Blomley v Ryan

[1956] HCA 81

99 CLR 362

Equity-Contract for sale and purchase of grazing property-Suit for specific perform-

ance brought by purchaser-Vendor aged and affected by long bout of rum drinking -Claim to set aside contract-Unconscionable bargain-Constructive fraud- SYDNEY,

Circumstances in which courts of equity will grant relief. 1954, June 8-11

Held, by McTiernan and Fullagar JJ., Kitto J. dissenting, that upon the July 26-29;

evidence adduced before him in a suit for specific performance brought in Aug. 27; Sept. 1;

the original jurisdiction of the Court by the purchaser under a contract for Oct. 5, 8, 11;

the sale and purchase of a grazing property Taylor J. was justified in refusing the relief sought and in ordering instead at the instance of the vendor that the said contract be set aside upon the ground that it was an unconscionable bargain such that a court of equity would not enforce. 1955, Aug. 30, 31;

Discussion of the nature of equitable fraud and of the circumstances in Sept. 1, 2, 5;

which equity will relieve against unconscionable bargains. Nov. 5, 9;

Earl of Chesterfield v. Janssen (1751) 2 Ves. Sen. 125 [28 E.R. 82]; Earl of Aylesford v. Morris (1873) L.R. 8 Ch. App. 484; Clark v. Malpas (1862) 31 Beav. 80 [54 E.R. 1067] 4 De G. F. &J. 401 [45 E.R. 1328]; Longmate V. Ledger (1860) 2 Giff. 157 (66 E.R. 67]; Baker v. Monk (1864) 33 Beav. 419 [55 E.R. 430] 4 De G. J. &S. 388 [46 E.R. 968] and Fry v. Lane (1888) 40 Ch. D. 312, referred to.

Observations by Fullagar J. on the attitude of courts of equity to cases where a party to a contract resisting specific performance or seeking its rescission asserts that he was drunk at the time of entering into it. Osmond Fitzroy (1731) 3 P. Wms. 129 [24 E.R. 997] Cory v. Cory (1747) 1 Yes. Sen. 19 [27 E.R. 864]; Shaw v. Thackray (1853) 17 Jur. 1045; Vivers v. Tuck (1863) 1 Moo. N.S. 514 [15 E.R. 794]; Scates v. King (1870) 1 V.R. (Eq.) 100; Wiltshire v. Marshall (1866) 14 L.T. 396: Cooke v. Clayworth (1811) 18 Ves. Sen. [34 E.R. 222]; Dunnage v. White (1818) 1 Swans. 137 [36 E.R. 329]; Nagle v. Baylor (1842) 3 Dr. &W. 60, referred to.

Decision of Taylor J., affirmed.

99 CLR 363

APPEAL from Taylor J.

On 10th August 1953 Graham Dudley Blomley, a resident of the State of Queensland commenced a suit in the original juris- diction of the High Court of Australia against Timothy Ryan, a resident of the State of New South Wales, seeking specific p ance or alternatively damages in relation to a contract dated - April 1953 for the sale and purchase of a grazing property known as "Worrah" near Boggabilla, New South Wales, for the sum of £25,000, the plaintiff being the purchaser and the defendant the vendor. By his defence the defendant sought relief against the said contract by way of counterclaim on the ground of constructive fraud.

The action was heard by Taylor J., in whose judgment the relevant facts and the course of the trial of the action appear.

D. McCawley Q.C. and R. W. Fox appeared for the plaintiff up to 29th July 1954, after which date B. P. Macfarlan Q.C. and R. W. Fox appeared for the plaintiff for the remainder of the trial.

Gordon Wallace Q.C., N. H. Bowen Q.C., C.L.D. Meares Q.C. and R. J. Ellicott, for the defendant.

Cur. adv. vult.

TAYLOR J. delivered the following written judgment :- The plaintiff in this suit seeks a decree for specific performance of an agreement for the sale to him of the defendant's grazing prop- erty known as 'Worrah " and which is situated near Boggabilla in New South Wales. Alternatively damages are claimed in respect of the defendant's refusal to complete the sale. The case is, of course, of a type in which a decree for specific performance is normally available but the defendant claims that the circumstances established by the evidence operated to render the agreement voidable at his option or, alternatively, show that this is a case in which the Court, in the exercise of its judicial discretion, should refuse to make such a decree. The circumstance that the latter defence was available only in answer in the plaintiff's primary claim for specific performance left the suit in such a form that it was possible that the claim for damages could succeed, although upon the evidence it might be proper to refuse a decree for specific performance and, indeed, although the evidence which made such a refusal proper was adequate to support a counterclaim for rescis- sion of the agreement. Upon consideration of the matter after the termination of the hearing I formed certain views on the ques- tions of fact involved in the case and it appeared to me that the

99 CLR 364

attention of the parties should be directed to this possibility. Accordingly the suit was restored to the list and I intimated to counsel for the parties that the views which I held upon the evidence as it then stood would require me to refuse to make a decree for specific performance and that consideration should be given to Taylor J.

the question of what other order or orders should be made. I further intimated to them that I had grave doubts whether justice did not require that further consideration should be given by the parties to the form of the pleadings and the parties were informed that I would be prepared to hear them on this aspect of the matter at some future time. At a later stage the defendant sought leave to amend his statement of defence by adding a claim for rescission alleging that at the time of the signing of the contract of sale and of the negotiations between the parties in connection therewith the defendant was an old man lacking in education, suffering from the effects of intoxication, mentally and physically weak, without proper advice, unable to protect himself and on unequal terms with the plaintiff all of which circumstances the plaintiff then well knew." The proposed amendment further alleged that the plaintiff "took advantage of the said circumstances of the defendant, that independent advice was not given to the defendant, that the plaintiff acted with undue haste and procured the said agreement of the defendant to the sale of the property

at a great under- value and upon terms highly favourable to the plaintiff and unfavour- able to the defendant." No objection was made to the substance of the amendment but counsel for the plaintiff objected that if the amendment were permitted at that stage it would result in serious prejudice to the plaintiff. In my view no question of prejudice arose and, being of opinion that it was proper to do so

I allowed the amendment and gave leave to the plaintiff to call such further evidence, if any, as he might think fit. Pursuant to leave

SO given further evidence was called on behalf of the plaintiff.

The property known as "Worrah" comprises some 3,696 acres of land under settlement lease and for a number of years prior to the date of the agreement upon which the suit is based, namely 21st April 1953, it was worked by the defendant with the assistance of other persons. At the time of the hearing of the suit the defend- ant was seventy-nine years of age and in recent years his main help has been his nephew, one Cooney, though there also resided at the homestead a person referred to in the course of the evidence as "Scotty" or Scotty Turner. The property carried somewhat more than 3,000 sheep and 50 head of cattle. No doubt because of his age and general physical condition the thought of disposing of

99 CLR 365

'Worrah had presented itself to the defendant's mind, and on 29th February 1952, he wrote, in answer to an inquiry by Mr. Gore, the immediate predecessor in business in Goondiwindi of Dalgety &Co. Ltd, "that this place will be for sale but not until the end of the year". He added that the price would be £9 per acre and that he would let Mr. Gore know when he was ready to sell. In September of the same year, in response to a further inquiry, he informed the representative of Dalgety &Co. Ltd. at Goondiwindi by letter that the place would not "be for sale until I shear my sheep in May next ". At this time it was disclosed that E. F. Blomley, the father of the present plaintiff, was the prospective buyer. Nothing more occurred until early in April 1953. About that time the defendant paid a visit to the office of Dalgety &Co. Ltd. in Goondiwindi. The visit was not connected with any negoti- tions for the sale of his property but it is said that whilst the defend- ant was there he was asked when it would suit him for Blomley to have a look at 'Worrah ''. The defendant is alleged to have said that "he could come out and have a look at the place any time". Pursuant to this conversation Stemm, the assistant manager of the branch of Dalgety &Co. Ltd. at Goondiwindi, and Blomley, together with the plaintiff, visited" Worrah" on Monday, 13th April 1953. They remained there for two or three hours during the course of which a brief inspection was made of portions of the property and the terms upon which Blomley and the defend- ant were respectively prepared to do business were discussed. Before referring with more particularity to the discussion which took place on 13th April I should mention that on the following Monday, 20th April 1953, Stemm and Blomley senior, accompanied by the latter's son-in-law, one Brian Doran, again came to "Worrah". This was the day upon which it is alleged that the parties agreed upon the terms and conditions of sale and the day before the execution of the agreement. Blomley, accompanied by his wife and daughter, again visited the property on 22nd April 1953.

The agreement upon which the plaintiff relies was signed by the parties on the afternoon of 21st April 1953 in the office of Mr. Rogers, a solicitor, in Goondiwindi. The agreement evidenced by this instrument was an agreement by the defendant to sell " Worrah to the plaintiff for the sum of £25,000, payable, as to £5 by way of deposit, as to £9,995 upon completion and as to "the balance then remaining, that is to say the sum of £15,000, by four equal annual instalments of not less than £3,500 on the first day of August in the year 1954, 1955, 1956 and 1957 together with interest thereon or on SO much thereof as shall from time to time be owing

99 CLR 366

calculated at £4 per centum per annum". The agreement was expressed to be subject to the consent of the Minister for Lands being given to the transfer and it was provided that the vendor should forthwith apply for such consent and that the purchaser should do all things necessary on his part to enable the vendor to obtain such consent including the completion of the necessary purchaser's declaration and, if necessary, the attendance of the latter at an inquiry ordered by the Minister. In the event of the consent of the Minister for Lands being refused or not being granted within three months from the date of sale either party was to be at liberty to cancel the sale upon notice in writing to the other.

It was alleged on behalf of the defendant that for some days prior to and upon the day when he signed this agreement his con- dition was such, as the result of over-indulgence in alcoholic liquor, that he did not possess the requisite contractual capacity. Alterna- tively, it was said that even if he was not incapable in this sense his mind was, to the knowledge of the plaintiff, SO affected by drink as to place him at a grave disadvantage in transacting the negotia- tions and sale that, taken with the other features of the case, the remedy of specific performance should be withheld. The other features relied upon are to be found in the allegations that the defendant quite obviously was an old man of failing intellect, that the sale was at a very substantial undervalue, that the terms of the agreement were unfair, that the transaction was concluded with undue haste and without adequate advice being available to the defendant and that the purchaser's agent himself had contributed to the defendant's debilitated condition. This may also be taken as a short summary of the matters now relied upon to support the claim that the agreement should be set aside.

