Gordonstone Coal Management P/L v Antonov Airlines (Cargo & Services) P/L

[1992] FCA 744

.%L t

JUDGMENT No. , 7 . -

TN THE FEDER-COURT OF AUSTRALIA 1

OUEENSLAND DISTRICT REGISTRY	1	No. QG 77 of 1992	I
GENERAL DIVISION	1	I i-
l
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I
I I

BETWEEN: GORDONSTONE COAL MANAGEMENT PTY LIMITED 4. I I

(A.C.N. 000 480 071)

First Applicant	I -
!

AND: ARCO COAL AUSTRALIA INC. (A.R.B.N. 009 738 407).

ARC0 RESOURCES LIMITED (A.C.N. 010 565 554). LEND	!
LEASE RESOURCES PTY LTD (A.C.N. 000 001 114) &	v i
:
MITSUI GORDONSTONE INVESTMENT PTY LTD (A.C.N. 002
429 7631	i

Second Applicants l

(A.C.N. 003 918 661)	I
I

First Respondent 1.

AND: VLADIMIR D'JAMIRZE I.

Second Respondent 1

AND:  ! I

Third Respondent .~

AND: VICTOR D'JAMIRZE

Fourth Respondent

MINUTES OF ORDER

JUDGE MAKING ORDER:  SPENDER J.

- 7 OCT 1992

DATE OF ORDER:  31 JULY 1992

PRINCIPAL

WHERE MADE:	BRISBANE	REGISTRY	I
l
THE COURT ORDERS THAT:	!

1.    The application for summary judgment filed on 4 June

1992 is dismissed.

2.    The costs of the first, second and third respondents in respect of the notice of motion filed on 4 June

1992 to be their costs in the principal proceedings.

THE COURT DIRECTS THAT:

3.   The applicants' request for further and better particulars be filed and served by 4 p.m. on Thursday 1-

6 August 1992. /

,

4.    The respondents to file and serve those further and better particulars by 4 p.m. on Tuesday 18 August

5.    The applicants' defence to the cross-claim and reply, if any, to be filed and served by 4 p.m. on Tuesday 25 August 1992.

6.  All parties are to make discovery by Friday 18 September 1992.

7.    Inspection to take place by 25 September 1992.

8.    The trial is to proceed by way of affidavit, subject to cross-examination and if there are witnesses unwilling to provide affidavits, their names, addresses and the substance of the evidence it is proposed they will give to be provided to the other party in the same time frame as for the affidavits of witnesses.

9.   The matter be listed for further review and final directions at 9.30 a.m. on Wednesday 7 October 1992.

NOTE:	Settlement and entry of orders is dealt with in Order
36 of the Federal Court Rules.

!

IN THE FEDERAL COURT OF AUSTRALIA	)
QUEENSLAND DISTRICT REGISTRY	1 No. QG 77 of 1992 !

l:

GENERAL DIVISION 1

!

! -

BETWEEN:  GORDONSTONE COAL MANAGEMENT PTY LIMITED
1A.C.N. 000 480 0711

First Applicant

AND: ARCO COAL AUSTRALIA INC. (A.R.B.N. 009 738

4071, ARCO RESOURCES LIMITED (A.C.N. 010 565
5541. LEND LEASE RESOURCES PTY LTD (A.C.N. 000

001 114) & MITSUI GORDONSTONE ImSTMENT PTY

LTD (A.C.N. 002 429 7631

Second Applicants

1 :

AND:	ANTONOV AIRLINES (CARGO & SERVICES) PTY LTD
(A.C.N. 003 918 6611  l

First Respondent !..

