B e f o r e :
LORD JUSTICE SOMERVELL,
LORD JUSTICE DENNING
and
LORD JUSTICE ROMER
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Between:
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Transcript of the Shorthand Notes of The Association of
Official Shorthandwriters, Ltd., Room 392, Royal Courts of Justice,
and 2, New Square, Lincoln's Inn, London, W.C.2.)
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MR R J. PLATTS-MILLS and MR L.J.3BLC0URT
(instructed by Messrs Beach & Beach)
appeared on behalf of the Appellant (Defendant
MR NEIL LAWSON (instructed by Messrs Oppenheimer, Nathan & Vandyk)
appeared on behalf of the Respondent (Plaintiff).
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HTML VERSION OF JUDGMENT
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Crown Copyright ©
LORD JUSTICE SOMERVELL: This is an appeal from an Official Referee, His Honour Sir Lionel Leach. The appellant must therefore satisfy us that the decision is wrong in law. The claim was for £350 as the balance due for work and labour and materials and goods supplied. The contract was for the redecoration and refurnishing of a small one room flat. There was and is some dispute as to the terms of the contract and where they are to be found, but its main provisions are clear. The plaintiff is an interior decorator and designer of furniture. The defendant desired to have his one room flat decorated and furnished in an ornate style. It was intended to result clearly in a single harmonious whole. The walls were to be repainted, certain electrical work was to be done, but the main items were furnishings, a curtain, a carpet, a divan cover, a settee of four movable chairs, a bedstead fitment, a wall fitment, a bookcase fitment, a combined writing table and cocktail cupboard and other minor items. The terms of payment were "net cash as the work proceeds, balance on completion." The negotiations began in March, 1950. On the 12th April, 1950, the defendant paid £150 and a further sum of £150 on the 19th when he and the defendant met. A sum of £750 was agreed for the work. The work had not started but these payments indicate that the parties were or thought they were ad idem at the latter date. A plan was prepared to scale showing the layout of the various items and was discussed at the meeting between the plaintiff and defendant on the 19th April. On the 25th April the plaintiff sent to the defendant two documents. The first set out in some detail the various items which on the plaintiff's view were to be included in the order placed and as shown on the plan for the £750. The other document set out in the same way further items which were admittedly discussed on the 19th. The estimate for them was about £100. The plaintiff regarded them as extras not included in the £750. The defendant at once objected that these items were to be included. He at one time demanded the return of the £300. The defendant without, as I understand it, withdrawing his contention which was never accepted by the plaintiff told the plaintiff to proceed. The work was done and furnishings installed by the 15th July. The defendant made a number of complaints. Some of these were attended to. On the 28th August the plaintiff chimed the balance of £450. The defendant replied complaining in general terms of omissions, faulty design and bad workmanship. He enclosed a further sum of £100. He said he proposed to call in a firm of good repute and get their estimate of what was required to complete what on his view were the defendant's obligations, which he proposed to deduct. He did not pursue this latter course. The furnishings remained in the flat and were used. The writ was issued on the 22nd November. The defence denied that the defendant was indebted to the plaintiff in the sum claimed or any sum. The first specific point taken was that the contract for £750 included what I have called the extras. The learned Official Referee referred to that as one of the main issues in the case before him. He decided that the work to be done for the £750 did not include these extras. On that point there is no appeal.
The defence proceeded on the basis that the plaintiff had failed to perform his obligations. It was alleged that the defendant relied on the plaintiff's skill and judgment, and an implied term based on this is set out. It was alleged that the plaintiff had failed to perform his contract and this as I read it is put forward as a defence to the whole claim. Alternatively it is alleged that the work was done negligently, unskilfully and in an unworkmanlike manner and reference is made to particulars already delivered. There was a subsidiary claim for negligence which does not now arise and a counterclaim for damages.
Particulars were ordered and given and when the case was transferred to the Official Referee a Scott Schedule was ordered.
