1947 Evans v. Evans, 1947 Oct. 20, 21, 22, 23, 24. Stroatfelia J. KING’S BENCH DIVISION. [1948] good fortune to share, but, having come to this view, I think it is my duty to express it. I would dismiss the appeal. Appeal allowed. Solicitors for the husband: Waller, Neale & Houlston, for Marsh & Ferriman, Worthing. Solicitors for the wife: Burion, Yeates & Hart, for Charles, Malcolm & Wilson, Worthing. CGM MORGAN v. MANSER. Contract—Manager to music hall artiste for term of ten years—Artiste not to offer his services to any other agent during term—Ariste called up for service in army—Absent for six years—Frustration of contract —Termination of contract by mutual consent. ‘The principle as to frustration of a contract may be stated thus : If there is an event or change of circumstance which is so funda- mental as to be regarded by the law as striking at the root of the contract as a whole and as going beyond what was contemplated by the parties and such that tohold the parties to the contract would be to bind them to terms which they would not have made had they contemplated that event or those circumstances, then the contract is frustrated by that event immediately and irrespective of the volition or the intention of the parties or their knowledge as to that particular event; and this even although they have continued for a time to treat the contract as still subsisting. In those circumstances the court would grant relief and pronounce that the contract had been frustrated either by implying a term to that effect or otherwise, The defendant, a music hall artiste, entered in February, 1938, into an agreement with the plaintiff by which he appointed the plaintiff his manager for term of ten years, and the plaintiff agreed to use his best endeavours to obtain engagements for the defendant at music halls, theatres, and in connexion with broad- casting, gramophone records and cinematograph films, and the defendant agreed to pay the plaintiff a certain percentage of his earnings. The defendant also agreed that he would not, during the term of the agreement, negotiate, book or offer his services to any other agent, manager, theatre proprietor or broadcasting cor- poration, or perform or give his services for salary or reward or for charity, without the consent of the plaintiff. The defendant was called up in June, 1940, for service in the army, and he was not1K. B. KING’S BENCH DIVISION. demobilized until February, 1946. The plaintiff alleged that the defendant had, in October, 1945, in breach of his agreement, entered into a contract with agents other than the plaintiff to appear in a theatrical performance, and that since February, 1946, the defendant had, without the plaintiff's consent and without making to the plaintiff any payments in respect thereof engaged his services to agents or managers other than the plaintiff and to theatre proprietors; and the plaintiff claimed damages for the defendant’s breach of his agreement. The defendant contended {inter alia) that by reason of an implied term the agreement was rescinded or dissolved by reason of his call-up to the army; alternatively, that the agreement was frustrated and rendered impossible of performance. Held, that there was such a change of circumstances and for such a duration that the original contract, looked at as a whole, was invaded by the call up of the defendant so fundamentally that it must be held to have been frustrated by that event. Action tried before Streatfeild J. On February 8, 1938, the plaintiff, a music hall agent and music publisher, entered into an agreement with the defendant, a music hall artiste whose professional name was Charlie Chester, by which the defendant appointed the plaintiff as his manager for a term of ten years from that date ; and the plain- tiff agreed to use his best endeavours on behalf of the defendant to obtain engagements for him at music halls, theatres, and in connexion with broadcasting, gramophone records and cine- matograph films in the United Kingdom and elsewhere throughout the world, and to obtain maximum salaries and payments for the defendant’s services. In consideration therefor the defendant agreed to pay the plaintiff 30 per cent. ofall his earnings on engagements booked by the plaintiff and 35 per cent. of his earnings on engagements booked by the plaintiff with the aid of another agent. It was also an express term of the agreement that the defendant should not, during the term thereof, negotiate, book or offer himself or his services, to any other agent, manager, or theatre proprietor or broad- casting corporation, or perform or give his services for salary or reward, or for charity, without the consent of the plaintiff. The plaintiff in this action claimed damages. He alleged that he had used his best endeavours in the performance of his obligations and was at all times ready and willing to perform the same, but that the defendant in’ breach of his agreement in October, 1945, without the plaintiff's consent entered into a contract with certain other theatrical agents or managers to 185 1947 Morcan v, ‘Manse,186, 1947 Morcan v MANszR, KING’S BENCH