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Fitzgerald v F J Leonhardt Pty Ltd

Fitzgerald v F J Leonhardt Pty Ltd

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Case Copied 13 May 1997 72 min read

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HIGH COURT OF AUSTRALIA

DAWSON, TOOHEY, McHUGH, GUMMOW AND KIRBY JJ

COLIN JOHN FITZGERALD v. F J LEONHARDT PTY LTD; F.C. 97/016
Contract - Illegality - Contract to drill bores

(1997) 189 CLR 215

13 May 1997
Contract - Illegality - Contract to drill bores

Contract—Illegality—Contract to drill bores—Claim by driller against landowner for money due under contract—Drilling without statutory permit—Whether obligation to obtain permit cast on landowner or driller—Whether contract as formed or performed prohibited by statute—Whether contract contrary to public policy. Water Act 1992 (NT), ss 48, 49, 56, 57, 90. Water Regulations 1992 (NT), reg 7, forms 9, 10.

Orders

Representation

K G Horler QC with F P van Haeften appeared for the appellant (instructed by Close and Carter)

J B Waters with D A Norman appeared for the respondent (instructed by Dennis Norman & Associates)

Order

Appeal dismissed with costs.

Decision

DAWSON AND TOOHEY JJ

1. McHugh and Gummow JJ have set out the facts in this matter and there is no need for us to repeat them. Nor is there any need for us to examine in any detail the provisions of the WaterAct 1992 (NT) ("the Act"), since we agree with McHugh and Gummow JJ, for the reasons which they give, that in prohibiting a person from causing, suffering or permitting a bore to be drilled unless authorised by or under the Act, s 56 of the Act is confined in its application to the owner, occupier or lessee of the property in question and imposes no obligation upon the driller to obtain a permit under s 57.

2. It is upon that construction of the Act that the defence of illegality to the driller's claim for moneys due under the contract must be considered. A convenient starting point is the observation by Gibbs ACJ in Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd[1]:

"There are four main ways in which the enforceability of a contract may be affected by a statutory provision which renders particular conduct unlawful: (1) The contract may be to do something which the statute forbids; (2) The contract may be one which the statute expressly or impliedly prohibits; (3) The contract, although lawful on its face, may be made in order to effect a purpose which the statute renders unlawful; or (4) The contract, although lawful according to its own terms, may be performed in a manner which the statute prohibits."

3. The first three instances identified by Gibbs ACJ clearly have no application here. In the first place, it is apparent that the Act did not forbid the drilling of a bore. Section 56 forbids an owner, occupier or lessee of land to cause, suffer or permit a bore to be drilled on the land without a permit under s 57 but that is something different. The obligation to obtain a permit was cast upon the owner, not the driller, and the drilling of a bore constituted no offence on the part of the…

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: [1997] HCA 17
Decision Date: 13 May 1997

CaseChat Overview and Summary

In *Fitzgerald v F J Leonhardt Pty Ltd*, the High Court of Australia considered a dispute between a landowner, Fitzgerald, and a drilling contractor, F J Leonhardt Pty Ltd. The contractor sought payment for drilling bores on the landowner's property, but the landowner refused to pay, alleging the contract was illegal. The core of the dispute concerned whether the drilling was performed in contravention of the *Water Act 1992* (NT) and, if so, the consequences for the enforceability of the contract.

The High Court was required to determine several key legal issues. Firstly, it had to ascertain whether the contract, as formed and performed, was prohibited by the *Water Act 1992* (NT) and its associated regulations. This involved examining the statutory obligations regarding the drilling of bores, specifically whether the responsibility for obtaining the necessary permits rested with the landowner or the drilling contractor. Secondly, the Court had to consider whether, even if not expressly prohibited, the contract was contrary to public policy due to its performance in contravention of the statute.

The Court reasoned that the *Water Act 1992* (NT) imposed a prohibition on the drilling of bores without a permit, but the obligation to obtain such a permit was cast upon the owner of the land, not the contractor. Therefore, the contract itself was not illegal, nor was its performance inherently illegal. The contractor's obligation was to drill the bores, and it was the landowner's responsibility to ensure compliance with the statutory permit requirements. The Court held that where a statute prohibits the doing of an act, but does not expressly state that a contract for the performance of that act is void or illegal, the contract will only be unenforceable if the statute makes it so, or if the performance of the contract necessarily involves the commission of an illegal act by the party seeking to enforce it. In this instance, the contractor did not commit an illegal act by drilling the bores; it was the landowner who failed to fulfil their statutory duty.

Consequently, the High Court found that the contract was not illegal and the contractor was entitled to recover the moneys due under it.

Orders