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[1950] HCA 35
respondent. Appeal dismissed with costs.
A grazier sold his large New South Wales station for cash plus an annuity and promises to keep employing family. He later worried about a big tax bill on the livestock and tried to get out of the deal, claiming he had been misled and that government approval came too late. The High Court said the buyer’s agent may have been less than frank about tax advice but the point was raised too late, the contract had been varied orally to allow more time for approval, and the approval had in fact arrived before any proper cancellation. Promises to employ the relatives could be handled by a separate deed. The sale therefore had to proceed.
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2,188 words · generated 24/04/2026
The defendant, Mr Suttor, owned the 45,000-acre Gundowda station near Mudgee. Negotiations conducted by McManamey led first to an option in June 1947 that contained an indemnity against income tax on stock. That option lapsed. On 30 September 1947 Mr Suttor signed a contract with McManamey as agent for a company yet to be incorporated. The price was increased to £85,000 cash (an extra £2,000 intended to cover tax) and the annuity was raised from £480 free of tax to £600 subject to tax. The formal contract with the newly formed plaintiff company was executed on 20 October 1947. It was expressed to be subject to the Treasurer’s consent under wartime economic regulations and contained two critical clauses. Clause 12 provided that if consent was not obtained within two months (or any agreed extension) the contract would be “deemed to be cancelled” and, upon return of the deposit, neither party would have further liability. Clause 8 required the purchaser to retain three of Mr Suttor’s relatives as employees for up to eight years at stipulated salaries and bonuses and to execute a deed with them “more effectually to carry out” those provisions.
No linked legislation citations have been extracted yet.
Before signing, McManamey had consulted Walter, the defendant’s accountant, who warned that the £2,000 allowance was likely to be grossly inadequate because s. 36 of the Income Tax Assessment Act 1936 could bring the difference between book value and market value of the 12,000 sheep into assessable income. The trial judge accepted Walter’s account but found it not proven that McManamey passed any reassuring misrepresentation on to Mr Suttor. Consent was obtained on 5 January 1948 after McManamey gave evidence (accepted by the trial judge) of conversations at Gundowda in late December 1947 that varied cl. 12 by extending time. Mr Suttor’s solicitor wrote on 15 January 1948 asserting automatic cancellation from 20 December 1947. The plaintiff sued for specific performance. After a twelve-day trial Roper C.J. in Eq. rejected the fraud defence and ordered specific performance. On appeal to the High Court the defendant advanced three main arguments: (1) fraud or at least sharp practice justifying refusal of specific performance, (2) automatic cancellation under cl. 12, and (3) that cl. 8 made the contract one for personal services incapable of specific performance. All were rejected and the appeal was dismissed with costs.
The Court began with the fraud allegation. It reiterated that the onus lay squarely on the defendant and that the trial judge’s finding, after seeing the witnesses and resolving conflicts, could not safely be overturned. Even the “scored on the £2,000” admission was explained as having been made in February 1948, not on 30 September 1947, once the judge accepted McManamey’s denial that he had ever offered to increase the sum to £4,000 or £5,000.
The more substantial argument—that suppression of Walter’s warning amounted to sharp practice and rendered specific performance inequitable—was met with a procedural bar. The point had not been pleaded, had not been argued before Roper C.J. in Eq., and did not appear in the grounds of appeal. Citing Connecticut Fire Insurance Co v Kavanagh [1892] AC 473 and Grey v Manitoba and North Western Railway Co of Canada [1897] AC 254, the Court held that an appellate court will not entertain a new point that might have been met by further evidence or that requires the trial judge to exercise a discretion he was never asked to exercise. The trial judge’s unchallenged finding that Mr Suttor believed the contract protected him (particularly by bringing stock in at book value) was fatal to any claim of clear injustice. Evidence that tax might exceed £11,000 was discounted because it wrongly credited the vendor with post-contract wool proceeds that belonged to the purchaser. In any event, no assessment had issued and expert opinions differed; the defendant might still “score on the £2,000”.
On cl. 12 the Court gave two independent answers. First, an oral variation extending time had been proved on evidence the trial judge accepted; because the Statute of Frauds (then s. 54A of the Conveyancing Act 1919) had not been pleaded, the variation was admissible. Second, and more fundamentally, the clause was construed, following Lord Atkinson in New Zealand Shipping Co Ltd v Société des Ateliers et Chantiers de France [1919] AC 1, as creating a voidable rather than automatically void contract. The Court held that the same construction applied whether or not the failure to obtain consent resulted from default. Because the vendor had not clearly elected to avoid before consent was obtained on 5 January 1948, and had in fact treated the contract as subsisting, the purchaser could enforce it. The later letter from the vendor’s solicitor proceeded on the erroneous premise of automatic cancellation.
