Furphy v Nixon [1925] HCA 34

Furphy v Nixon [1925] HCA 34 - HCA 1925 case summary — Zoe

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summons asking, in effect, for the determination of the amount properly payable under the contract and for an order that upon payment of such amount the appellants should transfer the lands in question to the respondents. The summons was served on Ist September, the time limited for appearance being sixteen days after service. On 12th September, before the time for appearance had expired and before any appearance had been entered, the respondents paid to the appellants the sum demanded by them under threat of cancellation of the contract in the event of non-payment on or before that day. On 17th September the appellants entered an appearance to the summons, which was subsequently amended by the insertion of a claim for repayment of the amount which should be found to have been overpaid by the respondents to the appellants. The alleged overpayments consisted of (a) a sum of £32 which the respondents claimed as an allowance in respect of certain land excluded from the transfer, (b) a sum representing interest computed on interest, and (c) a sum represent- ing interest on an amount equal to the amount of certain balances due to the Crown on the land transferred. It was admitted that the respondents were entitled to credit for the sum of £32 mentioned in (a) and that the appellants were not entitled under the contract to charge interest on interest, but the appellants contested the tight of the respondents to reopen the transaction of 12th September or to recover any part of the money paid on that day, on the ground that the payment was a voluntary payment made in order to close the transaction. The appellants also disputed the construction put on the contract by the respondents. On the hearing of the summons Long Innes J. held (1) that the payment made on 12th September was not a voluntary payment, (2) that the Court of Equity had jurisdiction to grant the relief claimed in the amended summons, and (3) that on the true construction of the contract of sale the contention of the respondents as to the amount on which interest should be computed was correct, and made an order which, so far as is material, is as follows : - {The portion of the order which is above quoted was set out]. From this order the present appeal is brought.

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by them to secure payment of the balance outstanding. By clause 19 of the contract the purchasers were given the right to elect to take a transfer of the land as conditionally purchased land unless the vendors should have been compelled by their vendor to make the land freehold or the land should have become freehold before the purchasers made their election, and it was provided that in the event of this right being exercised the vendors should allow the amount owing to the Crown to make the land freehold together with certain charges to be deducted forthwith from the purchase- -money. In July 1914 the purchasers exercised their right of election to take a transfer of the land as conditionally purchased land, and proposed that the land should be transferred to them in that condition and a mortgage given to secure the balance of purchase-money in accordance with clause 8 of the contract. The vendors professed their inability to transfer the land at that time, and in fact it was not transferred until September 1924. If a transfer had been given when demanded in 1914, it is clear that under clause 19 of the contract the purchase-money of the land would have been less than £8,112 15s. by the amount then owing to the Crown; and the amount secured by the mortgage for which the contract provided would have been, not £8,112 15s., but the lesser sum. [t follows that interest would have been payable under the mortgage on the lesser sum and not on £8,112 15s. The appellants now claim that, although the land was eventually transferred as conditionally purchased land and the purchase- money or price was accordingly reduced by deducting from the price on the basis of freehold the amount owing to the Crown, they are nevertheless entitled to charge the respondents with interest on the total sum of £8,112 15s. or on so much thereof as should from time to time remain unpaid. They base this claim on the agreement on the part of the purchasers to " pay interest on so much of the purchase-money as shall from time to time remain unpaid." It is argued for them that the expression purchase-money in this contract means the sum of £8,112 15s. and nothing else, and that therefore the purchasers have expressly agreed to pay the interest which was claimed and exacted. I am unable to take

