1. Land sale contracts — Vendor's right to cancel via notice — Counterclaim for declaratory relief regarding contract rescission. (Para 3 , 4 )
Back
Next 
1948 Supreme(SC) 24
Privy Council At Palestine
Sir Madhavan Nair, Lord Morton of Henryton, Justice Lord Simonds, JJ.
Joseph Klein and others -Appellant
Versus
Eliahu (Leo) Heiman and others -Resopndent
Privy Council Appeal No. 23 of 1946
Decided On : 08-03-1948
Advocates Appeared:
Vandyk, H. Oppenheimer Nathan, Kaufman and Co., Dingle Foot (for Phineas Quass), Patrick Devlin, Charles Lawson, C. Gallop
Vandyk, H. Oppenheimer Nathan, Kaufman and Co., Dingle Foot (for Phineas Quass), Patrick Devlin, Charles Lawson, C. Gallop
Declaratory relief is discretionary and should not be granted where it provides no practical benefit to the claimant, specifically when the claimant must still pursue separate legal action for the recovery of possession of property to realize their rights.
Headnote:(A) Civil Procedure Rules, 1938 - Rule 52 - Declaratory relief - Discretionary power of the court to grant a declaration - Inappropriateness of granting declaratory relief when the party must proceed to take action for recovery of possession to gain any actual benefit - A claim for declaratory relief only is not appropriate where the party is not in possession of the land and the declaration alone provides no practical remedy. (Para 8)
(B) Appellate jurisdiction - Interference with the discretion of the court of first instance - Reluctance to interfere unless the lower court failed to give proper weight to considerations which should be decisive in determining whether to grant discretionary relief. (Paras 7, 8)
Facts of the case:
Vendors and purchasers entered into contracts for the sale of land with provisions allowing the vendors to cancel the contracts upon notice. The vendors served a notice of cancellation but took no further steps to recover possession. The purchasers subsequently filed a suit for accounts. The vendors filed a counterclaim seeking a declaration that the contracts were cancelled. The trial court granted the declaration, but the appellate court reversed this decision, finding it inappropriate to grant such relief in the context of a counterclaim for accounts and noting a lack of sufficient factual findings to support the rescission.
Findings of Court:
The court found that the appellate court correctly exercised its judgment regarding the discretionary power to grant declaratory relief. It was determined that the vendors gained nothing from a declaration alone as they would still need to initiate separate proceedings for the recovery of possession of the land from the purchasers or their tenants.
Issues: Whether the appellate court was correct in deciding that a declaratory order should not have been made by the trial court in the given circumstances.
Ratio Decidendi: The granting of declaratory relief is a discretionary power. It is singularly inappropriate to grant declaratory relief only in cases where the party seeking it gains no practical advantage unless they proceed to take necessary action for the recovery of possession of the property. (Para 8)
Result: Appeal dismissed.
Legal Category Hierarchy
Table of Contents
2. Whether the contracts were lawfully rescinded by notice and whether a declaratory order was the appropriate remedy for the counterclaim. (Para 4 , 5 )
3. How should an appellate court treat the discretionary power of a lower court to grant declaratory relief?
While appellate courts are generally reluctant to interfere with the discretion of a court of first instance, they may do so if the lower court failed to give proper weight to decisive considerations. (Para 7 )
Lord Simonds.-
This appeal, which is brought from the judgment of the Supreme Court of Palestine reversing the judgment of the District Court of Tel Aviv, raises a number of questions, upon only one of which their Lordships think it necessary to express an opinion. They desire at the outset to emphasise this point in order to preclude the possibility of a plea of res judicata being raised by reason of their decision in respect of any other matter which may be in dispute between the parties.
[2] The single question upon which their Lordships propose to express their views is whether the learned Judges of the Supreme Court were right in deciding that the case was not one in which a declaratory order should have been made by the District Court.
[3] For the purpose of determining this question, they can state the relevant facts very shortly. The appellants as vendors and the respondents as purchasers on 3rd October 1937, entered into one or more contracts for the sale and purchase of certain land at Tel Aviv, upon which shops were to be erected by the appellants. Each contract contained a number of elaborate provisions which it is unnecessary to state and in particular by cl. 22 provided that in a certain event the appellants (the vendors) should be entitled to cancel the contracts by a preliminary notice of seven days and that the purchasers should pay the damages stipulated and that they should likewise immediately vacate the shop and deliver it back to the vendors in the same good condition as they received it.
[4] The appellants, claiming that in the events that had happened they were entitled to avail themselves of the provisions of cl. 22, purported on 20th January 1942, to serve upon the respondents a notice under that clause. No steps appear to have been taken to pursue whatever rights the notice gave to the appellants: by the respondents it was disregarded. But on 17th August 1942, the respondents commenced a suit in the District Court of Tel Aviv against the appellants alleging that they were entitled and were ready and willing to pay the balances due under the contracts but professing that they did not know how much was due from them and claiming that an account should be taken. The appellants not only defended this suit but put in the counterclaims which have given rise to this appeal. It is perhaps desirable to quote one of them in full. It ran thus:
"By way of counterclaim defendant alleges :
6. The plaintiffs committed a breach of the contracts between the parties and in accordance with what has been stipulated in the contracts defendants are entitled to cancel the contracts and this they did.
7. Defendant by way of counterclaim prays that judgment be given against plaintiffs (A) declaring that the contracts made between the parties are cancelled (B) ordering payment of costs and advocates fees."
[5] To this counterclaim the respondents put in their defence, pleading (inter alia) that the counterclaim did not reveal the nature of the breach and alternatively that no breach of the contracts had been committed by them.
[6] Upon these pleadings, inadequate as they appear, the parties proceeded to trial and certain issues were framed. It is unnecessary to say more than that the learned Judges of the District Court dismissed the action holding that "it had no legal or factual basis at all." For the purpose of disposing of the action, it was therefore not necessary for them to consider whether, as the appellants contended, the contracts had been rescinded by the notice already mentioned. But they proceeded to consider the counterclaim and upon it made a declaration that the contracts between the parties had been rescinded.
[7] The respondents did not appeal from the order so far as it dismissed their suit, but they did appeal to the Supreme Court from the order made on the counterclaim. The Supreme Court allowed the appeal. The learned Judges of that Court thought it sufficient to say that, while an appellate Court is always reluct
