Noske v McGinnis [1932] HCA 32

Noske v McGinnis [1932] HCA 32 - HCA 1932 case summary — Zoe

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Cosmopolitan Hotel, Swanston Street, Melbourne, for the sum of £35,000 payable immediately on the terms and conditions appearing therein. (3) It was a term of the said agreement, so far as related to the said sale, that the conditions of Table A of the Transfer of

Land Act 1928 (Vict.) should apply. (4) The plaintiffs duly paid the said purchase price, and were ready and willing to carry out the said agreement on their part. (5) The vendor has purported to rescind _ the said sale under condition 3 of the said conditions of Table A but has not repaid and refuses to repay to the plaintiffs the said purchase price paid as aforesaid. (6) By the said agreement it was also agreed that the plaintiffs would sell and the defendant would _ buy the pastoral property known as Warwillah near Booroorban in New South Wales comprising 38,934 acres or thereabouts of freehold and 3,062 acres or thereabouts of leasehold together with the buildings and other improvements thereon and also all the sheep, horses and cattle and all working plant on the property on the terms and conditions appearing therein for the sum of £124,535 3s. of which £35,000 should be paid immediately as a deposit in part payment _ of the purchase-money and the balance by instalments as therein set forth. (7) The defendant accepted title and on 4th September 1930 or thereabouts entered into possession of the said property and took delivery of the said stock and working plant. (8) The plaintifis have been at all times ready and willing to carry out the said agreement on their part, but the defendant has not paid the purchase price payable thereunder save and except the said deposit of £35,000 or alternatively has not paid any of such purchase price atall and has not completed the said purchase and has now renounced and refused to complete the same and has given up possession of and left the said property. (9) The plaintiffs have suffered damage by reason of the defendant's breach of the said agreement of 7th August 1930, The plaintiffs claimed: (1) repayment of the said sum of £35,000 referred to in par. 5 hereof; (1A) (added by amendment) damages for breach of the said agreement, £50,000 ;

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By his defence the defendant traversed pars. 1 to 8 of the statement of claim, and alleged : - (9) (a) If the defendant made the alleged or any agreement with the plaintiffs (which is not admitted) the defendant was induced to make the same by the representation made to him by the plaintiffs and/or their agents that the property Warwillah mentioned in the statement of claim had from the time of shearing in 1929 until the date of the defendant's inspection of the said property in August 1930 carried the whole of the sheep that were-upon the property at the time of the defendant's inspection and had during part of such period carried some thousands in addition. (b) The said representation was false and fraudulent and was made with intent to induce the defendant to make the alleged agreement. (c) The defendant having discovered the falsity of the said representation has elected and/or elects to rescind the alleged agreement. (10) Alternatively to par. 9 if the defendant made the alleged or any agreement with the plaintiffs (which is not admitted) upon the proper construction of such agreement they were terms thereof - (a) That any obligation on the part of the defendant to purchase and/or to complete the purchase of the property known as Warwillah mentioned in the statement of claim or the buildings, improvements sheep horses cattle and plant therein referred to should be conditional upon (i.) the purchase by the plaintiffs from the defendant of the property known as the Cosmopolitan Hotel or alternatively the defendant's right title and interest in such property being made and completed; (ii.) the property known as the Cosmopolitan Hotel or alternatively the defendant's right title and interest therein being transferred to the plaintiffs and such transfer and the undertaking by the defendant to pay and discharge certain liabilities of the plaintiffs to mortgagees and unpaid vendors of Warwillah and to Younghusband Limited being accepted as consideration for the purchase by the defendant of the said property known as Warwillah; (iii.) the defendant being able to make and give such title to the property known as the Cosmopolitan Hotel as

