Brownfield v Earle - [1914] HCA 11

rescind it as soon as he learns the facts, or else he forfeits all H. C. OF claim to relief."

In Inre Scottish Petroleum Co. 1 three propositions were laid down in the leading judgment of the Court of Appeal, with reference to cases of cancellation of share contracts. The second is relevant. It refers to what it terms "the well recognized rule in equity that a person who has been induced to enter into a contract by the fraudulent conduct of those with whom he has contracted, is entitled to rescind such contract provided he does

SO within a reasonable time after his discovery of the fraud. In such cases the contract is voidable, not void." The third rule restricts that power to the extent of requiring it to be exercised before winding up, when interests of third parties intervene. In such case the Court withholds its assistance. If a contract be such that at common law it is rescindable by the act of the party, that is, by mere repudiation, the doctrine does not apply, because repudiation itself works avoidance, but in the case of a contract to take shares that is not sufficient. This is pointed out in the same case by Fry L.J. 2, in an important passage:-

In the case of ordinary contracts if they are voidable an express repudiation avoids them.

This is not the case of an ordinary contract, but of a contract to take shares, which stands on a different footing. As regards such contracts the legislature has interposed, and has provided that they shall be made known in a particular way to shareholders and creditors notice of them is given to the world. Now the general principle is that no contract can be rescinded SO as to affect rights acquired bond fide by third parties under it. It is true that the creditors and the other shareholders have not acquired direct interests under the contract, but they have acquired an indirect interest. The share- holders have got a co-contributory, the creditors have got another person liable to contribute to the assets of the concern." This is in line with the observations of Lord Romilly in Kisch's Case 3, referred to by Mr. Mitchell.

In Scholey v. Central Railway Co. of Venezuela 4 Lord Cairns L.C. said :- The Court would be most careful to see, in

123 Ch. D., 413, at p. 429. 223 Ch. D., 413, at pp. 438, 439. 3L.R. 2 H.L., 99. 4L.R. 9 Eq., 266, n.

17 CLR 616

a company going on and trading, in which the rights of the

shareholders and others varied from day to day, that a person coming to complain of misrepresentation of this kind, and coming to avoid a voidable contract, came within the shortest limit of time which was fairly possible in such a case."

In In re Snyder Dynamite Projectile Co.-Shelton's Case (1) Stirling J. applied these principles and thought…

Grounds of appeal

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

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

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

Consideration

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

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

Continue reading Brownfield v Earle

Details

AGLC: Brownfield v Earle [1914] HCA 11
Case: [1914] HCA 11
Decision Date: 17 March 1914

CaseChat Overview and Summary

The case of *Brownfield v Earle* concerned an appeal to the High Court of Australia from a decision of the Supreme Court of Victoria regarding the interpretation of a testator's will. The dispute centred on a bequest of a share of the testator's residue to "Samuel Brownfield widower of my late sister Ann Brownfield and his sons who shall attain the age of twenty-five years or the survivors of them". The testator had directed that this share be divided upon the death or marriage of his widow, referred to as the "time of distribution". The Supreme Court had held the gift void for remoteness, leading to the appeal.

The primary legal issue before the High Court was whether the gift to Samuel Brownfield and his sons was void for remoteness, or if it was a valid bequest to designated living persons or a class. This involved determining the intended beneficiaries, specifically whether the bequest included potential sons from a future marriage of Samuel Brownfield, and whether the conditions attached to the gift, such as attaining the age of twenty-five, offended the rule against perpetuities. The court was required to consider the testator's intentions in light of the facts known or presumed to be known to him at the time of making the will, and the specific wording of the bequest.

The High Court, in allowing the appeal, reasoned that the gift was not void for remoteness. Griffith C.J. and Barton J. held that the bequest was to designated living persons, namely Samuel Brownfield and his sons, rather than a class that could expand to include future children. They emphasised that the testator's reference to Samuel Brownfield as the "widower of my late sister Ann Brownfield" indicated an intention to benefit the sons of that specific marriage. Furthermore, they considered that the testator's directions for immediate payment upon reaching twenty-five and the timing of the distribution at the widow's death were inconsistent with an intention to postpone the gift for the benefit of potential after-born sons. Isaacs and Gavan Duffy JJ. also found the gift valid, but on the ground that it was a gift to a class comprising Samuel Brownfield and the sons of his marriage with Ann Brownfield.

The High Court ordered that the appeal be allowed, the judgment of the Supreme Court be discharged, and judgment be entered for the defendants. This outcome meant that the share in question was to be divided among the five sons of Samuel Brownfield by his first marriage, who had survived the testator's widow and attained the age of twenty-five years.

Orders