The learned Official Referee found that there had been a failure to perform the contract with regard to certain of the items as set out in the Scott Schedule. He held that the defendant was liable for the sum of £750 less the cost of remedying the defects due to breaches of the contract as the Official Referee construed it. He allowed a deduction on this basis of £55.18s.2d.
Mr Platts-Mills submits that is wrong in law. He submits that this is an entire contract which on the findings of fact has not been performed. On the well-known principle applied to the facts of that case in Cutter v. Powell,((1795) 6 Term Reports, 320), he submitted that the plaintiff cannot therefore recover on his contract. He was not concerned to dispute that on this basis the plaintiff might on the facts of this case be entitled to recover on a quantum meruit. Such a claim has never been put forward. If it were he submits that the amount recoverable would be the fair value of what was done and delivered.
The learned Official Referee found that there had been a substantial compliance with the contract. Mr Platts-Mills submits that if his first point is right this does not enable the plaintiff to succeed. If necessary he submits that on his findings of fact the learned Official Referee was wrong as a matter of law in holding that there had been substantial compliance.
Before considering the legal issues I will summarise the effect of the learned Official Referee's findings on the major items of complaint. He found there was a twist of the door of the wardrobe which justified the defendant in requiring a new door. There was evidence which the learned Official Referee accepted that the cost of replacing the door would be £15. The new door in order not to twist had on the findings to have the veneer set at an angle. This would put the veneer on the inside of the door out of line with the veneer in the interior of the wardrobe. This would be obvious when the door was open and was described as unsightly by a witness for the plaintiff. The door as originally designed was on the evidence as accepted bound to twist.
The other important item was a bookshelf which owing to faulty measurements taken by those for whom the plaintiff is responsible was 2 ½ ins. too short. It was to join on to the wardrobe and as fitted had at the end what was called a scribing piece. The plaintiff and his witnesses came badly out of this transaction. They sought at different times to say that the scribing piece was in accordance with the plan; that the Defendant had misled them as to the measurements; that the scribing piece was necessary. All these were rejected. The faulty measurements also resulted in a hook-case at the other end being as originally constructed too large. It was cut down with the result that what was intended as a diamond pattern on some leather on a door was not a diamond pattern. The learned Official Referee held that the bookshelf must be remade and he accepted evidence that this would cost £29.6s.8d. The bookcase he held could be remedied by having the leather work replaced and he found the cost of this to be £4.
Mr Platts-Mills sought to argue that some of the other matters though small in amount were substantial in their nature. I do not agree with this. If any issue arises as to whether the breaches were substantial, I think it must be based on the items to which I have referred, bearing in mind, of course, that there were some additional minor defects.
The Official Referee regarded the principle laid down in Dakin & Co., Ltd. v. Lee, (1916, 1 King's Bench, page 566) as applicable. The contract in that case was for repairs to a house. The Official Referee before whom the case came in the first instance found that the work as completed did not accord with the contract in certain respects. He proceeded to hold that the plaintiff could not recover any part of the contract price or any sum in respect of the contract work. This decision was reversed in the Divisional Court and their decision was affirmed by this Court. In support of the Official Referee's decision it was argued that the plaintiff could not recover either on the contract or on a quantum meruit. No new contract on the latter basis could be implied from the fact that the defendant by continuing to live in her house had enjoyed the benefit of what had been done.