AND: VLADIMIR D'JAMIRZE

Second Respondent

AND: NICHOLAI D'JAMIRZE

Third Respondent

AND: VICTOR D'JAMIRZE

Fourth Respondent

C O W :	Spender J.
PLACE :	Brisbane
DATE:	31 July 1992

REASONS FOR JUDGMENT

This is an application for summary judgment pursuant

to 0. 20 r. 1 of the Federal Court Rules which relevantly
provides :

" where, i n r e l a t i o n t o the whole o r a n y part o f

t h e app l i can t ' s c la im f o r re l ie f , there i s

evidence o f the f a c t s on which t h e c la im o r

part i s based, and -

t h e r e i s evidence given by the appl icant

( a ) o r by some o t h e r r e s p o n s i b l e person t h a t ,

i n the belief o f the person g i v i n g the

evidence, the respondent has no defence to
the claim or part, ...

the applicant may move on notice for such judgment for the applicant on that claim or part and the Court may pronounce such judgment and make such orders as the nature of the case requires. "

On or about 23 February 1992 a conveyor belt at the Gordonstone Mine, in which the first applicant is primarily concerned, broke and the possibility of airfreighting a replacement from the United Kingdom was investigated. On or about 10 March 1992, after negotiations, the first applicant entered into an air charter agreement with the first, second and third respondents. That document is exhibit E to the affidavit of Mr Holland and it is necessary to have recourse to some aspects of the provisions of that air charter agreement.

By clause l(ii) and (iii) the parties agreed that:

"(ii) Antonov and D'Jamirze shall provide for the Charterer's use, and the Charterer shall accept for such use, aircraft complete with crew in accordance with the

following provisions.

(iii)The aircraft shall be used for two (2) flights by the Charterer

From: Manchester

To :  Brisbane/Rockhampton.

Clause 2 is important. It is headed "APPROXIMATE TIJ4ETABLE AND ROUTING" and then appears the following:

" 2. (i) First flight: ETD Manchester 2300 hours

7 April 1992 local time

ETA Brisbane/ Rockhampton

0100	h o u r s	9 A p r i l	1992
l o c a l	time.

Second	f l i g h t :	ETD Manchester 2300 h o u r s
16 A p r i l 1992 l o c a l t i m e .
ETA Br i sbane / Rockhampton
0100 hour s 18 A p r i l 1992
l o c a l t i m e .

(ii)   Antonov and D'Jamirze acknowledge and

agree t h a t the d e p a r t u r e d a t e o r ETD f o r

each f l i g h t s p e c i f i e d i n c l a u s e 2 ( i) above

may be changed by the Char t e re r , a t no

c o s t t o the C h a r t e r e r , n o l a t e r t h a n two

( 2 ) days b e f o r e the s p e c i f i e d d e p a r t u r e

d a t e o r ETD. "

The charter price is referred to in clause 3 of the agreement as $US720,000, being $US360,000 per flight, payments to be made to the account of Antonov at the Commonwealth Bank in Sydney. As to the terms of payment, clause 5 requires that 50 per cent of the charter price be paid on the signing of the agreement; 25 per cent on completion, loading and takeoff of the first flight and 25 per cent on completion, loading and takeoff of the second flight.

The question of government approval is addressed in

clause 7 which provides: 

"

The o p e r a t i o n o f each f l i g h t under th is Agreement i s

s u b j e c t t o An tonov and D'Jamirze o b t a i n i n g for

Antonov	the r e l e v a n t Government	approva l s and	a l l
n e c e s s a r y a u t h o r i s a t i o n s	for	the	u s e o f the a i r p o r t s

concerned. I f a n y such approval or a u t h o r i t y i s n o t

granted t o Antonov two ( 2 ) days p r i o r t o the

commencement o f a n y p a r t i c u l a r f l i g h t and such

f a i l u r e t o o b t a i n approval o r a u t h o r i t y i s beyond

the c o n t r o l o f Antonov and D'Jamirze, Antonov may

cancel the r e l e v a n t f l i g h t a t t h a t time and th is

Agreement may be t e rmina t ed by a n y p a r t y and a l l

moneys pa id u p t o t h a t t i m e w i l l be r e t u r n e d

f o r t h w i t h t o the C h a r t e r e r . Each p a r t y w i l l r e l e a s e

the o t h e r s from a n y l i a b i l i t y a r i s i n g o u t o f such

c a n c e l l a t i o n . "

Cancellation by the charterer is dealt with in clause
8, and clause 9 has a relevance to these proceedings in the

events that have occurred. Clause 9 deals with delays and says:

