Clifton v Coffey - [1924] HCA 35

ON APPEAL FROM THE SUPREME COURT OF Contract-Construction-Condition-Purchase of lease, licence, &., of hotel-

Property under mortgage-Purchaser to sign bill of sale to mortgagee-Refusn of mortgagee to advance money-Right of purchaser to recover deposit paid.

By a contract in writing for the sale of the lease, licence, goodwill and Aug. 13,20.

furniture of a hotel, the price agreed upon was £10,800, which was payable by a deposit of £300, £3,700 to be paid not later than a certain day and the balance, £6,800, " to be obtained by the purchaser and paid in cash, or a guarantee given for the same to the satisfaction of the vendor" " on another day. The vendor agreed to pay off and obtain the discharge of any security which there might be on the lease, licence or furniture. The purchaser agreed 1< to sign a bill of sale and other usual securities for £6,800 about, part of the said purchase-money, which is to be advanced by " a certain company, such securities to be signed

Held, by Isaacs A.C.J. and Gavan Duffy J. (Starke J. dissenting), that the words " which is to be advanced by " the company were the statement of an essential circumstance on the faith of which, as a fundamental term and condition, the purchaser entered into the bargain, and that upon the failure of that term and condition, by reason of the refusal of the company to advance the £6,800, the purchaser was entitled to recover the deposit of £300 which he had paid.

Decision of the Supreme Court of New South Wales (Full Court): Coffey V. Clifton, (1924) 24 S.R. (N.S.W.) 168, affirmed.

34 CLR 435

APPEAL from the Supreme Court of New South Wales.

An action was brought in the Supreme Court by Thomas Coffey against Edward Charles Clifton to recover the sum of £300 paid by the plaintiff to the defendant as a deposit on the sale by the defendant to the plaintiff of the lease, licence, goodwill and furniture of the Brooklyn Hotel, George Street North, Sydney. By the contract, which was dated 11th May 1923, the defendant agreed to sell and the plaintiff to buy the lease, licence, goodwill and furniture at the price and upon the terms following (inter alia) :-

"I. The purchase-money or price shall be £10,800 payable as follows, viz., a deposit of £300 to be paid forthwith to the vendor's agent, the balance of purchase-money, being the sum of £10,500, to be paid as follows, viz., £3,700 to be paid not later than the day before the transfer of licence is heard, such transfer to be heard, if possible, on or about the twenty-fourth inst. The balance of £6,800 to be obtained by the said purchaser and paid in cash, or a guarantee given for the same to the satisfaction of the vendor the day before transfer.

2. Of the said sum of £10,800, the sum of £3,000 shall be the consideration for the furniture described…

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 Clifton v Coffey

Details

AGLC: Clifton v Coffey [1924] HCA 35
Case: [1924] HCA 35
Decision Date: 20 August 1924

CaseChat Overview and Summary

The case of *Clifton v Coffey* involved an appeal to the High Court of Australia from a decision of the Supreme Court of New South Wales. The dispute concerned the recovery of a deposit paid by the purchaser, Thomas Coffey, to the vendor, Edward Charles Clifton, under a contract for the sale of a hotel lease, licence, goodwill, and furniture. The contract stipulated a purchase price of £10,800, with a deposit of £300, £3,700 payable by a specific date, and the remaining £6,800 to be obtained by the purchaser and paid in cash or secured by a guarantee to the vendor's satisfaction. Crucially, the contract also stated that the £6,800 was "to be advanced by" a particular company, Resch's Ltd., and that the purchaser would sign securities for this amount. Resch's Ltd. ultimately refused to advance the funds.

The legal issue before the High Court was whether the purchaser was entitled to recover the deposit paid, given that the anticipated advance from Resch's Ltd. did not materialise. The purchaser contended that the vendor's assurance that Resch's Ltd. would provide the £6,800 was a fundamental term of the contract, and its failure meant the entire bargain collapsed, entitling him to the return of his deposit. The vendor argued that the reference to Resch's Ltd. was merely a statement of expectation or an alternative payment method, not a condition precedent to the contract's validity.

A majority of the High Court, comprising Isaacs A.C.J. and Gavan Duffy J., held that the words "which is to be advanced by" Resch's Ltd. constituted a statement of an essential circumstance and a fundamental term of the contract. They reasoned that the parties, as business people, would have understood this provision as a core element upon which the purchaser entered into the agreement. The failure of this term, due to Resch's Ltd.'s refusal to advance the money, meant the contract could not be performed as intended, and therefore the purchaser was entitled to recover the deposit. Starke J., dissenting, viewed the provision as merely one of several possible methods for the purchaser to obtain the funds, rather than a foundational condition of the contract.

The High Court affirmed the decision of the Supreme Court of New South Wales and dismissed the appeal with costs.

Orders