Leap Lr. ' v Rogers.

_ A has a right to refuse to proceed further with the contract notwithstanding =

_ that B desires to waive the breach and proceed with the contract. Sypyry, Cullen v. Knowles, (1898) 2 Q.B., 380, followed. eae

A, who had discovered a process of manufacture, employed B to assist in parton, teance 'disposing of the process in consideration of B receiving a proportion of the "4 Rich JJ. "proceeds of disposal, but B never had any proprietary interest in the process.

An agreement was afterwards entered into by which A and B purported to

_ give an option to C to purchase the process, the consideration being a 20

per cent. fully paid up interest in a company which should be formed to work

_ the process, which company should have a working capital of £20,000. In

pursuance of this agreement a company was formed having a total capital of

£20,000 in 20,000 shares of one pound each, and an agreement was entered into

_ by it to purchase the process from C giving as consideration 10,000 of these

'shares as fully paid up. B became a director of the company.

Held, that as the company had not a working capital of £20,000 A was

entitled in an action brought by him alone against {3 and C and the company to a declaration discharging him from performance of the contract made by _ himself and his co-contractor B with C.

Decision of the Supreme Court of New South Wales (Harvey J.) affirmed.

Lion Warre Robert Rogers against the Lion White Lead Ltd., Jervis Geo: Leap Lr. '

Apprat from the Supreme Court of New South Wales. A suit was brought in the Supreme Court in Equity by Charles

Blackman, Samuel Bowen, Henry Petrie Fletcher and Catherine Fletcher in which the statement of claim was substantially as follows : -

The plaintiff is the original inventor of a process or invention for the manufacture of white lead known as " Process for the con- version of wet precipitates into oil pastes and the removal of water therefrom without first drying."

On or about 20th July 1917 the plaintiff duly applied to th Commonwealth Patents Office for a patent for the said invention, and the said invention has at all material times been and is now entitled to provisional protection. .

On or about 9th July 1917 the plaintiff and the defendant Jervis George Blackman, who had no interest in the said invention or process, gave to the defendant Henry Petrie Fletcher an option 0 purchase for fourteen days from the said 9th July 1917 of the said process on the following terms and conditions, namely : the purchaser to guarantee to find £20,000 working capital if required, subj to a satisfactory demonstration of the process by the plaintiff an subsequent confirmatory report by adjudicating chemist acceptabl e to the defendant Henry Petrie Fletcher, to which chemist a full and confidential disclosure had alone to be made; on notification of accep- tance of the terms of purchase therein additional time should be gi ; to enable the purchaser to complete the purchase in terms therein- after referred to by reason of the formation and registration of any desired company ; that in the event of the proposal being accepted by the purchaser the purchaser should pay as a full and only oon sideration to the plaintiff 20,000 one pound 6 per cent. debenti together with a royalty of 10 per cent. on net profit of white le: produced ; and that the plaintiff was to guarantee the profits sho not be less than the amounts therein mentioned, and was to be allowed the sum of £750 for management (which sum was based one, the production of 1,500 tons of white lead per annum) and to ie reasonably increased as the profits of the business warranted ; that the plaintiff would superintend the erection cf the plant necessary ;

to carry on the production of white lead by his process, and would H. ©. or A.

cs wry on the manufacture of white lead by his said process in works Be

so erected for a period of twelve months; and thas en completion Liox Warre

of the purchase in terms therein recited the plaintiff would disclose ae

the full method of manufacture of white lead by his said process Roe»ss-

fo an appointee or appointees of purchasers when called upon to d 080. The said option contained other provisions not material to herein set out, and the plaintiff craves leave to refer to the same s if it were set out in full hereins

On or about 20th July 1917 the defendant Henry Petrie Fletcher accepted the said option.

By memorandum of agreement made 26th July 1917 between the plaintiff of the one part, the defendant Jervis George Blackman 'of thesecond part, and the defendant Catherine Fletcher, the wife of the defendant Henry Petrie Fletcher, of the third part, it was agreed 'that the 20,000 debentures to be issued under the option in par. 8 hereinbefore mentioned should be divided as follows, namely, the plaintiff 15,000 debentures, to the defendants Jervis ge Blackman and Catherine Fletcher 5,000 debentures, and t the royalty to be paid should be divided between them in the following proportions, namely, to the plaintiff 60 per cent. thereof, to the defendant Catherine Fletcher 30 per cent. thereof and to the lefendant Jervis George Blackman 10 per cent. thereof.