Clause 8 was disposed of by reference to the distinction between executed and executory agreements. Citing Lord Selborne in Wolverhampton and Walsall Railway Co v London and North Western Railway Co (1873) LR 16 Eq 433, the Court held that the clause required only that the purchaser execute a deed with the three employees. Once that deed was executed the vendor would drop out; the employees would have direct rights. The clause was severable, its essential terms were settled, and the approval by the purchaser’s solicitors was limited to machinery provisions. Specific performance of the main bargain was therefore not impeded.
The mistaken reference to the “National Security Act” rather than the Defence (Transitional Provisions) Act 1946 was cured by falsa demonstratio non nocet. The contract was read as subject to the Economic Organization Regulations. Regulation 10(1) preserved contractual rights notwithstanding contravention of the consent requirement, and the Court adhered to its earlier view in O’Neill v O’Connell (1946) 72 CLR 101 that the regulations did not invalidate the underlying agreement for the purposes of specific performance.
Before Suttor v Gundowda the law on conditional contracts was unsettled in Australia. New Zealand Shipping had established that a party could not rely on a condition whose non-fulfilment was caused by his own default, but it was unclear whether the clause was void or merely voidable when the event occurred without default. The High Court settled that the clause is always construed as creating a voidable contract; the construction does not change with the facts. The decision also reinforced the strict rule against new points on appeal where the trial judge’s discretion is engaged or further evidence might have been called. The discretion to refuse specific performance for “sharp practice” (recognised in Summers v Cocks (1927) 40 CLR 321 and the Sydney Consumers’ Milk case) was confirmed but subordinated to procedural fairness.
After the decision, vendors could no longer assume that a two-month consent clause would automatically end a land contract; they had to make a timely and unequivocal election to avoid. Purchasers gained certainty that oral extensions would be effective if the Statute was not pleaded. The case became the leading Australian authority on the void/voidable distinction in conditional contracts and on the limits of raising discretionary equitable defences for the first time in the High Court. The treatment of cl. 8 confirmed that promises to confer benefits on third-party employees by deed do not render the entire sale contract unenforceable.
The Court’s adoption of Lord Atkinson’s speech in New Zealand Shipping is central: “It is undoubtedly competent for the two parties to a contract to stipulate by a clause in it that the contract shall be void upon the happening of an event over which neither of the parties shall have any control… But if the stipulation be that the contract shall be void on the happening of an event which one or either of them can by his own act or omission bring about, then the party who by his own act or omission brings that event about cannot be permitted either to insist upon the stipulation himself or to compel the other party, who is blameless, to insist upon it.” In plain English: you cannot engineer the failure of a condition and then use that failure to escape the deal.
On new points on appeal Lord Watson’s words were adopted: “When a question of law is raised for the first time in a court of last resort… upon facts either admitted or proved beyond controversy, it is not only competent but expedient… The expediency of adopting that course may be doubted, when the plea cannot be disposed of without deciding nice questions of fact.” Translation: the High Court will only hear a brand-new argument if the facts are completely settled; if it would require re-litigating facts or exercising a discretion the trial judge never considered, the argument comes too late.
The threshold for refusing specific performance was stated by reference to Fullers Theatres: “It is well established that the court cannot judicially exercise its discretion by refusing the remedy in a case of the appropriate class, unless some sound and recognized reason is shown.” Plain English: once you have a valid contract, the judge does not simply refuse to enforce it because he thinks it unfair; there must be a recognised legal reason, usually serious hardship or unconscionable conduct.
On cl. 8 the Court quoted Lord Selborne: an executory agreement is one in which “something remaining to be done, such as the execution of a deed… in order to put the parties in the position relative to each other in which by the preliminary agreement they were intended to be placed.” Translation: the main contract is not the final document; the deed with the employees finishes the job, so ordering the purchaser to sign the deed completes the bargain the vendor contracted for.
The decision is triggered whenever a land contract contains a time-limited consent or approval clause and one party later asserts automatic termination. It applies to any attempt to raise, for the first time on appeal, a discretionary equitable defence (sharp practice, hardship, unclean hands) that depends on factual findings the trial judge was never asked to make. It is engaged when a vendor claims he was misled about tax consequences of a walk-in walk-out sale but the purchaser can point to the vendor’s own belief that book values would protect him. The case governs contracts that require execution of a further deed with identified third parties (employees, family, trustees) because the deed is treated as the final instrument. It also applies to mistaken statutory references cured by falsa demonstratio and to contracts made subject to the Economic Organization Regulations or analogous consent regimes. Any dispute in which an oral extension of time is alleged and the Statute of Frauds has not been pleaded will engage the procedural ruling on proof of variation.
