Fletcher v Manton

This case concerned a dispute between a vendor, Russell Manton, and purchasers, John Hamlyn Fletcher and Florence Hilda Fletcher, regarding a contract for the sale of land with a brick terrace of houses. The core of the disagreement arose after the Housing Commission of Victoria declared the houses unfit for human habitation and ordered their demolition, a fact unknown to both parties at the time of the contract. The purchasers sought to rescind the contract and recover their deposit, while the vendor maintained the contract was binding. The matter was heard on appeal from the Supreme Court of Victoria.

The legal issues before the High Court of Australia were whether the demolition order constituted a defect in title that entitled the purchasers to rescind the contract, and when, under the Slum Reclamation and Housing Act 1938 (Vict.), the demolition order became legally effective and binding on the property. Specifically, the court had to determine if the order attached to the land at the time of the Housing Commission's declaration or only upon service of the notice on the owner.

A majority of the High Court, comprising Starke, Dixon, and McTiernan JJ., held that the demolition order did not become legally effective until it was received by the vendor on 3rd April 1940. As the contract of sale was entered into on 21st March 1940, the purchasers were considered the equitable owners of the land at the time the demolition order became operative. Applying the principle that property is at the purchaser's risk from the date of the contract, the court found that the purchasers should bear the loss occasioned by the demolition. Rich A.C.J. dissented, viewing the commission's declaration as immediately attaching a disability to the premises from the date of the declaration itself.

The appeal was dismissed, affirming the decision of the Supreme Court of Victoria. The purchasers were therefore not entitled to rescind the contract, and the loss resulting from the demolition of the houses was to be borne by them.