Summary of the law.

may be for the payment of money on a given day, the bargain of the parties is to be carried out, and the sum is to be treated as liquidated damages."

It must also be steadily borne in mind that in cases of this description the law proceeds on the two following principles: (1) "that people must be trusted to make their own bargains," and that therefore it is the business of the Court to ascertain the intention; and (2) that regard is to be made to the principles established by decided cases. The law on this subject was well stated by Sir George Jessel as follows:

"I have always thought, and still think, that it is of the utmost importance as regards contracts between adults-persons not under disability, and at arm's length-that the Courts of law should maintain the performance of the contracts according to the intention of the parties; that they should not overrule any clearly-expressed intention on the ground that judges know the business of the people better than the people know it themselves" (1).

"If cases have laid down a rule that in certain events words are to have a particular meaning, and that has become a settled rule, it may be assumed that persons in framing their agreements have had regard to settled law, and may have purposely used words which, though on the face of them they may have a different meaning, they know by reason of the decided cases must bear a particular or special meaning."

When one lump sum is made payable by way of compensation, on the occurrence of one or more or all of several events, some of which may occasion serious and others but trifling damage, the presumption is that the parties intended the sum to be penal and subject to modification; but where the payments stipulated are made proportionate to the extent to which the contractors may fail to fulfil, or, in the language of Scotch law, "implement" their obligations, and they are to bear interest from the date of the failure, payments so adjusted with reference to the actual damage are liquidated damages (2).

The Court will not allow a party who has bound himself by a penalty to do a certain thing to pay the penalty and get rid of his obligation, and if a thing be agreed to be done, though there is a penalty annexed to its non-performance, yet the very thing itself must be done (3).

(1) Wallis v Smith, 21 Ch. D. 243, and see notes, Brett's Leading Cases in Equity. p. 39, et seq.

(2) Lord Elphinstone v. Monkland

Iron and Coal Co., 11 App. Cas. 332. (3) Per Lord St. Leonards, French v. Macale, 2 Dr. & War. 269.

excuse per

on pay

ment of

The law on this subject is very well illustrated by a case The Court which came before the Court of Appeal in 1888 (1). The will not defendant on entering the service of the plaintiffs who were a formance banking company, executed a bond in the penal sum of £1000, of covenant the condition of which was that it should be void if he should perform his duties in the manner therein mentioned, and also if penalty. he should pay to the plaintiffs £1000 as "liquidated damages," in case he should at any time within two years after his leaving the service of the plaintiffs accept any employment in any other bank within twenty miles of the plaintiffs' bank or any branch thereof. The defendant voluntarily resigned his employment in the service of the plaintiffs' bank, and immediately entered the service of a rival bank in the same town. The plaintiffs then brought an action claiming an injunction to restrain the defendant from accepting any engagement in any bank unconnected with the plaintiffs' bank within twenty miles of the principal bank. The defendant was willing, and offered, to pay the penal sum of £1000. The Court, however, decided that the defendant could not satisfy his obligation by paying the penal sum which he offered.

One of the judges of the Court of Appeal in delivering judgment said: "These bonds are not easy to construe, but we have to do our best to find out the meaning from the words of the condition and from what must have been the intention of the parties. One thing is clear, that the object of the bond was to prevent a clerk of the bank from entering into the employment of any rival bank, but this object is wrapped up in affirmative and not in negative language. . . ."

"But in my opinion the true meaning of the condition is that which is contended for by the plaintiffs, namely, that if the plaintiffs should bring an action they were not to be embarrassed by having to prove actual damage, but should be entitled to recover £1000 damages. In the case of an ordinary bond it would be no answer to such an action that the defendant was ready to pay the penalty. That is settled."

In a case which came before the Court of Appeal in 1880, the plaintiffs lent money to a man upon his bond, under which the principal was to be paid in five years by instalments, in case the debtor should so long live, the instalments being calculated so as to cover the principal of the loan, interest thereon, the expenses of negotiating it, and a margin representing a premium for the insurance of the debtor's life.

(1) National Provincial Bank of England v. Marshall, 40 Ch. D. 112.

The

Relief against penalties.

condition of the bond made it void on certain stringent conditions, but provided that the whole balance of his instalments should be at once payable on the failure of any single instalment (1). Default was made in payment of one instalment and the whole sum was claimed. The Court of Appeal decided that the amount claimed was not a penalty, and that it therefore could be recovered. In this case the law was summed up as follows:

The doctrine in equity is stated by Lord Macclesfield, L.C., in Peachy v. Duke of Somerset. "The true ground of relief against penalties, is from the original intent of the case, where the penalty is designed only to secure money, and the Court gives him all that he expected or desired"; but it has been long established that relief in equity is also given where the penalty is intended to secure the performance of a collateral object (Sloman v. Walter). Familiar instances of the relief afforded in equity, may be found in those cases where a default has occurred in repayment of a loan secured by a mortgage; but where the intent is not simply to secure a sum of money, or the enjoyment of a collateral object, equity does not relieve.