In Eshelby v. Federated European Bank Ltd. (1932, 1 King's Bench, page 423,) at page 431 Lord Justice Greer clearly felt some difficulty about Dakin v. Lee as possibly inconsistent with Cutter v. Powell (6 Term Reports, page 320) and the cases following that decision as deciding that where work is to be done for a sum named neither that sum nor any part of it can be recovered while the work remains undone. We were referred to a number of these cases and I have considered those cases and others. Each case turns on the construction of the contract. In Cutter v. Powell the condition for the promissory note sued on was that the sailor should proceed to continue and do his duty as second mate, in the ship from Jamaica to the port of Liverpool. The sailor died before the ship reached Liverpool and it was held his estate could not recover either on the contract or on a quantum meruit. It clearly decided that his continuing as mate during the whole voyage was a condition precedent to payment. It did not decide that if he had completed the main purpose of the contract, namely, serving as mate for the whole voyage, the defendant could have repudiated his liability by establishing that in the course of the voyage the sailor had, possibly through inadventence, failed on some occasion in his duty as mate whereby some damage had been caused. In these circumstances, the Court might have applied the principle applied to ordinary contracts for freight. The shipowner can normally recover nothing unless the goods are carried to their agreed destination. On the other hand, if this is done, his claim is not defeated by the fact that some damage has been done to the goods in transit which had resulted from a breach of the contract. The owner of the goods had his remedy by cross action (Dakin v. Oxley, 15 Common Bench Reports, New Series, page 646). The damage might, of course, be so great as to raise the question whether what was agreed to be carried had substantially arrived (ibid). Sinclair v. Bowles (9 Barnewall and Cresswell, page 92) is often cited as an illustration of the Cutter v. Powell principle. The plaintiff had undertaken to repair chandeliers and make them "complete" or "perfect". This he quite plainly on the evidence and findings of the jury failed to do. It may perhaps be regarded as a case where on the construction of the contract having regard to the subject-matter there was no scope for terms collateral to the main purpose.
The principle that fulfilment of every term is not necessarily a condition precedent in a contract for a lump sum is usually traced back to a short judgment of Lord Mansfield in Boone v. Eyre (1 Hy.Bl. 273 n.) - the sale of the plantation with its slaves. Lord Mansfield said this:
"Where the mutual covenants go to the whole of the consideration on both sides they are mutual conditions the one precedent to the other. But where they go only to a part, where a breach may be paid for in damages, then the defendant has a remedy for his covenant and shall not plead it as a condition precedent".
One is very familiar with the application of this principle in the law relating to the sale of goods. Quoad stipulations which are conditions, the Cutter and Powell other party can repudiate, but there will not have been, as there was in Cutter v. Powell, a partial performance. But there may be other terms, collateral to the main purpose the breach of which in English law gives rise to a claim for damages, but not to a right to reject the goods and treat the contract as repudiated. (See definition of warranty, Sale of Goods Act, section 62).
In a contract to erect buildings on the defendant's land for a lump sum, the builder can recover nothing on the contract if he stops before the work is completed in the ordinary sense, in other words abandons the contract. He is also usually in a difficulty in recovering on a quantum meruit because no new contract can be inferred from the mere fact that the defendant remains in possession of his land (Sumpter v. Hedges, 1898, 1 Queen's Bench, page 673). In Appleby v. Myers (Law Reports, 2 Common Pleas, page 651) while the work was in progress the premises and the work so far done on them were destroyed by fire and the Court held both parties excused. At the end of his judgment Mr Justice Blackburn, after referring to Cutter v. Powell, Sinclair v. Bowles (9 Barnewall and Cresswell, page 92) and that line of cases, said:
"The plaintiffs having contracted to do an entire work for a specific sum recover nothing unless the work be done."
In Dakin v. Lee Lord Cozens-Hardy I think had this principle in mind when he said:
"The work was finished - and when I say this I do not wish to prejudice matters, but I cannot think of a better word at the moment."
The question here is whether in a contract for work and labour for a lump sum payable on completion the defendant can repudiate liability under the contract on the ground that the work though "finished" or "done" is in some respects not in accordance with the contract. Dakin v, Lee is, of course, binding on us, but Mr Platts-Mills submitted that it was an exception to a general rule applying to contracts such as that in issue here and should be confined within as narrow limits as possible. I agree with the learned editor of the notes to Cutter v. Powell in Smith's Leading Cases, Volume 11, 13th Edition, page 21, that Dakin v. Lee so far from being an exception reaffirmed the true position on the construction of this class of contract on which doubts had been thrown by taking certain observations out of their context.