There is not the slightest doubt that the defendant is a man who for a number of years at least has engaged in drinking bouts extending over periods ranging from a few days to a week or more. Those witnesses called on behalf of the plaintiff who had an oppor- tunity of observing the defendant from time to time were prepared to concede this sorry state of affairs and, indeed, frankly state that the bouts occurred at frequent intervals. I am satisfied that though the defendant's drinking habits may be SO described with accuracy the statement of his habits in this brief fashion tends to under-rate his propensities and in no way indicates the condition to which his drinking bouts would reduce him or the degree to which the degeneration of his mental processes had been accelerated thereby. At the relevant time he had, I am quite sure, arrived at a

99 CLR 367

stage where a few drinks might quickly reduce him to a state of stupidity and, perhaps, even to total incapacity. The defendant's condition and habits were a matter of common knowledge in and around Goondiwindi and, even if Blomley senior was not fully aware of these matters, there is no doubt that Stemm had full knowledge of them. There is, I should think, no doubt that on many occasions during his bouts of drinking the defendant lost all capacity to transact even the simplest business matters though at other times during these periods he temporarily recovered from his excesses sufficiently to exercise those impaired faculties which were the legacy of his advanced years and habits. Between these two states there must, of course, have been many occasions when it was difficult or even impossible to determine the degree of under- standing enjoyed by the defendant or, indeed, to say precisely when he commenced to emerge from a state of total incapacity.

There is good reason for thinking that the agreement of 21st April 1953 was executed by the defendant during the period over which one of these drinking bouts extended. Shearing opera- tions commenced at "Worrah" on Monday, 20th April 1953, and continued for some ten or eleven days. Some of the shearers arrived at the property on the previous Saturday and Mr. Binney, the shearing contractor, and his wife arrived on the Sunday afternoon. There is evidence that shearing time generally coincided with some of the defendant's heaviest bouts and this occasion seems to have proved no exception. There may have been some exaggeration on the part of some of the witnesses called on behalf of the defendant but I accept substantially their evidence as to the defendant's drinking excesses which occurred at Worrah" over this period and their description of the condition to which those excesses reduced him. In particular, I was impressed with the evidence of Mr. and Mrs. Binney concerning the condition and appearance of the defendant on their arrival on the Sunday afternoon and on the subsequent occasions when they had the opportunity of observ- ing him. Notwithstanding the fact that Mrs. Binney exhibited a marked aversion to drinking habits and that her feelings might have inclined her to paint a somewhat more sordid picture of what she observed at "Worrah" than she might otherwise have done,

I am quite satisfied that she attempted to give a true picture and that the actual state of affairs differed very little, if at all, from her description. I should, perhaps, add that the bedroom occupied by Mrs. Binney and her husband was adjacent to that of the defend- and and was separated from it by a wooden partition SO that she and her husband were in a position to hear what went on during

99 CLR 368

A. each night and the early hours of the morning in the plaintiff's

bedroom which, during the period of the shearing operations, he shared with "Scotty" Turner. On one point, however, Mrs. Binney was in error. She said that on 20th April the defendant did not leave his bed. But she appears to have left the house before Stemm and the defendant went downstairs and saw nothing of the latter whilst he was absent from his room. Her error did not, in my opinion, proceed from any desire to exaggerate or mis- lead the Court. Corroboration for the allegation that the defendant was indulging his weakness for rum at this time-if corroboration is necessary-is to be found in the answer given in cross-examination by Brian Doran, who was present with Stemm and Blomley at

Worrah" on 20th April, that the defendant looked as if he was recovering from a drinking bout and in the evidence of Mr. Folk, the Manager for Dalgety &Co. Ltd. at Goondiwindi, that on the morning of 21st April the defendant looked an older and sicker man than he had ever remembered. For obvious reasons neither Doran, who is the plaintiff's brother-in-law, nor Folk, who is Stemm's immediate superior, were anxious to give evidence which ran counter to that of the plaintiff's father and Stemm, but never- theless they were not prepared to support other evidence which spoke of the defendant both on 20th and 21st April as appearing to be in normal health. Upon the evidence I have no doubt that the defendant's drinking bout on this occasion extended from some little time before Saturday, 18th April, until, at least, towards the end of the following week and that there were many occasions during this period when he was quite incapable not only of transacting the simplest forms of business but even of attending to the most elementary of his bodily requirements.

Both Stemm and Blomley senior say that on Monday, 13th April, the defendant named £30,000 as his price for "Worrah", that he showed no inclination to recede from this figure and that it was after this figure was named that Blomley said he was not prepared to pay more than £25,000. The plaintiff's evidence is much the same but the defendant maintains that he insisted on £9 per acre and did not name any total figure. I have difficulty in understanding why the defendant without any process of bar- gaining should have departed from his previously stipulated price of £9 per acre, but I find it impossible to place any real reliance on his evidence. He has, I am sure, little or no recollection of the events of that day. On the other hand I am by no means satisfied that the brief account given by the other three witnesses who were present, of the discussions which took place on that day contained

99 CLR 369

a complete account of the discussion which took place as to price. Probably the figure of £30,000 was mentioned at some stage but

I am not prepared to conclude that the conversation as deposed to by those three witnesses constitutes a full and complete account of the discussions. This, however, is not vital to a determination of the case for it is not suggested that agreement was reached that day and the discussions concluded with the suggestion that the defend- ant should think the matter over during the ensuing week. Before leaving this occasion I should refer to one other aspect of the dis- cussion. It is alleged that on this occasion the defendant said that if he sold the property he would not require the whole amount of the purchase money and that he would be prepared to sell on terms. Following upon this Blomley senior said that in those circumstances his son, the plaintiff, would be the purchaser if a sale on terms eventuated.

When Stemm, Blomley and Doran came to "Worrah" about 3 p.m. on the following Monday, 20th April, the defendant was lying on his bed. The previous night he had drunk himself practically, if not entirely, into a state of insensibility but never- theless during the night and early hours of 20th April he and Scotty Turner, who was sharing his room with him, had more to drink. About 7 a.m. he was " lying sprawled across the bed and about 8 a.m. or 9 a.m. he had more to drink. Apparently he had not undressed during the night, and it is more than probable that at least on several of the nights succeeding 18th April he went to bed in the suit of clothes which he was wearing when the shearers commenced to arrive. On arrival at "Worrah" on the 20th Stemm went up to the defendant's room and subsequently he and the defendant came downstairs to the kitchen where Blomley then was. Both Stemm and Blomley gave evidence to the effect that the defendant did not appear to be other than his normal self. Stemm maintained that he showed no signs of having been engaged in a drinking bout and Blomley said that the defendant was not sick and did not appear to be sick. I find it impossible to accept this evidence. The defendant was known to both of these witnesses and although at that time he may not have been incapable of coherent speech his appearance alone must have been such as to give some real indication of his condition. It was in these circum- stances that Stemm produced a bottle of rum and invited the defend- ant to drink with them. Both Blomley and Stemm assert that the defendant refused but the others drank and, shortly thereafter, all four proceeded towards the shearing shed. As Stemm and the defendant walked towards the shearing shed, followed by Blomley

99 CLR 370

and Doran, Stemm claims that he said to the defendant " What is your price today Tim ?" This inquiry was the first inquiry as to price that day and was made at Blomley's suggestion. Accord- ing to Stemm, and, as he admits, a little to his surprise, the defend- RYAN.

ant immediately replied " £25,000 " Blomley claims to have overheard the defendant's reply, but the parties are said to have proceeded to the shearing shed without any further relevant dis- cussion. On their return to the homestead Stemm produced a form of contract and asked the defendant in Blomley's presence if he would like to sign an agreement for sale there and then, but accord- ing to both Stemm and Blomley, the defendant said he would prefer his solicitor to prepare the contract and with this Blomley agreed. Thereafter, it is said, the date for completion was discussed and delivery of possession in the month of August following was agreed upon. Subsequently during the afternoon it was arranged that the defendant should go to Goondiwindi, a distance of some forty miles, on the following day to see the solicitor selected by both parties and Stemm undertook to come out to "Worrah and drive him both into Goondiwindi and home again. Upon a consideration of the evidence I have no doubt that during the after- noon of the 20th the defendant's condition was such that he was incapable of considering the question of the sale of his property with any real degree of intelligent appreciation of the matters involved and that this was SO must have been reasonably apparent to both Stemm and Blomley. No doubt Stemm, and possibly Blomley, may have seen the defendant on other occasions in a not dissimilar condition and may, perhaps, have induced themselves to think that as Ryan wished to dispose of his property they were not in all the circumstances doing him a grave injustice by under- taking to relieve him of it for the sum of £25,000.

If the conversation on 20th April as to the price required by the defendant took place just as Stemm related in his evidence I do not doubt that he was surprised by the defendant's reply to his inquiry. Evidence as to the value of the property was given on behalf of both the plaintiff and the defendant and the lowest value placed on the property was £30,907. Mr. McGregor, a stock and station agent, called by the plaintiff, gave this as his estimate of the value of Worrah" in April 1953, but he said that in August it was worth £34,602. Between these two months there had, he said, been a big movement in land values and in the case of

'Worrah " he estimated the increase at approximately £1 per acre. I am quite unable to appreciate the grounds upon which it is suggested that such an increase occurred and I prefer the

99 CLR 371

evidence of Mr. Boland, a valuer, called on behalf of the defendant, that there is nothing to suggest that the value of the subject land altered appreciably between April and August 1953. Mr. Boland valued the property as at the former month for grazing purposes- exclusively of the chattels which were included in the agreement at £33,444 or slightly over £9 per acre, and I accept his estimate. The plaintiff's father, on the other hand, said that on 13th April he was of the opinion that £5 per acre was a fair price for Worrah" but I do not believe that his estimate could have been SO erroneous. Nor would such a view be consistent with his reasonably obvious eagerness to obtain it for his son at £25,000. I am satisfied, having regard to the experience of both Stemm and Blomley, that they believed that the purchase of "Worrah" at £25,000, and upon the terms of the contract subsequently executed, represented not only a good bargain but a purchase at a very substantial under- value. In these circumstances I cannot help but feel that Stemm's suggestion that the defendant might there and then on 20th April sign the form of agreement produced by him indicated a desire to conclude the matter before the defendant should have an oppor- tunity of considering the deal to which, apparently, he had that day assented or appeared to assent. Counsel for the plaintiff pressed upon me that there was nothing unusual in Stemm's suggestion but whether or not it is usual for formal agreements for the sale of substantial properties to be concluded in this fashion-and I should think most decidedly it is not-there was every reason why this deal should not have been SO concluded. There was no urgency about the matter: completion was not to take place for more than three months, the defendant at his best was an old man of failing intellect, he was in the condition which I have briefly attempted to describe and he had had no independent advice of any kind. Stemm did not, however, press the defendant to adopt his suggestion. Instead, as I have already said, he arranged to come out again to "Worrah" on the following morning and take the defendant to Mr. Rogers's office. This he did, but in the meantime he saw Rogers, apparently on behalf of both parties, and gave instructions for the preparation of a draft agreement. It must have been quite late in the afternoon when Stemm and Blomley left Worrah" but about 6.30 p.m. that evening the former telephoned Rogers and made an appointment for 7.30 p.m. that night. Stemm, accompanied by Folk, attended on Mr. Rogers at that hour and gave instructions for the preparation of the contract. Stemm, I believe, did not propose to allow the grass to grow under his feet and exerted himself to ensure that the

99 CLR 372

contract in its final form should be signed no later than the following day. It was said in evidence that it is the practice in this part of the State to arrange for a formal contract to be drawn up and executed immediately upon the conclusion of negotiations for the sale of any substantial property, but if this was the practice there was every reason in the circumstances of this case why it should have been departed from. But whether or not the expedition with which the written agreement was executed merely represented an observance of such a practice or sprang from a desire to conclude the matter before a period of sober reflection on the defendant's part is of little consequence, for the fact is that the rapid course of events did not afford any opportunity for any form of sober reflection on his part. I should, perhaps, add that Stemm's suggestion on 20th April that the contract should be forthwith signed at "Worrah" rather suggests the latter as the reason for haste.