On or about 20th August 1917 it was agreed between the plaintiff and the said defendants Jervis George Blackman and Henry

in lieu of 20,000 debentures and a royalty of 10 per cent.

It was subsequently agreed by and between the plaintiff and 'the defendants Jervis George Blackburn, Henry Petrie Fletcher and "Samuel Bowen, who claimed to be the principal of the defendant Henry Petrie Fletcher, that, in lieu of the plaintiff and the defendant

n the last preceding paragraph mentioned, a company should be 'incorporated under the Companies Act 1899 to acquire the said ess or invention and manufacture white lead, with a capital 'of at least £20,000, of which the whole amount thereof was to be paid for in cash and to be the working capital of the company ; and

H.C. or A. that the plaintiff and the defendant Jervis George Blackman were 1918. to have transferred to them by the defendants Henry Petrie Fletcher Lion Wurre and Samuel Bowen or one of them fully paid up shares in the said Lens company representing 20 per cent. of the capital of the said Rocers. company as the consideration for the sale by the plaintiff and the defendant Jervis George Blackman of the said process or invention. It was also further agreed by and between the said parties that not less than 50 per cent. of the profits to be made by the said company in any year should be distributed by way of dividend between and amongst the shareholders thereof, and that the plaintiff and the defendant Jervis George Blackman should be discharged from the

guarantee given by them in the said option of 9th July 1917.

As evidence of the said agreement the plaintiff and the defen- dant Jervis George Blackman wrote to the defendant Samuel Bowen, at the request of the defendant Henry Petrie Fletcher, a letter -dated 28th August 1917 containing the words and figures follow- ing : - * Re option of 9th July 1917 to H. P. Fletcher, re Rogers White Lead Process in which we were to receive 20 per cent.

royalty, we hereby agree to vary same and are prepared to accept 20 per cent. fully paid up interest in a company of at least £20,000 as full compensation for the said process with understanding that not less than 50 per cent. of profit to be declared in any one year." And in reply thereto the defendant Samuel Bowen wrote to the plaintiff and the defendant Jervis George Blackman a letter dated Ist September 1917 containing the words and figures following : - " Re Rogers White Lead Process. - In respect to the above option by you both and given to Henry Petrie Fletcher on the 9th inst., which terms of purchase were varied by mutual consent on the 28th of August in letter addressed to Samuel Bowen, I beg to notify you both that instructions have been given to our solicitors to prepare all necessary decuments. Re preparation of company to be regis- tered under the Limited Acts of New South Wales as specified. When-these documents are in order the registration of the company aforesaid will be proceeded with forthwith - we anticipate this will take probably a week."

The said letters of 28th August 1917 and Ist September 1917 were written with the intention of setting out the agreement in

Jervis George Blackman, Henry Petrie Fletcher and Samuel Bowen

not set out the said agreement the same were executed under a common or mutual mistake of the plaintiff and the said defendants. _ 10. By agreement in writing made 17th October 1917 between the defendant Samuel Bowen of the one part and Edmund Charles Barry for and on behalf of the Company thereinafter mentioned, of the other part, after reciting that the defendant Samuel Bowen was then entitled to the process or invention hereinbefore mentioned, that a company to be called "* Lion White Lead Limited " was about to be formed under the Companies Act 1899 having for its objects the 'acquisition of the said invention or process and the manufacture of white lead by the said process, and that the memorandum and ticles of association had with the privity of the defendant Samuel Bowen been prepared, that the nominal capital of the Company was t be £20,000 divided into 20,000 shares of one pound each, and that by the articles of association it was provided that the directors of the Company should immediately after the incorporation thereof adopt behalf of the Company and carry into effect an agreement therein

as follows: that the defendant Samuel Bowen should sell and the Company should purchase all that the said invention or process and any letters patent for the same; and as consideration for the said 'sale the Company should pay to the said Samuel Bowen the sum of F: 0,000, which sum should be paid and satisfied by the allotment nd issue to the defendant Samuel Bowen or his nominees of 10,000

purposes to be fully paid up shares; that the Company should undertake that a dividend of not less than 50 per cent. of the et profits in each year should be declared and paid to the share- olders of the Company ; that the purchase should be completed on

he adoption of the agreement by the Company the said Edmund 'les Barry should be discharged from all liability in respect of; and that the Company should pay all costs and expenses of

red to, being the now recited agreement, it was agreed (inter alia) _

. 7 hereinbefore mentioned and not otherwise, as the defendants H. ©. or A.

all material times were well aware, and if the said letters do Liox Wurre Leap Lap.

and incidental to the preparation and execution of the said agree ment and of the memorandum and articles of association of the Company and of and attendant upon the registration of the Com- pany, and all stamp duty, fees, advertising, printing, legal and other A expenses incident to the formation and registration of the Company. 11. On or about 19th October 1917 the defendant Lion White Lead Ltd. was incorporated as a limited company under the said Companies Act.