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possibility, short of torturing the language of the contract, can amount of £1,823, owing to the Crown on Ist August 1913, be ma equivalent to the reduced amount at a later date when the ele might take place. That would make the vendors suffer twice the same amount - once by payment to the Crown, and next diminishing the price they stipulated for. It was attempted to support it in two ways. One was by reference to clause 23. clause, however, seems to me to be plainly confined to compelling the purchasers after transfer to agree to take up whatever responsi bility the vendors had to make future payments to the On If it were not so, the purchasers would be compellable to pay Crown moneys in any event, that is, whether they had or had not elected to take the land as a conditional purchase. There is no provision for deducting that sum from the full freehold price unless there is such an election. Practically such a construction would depriving the purchasers of their right to elect, and would cut do clause 17 and other clauses. It is really an impossible constructio The other way in which the amount of £1,823 was sought to be justified was by reading "the purchase-money " in some places a " gross purchase-money " and in others as "' net purchase-mone and by giving a sort of general equivalent effect to the bargain irrespective of its actual language. Needless to say, that method construction would be disastrous to all security of contracts. Teece invited the Court to disregard the actual language of contract on the ground that it was not "artistic." I am unabl to find in that, even if the observation were well founded, a suffice reason for practically making a new bargain for the parties. | think, however, I perceive what was at the root of this argument Some written bargains, and it at times happens in hurried mercant transactions, are framed in an elliptical or conventional form, s that one has to try and read them as they would be expressed w the ellipsis supplied or in ordinary language. But this agreement is of the most formal character, there is nothing elliptical 0

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written in extenso and apply them faithfully to the circumstances that have arisen. It is not out of place to recall the words of Lord Eldon L.C. in Browne vy. Warner (1): "The Court cannot proceed safely in any other way than by acting upon the written contracts of men, as they are framed." Clause 17 of the contract entitled the purchasers to their transfer - '' wpon payment of the full amount of the purchase-money and interest." With that, however, must be read the qualification in their favour created by clause 19, whereby it is declared that " if transferred as conditional purchases the vendors will allow the amount owing to the Crown to make said land freehold together with deed fee stamp duty and assurance fee to the Crown and such amounts shall be deducted forthwith from the purchase-money." The contest centres round the question: What is meant by "the purchase-money'"?? It was admitted, and necessarily so, by Mr. Teece, that in clause 19 the expression " the purchase-money " means the full sum of £8,112 15s., that is, the price of the land as freehold. Obviously in clause 19 "the purchase-money " is the minuend, the " amounts " composed of the moneys owing to the Crown, plus fees and duties, are the subtrahend, and the difference is the agreed final amount payable 'on transfer. But the difference is ex necessitate not " the purchase- money " within the meaning of clause 19, where, if anywhere in the contract, one would expect it to be so termed. How, then, can it be so in clause 17, which assumes " the full amount" to be paid, which constitutes the minuend in clause 9? So that, apart from certain words found in clause 17 itself, it is clear there is no right to a transfer except upon payment of "the full amount," that is, £8,112 15s., or of that amount after allowing the agreed deductions. The saving words referred to in clause 17 are these: "if such transfer shall not have been already made." Those words send us again to the contract to see in what circumstances a transfer is contemplated prior to either the full payment or payment of that _ amount less the stipulated deductions. We find an answer to that in clauses 4 and 8. Logically, for present purposes, clause 8 ould be read first. It says that "at the time of or as soon as

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title the vendors will execute a transfer of the property sold to th purchasers but subject nevertheless to the purchasers execut and handing over to the vendors . . . a mortgage over lands sold in terms of condition 4 thereof." I may stop there fo a moment to emphasize the point that there is no right to a transfe prior to Ist February 1917, when the balance of the purchase-mor falls due, except upon the simultaneous giving of a mortgage to secure the balance of the purchase-money with interest. involves, not only the complete acceptance of title, but also the absence of all conveyancing objections and, in short, a perfect a unqualified admission of the liability to pay the balance of tl purchase-money and interest, either in full, if the land is taken freehold, or after allowance of the two stipulated amounts un clause 19. It follows that, so long as the purchasers are unw to give that mortgage and thereby finalize their liability under the contract, they cannot claim a right to the interim transf but must wait until Ist February 1917. And further, clause 8 expressly requires the purchasers to do what it is the ordi practice to do, namely, " prepare the necessary transfer and sub the same to the vendors for execution." This express pro' has special importance in this contract. The purchasers, havi to elect - if they have then the right to elect - in which form the will take the transfer and give the mortgage, must frame tht transfer accordingly. The provisions of the contract may, therefore for present purposes be thus stated : - (1) The land is sold as freehold for £8,112 15s., as purchase-money, payable normally as to 5 per cent by deposit; as to 5 per cent on Ist February 1914, with 44 per cent interest; as to 5 per cent on Ist February 1915, with 4} per cent interest ; as to 5 per cent on Ist February 1916, with 44 per ce interest ; and the balance with interest at 44 per cent on Ist February 1917. That last-mentioned date is - subject to a relaxation as to