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outgoings in respect of the said Cosmopolitan Hotel and/or all interest payable in respect of a mortgage of £20,000 thereon and paying to the defendant such rates taxes charges other outgoings and interest in June 1935 and in the meantime securing payment thereof by a mortgage to be given by the plaintiffs to the defendant over the said Cosmopolitan Hotel; (vi.) the plaintiffs repaying to the defendant an amount equal to the liability of the plaintiffs to Younghusband Limited on advance account by two equal payments on 31st July 1935 with interest thereon at £7 5s. per cent per annum and in the meantime securing such payments and interest by a mortgage over the said Cosmopolitan Hotel: (vii.) the plaintiffs repaying to the defendant the sum of £10,000 on 31st July 1935 or within one month thereafter and in the meantime securing such repayment by a second mortgage on the title to the said Cosmopolitan Hotel ; (viii.) there being no rescission under the condition mentioned in sub-par. (6) of this paragraph of the sale and purchase of the said Cosmopolitan Hotel: (b) That if the plaintifis should make any requisition or objection on or to the title of the defendant to the said Cosmopolitan Hotel which the defendant should be unable or unwilling to remove or comply with the defendant or his solicitor might give to the plaintiffs or their solicitor notice in writing to rescind the said agreement at the expiration of seven days unless such requisition or objection should be withdrawn and if such notice should be so given and the requisition or objection should not be 'Withdrawn within seven days the said agreement or alternatively the sale and purchase of the said Cosmopolitan Hotel should thereupon be rescinded. (11) (a) The defendant was not in fact able to make or give such title to the said property known as the Cosmopolitan Hotel as the plaintiffs were bound or willing to accept. (b) The plaintifis did not accept the title of the defendant to the said property known as the Cosmopolitan Hotel. (c) The plaintiffs made a Tequisition or objection on or to the title of the defendant to the said Cosmopolitan Hotel which the defendant was unable and

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the Cosmopolitan Hotel having a frontage of approximately 31 feet to Swanston Street by a depth of 75 feet to Little Bourke Street in the City of Melbourne for the sum of fifty-five thousand pounds. This property is subject to a building lease which expires in June 1935. The property is also subject to a mortgage for £20,000 leaving an equity of £35,000 which shall be credited as deposit on purchase of Warwillah with sheep horses cattle plant thereon as above specified. The balance of purchase-money £89,535 3s. shall be paid in terms of a contract of the said land made by the present vendors with Michael Hogan and others in respect of the said property and which said sum represents the balance due under the said contract the liability of which shall be taken over by the present purchasers. Such balance of purchase-money is payable as follows :

£5,000 due 15th January 1931. £5,000 due 15th January 1932. £5,500 due 15th January 1933. £5,500 due 15th January 1934. £14,785 3s. due 15th January 1935. The above payments bear interest at the rate of 64 per cent per annum which is payable half- yearly. The balance £53,700 is represented as a mortgage to Edward Norton Settlement bearing interest at 6 per cent per annum payable half-yearly and due and payable on 15th January 1935 the liability of payment of such sum and interest thereon shall be taken over by the purchaser in terms of the contract. Special Conditions. - (1) The Cosmopolitan Hotel property to be acquired by the vendors of Warwillah Station as subject to a ground lease expiring in June 1935 of £312 per annum. The purchasers of Warwillah shall be entitled to receive the rents payable under such ground lease of the Cosmopolitan Hotel property and continue as though the holders thereof until same shall expire and shall pay all outgoings in respect of the property including interest on present mortgage land taxes compensation fees and other outgoings until the expiry of the said ground lease in June 1935. The present purchasers of Warwillah under this option shall also arrange the renewal or another mortgage in place thereof of the said mortgage of £20,000 until the said ground lease shall expire in June 1935. All amounts so paid by the present purchasers of Warwillah in respect of the outgoings of the Cosmopolitan Hotel property under

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the said hotel property. (2) The present vendors of Warwillah 'are indebted to Younghusband Limited to the sum of approximately £9,000 in respect of advances against the wool and sheep and produce ereof now on the Warwillah pastoral property. The present purchasers of Warwillah Station will arrange to take over this overdraft with Younghusband Limited to be reduced with the it wool clip from the property in view of the present sale price of the station being based on delivery of the station property with the sheep in the wool. The present vendors of Warwillah will repay to the now purchasers thereof the whole of the amount of such overdraft of approximately £9,000 so taken over by them as aforesaid on expiry of the ground lease of the Cosmopolitan Hotel 'property in June 1935 and this amount together with the amount "specified in condition 1 hereof shall be a further charge against the equity to be acquired by the present vendors of Warwillah in the Cosmopolitan Hotel property to be repayable on the expiry of the present ground lease thereof in June 1935 or within one month thereafter. The vendors agree to pay interest on this sum of £9,000 calculated at the rate of 7} per cent in one lump sum shall become payable in June 1935 or within one month thereafter such interest to be calculated from 31st July 1930. (3) The Warwillah pastoral lands with all buildings and improvements and with plant cattle and horses shall be deemed to be taken as delivered on 31st July 1930 to the purchasers thereof free of all encumbrances other than the sum of £89,535 3s. due as aforesaid under and in terms of the contract of sale from M. Hogan and others with the present vendors of Warwillah. The sheep on Warwillah shall be taken as delivered in the wool as on 31st July 1930 the date of commencement of shearing and all adjustments of rents rates interests taxes wages and other outgoings in respect of the property together with the receipts of all profits and earnings of the property shall be payable or receivable by the present purchasers as and from 31st July 1930. (4) The condition of this sale shall be that on the expiry of the