DIVISION. (1948) appear in a theatrical production ; and that since February, 1946, the defendant without the plaintiff's consent, and without making any payments to the plaintiff in respect thereof, had wrongfully engaged his services to other agents or managers and to theatre proprietors, and to the British Broadcasting Corporation. The plaintiff also alleged that the defendant had, by letters from his solicitors, refused to perform his part of the agreement. The defendant by his defence averred that in June, 1940, he was called up for service in His Majesty’s Army for the duration of the then existing war, and that by reason of an implied term the agreement was thereupon rescinded and dis- solved ; alternatively, that the further operation thereof, and the object and purpose of the parties thereto, was frustrated and rendered impossible of performance, and the said personal relationship was destroyed. He further alleged that in August, 1945, the contract was rescinded by mutual consent: but on this point the case does not call for report. Roy M. Wilson and John Wilcox for the plaintiff. Rodger Winn and Lord Vaughan for the defendant. The arguments sufficiently appear from the judgment. STREATFEILD J. It is clear that the fundamental object of the contract was not only that the manager should obtain, but that the artiste should be in the position to perform, engagements which the manager obtained for him—that is to say, in connexion with music halls, theatres, broadcasting, gramophone records, and cinematograph films. Neither party considered in February, 1938, that during the currency of that agreement there might be an event which would prevent the fundamental object thereof from being carried out, and the question which I have to decide here is whether the call-up of Mr. Chester and his entry into military service in June, 1940, as opposed to the event of the war itself, operated as a frustration of it. When the war came, even before Mr. Chester was called up there were altered conditions. ‘There was, undoubtedly, an extra outlet for the activities of Mr. Chester through an organization called E.N.S.A. At the same time, there were obviously restrictions in that outlet. It was really a different form of activity from that which he had been doing before the war, and conducted on different lines from the engagements arising out of the contract itself,1K.B. KING’S BENCH DIVISION. whereunder Mr. Morgan had been entitled to a percentage of the fees paid to the artiste. Then there came this obstacle to the proper fulfilment of this contract, namely, the call-up of Mr, Chester in June, 1940, for service in the army. There he remained until he was demobilized in February, 1946. He might have remained in an operational unit during the whole of the war, in which case it would have been clear that there would have been such an interruption in the continuity of this contract as would clearly have amounted to a frustration of the objects of the contract. Instead of that, after eighteen months of military training, he was transferred to the entertainments pool where he continued for the rest of his army career in carrying out a very important and very useful work, but not for his own benefit. He did, of course, gain this much from it, that he kept his hand in in his ordinary civilian employment, and, no doubt, was able to keep his name before the public, and the army. During that period, too, Mr. Morgan undoubtedly did do something to try to keep the defendant’s name before the public and before potential employers after the war. What is frustration of a contract ? Various theories have been put forward, and have been examined in the House of Lords, but I do not think that it is necessary that any decision should be come to as to the precise basis on which frustration is founded. I think it is enough that one should look at a few of the authorities to which my attention has been drawn. From those I think it is clear what are the principles to be applied to the facts of this case. One naturally turns to the well-known passage of Lord Loreburn’s speech in the F. A. Tamplin Steamship Co., Ld. v. Anglo-Mexican Petroleum Products Company, Ld. (1), where he said: “In order to “ decide this question it is necessary to ascertain the principle “ of law which underlies the authorities. I believe it to be as “ follows : When a lawful contract has been made and there is “no default, a court of law has no power to discharge either “party from the performance of it unless either the rights of “some one else or some Act of Parliament give the necessary “jurisdiction. But a court can and ought to examine the “contract and the circumstances in which it was made, not “ of course to vary, but only to explain it, in order to see “‘ whether or not from the nature of it the parties must have «made their bargain on the footing that a particular thing or (1) [1916] 2 A. C. 397, 403. 