Ritter v North Side Enterprises Pty Ltd

High Court of Australia|1975-07-01|Before: Murphy JJ, Gibbs J

High Court of Australia Gibbs, Stephen and Murphy JJ. Ritter v North Side Enterprises Pty Ltd [1975] HCA 18

ORDER Appeal allowed. Judgment of the Supreme Court of Queensland set aside, and in lieu thereof, order that the appellants have leave to defend the action upon condition that they give security for the costs of the trial, and that the costs of the application be costs in the cause. Further order that the matter be referred to the Supreme Court of Queensland to fix the amount of security for costs and to give any necessary directions as to the conduct of the trial. Further order that the respondent pay the appellants' costs of the appeal. Further order that the security paid into court by the appellants be paid out to the appellants' solicitors.

The appeal is supported on three grounds. The first of these grounds is that the material before the learned primary judge raised a triable issue that the making of the contract had been induced by fraudulent misrepresentations made by one Warick Gray as agent of the respondent. The evidence on which the appellants relied in support of this ground was contained in an affidavit sworn by the male appellant which, so far as is relevant, was in the following terms:

I knew that the Caboolture Shire Council had not installed sewerage at that time and I informed the said Warick Gray of this. He then assured me that the Caboolture Shire Council would have sewerage in this area in less than four months. It was only after this had been made known to me that I considered the land to be of any use to us and I agreed to the purchase on this condition. The said Warick Gray agreed to this condition and asserted most emphatically that the said land would be connected with sewerage by the Caboolture Shire Council within four months from 29th April 1974.

On behalf of myself and my wife I was induced to enter into the said contract of sale by the said representations of the said Warick Gray and on condition that these representations were part of the agreement between the vendor and ourselves. This was agreed to on behalf of the plaintiff by the said Warick Gray.

The plaintiffs have breached the said representations and the said collateral agreements and we claim that the said representations were made fraudulently because the plaintiff's said agent well knew or recklessly so represented not caring whether it was true or false, that the said land would not be sewered by the said Caboolture Shire Council within four months from 29th April 1974 and in fact even at this stage the said land is not sewered and will not be so sewered before eighteen months from now at the earliest.

It will be seen that the appellants alleged both the making of representations and the making of a collateral agreement and it was submitted before us that the representations were promissory only, but it is clear to my mind that what was alleged was that fraudulent misrepresentations of fact were made. The representations alleged to have been made were as to the future, but they involved the assertion that Mr. Gray believed that the area would be sewered within the time mentioned. In other words, the fact allegedly misrepresented was the state of mind of Mr. Gray.

In my judgment the appellants have alleged with sufficient particularity a fraudulent misrepresentation of fact inducing the contract. It was submitted that the appellants have done no more than make general and vague allegations of fraud and we were referred to passages from the well-known decision in Wallingford v The Mutual Society [1] . However, in the present case the alleged fraudulent misrepresentations are fully particularized and although it is true that the evidence that would prove knowledge of their falsity is not set out, the material facts, as distinct from the evidence required to establish those facts, have been stated with particularity.

The respondent further relies on the fact that on 3rd September 1974, after the four months' period referred to in the representations had elapsed, its solicitors received a letter in the following terms from the solicitors for the appellants:

On discussion with our clients, we are instructed to inform you that by reason of present financial restrictions, our clients are unable to complete settlement on the due date, but are nonetheless quite prepared to proceed with the transaction as soon as possible. Our clients ask that your client kindly agree to an extension of time for effecting settlement for a further period of forty two days and we shall be pleased if you will allow us to hear from you thereon as soon as possible. It was said that this letter contained an unequivocal affirmation of the agreement and operated either as an election to affirm the agreement or by way of estoppel. However, it is nowhere alleged that when this letter was written the appellants had knowledge of the falsity of the representations. The letter may indeed prove to be a most important piece of evidence at the trial, but the undisputed fact that it was written is not in itself, and without more, sufficient to establish that the appellants' defence must fail.

In my judgment therefore, the allegations made by the appellants raise a triable issue upon which it is possible that the appellants might succeed at the trial. In these circumstances, in accordance with the established principles, the appellants should be given the opportunity to defend the action.

Since I have taken this view it is not necessary to say much about the second ground of appeal, which was that an issue was raised as to the fulfilment of a condition contained in cl. 25 (a) of the contract, which read as follows: "This contract is subject to separate titles being issued for the said land, such titles to be in order for settlement." Since this matter must go to trial, it seems right that the appellants should, at the trial, be allowed to canvass any relevant issues of fact that may arise in relation to the fulfilment of this condition.

The third ground argued was that the appellants had exercised a right to rescind the contract under s. 67 of the Auctioneers and Agents Act, 1971, as amended Q.

In relation to this ground, two questions arise, the first being one of fact, namely, whether the land, the subject of the contract, was the whole of the land contained in an existing certificate of title. That is a pure question of fact as to which I need say nothing, but if it is answered in the negative, the further question will arise whether the instruments referred to in sub-s. 3 (a) of s. 67 of the Act, were lodged with the Registrar of Titles and registered before the appellants became liable to pay the purchase price under the contract.

A right to avoid the contract can only arise under that sub-section if the instruments have not been lodged and registered before the purchaser becomes liable to pay the full purchase price. As to this matter, it was rightly pointed out by Mr. Mack, in argument, that under the present contract the price does not become payable until separate titles have been issued for the various parcels of land - see cl. 25 (b). The price therefore does not become payable until the instruments referred to in s. 67 (3) (a) have been lodged and registered, for it is obvious that the titles could not issue until those instruments had been lodged and registered.

It follows that no right to rescind this contract could ever have arisen under s. 67 of the Auctioneers and Agents Act.

I shall in a moment state the order that it is proposed to make in respect of this matter, but I would first say something as to the costs of the appeal. It seems to me that it was most inappropriate for a matter of this kind to be brought by way of appeal to this Court, although it is true that the appellants had a right under the existing law to bring the appeal here. An appeal of this kind would most appropriately be dealt with by the Full Court of the Supreme Court, and speaking for myself, I would in future be inclined to entertain the view that appellants who bring appeals of this kind to this Court, rather than to the Full Court of the Supreme Court, ought to be visited with consequences in costs. However, since no intimation has, so far as I am aware, previously been made to this effect, it seems to me that in the present case the costs of the appeal ought to follow the event.

I should add finally, that in my opinion this is a case in which security for costs of the trial ought to be given, because the letter to which I have referred casts a shadow of doubt over the defence which the appellants seek to raise.

I agree, and in particular would join in what has been said by the learned presiding judge concerning the question of costs of this appeal taken, as it has been, directly from a single judge of the Queensland Supreme Court to this Court.

I agree, except in respect of the order for costs. The case involves the construction of a Queensland Act, the Auctioneers and Agents Act, 1971-1972, and also involves questions of the interpretation and application of practice rules of the Supreme Court of Queensland.

The appeal should have been brought to the Full Court of Queensland. A very minor case has been brought here, although any appeal could and should have been taken to the Full Court of the Supreme Court of Queensland.

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Judgment (22 paragraphs)

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