At this stage I pause to mention that Walter Joseph Doran, who is the father of Brian Doran and the owner of the grazing property which adjoins Worrah" on the eastern side, gave evidence to the effect that on 15th April 1953 the defendant offered to sell "Worrah" to him for £25,000. The defendant is alleged to have said that Doran "could have the offer" and to have added that there was " no hurry" and that Doran could decide at any time". In cross-examination it rather appeared that if a firm offer was made it was made to Doran as a personal favour but it is not without significance that within a few days and without further reference to Doran the defendant proceeded to sell the pro- perty to the plaintiff. I have grave doubts whether the defendant really made a firm offer to sell to Doran at this figure, but, if he did, it was as a personal favour to Doran and it was almost immedi- ately forgotten by him. Perhaps if such an offer was made the defendant's condition was, at the time, the same as it was on the occasion towards the end of the shearing operations when he offered a number of rams to Binney as a present. The present was refused, Binney feeling that the defendant Was too stupid' to make it and that he would forget having made it. But what- ever the explanation is it is clear, I should think, that on 20th and 21st April the defendant had no recollection whatever of having made any offer to Doran.

The principal events of 21st April have given me considerable concern, but I am satisfied that during the preceding night the defendant was again grossly intoxicated and that in the morning when Stemm called for him his condition was far from normal.

99 CLR 373

At an early hour that morning he was, I should think, barely sensible of what was going on around him, though his condition may have improved a little during the drive to Goondiwindi. Nevertheless he was that morning in Goondiwindi older and sicker than Folk had ever seen him. Yet Stemm says he was quite sober and normal. Accepting Folk's statement and Mrs. Binney's evidence, as I do,

I find it impossible to accept Stemm's evidence on this point. No evidence was given by Stemm of any conversation between him and the defendant during the drive to Goondiwindi and I doubt if at least for some part of this drive the defendant was reasonably capable of intelligent conversation. But Rogers says that when Stemm brought the defendant to his office about 11.30 o'clock that morning his state of health appeared to be the same as it had been since he had known him and that there was not the slightest suggestion that he was in any degree under the influence of liquor. He says that the defendant in the course of a ten minute conversa- tion, after Stemm had left his office to go in search of Blomley, said, in reply to an inquiry as to what he would do after selling Worrah that he was getting on in years and that he intended buying a small place near Parramatta and that he would then retire. When Blomley and Stemm joined them the draft contract was read through and the amount of the deposit and other details agreed upon. The amount of the deposit, it is said by this witness, was suggested by the defendant himself though Blomley appears to think that it was his suggestion. In the face of Rogers' evidence I am not prepared to find that upon arrival at his office the defendant entirely lacked contractual capacity. It is, I think, probable that he had temporarily recovered from his over night excesses to have something more than a hazy understanding of what was going on, but I am quite convinced that if the execution of the contract had been left until his drinking bout had run its course and he had recovered from its effects he would have refused to execute a con- tract for the sale of his property for £25,000 or to sell upon terms comparable with those contained in the agreement upon which this suit is brought. I have little doubt that independent advice from a person having some knowledge of the value of the property and acquainted with the condition of the defendant on the 20th and of the events of that day might well have produced the same result. But he had no advice of this kind. Probably his condition was no different from that in which many of the witnesses had seen him on many other occasions, and Rogers, believing that he under- stood the nature of the transaction, did not concern himself with its fairness or with the events which had led to the meeting in his

99 CLR 374

office. Indeed, as Rogers frankly says, he had no knowledge of the

value of "Worrah" and consequently was quite ignorant of the fact that the sale was being made at a very substantial undervalue. Moreover, he knew nothing of the circumstances in which the arrangement of the previous day had been made. On Rogers's evidence I think it probable that at the time of the execution of the agreement the defendant had SO far temporarily regained his senses as to enable him to appreciate the purpose of his visit to Rogers's office and the nature of the transaction under discussion. At that time he was probably capable of understanding the general purport of the instrument which he was asked to and did in fact execute. It was not a complicated dealing and was not, I think, beyond the understanding and comprehension of the defendant at that time. But whilst I feel this is the proper conclusion upon the evidence I am satisfied that at no time was his participation in the transaction accompanied by any reasonably intelligent consent to it. At the best his failing mental equipment left him at a distinct disadvantage in negotiating with Stemm and Blomley and when there is added to this the fact that the negotiations and the execution of the agreement took place in the course of one of his periodical drinking bouts an explanation may be found for his consent to sell his property for a figure some £8,000 or £9,000 below its real value. Although the fact that the sale was at an undervalue is by no means sufficient to conclude the type of issue which arises in cases such as the present, it is a feature which is not without con- siderable significance when it is borne in mind that it is not suggested that the transaction should be regarded as other than a business dealing (cf. Johnson v. Buttress 1 ) and when it appears that the defendant might have secured a price of at least £8 per acre from the witness Barden, one of his near neighbours who was on good terms with him and with whom he had formerly carried on some business activities in partnership. On the day before the agree- ment was signed the defendant was in no condition to negotiate intelligently for the sale of his property; his condition must have been known to both Blomley and Stemm and, if it be the fact that on that day he simply and immediately nominated the sum of £25,000 as his price for "Worrah" this must have surprised both of them. The property was worth a great deal more and I do not doubt that both Blomley and Stemm had some knowledge of its real value. The expedition with which Stemm thereafter sought to conclude the deal was not unassociated with the thought that it might not be possible to obtain the execution of a contract at

1(1936) 56 C.L.R. 113, at pp. 135-136. 99 CLR 375

this price after a period of sober reflection upon the part of the defendant. To what extent, if at all, the defendant may have been induced by Stemm on 20th April to agree to the price of £25,000

I am unable to say but I am satisfied that Stemm knew that day that the defendant was in no condition to negotiate intelligently and it is reasonably clear to me that unless the deal was concluded quickly it was quite likely that it would not have been concluded at all. The night of 20th April did not afford the defendant any opportunity for sober reflection; on the contrary I doubt if on the morning of 21st April the defendant had any real recollection of the discussions of the previous day. Nevertheless, he was taken from his room by Stemm and, probably, some little time before he arrived at Rogers's office he knew the purpose of his intended visit. What was his position then ? He is an old man of weak and failing intellect. He was that morning sicker and older than Folk ever remembered. Though some degree of understanding had tempor- arily returned to him his condition was not such as to enable him to make an adequate analysis of the position in which he then stood or to make any attempt to safeguard his own interests. The intervention of Rogers did not in any way assist the defendant to do either of these things he was concerned rather with the con- veyancing aspects of the transaction and in obtaining information for this purpose concluded that the defendant was contractually capable. But he had no knowledge of the events of the previous day or of the real value of Worrah ". If he had possessed this knowledge I think it is probable that the agreement would not have been signed that day or at all. In all the circumstances of the case

I am satisfied that the defendant has brought himself within the principles which were applied in Clark v. Malpas 1; Baker V. Monk 2; Longmate v. Ledger 3 and Fry v. Lane 4 and to which reference was made in Wilton v. Farnworth 5.

Whilst it was conceded that if the circumstances as I have found them to be constituted the whole of the relevant facts, the defend- ant would be entitled to resist a decree for specific performance the plaintiff contends that there is an additional circumstance which should be taken into account. It is said that after the making of the agreement the defendant deliberately affirmed it and elected to proceed with it. I am, however, satisfied that this was not SO. The defendant's drinking bout, during which the agreement was

1(1862) 31 Beav. 80 [54 E.R. 1067]; 2(1864) 33 Beav. 419 [55 E.R. 430]. 3(1860) 2 Giff. 157 [66 E.R. 67]. 4 De G. F. &J. 401 [45 E.R. 4(1889) 40 Ch. D. 312. 1238]. 5(1948) 76 C.L.R. 646. 99 CLR 376

executed, continued for some days after 21st April 1953 and think it is probable that at its conclusion the defendant had, at the best, a hazy recollection of what had occurred. I am by no means satisfied that when Mr. Piddington saw him on 23rd April the defendant had any clear picture of what had occurred and I doubt if he obtained any precise knowledge until some two months later when he sought and obtained a copy of the contract. It was not until some little time after he obtained a copy of the con- tract that he raised objections to the sale but his conduct in the meantime was not, in my opinion, such as to disentitle him to resist the claim for specific performance or to seek to set the agreement aside.

For the reasons given I am of the opinion that the plaintiff's suit should be dismissed and that upon the defendant's counter- claim there should be a decree for the rescission of the agreement of 21st April. In these circumstances it is unnecessary to refer to the defences which were based upon the provisions of the agree- ment dealing with the requirement that the consent of the Minister for Lands should be obtained.

From this decision the plaintiff appealed to the Full Court. B. P. Macfarlan Q.C. and R. W. Fox (with them G. H. Bullock), for the appellant.

