Gall v Mitchell [1924] HCA 48

hiatal pastoral property for a lump sum, About one-fifth in area of the prop Nov. 19, 20, is ae i Pg was of poor quality and belonged to the respondent's children, who did concur in the sale and would not allow the respondent to make title to ree portion. 'The respondent had told the appellants that he would nob alll Starke JJ. good country without selling his bad country also. 'The appellants broug

an action for specific performance of the contract or of so much of it a8 respondent was competent to perform, with compensation in respect of so m of it as he was incapable of performing.

Held, that specific performance with compensation in respect of the land which the respondent could not make title should be decreed - neither the that the respondent would not have sold his land unless he thought that was in a position to sell his children's land, nor that the children's land not be as profitably worked by itself as in conjunction with the respond land, constituting a hardship which should prevent the Court from its discretion to grant such relief.

Decision of the Supreme Court of New South Wales (Harvey J.) : Mitchell, (1924) 24 S.R. (N.S.W.) 503, reversed.

Apprat from the Supreme Court of New South Wales to the High H- ©. or A.

A suit was brought in the Supreme Court in its equitable jurisdiction by Gordon Logan Gall, Oswald Chapman Gall, Ross Percival Gall, Rhoda Mary Gall, Euphemia Isabel Williamson and Mary Ann Moxham, trading as the Tycannah Pastoral Co., against Hugh Fraser Mitchell, in which by their statement of claim the plaintifis alleged (in substance) that on 3rd May 1923 it was agreed that the defendant should sell and the plaintiffs purchase a certain pastoral property of about 8,700 acres together with 5,000 sheep depasturing on the same for a lump sum of £32,750; that after the making of the agreement the defendant stated that he was unable to transfer the whole of the property the subject of the agreement as about 1,750 acres thereof was the property, as to 700 acres, of his daughter and, as to 1,050 acres, of his son; and that the plaintiffs offered to accept so much of the property as the defendant was competent to transfer, with compensation for so much thereof as the defendant was unable to transfer, but the defendant neglected and refused to perform the contract in whole or in part with or without compensation.

The plaintifis claimed (so far as is material) a decree for specific performance of the contract or of so much thereof as the defendant was competent to perform, with compensation in respect of so much thereof as he was incapable of performing ; a reference to the Master in Equity to inquire and certify as to the compensation payable in respect of any deficiency in area and as to the damages sustained by the plaintiffs by reason of the neglect and refusal of the defendant to perform the contract; and a decree that the defendant pay to the plaintiffs the amount so certified by the Master. The suit was heard by Harvey J., who refused to grant specific performance on the ground that he was satisfied that the defendant would not have offered to sell his land had he not thought that he was in a position to sell the land which belonged to his son and daughter: Gall v. Mitchell (1).

From that decision the plaintifls now appealed to the High Court.

Loxton K.C. (with him Wickham), for the appellants. Where a vendor includes in land which he contracts to sell some land which belongs to someone else, the Court will grant specific performance of so much of the contract as he is able to perform (Burrow y, Scammell (1); Barker v. Coa (2); Rudd v. Lascelles (3) ). Hardship which will induce the Court to refuse specific performance must amount to injustice (Z7homas v. Dering (4); Goldsbrough, Mort & Co. v. Quinn (5)). Damages may be given under sec. 9 of the Equity Act 1901 (N.S.W.) where all the facts exist which would entitle the plaintiff to specific performance if the Court thought fit in the exercise of its discretion to grant it (Ferguson v. Wilson (6) ).

[Isaacs J. referred to King v. Poggioli (7) ; Hipgrave v. Case (8); Fullers' Theatres Ltd. v. Musgrove (9).]

Innes K.C. (with him Davidson), for the respondent. To compel specific performance in this case would be a great hardship on the - respondent and his family which would justify the Court in refusing that relief (Rudd v. Lascelles (3); Gould v. Kemp (10)). The ; Court will consider the hardship to the children of the respondent, for they are interested in the property contracted to be sold (Thomas vy. Dering (11) ). There was such a mutual mistake that the Court will not grant specific performance with an abatement (Zarl of Durham v. Legard (12); McKenzie v. Hesketh (13) ; Rees v. Marquis - of Bute (14) ). Tt would be a hardship on the respondent to compel him to break up the family home and render the land of his children almost worthless by separating it from the respondent's land with which it is worked. The Court has not jurisdiction under sec. 9 - of the Equity Act 1901 (N.S.W.) to award damages in such a case as this. Where the Court cannot order specific performance of the - whole contract it will not award damages in lieu thereof.