Although the judgment itself does not cite subsequent authority, its reasoning has been applied consistently to the construction of conditional clauses. The voidable-not-void analysis drawn from New Zealand Shipping and refined in Suttor has been treated as settled law. The strict approach to new points on appeal, grounded in Connecticut Fire Insurance and Grey v Manitoba, has been followed whenever a party has sought to introduce a discretionary specific-performance defence only at appellate level. Courts have continued to treat cl. 8-style employee-benefit provisions as severable and specifically enforceable by requiring execution of the contemplated deed. The affirmation of O’Neill v O’Connell on the non-invalidating effect of the Economic Organization Regulations has been regarded as authoritative. The emphasis on the vendor’s own understanding of tax risk has been used to deny hardship claims where the vendor could have obtained his own advice but chose to rely on the purchaser’s agent. In short, the decision has been treated as establishing bright-line procedural and constructional rules rather than a broad equitable discretion.
The judgment leaves open the precise operation of s. 36 of the Income Tax Assessment Act 1936 on a walk-in walk-out sale where stock is brought in at book value; the Court noted only that experts differed and no assessment had issued. It did not decide whether the £2,000 allowance would in fact be adequate or whether the Commissioner could or would invoke the section once the full facts (including post-contract wool proceeds) were known. The precise boundaries of “clear election to avoid” under a cl. 12-style provision were not exhaustively defined; the Court held only that the vendor’s solicitor’s letter came too late. The interaction between the discretionary refusal of specific performance for suppression and a properly pleaded defence at trial remains fact-sensitive and was not fully explored because the point was raised too late. Whether a vendor who has received independent advice that tax will be payable can still claim hardship if the purchaser suppresses a contrary warning was not decided. Finally, the Court left untouched the question whether regulation 6(10) could ever validly substitute a shorter period than six months so as to render the contract unenforceable rather than merely penal. These issues continue to require careful factual analysis in any subsequent dispute.
High Court of Australia Latham C.J. Williams and Fullagar JJ. Suttor v Gundowda Pty Ltd [1950] HCA 35
The Court delivered the following written judgment: -
Sept. 26 Latham C.J., Williams and Fullagar JJ.
This is an appeal by the defendant from a decree made by Roper C.J. in Eq., sitting as the Supreme Court of New South Wales in its equitable jurisdiction, ordering the specific performance of a contract made on 20th October 1947 between the plaintiff as purchaser and the defendant as vendor for the sale to the plaintiff on a walk-in walk-out basis of the defendant's station property Gundowda of 45,000 acres or thereabouts situated near Mudgee in the State of New South Wales. The purchaser agreed to pay £85,000 in cash, that the vendor should be allowed to reside in the homestead for his life and be supplied with milk, meat and riding horses, to pay the vendor an annuity of £600, and to retain the services of three relatives of the vendor, W. B. Suttor, A. C. McGrath and C. W. Howard, who worked on the station. The purchase price for the stock was £3,550, this being the value at which they stood in the defendant's books. The sale was the culmination of negotiations between one McManamey and the defendant extending over several months. In the first instance these negotiations resulted in an option to purchase dated 29th June 1947 expiring on 21st July 1947 by which McManamey agreed, if the option was exercised, to pay £12,000 cash free of commission, to take over the existing mortgage to the Bank of New South Wales at £66,000 and the existing wool lien to the N.Z.L. & M.A. Pty. Ltd. at £5,000, to allow the defendant to reside in the homestead for his life and to pay the defendant an annuity of £480 free of income tax. McManamey also agreed that in the event of the option being the basis of completion of the sale of Gundowda the purchaser would pay and be liable for all or any income taxation that might be assessed against the vendor in regard to any stock changing hands on the sale.
This option was not exercised but on 30th September 1947 the defendant entered into a contract with McManamey as agent for a company to be formed and known as Gundowda Pty. Ltd. for the sale of the station to the company. On the same day, after the contract had been signed, the defendant signed another document dated 24th September 1947 renewing the terms of the option for a period of fourteen days from the date thereof. The contract of 30th September differed from the options in that, inter alia, it provided for a cash price of £85,000 instead of the purchaser paying £12,000 cash and taking over the mortgage and lien already mentioned, so that the total sum payable in money or money's worth was increased by £2,000. It also provided that the purchaser should pay the vendor an annuity of £600 subject to tax instead of £480 free of income tax. It is common ground that the increase of £2,000 was intended to cover any liability of the vendor for income tax in respect of the sale of the stock in lieu of the indemnity contained in the option to purchase and that the annuity was increased by £120 to cover the vendor in respect of any income tax payable upon the annuity.