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expire in June 1935 is that on the expiry of such ground lease in June 1935 the present vendors of Warwillah shall be entitled to vacant possession of the said hotel lands . . . together with the rights of the victualler's licence now held in connection with the hotel premises erected thereon free of any encumbrances whatsoever save and except the liability of a first mortgage of £20,000 and the charges or amounts to be repaid by the present vendors of Warwillah to the purchasers thereof in terms of conditions 2 and 3 hereof and to be charges against the equity to be acquired by the vendors of Warwillah in the said Cosmopolitan Hotel property which said equity shall be considered to have been acquired as and from 31st July 1930. All adjustments of rates taxes interest and other outgoings to be adjusted as between vendor and purchaser in respect of the said hotel property shall be adjusted as and from that date. (5) So far as the sale of the said hotel property is concerned from the purchasers of Warwillah to the vendors thereof for purposes of inspection of title making requisitions thereon and acceptance thereof the conditions of Table A of the Transfer of Land Act 1928 of the State of Victoria shall apply thereto. So far as relates to the sale of the Warwillah pastoral property from the present owners thereof to the above-named purchasers the conditions set out in Conveyancing Act 1919 of New South Wales shall for purposes of inspection requisition and acceptance of title in respect of the said land be applicable thereto subject to any alteration or modifications if any to such said conditions contained in the contract of sale under which the present vendors acquired the said land. This option of purchase is given to the said T. J. Noske and others on whose behalf he is at present negotiating to purchase the Warwillah pastoral property sheep cattle horses and plant thereon as aforesaid for a period of eleven days expiring at 11.30 a.m. on 9th August 1930 and must be accepted in writing on or before the expiry of such period. Such said acceptance to be delivered at the office of O'Connor, Egan & Smyth, 117 William Street, Melbourne on or before the expiry of such period. . . . Dated this 30th day of July 1930. The purchasers of hotel property will when called upon to do take a transter of the said hotel property and shall simultaneously

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to T. J. Noske or to whom he may direct to secure the amounts of principal and interest due under clauses 2 and 3 hereof as shall be payable under clauses 2 and 3 hereof. Likewise the purchasers of the hotel property may call on T. J. Noske or the registered proprietor of the Cosmopolitan Hotel property to give them a transfer of the hotel property and accept a second mortgage for to secure such moneys as shall be repayable under this agreement. For and on behalf of Warwillah Pastoral Company (Signed) I. M. McGinnis. I agree to purchase the above property in terms of above offer save and except the following alterations - (1) The price for Warwillah to be reduced by £10,000 in the event of Mrs. McGinnis and others being able to arrange with the executors of Michael Hogan and others the vendors to them to reduce the amount due under their contract by such amount of £10,000 then they may have the benefit of such reduction otherwise Mrs. McGinnis and others the present vendors of Warwillah shall repay to the present purchasers the said sum of £10,000 on 31st July 1935 or one month thereafter such amount to be secured by second mortgage on the title of the said hotel property. (2) The present purchasers of Warwillah to take over the present advance account with Young- husband Limited and after deduction of the proceeds of the present wool clip the amount then found on date of such sale due and owing _ to Younghusband Limited shall be repaid with interest at 7} per cent by the present vendors to the present purchasers in two equal amounts on 31st days of July in the years 1932 and 1935 and such payments to be secured by second mortgage on the title to hotel property. It is agreed that in the event of the present purchasers of the hotel property reselling same at any time before the due date _ of such last-mentioned payments then the whole of such amount of balance taken over from Younghusband Limited shall become due and payable and be repaid to the said T. J. Noske or his nominees out of deposit moneys received on the resale of the said hotel. Dated 7th August 1930. Delivery to be given and taken as and from 2nd September now next and adjustments to be made as and from that date. The purchasers of Warwillah agree to take present shearing tally as the count. for sheep on property. (Signed) T. J.