In Broom v. Davis (7 East, page 481) Mr Justice Buller decided that where a man had contracted to build a booth for a lump sum, and the booth was built but later fell down through faulty workmanship the plaintiff could claim the agreed sum, but the defendant could have a cross action for damages. So far as one can gather the facts from the report it might I think be held today that the defects were so substantial as to go to the root of the consideration, but it is an example, perhaps an extreme one, of the principle applied in Dakin v. Lee.
In Mondel v. Steel (8 Meeson and Welsby, page 858) the issue was procedural, but in a passage often cited Baron Parke deals with contracts "for an agreed price for work which was to be done according to contract." After referring to the fact that a breach of warranty does not preclude the buyer from maintaining an action for the price he says of an agreement for work at page 870:
"the law appears to have construed the contract as not importing that the performance of every part of the work should be a condition precedent to the payment of the stipulated price, otherwise the least deviation would have deprived the plaintiff of the whole price and therefore the defendant was obliged to pay it and recover for any breach of contract on the other side."
The learned Official Referee regarded Dakin v. Lee as laying down that the price must be paid subject to set off or counterclaim if there was a substantial compliance with the contract. I think on the facts of this case where the work was finished in the ordinary sense though in part defective this is right. It expresses in a convenient epithet what is put from another angle in the Sale of Goods Act. The buyer cannot reject if he proves only the breach of a term collateral to the main purpose.
I have therefore come to the conclusion that Mr Platts-Mills' first point falls. The learned Official Referee found that there was substantial compliance. Bearing in mind that there is no appeal on fact, was there evidence on which he could so find?
It is necessary here to consider a ruling given by the learned Official Referee that the defendant having approved the plan was not entitled to damages on the ground of faulty design. The question of design is, he said, not open. The ruling was given at the close of the plaintiff's case and was coupled with a ruling that the contract had been reduced to writing on the plan and specification subject to the question whether extra items were included in the £750. Mr Platts-Mills criticised these rulings and the time at which they were given. The word "design" may have more than one sense. It seems to me that on the evidence as given and accepted the learned Official Referee was entitled to rule that the defendant had accepted the general lay-out as shown by the plan. If he had intended to shut out evidence that the furniture as designed, or as delivered, was faulty though in accordance with the plan, he would have been wrong. It seems to me clear that he did not seek to do this as is shown by his findings as to the wardrobe door to which I have referred and other items.
With regard to the contract, it is material to consider the defence. The agreement is there alleged as concluded orally on the 19th April in terms which the defendant was saying covered the extras. This point was clearly kept open by the Official Referee. There was an allegation that the defendant relied on the plaintiff's skill and judgment as an expert furniture designer. Subject to the approval of the lay-out as shown on the plan I think the learned Official Referee was accepting this. An implied term based on this is set out. That is not therefore based on any express oral term. One turns to the particulars and the Scott Schedule and, reading them with the judgment, I cannot myself detect any error of law. If the defendant desired to come to this Court on the point that the ruling excluded relevant evidence I think the proper course would have been to ask the question, and if the Official Referee ruled it was inadmissible to ask him to take a note of Counsel's submission that it was wrongly excluded.
I come back to the finding that there was substantial compliance. The learned Official Referee having, as I hold, properly directed himself, this becomes, I think, a question of fact. The case on this point was, I think, near the border line, and if the finding had been the other way I do not think we could have interfered.