B. P. Macfarlan Q.C. There was here no relationship of influence of a kind calling for the intervention of a court of equity. The trial judge erred in regarding the case as falling within the principle of Clark v. Malpas 1. A court of equity does not intervene merely because a person is sick, old or illiterate. Those qualities only become relevant where there is a condition of dependency by such a person upon another. There is here no evidence of any such condition. The respondent is found to have had capacity on the day he executed the contract and both the respondent and the appellant were at arms length on that day. The respondent carried the onus of establishing facts from which the Court could say that there had been an unconscientious use of power and this he failed to do. [He referred to Johnson v. Buttress 2 and Wilton V. Farmworth 3.] Taylor J. found that sickness, age and illiteracy

1(1862) 31 Beav. 80 [54 E.R. 1067]; 2(1936) 56 C.L.R. 113, at pp. 134- 4 De G. F. &J. 401 E.R. 1238]. 3(1948) 76 C.L.R. 646, at pp. 654, 99 CLR 377

coupled with undervalue were sufficient to set aside the trans- action but he failed to consider the effect of those facts upon the appellant or to inquire whether there had been an unconscientious use by the appellant of some relationship existing between them. The appellant made no unconscientious use of the position in which he found himself. [He referred to Spencer Bower on Actionable Non-Disclosure (1915) par. 428 p. 390 Jenyns v. Public Curator (Q.) 1 ]. The evidence establishes that the respondent elected to affirm the contract with knowledge that he had the right to repudiate it and he cannot now resile from that position see Spencer Bower on Actionable Non-Disclosure (1915) par. 446 p. 412; Allcard v. Skinner 2; Wright v. Vanderplank 3; Stafford V. Stafford 4.

[FULLAGAR J. This would appear to be simply a case where the respondent was too drunk to appreciate exactly what he was doing. Should he not disaffirm within a reasonable time after regaining his sobriety and in default of SO doing be held bound by his contract?]

Yes. [He referred to Matthews v. Baxter 5; Gibbons V. Wright 6.] The trial judge having found that the respondent had capacity, drunkenness as such could not be a defence. There was clearly evidence that the respondent affirmed the contract and he is bound thereby.

R. W. Fox. The amendments to the defence ought not to have been allowed. The case was never conducted at the trial upon the basis that it fell within the line of authority commencing with Clark v. Malpas 7 which was only introduced after judgment was reserved for some time and after the trial judge had given certain indications as to his views on the matter. His Honour exercised his discretion wrongly in allowing the amendment and in failing to take into account the serious prejudice which would result to the plaintiff from the amendment at SO latera stage. On the way the case was conducted the plaintiff has every right to assume that he would at least recover damages and his costs and he was deprived of these by the amendment. An amendment after the close of evidence should only be allowed in exceptional circumstances and there were none here. The amendment creates in effect an entirely

1(1953) 90 C.L.R. 113, at pp. 132, 2(1887) 36 Ch. D. 145, at pp. 173, 3(1856) 8 De G. M. &G. 133, at 4(1857) 1 De G. &J. 193, at p. 201 [44 E.R. 697, at p. 701]. 5(1873) L.R. 8 Ex. 132, at pp. 133, 186, 187, 191. 6(1954) 9I C.L.R. 423. p. 147 [44 E.R. 340, at p. 345]. 7(1862) 31 Beav. 80 [54 E.R. 1067]. 99 CLR 378

new case which the plaintiff had no adequate opportunity to meet by re-opening his case. [He referred to Edvain v. Cohen 1 Abigail v. Lapin 2.] Specific performance or alternatively damages should have been awarded the plaintiff in this action. If the Court is not prepared to accede to that submission then a new trial should be granted.

N. H. Bowen Q.C. (with him R. J. Ellicott), for the respondent. The trial judge was correct in holding that there was here advantage taken of a situation of inequality and that the contract was one which equity would set aside. The jurisdiction to set aside uncon- scientious bargains is one which has not been limited by equity to cases where there is a relationship of influence. It is an old established ground for equitable relief: see Earl of Chesterfield v. Janssen 3; White and Tudor's Leading Cases 9th ed. (1928) vol. 1, p. 248; Kerr on Fraud and Mistake 7th ed. (1952) p. 225 et seq.; cf. Hals- bury's Laws of England 2nd ed., vol. 15, p. 282. The circumstances in which this jurisdiction has been exercised in relation to sales of land present great variety see Clark v. Malpas 4; Longmate V. Ledger 5 Baker v. Monk 6 Fry v. Lane 7; Evans V. Llewellin 8; Harrison v. Guest 9 Wilton v. Farnworth 10; O'Rorke v. Bolingbroke 11; Wood v. Avery 12; Dunnage V. White 13 Permanent Trustee Co. of New South Wales Ltd. V. Bridgewater 14; Harris v. Richardson 15; Kerr on Fraud and Mistake 7th ed. (1952) pp. 225, 226 Halsbury's Laws of England, 2nd ed., vol. 15, pp. 223, 282. The common features present in these cases are (a) that the parties met on unequal terms and (b) that advantage was taken of this by the stronger and (c) that a bargain resulted highly beneficial to the stronger. In the present case there was inequality of which advantage was taken by the appellant and a bargain highly beneficial to the appel- lant resulted. The appellant does not come to court with clean hands and it cannot be said that the lack of clean hands is only

1(1889) 43 Ch. D. 187, at p. 190. 2(1934) A.C. 491, at pp. 496, 497, E.R. 1298] ; (1860) 8 H.L.C. 503 ; (1934) 51 C.L.R. 58, at 481 [11 E.R. 517]. pp. 61, 67. 3(1751) 2 Ves. Sen. 125 [28 E.R. 4(1862) 31 Beav. 80 [54 E.R. 1067]. 5(1860) 2 Giff. 157 [66 E.R. 67]. 6(1864) 33 Beav. 419 [55 E.R. 430]. 7(1889) 40 Ch. D. 312. 8(1787) 1 Cox. 333 [29 E.R. 1191]. 9(1855) 6 De. G. M. &G. 424 [43 10(1948) 76 C.L.R. 646. 11(1877) L.R. 2 App. Cas. 814. 82]. 12(1818) 3 Modd. 417. 13(1818) 1 Swans. 137 [36 E.R. 329]. 14(1936) 36 S.R. (N.S.W.) 643 ; 53 15(1930) N.Z.L.R. 890, at pp. 918, 99 CLR 379

a collateral matter and does not affect his right to specific perform- ance. [He referred to Meyers v. Casey 1.] Alternatively, there was here a relationship of influence which arose upon the appellant choosing to negotiate the contract through a person in a relationship of confidence to the respondent. This applies both

SO far as Stemm and Rogers are concerned. If a principal to an intended contract negotiates by the agency of a person standing in a relationship of influence or confidence to the other contracting party the transaction is subject to the same principles as determine the validity of dealings between persons who stand to one another in such a relation. [He referred to Hesse v. Briant 2; Crampton V. Walker 3; Imesion v. Lister 4; Haywood v. Roadknight 5; Watt v. Grove 6; Peninsular &Oriental Steam Navigation Co. V. Johnson 7 Johnson v. McInerney 8; Spencer Bower on Actionable Non-disclosure (1915) pp. 357, 358.] When the relation- ship of confidence exists it is incumbent upon the person in whom the confidence is reposed, if he wishes to uphold the transaction, to show that there has been the utmost good faith and openness of dealing, that there has been a complete disclosure of all material facts known to him and that the transaction is a fair one having regard to all the circumstances. [He referred to Demerara Bauxite Co. Ltd. v. Hubbard 9; Tate v. Williamson 10; McPherson V. Watt 11.] If the confidant does not discharge this onus then the court at the suit of the confidor will set aside the transaction see Haywood v. Roadknight 12. An agent engaged for the purpose of finding a purchaser for his principal stands in a relationship of confidence to the principal: see Haywood v. Roadknight (12); Dunne V. English 13. Weight should be given to the fact that the agent who negotiated the sale acted for both parties. Stemm acted as agent for both parties and Rogers acted as solicitor for both and the respondent was deprived of the independent advice which he needed and to which he was entitled. The evidence will not support the view that the respondent affirmed the contract see Kerr on Fraud and Mistake 7th ed. (1952) p. 591 et seq. The trial judge rejected the view that the respondent had affirmed the contract. The Court ought not to interfere with the trial judge's

1(1913) 17 C.L.R. 90, at p. 123. 2(1856) 6 De G. M. &G. 623 [43 3(1893) 31 Ir. R. 437. 4(1920) 149 L.T. Jo. 446. 5(1927) V.L.R. 512, at pp. 516, 6(1805) 2 Sch. &Lef. 492, at p. 502. 7(1938) 60 C.L.R. 189, at p. 235. 8(1953) V.L.R. 343, at p. 347. 9(1923) A.C. 673. 10(1866) L.R. 1 Eq. 528. 11(1877) L.R. 3 App. Cas. 254. 12(1927) V.L.R. 512. 13(1874) L.R. 18 Eq. 524. 99 CLR 380

A. findings on the facts. [He referred to Paterson v. Paterson 1

Wilton v. Farnworth 2.] On the question of mere drunkeness, see Cooke v. Clayworth 3.

[McTIERNAN J. The Court does not desire to hear you on the question of the amendment.]

On the question of the Minister's consent, see the Crown Land Consolidation Act 1913 (N.S.W.), SS. 236, 272 (1) (2) and reg. 325 made thereunder and Lang v. Castles 4. The Minister's consent having been obtained by a misrepresentation and on a document which was not in fact a statutory declaration is void and ineffective. There was no consent in any relevant sense. [He referred to Butts v. O'Dwyer 5.] Alternatively the consent is voidable by the Minister and in the circumstances is not a proper consent and no consent was thus obtained within the stipulated time. The appeal should be dismissed.

B. P. Macfarlan Q.C., in reply. The critical date at which the question of influence must be determined is the date of execution of the contract. [He referred to Ralston v. Turpin 6.] From the trial judge's findings both in his acceptance of Rogers and his failure to make any adverse finding against the appellant in relation to his knowledge of the respondent's condition on such date the very basis for intervention by a court of equity is lacking. On the question of drunkeness in cases of this kind, see Cooke v. Clay- worth 7 Nagle v. Baylor 8; Molton v. Camroux 9 Mat- thews v. Baxter 10; Bawlf Grain Co. v. Ross 11; Gibbons V. Wright 12. Upon the hypothesis that there was here unfair dealing equity in the case of a drunkard not lacking in capacity will grant him no more favourable treatment as regards time for initiating proceedings than would both equity and law in the case of a contract which the drunkard is entitled to avoid because at the time of its making he was wholly incapacitated. Prompt dis- affirmation after recovery of sobriety is essential. [He referred to Williston on Contracts (1921) vol. 1, par. 253 p. 492 par. 260 p. 504.] So long as the Minister's consent in its present form remains

1(1953) 89 C.L.R. 212, at pp. 219- 2(1948) 76 C.L.R. 646, at p. 654. 3(1811) 18 Ves. Jun. 12 [34 E.R. 4(1924) S.A.S.R. 255, at p. 267. 5(1952) 87 C.L.R. 267. 6(1888) 129 U.S. 663, at p. 667 [32 Law Ed. 747, at p. 752]. 7(1811) 18 Ves. Jun. 12, at p. 13 [34 E.R. 222, at p. 223). 8(1842) 3 Dr. &W. 60, at p. 64. 9(1849) 4 Ex. 17 [154 E.R. 1107]. 222]. 10(1873) L.R. 8 Ex. 132. 11(1917) 55 Can. S.C.R. 232. 12(1954) 91 C.L.R. 423, at pp. 440- 99 CLR 381

the respondent cannot complain of it. Lang v. Castle 1 is distinguishable in that there was in that case no real consent to the relevant transaction.

