Gray v Dalgety and Co Ltd [1916] HCA 35

Gray v Dalgety and Co Ltd [1916] HCA 35 - HCA 1916 case summary — Zoe

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law have been at liberty to lend the money themselves without the _ plaintiff's express permission. Beckett J. thought, and I agree _ with him, that this was a misdirection, which might, I think, have affected, and probably did materially affect, the minds of the jury in considering Question 4. For these reasons I am of opinion that the finding of the jury in answer to Question 4 was demonstrably wrong and that the alleged contract was obnoxious to the Statute of Frauds. Tt follows from what I have said that the answer to Question 1 cannot stand. For, if the plaintiff really thought that the contract -was as found by the jury (which in the face of his letters it is hard to believe), there is no evidence upon which they could find that the defendants thought so. The finding is therefore, at best, founded upon conjecture. ____ I pass to the answer to Question 5, on which the learned Judges _ of the Supreme Court founded their judgment, thinking themselves _ precluded by the language of Isaacs and Powers JJ. on the previous

appeal to this Court from dealing with the other questions. [have already mentioned that after the A.M.P. Society refused to entertain the plaintiff's application for a loan of £72,000 the defendants at his request lodged a similar proposal with the National Mutual Life Association of Victoria. In the plaintiff's letter of 5th October enclosing this proposal he said : - '' I now enclose fresh proposal as requested but I think _ should this not be accepted it would be better considering the present conditions of the market and the season to let the matter test for a time." The National Mutual Life Association of Victoria on 14th October declined the proposal, as already stated, and the defendants contend, and the Supreme Court thought, that the defendants were thereupon, when the condition happened - as it did - absolved from the necessity of taking any further immediate action for procuring the loan of £72,000 at 4 per cent. and £12,000 at 5 per cent. The plaintiff relies on a passage in the judgment of Alderson B. in King vy. Gillett (1), to the effect that a defendant cannot succeed upon a _ plea of exoneration unless he proves a proposition to exonerate on

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So regarding it, I am clearly of opinion that there was abundant evidence to support the findings. Prior to 22nd July 1907 Gray had applied to the defendant for a loan of £12,000 to purchase "Kentucky " conditional on his selling certain farm lands. No rate of interest was mentioned. This proposal was discussed on 22nd July by the defendants' board, and postponed pending the result of the sale of farm lands. That sale took place on 20th August. But in the meantime Gray, who needed £84,000 in all, not having had any promise from Dalgety & Co., and while looking round for the £72,000 that he was to find for himself, entered into negotiations with Hobbs, a commission agent, for the total loan at 3% per cent. 'This agent's principal died and he came to Dalgety & Co. unknown to Gray, and sent in all the papers. It is of the first importance to notice that in the correspondence that Hobbs placed before Dalgety & Co. it appears that the business on foot was a proposed loan of £85,000. In their Melbourne letter to their Sydney house they say that Gray informed them he was going to get money at 3% per cent. and that they told him they thought it unlikely he would succeed. They add: "At the ordinary market rate we of course could help Mr. Gray as well as anybody else, if he would entrust the business to us as he is in fact half inclined to do." '"' The business " there referred to is at the least open to the meaning of the business of finding a lender or lenders of the whole £85,000. On the same day the Melbourne house writes to Gray and after referring to the Hobbs negotiation, says : - " We have no doubt that we could get the money just as well as anyone else if you care to entrust us with the business ; but it will first of all be necessary for you to write to Mr. Hobbs formally withdrawing the business from him." " The business " is obviously the whole loan of £85,000. The letter con- cludes with a reference to the original application for £12,000. But it is clear that two distinct lines of possible negotiation were going on at the same time: (1) a proposal for a combined loan of £85,000, for which Hobbs and then Dalgety & Co. were the intended intermediaries, and (2) a proposal for a contingent advance by Dal- gety & Co. of £12,000, which had not progressed even far enough to state the rate of interest. Until the sale of the farm lands it was apparently not thought worth while to mention the rate. And in