Even if I had felt we could interfere, the defendant would be in a further difficulty. The contract included a number of chattels. If the defendant wished to repudiate his liability under the contract he should not, I think, have used those articles, which he could have avoided using. On this view, though it is not necessary to decide it, I think he put himself in the same position as a buyer of goods who by accepting them elects to treat a breach of condition as a breach of warranty, I now come to the final question, the measure of damages. It seems from the argument that the defendant regards the price of £750 as excessive irrespective of any relief by way of reduction of price or on his counterclaim. He was anxious to put the plaintiff in the position of having to sue on a quantum meruit for the value of the work done and he was anxious to tender evidence designed no doubt to show that the work done was worth much less than £750. The learned Official Referee excluded this evidence. The measure he applied was the cost of putting the work in accordance with the contract and on this basis such evidence was rightly excluded. The defendant is bound, he held, to pay for the furniture supplied less the cost of putting right the defects. This I think is, as the learned Official Referee thought, in accordance with Dakin v. Lee. Lord Cozens-Hardy there said:
"the builders are entitled to recover the contract price, less so much as it is found ought to be allowed in respect of the items which the Official Referee has found to be defective".
This seems to follow what was said by Baron Parke in Mondel v. Steel (at pages 871-2). In dealing with the procedural point he said that the defendant need not bring a cross action but can diminish the price "by showing how much less the subject-matter of the contract was worth by reason of the breach of contract".
Mr Platts-Mills finally submitted that on the figures the Official Referee in certain cases took a manufacturer's price instead of a dealer's price. On examining the notes of evidence I do not think there is anything in this point. Nor on any view do I think it would be open in this case in this Court.
I therefore think the appeal must be dismissed.
LORD JUSTICE DENNING: This case raises the familiar question: Was entire performance a condition precedent to payment? That depends on the true construction of the contract.
In this case the contract was made over a period of time and was partly oral and partly in writing, but I agree with the Official Referee that the essential terms were set down in the letter of 25th April, 1950. It describes the work which was to be done and concludes with these words:
"The foregoing, complete, for the sum of £750 nett. Terms of payment are nett cash, as the work proceeds; and balance on completion."
The defendant paid £150 on 12th April, 1950, and another £150 on the 19th April, 1950. On 8th August, 1950, the plaintiffs said that they had carried out the work in absolute compliance with the contract and demanded payment of the balance of £450. On the 30th August, 1950, the defendant paid £100, but said that there were defects and omissions in the work and that he would call in someone else to make them good and deduct the cost from the plaintiffs' bill. He did not do this but entered into occupation of the flat and used the furniture. The plaintiffs then brought this action for the balance of £350. They denied that there were any defects at all. The Official Referee found that there were defects in three of the items of furniture and that the cost of remedying them was £55.18s.2d. He deducted that sum from the £350 and gave judgment for the plaintiffs for £294.1s.l0d.
The question of law that was debated before us was whether the plaintiffs were entitled in this action to sue for the £350 balance of the contract price as they had done. The defendant said that they were only entitled to sue on a quantum meruit. The defendant was anxious to insist upon a quantum meruit, because he said that the contract price was unreasonably high. He wished therefore to reject that price altogether and to pay simply a reasonable price for all the work that was done. This would obviously mean an inquiry into the value of every item, including all the many items which were in compliance with the contract as well as the three which fell short of it. That is what the defendant wanted. The plaintiffs resisted this course and refused therefore to claim on a quantum meruit. They said that they were entitled to the balance of £350 less a deduction for the defects.
In determining this issue the first question is whether, on the true construction of the contract, entire performance was a condition precedent to payment. It was a lump sum contract, but that does not mean that entire performance was a condition precedent to payment.
When a contract provides for a specific sum to be paid on completion of specified work, the Courts lean against a construction of the contract which would deprive the contractor of any payment at all simply because there are some defects or omissions. The promise to complete the work is therefore construed as a term of the contract, but not as a condition. It is not every breach of that term which absolves the employer from his promise to pay the price, but only a breach which goes to the root of the contract, such as an abandonment of the work when it is only half done. Unless the breach does go to the root of the matter, the employer cannot resist payment of the price. He must pay it and bring a cross-claim for the defects and omissions, or alternatively set them up in diminution of the price. The measure is the amount which the work is worth less by reason of the defects and omissions, and is usually calculated by the cost of making them good; see Mondel v. Steel ((1841) 8 Meeson & Welsby, page 858); H. Dakin & Co. Ld. v. Lee (1916, 1 King's Bench, page 566), and the notes to Cutter v. Powell in the 13th Edition of Smith's Leading Cases II., 19-21.