Cur. adv. vult. The following written judgments were delivered :-

McTIERNAN J. The action from which this appeal arises was within the original jurisdiction of this Court because the parties were residents of different States, namely Queensland and New South Wales. The action was tried by Taylor J. at Sydney. There was no controversy whether the law of one State rather than that of the other was applicable, because each State has the same law on the questions in the case in respect of which there might be room for such a controversy. The appellant was the plaintiff in the action. He brought it to enforce a contract made on 21st April 1953 by which the respondent, who was the defendant, sold a grazing property to the appellant for the price of £25,000. This property is a settlement lease of 3,696 acres at Boggabilla, a town in New South Wales. The respondent was in possession of the property. A settlement lease is a tenure created by the Crown Lands Acts of New South Wales. An incident of the tenure is that it is not transferable without the consent of the Minister for Lands. His approval was given to a transfer to be made pursuant to the contract. The respondent in the action counterclaimed for relief against the contract on the ground of constructive fraud. He alleged that it was unfair to him-a hard bargain. Matters upon which he relied to support this allegation were the price, the deposit, the rate of interest and the terms of payment. As already stated, the price was £25,000. This included £550, the value of some chattels sold with the land. The learned trial judge found that the market value of the property as grazing land on 21st April 1953 was £33,444 or "slightly over" £9 per acre. The value of the chattels is not included in this estimate. The deposit payable by the appellant as purchaser was £5. Having regard to the size of the transaction this was an abnormally low deposit. The rate of interest was four per cent upon outstanding purchase- money. This was one point less than the current rate. The con- tract stipulated that completion was to be made not later' than 1st August 1953: that the appellant, that is the purchaser, would pay £9,995 on completion and the balance of the price in four equal annual instalments of not less than £3,500, the last of which would become payable on 1st August 1957. The vendor,

1(1924) S.A.S.R. 255. 99 CLR 382

that is the respondent, alleged that these terms of payment were upon the whole extremely one-sided and unfair to him.

An agent, whose name is C. J. Stemm, and E. F. Blomley, father of the appellant, procured the purchase of the property from the respondent. An issue in the case is whether they met the respondent J. upon equal terms. He was about seventy-eight years of age.

On 20th April 1953 they made a bargain with him for the pur- chase of the property by the appellant for £25,000, upon terms, and delivery of possession to be given in August. The respondent was sodden with rum and sick. Stemm and Blomley acted in concert: the respondent was single-handed. The memorandum of the contract was signed by E. F. Blomley, as agent for the appellant and by the respondent. This was done on 21st April 1953 in the office at Goondiwindi of Mr. Rogers, a solicitor. The respondent has never denied that he signed this document. It was put in evidence at the trial. Mr. Rogers acted for vendor and purchaser at the execution of the contract. Besides being incapacitated by old age the respondent was then ailing in consequence of excesses in drinking rum. The respondent alleged that in the negotiations for the purchase of the property he did not meet Stemm or E. F. Blomley on equal terms and they procured the purchase by taking advantage of his relative weakness and that Rogers failed to give him proper advice and protection. The respondent did not obtain a copy of the contract until July 1953. The learned trial judge was not satisfied that the respondent had any precise knowledge of the price or other terms of the sale until he obtained the copy of the contract. Subsequently the respondent consulted Mr. Cole, his solicitor in these proceedings. He advised the respondent not to complete the contract. Mr. Rogers is, in this case, the solicitor for the appellant: he was called by the appellant to give evidence at the trial.

The Minister for Lands having given his consent to the transfer intended by the contract, it was ready for completion. The appellant was ready and willing to pay £9,995 when that event should happen. The respondent acted upon the advice given by Mr. Cole and accordingly refused to complete the contract. The appellant claimed in the action a decree of specific performance compelling the respondent to do SO alternatively, he claimed damages for breach of contract.

The respondent raised in the defence grounds for resisting both claims. It is not necessary now to refer to all these grounds. Those with which this appeal is more directly concerned are in pars. 10. 11, 12, 13, 14 and 15 of the amended defence. It is convenient to

99 CLR 383

refer first to pars. 12 and 13. The respondent charged in them irregularities in connexion with the appellant's part in the statutory application for the consent of the Minister for Lands to his being the transferee of the settlement lease. Nothing in pars. 11 or 12 entered into the reasons upon which the learned trial judge determined the action. It will not be necessary to deal with any point raised by pars. 11 or 12 unless the conclusion to which those reasons led him cannot be supported. The respondent charged in pars. 10 and 11 that the agreement (the contract sued upon) was and is unfair to (him) and claimed therein that specific performance, being a discretionary remedy, the Court would for that reason withhold it. Paragraph 10 contains allegations with respect to the conditions and circumstances of the respondent, the price and the terms of the bargain. Two of the former set of allegations were that at the time the respondent signed the contract he was intoxi- cated and incapable of contracting. The learned trial judge did not find that at the time alleged the respondent was SO drunk that he did not know that he was signing a contract for the sale of the property. Nor did he hold that he was then incapable of contracting by reason of mental infirmity. Paragraph 11 contained the allega- tions that at the time the contract was made the respondent was incapable of knowing or understanding the nature or effect of it It will be necessary to ascertain what the condition and circumstances of the respondent were on 20th and 21st April.

The respondent gave evidence. It appears by the reasons for judgment that the learned trial judge could place no reliance upon it because the decline of the respondent's memory was very evident. Upon a perusal of the transcript of his evidence it is difficult to resist the conclusion that only little of his intellect remained.

Paragraph 15 was a counterclaim for relief by way of setting aside the contract. It was founded upon pars. 11 and 14. The counter- claim and par. 14 were added to the defence very late in the trial. Beforehand, the learned trial judge decided on the evidence relating to the issues raised by the allegations in pars. 10 and 11 that he would refuse specific performance. Almost the whole of the evi- dence has a bearing upon those issues. When announcing this decision, the learned judge stated that in the view he took of the evidence it was adequate to support a counterclaim for the rescission of the contract; and that he was concerned with the possibility of being called upon to assess damages for breach of a contract which appeared to him, upon the evidence, to be an unconscionable bargain. Thereupon the respondent applied to add pars. 14 and 15 to the defence and the application was granted, but not without opposition

99 CLR 384

by the appellant, who contended that to amend in that way SO late

in the trial would cause him prejudice. The learned trial judge, however, had made it a condition of the leave to amend that the appellant was at liberty to call further evidence. He did this: the respondent did not call further evidence he rested upon the J. evidence already given and the further evidence called by the appel-

lant. In the end the Court granted the counterclaim and dismissed the action. A declaration and order were made upon the counter- claim, which operate to undo the contract and while this relief stands the appellant can get neither specific performance nor damages.

The questions which are of the first importance in the appeal are whether it was right to give such leave to amend SO late in the trial: and whether there is enough in the evidence upon which to set aside the contract on the allegations in pars. 11 and 14 of the defence. It is not easy to deal separately with these two questions for, if the evidence already given was sufficient for setting aside the contract, that lends strong support to the justice of allowing the respondent to counterclaim that relief. The first question logically is preliminary to the second. In my opinion, the order giving the leave has not been shown to be a wrong exercise of discretion. Later I shall state my reasons for SO deciding.

It has been said that par. 11 contained an allegation that at the time the respondent made the contract he was incapable of knowing or understanding the transaction, and by the same paragraph knowledge of this fact was attributed to the appellant. The main ground of the counterclaim, however, is constituted by the allega- tions in par. 14. The respondent alleged that at the time he signed the contract and of the negotiations his condition and circum- stances were: " (he was) an old man, lacking in education, suffering from the effects of intoxication, mentally and physically weak, without proper advice, unable properly to protect himself and on unequal terms with the plaintiff". The respondent attributed by this paragraph knowledge of these facts to the plaintiff, who, as has been said, is now the appellant. The respondent charged in this paragraph that the appellant took advantage of the said circumstances of the defendant (respondent)". There follow these additional allegations "The plaintiff employed as his solicitor in certain of the negotiations and in the drawing up of the said contract the same solicitor as acted for the defendant, who did not give to the defendant full and proper advice, and the plaintiff acted with undue haste." The last allegation in par. 14 is that the

99 CLR 385

appellant procured the said agreement of the defendant (respond- ent) to the sale of the property, the subject of the contract, at great undervalue and upon terms highly favourable to the plaintiff (appellant) and unfavourable to the defendant (respondent)

The question arises whether all or any of these allegations would if proved provide the respondent with an equity to be relieved against the contract. This is a question of law. In my opinion the facts alleged constitute fraud, according to the criteria of equity. The essence of the fraud thereby charged is that advantage was taken of weakness, ignorance and other disabilities on the side of the respondent and the contract was derived from such behaviour and it is an unfair bargain. Lord Hardwicke said in Earl of Chesterfield V. Janssen 1: "This Court has an undoubted jurisdiction to relieve against every species of fraud " 2. It appears by his judgment in that case that one species is getting bargains by taking surreptitious advantage of persons unable to judge for themselves by reason of weakness, necessity or ignorance. The word surrep- titious would imply that the bargain was snatched. A fraud of this kind, Lord Hardwicke said, may be presumed from "the circum- stances and conditions of the parties contracting (2). It seems from what is said by Lord Hardwicke that equity departs in this case from law, where deceit must be proved, not presumed, to make its jurisdic- tion of relief effective. The charge that a bargain was procured by this class of constructive fraud, spoken of by him, could be answered by showing that the bargain is not unfair to the weaker side. Lord Hardwicke returned to the principle of proof when he mentioned the cases described as "catching bargains " 3 with expectants. He said: "These have been generally mixed cases, compounded of all or several species of fraud; there being sometimes proof of actual fraud, which is always decisive. There is always fraud pre- sumed or inferred from the circumstances or conditions of the parties contracting: weakness on one side, usury on the other, or extortion or other advantage taken of that weakness. There has been always an appearance of fraud from the nature of the bargain " (3).