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of the confirmatory conversation, but does not deny it. His memory may have been considered weak, True, Gray's verbal account is verbally contradicted as to absoluteness with regard to _ the £72,000, and as to procuring a lender at all for the £12,000. He is also contradicted by Griffith. But the jury had the various : 'witnesses before them, they had letters, words and conduct to judge Sof (Moore v. Garwood (1) ). They had in the account given by ; 'Macrae and Aitken some extraordinary views put forward. As to the £72,000, admittedly it was to be "procured," not "lent," by Dalgety & Co. ; and it is now admitted by learned counsel in argu- ment - as, indeed, it could not be disputed without violence to the most elementary rule of equity with regard to agency transactions, based as it is on fundamental principles of justice - that Dalgety & Co. had no right to lend the £72,000 out of their own moneys without express permission. As to this £72,000 the defendants' evidence is only as to an "endeavour" to procure it. Then, as to the £12,000, _ Aitken's strange story is that they were to be under no obligation at all with respect even to the £12,000 ; they were to be " at liberty " to lend it. He says: "That had been so, from 26th August. If : circumstances arose which rendered it undesirable to do so, we were at liberty to exercise our judgment against the advance." Also: "We were absolutely bound to find £12,000 until we withdrew, and we were at liberty to withdraw it at any time." For a-statement of business obligations, the jury might well think that a most extra- ordinary one and indicative at the best of obscured memory. It 'may haye been also.an attempt to reconcile an absolute undertaking to lend £12,000 conditionally upon securing the £72,000 - an undertaking which would defeat the plaintifi's version of the eontract - with the previous statement of Macrae that defendants "deliberately broke their promise." But however it may be, there was in my opinion superabundant material upon which the jury could find the contract as they have done, and any Court, in setting that verdict aside and entering one for the defendants, would usurp the jury's function, very much as was attempted to be done in Pearse v. Schweder (2). In Middleton v. Melbourne Tramway and (1) 4Ex,, 681. (2) (1897) A.C., 520.

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_ say in their pleading constituted exoneration. In par. 12 of the _ defence it is said to rest on two circumstances : (1) a direction by the _ plaintiff to do nothing further, and (2) defendants' compliance with that direction. Pars. 13, 14 and 15 carry it no further. The Supreme Court agree with that, and consider that the letters of 5th and 19th October and the conduct of the defendants are of such a nature as to take the matter out of the hands of the jury and to constitute in law an exoneration, That is the real meaning of holding that the jury could not, as reasonable men, find as a fact that _ there was no exoneration before breach. In other words, the Supreme Court holds that before a reasonable time for performance had arrived the parties voluntarily and mutually agreed as a binding contract (King v. Gillett (2) ), and without further consideration _ to the plaintiff, that the contract here sued on should be put an end to and the defendants released from their undertaking. I should observe that the Supreme Court accepted as correct for this purpose the finding of the jury that on the expiry of 10th October the breach . had occurred - supposing, of course, there was no prior exoneration. And in holding there was exoneration prior to the 11th or prior to the 19th, their Honors must necessarily have excluded from the letter of 19th October any force whatever except as interpretative 'of the letter of 5th October. Assuming a breach on 11th October, then, if the letter of 5th October were ambiguous and were sworn by the defendants to have been interpreted and acted upon by them in one of the ambiguous ways, and if that interpretation were supported by the letter of 19th October, the latter document would be important - otherwise not. But the letter of 5th October is not, in my opinion, ambiguous, and, if it were, the defendants do not say they understood or acted on it as meaning that they were to be discharged from proceeding further. If they had said so, their actions would contradict them, or at least the jury could think so.

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October they deny the very existence of the contract as he states it. They state further how they do understand his final sentence. They also say: " We note in view of the season you think we should not endeavour to carry through the business at present" &c. (The italics are mine.) But the words " at present " are decisive that they did not understand a definite withdrawal when they wrote their letter of 10th October, and by firmly denying the contract and clearly refusing to acknowledge such a contract or any obligation to adhere to it, they fundamentally break it. They go on to suggest another. I should read Gray's letter of 19th October - when taken as part of the whole series of events - as an intimation that he would not entertain the substituted attempts suggested by Dalgety & Co., and considered it useless in view of all they had said and done to extend the time further. This was at all events clearly, I should say, open to the jury, and it leaves the matter as found by them with a breach of absolute contract not replaced or repaired by any substituted method of getting the money contracted for. At the worst for the plaintiff, this letter of the 19th definitely closed the reasonable time, but did not discharge the defendants from their breach of the absolute contract they had made. In this aspect the date of the breach should be placed as after the 19th instead of after the 10th, which would make no difference in the result. Alternatively, it was a decision not to substitute another attempt for the contract already broken by the failure to get the money and by the repudiation contained in their letter of the 10th. That appears to me to be the real legal position as the jury have found the fact. It is true there was further correspondence. The defendants on 25th October, unwilling to abandon the business, urge the plaintiff to proceed still further with what are seen to be outside attempts to get money - and they introduce the Mel- bourne Trust Ltd. as well as suggest reopening the National Mutual application. The communication elicits a complaint on 27th October of breach of undertaking - and incidentally there is the passage, " conditions necessitated by my intention to resell part of the estate," which was thought by the learned Chief Justice to destroy the plaintiff's case. But the letter ends with a promise to call, and on 29th October they approve of an interview.

