Rawson v Hobbs [1961] HCA 72; (1961) 107 CLR 466 (15 November 1961)

HIGH COURT OF AUSTRALIA

RAWSON v. HOBBS [1961] HCA 72; (1961) 107 CLR 466

Vendor and Purchaser

High Court of Australia
Dixon C.J.(1), Fullagar, Kitto(2) and Windeyer(3) JJ.
(THE HONOURABLE MR. JUSTICE FULLAGAR died at Melbourne prior to the delivery
of judgement in this appeal. )

CATCHWORDS

Vendor and Purchaser - Contract of sale of conditional purchase leases - Crown Lands (W.A.) - Consent of Minister necessary for transfer - Purchaser advised before time for completion that transfer would not be approved - Whether purchaser entitled to rescind - Equitable relief - Land Act, 1933-1958 (W.A.) ss. 47*, 143 (1)**.

HEARING

Perth, 1961, June 13, 14;
Melbourne, 1961, November 15. 15:11:1961
APPEAL from the Supreme Court of Western Australia.

DECISION

November 15.
The following written judgments were delivered:-
DIXON C.J. This is an appeal and a cross-appeal from an order of the Full allowed an appeal from a judgment of Wolff C.J. given in favour of the plaintiffs in an action for relief in connexion with an agreement dated 7th July 1958 between the parties by which the defendants respondents agreed to sell and the plaintiffs appellants to purchase a grazing property the subject of two conditional purchase leases. The judgment of the learned Chief Justice ordered that the agreement be rescinded and that, on the one hand, the defendants account to the plaintiffs first for a sum received under the agreement on account of purchase money secondly for another sum representing the value of a house erected by the plaintiffs upon the land and thirdly for a sum being the cost of sinking a bore; and that, on the other hand, the plaintiffs account to the defendants for sums of money received by the plaintiffs representing the value of certain plant and machinery the subject of the agreement, certain sheep and the net proceeds of the sale of certain wool: the judgment ordered that the plaintiffs recover 3,870 pounds 17s. 3d. (the balance of these sums) together with costs. By the order of the Full Court allowing the appeal the judgment of the learned Chief Justice was set aside and judgment was entered dismissing the plaintiffs' claim and the defendants' counterclaim in the action: the plaintiffs were ordered to pay two thirds of the defendants' costs. From this order of the Full Court the plaintiffs now appeal to this Court so far as the order dismissed the claim and ordered the plaintiffs to pay costs; and the defendants appeal from the order so far as it dismissed the counterclaim and ordered the plaintiffs to pay only two thirds of the defendants' costs. (at p473)

2. Under the agreement which the order of the Chief Justice rescinded but the order of the Full Court left standing the parties got themselves into certain difficulties. They are difficulties which arise initially from provisions of the Land Act, 1933-1958 of Western Australia governing conditional purchase leases of grazing land held under Pt V of the Act. On the face of the agreement it is a contract for sale of two distinct interests separately described. The first consists of land, livestock, plant and machinery, the land being comprised in one conditional purchase lease: the second consists of land contained in a second conditional purchase lease. The sale of these interests is for a sum of 10,160 pounds of which 1,160 pounds had already been paid and 2,000 pounds was to be paid immediately (the two sums forming a deposit) and the balance of 7,000 pounds to be paid as to 1,000 pounds on 1st July 1959, as to another 1,000 pounds on 1st July 1960 and as to the residue of 5,000 pounds on 1st July 1961. The agreement of course contained various conditions. But when the facts are looked at several features appear which to anyone sufficiently familiar with the Land Act might be disquieting. First the vendors are husband and wife. They are the defendants respondents but it will be convenient to describe them by their name which is Hobbs. Secondly the purchasers are husband and wife. They are the plaintiffs appellants, their name is Rawson and it will be convenient to describe them by name. Thirdly one lease comprised 4,945 acres and some odd roods and perches and the other lease comprised 4,997 acres and some odd roods and perches. The first of these conditional purchase leases (which may be identified as Victoria Location 10085) did not stand in the name of Hobbs husband or wife but in the name of two men called Cheeseman and one called McLean as co-owners. The second conditional purchase lease (identified as Victoria Location 10087) had stood in the name of the third of these men but had been transferred to Hobbs the husband and the transfer had been registered on 12th March 1956 by the Registrar of Titles. (at p474)

3. These facts are important because of the provisions of the Land Act. The leases were granted pursuant to s. 47 of that statute; a provision contained in s. 47 is that no person shall be competent to acquire either as lessee or transferee an area of land, in one or more parcels, exceeding . . . five thousand acres of grazing land. A provision deals with co-ownership in calculating the acreage held and by a proviso enacts that the wife or husband of any person who acquires land under Pt V shall not be qualified to acquire land thereunder so far as the acreage of their holdings would exceed the maximum area that may be lawfully acquired by either of them. One need be in no doubt that it is because of these provisions that Hobbs the wife did not take a transfer as purchaser of lease Victoria Location 10085. By taking a transfer the combined area held by her and her husband would have amounted to almost 10,000 acres. But it is quite clear that the Rawsons, being husband and wife, could not by transfer of the leases to them whether jointly or severally have become transferees of the leases and thus completed the purchase. Yet that seems at first sight to be what the contract contemplates. Section 143 (1) says that no transfer of any lease under the Act shall be valid or operative until the approval in writing of the Minister or an officer authorized in that behalf by the Governor is obtained. Such an approval of course could not lawfully be given if the result of the transfer were to be the infringement of s. 47 by the vesting in the transferee of a total area of land larger than that allowed by the section. Section 151 provides that registration of a transfer either in the office of titles or the Crown Lands Department is necessary to vest the estate or interest. Of course a transfer of an excessive quantity of land could not be registered. (at p474)