It is, of course, always open to the parties by express words to make entire performance a condition precedent. A familiar instance is when the contract provides for progress payments to be made as the work proceeds, but for retention money to be held until completion. Then entire performance is usually a condition precedent to payment of the retention money, but not, of course, to the progress payments. The contractor is entitled to payment pro rata as the work proceeds, less a deduction for retention money: but he is not entitled to the retention money until the work is entirely finished, without defects or omissions.
In this case the contract provided for "nett cash as the work proceeds and balance on completion." If the balance could be regarded as retention money, then it might well be that the contractor ought to have done all the work correctly, without defects or omissions, in order to be entitled to the balance. But I do not think the balance should be regarded as retention money. Retention money is usually only 10 per cent, or 15 per cent, whereas this balance was more than 50 per cent. I think this contract should be regarded as an ordinary lump sum contract. It was substantially performed. The contractor is entitled therefore to the contract price, less a deduction for the defects.
Even if entire performance was a condition precedent, nevertheless the result would be the same; because I think the condition was waived. It is always open to a party to waive a condition which is inserted for his benefit. What amounts to a waiver depends on the circumstances. If this was an entire contract, then when the plaintiff tendered the work to the defendant as being a fulfilment of the contract, the defendant could have refused to accept it until the defects were made good, in which case he would not have been liable for the balance of the price until they were made good. But he did not refuse to accept the work. On the contrary, he entered into possession of the flat and used the furniture as his own, including the defective items. That was a clear waiver of the condition precedent. Just as in a sale of goods, the buyer, who accepts the goods, can no longer treat a breach of condition as giving a right to reject but only a right to damages: so also in a contract for work and labour, an employer who takes the benefit of the work can no longer treat entire performance as a condition precedent, but only as a term giving rise to damages. The case becomes then an ordinary lump sum contract governed by the principles laid down in Mondel v. Steel and Dakin v. Lee. The employer must therefore pay the contract price subject to a deduction for defects or omissions.
I would point out that in these cases the question of quantum meruit only arises when there is a breach or failure of performance which goes to the very root of the matter. On any lump sum contract, if the work is not substantially performed and there has been a failure of performance which goes to the root of it, as, for instance, when the work has only been half done, or is entirely different in kind from that contracted for, then no action will lie for the lump sum. The contractor can then only succeed in getting paid for what he has done if it was the employer's fault that the work was incomplete; or there is something to justify the conclusion that the parties have entered into a fresh contract: or the failure of performance is due to impossibility or frustration, see Appleby v. Myers. (Law Reports, 2 Common Pleas, page 651, at page 660) and Sumpter v. Hedges (1898, 1 Queen's Bench, page 673), and section 1 (3) of the Frustrated Contracts Act, 1943. In such cases the contractor can recover in an action for restitution such sum as he deserves, or in the words of the Act, "such sum as the Court considers just." Those cases do not, however, apply in this case, because in this case the work has been substantially performed.
In my opinion the Official Referee was right and this appeal should be dismissed.
LORD JUSTICE ROMER: I agree that this appeal fails.
By the contract between the parties in this case the Plaintiff undertook to decorate and furnish a small bed-sitting room which the Defendant occupied. The work comprised the provision of a number of pieces of furniture and various fittings, the washing down and repainting of the walls, ceiling and woodwork and the carrying out of electrical work for the electrical fitments provided. The price agreed was to be an all-in sum of £750 and the terms of payment were described as "nett cash, as the work proceeds, and balance on completion." The contract was, accordingly, a "lump sum" contract. In due course the Plaintiff provided articles of furniture of the nature and character that he had contracted to provide and carried out the agreed re-decoration of the ceiling and walls. The Defendant, by instalments, paid £400 of the agreed price and kept the furniture but, when sued for the balance, refused to pay any more and said, indeed, and argued before us that he was not in law liable to pay anything under the contract at all because of certain defects in the furniture. The ground upon which he based this claim was that the contract was an entire contract, that the Plaintiff could not sue for any part of the purchase price unless and until he had wholly performed his obligations thereunder and that this was a condition precedent which had never been fulfilled. Inasmuch as the learned Official Referee who tried the case found that notwithstanding the most searching investigation by the Defendant into every possible source of complaint a sum of £55.18s.2d. only was required to put right such defects in the work as he (the Referee) found to have been established, the Defendant's contention would appear on the face of it to be somewhat harsh; and it is to be observed that the contention could have been similarly used had the remedial expenditure amounted to no more than a £5 note.