12. By the memorandum of association of the defendant Company it is provided that the objects for which the Company is established - are - inter alia - (a) to acquire the invention of Charles Robert -

Rogers of a new and improved process described as " Process for the - conversion of wet precipitates into oil pastes and the removal of the - water therefrom without first drying " and all letters patent in con- nection therewith, and all future improvements to the said invention, and all benefits, privileges and advantages appertaining thereto, and with a view thereto to adopt an agreement dated 17th October 1917 made between Samuel Bowen of the one part and Edmund - Charles Barry as trustee for the Company of the other part, being an

agreement for the acquisition of the said invention, letters patent and premises, and to carry such agreement into effect with or without modification; and that the capital of the Company is £20,000 - divided into 20,000 shares of one pound each.

13. By agreement under seal made 20th October 1917 between the defendant Company of the first part, the said Edmund Charles Barry of the second part and the defendant Samuel Bowen of the third part, it was thereby mutually agreed that the said agreement. of 17th October 1917 be adopted by the defendant Company, and was and should be binding on the defendant Company in the same manner and be read and construed in all respects as if the defendant Company had been incorporated prior to the date thereof and had been party thereto instead of the said Edmund Charles Barry, and that the said Edmund Charles Barry should henceforth be discharged and freed from all liabilities and obligations whatever incurred by him under the said agreement in the same manner as if he had not been a party to that agreement.

14. On or about 26th October 1917 the said agreement dated

Oth October 1917, and in par. 13 hereinbefore mentioned, was filed with the said Registrar of Joint Stock Companies.

16. On or about 29th October 1917 the defendant Company, at the request of the defendant Samuel Bowen, issued 4,000 fully aid up shares to the defendant Jervis George Blackman and the plaintiff conjointly, and the names of the plaintiff and the said defendant are entered in the register of members of the defendant Company as the holders of the said 4,000 fully paid up shares.

17. The plaintiff has never applied to the defendant Company or to the defendant Samuel Bowen for the said shares or for any _ shares in the said Company.

E18. The defendant Company has pursuant to the said agree- ments of 17th and 20th October 1917 issued to the defendant Samuel Bowen or his nominees 10,000 fully paid up shares in the defendant Company and has also issued 250 other fully paid up shares: no

• other shares have been issued by the defendant Company.

19. The plaintiff has disclosed to the defendant Henry Petrie letcher, who was appointed adjudicating chemist under the said ment, his said process or invention, for the purpose of enabling the said defendant to demonstrate the same to the defendant Samuel _ Bowen and a few other persons and not otherwise ; and prior to such isclosure it was expressly agreed by and between the plaintiff and

or persons prior to the issue of the said patent. 20. The defendants Jervis George Blackman, Samuel Bowen and Henry Petrie Fletcher decline to be bound by the said agree- ment in par. 7 hereinbefore mentioned.

21. The defendants claim the right to use and have threatened 0 use the said process or invention of the plaintiff in the manu-

• facture of white lead, and the plaintiff fears that unless the defen-

ith October 1917, and in par. 10 hereinbefore mentioned, was H. C. or A.

will use the same in the manufacture of white lead, and the plaintiff will thereby suffer great loss and damage.

22. The plaintiff submits to this Honourable Court that under the circumstances hereinbefore mentioned any agreement by the plaintiff or the plaintiff and the defendant Jervis George Blackman for the sale of the said process or invention is not binding on the

(1) That it may be declared that any agreement made by the plaintiff or by the plaintiff and the defendant Jervis George Black- man for the sale of the said process or invention is not binding on the plaintiff or the plaintiff and the defendant Jervis George Blackman ;

(2) That the defendants and the directors. managers and workmen of the defendant Company may be restrained by the order and injunction of this Honourable Court from disclosing the said process or invention or any portion thereof ;

(3) That the defendants and the directors, managers and workmen of the defendant Company may be further restrained by the order and injunction of this Honourable Court from using the said process or invention or any portion thereof and from holding the defendants or any of them out to be the owner of the said process or invention ;