4. There is, or there may be, one possible way out of the illegality in which these provisions involve the contract of the parties. It is suggested by sub-s. (5) of s. 47 which provides that at the expiration of the lease, or at any time after five years from its commencement, if the conditions have been complied with, the fencing and improvements maintained, and the price of the land fully paid, rent being deemed payments on account of the price, a Crown grant may be issued on payment of the prescribed fee. The Crown grant is for an estate in fee simple. If before the time for completion the vendors, Hobbs, were able, under s. 47 (5), to obtain a Crown grant of the land comprised in one of the two leases for an estate in fee simple and at the same time were in a position to give the purchasers, Rawson, a transfer of the lease of the other piece of land, that might perhaps be considered a sufficient performance and certainly s. 143 (1) would not apply to require approval by the Minister, or by an officer, of the transfer of a fee simple and there is no other provision requiring approval of such a transfer. While no attempt was made actually to vest the lease, Victoria Location 10085, in Mrs. Hobbs a transfer thereof to her was executed by the Cheesemans and McLean but of course it was never tendered for approval or for registration. While the lease, Victoria Location 10087, remained vested in Hobbs, the husband, that could not lawfully be done. It is therefore evident that if the way out suggested by s. 47 (5) were to be pursued successfully, it must have been done by converting the latter lease into a fee simple. (at p475)

5. It is important however to see what conditions must be fulfilled in order to do that and how far the fulfilment was possible. In the first place five years must have elapsed from the commencement of the lease. The date of the commencement of the lease in question was 1st July 1954 and the term of the lease 25 years from that date. In the next place the price of the land must be paid, rent being treated as payments on account of the price. The price named in the lease was 1,249 pounds 8s. 0d. and the rent 2 pounds 2s. 9d. every half year for the first five years and thereafter one fortieth part of the price every half year or 31 pounds 4s. 9d. Section 53 provides for the selection of land exclusively under the conditions therein provided for accelerated payments but we are concerned here with conditional purchase leaseholds issued under the general provisions of s. 47. Sub-section (5) of s. 47 however contemplates the price of the land being fully paid up at any time after five years and in fact the lease, which is in the form of the eighth schedule, provides expressly that at any time during the continuance of the term, upon furnishing after the first five years of the term to the satisfaction of the Minister of Lands the proofs required by the Act and upon payment of the full purchase money and the prescribed fee the lessees shall be entitled to a Crown grant in fee simple. It appears therefore that, if at any time after 1st July 1959 the rent and the price of the land were paid up, it would be open to apply for a Crown grant, that is to say if and only if all other conditions were satisfied. Of course Hobbs as registered transferee is the person who must apply and it is he who must show that the other conditions have all been fulfilled. What are those other conditions? The fencing and improvements must be maintained. Prima facie the lessee must expend in prescribed improvements an amount equal to one fifth of the purchase money in every year of the first ten years. Certain credit against this is given for sheep- and cattle-proof fences and a still greater allowance may be obtained by the erection of a rabbit-and dog-proof exterior fence: sub-s. (4) (c) of s. 47. Then prima facie the lessee must by himself or, if the Minister approves, by his wife, parent, or child (being over sixteen years of age) reside upon the land and make it his usual home during at least six months of each of the first five years. The Minister has a discretion to accept for performance of the residence conditions during the first five years, performance during some other period of five years. If he is not satisfied with the evidence of performance he may require greater expenditure (not exceeding double) on improvements: and in the case of grazing land he may accept nine months' residence in each of the five years by a servant or agent as sufficient. There is an overriding provision enabling the Governor in Council to prescribe personal residence by the lessee as obligatory. Now if the defendant Hobbs as vendor were to choose to try turning the tenure into a fee simple as a way out of the difficulties arising from the size of the blocks and the married state first of the two vendors and next of the two purchasers, the burden must fall upon him of fulfilling the foregoing conditions including the payment in full of the price. The statement that the burden must fall upon him is an important one and it perhaps needs some explanation and some justification. There are clauses in the contract imposing obligations upon the purchasers with respect to payment of rents, rates and outgoings, to maintenance of fences and cultivating, suckering and keeping down vermin. But the presence of these clauses cannot affect the vendor's obligation (subject to cl. 12) to give the purchasers a title to the land. If to put himself in a position to give a title to the land it is necessary that he should obtain a Crown grant it follows that it is he who must do everything which either the Act or the lease makes necessary for that purpose, and none of the clauses in the contract which are directed to quite another purpose, namely to the obligations of the purchaser in looking after the land and preserving the lease, can relieve the vendor of requirements which are the result of his duty to give a title and his inability to do it except by a Crown grant. Was it possible for him to do it? We are concerned with a time when the Rawsons sought to extricate themselves from the contract. Taking one's stand as at that time, which as will appear was 16th March 1959, the crucial enquiry must be whether the Hobbs as vendors stood then in a position of which it could rightly be said they were able when the time arrived to fulfil their part and willing to take the necessary steps to do so. That means was the male defendant Hobbs in a position to turn his lease into a fee simple and was he ready to do what was needed. (at p477)

