Facey v Rawsthorne [1925] HCA 10

Facey v Rawsthorne [1925] HCA 10 - HCA 1925 case summary — Zoe

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Rawsthorne of the costs of the suit; further consideration was reserved with liberty to apply. In March 1924 Facey by deed purported to assign all his estate to Joshua Evans, Clarence Brooke and William Munro Walker as trustees for his creditors, The decree was, on 28th August 1924, registered as a lis pendens inrespect of the Burwood Markets. Cross-appeals to the High Court from that decree having been instituted by Rawsthorne and Facey, an agreement was, in July 1924, arrived at between them that the appeals should be withdrawn on certain terms, among which were that the Burwood Markets should be transferred to Rawsthorne and that Eulandool should be transferred to Facey. Certain disputes having arisen as to the ability of Facey to give a good title in respect of the Burwood Markets, an application was made by Rawsthorne to the Master in Equity, with the consent of Facey, for an inquiry as to Facey's title to that property, such inquiry being limited to what had taken place since the decree. On 11th November 1924 the Master certified that on that date a good title could not be made by Facey to Rawsthorne, on the grounds (inter alia) that Rawsthorne had notice that Facey had committed an act of bankruptcy in that on or before 23rd August 1924 he had failed to comply with the requirements of a bankruptcy notice served on him on 16th August 1924 at the instance of Herbert Harvey Tompson, and that Facey's title was defeasible upon any sequestration order being made against him which was grounded upon that act of bankruptcy. Facey then applied on summons to Harvey J. to discharge or vary the certificate of the Master in Equity, and Rawsthorne by cross-summons applied that if the Master's certificate were upheld a decree should be made declaring that he was entitled to be discharged from both contracts, for an order dismissing the suit and for certain consequential relief. The summons came on for hearing on 11th December 1924, when the learned Judge granted leave for the trustees of the deed of assignment of March 1924 to be added as plaintifis, and they were accordingly added. On 24th December 1924 Harvey J. delivered his judgment, i

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notes to be handed over to-day as follows : £1,000 drawn in favour _ of E. H. Ward, payable Ist November 1924 ; £500 drawn in favour _ of Dalgety & Co. Ltd., payable Ist March 1925; £1,000 drawn in favour of Dalgety & Co. Ltd., payable 1st November 1925; £500 drawn in favour of Dalgety & Co. Ltd., payable Ist March 1926. An arbitrator to be mutually agreed upon has to be appointed to decide on the amount Mr. Rawsthorne should pay for the occupation rental of Eulandool and a bill payable not later than Ist January next to be given for any moneys found to be due after the set off of the rents of the Burwood Markets, in all other respects judgment to stand, both appeals to be withdrawn. An undertaking to be given that Mr. Rawsthorne will provide security for the payment of the above bills. All costs up to to-day are included in the above settlement but, should it be necessary to incur further costs, these will have to be met by Mr. Rawsthorne." On the same day respondent's solicitor wrote in reply as follows : - ' Your letter of even date herewith to hand, and my client agrees to the terms of settlement of the suits set out therein, provided that with F "regard to the security referred to he will only undertake to give a second mortgage over certain town property he holds in Forbes, also that the £3,000 represented by the promissory notes is in full settlement of all moneys payable under the decree or otherwise except any sum that may be found to be due on setting off rents and profits from Markets against occupation rent to be agreed upon for Eulandool, and making the usual adjustments under the contracts on settlement, such adjustments to be made up to this date. Of course the promissory notes are handed over subject to your client giving mine a good title to the Markets. This now disposes of both suits, and the appeals are to be withdrawn and each party is to sign any necessary consent or other document to enable such appeals to be withdrawn without costs and to give effect to the settlement. T enclose herewith the four promissory notes representing the £3,000 and shall be glad of your acknowledgement of the same." On