(4) That it may be declared that the plaintiff is not bound to assign or transfer his said process or invention to the defendants or any of them in consideration of the issue to the plaintiff and the defendant Jervis George Blackman of the said 4,000 shares in the defendant Company or any shares in the defendant Company ;

(5) That the register of members of the defendant Company may be rectified by striking out therefrom the names of the plaintiff and the defendant Jervis George Blackman or the name of the plaintiff as the holders or holder of the said 4,000 shares or any portion thereof ;

(6) That if and so far as necessary the agreement contained in the letters of the said 28th August 1917 and Ist September 1917 may be rectified so as to set out the true agreement between the plaintiff and the defendants other than the defendant Company ;

(7) That the defendants Samuel Bowen, Henry Petrie Fletcher

and the defendant Company or some or one of them may be ordered H. C. or A.

to pay the costs of this suit ; 1918. _ (8) That the plaintiff may have such further or other relief as this iow Wee Honourable Court may think fit to grant. Leap Lr.

v. The defence of the defendants other than Catherine Fletcher was ROGERS.

4 1. In answer to par. 2 of the statement of claim these defendants do not know and cannot admit that the date of the application is rein correctly stated.

2. In answer to par. 3 the defendant Jervis George Blackman ies that he had no interest in the said invention or process.

_ 3, In answer to par. 6 these defendants say that the agreement therein mentioned was set out in the document signed by the 'plaintiff! and the defendant Jervis George Blackman, a true copy hereof is as follows : - " Sydney, August 13, 1917. - H. P. Fletcher, 8q. - Dear Sir - Re our option to you in which we were prepared to accept 20,000 £1 debentures carrying 6 per cent. interest and 10 per cent. of the profits - we are prepared to vary that to read as a eounter proposal which may be more acceptable to you or your

incipals to accept 20 per cent. of profits as full payment for C.

R. Rogers process. - C. R. Rogers. J. G. Blackman."

4. In answer to pars. 7 and 8 these defendants say that the whole

ement between the plaintiff and the defendants Jervis George

jlackman, Henry Petrie Fletcher and Samuel Bowen is set out in

5. In answer to par. 9 these defendants deny that the said letters

or either of them were written with the intention of setting out the

nent in par. 7 of the statement of claim, and they deny that

the same or either of them were executed under a common or mutual

or any mistake of the plaintiff and the defendants or any of them.

_ 6. These defendants crave leave to refer to the documents

entioned in pars. 10, 12 and 13 of the statement of claim, and do

admit that the same are correctly or sufficiently set forth 7. In answer to par. 18 the defendant Company says that 5,637

0 shares have been applied for and issued as fully paid up.

8. The defendant Henry Petrie Fletcher denies it was ever

ba 542 HIGH COURT (1918, - H.C. or A. agreed between him and the plaintiff that in consideration of the

seed plaintiff disclosing his said process or invention to the said defendant, or for any other consideration or at all, he, the said defendant, would

pees not disclose the same to any person or persons prior to the issue of

the said patent or at all. 9. Tnanswer to par. 20 these defendants repeat pars. 4 and 5 hereof. 10. These defendants submit that this suit should be dismissed

with costs. The plaintiff joined issue on that defence.

The suit was heard by Harvey J., who found substantially in accordance with the facts alleged in the statement of claim, and made a decree declaring that no partnership then existed between the plaintiff and Blackman in respect of the rights in the process or invention in the pleadings mentioned, and that Blackman had no proprietary interest in such process or invention; declaring that there was then no contract made by the plaintiff or the plaintiff and Blackman with Fletcher and Bowen or either of them binding on the plaintiff for the sale of the process or invention ; decreeing that the defendants and each of them and the directors, managers and work- men of the Company and each of them should be and they were thereby perpetually restrained from disclosing the process or inyen- tion or any portion thereof; decreeing that the defendants and each of them and the directors &c. of the Company should be and they were thereby restrained from using the process or invention or any part thereof; decreeing that the defendants and each of them and the directors &c. of the Company should be and they were thereby perpetually restrained from holding out the defendants or any of them to be the owners or owner of the process or inven- tion ; declaring that the plaintiff was not bound to transfer or assign the process or invention to the defendants or any of them in con- sideration of the issue to the plaintifi and Blackman of the 4,000 shares mentioned in the pleadings or any shares in the Company ; and decreeing that the Company should within three weeks rectify the register of members by striking out therefrom the names of the plaintiff and Blackman or the name of the plaintiff as the holders or holder of the 4,000 shares or any portion thereof.

