AH McDonald & Co Pty Ltd v Wells - [1931] HCA 24

A. H. McDONALD AND COMPANY PRO-

PRIETARY LIMITED DEFENDANT, WELLS

ON APPEAL FROM THE SUPREME COURT OF Contract-Rescission-Restitutio in integrum-Whether possibleDamagesTrans 1931.

lating damages from foreign currency into sterling-Translating damages from currency of one Dominion to currency of another. MELBOURNE,

Rescission must be of the entire transaction, and a substantial restoration July 4.

of the parties to the position they occupied before they embarked upon it must be possible.

Held, in a transaction made up of successive agreements, that there could be no rescission unless the parties were restored substantially to the same situation as before the first of them.

45 CLR 507

The question whether upon rescission of the contract in question restitutio in integrum was possible upon the facts of this case considered.

The rule that, in translating damages from foreign currency into sterling, the date at which that process has to be effected is the date of the breach of contract, which was laid down in In re British American Continental Bank Ltd.: Goldzieher &Penso's Claim, (1922) 2 Ch. 575, at p. 587, is applicable to the case of currencies between the Dominions although expressed in sterling.

Judgment of the Supreme Court of Victoria (Irvine C.J.) discharged and new order substituted.

APPEAL from the Supreme Court of Victoria.

In an action brought in the Supreme Court by William Wells against A. H. McDonald &Co. Pty. Ltd., the plaintiff claimed (inter alia) specific performance of an agreement dated 29th March 1928 made between him and the Company, or (alternatively) damages for breach of the contract. The defendant counterclaimed for (inter alia) rescission of the agreement above mentioned on the ground of misrepresentation.

Irvine C.J., who tried the action, gave judgment for the plaintiff for £2,291 5s. 3d. damages for breach of contract with costs, and dismissed the defendant's counterclaim with costs.

From this decision the Company now appealed to the High Court. The facts are fully stated hereunder in the judgment of the Court. Wilbur Ham K.C. (with him Ellis), for the appellant. Arthur Dean, for the respondent.

Cur. adv. vult.

THE COURT delivered the following written judgment :- This is an appeal by the defendant from a judgment of Irvine C.J. by which he awarded to the plaintiff (respondent) £2,291 5s. 3d. for breach of contract, and dismissed a counterclaim by the appellant for rescission on the ground of misrepresentation.

The contract upon which the plaintiff (respondent) sued was made on 29th March 1928 and it rescinded a prior agreement between the parties dated 11th August 1927. In substitution for the agreement so rescinded the parties agreed that certain letters patent, fourteen

45 CLR 508

in number, which were the subject of the previous agreement, should be divided between them upon certain terms and conditions. The transaction from which this agreement arose began in May 1927. The respondent had acquired from one Forsyth an option to buy, for the sum of £5,000, letters patent for the Commonwealth WELLS.

of Australia for inventions relating to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1931] HCA 24
Decision Date: 4 July 1931

CaseChat Overview and Summary

This case involved an appeal to the High Court from a decision of the Supreme Court of Victoria. The plaintiff, William Wells, had sued A. H. McDonald & Co. Pty. Ltd. for specific performance or damages for breach of a contract dated 29th March 1928. The defendant company counterclaimed for rescission of the same agreement, alleging misrepresentation. The Supreme Court had awarded damages to the plaintiff and dismissed the counterclaim.

The High Court was required to determine whether the defendant was entitled to rescission of the contract on the grounds of misrepresentation, and if not, what damages the plaintiff was entitled to for breach of contract. A key issue was whether *restitutio in integrum* was possible, given the complex history of successive agreements and the parties' actions since the contract was formed. The court also considered the appropriate date for converting damages from foreign currency into sterling.

The Court found that while misrepresentation had occurred, it was innocent, not fraudulent. Crucially, the Court held that rescission was not possible because *restitutio in integrum* was not achievable. The transaction involved successive agreements, and the parties could not be substantially restored to their original positions. The patents had been exploited, some had expired, and the opportunity for exploitation over the intervening years could not be restored. Therefore, the counterclaim for rescission failed. However, the misrepresentation provided a defence to the plaintiff's claim for specific performance. The Court also determined that the plaintiff was not entitled to damages for loss of the bargain, but rather for the specific breach of failing to pay an instalment due to Forsyth. The Court applied the principle that damages from foreign currency should be translated into sterling at the date of the breach.

The High Court allowed the appeal, discharging the Supreme Court's judgment. It substituted an order allowing the plaintiff to elect, within seven days, to have a reference for the ascertainment of damages at his own risk as to costs, or otherwise to have judgment for one shilling without costs. The defendant's counterclaim was dismissed without costs. Both parties were ordered to bear their own costs in both the High Court and the Supreme Court.

Orders