Beswick v Beswick

A contracting party may obtain specific performance of a promise made for a third party’s benefit. The promisee’s personal representative has the same right. The beneficiary’s inability to sue personally under the doctrine of privity does not prevent an order directing the promisor to perform in the beneficiary’s favour.

Specific performance is particularly appropriate where the promise concerns a continuing annuity, damages would provide inadequate justice, repeated actions would otherwise be required, and the promisor has received the agreed consideration. Section 56(1) of the Law of Property Act 1925 does not generally give an intended beneficiary a personal right to enforce an ordinary contract.

Under an agreement for the transfer of a coal business, the appellant promised the respondent’s husband a weekly payment for life and promised thereafter to pay the respondent a weekly annuity. After the husband died, the appellant made one payment and repudiated the continuing obligation.

The respondent sued both personally and as administratrix of her husband’s estate. The Vice-Chancellor of the Chancery Court of the County Palatine of Lancaster dismissed the suit. The Court of Appeal allowed her appeal and ordered payment of the arrears and specific performance: [1966] 3 WLR 710.

The questions before the House were whether the administratrix could obtain specific performance of the promise to pay the annuity and whether section 56(1) of the Law of Property Act 1925 gave the respondent a personal right to enforce it.

1. Disposition. The House unanimously dismissed the appeal and affirmed the order for payment of the arrears and specific performance. The respondent succeeded as administratrix, rather than through a personal right to enforce the contract.

2. Enforcement by the promisee’s representative. Lord Reid held that the contracting promisee could require the promisor to perform an obligation to pay a third-party beneficiary. The respondent, as administratrix, stood in her husband’s position. Lord Guest expressly agreed with Lord Reid on this issue, and Lord Hodson, Lord Pearce and Lord Upjohn reached the same conclusion. Equity could direct payment to the intended beneficiary without conferring upon her an independent contractual right.

3. Specific performance. Lord Hodson, Lord Pearce and Lord Upjohn emphasised that damages were inadequate. The obligation was a continuing annuity, so a damages remedy could alter the nature of the agreed performance or require repeated actions. The appellant had also received the entire benefit of the transfer. Justice therefore required performance of the corresponding obligation. The possible absence of substantial loss to the estate did not bar equitable relief, and the order was capable of enforcement through ordinary procedures.

   The speeches did not establish a common rule about the amount of common-law damages. Lord Reid assumed for the case that damages would be nominal, Lord Hodson regarded nominal damages as inadequate, and Lord Upjohn considered that the promisee must prove his own loss. Lord Pearce considered that substantial damages might be recoverable. The point was unnecessary because specific performance was the appropriate remedy.

4. Beneficial destination of the payments. Lord Reid treated the intended destination of a payment to a third party as a question of construction in the circumstances known to the contracting parties. Here the annuity was intended for the respondent’s own benefit. Lord Upjohn likewise concluded that, although the contracting parties could have modified or discharged the obligation before enforcement, payments made under it belonged beneficially to the respondent.

5. Privity and section 56. The respondent did not maintain before the House that she could sue personally at common law, and their Lordships proceeded on the orthodox footing that a non-party ordinarily could not enforce the contract. Although unnecessary to the disposition, Lord Reid, Lord Hodson, Lord Guest and Lord Pearce concluded that section 56(1) of the Law of Property Act 1925 did not confer the asserted personal right. Its context as a consolidation provision prevented section 205(1)(xx) from expanding it into a general reform of privity. Lord Upjohn also concluded, tentatively and obiter, that the section did not assist the respondent. On his narrower analysis it addressed the technical law of sealed indentures and applied only where the beneficiary was a purported grantee or covenantee under a document strictly inter partes.

• House of Lords: The House unanimously dismissed the appeal and affirmed the order for arrears and specific performance in Beswick v Beswick [1968] AC 58.
• Court of Appeal: The court allowed the respondent’s appeal and ordered payment of the arrears and continuing performance of the annuity: [1966] 3 WLR 710.
• Chancery Court of the County Palatine of Lancaster: The Vice-Chancellor dismissed the respondent’s suit.