6. It may be that an affirmative answer to the question whether at the point of time mentioned Hobbs, as lessee and vendor of Victoria Location 10087, was able and willing to fulfil all the conditions which would enable him to convert the perpetual lease to a fee simple would not suffice to make good his defence, but that can be put aside for the moment. To answer the question whether he was in truth able and willing so to do it is necessary to turn briefly to the terms of the contract and to say something of the facts of the case. The contract did not state unequivocally that the Hobbs were husband and wife or that the Rawsons were husband and wife but it appeared as a natural inference from the descriptions employed. A recital said that Hobbs, the male defendant, was the owner of the land in the first schedule (scil. No. 10087) and stock plant and machinery, and that Hobbs, the female defendant, was the owner of the land in the second schedule (scil. No. 10085). It is convenient to pause here to put aside one argument relied upon for the Rawsons. It was argued that this amounted to a warranty that the legal estate in the lease was vested in her or at all events that she had an absolute right to call for it. But that contention goes too far. The statement is not expressed in promissory terms: it is nothing but a recital of a fact, even if the fact be wrong. Next the contract witnesses an agreement to sell and buy the two pieces of land and also the livestock plant and machinery that are mentioned in the schedule relating to Mrs. Hobbs' land. The price is given (10,160 pounds) and the terms as already mentioned. It is perhaps not unimportant to notice that the two schedules give a precise description of the leases and so far there is no hint to suggest that the contract might be performed by a transfer of the fee simple of either or both leases. The final balance of purchase money is payable on 1st July 1961 and interest in the meantime is provided for. The purchasers may make payments on account of purchase money earlier in multiples of 100 pounds. The purchasers (the Rawsons) are to be deemed to have been in possession as from 1st July 1958. They covenant among other things to maintain and keep in repair dividing and other fences gates and improvements and to do suckering and keep down rabbits poisonous plants and other vermin, to insure buildings and improvements (presumably against fire) and at all times comply with the conditions of the lease. Two important clauses follow: they are cl. 9 and cl. 12. By cl. 9 it is provided that if the purchasers shall fail to pay any instalment of purchase money or interest on the due date or within seven days thereafter or shall make default in the observance or performance of any condition and such default shall continue for seven days after notice in writing of such breach then and in any of such cases all moneys which shall have been paid by the purchasers shall be absolutely forfeited to the vendors and the vendors shall be at liberty without further notice to rescind the agreement. There follow provisions for the alternatives of the vendors holding the land as of their former estate or reselling it and recovering the deficiency from the purchasers. Clause 12 provides that the vendors shall not be called upon to procure the consent of the Minister for Lands to the necessary instrument of transfer but the same shall be procured by the purchasers and in case the Minister shall refuse to give such consent the vendors or the purchasers may at their option annul the sale by notice to the other in which case all moneys paid by the purchasers on account of the purchase price shall be refunded to them without interest. A peculiarity of this case is that the purchasers (the plaintiffs Rawson) sought to invoke cl. 12 and that shortly afterwards without personally knowing of the plaintiffs' action, the vendors (the defendants Hobbs) gave notice under cl. 9. (at p478)

7. The contract was prepared by solicitors whom Hobbs had consulted and they apparently acted for both parties in the transaction. There is some dispute as to what the Rawsons were told about the impossibility of obtaining a title. The conclusion of Wolff C.J. on this question of fact is expressed in the following passage from his reasons for judgment: "Rawson's evidence is in sharp contrast to that of the solicitor and the conveyancing clerk, both of whom say they explained the position to Rawson that he could not get a title to either location until one or other of the blocks was freeholded. The solicitor said he was struck with the difficulties of the situation and thought it necessary to explain the position to Rawson before he committed himself to signing. I do not doubt the solicitor's bona fides, but I am sure that the position was not adequately explained to Rawson and that Rawson was quite unaware of the complications relating to the sale of two leases." This conclusion may safely be accepted for the purposes of the present appeal but in any case it is difficult to see how the meaning or operation of the agreement as a written document could be affected by the evidence. The purchasers, the Rawsons, entered into possession of the blocks at once and paid the amount of 3,160 pounds mentioned in the contract. Various steps were taken, which will be referred to in due place, but what for present purposes is immediately important is that in consequence of attempts to raise more money the Rawsons learned first from a bank and then from the officers of the Lands Department that owing to the size of the blocks and the fact that the Hobbs were husband and wife a transfer would not be permitted. A letter to Rawson from the Under-Secretary of Lands dated 9th March 1959 informed him that a transfer in leasehold of the aggregate area comprised in Victoria Locations 10085 and 10087 would not be approved. The Under-Secretary proceeded to point out that the maximum of conditional purchase leasehold land which can be held by any one person under the provisions of the Act is the equivalent of 5,000 acres of grazing land and that husband and wife are deemed to be one person. The Rawsons had consulted independent solicitors with the result that the latter wrote to the firm which had acted for both parties as representing Hobbs. The letter which was dated 16th March 1959 was expressed as a formal annulment of the sale on the grounds that the Minister of Lands would not consent to the necessary instrument of transfer in order to perform fully the agreement, and the letter went on to say that their clients had obtained a ruling from the Under-Secretary that the transfer of the leasehold property the subject of the contract would not be approved. The letter said that the exercise of this power of annulment was made pursuant to cl. 12 of the agreement but was made without prejudice to any other rights which the purchasers might have to apply for rescission of the agreement. The letter went on to demand repayment of the 3,160 pounds. The solicitors to whom this letter was addressed replied on 19th March saying that they had advised their clients that the Rawsons were not in a position to annul the sale in manner indicated in the letter of 16th March written on behalf of the Rawsons. They inquired whether the letter of 16th March 1959 might be taken by the vendors as a repudiation by the purchasers of the contract of sale. Hobbs did not in fact see the notice until after writ issued. That appears from the evidence but it is pleaded as a fact in the defence. The Hobbs had changed their solicitors and in apparent ignorance of the notice of the plaintiffs of 16th March 1959 their new solicitors on 6th May 1959 gave notice to the plaintiffs under cl. 9. The notice was formally drawn and placed on the ground of failure on the part of the purchasers to observe and perform covenant and conditions etc. of the contract. Annexed to the notice was a list of the alleged breaches. The notice said "we intend if such default shall continue for seven days after the receipt by you of this notice to forfeit absolutely all moneys which have been paid by you and we shall then be at liberty without further notice to rescind the contract and retake possession of the land" and so on in the form of cl. 9. This was treated on the side of the Hobbs as an actual cancellation of the contract. In their defence it is pleaded thus: "The defendants say that if the contract was not rescinded by the plaintiffs' notice of 16th March 1959 then it was rescinded by the defendants' notice of 6th May 1959." (at p480)

8. After the giving of the notice on behalf of the Rawsons, and before the giving of the notice to them on behalf of the Hobbs, a notice of assignment by the latter of the contract to a bank by way of mortgage was served upon the Rawsons. According to the notice an indenture of mortgage assigning their interest in the contract had been given by the Hobbs to the bank on 17th December 1958. (at p480)

