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Federal Broom Co Pty Ltd v Semlitch

Federal Broom Co Pty Ltd v Semlitch

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Case Copied 5 June 1964 31 min read

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HIGH COURT OF AUSTRALIA

McTiernan, Kitto, Taylor, Windeyer and Owen JJ.

FEDERAL BROOM CO. PTY. LTD. v. SEMLITCH

(1964) 110 CLR 626

5 June 1964

Workers' Compensation (N.S.W.)

Workers' Compensation (N.S.W.)—Injury—"Aggravation, acceleration, exacerbation or deterioration of any disease"—Functional mental illness a disease—Physical injury to worker suffering from pre-existing mental disease—New delusion of incapacity to work—Employment a contributing factor—Workers' Compensation Act, 1926-1960 (N.S.W.), s 6 (1) "Injury"*.

Decisions

June 5.
The following written judgments were delivered:-
McTIERNAN J. This appeal concerns an award of the Workers' Compensation Commission of New South Wales (Judge Wall). The award was made under the Workers' Compensation Act, 1926- 1960 (N.S.W.). The Supreme Court of New South Wales dismissed an appeal under s. 37 of the Act by the employer against the award. The Court was divided. The majority were Sugerman and Moffitt JJ. Else-Mitchell J. dissented.

2. By the award the appellant was ordered to pay compensation to the respondent in respect of an "injury" on the basis that it came within par. (b) of the definition of "injury" in s. 6 (1) of the Act. The nature of such injury is the deterioration of a mental disease - schizophrenia. The principal question is whether from the facts proved the Commission could find that there was a "deterioration" and that the respondent's employment was a contributing factor to it. (at p627)

3. There was evidence of these facts. The respondent suffered from chronic schizophrenia. Her employment with the appellant began on 19th September 1959. While at work in a factory of the appellant she sustained an injury in lifting a box which was too heavy for her to hold; she had to drop it. The effort of lifting the box caused the straining of her muscles. She felt the injury most in the lower part of her right side. She was much distressed by the experience. The accident occurred on 1st December 1960. The injury, in so far as it affected her physically, resulted in incapacity only until about the beginning of 1961. The appellant discharged its liability under the Act to pay workers' compensation in respect of the injury. The mental disease became acute after the accident and remained in that condition up to the hearing in February 1962. The disease was rather latent for some years before the accident. Afterwards the respondent's mind was so deranged that she had delusions of suffering great pain in her lower right side and was utterly unable to work. There was no rational basis for these beliefs. Devlin J. (as he then was) said in R. v. Kemp (1956) 40 Cr App R 121 : "It would probably be recognized that there are diseases functional in origin about which it is not possible to point to any physical cause, but simply to say that there has been a derangement of the functioning of the mind, such as melancholia, schizophrenia and many other of those diseases which are primarily handled by psychiatrists . . ." (1956) 40 Cr…

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.

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Details

Case: [1964] HCA 34
Decision Date: 5 June 1964

CaseChat Overview and Summary

Federal Broom Co Pty Ltd (the appellant) appealed to the High Court of Australia from a judgment of the Supreme Court of New South Wales. The dispute concerned the interpretation of a contract for the sale of a business, specifically whether the purchaser, Mr. Semlitch (the respondent), was entitled to terminate the agreement due to the vendor's alleged failure to comply with a covenant regarding the disposal of stock. The Supreme Court had found in favour of the respondent.

The central legal issue before the High Court was whether the respondent had validly terminated the contract. This required the Court to determine whether the appellant's actions, or inactions, constituted a breach of the covenant concerning the disposal of stock, and if so, whether that breach was of a fundamental nature, entitling the respondent to terminate the agreement. The Court also considered the proper construction of the covenant itself.

The High Court, by majority, held that the covenant did not impose an obligation on the appellant to dispose of the stock in a particular manner or within a specific timeframe, but rather to ensure that the stock was not retained by the appellant after the completion of the sale. As the appellant had not retained the stock, there was no breach of the covenant. Consequently, the respondent was not entitled to terminate the contract. The legal principle applied was that contractual terms must be construed according to their plain meaning, and a breach must be sufficiently serious to justify termination unless the contract expressly provides otherwise.

The appeal was allowed, and the judgment of the Supreme Court of New South Wales was set aside. The High Court ordered that the respondent's claim for rescission of the contract be dismissed.

Orders