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acknowledging receipt of his letter of the 7th and of the promissory notes enclosed in it, and confirming a conversation in which the parties had agreed on the arbitrator who was to decide the amount of the occupation rent of Eulandool. On 18th July respondent's solicitor wrote to appellant's solicitor requesting an abstract of the deed of assignment executed by appellant, asking whether the trustee of the assigned estate intended to take a transfer of Eulandool, and saying that, as the respondent was anxious to get the matter finalized, he would be glad of a reply without delay. On 31st July appellant's solicitor wrote to respondents solicitor a letter, the material portion of which is as follows : - * I have gone into this matter exhaustively with my clients and also with counsel, and it appears quite unnecessary for the persons mentioned as trustees in the deed of assignment, which I hold in escrow (this document not having been signed by several creditors), to clog the title by this document. Therefore, the transfer of Eulandool will be made to Facey direct, and Facey will convey the Markets to Joseph Edward Rawsthorne. Kindly submit draft conveyance of Burwood Markets and also let me have particulars of title of the town property at Forbes over which Mr. Rawsthorne has to provide security for the payment of the bills." On 8th August appellant's solicitor, having had no reply to his letter of 31st July, threatened to move to strike out the respondent's appeal to this Court for want of prosecution, and, on the same day respondent's solicitor replied to the letters of 31st July and 8th August in the following terms : - " What is bothering me in the matter is the question of title. You will remember that you mentioned to the Bankruptcy Court some months ago that Facey had assigned his estate, and you also wrote me confirming this and giving me the names of the trustees. The whole of the negotiations for settlement have been with you and Messrs. Minter, Simpson & Co. on behalf of the trustees, and the trustees finally fixed the terms of settlement and received the promissory notes. Now you say the trustees are not concerned with the title and the deed was only held in escrow, but I am of the opinion, in view of the non-registration of such deed and the way the trustees have taken charge of and acted in the matter, that there is very grave doubt whether Facey can give a

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performance was made sixteen months after the first decision. In 1845 the same learned Judge, in Fraser v. Wood (1), dismissed a bill where the Master had reported against the title. But he said (2):

The question is, whether this is one of those cases in which the Court has given time to the plaintiff to set the matter right. I did so in Sidebotham v. Barrington (3), but each case must depend on its peculiar circumstances. I must see that the parties have not been in grievous error ; and I ought also to see some probable chance of the difficulty being got over ina short time. I do not see either." The Master of the Rolls (4) had stated the issue before him in these terms : - *' It is clear that there is at present no title : the only question is, whether the vendors are entitled to any further inquiry." As against those authorities, there was cited Lowes v. Lush (5). There Sir William Grant MR. refused to force on a purchaser the title of a vendor who had committed an act of bankruptcy, and dismissed the bill. But it does not appear what the nature of the purchase was or whether time was either by stipulation or otherwise of the essence of the contract. The only point contested was whether there could be a reference as to any debt for which a commission might issue. In the immediately succeeding case in the report (Franklin v. Lord Brownlow (6)) the bill was also dismissed. The report is fuller. It appears that a day was fixed for completion, namely, 5th April 1804. The vendor committed an act of bankruptey and the learned Judge would not decree the purchaser to accept the title. But Sir William Grant made some observations which are important. He says (7) that in Lowes v. Lush "there was no defect in the title, properly speaking: but my opinion was, that the party could not give the estate; as ultimately it might not be his, but the estate of the assignees. There is just the same inability to give a secure title to the money, as there was in that instance to give a secure title to the land." The point there, which is the second important point of this appeal, is that the objection in such a case is, not absence of title owing to the necessity of

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ut absence of indefeasible title in the vendor. The title cannot be abeyance, it cannot be in a non-existent person by virtue of a -existent event. It is still in the vendor, judging by all events that have so far happened, but there has happened an event and 'if another event occurs which is possible but not certain, then the will, by force of law, be deemed not to be in the vendor now. 'Ifhe conveys now and the possible events do not occur, the grantee s a perfect title, which could not be unless the grantee now has the That is the force of Sir William Grant's language. He missed the bill, but the purchaser was entitled in equity to a conveyance on a day then past, fixed as the day of completion, and a later day was actually fixed as the day of execution of the 3 conveyances. I am unable to regard Lowes v. Lush (2) in 1808 as an authority in conflict with, or sufficient to override, the much later eases I have mentioned which declare the Court's refusal in cases of merely insecure title to apply as rigid a rule as in cases of really "defective title. The true effect of the relevant cases is, in my opinion, correctly stated in Williams on Vendor and Purchaser, ed., at p. 520. There, speaking of a purchaser's objection to

title on the ground of the vendor's act of bankruptcy, the learned author says: " And it is submitted that if the purchaser make this _ objection and at the time fixed for completion the vendor still remain unable to make a valid conveyance, either alone or with the concurrence of the trustee under an adjudication of bankruptcy against him, the purchaser, not being in default with regard to the performance of his part of the contract, will be entitled to treat the contract as broken." This is in accord with what is stated n _ Halsbury's Laws of England, vol. xxv., p. 383, sec. 649, par. 2. Now, what day, having regard to the terms of the decree as modified by the subsequent agreement of the parties, could Rawsthorne Tequire to be observed as the day of completion? None, so far as IT can see, or could be suggested at the Bar. There was nothing, and there is still nothing, in view of the title - though defeasible - in the vendor, to oppose to the just and elastic rule expressed by

