was an agreement contained in a letter consisting of a printed form with conditions attached addressed by the defendant to the plaintiff company, which has a large business in the manufacture of jam and preserved fruits, and was in the following terms:

"Dear Sirs,

I hereby agree to sell to you, delivered free to your Factory at Hobart, the prices named hereunder, and in accordance with the conditions given on the other side of this sheet, which conditions are to be read into and considered as forming part of the Contract -

raspberries six tons

gooseberries two tons

red currants one ton

black currants two tons

Should my crop in any season during the currency of this contract exceed the above stated quantities then you are to have the option of taking the whole or any part of such excess; option to be declared by you on or before the delivery of my first consignment each season.

PRICE: Your current daily rates on delivery.

This contract holds good for ten seasons, viz. -

1947 - 48 1952 - 53

1948 - 49 1953 - 54

1949 - 50 1954 - 55

1950 - 51 1955 - 56

1951 - 52 1956 - 57"

(The prices are fixed under law in Tasmania.)

2. The option to take the whole or any part of the excess over the quantities named was not exercised before delivery of the first consignment in the relevant season. Accordingly, the contract in this season becomes a contract to sell specified quantities of raspberries and the other fruits mentioned, those fruits to be fruits grown on the property of the defendant. Thus the contract becomes simply a contract for the sale of goods by description. It is not a contract of which specific performance could be ordered under s. 56 of the Sale of Goods Act 1896 (Tas.). Prima facie, also, an injunction would not be granted in relation to such a contract. It is sought to construe the contract as meaning that the defendant contracts not to sell to any person other andan the plaintiff raspberries etc. grown by him on hi property. If there were such a negative stipulation, then, subject to any considerations as to the validity of the whole of the contract, an injunction might be granted to restrain action inconsistent with such a term. But there is no such stipulation in the contract. Evidence is given for the plaintiff by affidavit that the quantity grown on the defendant's farm in the relevant season was in fact less than the amounts contracted to be sold; but this fact does not in my opinion turn the contract into a contract to sell the whole of the produce of the farm to the plaintiff, and accordingly, in my opinion, there is not the alleged basis to support the argument that there is an implied negative term in the contract. Then it is said that in this case damages are not an adequate remedy because the plaintiff depends upon regular supply of fruit and has contracts from a large number of farms in order to keep his factory going. In my opinion such a fact does not show (and has not in the past been taken as showing) that damages are not an adequate remedy. It amounts only to this - that goods of the description mentioned in the contract are in short supply. Such a fact would be reflected in any damages in normal times. The fixing of prices does affect that matter, but in my opinion it does not affect the application of the general principle. The fixing of prices may limit the amount of damages recoverable. In my opinion no ground is shown for grant of an injunction, and the plaintiff should be left to its remedy in damages for the net disputed breaches of the contract. Accordingly in my opinion the appeal should be dismissed.

STARKE J. I agree that this appeal should be dismissed. I regret that special leave should have encouraged the appellant to pursue an appeal that has no real basis.

DIXON J. I agree

WILLIAMS J. The contract sued on is affirmative in form and not of such a nature that it could be specifically enforced. It could only be indirectly enforced by an injunction if it contains a negative covenant, either express or implied, and then only to the extent to which it could be enforced by granting an injunction in the terms of the covenant. There is here no express negative covenant. The contract is affirmative throughout, and I am unable to find any sufficient indications in the contract itself or the surrounding circumstances to justify an implication of a negative covenant. The contract is not one for the sale of the whole of the crop, in which case it might be possible to imply a negative covenant, but for certain quantities of fruit, and even with respect to these quantities there are two options, one to take increased quantities by purchasing the whole of the crop, and a further option to reduce the specified quantities or to cancel or suspend the contract, in the event of a shortage of sugar or tinplate at the plaintiff's factory. In these circumstances it seems to me to be quite uncertain what would be the terms of the negative covenant which ought to be implied, if one ought to be implied at all; and, as I have already said, I do not think the contract itself or the circumstances are such as to justify the court in implying such a covenant. A mere shortage of goods is not sufficient to make a contract for such goods specifically enforceable when it contains terms which require the supervision of the court. The principle of equity is that such a contract cannot be specifically enforced, because the court is unable to supervise it, and that principle applies whatever may be the condition of the market with respect to the supply of the goods. I think the law is well stated in two decisions of the Supreme Court of New South Wales. The first is the case of Wood v. Corrigan (1). Long Innes J. said (2):

"But, however that may be, I think that it is settled by authority that a negative quality will not be imported into an agreement which is affirmative in form and is of such a nature that it cannot be specifically enforced."

2. That case was explained by Harvey J. in Howes v. O'Neill (3). He said:

"That was a case of a contract for sale of definite chattels, or something in the nature of definite chattels. The court was not asked to enforce the specific sale of the chattels, but was asked to grant an injunction to restrain the defendant from selling them elsewhere."

(1) (1928) 28 SR (NSW) 492.

(2) ibid., at p. 500.

(3) (1930) 30 SR (NSW) 167, at p. 168.

3. That appears to me to be exactly the position here. His Honour went on to say:

"It is obvious that where it is a contract for the sale of chattels between two persons and that contract is of a nature that cannot be specifically performed, the court will not stultify itself by endeavouring to force the defendant to specifically enforce the contract by forbidding him to sell to somebody else, the court not being able to carry proceedings any further than to prevent the defendant from selling the goods. In that case the court ought not to enforce the principle that an agreement to sell particular chattels to a particular person impliedly carries with it an obligation not to sell them to anybody else."

4. For these reasons I agree that the appeal should be dismissed.

5. Appeal dismissed with costs.

Solicitors for the appellant, Simmons, Wolfhagen, Simmons and Walch, Hobart, by Hedderwick, Fookes and Alston.

Solicitors for the respondent, Bruce Piggott and Jennings.