McWilliam v McWilliams Wines Pty Ltd [1964] HCA 6; (1964) 114 CLR 656 (25 February 1964)

HIGH COURT OF AUSTRALIA

McWILLIAM v. McWILLIAMS WINES PTY. LTD. [1964] HCA 6; (1964) 114 CLR 656

Vendor and Purchaser

High Court of Australia
McTiernan(1), Taylor(1) and Menzies(2) JJ.

CATCHWORDS

Vendor and Purchaser - Irrigation farm lease - Transfer - Prohibited without consent of statutory body - Implied term - Land held by bare trustee for vendor - Obligations of trustee - Entry into possession by purchaser - Effect - Crown Lands Consolidation Act, 1913 (N.S.W.), as amended, s. 145A*.

HEARING

Sydney, 1963, November 29, December 9, 10;
Melbourne, 1964, February 25. 25:2:1964
APPEAL from the Supreme Court of New South Wales.

DECISION

1964, February 25.
The following written judgments were delivered:-
McTIERNAN AND TAYLOR JJ. We are of the opinion that subject to some dismissed. The basis upon which the order below was made was that in the events which happened the appellant became a trustee of the farm land in question upon trust, during the subsistence of the contract of 6th July 1931, to permit the respondent company to be and remain in possession thereof until the Water Conservation and Irrigation Commission should consent to a transfer to the company and, thereafter, upon trust for the company absolutely. "If the contract should go off through refusal of consent to the transfer the trust" would, according to the learned judge of the first instance, "come to an end". But whether his Honour ultimately thought that the appellant became a trustee of the land for the company by reason of the continued subsistence of the contract or by reason of the declaration of trust subsequently executed on 14th December 1932 does not clearly appear. We entirely agree with his observation that there was implicit in the contract - which evidenced the sale of a number of parcels of land most of which were not subject to the provisions of the Crown Lands Consolidation Act, 1913 (N.S.W.) and which provided a single consideration for the sale - a condition that, in so far as it related to the sale of the farm land in question, it was subject to the consent of the Commission being obtained and that, this being so, it was ineffective to constitute the appellant a trustee of the land for the company notwithstanding the fact that the obligation to provide the specified consideration was fully satisfied. But his Honour proceeded: "As he was only a bare trustee of the land, the defendant could not have given to the company a greater interest than that to which it was entitled under the contract of sale, and it is apparent from the terms of the deed that it was neither his intention, nor the intention of the company, that he should do so. Under the contract, the company was entitled to immediate possession of the land and would become absolutely entitled when the consent of the Commission should be given to the transfer. The effect of the deed, therefore, was to constitute the defendant a trustee of the farm upon trust, during the subsistence of the contract, to permit the company to be and remain in possession thereof until the Commission should consent to the transfer of the farm to the company and thereafter upon trust for the company absolutely. Since the contract was valid the declaration of trust, which created no further interest, was also valid". (at p659)

2. With respect to his Honour we do not think it is correct to say that under the contract the company became entitled to immediate possession. What the contract provided was that "the purchase shall be completed immediately after the registration of the company when possession of the premises hereby sold shall as far as practicable be given to and taken by the company" (cl. 6). Presumably the contract had been prepared some weeks before its execution for the company had been incorporated on 22nd June 1931. Of necessity the execution of the contract awaited the incorporation of the company and the clause, as drawn, did no more than provide that possession of the subject lands should be given upon completion. Moreover, since the contract, in so far as it related to the sale of the farm land, was subject to the condition already mentioned the clause should not, in the absence of a clearly expressed intention to the contrary, be regarded as designed to give a right to possession before the necessary consent had been obtained. We add that if the contrary view of the effect of the clause were correct it would be open to question whether it evidenced a "dealing" in contravention to s. 145A of the Act. But, taking the contrary view, the learned judge of first instance thought that the declaration of trust subsequently executed by the appellant "created no further interest" and that, presumably, because of this circumstance, it could not be said to be a dealing and was valid and enforceable. It seems to us that it is probable that the declaration of trust was prepared in the belief that pursuant to the contract the company had obtained an equitable title to the land and that the declaration was taken merely to confirm that title. Nevertheless there may be much to be said for the view that upon its true construction it did no more than require the appellant to hold the land in trust for the purpose of completing the contract. But whether it extended further is not, we think, a matter of much importance in the case. If it did not then the measure of the relief to which the respondent company was entitled in the suit is to be found in its rights under the contract whilst, if its effect, apart from the provisions of the Act, would have been by its own force to vest in the company an equitable title to the land then it constituted a dealing within the meaning of s. 145A and, having been effected without the consent of the Commission, was, in the language of s. 145A, not valid for any purpose whatsoever. (at p660)