In the present case what is alleged in the defence in support of the counterclaim is, in effect,- weakness on one side" and " advan- tage taken of that weakness " on the other side. Such is the class of fraud charged here. Inadequacy of price and other inequalities in

bargain are alleged. These elements are not made an

1(1751) 2 Ves. Sen. 125 [28 E.R. 2(1751) 2 Ves. Sen., at p. 155 [28 E.R. at p. 100]. 3(1751) 2 Ves. Sen., at p. 157 [28 82.] 99 CLR 386

independent ground of relief. They are charged as ingredients of the equity upon which relief is counterclaimed.

Lord Selborne said in Earl of Aylesford v. Morris 1 that the fraud which Lord Hardwicke said may be presumed or infer- red means an unconscientious use of the power arising out of these circumstances and conditions" of the contracting parties.

"When" (said Lord Selborne) the relative position of the parties is such as prima facie to raise this presumption, the transaction cannot stand unless the person claiming the benefit of it is able to repel the presumption by contrary evidence, proving it to have been in point of fact fair, just, and reasonable" 2. This principle of relief is not limited to transactions with expectants. It has been extended to all cases in which the parties to a contract have not met upon equal terms " White and Tudor's Equity Cases 7th ed. (1897) vol. 1, p. 313. The principle extends to a case in which the victimised party is entitled in possession to the interest which is the subject of the impeached transaction.

The issues of fact and law raised by the amended defence make it important to ascertain what were the circumstances and condition of the respondent on 13th April 1953 when E. F. Blomley and Stemm first solicited him to sell his property, on 20th April when they concluded the transaction and on 21st April when he signed the contract. The facts established by the weight of evidence are these. The respondent was about seventy-eight years of age and his mental and physical powers were much impaired by old age and addiction to rum. He left school at the age of fourteen years he was uneducated and of humble social station. His mental weakness did not amount to continuous contractual incap- acity. He owned and managed this valuable grazing property named "Worrah" at Boggabilla. He had held it since 1926. The area of the property is 3,696 acres: it was carrying, in April 1953, about 3,000 sheep and 50 head of cattle owned by the respond- ent. He lived in an unpretentious house on the property. The only other residents were Scotty Turner, an old age pensioner, whom, as appears by the evidence, he befriended by taking him into the house, and John Cooney, a nephew of the respondent. The former is not presented by the evidence as a man of any parts, or as capable of advising the respondent on any matter of business. His only trait, noticed in the evidence, is a strong appetite for rum. He was referred to in evidence as the respondent's drinking partner". Cooney did all the substantial work about the property and was paid wages by the respondent. It is evident that without

1(1873) L.R. 8 Ch. App., 484. 2(1873) L.R. 8 Ch. App., at p. 491. 99 CLR 387

Cooney the respondent could not carry on the property. However he was secretive about his plans in his relations with Cooney. At shearing time, the shearers lived in the house then the pressure on the accommodation made it necessary for the respondent and Turner to share one bedroom.

Rather late in life, Ryan contracted a habit of indulging in extended bouts of drinking. He usually went on one of these sprees at shearing time. He was SO intoxicated at times that he could not manage himself or his affairs. When he was drunk at shearing time he took no interest in what was going on and moped about the place. Drinking was then his preoccupation.

The shearers arrived on 19th April and began shearing on the next day. A few days before they arrived the respondent obtained a supply of rum from stock and station agents at Goondiwindi. When the shearers came he was drunk and dirty and his house was in a filthy condition. Turner had moved into the respondent's room and they kept up an almost incredible spree in this room morning, day and night, for some days.

As for the appellant, no relationship of confidence existed between him and the respondent no reason can be suggested why the respondent would favour him in this transaction. He is a young grazier, and as far as the evidence goes, was a stranger to the respondent. The intemperate habits and way of life of the respond- ent were notorious and the appellant was not entirely ignorant of them.

The purchase of the property from the respondent for the appel- lant was negotiated by his father, E. F. Blomley and C. J. Stemm. The former was an experienced grazier and he had a good knowledge of this property. His age was about fifty-six years. He was anxious to purchase it either for himself or his son, the appellant. Stemm was the assistant manager of the branch at Goondiwindi of the stock and station agents from whose store the respondent bought the supply of rum before shearing time. This town is forty miles from Boggabilla. Both E. F. Blomley and Stemm were acquainted with the respondent and knew about his intemperate habits and peculiar manner of life. The appellant's direct partici- pation in the purchase of the property of the respondent was small, but he would, in the circumstances, be affected, if his father and Stemm or either of them brought about the transaction by fraud. The contract could, in that event, be avoided against the appellant.

The initiative in the transaction was never taken by the respond- ent. In February 1952 he was asked whether the property was for sale. He said it would be, but not until the end of the year, and

99 CLR 388

that the price would be £9 per acre. The total price on this basis would be £33,264. Stemm wrote a letter in September 1952 making a further inquiry. This was prompted by E. F. Blomley whom he described as our buyer". The respondent replied that it would not be for sale until after shearing in May 1953. The respondent's J. letters show that his small measure of literacy was declining.

Stemm asked the respondent to allow E. F. Blomley to inspect the property and he consented.

The next issue is how the contract of sale was negotiated and con- cluded. On 13th April 1953, E. F. Blomley, his son (the appellant) and Stemm drove to the respondent's house on the property. Stemm brought a bottle of rum. Before bargaining began, and when it ended for the day, Stemm poured drinks for the respondent, his companion, "Scotty" Turner, E. F. Blomley and himself and all had several drinks. The bottle was left behind with a small residue in it.

The bargaining took place between E. F. Blomley and Stemm on one side and the respondent, Ryan, on the other. According to their evidence, E. F. Blomley offered £25,000, the respondent firmly refused to take less than £30,000, saying he would sell at that price on terms, and Blomley told the respondent that as he would give terms, his son, the appellant, would be the buyer. The respondent said in evidence he mentioned no other price than £9 per acre. According to the evidence, the only progress made was that the respondent would consider the question of price. The learned judge was not satisfied that Blomley, his son or Stemm had given evidence of all that passed between them and the respondent. He thought that the sum of £30,000 might have been mentioned. As for the evidence of the respondent, he felt that he could not act upon it because his faculties were declining, a fact shown by his demeanour and appearance in the witness-box.

Before going to the events of 20th April, when E. F. Blomley and Stemm resumed bargaining, it is convenient to notice the evidence given by W. J. Doran, a grazier, a neighbour of the respond- ent. This witness, whose son is married to a daughter of E. F. Blomley, said that on 15th April 1953 he told the respondent that he heard that his property was for sale. According to Doran's evidence, the respondent offered, without any ado, to sell it to this witness for £25,000 on terms, and gave him plenty of time to make up his mind about this offer; the respondent did not tell him that anybody had inquired about the property and never again mentioned the offer to the witness. If this evidence be true, the respondent gave this option to Doran to buy the property at a price very much

99 CLR 389

less than that which he specified two days before to E. F. Blomley and Stemm. There was no decline of the value of this class of prop- erty since the respondent wrote in September 1952 that the price at which he would sell after next shearing would be £9 per acre.

It is important, in this connexion, to refer to the evidence of C. B. Barden, a grazier, another neighbour of the respondent. He and the respondent had been in partnership and were on friendly terms. This witness said that in February 1952 he offered the respondent £8 per acre for the property Precisely what Barden said in evidence was this "I said" (to Ryan): Would £8 shift him ?' and he replied 'No', he wanted £9 It appears by the evidence that the respondent gave his "Land Rover " to Barden's son, upon his return from the Korean war.

The appellant relies upon the evidence of Doran to prove that the respondent had made a decision, since he refused Blomley's offer on 13th April, that it was worth while selling for £25,000. But, if that be the case, his reason for refusing to complete this contract, by which the appellant is bound to pay that price, is obscure.

A reason urged by the appellant was that the respondent's pride was hurt by scoffing that went on at the small deposit of £5. This is a strange reason for repudiating the contract, if as the appellant urged, the respondent was a shrewd old man. The summary manner in which, upon Doran's evidence, the respondent gave the verbal option to him, lends no support to this appreciation of the respondent.

With respect to the evidence of W. J. Doran, the learned trial judge made these observations: " I have grave doubts whether the defendant really made a firm offer to sell to Doran at this figure but if he did it was a personal favour to Doran and it was almost immediately forgotten by him. Perhaps, if such an offer was made, the defendant's condition was at the time the same as it was on the occasion towards the end of the shearing operations when he offered a number of rams to Binney as a present. The present was refused, Binney feeling that the defendant ' was too stupid' to make it and that he would forget having made it. But whatever the explanation it is clear, I should think, that on 20th and 21st April the defendant had no recollection whatever of having made any offer to Doran".

The incident deposed to by Doran is a very curious one and gives rise to speculations. There is nothing in the evidence upon which it can be said with any force that the way in which the learned judge dealt with it is wrong. It is, I think, too subtle a speculation

99 CLR 390

that the respondent, before E. F. Blomley and Stemm met him again on 20th April, had judged that it would be prudent to take £25,000 for the property because he could immediately relieve himself of the burden of it at that price. The learned judge's observations provide an insight into the weakness of the respond- ent's mind and character.

On 20th April 1953, E. F. Blomley and Stemm drove again to the respondent's house. This time the appellant did not come but his brother-in-law, B. Doran, a son of the witness W. J. Doran, came with them. Again Stemm brought a bottle of rum. He knew that the respondent had a few days previously obtained a supply of rum from his principal's store at Goondiwindi in the ordin- ary course of business. Stemm said he brought a bottle of rum with him as friendly gesture". Disclaiming that it was an artifice, Stemm said that he would have brought more if he were minded to use it to get a bargain. The respondent's idea was that the rum was brought for the purpose of "softening his heart ".

It is certain, upon the weight of the evidence, that the respondent was very drunk when these three persons arrived, and that nobody who saw him could have any doubt that he was. However, according to the evidence of Blomley and Stemm, the respondent was sober and sensible. The learned trial judge did not believe this evidence about the respondent's condition. The facts, found by the learned judge, establish that the respondent was so drunk that he was incapable of managing himself and was in a degraded state.

