Papua New Guinea Law Reports - 1987
[1987] PNGLR 92
SC334
PAPUA NEW GUINEA
[SUPREME COURT OF JUSTICE]
WOODWARD
V
WOODWARD
Waigani
Kapi DCJ Amet Woods JJ
23 April 1987
28 May 1987
SPECIFIC PERFORMANCE - Defences - Uncertainty - Vagueness of terms - Deed of indemnity guaranteeing mortgage to be entered into - Terms acted upon - Intention that deed to have legal effect - Specific performance available.
CONTRACT - Matters not giving rise to binding contract - Vagueness and uncertainly - Deed of indemnity guaranteeing mortgage to be entered into - Terms acted upon - Intention that deed to have legal effect - Specific performance available.
GUARANTEE AND INDEMNITY - Deed of indemnity - Whether too vague and uncertain as to be enforceable - Guarantee of mortgage to be entered into - Terms acted upon - Intention that deed have legal effect - Specific performance available.
As part of a property settlement a deed of indemnity was entered into which acknowledged the former wife’s intention to purchase a house and to secure a mortgage thereon and in which the former husband as guarantor covenanted:
“to observe and perform all the terms and conditions of the said mortgage relating to the repayment of principal and interest set forth therein”
and to indemnify:
“the purchaser against all demands, costs, claims and expenses whatsoever in relation to such mortgage so far as its provisions in relation to the repayment of principal and interest.”
On appeal from an order granting specific performance of the deed of indemnity,
Held
(Dismissing the appeal) that the deed of indemnity was not void for uncertainty.
(Per curiam) Whilst as a general rule the court will not enforce an agreement the terms of which are so vague or indefinite that the intention of the parties cannot be ascertained with reasonable certainty, nevertheless, if the court can resolve the uncertainty by reference to other acceptable evidence or the subsequent conduct of the parties it may enforce the agreement where parties have acted upon and intended the agreement to have legal effect.
Brown v Gould [1971] WLR 334 at 337, G Scammell & Nephew Ltd v Ouston [1941] AC 251 at 261 and Allcars Pty Ltd v Tweedle [1937] VLR 35, applied.
Bishop & Baxter Ltd v Anglo Eastern Trading and Industrial Co Ltd [1943] All ER 598, distinguished.
Cases Cited
Allcars Pty Ltd v Tweedle [1937] VLR 35; (1936) ALR 514.
Bishop & Baxter Ltd v Anglo Eastern Trading and Industrial Co Ltd [1944] KB 12; [1943] 2 All ER 598.
Brown v Gould [1972] Ch 53; [1971] 3 WLR 334; [1971] 2 All ER 1505.
Scammell (G) & Nephew Ltd v Ouston [1941] AC 251.
Appeal
This was an appeal from a decision of the National Court granting specific performance of a deed of indemnity.
Counsel
I Molloy, for the appellant.
S Golledge, for the respondent.
Cur adv vult
28 May 1987
KAPI DCJ AMET WOODS JJ: The appellant is appealing against a decision of the National Court given on 18 August 1986 ordering specific performance by the appellant of a deed of indemnity between the parties dated 16 May 1984 and restraining the appellant from further breaches of the said deed.
The history of this matter is that in 1982 the parties in this case dissolved their marriage and under a deed of settlement the appellant agreed inter alia to pay a certain capital amount to the respondent in the number of instalments and until such capital amount was paid he would provide suitable accommodation.
The obligation concerning the capital amount was fulfilled in June 1983. During that period it appears that the appellant was not met with any demands in relation to the obligation to provide suitable accommodation.
On 16 May 1984, nearly a year after his obligations to the capital amount had ceased, the appellant entered into a deed of indemnity with the respondent. This deed acknowledges that the respondent was about to purchase a house property and that she intended to mortgage the property to enable her to obtain sufficient funds. The deed recited as follows:
“1.      It is agreed by and between the parties hereto that the Purchaser shall purchase the property hereinbefore referred to as being the whole of the land comprised in Certificate of Title Volume 13193 Folio 87 and shall execute a mortgage in favour of a Mortgagee nominated by the Guarantor.
2.       That the Guarantor for himself his executors and administrators hereby covenants to observe and perform all the terms and conditions of the said mortgage relating to the repayment of principal and interest set forth therein and indemnifies the purchaser against all demands costs claims and expenses whatsoever in relation to such mortgage so far as its provisions in relation to the repayment of principal and interest.