" ( i ) I f t h e r e i s a n y d e l a y i n the performance o f t h i s Agreement which i s caused by Antonov or a n y o f i t s s e r v a n t s , a g e n t s o r c o n t r a c t o r s and /or by D'Jamirze

and	which	d e l a y h a s n o t r e s u l t e d from	c i rcums tances
beyond	the c o n t r o l	o f Antonov and /or D'Jamirze	( a s

e s t a b l i s h e d t o t h e s a t i s f a c t i o n o f t h e C h a r t e r e r ) ,

Antonov and D'Jamirze agree t o pay t o the Char t e re r

t h e amount o f US$50,000 p e r day , which m a t t e r i s

agreed by t h e p a r t i e s t o be a r easonab l e pre-

e s t i m a t e o f the damage occas ioned by the Char terer .

( i i ) I f there	i s a n y d e l a y i n the performance o f
th is Agreement	which i s caused by t h e Char t e re r o r

a n y o f i t s s e r v a n t s ,	a g e n t s or c o n t r a c t o r s	and	which
d e l a y h a s n o t r e s u l t e d	from	c i r cums tances beyond	the

c o n t r o l o f the C h a r t e r e r ( a s e s t a b l i s h e d by the

Char t e re r	t o	the	s a t i s f a c t i o n	o f	An tonov) ,	the
Char t e re r	s h a l l	p a y	t o Antonov	t h e	amount	o f

US$50,000	p e r day , which amount i s agreed t o be a
reasonable p re - e s t ima te	o f the damage occasioned by
Antonov. "

Clause 15 of the Air Charter Agreement provides:

" UNDERTAKING BY D'JAMIRZE

15. As a p r i n c i p a l o b l i g a t i o n , D'Jamirze under takes

t o pe r fonn or o t h e r w i s e s a t i s f y i n a l l r e s p e c t s
t h e	o b l i g a t i o n s and l i a b i l i t i e s o f Antonov
under t h i s Agreement.	"

On an application for summary judgment under 0. 20 r. 1, the principles are not in dispute. Where a judge is satisfied not only that there is no defence but no point fairly able to be argued on behalf of the respondent, it is the judge's duty to give effect to the section and give judgment to the applicant. However, a respondent ought not to be shut out from

defending an action unless it is very clear that it has no defence and summary judgment should not be granted when any serious conflict as to a matter of fact or any real difficulty as to a matter of law arises.

On or about 10 March 1992 both aircraft, with the capacity to honour the obligations of the Air Charter Agreement, were arrested at Schiphol airport in Amsterdam. On 11 March the first applicant paid the sum of U.S.$360,000 to the account of D'Jamirze. On 16 March 1992 the respondents were able to secure the release of one of the two arrested aircraft, an aircraft identified by the number CCCP 82020. The availability of this aircraft to perform the contractual obligations of the respondents is a matter for serious consideration and I have had regard to exhibit A to an affidavit of Vladimir D'Jamirze filed in court on 28 July 1992. That exhibit is a facsimile transmission of 25 March 1992 and the subject is said to be "Ban

on Antonov Airlines a i r c r a f t 820020", and the text of the message

is as follows:

"

W e h e r e w i t h c a n i n f o r m you t h a t the l e g a l b a n o f the

abovement ioned A n t o n o v Airlines a i r c r a f t h a s been

l i f t e d by o u r l a w y e r .

No o b j e c t i o n s for the d e p a r t u r e o f th is p a r t i c u l a r "

a i r c r a f t w i l l be made by Road A i r BV.

That message, in my view, does not provide a basis for saying that the nominated aircraft was immune from arrest should it return to Holland. It is, however, a matter for further evidence.

On or about 3 April the timetable for the uplift of the aircraft was set by requiring the aircraft to be available at Manchester airport on 6 April 1992. However, on 3 April it became clear that it would be difficult for the respondents to perform the Air Charter Agreement as the British airport authorities had refused to give approval to land the Antonov aircraft at Manchester.