On the morning of 30th September 1947, prior to the signing of this contract, McManamey and the defendant went to Mudgee and the defendant introduced McManamey to Walter, a partner in the firm of Langdon & Walter, chartered accountants (Aust.), who looked after the defendant's income tax affairs. Langdon usually did the defendant's work but he was away so that the interview was with Walter. The defendant introduced McManamey to Walter so that the latter, at the request of another chartered accountant (Aust.), Allworth, now dead, who was to be one of the directors of the new company, might check the figures on a statement which the defendant had given McManamey of his taxable income for some years past including particulars of the live stock over the past five years.
McManamey had two interviews with Walter at neither of which the defendant was present. In his judgment his Honour said: "Although the defendant was not present at these interviews he did authorize Mr. Walter to give Mr. McManamey such information as he might desire as to the defendant's financial affairs. There is a conflict of evidence as between McManamey and Walter as to some of the things which occurred in these interviews. McManamey says that he was interested only to obtain particulars of the defendant's income as returned for taxation purposes, and of amounts at which the stock and plant were valued for income tax purposes, and that this information substantially was given to him by Mr. Walter. Mr. Walter says that there was also a discussion about the liability which the defendant might incur in respect of income tax if the sale to Gundowda were carried through. Mr Walter says that he pointed out that the stock stood at a very low figure, for the purpose of taxation, in the defendant's books, and that the difference between that figure and the market value of the stock would, or might be considered, as assessable income of the defendant, and further that the structural improvements on the property had been written down by depreciation claimed for income tax purposes, and that on the sale the Commissioner for Taxation might claim that some part of their value should be brought in for income tax purposes, and Mr. Walter says that he told McManamey that the defendant's liability to income tax would be considerable. Mr. Walter's evidence is confirmed to some extent as to these matters by the evidence of his partner, Mr. Langdon, who was not present at the interview, but to whom Mr. Walter spoke on the telephone for the purpose of getting information and an opinion in the course of the interview."
Later in his judgment his Honour said that he was satisfied that there was a discussion on the liability of income tax in Walter's office, substantially as related by him. In his evidence Walter said that McManamey told him that the defendant was rather worried about his tax and they were going to indemnify him against all tax commitments and had provisionally allocated £2,000 to cover the liability and he would like to know whether that would be adequate. Walter told McManamey that the £2,000 would be adequate to cover taxation commitments up to 30th June 1947, but that the sale of stock would be taxed at their market value whereas in previous returns they were brought into account on the principle of the average cost, that the difference between the average cost and the market price in the case of the sheep could not be less than £1 a head, that there were approximately 12,000 sheep and that the £2,000 would be wholly inadequate to cover the tax arising out of the sale. Walter said that he referred McManamey to s. 36 of the Income Tax Assessment Act 1936 as amended and to certain pages in Mr. Gunn's book on the subject.
Immediately after the second interview McManamey met the defendant in the street and they went to the office of the defendant's solicitor and signed the contract of 30th September. The hearing before Roper C.J. in Eq. occupied twelve days, but it was not until the seventh day that an amendment was made to the statement of defence alleging that the defendant was induced to enter into the contract of 20th October by the fraudulent misrepresentation of McManamey that Walter had informed him during their interviews that no income tax would be payable on the sale of the sheep. The onus was on the defendant to prove this representation which it was alleged was made to the defendant after McManamey's second interview with Walter and before the contract of 30th September was signed. As his Honour said, if the representation was made and induced the defendant to enter into the contract of 30th September and the defendant was not disillusioned in the meantime, it would be reasonable to infer that it also induced him to enter into the contract sued on. But his Honour was not satisfied that the representation was made. As his Honour accepted Walter's evidence, it would seem that his Honour must have thought that McManamey decided to keep Walter's opinion that £2,000 would be wholly inadequate to cover the defendant against income tax on the sale of the stock to himself and not to reveal it to the defendant. It was contended for the plaintiff that Suttor could not have been exercised about the matter because, if he had been, it would have been easy for him to have sought Langdon and Walter's advice before entering into the contract of 30th September and a further three weeks elapsed before the making of the contract sued on. On the other hand it was contended for the defendant that he did not do so because he had confidence in McManamey and relied upon his statement that Walter had said that no such income tax would be payable. McManamey's conduct in not passing on the information to the defendant does not indicate that he is a man of the highest morality, but he was not under any legal obligation to do so and there does not appear to be any sufficient material on which it would be safe for us to disagree with his Honour's finding that he was not satisfied that McManamey made the alleged representation and affirmatively to find that he made it.