As already stated, shearing began on 20th April. The respondent was following his practice of going on the spree on such occasions. He and Turner in their common room were indulging in gross excesses of drinking. The learned judge found that on the night of 19th April the respondent' "had drunk himself practically, if not entirely, into a state of insensibility": since 18th April when the spree began he had not changed his clothes day or night he resumed drinking on the morning of 20th April: when Stemm arrived he went up to the bedroom and found the respondent lying on his bed: his posture was described as "sprawled on the bed ": Stemm and the respondent came down to the kitchen where E. F. Blomley was waiting: Stemm produced the bottle of rum and invited the respon- dent to drink. Blomley and Stemm not only asserted that the respondent was not drunk, but they maintained also that he did not drink when invited, although everybody else did. They also said that the respondent appeared to be in his normal state of health he showed no signs of having been on a spree nor did

99 CLR 391

he appear to be sick. The learned trial judge explicitly rejected this account of the respondent's condition and appearance and made findings opposite to it.

After the drinks, according to the evidence of Stemm, E. F. Blomley and Doran, they and the respondent walked towards the shearing shed. Stemm deposed that, prompted then by Blomley, he said to the respondent: "What is your price to-day, Tim ?", and the latter immediately replied, " £25,000 ". Stemm admits having been surprised at the reply. It should be remembered that E. F. Blomley said in his evidence that Stemm had an opinion that the value of the property was £50,000. Stemm's principals were to get a commission from the respondent on the sale, but he did nothing to protect the respondent by telling him that £25,000 was an extremely low price for the property. Both Stemm and Blomley knew that it was. Blomley knew too that Stemm was not con- cerned to protect the respondent. Stemm was entirely on Blomley's side. His anxiety to effect the purchase of the property for the Blomleys was shown by his action in asking the respondent immedi- ately to sign a form of contract produced by Stemm. The respond- ent did not sign it. He preferred, SO the evidence of Stemm and others proves, that Mr. Rogers, a solicitor at Goondiwindi, would act for him in the transaction. Considering the state of the respond- ent it is probable that this resistance to Stemm's pressure was an intuitive rather than a conscious action. In any case it was a clear demonstration to E. F. Blomley and Stemm of the respondent's trust and confidence in Rogers. It will be seen that Rogers failed to caution the respondent about the price at which he was selling the property. Another arrangement said to have been made was that the respondent would give possession in August 1953. Stemm forthwith arranged with the respondent to drive him to Rogers's office on the next day.

The evidence, on the appellant's side, of how Stemm made the deal with the respondent on the walk to the shearing shed does not read like a straightforward story. It is evident that the learned trial judge mistrusted it: the respondent's memory was too bad to be depended upon to add any reliable details. Taking against Stemm and Blomley the evidence given on their side it was not fair and honest to ask the respondent, having regard to his condition, the question, What is your price to-day, Tim?" It was plain that he was in no condition to consider the question, to judge for himself, or to resist the pressure of Stemm and Blomley to sell his property or to sell it at Blomley's price; or to decide whether to enter into a contract with Blomley's son, the appellant.

99 CLR 392

The respondent was clearly the weaker side. His weakness was of the kind spoken of by Lord Hardwicke in defining the fraud characterised as taking surreptitious advantage of the weakness, ignorance or necessity of another. The essence of such weakness is that the party is unable to judge for himself. The condition McTiernan J. and circumstances of the respondent have been mentioned. His

mental and physical powers were impaired by the cumulative effects of old age, intemperance and his manner of life the burden of holding this property was increasing with the years and the deterioration of his powers and at the time this bargain was concluded he was in worse than his normal poor state of mental and bodily health by reason of drinking excesses and irregular living of the past few days. The respondent, being in possession of this valuable grazing property, was by reason of his circum- stances and condition, exposed to imposition and overreaching and E. F. Blomley and Stemm had, relatively to him, great bargain- ing strength and could dominate his will and they were anxious to effect a sale of the property upon terms advantageous to the Blomleys. There is a strong presumption upon these facts that they took advantage of their relatively superior strength and made undue use of it, and by such unconscientious behaviour pro- cured the purchase of the property at a great undervalue. The price, £25,000, is £8,444 less than the estimate of the market price accepted by the learned trial judge. The price is strikingly dis- proportionate to the estimate. There is nothing in the evidence, upon which the learned trial judge was prepared to act, by which it could be found that £25,000 is a reasonable measure of the value of the property. His Honour was satisfied that E. F. Blomley and Stemm were aware at every stage of the transaction that £25,000 was a substantial undervalue. E. F. Blomley said in evidence that his estimate of the value of the property in April 1953 was £5 per acre. The learned judge made this comment:

Let us see what actually occurred, according to Rogers's evidence. Stemm brought the defendant into Rogers's office about 11.30 a.m., but he was obviously not shepherding him, for he left him alone with Rogers for ten or fifteen minutes while he himself went up the street to look for Blomley. Now, the defendant was no stranger to Rogers they knew each other reasonably well" as Rogers put it: and they spent the waiting time in general conversation. The defendant had no difficulty in walking, or in talking on general subjects; he did not smell of liquor; and he spoke intelligently of his plans for the future. Asked what he intended to do when he had sold Worrah", he replied that he intended to buy a small place near Parramatta and to retire there. He seemed to Rogers "quite enthusiastic about the whole sale Then Stemm and Blomley came in, and Folk also. Rogers went through the draft contract he had prepared, filling in blanks in accordance with the joint instructions of Blomley and the defendant, and forming an

99 CLR 423

impression which he stated in cross-examination by saying that he had no doubt the defendant understood the price and the terms as much as any layman would. Rogers asked what the deposit was to be, and Blomley said "That is up to Tim " (the defendant). The defendant said he did not care what it was. Rogers said ten per cent was the usual deposit, and that a vendor usually preferred a high deposit and a purchaser a low one. He also said that an agent generally liked to see a deposit sufficient to cover his commis- sion, an aspect about which Folk said he was not worried. It was the defendant who named a figure. He said "What about a fiver And Blomley, naturally enough, said that that would suit him. Stopping there, it could be, of course, that the defendant was sitting in a state of mental torpor, and following the discussion just enough to give an answer that fitted the question but naming the first amount that came into his fuddled head. But, if so, Rogers would surely have had to be blind not to see it. He inserted the £5 in the contract, however, and went on to the next question which was the method of payment of the purchase money. On this, the defendant's general attitude had been defined days before. Blomley suggested that £10,000 be paid on delivery of possession, and the balance by instalments over a period of four years. To this the defendant replied, That will suit me. I do not want all the money now, as I am going to retire." Rogers asked about the rate of interest, and it was the defendant who nominated four per cent.

So far, unless Rogers was simply inventing all this, the defendant's attitude was intelligent enough to all appearance. True the four per cent was low the current bank rate at the time was five per cent. But the statement that he was going to retire and did not want full payment at once was sensible and accorded with what he had said previously; and he repeated to Rogers the thoughtful income-tax reason that he had stated at "Worrah" on the previous day for wanting the date for delivery of possession put forward to 1st August, namely that that would give him time to sell his sheep after the end of the financial year. There was not the slightest attempt to bustle him, or cajole, or persuade him. He had raised no question or demur when the price had been read out as £25,000. But there next occurred an incident, relating to the very matter of the sale price, which makes it exceedingly difficult to suppose that the defendant was labouring under any handicap in the settling of the terms of the contract. After Rogers had gone through various provisions which excited no comment from any of those present, he came to the question of apportioning the sale price as between the various items comprised in the property sold. This,

99 CLR 424

as he said at the time, could help to protect the defendant in relation to income tax, that is in relation to recoupment of depreciation on capital assets which had been allowed in his assessments for past years. Rogers, with the defendant's assent, spoke on the telephone to a local accountant named White, who had kept the defendant's books and attended to his income-tax affairs for the preceding six years, and made an appointment for the defendant to see him that day. To prepare a draft clause on this topic Rogers asked what movables were to be included, and the defendant replied "There is no stock. Everything goes in except the Land Rover, my clothing and ports to take the clothes away in." Rogers asked about tools and furniture, and the defendant said "Yes, I will not want any of that stuff where I am going to." After Blomley had said not to worry about an inventory, as he had known the defendant for over thirty years and could accept his word, the parties dispersed, agreeing to assemble again after lunch when Rogers should have received the suggested apportionment from Mr. White the account- ant, and have had time to engross the contract. The defendant went straight to White's office, and he went alone. That he dis- cussed with White the details of the apportionment, and therefore the fact that the total price was £25,000, is certain, for Rogers produced a draft containing figures which he swore and White acknowledged had been written by White, and these figures included the £25,000 itself. White, however, had no independent recollection of the interview by the time he went into the witness-box-a fact which tells against the defendant, for if he had been so drink- sodden as to be incapable of intelligent consideration of the sale he was making it is difficult to imagine that White would not have observed the fact and been scandalised to find himself asked to assist a man to part with his property while in such a condition. And moreover, if to men like Blomley and Stemm £25,000 was as obviously an undervalue as is now suggested, one might have expec- ted it to cause some little surprise to White also. But evidently there was nothing about the defendant's visit which interested White sufficiently to leave any lasting impression.

The party re-assembled at 2.30 p.m. or thereabouts in Rogers's office. While the contract was being typed, Rogers took down from the defendant his instructions for the application for the Minister's consent to the sale. The information the defendant had to supply for this purpose was sufficiently extensive to make it quite certain, one would think, that if his capacity for thought and this grasp of considerations relevant to the sale had been dimin- ished to any substantial extent by the effects of alcohol Rogers

99 CLR 425

must have seen signs of it then, even if he had not seen any before. But although he then detected liquor in the defendant's breath, he found no difficulty in getting the instructions, and he swore at the trial that he had " no idea whatever" in his mind that the defendant was 'in any way influenced by alcohol". He read through the contract in detail and assured himself that both the defendant and Blomley understood it, and they then executed it, Blomley signing for his son the plaintiff. The gathering then broke up, and only one other event of any relevance occurred that day. Blomley met the defendant at the Royal Hotel, and asked whether the plaintiff could put some cattle on the property. According to him, the defendant agreed as he had already disposed of his cattle, but said that the plaintiff could not put sheep on the property until he sold his own. This rings true, for shortly afterwards the plain- tiff did put cattle on "Worrah", and this fact assumes some significance when it is realised that weeks went by with these cattle on the property, and no word of complaint came from the defend- and that he had been unfairly dealt with on 21st April.