3 From that decision the defendants the Lion White Lead Ltd., H.C. or A.

Samuel Bowen and Henry Petrie Fletcher now appealed to the te eur

_ Loxton K.C. and 8. A. Thompson, for the appellants. There was podans, mple evidence of a consensus ad idem. The term " working capital" in the agreement included the money or shares representing

vidence shows that on 28th August 1917, when the final agree- tment was made, it was obvious to all parties that nothing like 000 of capital was necessary to work the process. This is an etion for a declaration that the contract is at an end, and such an ction does not lie unless the other party to it has indicated an intention to be no longer bound by the contract (Francis v. Lyon (1); Freeth v. Burr (2); Halsbury's Laws of England, vol. vu., p. 39, art. 898). _ [Ricx J. referred to General Billposting Co. v. Atkinson (3).] Even if such an intention was indicated, the breach did not go to root of the contract, and the only remedy is in damages. Rogers and Blackman had a joint interest in the process. If one person conceived an idea and another makes that idea articulate, y have joint proprietary rights in a contract made by them with other person to provide money to carry out the idea which has en so made articulate. Rogers and Blackman were in any event mtractors, and, the contract being joint, both must join in an ction in respect of the contract (Halsbury's Laws of England, vol. p. 337, art. 691). If one of the co-contractors will not join in e action, the proper course is for one of them to ask the Court to wind up the transaction. Before an action like the present is brought he co-contractors have to elect whether they will treat the contract as at an end or will sue for damages, and that is a matter which they must determine between themselves with or without the aid of Co

_ R. K. Manning, for the respondent Rogers. This respondent

(1) 4C.L.R., 1023, at p. 1035. (3) (1909) A.C., 118, at p. 121. (2) LR. 9 CP., 208, at p. 213. (4) (1898) 2 Q.B., 380.

could come into a Court of equity and for himself ask for a rescission of the contract (Rhymney Railway v. Brecon ad Merthyr Tydfil

The respondents Blackman and Catherine Fletcher appeared to submit to any order the Court might make.

Barton J. Having had the advantage of reading the judgment of my brothers Isaacs and Rich, which is about to be delivered, I do not propose to state my conclusions at length, as I am in agreement with those at which my colleagues have arrived. I desire, however, to make a few observations on the third question - that is, the com- petency of the respondent Rogers as sole plaintiff to sue for the relief he seeks.

The plaintiff had the sole proprietary interest in the process which was the subject of the agreement. Blackman was really brought into the agreement for the purpose of securing to him certain remuneration for his services to the plaintiff. The considera- tion for the agreement was the process, a consideration moving from the plaintiff only. The complaint of the appellants is that Blackman was not made a party plaintiff. As a party defendant he has been before the Court throughout. Blackman was obviously in opposition to the plaintiff from a time not very long after the variation of 28th August; he refused to sign a paper repudiating the agreement, and indeed is a director of the Company formed in defiance of it, and, as a request for his consent would have been a manifest futility, it is quite plain that Rogers could not have joined him as a co-plaintiff. No doubt, equity requires that all the parties directly concerned should be before the Court. But the plaintiff has not offended against that requirement. Is he, then, to be deprived of his remedy because he has made a defendant of one whom he could not have as a co-plaintiff ?_I think such a conclusion would be quite absurd. Of course, Blackman would have been within his right in refusing, as he must have refused, his consent

owles (): " The question, therefore, here is whether such refusal

as plaintiff, as a defendant." Here there has been no formal request nd therefore no refusal: the plaintiff's course has been taken because Blackman's consent is inconceivable. To my mind the absence of consent does not affect the principle in such circum- It is impossible for any of the defendants to say that the consent was obtainable. All the parties interested were before the Court, and, once there, the Court: was fully entitled to adjudicate. "Had the facts admitted of some decree which would have given relief to both the plaintiff and Blackman, it would have been open to Harvey J. to pronounce it. But it is through Blackman's conduct in allying himself with Bowen and Fletcher that no such decree _ was open on the facts.

Tsaacs anp Ricu JJ. Rogers sued all the other parties to this ppeal, substantially claiming that in view of the events that have happened he is entitled to a declaration either (1) that on the true construction of the documents he is not now bound by any agree- "ment of sale of his white lead process, or (2) that if on the true 'construction of the documents as they stand he is bound, then y should be rectified so as to conform to the actual agreement e entered into, and that on such agreement he is not now bound. e was the usual general prayer for relief. The defendants to action, except Catherine Fletcher, in a joint defence resisted oth specific claims, and denied all right to relief.