Mr. Shand's sheet anchor was an admission by McManamey that he had told the defendant that he had scored on the £2,000 meaning that the income tax in question would not be £2,000, so that the defendant was better off with £2,000 added to the purchase price than he would have been with an indemnity against any income tax as originally agreed. McManamey admitted at first that he had said this on 30th September 1947 and this admission would tend strongly to prove that he had made the representation. But later he altered his evidence and said that he had not made the statement until 5th and 9th February 1948. It was contended that this change of date could not be correct because by that time McManamey had been advised that the tax would be in excess of £2,000 and had offered to increase this sum to £4,000 or to £5,000. A good deal of evidence was tendered on behalf of the defendant to prove that McManamey was offering this increase in January and February 1948 and this evidence, if accepted, would be quite inconsistent with McManamey saying at that time that Suttor had scored on the £2,000. But McManamey denied that he had ever offered to increase the £2,000 and his Honour was at liberty to accept this evidence and evidently did so. If no such offer was ever made by McManamey, his amended evidence that he made the statement in February 1948 and not in the previous September could be true. McManamey was not bound to accept Walter's opinion that income tax would be payable on the sale of the stock. According to Walter, McManamey said that he would refer this matter to Allworth, and McManamey said that he did so and that Allworth advised him to the contrary. In February McManamey was upbraiding the defendant for refusing to complete the contract and it would have been natural for him to have made the statement in question in this connection. Apart from this incident it is clear that there is a considerable conflict in the evidence in support of and against the probability of the representation having been made, and the case is not one in which an appellate court would be justified in overruling his Honour's finding.
But the appellant also contends that on his Honour's findings the plaintiff was at least guilty of sharp practice by its agent McManamey when he failed to reveal Walter's opinion to the defendant, that specific performance is a discretionary remedy, that in all the circumstances it would be inequitable and oppressive specifically to enforce the contract against the defendant and that the plaintiff should be left to its remedy if any at law. It was contended that McManamey knew perfectly well all along that the defendant was not willing to sell Gundowda unless he was fully protected against liability for income tax on the sale of the sheep, and that it would be oppressive to enforce the contract when it is clear that the defendant will have to pay income tax under s. 36 of the Income Tax Assessment Act far in excess of the £2,000 included in the purchase price to cover this liability. Evidence was led that at least £11,000 of income tax would be payable under this section. This amount is obviously excessive for it was arrived at after crediting the defendant with the whole of the proceeds of the sale of wool at Gundowda sold after the date of the contract, the profit from which under the contract belonged to the plaintiff and not the defendant. But it may well be that the defendant will have to pay income tax under this section considerably in excess of £2,000. Lack of candour and suppression of the truth on the part of the plaintiff, where this results in hardship to the defendant, has been held to be a sufficient ground for refusing specific performance (Summers v. Cocks [1] ; Sydney Consumers' Milk and Ice Co. Ltd. v. Hawkesbury Dairy and Ice Society Ltd. [2] ).
The difficulty is that this defence is now raised for the first time on the hearing of this appeal. It does not even form one of the grounds of appeal. It is true that it would not naturally occur to the defendant to raise the defence before his Honour delivered judgment, because it is grounded on his Honour's findings that Walter told McManamey that £2,000 would be quite inadequate to indemnify the defendant against income tax on the sale of the sheep and that McManamey suppressed this from the defendant. But it was open to the defendant to ask his Honour to restore the suit to the list and hear argument upon the effect of these findings and if necessary to re-open the case and hear further evidence. The circumstances in which an appellate court will entertain a point not raised in the court below are well established. Where a point is not taken in the court below and evidence could have been given there which by any possibility could have prevented the point from succeeding, it cannot be taken afterwards. In Connecticut Fire Insurance Co. v. Kavanagh [1] , Lord Watson, delivering the judgment of the Privy Council, said, "When a question of law is raised for the first time in a court of last resort, upon the construction of a document, or upon facts either admitted or proved beyond controversy, it is not only competent but expedient in the interests of justice, to entertain the plea. The expediency of adopting that course may be doubted, when the plea cannot be disposed of without deciding nice questions of fact, in considering which the court of ultimate review is placed in a much less advantageous position than the courts below." [2] . The present is not a case in which we are able to say that we have before us all the facts bearing on this belated defence as completely as would have been the case had it been raised in the court below. The decision whether or not to refuse specific performance in the exercise of the discretion is one peculiarly for the trial judge and his Honour should have been given an opportunity of exercising his discretion before being told that the appeal had been allowed upon a point he had no opportunity of considering (Sutherland v. Thomson [3] ). In Grey v. Manitoba and North Western Railway Co. of Canada [4] , Lord Hobhouse, delivering the judgment of the Privy Council, made the following appropriate remarks: "The questions now raised ought to have been raised on the pleadings and evidence so that they might be properly thrashed out in the courts below. As the matter stands they have not been touched by the courts below they (their Lordships) confine themselves to deciding the issues which the court below were invited by the plaintiffs to decide." [5] .