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can give, and to give a mortgage irrevocably binding the purchasers to pay whatever balance may be due to the vendors in accordance with the election. (5) The amount deductible in respect of Crown liabilities is, on the true construction of the contract, the amount owing to the Crown at the time of transfer. The election, say on Ist February 1917, cannot entitle the purchaser to a deduction of the amount due on Ist August 1913. (6) Refusal to accept such transfer or give that mortgage on the ground of conveyancing objections might be justified and be consistent with an action for damages, but cannot alter the conditions of the contract if simple performance is relied onas in a Court of law. The fact that the purchasers did not prepare and tender a transfer is a strong piece of evidence that they were not ready and willing to accept it and to give the necessary mortgage. It is not at all an end of the matter, as I have said, that the vendors were not ready and willing to execute it at a given date unless the purchasers chose to sue for damages for breach, and even then they would have to prove their readiness and willingness to perform their part, which includes the non-objection as to conveyance as well as title, and also readiness and willingness to enter into the stipulated mortgage. But that is foreign to the question under the summons. Now, on what date were the purchasers so ready and willing, and on what date did they so inform the vendors? The onus is on them. Particularly is that so, in view of their non-presentation of any transfer under clause 8. The learned primary Judge has rightly disregarded for this purpose all communications earlier than 1st July 1914. But he has taken the letters of that date and of 30th July 1914 as constituting an effective election. But, with great respect, that is an error. The letter of 30th July expressly makes eighteen requisitions on title. 'It is, on the face of it, a refusal to accept a transfer instanter and give the required mortgage. I am not concerned whether this refusal was owing to the default of the vendors. If not, the purchasers cannot complain at all. If it was, then the purchasers can complain, but only by relying on a breach of contract and obtaining either damages at law or some adjustment by a Court

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indefiniteness is, to say the least, consistent with the purch: money being reduced from the primary amount (on the basis of transferring freehold) of £8,112 15s., and with a general adjustment of the accounts on Ist February 1917. The purchasers were at liberty on any half-yearly day fixed for payment of interest, a on three months' notice, to pay to the vendor any part of principal money not less than £200 or a multiple thereof. Under clause 3 the purchasers were to pay interest on so much of " purchase-money " as should for the time being remain unpaid at the rate of 44 per cent as from Ist August 1913, the first payment to be made on Ist February 1914. This is the clause that creates and defines the obligation of the purchasers to pay interest. It is urged for the defendants that the purchasers are bound by clause 3 to pay interest on all the £8,112 15s., so far as unpaid, to vendors from time to time ; even if (under clause 19) the purcha money be reduced in the meantime. If such is the clear, necessary meaning of the clause, we must give effect to it; but if we find that there is an alternative meaning, of which the words are equally capable, and which does not lead to a result so unjust and so abs , we should accept it. The plaintiffs contend that the clause merely binds them to pay interest on the purchase-money whatever it may turn out to be - on the £8,112 15s. if there be no deduction from the primary purchase-money (under clause 19), on the reduced sum if there be a deduction. Under the primary arrangement for sale on the basis of freehold, there was to be a transfer - as I read the contract, a transfer in fee simple, all Crown instalments paid by the vendors - to the purchasers, on payment of the deposit and acceptance of the title; and the purchasers were to execute a mortgage to secure the balance of the purchase-money (clauses 4, 8). According to clause 9, all the conditions had been fulfilled as to these lands conditionally purchased except payment of the balance due to the Crown. If error were found in the area "the necessary adjustment of purchase-money shall be made at the time when the last instalment becomes due"

that is to say, on Ist February 1917 when the " balance purchase money" becomes due - the time when figures can be adjusted.

At a glance

Court

Decision date

Before

Source

Judgment (95 paragraphs)