387 1947 ‘Morcan v, MANsER. Streabfeila J188 1947 Morcan v. ‘Manse, Streattoild J. KING’S BENCH DIVISION. [1948] “state of things would continue to exist. And if they must “have done so, then a term to that effect will be implied, “ though it be not expressed in the contract. In applying this “rule it is manifest that such a term can rarely be implied “except where the discontinuance is such as to upset altogether “the purpose of the contract. Some delay or some change is “very common in all human affairs, and it cannot be supposed “that any bargain has been made on the tacit condition “that such a thing will not happen in any degree.” .. . . “When our courts have held innocent contracting parties “absolved from further performance of their promises, it has “been upon the ground that there was an implied term in the “contract which entitled them to be absolved. Sometimes it “ig put that performance has become impossible and that the “ party concerned did not promise to perform an impossibility, “ Sometimes it is put that the parties contemplated a certain “ state of things which fell out otherwise. In most of the cases “it is said that there was an implied condition in the contract “which operated to release the parties from performing it, “and in all of them I think that was at bottom the principle “upon which the court proceeded. It is, in my opinion, “ the true principle, for no court has an absolving power, but it “ can infer from the nature of the contract and the surrounding “ circumstances that a condition which is not expressed was a “foundation on which the parties contracted.” There, Lord Loreburn is stating what we have been calling the “implied term” theory. The other way in which it can be put, not using the words “implied term,” is to be found in the speech of Lord Simon in Cricklewood Property & Investment Trust, Ld. v. Leighton’s Investment Trust, Ld. (1): “ Frustration,” he says “ may be “defined as the premature determination of an agreement “between parties, lawfully entered into and in course of “‘ operation at the time of its premature determination, owing “to the occurrence of an intervening event or change of “ circumstances so fundamental as to be regarded by the law “ both as striking at the root of the agreement, and as entirely “beyond what was contemplated by the parties when they “entered into the agreement. If, therefore, the intervening “circumstance is one which the law would not regard as so “ fundamental as to destroy the basis of the agreement, there is “no frustration, Equally, if the terms of the agreement show () [1945] A. C. 221, 228.1K. B. KING’S BENCH DIVISION. “that the parties contemplated the possibility of such an “ intervening circumstance arising, frustration does not occur. “Neither, of course, does it arise where one of the parties has “ deliberately brought about the supervening event of his own 189 1947 Morcan ve Manser, “choice.” (See the cases collected in Joseph Constantine Streatfeita J. Steamship Line, Ld. v. Imperial Smelting Corporation, Ld. (1).) “ But where it does arise, frustration operates to bring the “ agreement to an end as regards both parties forthwith and “ quite apart from their volition.” On p. 232 the Lord Chan- cellor says: ‘‘ Frustration, where it exists, does not work “ suspension but brings the whole arrangement to an inevitable “end forthwith.” Dealing with the case before him, with regard toa lease, he said he could not regard the interruption which had arisen as such as to destroy the identity of the arrangement or make it unreasonable to carry out the lease according to its terms as soon as the interruption in building was over. It is noticeable that, in that case, Lord Simon, although he had himself spoken of the “ implied term” theory in the Joseph Constantine Steamship Line, Ld. v. Imperial Smelting Cor- poration, Ld. (x), was, in this passage, actually not using the words “ implied term.” But, it seems that, having regard to other pronouncements that that distinction may not really have been of particular moment. In Hirji Mulji v. Cheong Yue Steamship Co., Ld. (2), Lord Sumner says: “An event occurs, not contemplated by “the parties and therefore not expressly dealt with in their “contract, which, when it happens, frustrates their object. “ Evidently it is their common object that has to be frustrated, “ not merely the individual advantage which one party or the “other might have gained from the contract. I{so, what the “law provides must be a common relief from this common “ disappointment and an immediate termination of the “ obligations as regards future performance. This is necessary, “because otherwise the parties would be bound to a contract, “« which is one that they did not really make. Lf it were not so, “a doctrine designed to avert unintended burdens would “ operate to enable one party to profit by the event and to “hold the other, if he so chose, to a new obligation.” On p. 509, Lord Sumner continues: “ Evidently, therefore, what- “ever the consequences of the frustration may be upon the “ conduct of the parties, its legal effect does not depend on their “ intention or their opinions, or even knowledge, as to the event, (x) [1942] A. C. 154, 160. (2) [1926] A. C. 497, 507.190 1947 Morcan v, Manser. Streatfeild J. KING’S BENCH DIVISION. (1948) “which has brought this