Specific performance is not a remedy which should lightly be refused when the plaintiff has established the existence of a contract capable of specific performance which the defendant has refused to complete. "It is well established that the court cannot judicially exercise its discretion by refusing the remedy in a case of the appropriate class, unless some sound and recognized reason is shown" (Fullers Theatres Ltd. v. Musgrove [1] ). It would be necessary for the defendant to prove that a hardship amounting to an injustice would be inflicted on him by holding him to his bargain and that it would not be reasonable to do so. The fact that McManamey suppressed Walter's opinion is an important circumstance but it is not the only circumstance which would have to be taken into account. There is his Honour's finding, amply supported by the evidence, that the defendant thought that the terms of the contract of 30th September gave him sufficient protection in the matter of income tax. His Honour said: "It is clear that he regarded the substitution of £600 a year in place of £480 per year free from income tax as satisfactory to him, and I think that he thought that if the stock were brought into the sale at the values at which they stood in his books for income tax purposes, he would not be liable to pay any income tax arising out of the sale of those stock, and they were brought into the contract at that value. It is clear from earlier correspondence that he attached importance to the values at which the stock were to be brought in upon a walk-in walk-out sale, and the view that no tax would be payable in respect of the sale of stock if they were brought into the purchaser's opening books at the value at which they stood in the vendor's books at the time of the sale, was not an unreasonable one to entertain in the light of the history of s. 36 of the Income Tax Assessment Act 1936, and I think that the defendant entertained it." There is also the fact that, although income tax on the sale of the sheep would have been assessable, if at all, in respect of the year ended 30th June 1948, there is no evidence that the defendant has ever been assessed. Neither party called the Commissioner of Taxation. The evidence is confined to speculations by experts expressing inconsistent views as to the likelihood or not of s. 36 being invoked against the defendant and the extent of his liability under it. The defendant may never be assessed under the section, in which event he will, as McManamey said, score on the £2,000. It is obvious that effect could not be given to the defence without deciding nice questions of fact, and it is by no means clear that, if the defence had been raised in the court below, further relevant evidence might not have been tendered. In these circumstances we are of opinion that it is now too late to raise the defence.
It is therefore necessary to consider the other contentions raised on the appeal. These were shortly (1) that cl. 12 of the contract of 20th October 1947 provided that in the event of the consent of the Treasurer not being obtained within two months from its date (that is 20th December 1947) or within such further period as might be mutually agreed upon by the parties the contract should be deemed to be cancelled and upon the vendor returning to the purchaser any deposit neither party should be under any further liability to the other for any sum for damages, costs or otherwise, and that the consent of the Treasurer was not obtained within two months so that the contract was automatically cancelled on that date; (2) that cl. 8 of the contract provided that the purchaser would continue to employ W. B. Suttor, A. C. McGrath and C. W. Howard each at a certain salary and bonus up to a period of eight years on the terms and conditions therein mentioned, that this was a contract for personal services, and that a Court of Equity will not specifically enforce such a contract.
So far as cl. 12 is concerned, there are, in our opinion, two answers to the contention of the appellant.
In the first place McManamey was at Gundowda from 29th November to 8th December 1947 and he gave evidence of conversations between himself and the defendant which his Honour accepted and which are quite sufficient to prove an oral agreement prior to 20th December that the time for the Treasurer's consent should be extended for a reasonable period after that date. This agreement would vary cl. 12 whether that clause originally provided for an automatic cancellation or not. This variation of cl. 12 was expressly alleged in the statement of claim. It was a variation of a contract for the sale of land and therefore a contract which could not have been proved if the Statute of Frauds (now s. 54A of the Conveyancing Act 1919 N.S.W. as amended) had been pleaded. But the statute was not pleaded and it was therefore open to the plaintiff to prove the variation.