9. The primary case for the Rawsons as purchasers is that the Minister had, within the meaning of cl. 12 of the contract, refused his consent to "the necessary instrument of transfer" so that they thereupon became entitled to annual the sale and recover all moneys they had paid to the vendors. It may be taken that the Minister had intimated by his officers that he would not approve a transfer of the conditional purchase leases or, unless one of them was converted to a freehold, either of them and it is certain not only that he would not do so but further that he could not lawfully do so. But at the same time cl. 12 appears to be directed to an existing transfer which completes the contract and not to a refusal de futuro at some intermediate stage. The notice cannot therefore be regarded as an effective exercise of the special power given by cl. 12. It was however a clear intimation of the intention of the purchasers, the Rawsons, no further to perform the contract on their part but to treat it as annulled or rescinded. If at that point of time the vendors, the Hobbs, were finally disabled from any lawful performance on their part the purchasers were justified in renouncing the contract, and so were they if, though some single possible course by which the contract might be completed was not yet definitely closed, the vendors had determined not to take it. (at p480)

10. In British and Benningtons Ltd. v. North Western Cachar Tea Co. (1923) AC 48, at pp 71, 72 Lord Sumner dealt with the question how far a party accepting an anticipatory renunciation of a contract must up to that point himself be ready and willing to perform his contract as and when the time for performance arrived. It is hardly necessary to say that once there has been a renunciation of a contract or of future performance of an essential obligation thereof by one contracting party, the other if he elects to treat that as an anticipatory breach discharging the contract is relieved from all further obligation to perform on his side and in consequence need not thereafter be ready and willing to do what would otherwise be his part. But that is not the question. What is the question is whether up to that point he must not be ready and willing to proceed with the contract and, as and when the time comes to do his part, so far as it is of the essence, to perform the contract on his side. Lord Sumner speaks of a party "already completely disabled from doing his part at all" and of a party who "had become wholly and finally disabled from performing essential terms of the contract altogether" (1923) AC, at p 72 . A party in that situation cannot recover from the opposite party to the contract if the latter at that point renounces the contract on his side. But Lord Sumner was not attempting to give an exhaustive definition, positive and negative, of the condition which must be satisfied with respect to the then present readiness and willingness of the party to perform in the future the obligations of a contract which the opposite party renounces. Indeed Lord Sumner in formulating the erroneous theory for which reliance was mistakenly placed on Braithwaite v. Foreign Hardwood (1905) 2 KB 543 uses the traditional terms: he describes the erroneous contention as being that the party renouncing a contract when the other party accepts the renunciation and sues "cannot require the latter to prove his readiness and willingness to perform any of his obligations under the contract thus repudiated" (1923) AC, at p 70 . One must be very careful to see that nothing but a substantial incapacity or definitive resolve or decision against doing in the future what the contract requires is counted as an absence of readiness and willingness. On the other hand it is absurd to treat one party as tied to the performance of an executory contract although the other has neither the means nor intention of performing his part when his turn comes, simply because his incapacity to do so is not necessarily final or logically complete. (at p481)

11. In the particular application of the law of contract to the sale of land this may be seen in Forrer v. Nash [1865] EngR 680; (1865) 35 Beav 167 (55 ER 858; 147 RR 92) ; and Brewer v. Broadwood (1882) 22 Ch D 105 . In Halkett v. Earl of Dudley (1907) 1 Ch 590 Parker J. explained the operation of the equitable requirement of mutuality for specific performance as the justification for the rule that a vendor could not obtain a decree if he disclosed in his abstract a title defective in some particular but capable of being perfected if he obtained before completion a release surrender confirmation or the like by a stranger not legally bound to give it. Mr. Cyprian Williams considered that even in such a case law as well as equity treated the pruchaser as not further bound to complete. But Sargant L.J. in Procter v. Pugh (1921) 2 Ch 256, at p 268 adopted the view of Parker J. A full discussion will be found in Williams', Vendors and Purchasers 3rd ed. (1922) vol. 1, p. 154, note (d) ; 4th ed. (1936) vol. 1, p. 203, note (d). We are not here however faced with a defect of title which the vendor may remove by procuring the assent of someone not bound to give it, but with a case where the vendor is positively unable to complete unless by pursuing himself a special or particular course which, however, he may be neither able nor willing to do. The question is the capacity and the readiness of the defendant Hobbs as lessee of Victoria Location 10087 to convert it into a fee simple. The necessity rested on him. Clause 12 might have relieved him of all active steps to obtain the Minister's approval of a transfer of the lease but has nothing to do with avoiding the necessity of the Minister's approval by converting the tenure to a fee simple. (at p482)

12. As he was lessee no one but he could convert and he could not do it except by complying with the necessary conditions and if that was the way in which as vendor he might fulfil his contract he must do it. Now the first step it was necessary to take was to pay up the full purchase money reserved by the lease to the Crown. Then next he must fulfil the obligation of residence. The modifications of this obligation which the Minister might accept as fulfilment have already been discussed. But it lay upon Hobbs to secure somehow fulfilment of the condition. That again is true of the improvements so far as concerns the purpose of securing a Crown grant in order to fulfil the contract. Now it seems on the facts that the defendant Hobbs in March 1959 had no then present intention of doing any of the foregoing things: he did not look upon them as incumbent upon him, but as belonging to Rawson. The time for the completion of the contract was in effect 1st July 1961. It was impossible for the defendant Hobbs within that time to put himself in a position to obtain a title to the fee simple as of right or to do so within any reasonable time thereafter ; nor had he any present intention of taking for himself the steps necessary for the purpose of obtaining a Crown grant. (at p482)

13. A question which perhaps logically should have been dealt with before giving consideration to the possibility of the defendant Hobbs, the husband, converting his perpetual lease of Victoria Location 10087 into a fee simple is whether upon its proper interpretation the contract is for the sale and transfer of a perpetual lease and could be performed only by transferring a perpetual lease of that Location. It is a question which the text of the contract does not make it easy to answer. But on the whole when the provisions of the Land Act are studied and taken into account and the nature and terms of a perpetual lease are considered the proper conclusion would appear to be that the contract should receive an interpretation which would admit of a mode of performance by obtaining a Crown grant of either or both Locations. No purpose would be served by going into detailed reasons for this conclusion. But even on the footing that such a mode of performance is compatible with the provisions of the contract, it is clear enough that the defendants Hobbs could not in point of fact have taken this way out of the difficulty and in any case had no intention at any material time of themselves adopting the necessary course of conduct to do so. Prima facie therefore the plaintiffs Rawson were on 16th March 1959 entitled to treat themselves as discharged from the contract. (at p483)