On 4 April there were negotiations and discussions involving Mr Holland, as a result of which there was a variation to the Air Charter Agreement, the consequences of which were that the respondents would perform their obligations by providing an

AN-124 aircraft at Schiphol Airport, Amsterdam on 6 April 1992

and that the belting would be transported by road to the airport in Amsterdam in the Netherlands, the cost of that transport being shared between the first applicant and the respondents.

In relation to the variation of the agreement, there
is a facsimile transmission of 5 April 1992 to Antonov Australia
page 2 that: Pty Ltd from Mr Holland. The transmission says in clause 4, at " C h a r t e r e r and Antonov agree the a i r p o r t for the

depar tu re o f the first c h a r t e r f l i g h t s h a l l be

Amsterdam and t h a t the c o s t of t r a n s p o r t a t i o n s h a l l

be shared by c h a r t e r e r and Antonov. "

-

and there are further agreements.

Exhibit K to the affidavit of Mr Holland is a facsimile transmission from Antonov Airlines to M r Holland which says in part:

" Ref telcon this morning we herewith confirm that the

Antonov Airlines aircraft AN124 is available to operate flight to Brisbane Australia on Monday 06 April 1992. "

On 6 April the respondents were unable to fly the aircraft out of Schiphol as the fuel in the tanks was the subject of a lien. As at 6 April no preparation to move the CP 82020, which was then in Singapore, had begun. On 7 April the respondents attempted to have the lien on the fuel lifted but were unsuccessful, and on that day Mr Holland, on behalf of the applicants, terminated the air charter agreement in a telephone conversation with the second respondent, Vladimir DfJamirze. This is denied by Mr DrJamirze and on the respondents' case the purported termination occurred no earlier than 8 April 1992, when a letter of termination was received by an agent of the respondents.

On 8 April the applicants made further arrangements to transport the cargo to Australia. German Cargo Services were utilised and the conveyor belt was transported to Australia at	a increased transport cost compared with the cost in the original	air charter agreement. As I indicated in the course of
submissions, the affidavit material filed on behalf of the respondents has serious difficulties, but there are sufficient factual questions requiring resolution which affect the correct legal interpretation of the events that occurred, particularly on 6 and 7 April 1992, in Amsterdam. In particular, the respondents say that the applicants, through Mr Holland, were
seeking to resolve the impasse with the aircraft whose fuel had been the subject of a lien by Roadair BV.
It is said that there was, during this conduct, a suspension of the respondents' obligation to discharge their obligations pursuant to the air charter agreement in a timely way. The respondents say they ought to have been put back on notice and, had that been done, they would have been in a position to comply with their contractual obligations within a very short time. In particular, they say, it was not open to the first applicant, through M r Holland, to determine the charter peremptorily when it was engaged in seeking to obtain a position where the aircraft in Amsterdam would be available to transport the belting.
That conclusion, it seems to me, was accepted somewhat implicitly in the submissions made by Mr Chesterman, senior counsel for the applicants, and on the material, I am not prepared to give judgment on the basis that in the factual
circumstances as disclosed by the affidavit material, there is no issue that the applicants were entitled to determine the air charter, as they claim to have been entitled.
However, there is a further basis, and one which has caused me some concern. It was submitted on behalf of the applicants, that the US$360,000 paid on 11 March in respect of the first flight of the charter was paid for a consideration which has wholly failed and the applicants are entitled to its repayment as money had and received by the respondents to the use of the applicants.
It was submitted on behalf of the applicants that even if it was assumed that the applicants were in default of the agreement, which the applicants deny, the applicants are still able to recover the sums paid for a consideration which has wholly failed, less a sum that represents the respondents' actual damages from the breach. It seems to me that that proposition is sound, but in the absence of a determination of the amount that represents the actual damage for breach, on the hypothesis that the applicants are in default, in my view I am unable to make any order by way of summary judgment.
In D. Galambos & Son Ptv Ltd v. McIntvre (1974) 5 A.C.T.R. 10, Woodward J. summarised the position in relation to a set-off or counter claims in the context of a building dispute. His Honour said at 25-26:

" I believe t h a t the r e l e v a n t p r i n c i p l e s t o be

e x t r a c t e d from the a u t h o r i t i e s a r e a s f o l l o w s : -

(i) F a i l u r e i n p a r t t o pe r fo rm a c o n t r a c t , o r

d e f e c t i v e performance o f a c o n t r a c t r e q u i r i n g work

t o be done aga in or d i r e c t l y r e d u c i n g the v a l u e of

work done or goods s u p p l i e d , may be r a i s e d a s a

d e f e n c e t o an a c t i o n f o r money due under t h a t c o n t r a c t : Allen v. Cameron: m v. Holme; Mondel v.

m.

(ii) Claims f o r money due under a c o n t r a c t and f o r

damages for breach o f the same c o n t r a c t ( a r i s i n g ,

f o r example, from d e l a y ) may be s e t - o f f a g a i n s t each other where the equity o f the c a s e requires t h a t it shou ld be s o . T h i s w i l l depend upon how c l o s e l y the

r e s p e c t i v e c l a i m s a r e r e l a t e d , p a r t i c u l a r l y a s t o

t i m e and s u b j e c t - m a t t e r . The genera l conduc t o f the

r e s p e c t i v e p a r t i e s w i l l , a s a lways , be r e l e v a n t to

the g r a n t i n g o f such e q u i t a b l e re l ie f : v.

Kltchin; Newfoundland Government v. Newfoundland

R a i l w a v CO; Bankes v. J a r v i s ; Hanak v. Green.

( i i i ) Even where one o f the c l a i m s i s not i n t e r m s

b a s e d upon the c o n t r a c t , b u t it f l o w s o u t o f and i s

d i r e c t l y c o n n e c t e d w i t h i t , a c o u r t m a y be prepared

t o r e c o g n i z e a n e q u i t a b l e se t -o f f : Piaaott v.

W i l l i a m s ; B e a s l e y v. D ' A r c v ; S m i t h v. P a r k e s ; JIorqan

& Son v. S . M a r t i n Johnson & Co.;	Hanak v. Green
( p e r Sellers	L J ) .

( i v ) The above s t a t e m e n t s o f p r i n c i p l e c a n n o t be

r e g a r d e d	a s h a v i n g	u n i v e r s a l	a p p l i c a t i o n .	T h e y d o
c l e a r l y a p p l y t o c o n t r a c t s for	work	and	l a b o u r ,	b u t
s p e c i a l	c o n s i d e r a t i o n s	a r e r e l e v a n t	i n other	a r e a s

s u c h a s - bi l l s o f exchange: Glennie v. W ; James

Lamont & CO L t d v. Hvland L t d ; l a n d l o r d and t e n a n t :

m v. C i l l i and c a r r i a g e o f goods: Henriksens A/S

v.    R o l i m p e x .

T h a t l a t t e r c a s e i s t o be found i n [ l 9 7 4 1 Q.B. 233 , but it h a s

no p r e s e n t d i r e c t r e l e v a n c e .

I n AWA L t d v . Exicom A u s t r a l i a P t v L t d ( 1 9 9 0 ) 19 N.S.W.L.R

7 0 5 , G i l e s J . r e f e r r e d t o the summary o f p r i n c i p l e s by

Woodward J . i n the Galambos c a s e , and he c o n c l u d e d t h a t :

" A d e f e n d a n t w i l l be p e r m i t t e d t o r a i s e a cross

demand by way o f e q u i t a b l e set o f f or strictly

c a l l e d , e q u i t a b l e d e f e n c e , where it would be u n j u s t

or i n e q u i t a b l e for the p l a i n t i f f t o be p e r m i t t e d t o

proceed w i t h i t s c l a i m w i t h o u t m a k i n g a l l o w a n c e for

the cross demand. "

He i n d i c a t e d t h a t :

" A l l the c i r c u m s t a n c e s o f the c a s e m u s t be

c o n s i d e r e d , b u t f a c t o r s which a c o u r t m a y c o n s i d e r

i n d e t e r m i n i n g this question i n c l u d e :

(i)      the n a t u r e o f e a c h c l a i m ;

( i i )	the closeness o f the c o n n e c t i o n b e t w e e n the
c l a i m s ; and

( i i i ) the c o n d u c t o f the p a r t i e s , for example , a n y

d e l a y by	the	d e f e n d a n t	i n p u r s u i n g	the cross-
demand. "

His Honour said, explaining Rawson v. Samuel [l8411 Cr. and Ph.