In the second place, although cl. 12 in terms provides for an automatic avoidance of the contract on the occurrence of a specified event, that is (even if no agreement for an extension of time were made) by no means the end of the matter. The effect of contractual provisions of this character was discussed and explained in New Zealand Shipping Co. Ltd. v. Société des Ateliers et Chantiers de France [1] . Lord Atkinson said: - "It is undoubtedly competent for the two parties to a contract to stipulate by a clause in it that the contract shall be void upon the happening of an event over which neither of the parties shall have any control, cannot bring about, prevent or retard. For instance, they may stipulate that if rain should fall on the thirtieth day after the date of the contract, the contract should be void. Then if rain did fall on that day the contract would be put to an end by this event, whether the parties so desire or not. Of course, they might during the currency of the contract rescind it and enter into a new one, or on its avoidance immediately enter into a new contract. But if the stipulation be that the contract shall be void on the happening of an event which one or either of them can by his own act or omission bring about, then the party, who by his own act or omission brings that event about, cannot be permitted either to insist upon the stipulation himself or to compel the other party, who is blameless, to insist upon it, because to permit the blameable party to do either would be to permit him to take advantage of his own wrong, in the one case directly, and in the other case indirectly in a roundabout way, but in either way putting an end to the contract." [1] .
Where the event in question is one which cannot occur without default on the part of one party to the contract, the position is clear. The provision is then construed as making the contract not void but voidable: only the party who is not in default can avoid it, and he may please himself whether he does so or not. In the present case the happening of the event (not obtaining the Treasurer's consent) may be brought about by failure on the part of either party to take certain necessary steps (provision of particulars by the vendor or making of application by the purchaser) to obtain the Treasurer's consent, or it may be brought about without any default on the part of either party. In fact, although there was some argument to the contrary, it was, we think, brought about without any default on the part of either party. Such a case is perhaps not quite so clear as the simpler case where the event cannot occur without default on one side or the other. But we are of opinion that the New Zealand Shipping Case [2] requires the same construction to be given to the contract in both classes of case. The provision in question is to be construed as making the contract not void but voidable. The question of who may avoid it depends on what happens. If one party has by his default brought about the happening of the event, the other party alone has the option of avoiding the contract. If the event has happened without default on either side, then either party may avoid the contract. But neither need do so, and, if one party having a right to avoid it does not clearly exercise that right the other party may enforce the contract against him. This is, we think, the view of Lord Shaw and Lord Wrenbury in the New Zealand Shipping Case [2] , and it is consistent with what was said by Lord Finlay L.C. The language of Lord Atkinson [1] may perhaps be regarded as expressing a different view, but we doubt whether his Lordship had in mind the precise point which arises here and which did not arise in the New Zealand Shipping Case [2] . Although the effect of a provision in a contract may differ according to the events which happen, its construction cannot differ according to the events which happen. If "void" means "voidable," it means "voidable" whatever happens. It cannot very well mean "voidable" if an event happens through the default of one party, and "void" if the event happens without default by either party.
McManamey and Allworth were at Gundowda from 27th to 31st December 1947. The construction of cl. 12 which we have adopted is that the clause did not automatically cancel the contract of 20th October 1947 but only brought it to an end if after that date one of the parties exercised its option to cancel it. On 6th January 1948 the defendant's solicitor wrote to the plaintiff's solicitors that cl. 12 of the contract spoke for itself and this may have been intended to be a notice that the defendant considered the contract to be cancelled. But there was no clear statement that the contract was considered by the defendant as cancelled until 15th January 1948 when the defendant's solicitor wrote to the plaintiff's solicitor that "the consent of the Treasurer was not obtained within the period of two months of the date of the contract and therefore the contract is no longer effective after 20th December 1947." But this letter was obviously written on the view, with which we do not agree, that cl. 12 effected an automatic cancellation of the contract when the Treasurer had not consented by 20th December 1947. His Honour accepted the evidence of McManamey and Allworth of the events that occurred at Gundowda between 27th and 31st December, 1947, and it is clear from this evidence that the defendant was treating the contract as still on foot although he was asking for certain variations to which McManamey agreed provided the directors of the plaintiff approved. Before the defendant's solicitor purported to cancel the contract the consent in writing of the Treasurer to the transfer had been obtained on 5th January, 1948, and the cancellation was therefore too late.
Clause 11 of the contract provides that it is entered into subject to the National Security Act and all regulations and proclamations thereunder and subject to the consent of the Treasurer being obtained. There was no National Security Act in force at the time the contract was made. The Act in force was the Defence (Transitional Provisions) Act 1946 which continued in force, until 31st December 1947, many sets of regulations made under the National Security Act including the National Security (Economic Organization) Regulations. We are of opinion that the reference to the National Security Act in the contract is a mistake, that it was intended to refer to the Defence (Transitional Provisions) Act, and this is simply an example of falsa demonstratio non nocet. The contract was therefore entered into subject to the Economic Organization Regulations which made the purchase of land unlawful without the Treasurer's consent.