Cur. adv. vult. (1) (1881) 19 Ch. D, 175, at p. 182. (8) (1885) 28 Ch. D. 356, at pp. 359, (2) (1876) 4 Ch. D. 464, at p. 468. 361. (3) (1900) 1 Ch. 81 (9) (1923) 31 C.L.R, 524, at p. 549. (4) (1837) 1 Keen 729. (10) (1834) 2 My. & K. 304, at p. 308. (5) (1910) 10 C.L.R. 674, at pp. 680, (11) (1837) 1 Keen, at p. 743. 687. (12) (1865) 34 Beav. 611.

(6) (1866) L.R. 2 Ch. 77, at pp. 88,91. (13) (1877) 7 Ch. D. 675. i (7) (1922-2: LR. tp. 246. (14) (1916) 2 Ch. 64,

Knox C.J. anp Srarke J. The defendant sold a pastoral property known as Kingstown, containing about 8,700 acres, which had been the home of himself and his family, to the plaintiffs, on terms which were both " fair and just and not productive of " any " hardship." He chose to enter into the contract, representing and agreeing to sell it as his own, but some 1,700 acres of the property, of poor grazing quality, belonged to the defendant's son and daughter, who have not concurred in the sale or allowed their father to make title to the area. The son and daughter wish to keep the old home intact, and their refusal to join in the sale is doubtless dictated by this very natural desire.

The plaintiffs, however, have brought an action for specific performance of the contract, claiming that the defendant specifically perform it, or "'so much thereof as he is competent to perform, with compensation in respect of so much thereof as he is incapable of performing." But the defendant insists that the performance of the contract, with an abatement of purchase-money, would impose too great hardship upon him, and that the Court ought not to make such a decree, but should leave the plaintiffs to their remedy in damages. This view found favour in the Court below, but cannot,

The learned Judge who tried the action was satisfied that the defendant would not have sold the Kingstown property if he had not thought he was in a position to sell the 1,700 acres. The reason was that he desired to sell the whole of the family holding, but all the purchasers knew was that the defendant would not sell his good country without selling his bad country also. But what is the hardship? The defendant will get his purchase-money, less an

abatement for the 1,700 acres, which, on the evidence, is capable of .

easy estimation at a money value. So that he is not prejudiced pecuniarily or in his rights. The children have no rights or interests in their father's land, and are not, therefore, prejudiced in any rights by an order that the father carry out his contract so far as he can and pay compensation for the deficiency. Further, the children retain control of their land and may do as they please with it. The father has no interest in their land, and the fact that the children

H. C. oF A. cannot work or sell their land as profitably by itself as in conjunetio

with his land in no wise prejudices him pecuniarily or in his rig Again, the fact that the children may be unable to work or se their land as profitably by itself as in conjunction with their father land does not interfere with or prejudice any right of theirs. If such a detriment or loss is likely to occur, the children would be well advised to concur in their father's sale, but the father cannot s that it imposes any hardship upon him or affords any reason fo refusing to perform his contract so far as he can.

Specific performance, with abatement in purchase-money as t land in respect of which the defendant cannot make a good title, should be decreed in the ordinary form and with the consequences,

Isaacs J. The respondent, a station owner, by contract in writing sold to the appellants what was described as " property known Kingston, comprising approximately 8,700 acres . . . together with about 5,000 mixed sheep now depasturing on property. The contract of sale was as follows : - '* Kingstown, 3rd May 192

• Walter J. Hawke & Co., Armidale, conjointly Crane & Co., Moree, as agents for H. F. Mitchell, of Kingstown, have this day sol Tycannah Pastoral Company the property known as Kingstown comprising approximately 8,700 acres, freehold, C.P. and C. Parish Baldwin, County Hardinge, together with about 5,000 mixed sheep now depasturing on property, also all plant used in the working of the place, with the exception of horses, waggon harness, saddles, sulky and motor-car, and furniture for a lump su

be taken and given at the end of May 1923, unless vendor agree to accept right of retaining sheep and property until end of Octobe or 15th November when purchaser agrees to take over all land an plant at above price, after deducting the following, namely, 15s. for al] weaners and 25s. per head for grown sheep," &c. ;

'The evidence, including that of the defendant himself, is clear H- ©. oF A. " from first to last the price was arrived at by calculating what is -

_ the defendant's own land at £3 7s. per acre and what is the children's oe

Jand at £2 5s. per acre. The identity of those portions of the property Mrrcrext. sold was carefully preserved, not because of the separateness of jsaaaJ title, but because of the difference in quality. The identity of the sheep was similarly preserved, as was that of the plant. The separate values of each unit was calculated and added together and came to something over £33,000. Then, as the result of the bargaining, the vendor agreed to take off £545 from the total, leaving the contract price £32,750. That reduction did not destroy the internal separateness of the items, which is evident from the last clause quoted. 'The difficulty in this case arises from the reluctance of the two children, both now of age, to transfer, using their strict legal tights as a means of preventing, if they can, the vendor, their father, from fulfilling in its integrity the bargain he made, and thereby furnishing him with what is urged as a valid reason, in the view of a Court of equity, for declining to fulfil his bargain at all and leaving the purchaser to his remedy at law.