about, but on its occurrence in such “circumstances as show it to be inconsistent with further “‘ prosecution of the adventure. Sometimes the event is such “‘as to speak for itself, like the outbreak of war on August 4, “xorg, in Horlock v. Beal (1), see per Lord Wrenbury. “Sometimes the frustration is evident, when the gravity and “the circumstances of the breakdown can be known, as in “ Bensaude’s case (2) ; sometimes, as in the case of requisition, “when it can be known that in all reasonable probability the “ delay will be prolonged and a fortiori when it has continued “so long as to defeat the adventure. Frustration is then “complete. It operates automatically: Larrinaga & Co.'s “case (3). What the parties say and do is only evidence, and “not necessarily weighty evidence, of the view to be taken of “the event by informed and experienced minds.” Lastly of the important matters which have been referred to me in this connexion, there is the case of Denny, Mott & Dickson, Ld. v. James B. Fraser & Co. (4). Lord Wright says: “It is now I think well settled that where there is " frustration a dissolution of a contract occurs automatically. “Tt does not depend, as does rescission of a contract, on the “ ground of repudiation or breach, on the choice or election “of either party. It depends on what actually has happened “‘on its effect on the possibility of performing the contract. “ Where, as generally happens, and actually happened in the “ present case, one party claims that there has been frustration “and the other party contests it, the court decides the issue ‘and decides it ex post facto on the actual circumstances of “the case.” Then, Lord Wright discusses at some length the basis of the “implied term ” rule, and he enunciates what he calls the somewhat heretical theory to which my attention has been drawn. Lord Porter (5) quotes the passage from Lord Loreburn in the Tamplin Steamship Company case (6) to which I have already referred, and he continues : “‘ Whether “ this result follows from a true construction of the contract or “whether it is necessary to imply a term or whether again it is “more accurate to say that the result follows because the “basis of the contract is overthrown, it is not necessary to “decide. The principle is well established but it is the contract “as a whole which has to be considered, not a part only.”” He (1) [1916] 1 A. C. 486, 528. (4) [1944] A. C. 265, 274. (2) [1897] A. C. 609. (5) Ibid. 28r. (3) (1922) 27 Com. Cas. 160. (6) [1916] 2 A. C. 397, 403, 404.AKB. KING’S BENCH DIVISION. then goes on to approve of the passage in the r1th edition of Pollock on Contracts at p. 255, with one slight amendment which has now been made in the x2th edition at p. 246: “ Further, it is to be observed that the disturbing cause must “‘ go to the extent of substantially preventing the performance “of the whole contract,” the amendment being that it should be “‘ the contract as a whole.” It seems to me from those authorities that whether relicf is given by way of implying a term or otherwise, the principle may be stated in this way. If there is an event or change of circumstances which is so fundamental as to be regarded by the law as striking at the root of the contract as a whole, and as going beyond what was contemplated by the parties and such that to hold the parties to the contract would be to bind them to terms which they would not have made had they con- templated that event or those circumstances, then the contract is frustrated by that event immediately and irrespective of the volition or the intention of the parties, or their knowledge as to that particular event, and this even although they have con- tinued for a time to treat the contract as still subsisting. In those circumstances the court would grant relief and pronounce that the contract has been frustrated either by implying a term to that effect or otherwise. Their own belief and their own knowledge and their own intention is evidence, and evidence only, upon which the court can form its own view whether the changed circumstances were so fundamental as to strike at the root of the contract and not to have been contemplated by the parties. It has been urged upon me that, in this case, the parties after the call-up of the defendant, continued to treat the contract, as nearly as they could, as though it was still subsisting. It is agreed that the scope of the contract was necessarily much restricted, but it has been urged that the parties so far as possible continued under it, realizing that the contract was not wholly impossible to carryout ; that Mr. Chester continued to treat Mr. Morgan as his manager and Mr. Morgan continued to carry out that part of the contract which remained with a view to resuming full activity when the artiste should be released from the army. I am not sure that, while the parties were carrying on in that way and the defendant continued to treat the plaintiff as his manager, that either was really acting in pursuance of an existing contract between them. It may well have been that the defendant regarded it as a gL 1947 ‘MORGAN v. Manser, Steeatfeild J.