Regulation 6 (1) of these regulations makes it an offence to purchase any land without the consent in writing of the Treasurer. Regulation 6 (10) provides that a transaction shall not be deemed to be entered into in contravention of this regulation if an application for the consent of the Treasurer is made within three months after the date of the transaction, but the transaction shall not have any effect unless the Treasurer gives his consent thereto within a period of six months after the date of the transaction, or within such other period as is agreed on in writing, at the time the transaction is entered into or at any time thereafter, by all the parties to the transaction. Regulation 10 (1) provides that where any transaction is entered into in contravention of this part or where any condition to which the transaction is subject is not complied with, the transaction shall not thereby be invalidated, and the rights, powers and remedies of any person thereunder shall be the same as if these regulations had not been made. It was contended that in the contract of 20th October 1947 the parties had provided in writing for a period other than the period of six months provided for in reg. 6 (10), that this period was substituted by the sub-regulation for the period of six months, and that the contract had no effect because the Treasurer did not give his consent in writing within two months.
We are of opinion that on its true construction cl. 12 of the contract is not a condition precedent but a condition subsequent, and that this construction is not affected by reg. 6 (10). In a case raising the construction of this regulation, before the words commencing "within a period of six months &c." were added, this Court in O'Neill v. O'Connell [1] sought to reconcile the contents of reg. 6 (10) with those of reg. 10 (1), and the opinion was then expressed, to which we adhere, that the rights and remedies of the parties under the contract were not affected by the regulations and the contract could be enforced as though they did not exist. Accordingly a contravention of the regulations did not affect the operation of the contract but merely exposed the contravenor to penalties. We do not think that the additional words have altered the meaning of reg. 6 (10) and that for the purposes of specific performance the contract of 20th October 1947 should be construed as though the sub-regulation did not exist. Clause 12 of the contract therefore remains a condition subsequent having the incidents already mentioned and did not operate to cancel the contract because either it was varied before 20th December 1947 so as to give the plaintiff a further reasonable time after that date to obtain the Treasurer's consent, or the defendant was too late in availing himself of any option he had to cancel the contract.
The final question is whether cl. 8 of the contract is an impediment to its specific performance. This clause concludes by providing that the purchaser shall enter into a deed between it and W. B. Suttor, A. C. McGrath and C. W. Howard more effectually to carry out its provisions, such deed to be drawn by the vendor's solicitors and approved by the purchaser's solicitors at the expense of the purchaser. His Honour held, and we agree, that on its true construction cl. 8 only requires for its completion that the purchaser shall enter into the deed therein provided for, and that the parties intended that thenceforth the rights of the employees should be rights under the deed which they could themselves enforce and not rights under the contract which, if enforceable at all, could only be enforced on their behalf by the defendant. The purpose of the deed is stated to be more effectually to carry out the clause instead of stating that it is effectually to carry it out but we are of opinion that this is its true meaning. In Wolverhampton and Walsall Railway Co. v. London and North Western Railway Co. [1] , Lord Selborne L.C. said: "There is a class of suits in this court, known as suits for specific performance of executory agreements, which agreements are not intended between the parties to be the final instruments regulating their mutual relations under their contracts The common expression, "specific performance," as applied to suits known by that name, presupposes an executory as distinct from an executed agreement, something remaining to be done, such as the execution of a deed or a conveyance, in order to put the parties in the position relative to each other in which by the preliminary agreement they were intended to be placed." [2] . Clause 8 deals with a topic altogether separate and apart from the other clauses of the contract. It is a clause intended to confer benefits on the employees in question and not on the vendor, and the employees would have a vital interest in the exact terms and conditions of employment embodied in the deed. The defendant could not object to variations of the clause agreed upon between them and the purchaser. The general frame of the clause points unmistakably to an intention that it would be completely performed by the purchaser entering into a deed with the employees containing the benefits stipulated for. The deed is to be approved by the purchaser's solicitors but the parties have already agreed upon its essential provisions, and this stipulation only means that the solicitors may insist upon any provisions being inserted in the deed properly required to carry the concluded agreement of the parties into effect: Chipperfield v. Carter [1] ; Caney v. Leith [2] .
For these reasons we are of the opinion that the appeal should be dismissed with costs.
Suttor
Gundowda Pty Ltd
Appeal dismissed with costs.