161, 41 E.R. 451, that:

" T h e r e i s no genera l r u l e p r e v e n t i n g a c l a i m for

damages for b r e a c h o f a c o n t r a c t b e i n g set o f f

a g a i n s t a c l a i m for a n amount d u e u n d e r the

c o n t r a c t . or c l a i m for a n a c c o u n t u n d e r the

c o n t r a c t . "

At 714 his Honour said:

" Even b e f o r e D . Galambos & Son P t y L t d v. McIntvre,

c l a i m s	for	damages	u n d e r	c o n t r a c t s	w e r e	se t -o f f
a g a i n s t	c l a i m s	for	money d u e	t h e r e u n d e r :	see	m

v. K i t c h i n ( 1 8 7 8 ) 3 Ex D 127; = e v. Holme ( 1 8 8 3 )

10 QED 286 and Newfoundland Government v.

Newfoundland R a i l w a v C o . I t i s not n e c e s s a r y t o

rely on the more c o n t r o v e r s i a l c a s e s of Morqan & Son

~ t v. d S . ?Jar t in Johnson & C o . L t d [1949]-1~~-7

and Hanak v. Green, b u t i n Sun C a n d i e s P t v L t d v.

Pol i tes [ l 9 3 9 1 VLR 132 , Mann C J a l l o w e d the

e q u i t a b l e se t -of f	o f a	c l a i m for	b r e a c h o f w a r r a n t y
a s t o the	v a l u e o f a	b u s i n e s s a g a i n s t a	c l a i m for

"

the u n p a i d b a l a n c e o f purchase money.

Finally, in a case principally relied on by the
applicants, the Court of Appeal in Rover International Ltd v.

Cannon Film Sales Ltd (1989) 1 W.L.R. 912, was concerned, amongst

recoverable and, if so, on what basis. Proper Films Ltd was a	other questions, with whether an instalment of $900,000 was
company incorporated in Guernsey which had concluded a contract with Thorn-EM1 Film Distributors for the exhibition of films in Italy. Cannon Film Sales Ltd, which was the successor to Thorn- EM1 Film Distributors, wished to pursue a counter-claim against Proper Films Ltd for the payment of the final instalment of $900,000. The issue in the case was whether Cannon Films Sales Ltd was entitled to claim this instalment notwithstanding the fact that it rescinded the contract on the ground of Proper Films
Ltd's breach, as it was accepted it was entitled to do. Proper Films Ltd contended that if it had paid this instalment before rescission, then it would now be recoverable by it and that a f o r t i o r i it could not be held liable to pay it. Proper Films Ltd
did not claim repayment of the $900,000 paid under the first and second instalments. Kerr L.J. said at 929:

" But they d e n y the ir l i a b i l i t y t o p a y the f i n a l

i n s t a l m e n t and c o n t e n d t h a t Cannon a r e r e s t r i c t e d t o

the c l a i m f o r damages, i f a n y . "

His Lordship said at 930:

" The r e l e v a n t p r i n c i p l e s were s t a t e d by Dixon J i n

the High C o u r t o f A u s t r a l i a i n McDonald v. Dennv

L a s c e l l e s L t d ( 1 9 3 3 ) 48 C.L.R. 457, 476-478. P a r t o f

t h i s judgment was c i t e d by Edmund-Davies L. J . i n

H w n d a i H e a w I n d u s t r i e s C o . L t d v. Papadopoulos

[ l 9 8 0 1 1 W.L.R. 1129, 1141, b u t for p r e s e n t p u r p o s e s

i t i s h e l p f u l t o quote a f u l l e r e x t r a c t . "