Attention has already (ante, p. 125, et seq.) been directed in connection with the subject of property to the important provisions of the Conveyancing Act (2) with reference to relief Forfeiture. against forfeiture of leases. Prior to this enactment the Courts had only the power to relieve in cases of non-payment of rent and breach of covenant to insure. The provisions of Lord St. Leonards' Act (22 & 23 Vict. c. 35) with reference to relief in respect of insurance are now repealed, and relief in respect of breach of covenants of this description is now placed on the same footing as that in respect of other covenants.

In connection with the subject of forfeiture it should be borne in mind that it is expressly provided by the Settled Land Act,

(1) The Protector Endowment, Loan, and Annuity Co. v. Grice, 5 Q. B. D. 592.

(2) 44 & 45 Vict. c. 41, s. 14, and see cases thereon collected in note, Clerke and Brett's Conveyancing Acts, 3rd ed. p. 79, et seq. In a case where a lease contained a proviso, that in case (inter alia) the lessees should during the term be bankrupt, or file a petition in liquidation, the term should cease, the lessees presented a petition, and a receiving order was made, it was contended that sub-sect. 6 only applies to cases

where the estate must pass away entirely from the lessee, and that in the present case if there had been a composition the estate would not pass. The Court, however, decided that the presentation of the petition caused a forfeiture of the term, and that sect. 14 of the Conveyancing Act had no application to the case before it. Ez parte Gould, 13 Q. B. D. 454.

See as to clause of forfeiture of property on bankruptcy being void as a violation of the bankruptcy law: Ex parte Jay, 14 Ch. D. 19, and cases therein referred to.

1882, that any clause of forfeiture purporting, or attempting, or tending, or intended to prohibit, or prevent a tenant for life from exercising, or to induce him to abstain from exercising, or to put him into a position inconsistent with his exercising, any power under this Act, that provision, so far as it purports, or attempts, or tends, or is intended to have, or would or might have, the operation aforesaid, shall be deemed to be void. And the next section provides that notwithstanding anything in a settlement the exercise by the tenant for life of any power under the Act shall not occasion a forfeiture (1).

(1) 45 & 46 Vict. c. 38, ss. 51, 52. The question under what circumstances is a vendor entitled to forfeit the deposit which the purchaser has paid, was much discussed in a recent case when the principle was laid down that, in order to enable the vendor to forfeit the deposit, there must be acts on the part of the purchaser which not only amount to delay sufficient to deprive him of the equitable remedy of specific performance, but which would make his conduct amount to a repudiation on his part of the contract. The pur

chaser must, in fact, have lost not only his right to specific performance, but also his right to sue for damages: Howe v. Smith, 27 Ch. Div. 89; Soper v. Arnold, 35 Ch. D. 384, affirmed 14 App. Cas. 429: and see also Ex parte Barrett, L. R. 10 Ch. 512; Thomas v. Brown, 1 Q. B. D. 714; Clerke & Humphry's Sales of Land, p. 109, et seq. See also on the subject of liquidated damages: Lea v. Whitaker, L. R. 8 C. P. 70, and Magee v. Lavell, L. R. 9 C. P. 107; Re Newman, 4 Ch. D. 724.

CHAPTER XVIII.

THE BUSINESS SPECIALLY ASSIGNED BY STATUTE TO THE CHANCERY DIVISION.

The subject which it is now proposed to consider under the above title is generally spoken of as "The Statutory Jurisdiction of the Chancery Division." This phrase, though compendious, and to a certain extent sanctioned by usage, is nevertheless to some extent misleading. "Whatever jurisdiction the Court of Chancery formerly had," said the late Lord Justice James (1), "has now been transferred to the High Court of Justice. The only question is as to the mode of proceeding, and no one has a vested right in any particular form of proceeding. A man has no vested right to have his cause tried before a judge of the Chancery Division any more than he had a vested right to have it heard by a particular judge of the Court of Chancery, or a vested right to prevent it being transferred from one judge to another." What has been done is to assign particular matters to the Chancery Division, and as was pointed out by Sir George Jessel (2), that which is assigned to the Chancery Division is by no means co-extensive with the old equity jurisdiction but very much less.

Among the matters so assigned, are mentioned all causes and matters to be commenced after the commencement of the Judicature Act, 2nd November, 1875, under any Act of Parliament by which exclusive jurisdiction, in respect to such causes or matters has been given to the Court of Chancery. Our present task is to consider the principal statutes by which jurisdiction has been given.

(1) Warner v. Murdock, 4 Ch. Div.

752.

(2) Rogers v. Jones, 7 Ch. Div. 349. The lengthy enumeration of more than one hundred statutes "conferring a statutory jurisdiction on the Chancery Division," which is to be found in Daniell's Chancery Practice, 6th ed., p. 2037, et seq., becomes considerably less formidable when we bear in mind that a consider

able number of the statutes so enumerated have no special reference whatever to the Chancery Division. Several of them, though not repealed, are practically obsolete, e.g. the Land Registry and Declaration of Title Acts of 1862, 25 & 26 Vict. cc. 53, 67; and the Land Transfer Act of 1875, 38 & 39 Vict. c. 87; while a considerable number of others are of comparatively slight importance.