14. It might be suggested that the contract (the two parties on each side of the contract being husband and wife) was illegal in its inception. To this suggestion there are three answers. The first is that in fact the defendant Hobbs, the wife, was not herself a lessee and had only a contractual title. The second is that the contract admitted of a performance by obtaining a Crown grant. The third is that, according to the findings of his Honour Wolff C.J. the Rawsons were not in pari delicto with the Hobbs. (at p483)

15. The plaintiffs Rawson were in possession of the Locations or perhaps of No. 10087 in fact from 1st July 1958 until shortly after the notice of 16th March 1959, perhaps until 30th April 1959 when a sale was held at the homestead. During that time they built a house costing about 1,490 pounds and sank a bore costing 180 pounds. In the first schedule to the contract is set out the subject of the contract of sale so far as it is attributed to the ownership of Hobbs the husband. The schedule gives the conditional purchase lease of the Location 10087 and then enumerates some farm implements and 900 sheep. The value or price is set after each item of the chattels and the total is given at 1,870 pounds, of which the sheep are put down at 900 pounds. Clause 11 of the contract apportions the price so far as relates to the interest of the defendant Hobbs, the husband, and puts down 900 pounds for livestock and 970 pounds for plant and machinery. At the sale on 30th April 1959 the items of plant referred to and the sheep (of which it may be taken that in the first instance not more than 620 had been mustered or delivered) were sold for a gross amount of about 495 pounds for the chattels other than livestock and an amount of 63 pounds for the survivors of the sheep. From this perhaps 70 pounds to 80 pounds should be deducted for charges in connexion with the sale. The question then arises whether to sell the sheep and chattels before leaving the land might not preclude the plaintiffs from setting up the fact that they had already treated themselves as discharged. It can hardly be doubted that no practical alternative remained to the plaintiffs unless it were to abandon the sheep and chattels in that not very thickly inhabited country. Property in the sheep and chattels had in fact passed to the plaintiffs and they had moreover occupied the land for a period of possible enjoyment. The discharge could not amount to a rescission ab initio with complete restitutio in intergrum. The question necessarily becomes one of the conditions of equitable relief. (at p484)

16. The purchasers had in fact occupied the land for about ten months and if equitable relief were to be granted it would be necessary in ordering a return of the purchase money paid by the Rawsons as purchasers to allow whatever might be found to be proper for occupation and to that would be added the value of the chattels. It would of course be necessary to make a proper assessment. The learned Chief Justice expressed his views as to these matters but not exactly on the basis upon which the foregoing reasons proceed. Nor was it exactly the basis adopted by the statement of claim. That pleading after stating the nature of the contract and the terms of sale it contains alleged a warranty by the defendants that the female defendant was the owner of Victoria Location 10085 and the breach of that warranty. It then alleged that the male defendant is the owner of the lease of Victoria Location 10087 and set out the effect of the Land Act as to husband and wife, and of cl. 12 of the contract. The pleading then alleged the refusal on 9th March 1959 of the requisite consent, the notice of 16th March 1959 annulling the contract and the defendants' refusal to refund the moneys. Next the pleading went back to the warranty and alleged that relying thereon the plaintiffs expended moneys, which are specified, in erecting a house and sinking a bore, moneys which the plaintiffs further claim as damages. The statement of claim went on to plead that by reason of the breach of warranty the plaintiffs were forced to sell the plant stock machinery and chattels at a price considerably below that stated in the schedule to the contract and claims the deficiency. The prayer to the statement of claim began by seeking a declaration that the contract had been annulled under cl. 12 but the prayer went on to claim the various amounts expended by the plaintiffs, or alleged to have been lost, not only under cl. 12 but as damages. The counterclaim of the defendants sought declarations that the plaintiff's notice of rescission (scil. under cl. 12) was of no effect, that the defendants' notice of rescission (scil. of 6th May 1959) was validly given and that "the subsequent rescission by the defendants put an end to the contract" and that the defendants were entitled to retain the purchase moneys paid by the plaintiffs. The pleadings contain a sufficient statement of the facts though the conception of the causes of action or basis of relief may be open to criticism. The Court is not confined in granting relief to that which plaintiffs have specified and in the situation which the foregoing account of the case describes the appropriate relief appears to be a declaration that the plaintiffs are discharged from the contract of sale and are entitled to a refund of the purchase money paid by them and to the cost of erecting the house and sinking the bore subject to a deduction therefrom of the amount named in the contract as the price allocated to plant and machinery, 970 pounds, and of the price of the number of sheep which may be taken to have been delivered, viz. 600 pounds. If the occupation of the property by the plaintiffs up to 30th April 1959 were advantageous or profitable the defendants might have an enquiry as to what was a proper charge to be made in respect thereof against the purchase money to be returned by the defendants. But the evidence appears to show that on that footing there was nothing in respect of which an allowance would in the result be made. The consequence of the foregoing would be that the plaintiffs should receive 1,590 pounds in respect of the purchase price paid by them (that is to say 3,160 pounds paid less 1,570 pounds for chattels and stock) together with 1,671 pounds 9s. 10d. spent on the house and bore or 3,261 pounds 9s. 10d. in all. (at p485)

17. The appeal should be allowed, the order of the Full Court set aside and an order substituted for the declaration mentioned and the payment of 3,261 pounds 9s. 10d. (at p485)

