Australian Gypsum Limited v Hume Steel Limited [1930] HCA 38

Australian Gypsum Limited v Hume Steel Limited [1930] HCA 38 - HCA 1930 case summary — Zoe

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was to occupy these premises until it completed an existing contract - for the supply of steel pipes to the South Australian Government and future contracts of the same nature which it might thereafter obtain. Upon completing such contracts it was to sell its interest in the whole _ of the assets purchased, including the premises in question, to the Gypsum Company. Acting in pursuance of this joint arrangement the respondent made a contract dated 16th April 1926 with the owner of the undertaking by which the respondent became the purchaser thereof. In the events which happened the purchase- - money became payable on 12th June 1926. On 14th May 1926 the Adelaide solicitor of the Gypsum Company, who had already - discussed the matter with the respondent's solicitor, handed him a - memorandum of a new plan for carrying it through. This plan 5 was to form a new company to acquire from the respondent the undertaking which it had contracted to buy at the price it had agreed to give. The new company was to let to the respondent the premises - required on the same terms as then existed between the Gypsum Company and the respondent. The respondent assented to this proposal, and the new company was incorporated on 11th June 1926. This new company was the appellant the Australian Plaster Co. Ltd. (hereinafter also called "the Plaster Company "). The respondent was represented by a solicitor in Adelaide, and the appellants by solicitors in Sydney and in Adelaide. These solicitors set about carrying into effect the arrangement between their respective clients. The appellants' Sydney solicitors sent to their Adelaide solicitors the first draft of the various necessary documents, including an agreement for lease of the premises previously referred to. This agreement for lease included a provision for a term of four years or the period occupied by the respondent in performing - its Government contracts, whichever should be the shorter. After ; perusing the draft, and acting on instructions, the respondent's _ solicitor told the appellants' Adelaide solicitors that the limitation of four years was new, and that the respondent wanted a proviso added that if it were in the middle of a contract at the expiration - of four years, it should be entitled to remain in possession until - the completion of the contract. A note of the amendments required in the draft was dictated by the appellants' Adelaide solicitors and

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cash at the date when the lease terminated and the lessee (the respondent) delivered possession of the premises to the lessor. The plaintiff, the respondent, therefore considered the Australian Gypsum Ltd. a proper party to the action. A brief description is necessary of the transaction of which these instruments formed a part. On 23rd February 1926 the respondent and the appellant the Australian Gypsum Ltd. made a contract by which they agreed between themselves that they should acquire on their joint account the assets of an undertaking which included the premises afterwards demised to the respondent. The price was not to exceed £20,000, of which the Australian Gypsum Ltd. was to contribute £12,500 and the respondent £7,500 in the first instance. The respondent was to occupy such premises until it completed its Government contracts, then existing or thereafter made. Upon completing them, it was to sell its interests in the whole of the assets purchased, including such premises, to the Australian Gypsum Ltd. for the sum of £7,500 "less a sum calculated at the rate of £1,000 per annum from the date of the contract of purchase to be entered into with" the owner of tlie undertaking " to the date of " the respondent "giving up possession in accordance with this agreement which shall be the date fixed for the payment of the purchase-money." Acting in pursuance of this joint arrangement, the respondent made a contract dated 16th April 1926 with the owner of the undertaking by which the respondent became the purchaser at the price of £20,000. The date of completion under this contract depended upon contingent events which so fell out that the purchase-money became payable on 12th June 1926. On 14th May the Adelaide solicitor of the Australian Gypsum Ltd., who had already discussed the transaction with the respondent's solicitor, handed to him a memorandum of a new plan for carrying it through. The plan was to form a new company to acquire from or through the respondent the undertaking which it had contracted to buy at the price it had contracted to give. The new company was to give a lease to the respondent of the premises it required " on the same terms as now exist between the Australian Gypsum Limited and " the respondent. Although the document handed over did not expressly say so, the

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most material facts. The plan or scheme upon which they were proceeding had been propounded as an alternative by the appellant 4 the Australian Gypsum Ltd. and although the respondent had assented to, or approved of, the proposal, it is clear that all parties ; treated it as a transaction which must be worked out and arranged - among their solicitors, and did not regard themselves as having : come to a definite agreement which needed no more than formal statement. When the Sydney solicitor for the appellants introduced - in the first draft of the agreement for a lease a maximum term of four years, the respondent regarded the length of the term as a _ matter open for discussion and negotiation. Whether the appellants' - solicitor so drafted this provision because of instructions, as one part of the learned Judge's reasons suggests, or upon his own responsibility, must be uncertain in view of his Honor's rejection of Rodgers's testimony. When he redrew the provision with the result that four years became a minimum, we do not know whether he communicated this fact to any officer of the appellant the Australian Plaster Co. Ltd., although it is clear enough that two years later Rodgers either did not know or had forgotten that such an alteration had been made. It is, however, incredible that the draftsman of the provision did not appreciate its effect and intend that four years should be a minimum term. The draftsman was a solicitor acting wholly in the interests of one party to the agreement. He was not charged with the responsibility of reducing to form what already had been agreed to, but his task, at least in the case of this provision, was to express what he considered his client was prepared to agree to. Whether he had a general authority from his client to decide for it what should be adopted as the term of the lease, or whether, as often happens, he knew that his mind upon the subject would determine his client's actions, or whether he acted upon the explicit instructions of his client, or whether he acted without instructions and in a way in which his client would not have approved, the fact remains that the task of settling the provision was committed to him, and the only term which the Australian Plaster Co. Ltd. intended to agree upon was that which he might specify in the document which he settled. He definitely chose to draw the provision upon its behalf in a form which gave

At a glance

Court

Decision date

Before

Source

Judgment (85 paragraphs)

Cited By (8)