Arthur Cinnamond, Continued in the Name of Helen Batty Cinnamond, His Executrix, Plaintiff; William John M'Curdy, Defendant

• Jurisdiction: Ireland
• Judge: K. B. Div.
• Judgment Date: 16 November 1908
• Court: King's Bench Division (Ireland)
• Docket Number: (1906. No. 12,105.)
• Date: 16 November 1908

Arthur Cinnamond, continued in the name of Helen Batty Cinnamond, his Executrix

Plaintiff

and

William John M'Curdy

Defendant (1).

K. B. Div.

(1906. No. 12,105.)

CASES

DETERMINED BY

THE KING'S BENCH DIVISION

OF

THE HIGH COURT OF JUSTICE IN IRELAND,

AND ON APPEAL THEREFROM IN

THE COURT OF APPEAL,

AND BY

THE COURT FOR CROWN CASES RESERVED.

1909.

Bankruptcy — Composition after bankruptcy — Provable debt — Unliquidated damages for breach of contract — Breach of covenant to repair — Continuing breach — Irish Bankrupt and Insolvent Act, 1857 (20 & 21 Vict. c. 60), sect. 149 — Bankruptcy (Ireland) Amendment Act, 1872 (35 & 36 Vict. c. 58), sect. 46.

Damages for breach of covenant to keep in repair do not constitute a provable debt unless and until assessed under section 46 of the Bankruptcy (Ireland) Amendment Act, 1872; and in the absence of such assessment the bankrupt lessee in whom the lease continues vested is liable for full damages for such breach, notwithstanding that the breach existed at the time of the bankruptcy, and that the lessee has carried a composition after bankruptcy, under sections 149 and 150 of the Irish Bankrupt and Insolvent Act, 1857.

Per Gibson, J.: Quære— Whether the lessor, not having been returned as creditor, and not having received any composition, would in any case be bound. Quære, also, Whether section 46 of the Act of 1872 applies to a continuing breach where the lease continues to be vested in the bankrupt lessee, and whether the lessor's right to recover full damages could be thereby affected.

Per Kenny, J.: Even if the damages that accrued up to the time when they could be assessed in the bankruptcy proceedings were a provable demand, the lessee would not be discharged from future liability where the breach of covenant was a continuing one.

Hardy v. Fothergill (13 App. Cas. 351) discussed and distinguished.

Motion to set aside verdict and judgment for the plaintiff, and to enter verdict and judgment for the defendant, or, in the alternative, for a new trial.

The action was originally brought by Arthur Cinnamond, who died in the course of the proceedings, which were continued in the name of Helen Batty Cinnamond, his executrix. The action was for damages for breach of covenant to repair, and keep in repair,

buildings, contained in an indenture of fee-farm grant dated the 7th March, 1904, and made between Arthur Cinnamond of the one part, and the defendant of the other part, by which, for the considerations therein mentioned, Arthur Cinnamond granted to the defendant, his heirs and assigns, a bleach green, bleach mills, and works, at the yearly rent therein-mentioned. In the fee-farm grant there was contained a covenant by the defendant with Arthur Cinnamond to repair and keep all buildings at any time on the premises in good, substantial, and tenantable order, repair, and condition.

In the month of September, 1905, certain buildings on the premises comprised in the fee-farm grant were destroyed by fire, and were not restored by defendant.

On the 15th December, 1905, the defendant was adjudicated bankrupt by the Judge of the Belfast Local Bankruptcy Court, of which bankruptcy and all subsequent proceedings therein Arthur Cinnamond had notice, but did not prove any claim for damages in respect of the breach of the covenant in question, although he proved in respect of another claim. On the 2nd July, 1906, the defendant carried, with the approval of the Local Bankruptcy Court, a composition after bankruptcy with his creditors, the amount of which was afterwards paid to the creditors, including Arthur Cinnamond, in respect of the claim for which he proved, and the bankruptcy of the defendant was annulled by order dated the 29th October, 1906. Arthur Cinnamond had not been returned as a creditor in respect of the damages now claimed, and did not receive any composition on foot of such damages.