As Harvey J. says, there were three grounds put forward as constituting reasons sufficient to justify this, namely, (1) the purchasers' knowledge of the infirmity of title to the 1,700 acres ; (2) the hardship on the son and daughter of losing the benefit of working their inferior land with the father's superior land, and (3) the distinct statement by the vendor to the purchasers that the purchaser must take the whole or none. The learned primary Judge repelled the first and second reasons, but accepted the third. He so decided on the third ground because, as his Honor said (1) : - '* I am satisfied that the defendant would never have offered his 6,705 acres for sale had he not thought that he was in a position to sell the 1,700 acres which belonged to his son and daughter. The reason was not disclosed to the plaintiff at the time. The only inference which Mr. Gall would have drawn from the vendor's language was that he wanted to sell his bad country with the good, whereas the real reason was that he wished to sell the whole of the family holding

in the district." In those circumstances the Court ought not, the

learned Judge considered, to force the vendor to part with property. His Honor considered that specific performance

compensation was essentially a matter of discretion, and that a cas was not made out for the exercise of that discretion. Harvey J further held that, though damages were recoverable at law, he ha no power under sec. 9 of the Equity Act to award any. : The appellants contest both the adverse conclusions; that they contend that they are, notwithstanding the facts found relatiys to the third ground, entitled to specific performance with abateme in respect of the 1,700 acres and, alternatively, are entitled damages in equity. I think their primary contention correct. While it is true that specific performance is always discretionary, it is so in a very well settled sense. The relevant authorities this point are stated in Goldsbrough, Mort & Co. v. Quinn (1) Fullers' Theatres Ltd. v. Musgrove (2). Having regard to the natun of "discretion " as established by those authorities, I am unabl when the statement referred to by the learned primary Judge is properly interpreted, to treat it as a valid ground for exercising th Court's discretion against the appellants. In my opinion, question comes as a matter of principle to the one test of justice injustice in such a case that was stated by Lord Macnaghten i Stewart v. Kennedy (3), namely, whether it would be "highly unreasonable " to require the contract to be specifically perform as it is capable of being specifically performed. Lord Macnagh seems to have had in mind the language about to be quoted. Watson v. Marston (4) Turner L.J. confirms the law as stated Lord Langdale M.R. in Wedgwood v. Adams (5), in the follow words : - " I conceive the doctrine of the Court to be this, that the Court exercises a discretion, in cases of specific performance, a directs a specific performance unless it should be what is call highly unreasonable to do so. What is more or less reasonable, not a thing that you can define, it must depend on the circumstane : of each particular case. The Court, therefore, must always h regard to the circumstances of each case, and see whether it is (1) (1910) 10 C.L.R., at pp. 697-700. (4) (1853) 4 DeG. M. & G. 230, atp

(2) (1923) 31 C.L.R., at pp. 548, 549. 239, 240. (3) (1890) 15 App. Cas. 75, at p. 105. (5) (1843) 6 Beav. 600, at p. 605.

order a specific performance, knowing at the time that if it ins from so doing, a measure of damages may be found and warded in another Court. Though you cannot define what may

| 7 considered unreasonable, by way of general rule, you may very well, in a particular case, come to a balance of inconvenience, and determine the propriety of leaving the plaintiff to his legal remedy ' by recovery of damages." Then, said Turner L.J., for himself : - , "Tf we acceded to the respondent's argument, we should, I think, _ be deviating from the principles on which the Court has acted in ; these cases. The Court does not refuse a specific performance on the arbitrary discretion of a Judge. It must be satisfied that the agreement would not have been entered into if its true effect had been understood." In that case the vendor inadvertently placed herself in a situation by which she incurred a serious risk of direct ulterior loss if the contract were performed. That was held to be

a ground of such unreasonableness as attracted the Court's

• discretion to refuse specific performance. is Here, the learned Judge considered that the vendor would not ~ have offered his own property if he had thought he could not at the same time effectually sell his children's property. I shall assume inability to transfer the son's land. But does this case fall within the principle of Wedgwood v. Adams (1) or Watson v. Marston (2) 2 ~The circumstance upon which the vendor was relieved from "specifically performing his bargain amounts merely to motive, and, being unexpressed to the other party, cannot affect the principle aid down in the following terms by Lord Eldon in Mortlock v. Buller

: -(3): - " If a man, having partial interests in an estate, chooses to :

enter into a contract, representing it, and agreeing to sell it, as his own, it is not competent to him afterwards to say, though he has valuable interests, he has not the entirety; and therefore the purchaser 'shall not have the benefit of his contract. For the purposes of this jurisdiction, the person contracting under those circumstances, is bound by the assertion in his contract ; and, if the vendee chooses to take as much as he can have, he has a right to that, and to an

(1) (1848) 6 Beav. 600. (2) (1853) 4 DeG. M. & G. 230. $ (3) (L804) 10 Ves. 292, at p. 316.