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Noske. We confirm the above sale. (Signed) Warwillah Pastoral Company, I. M. McGinnis." . On 22nd August 1930 the plaintifls made a requisition asking whether the hotel property was "subject to any unregistered mortgages, charges, liens, rights or encumbrances of any kind other than those disclosed on the title or by the usual searches." On 7th October 1930 the defendant's solicitors wrote stating: " We have been notified by Messrs. Arthur Phillips and Just who are acting for Mrs. C. C. Noske that she is claiming that Mr. Noske is a trustee for her of the Cosmopolitan Hotel or alternatively an undivided share therein and they also inform us that they have lodged a caveat against the title forbidding the registration of any transfer or dealing." On 8th October 1930 the plaintiffs' solicitors replied as follows : - "Referring to your letter of the 7th inst. embodying replies to our requisitions and our interview yesterday afternoon, on behalf of Mrs. McGinnis, we require your client to arrange forthwith for the withdrawal of the caveat lodged on behalf of Mrs. Noske, and to transfer the hotel title to our client, subject only to the encumbrances referred to in the contract of sale, or alternatively to pay Mrs. McGinnis in cash an amount equivalent to the value of your client's equity in the hotel as fixed by the contract, viz., £35,000 less £10,000 the amount by which it was agreed the price of Warwillah should be reduced, and less also the amount of her indebtedness to Younghusbands which, in terms of the contract, is to be taken over by Mr. Noske." The defendant's solicitors replied on 13th October 1930 : - * Our client is unable to compel or arrange for the with- drawal of the caveat lodged on behalf of Mrs. Noske or to make the transfer of the hotel property to your client except subject to Mrs. Noske's interest therein. Your client is not entitled to demand the second alternative set out in your letter, viz., the payment of cash. We now give you notice that it is our client's intention to rescind the contract at the expiration of seven days unless your Tequisitions and objections above referred to be in the meantime withdrawn." The plaintiffs' solicitors refused to withdraw their requisition, and on 21st October 1930 the defendant's solicitors purported to rescind the contract on his behalf. The plaintiffs' solicitors replied on 22nd October 1930 : - '' We would once more

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as subsidiary. Questions relating to procedure are matters quite divorced from the questions which arise in the present case. Though the effect of this Act is to deprive the parties of their rights for a time, the matter is governed by the proper law of the contract and not y thelex fori. The contract was rightly rescinded under the Transfer of Land Act. There was no evidence on which the learned trial judge could find that the caveat was the defendant's caveat. What s to be shown under the clause is the defendant's inability or unwillingness to carry out the contract. Unless there is some

evidence to support the Judge's finding that it was the defendant's caveat and not his wife's, the right of rescission arose. Condition Fe of Table A applies, as the question relates to the title to the hotel. 'Though condition 3 may not directly authorize the rescission of the sale of the grazing property, it does so indirectly as the two transactions could not be severed. The parties intended that if the purchaser should be unable to make title to the hotel he should have the right to rescind the contract to purchase the station perty. There are sufficient facts shown to prove inability on the of the defendant whatever view may be taken as to the credibility _ of these two witnesses, and there is no evidence of any fraud. There was no evidence to show that the defendant could have had the caveat removed. There is an interest outstanding in a third party which disabled the defendant from carrying out this contract, and he did not enter into this contract with any reckless disregard of this fact so as to prevent the clause as to rescission in the contract
operating. Apart from condition 3, the rule in Bain v. Fothergill (1) is sufficiently wide to prevent damages being recovered against the defendant. Day v. Singleton (2) related to the sale of leasehold. The limit of Bain v. Fothergill is where the vendor has made no reasonable efforts to carry out his contract. _° [Evarr J. referred to Braybrooks v. Whaley (3).] _ There was no sufficient evidence to justify the amount of damages awarded. If this contract had been carried out on 24th October 1930 the plaintiffs would have had a hotel worth £35,000. That (1) (1874) LR. 7 HLL. 158, at p. 208. (2) (1899) 2 Ch. 320,