KITTO J. The appellants, who are husband and wife, were the purchasers, and the respondents, who are also husband and wife, were the vendors, under a contract of sale of two conditional purchase leasehold properties, together with certain plant, machinery and livestock, for a price of 10,160 pounds. The purchasers had paid the vendors 1,160 pounds beforehand, and on the execution of the contract, which took place on 7th July 1958, they paid them a further 2,000 pounds. The contract provided for the payment of the balance, 7,000 pounds, by three instalments, 1,000 pounds on 1st July 1959, 1,000 pounds on 1st July 1960, and 5,000 pounds on 1st July 1961. Upon payment of the whole of the purchase moneys, the vendors were to execute and deliver to the purchasers a proper registrable transfer of the land sold to and in favour of the purchasers, and make the "certificate of title" available free from encumbrances for the registration of the transfer. (The reference to the certificate of title must be understood as a reference to the Crown Leases.) Then, in cl. 12, there was a provision in these terms: "The vendors shall not be called upon by the purchasers to procure the consent of the Minister for Lands to the necessary instrument of transfer but the same shall be procured by the purchasers and in case the Minister shall refuse to give such consent the vendors or the purchasers may at their option annul the sale by notice to the other in which case all moneys paid by the purchasers on account of the purchase price shall be refunded to them without interest". (at p486)

2. The situation which led to the inclusion of this provision in the contract was that the leases were held of the Crown under the provisions of Pt V of the Land Act, 1933-1958 (W.A.), and s. 143 of that Act provides that no transfer of such a lease shall be valid or operative until the approval in writing of the Minister or an officer of the Department authorized in that behalf by the Governor is obtained. The Department here referred to is the Department of Lands and Surveys, and the Minister is the Minister of the Crown administering the Act and the Department: s. 3. (at p486)

3. On 9th March 1959 the Under-Secretary for Lands wrote to one of the purchasers a letter which referred specifically to the subject leases and stated: "In reply to your verbal inquiry today, it is advised that a transfer to you in leasehold of the aggregate area comprised in the abovementioned Locations would not be approved. It is pointed out that the maximum area of conditional purchase leasehold land which can be held by any one person under the provisions of the Land Act, 1933-1958 is the equivalent of 5,000 acres of grazing land. Husband and wife are deemed to be one person." (at p486)

4. Thereupon, on 16th March 1959, the purchasers' solicitors wrote to the vendors purporting to annul the contract under cl. 12, on the stated ground that "the Minister for Lands will not consent to the necessary instrument of transfer"; and they demanded repayment of the 3,160 pounds which the purchasers had paid on account of the purchase price. (at p486)

5. If the contract had contained no express provision on the subject of the Minister's approval, the implication would have been that the vendors should take the steps necessary for obtaining the approval, and that in the event of its being refused the contract should go off: Duncan v. Mell (1914) 14 SR (NSW) 333, at p 339; 31 WN 113, at p 114 ; Egan v. Ross (1928) 29 SR (NSW) 382, at p 387; 46 WN 90, at p 92 . Since under a provision contained in s. 143 (2) the purchasers might be required by the Minister to verify by statutory declaration their eligibility to hold the subject land, it is not surprising that cl. 12 required that the application for the approval be made by them. It was at the point of the purchasers' eligibility that a difficulty was inherent in the transaction. By reason of provisions contained in s. 47 (1), no person is competent to acquire either as lessee or transferee, and a husband and wife are not competent to acquire jointly, an area of land, in one or more parcels, exceeding 5,000 acres of grazing land; and the land comprised in the sale was grazing land, nearly 10,000 acres in total area. (at p487)

6. The vendors themselves had found themselves in the same difficulty, and they had adopted a device to circumvent the Act. The husband had purchased one property and had become registered as lessee by transfer, while the wife had entered into a contract to purchase the other property, but had allowed the title to it to remain in the name of her predecessors, three persons who are strangers to these proceedings, contenting herself with an unregistered transfer. But the contract which is now in question did not contemplate or allow for any such expedient. The purchasers were to receive on completion a registrable transfer of both leaseholds. In the course of discussions which took place between the parties and their legal advisers there was mention of a possibility of the vendors overcoming the difficulty by converting one of the leaseholds into a freehold under provisions in s. 47 (5) for conversions upon performance of conditions. But that course, even if conversion could have been effected by the agreed time for completion, would have offered only a substituted performance of the contract, and not a performance of the contract according to its terms. True, a freehold would be better for the purchasers than a leasehold; but the question before us must be decided on the terms of the contract. The question is whether the purchasers' purported annulment under cl. 12 was justified in view of the statement in the Under-Secretary's letter of 9th March 1959 that the transfer "in leasehold", which was what the contract provided for, would not be approved. (at p487)

7. Since the contract did not fix a time within which the Minister's approval should be obtained, an approval at any time up to the agreed date for completion would suffice. But according to well-recognized principle, the purchasers, if there had been no provision in the contract on the subject of cl. 12, would not have been bound to wait until the date for completion and to perform the contract on their part in the meantime, if before that date they could show by sufficient evidence that the Minister's approval would not be obtainable: Smith v. Butler (1900) 1 QB 694, at p 699 ; Halsbury, Laws of England, 3rd ed., vol. 34, pp. 324-326, par. 551; Doyle v. Heenan (1946) VLR 77, at p 81 . In order to show this, a refusal given at any time would suffice, provided it were final and definite: Walker v. Oldham (1948) 23 ALJ 382 ; Patti v. Belfiore [1958] HCA 29; (1958) 100 CLR 198 . (at p488)