, by its extraordinary jurisdiction, interfere H.C. or A.

abatement ; and the Court will not hear the objection by the ven that the purchaser cannot have the whole." That is to say, vendor will not be heard to urge his personal inability to give all undertook to give, as an answer to a claim to have all he is ab give. Rudd v. Lascelles (1) reaffirms this doctrine of representatio An unexpressed motive cannot overcome that. If, outside his m : inability, he can prove circumstances establishing what the Co would nevertheless regard as making it " highly unreasonable" order specific performance, he is at liberty to do so, but his m inability is not so regarded. Here, however, that mere inability j the only ground on which the discretion is rested. It is not a the vendor stated that he was disposing of the estate as one indivi working proposition and that, notwithstanding his ability to tran he would not transfer part only unless he had the consent of h family. The statement to Gall that "he must take the whole o none " was obviously no qualification of the representation of th ability of the vendor to transfer all, or of his willingness to do It was nothing more, so far as Gall would naturally understan than requiring him to agree to take all if he desired to p any. Gall agreed and did purchase all, but that, so far from b a protective stipulation to the vendor, only made it clear that bh was prepared to give all and would do so if Gall purchased.

so far as the third ground is concerned. This, however, does not conclude the matter, because Mr. I went further and pressed upon this Court the view that it would b a hardship, within the proper understanding of that term, if th vendor should be compelled to break up the family home and inj the children's property by separating the lands in such a way that they would not be used together. I agree with Mr. Jnnes that thi is not exactly the same proposition as the one acted on by Ha on the second ground. Hardships of third persons enti unconnected with the property are immaterial. But I do not thin that rule excludes the case of third persons so connected with defendant that, by reason of some legal or moral duty which he ow them, it would be "highly unreasonable" for the Court a

s of such a case might, in my opinion, be properly d for the purpose of determining the discretion of the Court. answer to the point made is that the children in the present ve no legal or equitable interests in the vendor's own land ; ave no legal right to work it with their own, and no legal or tight of theirs would be in any way infringed or affected. pezament, when tested, amounted to nothing but a strong inclination to shift from the family home until another, which | been contemplated, could be conveniently obtained. The

ry impulse comes from the other 'members of his family, the

is used only as a means of incapacitating the vendor from g a bargain that he originally thought advantageous to all d, and now under pressure desires to depart from. But

ition, namely, the power, in the event of the primary contention to give damages under sec. 9 of the Equity Act. As to that only say it deserves very careful consideration.

Appeal allowed. Judgment appealed from discharged. Direct that the defendant specifically perform the agreement sued on subject to an inquiry as to whether any and what abatement should be allowed in the purchase-money in respect of any defect in title, and to a deduction from the purchase-money of such sum as shall be allowed to the plaintiffs on such inquiry. Direct an account of the balance of the purchase-money. Remit case to Supreme Court to do what is right consistently with this judgment.

ent the defendant from discharging his duty, The H.C. or A.

HL. C. oF A. Defendant to pay costs of suit to date of this ji as and of this appeal. Reserve further consideratio Gay suit and further costs to Supreme Court. '

Solicitor for the appellants, W. C. Moodie, Moree, by Vill

Solicitor for the respondent, C. L. Mackenzie, Guyra, by Bi

THE METROPOLITAN KNITTING AND j HOSIERY COMPANY LIMITED (IN; Appeu LIQUIDATION) «ee

DEFENDANT, "AND THOMAS BURNLEY & SONS LIMITED . _ . Resrowi PLAINTIFF,» ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES. H.C. or A, Comract - Sale of goods - Contract not in writing - Part performance - P

Direction to jury - Statute of Frauds (29 Car. II. ¢. 3), sec. 17 - Sale 6 Act 1923 (.S.W.) (No. 1 of 1923), sec. 9. 7

Held, by Gavan Duffy and Starke JJ., that, where a plaintiff, su a contract for the sale of goods which is within sec. 17 of the S Frauds, seeks to establish acceptance of or payment for the goo to satisfy the section, he must prove that the goods were acve Isaacs 4-Civ' paid for in pursuance of the contract sued on; and, therefore, tha and Starke JJ. ty plaintiff sued upon two contracts for the sale of the same dé of goods, one of which contracts was admitted and the other den

defendant, the jury were properly directed that in order to satisfy th