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the deduction of a mortgage of £20,000; (2) £89,535 - represented by £35,785 of unpaid purchase-money owing by the respondents to the vendors from whom they had acquired the station property and by £53,750 secured by way of mortgage over the property. Clause 5 of the contract provided that so far as the sale of the hotel was concerned from the appellant to the respondents for purposes of inspection of title, making requisitions thereon and acceptance thereof the conditions of Table A of the Transfer of Land Act 1928 of the State of Victoria should apply thereto. Similarly the conditions set out in the Conveyancing Act 1919 of New South Wales were made applicable to the sale of the station property from the respondents to the appellant. Requisitions were made under these provisions and the parties proceeded under the contract in a regular manner until 7th October 1930, when, in answer to a requisition made on behalf of the respondents inquiring whether the hotel was subject to any unregistered mortgages, charges, liens, rights or encumbrances, the appellant's solicitors wrote as follows: "We have been notified by Messrs. Arthur Phillips & Just who are acting for Mrs. C. C. Noske that she is claiming that Mr. Noske is a trustee for her of the Cosmopolitan Hotel or alternatively an undivided share therein and they also inform us that they have lodged a caveat against the title forbidding the registration of any transfer or dealing." On 8th October 1930 respondents' solicitors replied requiring the appellant to arrange forthwith for the withdrawal of the caveat lodged on behalf of his wife and to transfer the hotel subject only to the encumbrances referred to in the contract or to pay the amount of the purchase-money, £35,000, fixed by the contract as the value of the equity in the hotel, less a sum of £10,000 by which the price of the station property had been reduced by agreement between the parties. The appellant's solicitors replied on 13th October that their client was unable to compel or arrange for the withdrawal of his wife's caveat and that unless the requisition was withdrawn he would rescind at the expiration of seven days. The respondents refused to withdraw their requisition, and on 2Ist October 1930 the appellant's solicitors purported to rescind the - contract on his behalf. The purported rescission was rested on the . 3rd condition of Table A of the Victorian Transfer of Land Act 1928. ;

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not incorporated in the contract by the provision which adopts the conditions of Table A only for purposes of inspection of title, making requisitions thereon and acceptance thereof. A power to rescind a contract in consequence of a purchaser insisting upon requisitions he has made cannot be considered as incidental to the making of requisitions or the acceptance of title. The New South Wales conditions incorporated with respect to the station property contain no analogous provision. I am disposed to think that, if the power of rescission were meant to apply to the hotel, clearer words should have been used. Many difficulties have arisen in the attempt of the appellant to rely upon it as a coherent part of this somewhat ill-drawn contract. Standing as he does in the situation of vendor of the hotel, he claims that he can rescind the entire contract and thus relieve himself of his obligation to acquire the station property, of which, to put it mildly, he appeared to be no longer an eager purchaser. The respondents retort that if the condition be a part of the contract its operation must be confined to the sale of the hotel and that, if in his character of vendor of that property he is unable and unwilling to comply with a proper Tequisition and so prefers to rescind its sale, the contract must be understood to mean that he should pay the sum of £35,000 (less the agreed deduction) which otherwise would be satisfied by the transfer of the hotel. The appellant replies that the contract is entire and severance isimpossible. In the Supreme Court of Victoria Macfarlan _ J. assumed that the condition was incorporated and proceeded to investigate the bona fides of the exercise of the power it confers. After listening to evidence of the relations between the appellant and his wife, and of the circumstances in which she was alleged to have acquired and to retain an equitable interest in the land the legal estate of which was vested in the appellant, his Honor said :

*Treject the evidence of an estrangement and the evidence of the Parties, that is, of the defendant and his wife. . . I am quite satisfied _ that the defendant had only to ask, and this caveat would have been removed, but further than that I am satisfied that it was his caveat, that the objection was his and the caveat was his. I am willing, if the parties desire it, to give my reasons for arriving at

