Dowsett v Reid

The appeal concerned a dispute over an agreement for a lease with an option to purchase. The respondent (plaintiff) sought specific performance of the contract, while the appellant (defendant) counterclaimed for rescission. The appellant argued for rescission on three grounds: his alleged total ignorance of the contract's terms, the existence of a fiduciary relationship between himself and the respondent's husband (who acted on the respondent's behalf), and that the contract was an unfair and unconscionable bargain.

The High Court was required to determine whether the appellant was entitled to rescission of the contract. Specifically, the court had to consider whether the appellant's alleged ignorance of the contract's terms was a valid ground for rescission, whether a fiduciary relationship existed between the parties, and whether the contract was so unfair or unconscionable as to warrant refusal of specific performance.

A majority of the High Court, comprising Griffith C.J. and Barton J. (with Higgins J. dissenting), held that no fiduciary relationship existed between the parties. They found that the appellant, despite being illiterate, had understood the contract's terms, as determined by the primary judge who had assessed witness credibility. However, the Court unanimously agreed that specific performance should not be ordered. This was because the contract, while not subject to rescission on the grounds of ignorance or fiduciary duty, represented a bargain that would impose great hardship on the appellant.

Consequently, the High Court varied the judgment of the Supreme Court. Instead of ordering specific performance, the Court declared that the respondent was entitled to damages for the appellant's non-performance of the contract. The matter was remitted to the Supreme Court for the assessment of these damages.