3.       This Deed shall remain in force until the repayment of the whole of the principal and interest payable pursuant to such mortgage and shall remain in effect and in force notwithstanding the death of the purchaser or the guarantor.
4.       The Purchaser acknowledges that the payment to be made by the Guarantor in respect of such mortgage are payments made in relation to a property settlement agreed by the parties hereto.”
After the deed was executed the property was purchased and a mortgage was signed with a Building Society. The appellant made arrangements direct with the Building Society and payments due under the loan were made direct by him until the middle of 1985. At that stage the appellant stopped making payments but after appeals by the respondent he paid outstanding arrears. Payments were again not made and then again arrears were paid. Then the appellant refused to make any more payments. The Building Society is taking action against the respondent under the mortgage and the respondent therefore sought specific performance of the deed of indemnity.
The appellant’s grounds of appeal are, in brief, that the agreement is so vague and uncertain as to be unenforceable and that his Honour in the National Court erred in not finding the agreement void.
The appellant submits that the deed refers to the appellant agreeing to perform all the terms and conditions of the mortgage relating to the repayment of principal and interest; however as the terms of the mortgage are not spelt out the obligations of the appellant are dependent upon some agreement to be made between the respondent and a third party. Therefore as was said by the House of Lords in G Scammell & Nephew Ltd v Ouston [1941] AC 251 at 261, per Lord Russell:
“in view of the numerous forms of hire purchase transactions and the multiplicity of terms and details which they involve, the respondents are faced with what appears to me to be a fatal alternative, namely, either (1) this term of the alleged contract is quite uncertain as to its meaning, and prevents the existence of an enforceable contract, or (2) the terms leaves essential contractual provisions for further negotiations between the parties, with the same result”.
Whilst this Court would not disagree with the general rule that if the terms of an agreement are so vague or indefinite that it cannot be ascertained with reasonable certainty what is the intention of the parties there is no contract enforceable at law, if the court can resolve this uncertainty by reference to other acceptable evidence or the subsequent conduct of the parties it should attempt to find that parties have acted upon and intend an agreement to have legal effect.
As was stated in Brown v Gould [1971] 3 WLR 334 at 337: “The Court is reluctant to hold void for uncertainty any provision that was intended to have legal effect.” The difficulty must be so great that it amounts to an impossibility, the doubts so grave that there is not even an inclination of the scales one way.
In G Scammell & Nephew Ltd v Ouston no hire purchase agreement had been entered into nor any agreement made as to its provisions. However in the case before us the mortgagee had to be nominated by the appellant, a mortgage was duly entered into, signed by the appellant as guarantor, and the appellant made arrangements direct with the mortgagee for the terms to be met, and for over a year he complied with the terms of the mortgage. In the circumstances how could it be argued that he had no idea of the details of the terms and conditions by which he would be bound.
This is similar to the situation in the case of Allcars Pty Ltd v Tweedle [1937] VLR 35; (1936) ALR 514, where a clause included the words “at your option sign an offer to hire to any other person or corporation you shall nominate ... on the terms of your usual hiring agreement or that of the nominee ...”. It was held in that case that the clause in question entitled the complainant to nominate any person or corporation which had a usual hiring agreement and that the contract between the parties was not void for uncertainty.
This Court is entitled to say that the appellant here intended to be bound and by his subsequent actions emphasised this intention in terms that were clearly specified and which can now be clearly ascertained.
This is not similar to the case of Bishop & Baxter Ltd v Anglo Eastern Trading and Industrial Co Ltd [1943] All ER 598 where the Court was dealing with two separate letters which were in effect an offer and a counter-offer and the parties had therefore not reached any agreement.
It is submitted that his Honour in effect found the appellant bound by some later contract or agreement and not on the agreement sued upon. It is submitted that it was necessary for the respondent to sue on the later contract not the “vague” indemnity. However we have found that this was not a vague indemnity.
We are quite satisfied that the appellant intended to be bound to pay the mortgage entered into by the respondent to enable her to buy the house property and therefore fully intended to be bound by the deed of indemnity of 16 May 1984, the details of which were clearly evidenced by the appellant’s later actions.
We therefore dismiss the appeal with costs.
Appeal dismissed
Lawyer for appellant: Young & Williams.
Lawyer for respondent: Kirkes.