The action was tried before Mr. Justice Wright and a special jury of the City of Belfast, at the July Assizes, 1908, when the above matters were proved or admitted, and further evidence given not material for the purposes of this report, being mainly directed to the question of the amount of damage sustained.

Counsel for the defendant asked for a direction, contending that the remedy on the covenant was gone by reason of the bankruptcy of the defendant after the breach of covenant had occurred in the lifetime of the original plaintiff, Arthur Cinnamond, who had notice of the bankruptcy, and made no claim on foot of the covenant in that bankruptcy matter. Mr. Justice Wright declined to direct. The jury found for the plaintiff, and assessed the damages at £700, and the Judge gave judgment for the plaintiff for that amount with costs.

Ignatius O'Brien, K.C. (with him Devitt), for the defendant:—

Under section 149 of the Irish Bankrupt and Insolvent Act, 1857, where a composition after bankruptcy is carried, and the adjudication annulled, every creditor of the bankrupt is bound by the composition. The damages recoverable in respect of the breach of covenant at the date of the adjudication were the same as those sought to be recovered in the present action. These damages could have been proved for in the bankruptcy matter, and the claim in respect of them is therefore now barred by the composition: Bankruptcy (Ireland) Amendment Act, 1872, s. 46; Irish Bankrupt and Insolvent Act, 1857, ss. 58, 257; Hardy v. Fothergill(1). A creditor having notice of the proceedings, and failing to put in a claim, must be taken to be in the same position as if he had proved.

Even assuming that some damage has been suffered between the date of the adjudication and the bringing of the present action, and that an action lies for such, the damages recoverable would be only nominal, and the verdict for £700 could not be sustained. The case would be the same as if there had been a second action after a previous one, in which the whole amount of the actual loss up to then had been recovered.

[He referred to In re Kelly(2), Foott v. Benn(3).]

Gordon, K.C., and M'Ilroy, K.C. (with them Hanna), for the plaintiff:—

The breach of covenant here is a continuing breach: Maddock v. Mallett(4). The landlord may select his own time to bring the action. He is not bound to prove in the bankruptcy proceedings. Take the case where the dilapidations were wholly unknown to the landlord; could it be contended that his claim would be barred by the composition? In the case of unliquidated damages for

breach of contract there is no provable debt until the damages have been assessed under section 46 of the Act of 1872. That section was copied from section 153 of the English Bankruptcy Act, 1861, the decisions upon which show that, the section being an enabling section for the benefit of the creditor, he is not bound to come in under it, and that unless and until his claim has been assessed under the section there is no debt provable in bankruptcy, and the creditor is not therefore barred by the composition deed: In re Penton(1); Sharland v. Spence(2); Robertson v. Goss(3); Ex parte Wilmot(4); Williams on Bankruptcy (9th ed.), p. 129. Hardy v. Fothergill(5) is not in point. The claim there was by the lessees against the assignees of the lease upon an indemnity given by the assignees. The case has no application as between lessor and lessee of an existing lease: In re New Oriental Bank Corporation (No. 2)(6). Moreover, the case was decided under section 31 of the English Bankruptcy Act, 1869 (32 & 33 Vict. c. 71), by which all liabilities, including all possible claims in respect of breach of contract, whether present, future, certain, or contingent, were declared to be debts provable in bankruptcy. This section differs altogether from section 46 of the Act of 1872, by which the demand is not provable until assessed.

Cur. adv. vult.

Ignatius O'Brien, K.C., in reply.

Lord O'Brien, L.C.J.:—

Arthur Cinnamond, the original plaintiff in this case, demised to the defendant, by way of fee-farm grant, certain houses and premises; and the fee-farm grant which was executed contained a covenant on the part of the defendant to repair and keep in repair. The defendant did not fulfil his covenant, and the plaintiff brought an action for its breach against the defendant. The damages were assessed by the jury who heard the case at £700. The defendant, some considerable time before the trial, namely, on the 15th December, 1905, had become bankrupt,

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