The case was heard by Harvey J., who made the first declaration ed for, and added ancillary relief specifically claimed. A good eal of oral evidence was taken, including that of Rogers, Blackman, jowen and Fletcher, and others. The learned Judge said : - *I ink Rogers is a truthful witness, though be is anything but a wd business man. The recollection of Bowen and Fletcher and ckman is, in my opinion, not reliable, and I think they have

over the difficulty by joining the co-promisee who refuses to join Tap a

0 be joined. Bigham J. (now Lord Mersey) says, in Cullen y. H.C. or A.

H.C. or A. deposed to conversations taking place with Rogers which took we place behind his back. In my opinion there was a want of frankness

Lion Wurre on their part in dealing with Rogers." pee In view of the direct conflict of testimony which the evidence Rocers. presents, it is clear that unless some overwhelming circumstances Tsnacs J. could be pointed to in order to show that the Court's reliance on Rogers was misplaced, his version of the facts must be accepted

should it be necessary for him to travel outside the purport of the

documents themselves. Learned counsel for the appellants did not suggest any such circumstance, except what was termed the probabilities of the situation. It was urged for the appellants that even accepting the uncontroverted facts they should succeed.

The facts which must govern our decision are contained in the documents themselves and in Rogers's evidence, which is mostly uncontradicted on the material facts, and, where contradicted, must be accepted, having regard to the opinion of the learned Judge on the question of his reliability.

Three questions present themselves for determination, namely, (1) the terms and effect of the contract actually made; (2) the nature of the breach if any; and (3) the competency of the respondent Rogers as sole plaintiff to sue for the relief he seeks.

From the facts in evidence, ascertained as abovementioned, it appears that Rogers was the discoverer of a valuable process of manufacturing white lead, and, though immaterial to the decision of this appeal, it may be observed that it was a process which perhaps he brought to a more satisfactory operation after meeting Fletcher, but which owes almost its whole merit to Rogers himself. He employed Blackman, who informed him that he was a successful company promoter and knew a good many business people of standing in Sydney, to assist him in disposing of his process. The arrangement was that Rogers would give Blackman 40 per cent. of what he was allowed. Blackman never acquired any pro- prietary interest in the process. So Harvey J. found, and from that Blackman has not arpealed, and the facts support the conclusion. Blackman's only interest was as Rogers's agent to share his remunera- tion, and this fact was throughout well known to everybody concerned. Efforts to sell extended over many months. Blackman

ght Fletcher to Rogers in connection with some other matter, H.C. oF A- 1918. ao

sued. Rogers constantly made plain and prominent his belief Liox Warre

that £20,000 working capital must be provided by the purchasers. /™4P ™-

nd then the process itself was spoken of. Several conversations

_ Eventually, an agreement in writing was drawn up, dated 9th July 1917. It is signed by Rogers and Blackman, and purports to Isaacs, J. 4 soe . 'ich J.

give jointly an option to Fletcher. But Blackman's position being

as described, he had, of course, nothing to give, and as the considera- mn moved from Rogers, his participation was apparently to secure self with respect to his share of the remuneration which Rogers toreceive. But his joining in the offer did not in fact, as between and Rogers, give him any right to control the process or the

who may for present purposes be regarded as the sole

or, agreed to give Fletcher an option of purchasing the process,

should "guarantee to find £20,000 working capital if required." The document left it to the purchasers themselves to determine whether they would be incorporated or unincorporated. The word 'guarantee " is very strong to indicate the importance of the ation as to working capital. The expression "if required" is attached, not to " guarantee," but to the words " working capital." e stipulation is preceded by the phrase " terms and conditions," and on the proper construction of the document the stipulation is a true condition that the purchasers must " guarantee," or warrant, it £20,000 for working capital must be forthcoming if that amount ould be required for the purposes of the business. And it is 'equally clear that either manifest inability or unwillingness to provide t capital when the time of performance arrived would be a vital h of the condition of the offer. The document provided also t if the purchasers decided to incorporate, then additional time d be allowed for the completion of the purchase. The con- tion for the sale, apart from the guarantee as to working capital, was to be 20,000 one pound 6 per cent. debenture " shares," which meant simply debentures, and also a royalty of 10 per cent. net profits, and other terms unnecessary to specify.