The Defendant's only attack on the Plaintiff's performance of his obligations was in relation to certain articles of furniture which the Plaintiff supplied and which the Defendant says were faulty and defective in various important respects. The finding of the learned Official Referee on this was "that the furniture supplied constituted a substantial compliance with the contract so far as the supply of furniture was concerned." That is a finding of fact and whether or not another mind might have taken a different view it appears to me impossible to say that there was no sufficient evidence upon which the finding could be based. This, then, being a lump sum contract for the supply of furniture (and the carrying out of certain minor work) which was substantially complied with by the Plaintiff, the question is whether the Official Referee was wrong in law in applying the principle of H. Dakin & Co. Ltd. v. Lee and rejecting the Defendant's submission that the Plaintiff had failed to perform a condition upon the fulfilment of which his right to sue depended. In my judgment he was quite right in applying the Dakin v. Lee principle to the facts of the present case. I can see no reason why that principle should be approached with wariness and applied with caution. In certain cases it is right that the rigid rule for which the Defendant contends should be applied; for example, if a man tells a contractor to build a 10 ft. wall for him in his garden and agrees to pay £X for it, it would not be right that he should be held liable for any part of the contract price if the contractor builds the wall to 2 ft. and then renounces further performance of the contract, or builds the wall of a totally different material from that which was ordered or builds it at the wrong end of the garden. The work contracted for has cot been done and the corresponding obligation to pay consequently never arises. But when a, man fully performs his contract in the sense that he supplies all that he agreed to supply but what he supplies is subject to defects of so minor a character that he can be said to have substantially performed his promise, it is in my judgment far more equitable to apply the Dakin v. Lee principle than to deprive him wholly of his contractual rights and relegate him to such remedy (if any) as he may have on a quantum meruit; nor, in my judgment, are we compelled to a contrary view (having regard to the nature and terms of the agreement and the Official Referee's finding) by any of the cases in the books.
The position is, I think, in some respects analogous to a case where a man agrees to sell land and, before completion, finds that he is unable to make title to a small part of it which is of no great significance in relation to the whole. In such a case the vendor can substantially perform what he has agreed to do but cannot perform it wholly, and the Court of Chancery has never hesitated to grant specific performance at his instance against the purchaser subject to a proper and reasonable deduction being made in the purchase price; it would not, however, make such an order if it resulted in the purchaser getting something substantially less than or different from what he had bargained for. The general principle is clearly stated in Fry on Specific Performance (6th Edition, 1213) as follows:
"The description by which a. thing is contracted to be sold is a matter for which the vendor is prima facie responsible. Inasmuch, however, as Equity looks to the substance rather than to the mere letter of a contract, if the vendor shows that he can substantially do what he contracted to do he is entitled to enforce specific performance, although he may be unable to do it modo et forma according to the letter of the contract; the difference between what he contracted to do and what he can actually do becoming the subject of compensation."
I am accordingly of the opinion, as already indicated, that the learned Official Referee fell into no error of law and that this appeal fails. If, however, I had come to a different conclusion on the point which I have been considering I should nevertheless be inclined to the view (for the reasons stated by Lord Justice Denning in his judgment) that the appeal must fail on the ground of the Defendant's waiver.
(Appeal dismissed with costs: leave to appeal refused)