8. Was it, then, the intention of cl. 12 to create a situation more burdensome for the purchasers, by postponing the right of annulment so that it should not be exercisable until after completion, however clearly the fact might appear at an earlier stage that the Minister's approval could not be obtained? According to the construction adopted by all the judges in the Supreme Court, the answer is Yes. The clause as their Honours read it, refers only to a consent of the Minister to an instrument executed in completion of the contract, and the provision for annulment therefore applies only (as Wolff C.J. expressed it) "if and when the time comes that the purchasers, having paid all the purchase money and complied with the conditions of the agreement, and having obtained a transfer, fail to get the consent of the Minister for Lands". If this be correct, the purchasers have bound themselves to a course, not only more onerous than the law would have obliged them to follow if there had been no provision as to annulment, but onerous beyond reason. With respect, it seems to me that only the clearest words should suffice to persuade the reader that that is the effect of the clause. The words are in fact by no means clear. It is true that the consent which is referred to is described as a consent "to the necessary instrument of transfer"; and it is true also that cl. 12 is separated only by a provision for allocation of the purchase price as between the respective interests of the vendors in the subject-matter of the sale from the provision in cl. 10 for the execution and delivery of "a proper registrable transfer" upon payment of the whole of the purchase moneys. But even so, surely it does not mean that settlement, including the payment of the whole balance of the purchase price, shall take place before the consent by the Minister is to be sought, and therefore before there can be such a refusal of consent as will justify annulment of the contract. There could be no better illustration of the practical absurdity of the result than the facts of this case provide. The purchasers, though officially informed that the Minister would not, indeed could not, give the consent which they had to obtain under cl. 12, would be bound to remain in possession of the properties for a further two years and more, discharging onerous obligations including the payment of the current land rents, and paying a further 7,000 pounds in purchase money, though knowing that in the end, unless the vendors made some new arrangement with them, they would have to annul the contract, and hope to receive back their 7,000 pounds. (at p489)

9. It seems clear that the consent referred to in cl. 12 is the approval required by s. 143 of the Act. That is, it is true, an approval to the transfer which will complete the transaction. But it is not an approval which cannot be given save to a completed instrument delivered by the vendors to the purchasers on settlement. Indeed, one would expect that in the ordinary course of conveyancing the approval would have to be obtained before the purchaser would be willing to complete. If, then, the first limb of cl. 12 be read as obliging the purchasers to undertake the task of getting the Minister's consent (or approval, to be precise), not to an existing document necessarily, but to the effectuation of the sale by means of the necessary instrument of transfer, the way is completely open to reading the second limb of the clause as producing the entirely sensible result of conferring an immediate right of annulment upon its being established at any stage of the transaction that the Minister's approval to the carrying out of the sale is finally and definitely refused. In my opinion that is how the clause should be understood. (at p489)

10. If this be so, there remains only the question of fact, whether the Under-Secretary's letter of 9th March 1959 was a sufficient refusal of the Minister's consent. It seems to me that it clearly was. It left no room for doubt that there was no chance of the approval being given. The letter came from the permanent head of the department, to whom s. 168 gave authority to correspond with persons under the direction of the Minister; its terms were unequivocal; in tone it was final, inviting no discussion or further representations; and the reason it gave was the unanswerable reason of a statutory prohibition. (at p489)

11. In these circumstances I am of opinion that the plaintiffs' purported annulment of the contract under cl. 12 was effectual, and that, subject to what follows, they are entitled by virtue of the clause to recover from the defendants the 3,160 pounds they have paid on account of the purchase price. The annulment makes the contract void ab initio, cl. 12 being in the nature of a resolutive condition the operation of which does not depend, as does rescission under the general law, upon the possibility of a substantial restitutio in integrum. The moneys expended by the purchasers on the properties while they were in occupation are not recoverable. In the statement of claim the purchasers sought to recover these moneys, alleging that in the contract the vendors warranted that the female vendor was the owner of the lease which in fact stood in the names of the three strangers, and that relying on the warranty the purchasers expended 1,490 pounds 13s. 4d. in erecting a house and 180 pounds 16s. 6d. in sinking a bore. These sums they claimed as damages for breach of the warranty. They also alleged that by reason of the breach of warranty they were forced to sell the plant, stock, machinery and chattels at prices below value, and they claimed 1,392 pounds 7s. 11d. as damages for this loss. These claims are, in my opinion, misconceived. Apart from any other consideration, the imprecision of the statement that the female vendor was "the owner" of the land referred to, makes it impossible to hold that there was here a breach of warranty. (at p490)

12. It remains to consider what consequences flow from the fact that the purchasers, after giving their notice of annulment, sold at auction the plant, stock, machinery and chattels which had been delivered to them under the contract. Clearly, this conduct was not intended as an offer to re-instate the contract and did not operate to do so. The sale produced 477 pounds 12s. 1d. In the prayers of the statement of claim the purchasers treated the 3,160 pounds which they had paid the vendors on account of purchase moneys as consisting of 1,290 pounds in respect of the lands, and 1,870 pounds in respect of the plant etc. This was in accordance with the allocation which the contract itself had made, in cl. 11. They claimed repayment of the 1,290 pounds only, and, treating the 1,870 pounds as lost except to the extent of the 477 pounds 12s. 1d. which the auction sale had brought in, they claimed the balance, 1,392 pounds 7s. 11d., as damages. It emerged at the trial that the purchasers, while in possession under the contract, sold wool from sheep comprised in the contract for 483 pounds 0s. 6d. This wool must be regarded now as having been the vendors' property, and the purchasers must account for the proceeds. The right of the purchasers to recover the 3,160 pounds is contractual: it is not equitable relief, and no term can be imposed requiring the purchasers, as plaintiffs, to do equity. But the vendors are entitled to have them account for the proceeds of the auction sale and of the sale of the wool. They may have other cross-demands for damages by reason of acts or omissions of the plaintiffs while the contract was on foot, but as there is no counterclaim for any damages, they must resort to independent proceedings in default of agreement. But the liquidated amounts, totalling 960 pounds 12s. 7d., which the purchasers have received by means of sales must be deducted from the purchase moneys that are recoverable. In the view I have taken of the case there should be judgment for the plaintiffs for the difference between 960 pounds 12s. 7d. and 3,160 pounds, namely 2,199 pounds 7s. 5d. (at p490)