548 HIGH COURT {i9ls. | H.C.or A. On 20th July the option was accepted by Fletcher, and also, AOL: separately, by Bowen as Fletcher's principal. A few days later Lowi Wa Fletcher informed Rogers that the provision as to debentures was tanap Lap. impracticable from a business standpoint, and suggested that, Rogers. instead of the debentures and 10 per cent. royalty, there should be Ieaacs 3 substituted a 20 per cent. royalty. To this Rogers agreed; and about a week later, Fletcher informed Rogers that the Common- wealth authorities, acting under the War Precautions Act, would

object to any company if the basis of royalty was adopted, and said that Rogers would have to choose between partnership and shares. He chose " shares " since there was " no alternative," as he supposed from what he was told. Accordingly, the letter of 28th August 1917 was signed addressed to Bowen. On Ist September Bowen by letter closed the matter, intimating also that a company was to be registered. The additional time referred to in the letter of 9th July then commenced, and ended on 17th October, when the Company was registered, as hereinafter mentioned.

Throughout, according to Rogers's evidence, he insisted on retain- ing the obligation of the purchasers to see that £20,000 working capital should be provided. The letter of 28th August is quite consistent with that, provided it be remembered that Rogers was not himself contracting or proposing to contract with a company formed or to be formed, but with Bowen and anyone associated with him ; and it was to him or them that Rogers looked to see that the company if formed had £20,000 working capital. If Bowen or his friends paid to the company they formed cash for whatever shares they handed paid up to Rogers, the two conditions could stand together. But Bowen did not disclose to Rogers that he contem- plated selling, as his own and independently, to a company which he was proposing to treat as an independent purchaser, and repre- sented by another person as trustee in that company, the process in return - not for cash - but for 10,000 paid up shares, leaving only 10,000 shares to be paid for in cash, if indeed they were taken up. This, however, he did on 17th October, a person named Barry being the ostensible purchaser for the company to be formed. The Company was registered on 19th October. On 20th October - the next day - the Company by agreement with Bowen formally

opted the agreement and became the legal purchaser from Bowen . ©. or A. far as it could under the terms of the agreement of 17th October. 191%

pound shares, it is evident that Bowen as the purchaser could not Roos. antee, and never intended to fulfil a guarantee, that £20,000 Isaacs J. orking capital would be forthcoming if required, and, further, it is : plain that there could not, even if all the remaining shares had been

applied for and allotted, be in any real business sense £20,000 work-

'ing capital. Doubtless there is power under the Companies Act 1899

and the articles of this Company to increase the capital. But

has not been done, and may never be done ; and the Company under no contractual obligation to any person to do it. Besides, special resolution, even if passed, would not in itself provide the capital: the shares might not be taken up. That this is not a _merely theoretical consideration is further shown by the fact that even as late as February 1918, when the defence was put in, there ere only 5,637 shares applied for " issued as fully paid up " (what- ever that means) - par. 7 of the defence - in addition to the 10,000 Bowen shares.

" Again, Rogers's agreement of 28th August was to get a 20 per cent. interest in the Company, and it would raise a very serious question whether he would not be entitled to have allotted to him fully paid for shares to maintain his proportional interest in the full capital of the Company. In any event, the attitude assumed by he defendants, in the action, was that they were not bound to provide £20,000 working capital; they refused to do so, and the each was complete.

Consequently, construing the documents by the light of the ations in which the parties stood to each other, the condition as to guaranteeing £20,000 working capital was broken, and it is funda- mental as it stands in the document of 9th July. Even supposing 'in favour of the appellants - a violent supposition - that the 20 per ent. remuneration ultimately agreed to was pro tanto a modification

H.C. or A. £16,000 working capital to be provided, which is also a fatal devia-

1918. 'tion. But if, going further, the strict construction of the letter of

Lion Wurre 28th August would bind Rogers to present arrangements, the

evidence he gives, both alone and supported by his attitude as Rocers. deposed to by Sir Allen Taylor, makes it quite clear that he was

Teaacs J. persistent in adhering to the requirement of £20,000 working capital, and that both Fletcher and Bowen must be taken on the evidence as tacitly agreeing to this, and in that case the document should be rectified accordingly, so as to accurately represent the contract actually made.

The real position, however, is that Bowen's sale to the Company on 17th October 1917, as already pointed out, is ultra the position of Rogers, and that Bowen, whatever he chose to arrange between himself and the Company, was bound to see (1) that Rogers got 20 per cent of the share capital and (2) that the Company provided £20,000 as working capital. If that were not so, Bowen could, if he

had chosen, have fixed his own consideration at 16,000 shares less

a sufficient number to constitute the Company, and so he could have -

left the Company without any means of working the process, but in possession of the process, for which Rogers would ultimately receive nothing. That position is too absurd for contemplation.