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the matter there." The parties manifested no further curiosity in respect of his Honor's reasons but the appellant contends that whatever may have been the verba que tacite insunt there is no affirmative evidence, first, that his wife had no interest; second, that he instigated the caveat, and, third, that he could secure its removal. His difficulty is that, in the circumstances set up by him, if his wife possessed an independent or adverse interest, he knew it existed when he entered into the contract. He must therefore be taken to have recklessly entered into the contract in a rash expecta- tion of it proving acceptable to a wife he could not cajole. control or coerce. Adopting, therefore, the only logical alternative to that which commended itself to Macfarlan J. the appellant occupies a situation which, according to the well settled interpretation of such a condition as clause 3 of Table A affords no ground for rescission under the power it confers (In re Des Reaux and Setchfield's Contract (1) ). A vendor who enters into a contract with full knowledge that his ability to complete depends upon the subsequent adoption of the bargain by an equitable owner of a share or interest in the estate, cannot shelter himself from the consequences of his recklessness under a clause directed to the unwillingness or inability of a vendor to comply with requisitions upon title. If, however, the hypothesis accepted by Macfarlan J. be adopted and the matter is determined upon the assumption that the caveat was a pretended and not a real obstacle to completion, it is equally clear that the appellant cannot rely upon the third condition of Table A. In any view therefore the appellant's attempted rescission amounted to a repudiation of the contract. This repudiation the respondents did not accept before action brought as putting an end to the contract and leaving the appellant liable to them for damages for loss of the bargain. On the contrary, they attempted to hold him to the contract by bringing an action for specific performance. However, this proceeding, in the course of its rather unsteady progress, lost some of its unequivocally equitable character. when by amendment a claim was added for damages for loss of the contract. As a result specific performance was not decreed, as, so far as I can see it might

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recoverable by a purchaser against a vendor of land who cannot perform because of the existence of some outstanding interest. A singular feature of this contention is that the position of purchaser and not of vendor is really occupied by the party who relies upon it, The postulated defect of title relates not to the land the successful

disposal of which under the contract would have enriched the claimants but to the land to be transferred as part of the price. But in any case the modern authorities exclude from the application of this somewhat difficult rule breaches of his contract by a vendor occasioned by his deliberate omission. The most recent expositions of this rule are contained in the judgments of Sargant J. in In re Daniel ; Daniel v. Vassall (2), and of Russell J. in Keen v. Mear (3), where he says: 'In re Daniel was a case of a contract for sale of a _ property free from incumbrances by a vendor who must have known that he could not pay off a mortgage on the property sold with other property if the mortgagees refused, as in fact they did, to release the property sold from their security." Sargant J.in In re Daniel said (4) : - "(Contracts for the sale of real estate, like other contracts for sale, cast on vendors a general liability for damages for non-fulfilment of contract, subject only to an exception in a very special and limited class of cases, and that, unless a case is brought within that special class, the general rule applies. In Day v. Singleton (5) the question of the vendor's conduct was material, because, on the view taken by the Court, it prevented the case from falling within the special class by reason of the failure being due, in fact, not to inability to make title, but to deliberate abstention from doing so. But if the case, as here, is outside the special class of exception for another reason, namely, because it is a case merely of inability to convey, the question of conduct is immaterial, and the vendor is liable for non-fulfilment of contract, wholly irrespective of misconduct. The question, indeed, seems to me to be covered by the following passage in the

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date the appellant purchased was a very reasonable value; that he bought it very well. The looseness of these expressions makes it a little uncertain whether the witness considered the money sum specified to be reasonably low or the entire bargain to be satisfactory. But Macfarlan J., who heard the evidence, was in the best position to interpret it. He is not likely to have overlooked the predilection 'of those who negotiate contracts of exchange for putting the highest possible figures against each of the properties. Notwithstanding these considerations, his Honor adopted the figure of £114,525 as