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cannot help thinking that any confusion which has arisen is due to both parties treating transactions since the decree - the assignment creditors, and the plaintiff's other act of bankruptey - as if they ented, or might prevent, the purchaser (the respondent here) securing eventually all his rights under the decree. Unless 4y did so prevent the purchaser, I cannot conceive how this order could be made, summarily and absolutely depriving the plaintiff of the rights given him by the decree for specific performance. 'There were two contracts, mutually dependent, made on Ist nuary 1923 - a contract of the plaintiff Facey to sell to the defendant Rawsthorne Burwood Markets, and a contract of the defendant to sell to the plaintiff Eulandool. The contracts fixed the e for completion - mutual conveyances, and final settlement of payments - for about 15th January 1923. The defendant d to complete ; he admits frankly that he was and is unwilling to fpamplete. In May 1923 the plaintiff brought an action for the performance of both contracts. On 26th February 1924 Supreme Court made a decree for specific performance. On March following the plaintiff assigned his estate for the benefit his creditors ; but it does not appear whether or not this act was to the refusal of the defendant to complete the contracts. On d August the plaintiff committed an act of bankruptcy by failing to comply with a bankruptcy notice ; and if the act of bankruptey followed by a petition for sequestration based thereon within ix months, and if the petition were successful, the title of the official would relate back to 23rd August. On 28th August plaintiff's counsel consented before the Master to an inquiry as to e plaintiff's title, but limited to facts since the decree. There had n no inquiry as to title directed by the decree, as neither party for it. I confess that I have never known of an inquiry as to limited to facts since a decree ; for the very good reason that ly all rights created since a decree are subject to the rights nd duties established by the decree. The mere fact that there was pending suit would ordinarily prevent a title from being acquired dealings during the suit, such as would prejudice the title of the ite party. Lord Hardwicke gravely based this doctrine on the

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and the decree under the circumstances. But this is just what is not clear. There is no rule established that if the vendor cannot make a title at the date of the report the purchaser had a right to be discharged ; and " where the Master's report is, that the vendor, getting in a term, or getting administration, &c., will have a title, the Court will put him under terms to procure that speedily " (per Eldon L.C. in Coffin v. Cooper (1) ). In the case of Byston vy. Simonds (2) a person contracted to sell an estate as to which he had actually 'no title whatever, because one of those under whom he claimed had been an alien. Pending the suit, the plaintiff vendor obtained a grant of the estate from the Crown ; and specific performance was enforced. The Vice-Chancellor, Knight Bruce, pointed out that the title was good subject to the Crown's power to defeat it; that the grant merely relieved from this defeasibility - was not a new title within the rule; and that the case fell within the established rule which allows a vendor to make good the title before the Master. In Paton v. Rogers (3) the Master reported that a good title could be made except as to the dower to which a widow was entitled, and that she refused to join in the conveyance to the purchaser. Afterwards the widow expressed herself as ready to release her dower and to join in the conveyance; the defendant urged that as no good title could be made at the time of the report specific performance could not be completed: but the Vice-Chancellor said the vendor 'was in time to cure the objection. In Sidebotham v. Barrington (4) there was an objection to title, and the Master rightly reported that the vendor could not make title. It was a matter of title and not of mere conveyance - an assignee in insolvency had the title ; but on its being represented at the hearing that the assignee would join in the conveyance and within a limited time, the Master of the Rolls referred it to the Master to inquire whether with the concurrence of the assignee in insolvency the vendors could make a good title ; and the Master having reported that the vendors could, an order 'was made in favour of the vendors for specific performance (see (1) (1807) 14 Ves. 205. '(4) (1841) 3 Beav. 524; 4 Beav. 110;

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Judgment (123 paragraphs)

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