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Election

Sargent v ASL Developments Ltd [1974] HCA 40; (1974) 131 CLR 634 per Stephen J: (at p 646)

28. In the present appeals I conclude that, contrary to the appellants' contentions, all that need be established in order for the doctrine of election to apply is knowledge by the vendors of the facts giving rise to inconsistent legal rights; the appellants are to be taken to know of their rights of rescission conferred by cl. 16 and, of course, of their right to enforce the contracts according to their terms.

If they then knew of the relevant facts giving rise to the rights of rescission, that is, the existence of a planning scheme affecting the lands sold, that is enough to invoke the doctrine.

Their own interpretation or understanding of the nature or extent of their contractual rights will be irrelevant, so that it matters not at all whether they were aware of the existence of cl. 16 or of its effect as it came to be enunciated in Wolczyk v Barr (1970) 92 WN (NSW) 518 ); it is enough that they knew of facts which have brought cl. 16, as so interpreted, into operation.

29. The words or conduct ordinarily required to constitute an election must be unequivocal in the sense that it is consistent only with the exercise of one of the two sets of rights and inconsistent with the exercise of the other; thus for a lessor to continue to receive rent under a lease will be consistent only with his rights as lessor and inconsistent with the exercise of a right to determine the lease: Viscount Dilhorne in the Kammins Ballrooms case (1971) AC, at p 873 ; Herring CJ in the Coastal Estates case (1965) VR, at p 436 ; Kitto J, in Tropical Traders Ltd v Goonan [1964] HCA 20; (1964) 111 CLR 41, at p 56.

However, less unequivocal conduct, only providing some evidence of an election, may suffice if coupled with actual knowledge of the right of election: Elder's Trustee case (1941) 65 CLR, at p 618.

There need be no expressed intention to elect, nor will an express disclaimer of such an intention be of any avail in preserving one right if in fact there be an exercise of another inconsistent right: Croft v Lumley [1858] EngR 626; [1858] EngR 626; (1858) 6 HL Cas 672 (10 ER 1459); Matthews v Smallwood (1910) 1 Ch, at p 786.

For an election there need be no actual, subjective intention to elect: Scarf v Jardine (1882) 7 AC, at p 361, an election is the effect which the law attributes to conduct justifiable only if such an election had been made: per Kitto J in Tropical Traders Ltd v Goonan (1964) 111 CLR, at p 55; cf. S Kaprow & Co Ltd v Mclelland & Co Ltd, per Wrottesley LJ (1948) 1 KB 618, at pp 629-630.

30. On the question of detriment to the other party as an ingredient in election there exists, again, a divergency of views. Many of the leading cases on the topic make no reference to detriment and, in speaking of the irrevocability of an election, seem to treat that as arising, regardless of whether or not the other party has acted upon it to his detriment, as soon as the fact of election is communicated to the other party: eg Scarf v Jardine, per Lord Blackburn (1882) 7 AC, at p 361, or indeed regardless perhaps of communications: eg Matthews v Smallwood (1910) 1 Ch, at pp 786-787.

On the other hand, in Spencer Bower and Turner: Estoppel by Representation (1966), at pp 323-325, election is treated as necessarily involving detriment, although detriment is there given a wide meaning.

It may be that in very many of the decided cases involving election some detriment to the other party can be discovered on an examination of the facts, but the authorities in this Court are consistent in their silence as to detriment, regarding the elector's act of disaffirmation or adherence to the contract as itself completing the election without more: Craine's Case (1920) 28 CLR, at pp 325-326; Fullers' Theatres Ltd v Musgrove (1923) 31 CLR 524, at pp 540-541; Elder's Trustee Case (1941) 65 CLR, at pp 616-617, 618; Tropical Traders Ltd v Goonan (1964) 111 CLR, at p 55.

Perhaps Newbon v City Mutual life Assurance Society Ltd [1935] HCA 33; (1935) 52 CLR 723 throws most light upon the matter. There this Court dealt with two distinct issues, election and estoppel, and their treatment of the former, when contrasted with that accorded to the latter, satisfies me that no question of detriment was thought to be a necessary ingredient in election. (at p647)

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37. Again, where a vendor so arranges matters that his solicitor undertakes on his behalf the carrying out of a conveyancing transaction as a whole he thereby not only authorises his solicitor to perform all necessary steps but also places the solicitor in the position of acquiring at first hand knowledge of relevant facts, at the same time depriving himself of the opportunity of acquiring such first hand knowledge.

If any such steps taken by the solicitor happen to constitute acts of affirmation of the continued existence of the contract they will be binding upon the client: Provincial Insurance Co. of Canada v Leduc (1874) LR 6 PC 224, at p 239.

If they be unequicoval and are performed at a time when the solicitor has himself acquired knowledge of facts giving rise to a right to rescind the contract the client will, without the need to attribute to him the knowledge of his solicitor, be bound by those acts of affirmation as on an election; the duly authorized conduct of the solicitor, who has acquired the relevant knowledge, will, without either conduct or knowledge on the client's part, constitute an effective election not to rescind the contract: Hough v Guardian Fire and Life Assurance Co Ltd (1902) 18 TLR 273; Ayrey's Case (1918) 1 KB, at p 142. (at p649)

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per Menzies J

30. Lord Blackburn said in Kendall v Hamilton (1879) 4 AC 504, at p 542 , "there cannot be election until there is knowledge of the right to elect".

The rule then enunciated has been applied so as to preserve to an injured worker his statutory option to claim compensation under Workers' Compensation Acts or to sue for damages at common law when he has received workers' compensation in ignorance of his alternative remedy: Young v Bristol Aeroplane Co Ltd (1946) AC 163, at pp 169, 173, 186; O'Connor v SP Bray Ltd [1937] HCA 18; (1937) 56 CLR 464; Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62, at pp 78, 94.

However, as between lessor and lessee it has been said that election may take place in the absence of knowledge on the part of the person electing of the existence of the alternative right, so long as he has knowledge of the facts giving rise to the existence of that right.

Thus, a lessor by accepting rent with knowledge of a breach of covenant by the lessee may elect to affirm the lease though unaware that the breach entitled him to forfeit the lease:  Matthews v Smallwood (1910) 1 Ch 777, at pp 786-787; Fuller's Theatre and Vaudeville Co Ltd v Rofe (1923) AC 435.

In Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd (1971) AC, at pp 860, 873, 878-879, 883-885 conflicting opinions were expressed as to the necessity for the existence of knowledge of the right to object that there had been a noncompliance with the statute in a case which was not so much a case of election as a suggested case of waiver of a defence. (at p657)

 

 

 

 

 

 

 

 

 

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