3. The question, therefore, must be taken to be confined to a consideration of the rights, if any, to which the respondent company became entitled by virtue of the contract. Under a contract for the sale of land unaffected by statutory provisions such as those to be found in the Crown Lands Consolidation Act the vendor assumes an obligation, subject to the terms of the contract, to execute a conveyance of the land sold to the purchaser or as he may direct. Further, where the purchase money specified in the contract has been paid the purchaser becomes entitled in equity to the land and the vendor thereafter becomes a bare trustee. But the contract in this case was subject to an implied condition that the sale of the farm land in question was subject to the consent of the Commission being obtained (Egan v. Ross (1928) 29 SR (NSW) 382; 46 WN 90 and Butts v. O'Dwyer [1952] HCA 74; (1952) 87 CLR 267 ) and, that being so, it could not be contended that the respondent company became entitled by force of the contract to an equitable interest in the land. Nevertheless, upon the authority of the last two mentioned cases, the contract imposed upon the vendor an obligation to do all such things as might be necessary to obtain the consent of the Minister. Further the appellant as a party in whom, according to the contract, the legal estate was vested in trust for the vendor and as a party joining in the contract for the purpose of signifying his approval thereto, became subject to a like obligation. Such an obligation was one which would continue in full force and effect so long as the contract remained on foot and is an obligation which is clearly enforceable in a court of equity. It is, of course, true that the contract was made many years ago. But no suggestion has been made that, dealing as it did with several different parcels of land, it came to an end; the only contention raised here is that so far as the contract related to the land in question, it was void by reason of the provisions of s. 145A and that, to that extent, it never came into operation. For the reasons given we do not think this contention can be supported and accordingly we think it proper at this stage to direct the appellant to do all such things as may be necessary on his part to support an application for the consent of the Commission to a transfer of the subject land to the respondent company or as it may direct. (at p661)

4. One other matter remains to be mentioned. It appears that the company is, in fact,in occupation of the land in question and has been so since the date of its incorporation or very shortly thereafter. This occupation, it was contended, was in breach of the provisions of the Act and it was argued that because of this the company was not entitled to any relief. We do not assent to this proposition. Whatever may be the consequences, or possible consequences, of the fact that the company assumed possession its rights under the contract remained unaffected and, in our view, may be enforced by an order in the terms which we have proposed. Further, we add that even if it should be found that the company has no legal right to possession, it would by no means follow that the appellant could assert a right to possession for the vendor, or the pre-existing partnership, and not the appellant, was in possession immediately before the making of the contract and it was from one or other of these two sources that the company obtained possession. (at p662)

MENZIES J. In this matter we are not called upon to investigate the beneficial ownership of Irrigation Farm Lease Farm 130 (which on 29th April 1948 became a Crown grant and which I shall refer to as "Farm 130") prior to the contract of 6th July 1931. Our starting point can be that, when that contract was made, as appears therefrom, the appellant was trustee of Farm 130 for J. J. McWilliam, the vendor, selling under that contract. By the contract the vendor sold his beneficial interest in Farm 130 and other lands to the respondent company but did so, as far as Farm 130 was concerned, subject to the implied condition that the transfer would be subject to the consent of the Water Conservation and Irrigation Commission of New South Wales - Egan v. Ross (1928) 29 SR (NSW) 382; 46 WN 90 ; Butts v. O'Dwyer [1952] HCA 74; (1952) 87 CLR 267 . That consent has not been given and has not been refused. Accordingly, the rights of the parties with regard to Farm 130 remain as they were when the contract was made subject only to a declaration of trust executed by the appellant in favour of the respondent company on 14th December 1932. If that declaration did no more than state explicitly what was the legal consequence of the earlier contract, it can be disregarded. Otherwise it must, I think, be disregarded on the simple ground that the beneficial owner was not a party to it and a trustee cannot by his declaration affect beneficial interests. I will hereafter state where I think the beneficial interest lay. (at p662)

2. I am, therefore, obliged to consider this case on the footing that the rights of the parties do still depend upon the contract of 6th July 1931 which did not entitle the purchaser to possession prior to completion and, being subject to the implication aforesaid, was not a dealing forbidden by s. 145A of the Crown Lands Consolidation Act. It is not altogether easy to state the position resulting from this contract, having regard to the implied condition affecting the sale and transfer of Farm 130, but I have reached the conclusion that, despite the payment in full of the consideration for all that was sold, the appellant remained trustee for the vendor and did not become trustee of that farm for the respondent company as purchaser. As, however, the vendor was obliged to do whatever was necessary to obtain the consent of the Commission to the transfer of Farm 130 to the respondent company, the appellant, as trustee for the vendor - and who as such executed the contract - became subject to a like obligation. (at p662)

3. It appears to me that the real difficulty in framing a satisfactory order in this case stems from the order made upon demurrer debarring the respondent Keith Stewart McWilliam, as executor and trustee of the will of the late J. J. McWilliam, from claiming relief in the suit alternatively with that claimed by the respondent company. However this may be and doing the best that can be done with the proceeding as it now stands, I consider that the declaration made by his Honour that the appellant is trustee for the respondent company goes too far on the facts as they appear and that the proper declaration is that the appellant is bound to do what he can to bring about the transfer of Farm 130 to the respondent company or as it should direct. If it should eventuate that such a transfer cannot be made, the next round in this unfortunate family conflict is likely to be between the appellant and the respondent Keith Stewart McWilliam in his representative capacity. (at p663)

4. I have had the advantage of reading the joint judgment. I agree with the order which it proposes and with their Honours' fuller statement of the reasons for this Court making that order. (at p663)

ORDER

Decree of the Supreme Court varied by omitting therefrom the declaration therein contained and the first order thereinafter immediately appearing and by substituting therefor a declaration that the appellant (defendant) is bound by an obligation implied in the contract mentioned in paragraph (8) of the statement of claim to do all such acts and execute all such documents as may be reasonable and proper on his part to enable the respondent (plaintiff) company to apply to the Water Conservation and Irrigation Commission for its consent to a transfer to the company, or as it may direct, of the land comprised in Crown Grant Registered Vol. 5831 folio 19 and an order that within fourteen days after service upon him of an office copy of this decree as amended the appellant (defendant) at the cost of the company do all such acts and execute all such documents as may be reasonable and proper as aforesaid. Subject to this variation appeal dismissed with costs.