Gray v Dalgety and Co Ltd

John Guthrie Gray (the plaintiff) brought an action against Dalgety & Co Ltd (the defendants) in the Supreme Court of Victoria. The plaintiff alleged an oral contract whereby the defendants agreed, for reward, to raise £84,000 for him on the security of his station property, "Kentucky". The sum was to be secured by a first mortgage of £72,000 at 4% interest and a second mortgage of £12,000 at 5% interest. The plaintiff claimed damages for the defendants' failure to raise the money. The defendants denied the contract and pleaded the Statute of Frauds. The trial judge directed a verdict for the defendants, which was upheld by the Full Court of Victoria. The plaintiff appealed to the High Court of Australia.

The legal issues before the High Court were: (1) whether, on the plaintiff's version of the conversation, there was sufficient evidence upon which reasonable men could conclude that the defendants had undertaken to find lenders for the specified sums and interest rates; (2) whether, if such an agreement existed, it constituted an enforceable contract; (3) whether the defendants were entitled to lend their own money under such a contract; and (4) whether the contract was one concerning an interest in land, and therefore subject to the Statute of Frauds.

By majority, the High Court (Isaacs and Powers JJ., Griffith C.J. dissenting) held that the evidence was capable of supporting a finding that the defendants had undertaken for valuable consideration to find persons willing to lend the plaintiff the specified sums on the terms outlined, with other terms being reasonable. The Court further held that such an agreement was an enforceable contract, and that under its terms, the defendants were not entitled to lend their own money. Crucially, the majority found that the contract was not one concerning an interest in land, and thus was not barred by the Statute of Frauds.

The High Court reversed the decision of the Supreme Court of Victoria, finding that there was evidence upon which a jury could find a contract existed and that it was not void under the Statute of Frauds. The case was remitted for a new trial.