the commencing point, and in my opinion a Court of appeal who has not seen or heard the witnesses cannot interfere with his conclusion in this respect. He next had to consider how much of this value had disappeared when the property was thrown back on the : respondents' hands. He arrived at what at first sight appears the astonishing conclusion that one-third of the value had disappeared in the short space of three months. But this fact was directly _ deposed to by a valuer of experience and was explained by the economic and political events of the period. Tumbling prices of primary products, impending and actual political changes, financial disasters and the uncertainty of the value of money, promoted apprehensions, not to say terrors, which would make values conjec- tures rather than assessments of sums actually obtainable. I think 'itis impossible to say that the depreciation fixed upon by the witness and adopted by the Judge is unreasonable. On the other side of the transaction his Honor accepted evidence which showed that for various reasons the hotel which the respondents would have acquired if the transaction had gone through possessed but little of the value assigned to it in the contract, viz., £55,000, considered as unencum- _bered. It cannot be said that Macfarlan J. adopted too high a value of the hotel as at the date of breach. No doubt the depreciation or reduction in values leaves the encumbrances greater than the -yalues of the properties, but this is unimportant since, at least during 'the period we are concerned with, personal covenants continued to impose a liability. A further difficulty arising from the award of damages was mentioned from the Bench but not relied upon by the parties. Apparently the respondents' election to treat the appellant's

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A third contention relied upon by the appellant is that damages for the respondents' loss of the contract ought not to have been awarded against him because his failure to perform it arose out of matters of title. It is to be noticed that in this case the party recovering damages is in the position of vendor because the respon- dents' loss consists in the difference between the amount or value which they would have obtained for their land if the contract had been performed and the value of the land as it remains on their hands. The appellant, however, insists that the contract remained unperformed because of his difficulty in making a good title to the hotel and that the reason of the rule in Flureau v. Thornhill (1) and Bain v. Fothergill (2) applies. However this may be, the circumstances in which he renounced the contract do not bring him within the rule. If in fact his wife had no interest in the hotel, he is simply in the position of one who, being able to carry out his contract, refuses to do so. If, on the other hand, knowing that his wife had an equitable interest, he made the contract relying upon his ability to obtain her consent or acquiescence, it is clear that upon the evidence the learned Judge was at least entitled to conclude that he had made no honest effort to carry the contract through. His own reliance, when he made the contract, upon his wife's subsequently giving her concurrence would place upon him the burden of showing why it was that his anticipations were unfulfilled, and of establishing that he himself had done what he could to carry through the transaction in the manner he hoped to do when he entered upon it. There is every reason to suspect that he at least welcomed his wife's intervention, and he has failed to establish that he took any steps to secure her concurrence, or to prevent the lodgment or to obtain the removal of the caveat. In these circum- stances, I think the learned Judge was right in giving damages for the loss of the bargain. The evidence upon which he acted in _ assessing the amount of damages is not very satisfactory. But it

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made by the appellant, because £55,000 was the contract price and the value therein assigned to the hotel. The result in damages to the respondents is the same whatever the true value of the hotel at the time of the contract, because the price or value equivalent assigned by the contract to the hotel was £55,000. The damages awarded cannot be questioned if one accept the "evidence of a depreciation of one-third in the value of Warwillah. The witness M. K. Smythe asserted that, between August 7th 1930 and October 21st of the same year, a period of two and a half months, Warwillah depreciated by at least 33 per cent, and his Honor accepted this evidence, the figure being £38,178. : Now, Smythe himself made no sale of any Riverina property between August and December of that year. I have read the evidence of this witness very carefully, and in my opinion the suggestion of a fall of nearly £40,000 in the fee simple value between the two dates is quite incredible. That there was a fall in values during the year is clear enough. Another witness, W. D. Adams, says there was a fall in values from 10 per cent to 15 per cent. Neither of the witnesses could support their evidence by reference to any actual sales, but both based their opinion to some extent upon a change of government in New South Wales, though that did not take place until after the date of the breach! It is obvious that both were hazarding a more or less plausible guess about a decline in values over a very short period of time. But comparison was almost impossible and the witnesses have been affected by subsequent events which bore no relation to the real question before them. Such evidence is no satisfactory basis for the award of damages in contract. Tt was for the respondents to put forward evidence upon which a fair estimate of damages could be based, and they failed to do so. The importance of this aspect of the appeal is great because, if the reduction in value of Warwillah over the period had been 10 per cent instead of 33} per cent, the depreciation would have been only £11,453, not £38,178, and the respondents' damages would have been nominal. Even if the depreciation had reached the percentage of 25 (enormous as it is, having regard to the time), the depreciation

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Judgment (172 paragraphs)