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in the matter for the present ; it states its opinion that he should purchase the property without further delay; and it describes a conversation with McKay, the manager of the Melbourne Trust Company, from which it appeared that that Company would probably be prepared to find £72,000 at 5 per cent., excising from its mort- gage any portion of the land sold if the sale did not interfere with the value of the rest. The letter winds up by saying that if he favourably considered "reopening" the matter with the National Mutual, or "treating with" the Melbourne Trust Company, he might come to Melbourne and discuss the matter with the defendant. The plaintiff on 27th October reminds the defendant that it was getting away from the fact that it had undertaken to find a first mortgage at 4 per cent. (as well as a second mortgage at 5 per cent), and that even half per cent. difference on the first mortgage would be £360 per annum, or £1,800 in 5 years; but that he would call upon them after 1st November in connection with this business. _ On 14th November the plaintiff called. Mr. Macrae, the manager, told him that if he could get the Melbourne Trust Company to lend _ him £72,000 the defendant would discuss the lending of £12,000 - infact would pay it. What followed may be disregarded on this _ question of exoneration. It relates to what Mr. Macrae calls a "new proposal"; and when the plaintiff asked definitely whether the "defendant would find him the £12,000, the defendant said (22nd 3 November) that the head office in London, by cable, had refused to authorize the advance. _ [have now examined at some length what took place from 5th _ October onwards, and I cannot find from first to last any indication of the plaintiff offering to relieve the defendant Company of its obligation under the contract, or of the defendant Company consent- _ ing to be so released, or to forego the commission and the other substantial advantages which it would derive from putting the loan through. So far as the plaintiff is concerned, I should gather that he thought that the defendant Company had already before 5th ¥ October broken its promise. This is the opirion of Cussen J. also ; but the jury has found that the contract was not broken till " after 10th October 1907"; and there is no sound reason for asserting that this finding is clearly wrong. It was a finding that cannot be

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called impossible, or even unreasonable. The jury may hay thought that a delay from 26th August to 10th October in carr: out the promise to find the lenders was not an unreasonable delay on the part of the defendant under all the circumstances. I cannot, however, accept the view that there was any repudiation of th contract by the defendant such as would be a breach within the ruk in Hochster v. de la Tour (1); for, though the defendant denied the terms of the contract as alleged by the plaintiff, it still endeavoi to get for the plaintiff the money which he wanted, and in a mai which was consistent with the view of the contract taken by the plaintiff as well as with the view of the contract taken by defendant. There was no final and absolute refusal on the part of the defendant to perform its (alleged) obligations under the contra There was not, as there was in Hochster v. de la Tour, any absolute declaration by the defendant that it would never act under contract. But if it is true that the plaintiff wrote the letter of 5th October in the belief that the time had expired within which lenders should be found, it follows that he did not, in that or in the subsequent letter, apply his mind to any rescission of his contr with the defendant Company. '" Exoneration " means rescission or it means nothing - in law. The exoneration must be mutual (King v. Gillett (2) ). Did the plaintiff and the defendant agree rescind before breach their mutual relations as fixed by the contract of 26th August ? There can be no exoneration except by mut consent, and there is not one tittle of evidence that the defendan t Company gave any consent. It differed from the plaintiff as to what the contract was; but it went on with its endeavor to get the money for the plaintiff. In my opinion, therefore, # jury's finding of "no exoneration " should not be set aside as against evidence. This finding represents a view of the facts whi

to say the least - a jury might reasonably take. There is no difficulty as to the interpretation of the letters, such as would justify the Court in interfering ; it was for the jury, looking at all the conversations as well as the letters, to say whether there wa exoneration by mutual consent, whether there was rescission of the contract or not (Moore v. Garwood (3) ). :

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Judgment (265 paragraphs)

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