Kerr L.J. then quoted from the judgment of Dixon J., as he then was, including two passages which he emphasised, namely:

" I t d o e s not-, however , n e c e s s a r i l y f o l l o w from these

p r i n c i p l e s t h a t when, u n d e r an e x e c u t o r y c o n t r a c t

f o r the s a l e o f p r o p e r t y , the p r i c e o r part o f i t i s

pa id or p a y a b l e i n advance , the seller m a y both

r e t a i n what he h a s r e c e i v e d , or recover o v e r d u e

i n s t a l m e n t s ,	and	a t the same	t i m e t r e a t h i m s e l f	a s
r e l i e v e d	from	the	o b l i g a t i o n	o f	t r a n s f e r r i n g the

p r o p e r t y t o the b u y e r . "

The second passage emphasised by Kerr L.J. was:

" I t i s now beyond question t h a t i n s t a l m e n t s a l r e a d y

p a i d m a y be r e c o v e r e d by a d e f a u l t i n g p u r c h a s e r when

the v e n d o r elects t o d i s c h a r g e the c o n t r a c t . (Mavson

v. C l o u e t [ l 9 2 4 1 A.C. 9 8 0 ) . . . "

At 931 Kerr L.J. said:

" The s i t u a t i o n e n v i s a g e d by Dixon J i n the m a i n

passage , at: pp. 476-478, w h i c h I h a v e q u o t e d , a r o s e

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i n v. B r i t i s h and ~ n t e r n a t i o n a i ~ i n i n q and

F inance C o r ~ o r a t i o n L t d [ l 9 3 9 1 1 K.B. 724 . The

d e f e n d a n t s had c o n t r a c t e d t o sell c e r t a i n r i f l e s and

ammunit ion f o r a t o t a l sum o f f270,OOO. The b u y e r

p a i d f100.000 b u t was t h e r e a f t e r i n b r e a c h by

f a i l i n g t o make a n y f u r t h e r payments and d e c l i n i n g

t o t a k e d e l i v e r y . T h e d e f e n d a n t sellers e l e c t e d t o

t r e a t the c o n t r a c t a s a t a n e n d .	The p u r c h a s e r	then
sued t o recover the f100,OOO	which he had p a i d ,	and
succeeded .	S t a b l e J	s t a t e d the contention which he
a c c e p t e d a s f o l l o w s ,	r e l y i n g inter a l i a on	Palmer v.
T e m ~ l e	(1839) 9 Ad.	& E. 5 0 8 t o which Dixon J had
a l s o r e f e r r e d ,	a t pp .	736-737:

'

Where there i s a c o n t r a c t f o r the s a l e o f goods ,

and a p a r t payment f o r the goods i s made, b u t no

goods a r e d e l i v e r e d or t e n d e r e d by r e a s o n o f the

d e f a u l t o f the b u y e r , the seller's only r e m e d y
i s t o recover damages f o r the d e f a u l t , w h i l e the

b u y e r , n o t w i t h s t a n d i n g t h a t it i s by r e a s o n o f

h is d e f a u l t t h a t the c o n t r a c t h a s not been

per formed , i s e n t i t l e d t o recover the p u r c h a s e

p r i c e t h a t he h a s p a i d , s u b j e c t p o s s i b l y t o the

r i g h t o f the seller t o set o f f a g a i n s t t h a t

c l a i m the damages t o wh ich he c a n e s t a b l i s h h is

t i t l e . ' "

The view of Kerr L.J. at 932 was that the case with which

he was concerned was:

" . . . i n d i s t i n g u i s h a b l e i n p r i n c i p l e from the

s i t u a t i o n s examined by Dixon J . i n McDonald v.

Dennvs L a s c e l l e s L t d . , 4 8 C.L.R. 457, and the

d e c i s i o n i n u	s	v.	B r i t i s h and I n t e r n a t i o n a l Mininq
and	F inance	C o r n o r a t i o n L t d .	"

And he concluded: 

" ... this i n s t a l m e n t was p a y a b l e i n advance o f a n y

c o n s i d e r a t i o n f o r the payment wh ich f e l l t o be

p r o v i d e d from the s i d e o f Thorn E>II/Cannon. Indeed ,

when Proper d e c l i n e d t o p a y i t , it was r i g h t l y

p o i n t e d	o u t on	b e h a l f o f Cannon	t h a t n o t h i n g i n the
way o f per formance	was a s yet	d u e from	their s i d e .

