AH McDonald & Co Pty Ltd v Wells

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.