Clifton v Coffey

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.