WINDEYER J. I consider that the purchasers, the Rawsons, became discharged from the contract because the vendors, the Hobbs, were not in a position to give a good title to the land. But I do not base this conclusion on cl. 12. Quite apart from cl. 12 and not, in my view, superseded by it, stands the general principle that a contract for the transfer of an interest in Crown land which can only be effected by consent of the Minister goes off if his consent is refused: Egan v. Ross (1928) 29 SR (NSW) 382, at p 387; 46 WN 90, at p 92 ; Roach v. Bickle [1915] HCA 80; (1915) 20 CLR 663 ; Butts v. O'Dwyer [1952] HCA 74; (1952) 87 CLR 267, at p 284 ; Watt and Clarke v. De Stokar (1910) QSR 155, at p 160 . The general rule in transactions between vendor and purchaser is that where completion depends upon obtaining the consent of a third person it is the vendor's duty to obtain the consent; but that he is not bound to obtain it before the date for completion. He has until then the opportunity of getting it; therefore the purchaser cannot before then repudiate the contract on the ground that the consent has not been obtained: Ellis v. Rogers (1885) 29 Ch D 661, at p 671 ; Dart on Vendors and Purchasers 8th ed. vol II pp. 918, 919; Webster on Conditions of Sale 3rd ed. (1907) p. 311. Nevertheless, if it becomes apparent that the consent cannot be obtained by the due date, the purchaser may forthwith treat the contract as at an end: Smith v. Butler (1900) 1 QB 694 . Clause 12 does not, I think, cut down this general rule. It absolves the vendors from the obligation of seeking the Minister's consent "to the necessary instrument of transfer" and stipulates that the purchasers shall procure the consent and that, if it be refused, either party may annul the contract. I think that all this, when read with cl. 10, related to matters to be done on completion, that is when the time for conveyance arrived. That is how it was construed by the learned Chief Justice of Western Australia and by the Full Court. The Minister's consent "to an instrument of transfer" was not refused. What happened was that it became apparent that the vendors did not have, and had no prospect of being able, within the agreed time, to get, a title to the land they had contracted to sell. The purchasers were therefore entitled to be discharged under the principle of Forrer v. Nash [1865] EngR 680; (1865) 35 Beav 167 (55 ER 858; 147 RR 92) . It is not necessary to consider the debated question as to the nature of the right involved: see Halkett v. Earl of Dudley (1907) 1 Ch 590, at p 596 ; Harold Elliott and H. Elliott (Builders) Ltd. v. Pierson (1948) 1 Ch 452, at p 456 . (at p491)

2. I appreciate the force of what was said by the Full Court, namely that the only express ground on which the plaintiffs here proceeded was that they had effectively annulled the contract pursuant to cl. 12. And if, as their Honours thought, the plaintiffs must, because of their pleading and the way in which the case was fought, be confined to that ground then I would accept the conclusion at which their Honours arrived. But the claim based on cl. 12 was coupled with a statement that it was without prejudice to the plaintiffs' rights to rescind on other grounds. They were not there merely reserving their rights. They were asserting that the contract was at an end: cf. Haynes v. Hirst (1927) 27 SR (NSW) 480; 44 WN 138 . In the circumstances, I agree in the conclusion of the Chief Justice that the Court was not precluded from giving relief according to equitable principles. (at p492)

3. How then does this work out? The contract of sale was doubtless, in its inception, an entire contract for both parcels of land, and for the whole of the livestock, plant and machinery set forth in the schedules to the contract. But, although the total price was fixed at 10,160 pounds, the contract provided in cl. 11 that this price "should be allocated" as to livestock 900 pounds, plant and machinery 970 pounds. And in the schedule, prices totalling 970 pounds are set against the various items of plant, and under "livestock" there appear the words "900 sheep - 900 pounds". This breaking up of the total purchase price was said to have been made for stamp duty purposes only. But, for whatever reason it was done, it states what the parties agreed should be the prices at which the various items of property comprised in the sale were sold. The plaintiffs were to go into possession in July 1958 and would have until July 1961 to pay the balance of purchase money. It seems to me that in this case the property and the risk in the plant and the sheep passed to the purchasers when they went into possession. A clause in common form requiring the purchasers to maintain the plant and machinery and not to remove it and to keep up the number of sheep was in the contract as it was first drawn. But it was deliberately struck out before the contract was signed. This was done because the plaintiffs wished to be at liberty to trade-in the plant and machinery when purchasing new articles, and to dispose of sheep and put cattle on the land. Even if the clause that was struck out had remained in, the plaintiffs' obligation would not have been to keep the actual sheep sold but to keep an equivalent number of sheep on the property pending completion. In the ordinary course of running the property the purchaser would naturally have to deal with the sheep as his property - their progeny would be his - their wool would be his. Of the 900 sheep said to be on the property, somewhat more than 600 were mustered when the plaintiffs went into possession. There was evidence, accepted by the learned trial judge, that Hobbs said that for this reason he would reduce the purchase price by 300 pounds. Therefore, in the way I see the matter, the plaintiffs are liable to pay 600 pounds to the defendants for the stock and 970 pounds for the machinery, notwithstanding that the sale as a whole went off. And they are entitled to retain the proceeds of the sale of these chattels, they having become their property. As to the other matters in question, there too I agree in the conclusion of the Chief Justice and in the order he proposes. (at p493)

ORDER

Appeal allowed with costs. Cross appeal dismissed with costs. Order of the Full Court of the Supreme Court of Western Australia discharged. In lieu thereof Order that (1) there be substituted for pars. 1 and 2 of the judgment or order of the Chief Justice dated 23rd October 1959 a declaration that the plaintiffs are discharged from the contract of sale dated 7th July 1958 mentioned in par. 1 of the statement of claim and are entitled to have refunded to them the purchase money paid by them to the defendants and the costs of erecting the house upon the land and of sinking the bore upon the land subject to a deduction therefrom of the price allocated in the said contract of plant and machinery, viz: 970 pounds and of the price of certain sheep delivered fixed at 600 pounds amounting in all to 1,570 pounds; (2) that in the said judgment or order, for the figure of 3,870 pounds 17s. 3d. as the amount to be recovered there be substituted the figure 3,261 pounds 9s. 10d.; (3) that otherwise the appeal to the Full Court of the Supreme Court from the said judgment or order of the Chief Justice be dismissed with costs.