It was argued that the failure to comply with the stipulation as to £20,000 working capital was not fundamental, but at most a subject for damages, and that no substantial sum would in the circumstances be awarded. The rule of law applicable to this particular branch is that where the thing tendered as the considera- tion differs essentially from the thing contracted for, there is a failure of consideration, and the bargain is at an end (Kennedy v. Panama, New Zealand and Australian Royal Mail Co. (1)). A company with only £5,637 of working capital, and not only so, but with 10,000 shares issued as paid up and participating in dividend though not contributing to capital, is essentially different from a company having £20,000 of working capital and formed merely of those who have bought the process for no consideration but that paid and payable to Rogers himself, which was the plain object of the option.

Questions 1 and 2 must, therefore, be answered adversely to the H. C. or A. yppellants. 1918.

The third question, namely, Rogers's status in suing alone. is Liox Wuxre

an interesting one. Learned counsel put the matter thus: - There '™4? /7°-

were two joint contractors, Rogers and Blackburn, and whatever Rocens.

their respective proprietary rights might be, they were still joint J.

I ci : Rich J. contractors. Consequently, it was said, they must agree between

hemselves whether they would elect to affirm or to disaffirm the ontract ; in other words, whether they would sue for damages on the basis of transferring the process, or would sue for rescission on the basis of keeping it. The position, however, though somewhat novel, seems clear in principle. If A and B jointly agree with C, and if C announces, before the normal moment of performance arrives, that he renounces the contract, it is competent for A and B jointly to accept that renunciation, and to terminate the contract. But that is a new agreement, and requires the assent of all. A may refuse, and, if so, B and C must abide by the bargain until the time for actual performance arrives. The contract may or may not then be normally performed. But once that time has arrived, if C commits an actual breach going to the root of the bargain, A has a right, by virtue of the contract already made, to say he will not proceed further, and he may refuse notwithstanding B's desire to waive his rights and proceed. The same necessity of a new bargain which in the case first put prevents A from altering the existing position prevents B in the second case from affecting A's acerued tights. It is the second case that arises here. The time for per- _ formance having arrived and an actual fundamental breach having occurred, Rogers is entitled to say "I will not proceed further. There is nothing to compel me." Bowen cannot affect Rogers's rights in that regard, and Bowen has no right to compel Rogers to agree to what Blackman may desire. Blackman, who is a director of the appellant Company and who as such director agreed to adopt Bowen's sale to the Company, and who is interested in sharing _ whatever Rogers might be paid for transferring his process, naturally does not join Rogers in this action. But his wish is immaterial unless Rogers concurs. Rogers, having joined all parties interested in the suit, had a right to ask a Court of equity to declare, in the

H.C. or A. circumstances as they existed when he commenced his proceedings,

1918. 'that he was not bound to proceed further with the transaction.

Lion Wurre Having established his necessary facts, his status is clear. The

pee aD: case of Cullen v. Knowles (1) is a clear authority. RENEE In the result, the appeal should be dismissed with costs. Tsaaes J. en [Note. - As to the third question see per Lord Wrenbury in the

case of Bradley v. Newsum, Sons & Co. Ltd. (2), the report of which was not available to us until after this judgment was delivered. - LAL, GER)

Solicitor for the appellants, R. W. Fraser. Solicitors for the respondents, Pigott & Stinson ; Dodds & Richard- son; R. W. Fraser.

% Exchanges Guarantee (1) (1898) 2 Q.B., 380. (2) 119 L.T., 239, at p. 250. g yi Gaara (CSR 185 (HIGH COURT OF AUSTRALIA.) THE COMMONWEALTH . fi e 3 . APPELLANTS ; DEFENDANTS, AND HAZELDELL LIMITED Fs 4 . : . RESPONDENTS. PLarntIFrs,

ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES.

Land - Acquisition by Commonwealth - Compensation - Minerals - Reservation of all minerals in Crown grant - Right of public to mine for " all minerals" - Sub- stance proclaimed a mineral - Limestone - Lands Acquisition Act 1906 (No. 13 of 1906), secs. 26, 37 - Crown Lands Alienation Act 1861 (N.S.W.) (25 Vit

1), secs. 13, 18 - Crown Lands Act 1884 (N.S.W.) (48 Viet. No. 18), secs.

4, 5, 6, 7 - Mining Act 1906 (N.S.W.) (No. 49 of 1906), secs. 3, 45, 46.