T h i s i n s t a l m e n t would a c c o r d i n g l y h a v e been

r e c o v e r a b l e by P r o p e r i f i t had been p a i d , and it i s

t h e r e f o r e i r r e c o v e r a b l e by Cannon f o r the same

r e a s o n . The only c l a i m open t o them would h a v e been a c l a i m f o r damages i f they had shown t h a t they had s u f f e r e d any a s the r e s u l t o f the t e r m i n a t i o n o f the

con t r a c t . "

Dillon L.J. said at 936:

" There is no doubt that the $900,000 was not payable

by way of deposit or earnest. It was merely payable as the final instalment of the price for the licence under the Proper agreement. Consequently, if the Proper agreement had been a contract for the sale of land which went off through Proper's default before the land had been conveyed to Proper, there is no doubt that the $900,000 instalment, if paid, could have been recovered by Proper from Cannon subject to set-off only of Cannon's actual damage from Proper's

default: f4avson v. Clouet [l9241 A.C. 980 and Palmer v. Temple, 9 Ad. & E. 508. So equally if it had been a contract for the sale of goods, property in which had not passed to Proper: Dies v. British and International Mininu and Finance Corporation Ltd. [l9391 1 K.B. 724. "

It seems to me then that on the hypothesis on which this part of the argument was predicated, namely that the applicants were in default of the agreement, their entitlement is to receive the sums paid for a consideration which has wholly failed less the sums that represent the actual damage suffered by the respondents. It is a matter of equitable set-off or equitable defence. In those circumstances it is not possible to give judgment for the sum of $US360,000, or its Australian equivalent.

I have considered also whether it is possible, given the wide terms of 0. 20 r. 1 of the Federal Court Rules, to require	that sum to be paid in. It seems to me that is not a proper
approach to a question of summary judgment. If there is some concern concerning the capacity of the respondents to pay, or their intentions in respect of assets, other forms of relief are available to the applicants.
The conclusion I have reached depends on a recognition of the stringency of the requirements before proceedings will be
disposed of in a summary way. On the present material I am not minded to take that course. The application for summary relief is dismissed. The costs of the first, second and third respondents, in respect of the notice of motion for summary judgment, are their costs in the principal proceedings.
Any request for particulars by the applicants of any of the respondents is to be filed and served by 4 p.m. on 6 August 1992, and the reply to be filed and served by 4 p.m. on 18 August 1992.
The applicants' defence to the cross-claim and reply, if any, is to be filed and served by 4 p.m. on Tuesday, 25 August 1992.
All parties are to make discovery by 18 September 1992 and inspection is to take place by 25 September 1992.
I direct that the trial be by way of affidavits, prove unwilling to provide affidavits, their names and addresses subject to cross-examination, and if there are witnesses who
and the substance of the evidence that is hoped to be led from them orally should be communicated to the solicitors for the other party in the same time frame as the affidavits of witnesses would be delivered.
Whether those affidavits already filed are to be the affidavits in the trial is a matter for the parties. Of course,
it is unnecessary to have further affidavits merely duplicating those already filed.
This matter will be listed for review and final directions at 9.30 a.m. on Wednesday, 7 October 1992.

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I c e r t i f y that t h i s and the I

preceding f i f t e e n (15) pages are :

a true copy o f the reasons for !

judgment herein o f the Honourable , .

Mr Justice Spender.

W .

I .

, . , ,

Date: 31 J u l y 1

Counsel for the	applicants:	M r A. K. Chesteman Q.C.	with
Mr R. Derrington
instructed by:	Morris Fletcher & Cross

Counsel for the respondents:	Mr. Birch
instructed by:	Quinlan Miller & Treston

Date o f Hearing: 28 July 1992

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