In those weeks several events occurred, some before the period of heavy drinking ended and some after, which tell heavily against the notion that on 21st April the defendant assented to a sale from which a period of sober reflection would have saved him. They must be considered in the light of the fact, which it is quite impossible to doubt, that the defendant at least knew he had sold his property for £25,000. At the trial he would have had the judge believe that he did not know the price until his nephew Cooney got a copy of the contract for him from Rogers's office. But that was about 15th July 1953, and a month earlier he was grumbling to a stock and station agent named D. C. Piddington that "I sold this place too cheap. I was not drunk at the time but I was in a bad mood." That he knew all along that he had signed a contract of sale is beyond dispute and it is unbelievable that he went along either not troubling what the price was or confident that despite an absence of recollection on the point he could depend on its having been £9 per acre and had no need to make sure.

Blomley was at "Worrah" the next day with his wife and daughter, inspecting the house and the general set-up and talking with the defendant. The day after, 23rd April, an agent called H. R. Piddington, the father of D. C. Piddington, called on the defendant to seek the sale of his sheep. His evidence was that the defendant told him he had sold the property to Blomley for £25,000, promised to offer the sheep to Piddington later on, and discussed quite intelligently the shearing and his plans to go and live at

99 CLR 426

426

HIGH COURT

OF A. Parramatta. In relation to this occasion the learned judge said

he was not satisfied that the defendant had any clear picture of what had occurred; but he did not express any doubt of H. Piddintgon's veracity, and unless the latter was lying his evidence shows that the defendant was fully alive to the only thing that really mattered, namely that he had agreed to a sale for £25,000. Blomley was out there on several other occasions before 1st August, and on one occasion, in June, the plaintiff himself and his fiancee went out to inspect the house, while D. C. Piddington measured the house for insurance purposes. Still there was no word of complaint.

But an even more significant event occurred two months after the date of the contract, on 26th June 1953. The drinking bout was a thing of the past by then, and there is no suggestion that another had begun. The defendant called on Rogers not indeed to complain that he had made an improvident sale at a time when he was not himself, and certainly not to remonstrate with Rogers for the part he had played in the matter, but to avail himself once more of Rogers's professional services. And this time it was to act for him in the purchase of a cottage in Goondiwindi. Rogers asked him had he changed his mind about going to Parramatta, and he replied: "Yes, I think I will stay here in Goondiwindi now." He wanted completion of the purchase of the cottage to be fixed for a week or SO after the settlement date for "Worrah", saying that he could use money from the sale of that property to settle the house purchase. He was here speaking to the solicitor who he knew had drawn up the contract of sale of "Worrah"--it was to his office that he was later to send Cooney to get a copy of the con- tract-and the reference to Parramatta reached back to their conversation on the day of that contract. But there was no complaint, no suggestion of ignorance of any material matter, no request for information, only instructions for the purchase of a house in which he could live when he left Worrah". This was surely not the conduct of a man who had made, under the effects of drink, a sale to which in cold sobriety he saw reason to take exception.

The defendant even went SO far as to sell his sheep. But apparently people began to suggest that he had sold "Worrah" too cheaply, and some comment seems to have been made to him about the unusually small deposit he had agreed to. Apparently this preyed on the defendant's mind, for he said in evidence that " the whole public" had told him about the deposit " in fact the dogs are barking it ". And he said that people were laughing at him about it, and named some of them. At some stage, perhaps because he

99 CLR 427

was stung by what people said to him, he decided not to go on with the contract. In his evidence he first fixed this time as a couple of months after signing the contract. Later he said that he would have liked to tell Blomley a week after having signed it, "when the boooze got out of my system", that he would get out of the contract if he could. But in fact he told him nothing of the kind, and instead, as has been mentioned, he went on to sell his sheep and buy a house to live in.

When finally the defendant made up his mind to cancel the contract it was on the ground that (as he and his newly-engaged solicitors supposed) the Minister's consent had not been obtained within the time allowed in the contract. It was only when that ground failed that he set up that he was not in a fit condition at the time of the contract. In the box his suggestions were extrava- gant "I had sold it for half-price"; "I was blithered-drunk" Asked whether he thought, when he bought the Goondiwindi cottage, of leaving 'Worrah " and settling down, he said, "Well,

I did when I was a bit intoxicated"; and then he added "and I was sick and sorry for leaving it "_a statement which may well point to the truth of the matter, at least if added to his statements that he had sold to Blomley when he was in a bad mood and that people were laughing at him.

When the date for completion arrived, Blomley was in Rogers's office, ready with the amount of money then payable. The defend- ant came in, but said he had not come about Worrah" but about the house he was buying, that he would not go on with the sale of "Worrah and that he would not discuss the matter without his new solicitor, a Mr. Cole. Blomley went to see him at "Worrah" at some time within the next three days, and offered to discuss the matter, but the defendant became angry and refused to talk about it. Still there was no specific ground put forward as entitling the defendant to get out of the contract. On 3rd September Rogers wrote to Mr. Cole on the subject, and the reply said vaguely that one ground

concerns the circumstances of the night of the 20th April and the following morning, the 21st April at your office and involves yourself, the agent and your client's father." Not until the defence was delivered on 3rd December was a clear line adopted, and even then it was to be modified as the case went on, by the successive amendments which have been described.

On a full review of the evidence, the main features of which have now been surveyed, the conclusion to which I have come, with great respect to the learned trial judge and with much hesitation,

99 CLR 428

OF A. is that the evidence in the case does not provide a sufficient founda-

tion for the findings which entitled the defendant to the relief granted him. The hypothesis in applying the relevant head of equity is that the person claiming relief possessed at the material time such a degree of understanding that the contract or dealing which he impugns is not voidable at law for want of mental capacity, on the principles to which reference has recently been made in Gibbons v. Wright 1. Where that capacity exists, no imperfection of reasoning power, no difficulty of comprehension, can suffice by itself to give a title to, or a defence to a claim for, equitable relief. But such deficiencies may combine with other circumstances to form a total situation of such a character that the Equity Court will see in it a ground for active interference or for refusal of equit- able remedies to the opposite party. Even though the bargain made may be onerous, there still may not be enough in the case for either purpose. So, as Isaacs and Rich JJ. mentioned in Fullers' Theatres Ltd. v. Musgrove 2; "In Stewart v. Kennedy 3 Lord Watson says: 'Specific performance is not a matter of legal right, but a purely equitable remedy, which the Court can withhold when there are sufficient reasons of conscience or expediency against it.' In Davis v. Maung Shwe Go 4 the Privy Council were urged on the ground of discretion not to affirm a decree for specific perform- ance having regard to the onerous nature of the bargain. But their Lordships held that in the absence of fraud or misrepresentation or any unconscionable feature, or proof of improper advantage having been taken, they could not accede to the argument " 5. Cf. Boyd v. Alexander 6; Yerkey v. Jones 7 Wilton v. Farn- worth 8. The essence of the ground we have to consider is uncon- scientiousness on the part of the party seeking to enforce the contract; and unconscientiousness is not made out in this case unless it appears, first, that at the time of entering into the contract the defendant was in such a debilitated condition that there was not what Sir John Stuart called "

a reasonable degree of equality between the contracting parties Longmate v. Ledger 9, and secondly, that the defendant's condition was sufficiently evident to those who were acting for the plaintiff at the time to make it prima facie unfair for them to take his assent to the sale. If these two propositions of fact were established the burden of proving

1(1953) 91 C.L.R. 423. 2(1923) 31 C.L.R. 524. 3(1890) 15 A.C. 75, at p. 102. 4(1911) L.R. 38 Ind. App. 155. 5(1923) 31 C.L.R., at p. 549. E.R. 67, at p. 69]. 6(1931) 31 S.R. (N.S.W.) 645, at p. 648; 48 W.N. 202. 7(1939) 63 C.L.R. 649, at pp. 678- 8(1948) 76 C.L.R. 646, at p. 653. 9(1860) 2 Giff. 157, at p. 163 [66 99 CLR 429

that the transaction was nevertheless fair would lie upon the plaintiff: Earl of Aylesford v. Morris 1; Permanent Trustee Co. Ltd. v. Bridgewater 2. If the burden were not discharged the defendant would be entitled to hold the judgment appealed from, since in that event it would be right to draw the conclusion that, as was said in Evans v. Llewellin 3,

though there was no actual fraud, it is something like fraud, for an undue advantage was taken of his situation

The fact that the defendant's condition was the result of his own self-indulgence could make no difference, for, as is shown by Cooke v. Clayworth 5, the principle applied is not one which extends sympathetic benevolence to a victim of undeserved misfortune it is one which denies to those who act unconscientiously the fruits of their wrongdoing.

The learned trial judge was under no misapprehension as to the relevant principles of law. The difficulty in the case is to decide whether the findings should stand which were made as to the condition in which the defendant was at the time when he signed the contract of sale and as to the knowledge and conduct of Blomley and Stemm. The features of the case which call for a close and indeed a suspicious scrutiny of the evidence are obvious, and one cannot fail to be conscious of the advantage which his Honour possessed in seeing the witnesses and having an opportunity to assess the character of each of the persons who took part in the material transaction. But even so, I find myself unable to avoid the conclusion that the defendant all along acted deliberately, even if not as hard-headedly as he might have that he was quite capable of judging of his interests and of dealing with Blomley and Stemm on equal terms: and that there was nothing in the conduct of Blomley, Stemm or Rogers which amounted to over-reaching, sharp practice, or in any other way taking an unfair advantage of the defendant. The defendant was not the "poor and ignorant man who figures in the cases as a ready victim for the unscrupulous. He was not poor, he was not ignorant as regards matters relevant to the value of his property; and he was not under any sort of pressure, of circumstances any more than of persons. He stood in no need of independent advice. His decision to accept a price

SO much below that which he had been demanding does not need any more probable explanation than that being, as he said, in a bad mood, tired of managing the property, feeling his age and the depressing effects of indifferent health, desiring the convenience of

1(1873) L.R. 8 Ch. 484, at p. 490. 2(1936) 36 S.R. (N.S.W.) 643, at E.R. 1191, at p. 1194]. pp. 651, 652; 53 W.N. 250. 3(1787) 1 Cox. 333 [29 E.R. 1191]. 5(1811) 18 Ves. Jun. 12 [34 E.R. 99 CLR 430

town life and the company it would afford, and realising that £25,000 was ample for his needs in such years as might remain to him, he came to the conclusion that the best thing to do was to take Blomley's offer and be done with it. RYAN.

In this situation I see no reason why a court of equity should not hold the defendant to his contract and require him to perform it. In my opinion the appeal should be allowed, the judgment appealed from should be set aside, and in lieu thereof there should be judg- ment for specific performance.

Appeal dismissed with costs. Solicitors for the appellant, Rogers &Stein, Goondiwindi, by Anthony B. Bradfield &Johnson.

Solicitors for the respondent, Moodie Cole &Sons, Moree, by Purves, Moodie &Storey.