Amalgamated Wireless (A/sia) Ltd v Philpott

Amalgamated Wireless (A/sia) Ltd (AW) sought to recover from Mr Philpott the sum of £1,000, which it had paid to him as a deposit for the purchase of certain shares. AW alleged that Mr Philpott had failed to deliver the shares as agreed, and therefore the deposit was irrecoverable. The High Court of Australia was required to determine whether AW was entitled to recover the deposit.

The central legal issue was whether the contract for the sale of shares had been frustrated by circumstances that occurred after its formation. Specifically, the court had to consider whether the inability of Mr Philpott to deliver the shares, due to their seizure by the Commonwealth government under wartime powers, amounted to a frustration of the contract, thereby excusing his performance and preventing AW from recovering the deposit.

The High Court held that the contract had not been frustrated. Dixon C.J. and Kitto J. reasoned that the seizure of the shares by the Commonwealth government did not render the performance of the contract impossible, but rather made it illegal. They distinguished between impossibility of performance and illegality, stating that where a contract becomes illegal to perform due to a supervening event, the contract is not frustrated but rather discharged by operation of law. Taylor and Windeyer JJ. concurred, finding that the seizure of the shares did not destroy the fundamental basis of the contract, but merely made performance impossible for a time. The court applied the principle that frustration occurs when an unforeseen event makes performance radically different from that which was contemplated by the parties.

The High Court ordered that AW was entitled to recover the deposit of £1,000 from Mr Philpott.