contract-Evidence of surrounding circumstances. The plaintiff entered into a written contract to erect a dairy plant and butter factory upon the defendant's land, situate in the western district of New South Wales. The contract provided that the plant should be paid for out of the proceeds of butter produced by the defendant's cows, and manufac- tured within the factory, and contained a statement that there was no agree- ment or understanding between the parties which was not embodied in the written contract. In an action by the plaintiff to recover the price of the plant which the plaintiff had erected, evidence was given for the plaintiff that, if the conditions existing at the date of the contract had continued, a reason-
able time would have elapsed for the production of sufficient butter to pay for the plant, but it also appeared that, after the erection of the plant, by reason of a drought, there was not sufficient feed to enable the defendant's cows to produce butter.
Held, that notwithstanding the negativing of any agreement not embodied in the written contract, the language of that contract properly construed imported a promise by the defendant that she would produce sufficient butter to pay for the plant within a reasonable time, and that evidence as to the conditions existing at the date of the contract was admissible on this point. But held, also, that the onus was upon the plaintiff to prove what were the conditions existing after the plant was erected, and to show that under these conditions a reasonable time had elapsed for the production of sufficient butter to pay for the plant; and held, on the evidence, that he had failed to discharge this onus.
Decision of the Supreme Court: (Mc Donald v. Hart, 9S.R. (N S. W.), 463 26 W.N. (N.S.W.), 105), reversed on different grounds.
APPEAL by the defendant from the decision of the Supreme Court of New South Wales refusing an application by the defendant to set aside a verdict found for the plaintiff, or to enter a nonsuit, or verdict for the defendant, or in the alternative to grant a new trial, upon the grounds 1 that the plaintiff should have been nonsuited, as there was no evidence to support either of the counts of the declaration (2) That evidence of the circumstances surrounding the making of the contract, the subject-matter of the action, was wrongly admitted; (3) That the verdict was against evidence.
The facts are sufficiently stated in the judgment of Griffith C.J. Wise K.C. and Boyce, for the appellant. The written contract does not support the contract as alleged in the declaration. The contract expressly provides that there is no agreement or under- standing not embodied in the tender. But assuming that there is an implied obligation upon the defendant to use reasonable efforts to produce butter for payment of the purchase money, it was impossible to…
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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AGLC
Hart v Macdonald [1910] HCA 13
Case
[1910] HCA 13
Decision Date
CaseChat Overview and Summary
This case involved an appeal to the High Court of Australia concerning a contract for the erection of a dairy plant and butter factory. The plaintiff, Mr. Hart, had entered into a written agreement with the defendant, Mrs. Macdonald, to construct the factory on her land. Payment for the plant was to be made from the proceeds of butter produced by Mrs. Macdonald's cows and manufactured within the factory. The contract also contained a clause stating that no agreement or understanding existed between the parties that was not embodied in the written contract. Following the erection of the plant, Mrs. Macdonald made no payments, and Mr. Hart sued for the contract price.
The central legal issues before the High Court were whether the written contract implied a promise by Mrs. Macdonald to produce sufficient butter within a reasonable time to pay for the plant, and if so, whether Mr. Hart had discharged the onus of proving that such a reasonable time had elapsed. The court also considered the admissibility of evidence regarding the circumstances surrounding the contract's formation and the impact of a severe drought on the feasibility of performance.
The High Court held that, despite the clause excluding external agreements, the contract's language necessarily implied a promise by Mrs. Macdonald to produce butter within a reasonable time for payment. Evidence of surrounding circumstances was admissible to determine what constituted a reasonable time. However, the onus was on Mr. Hart to prove that the prevailing conditions, both at the time of the contract and subsequently, allowed for the production of sufficient butter within a reasonable period. The court found that the extensive evidence, particularly the correspondence detailing a severe and prolonged drought, demonstrated that it was impossible to carry on dairying in the ordinary way. Consequently, Mr. Hart had failed to discharge his onus of proof.
The appeal was allowed, and the verdict entered for the plaintiff was set aside, with a nonsuit to be entered. The court also determined that no interest was payable on the contract price, as the condition precedent for interest to accrue – the factory operating for six months – had not been met due to the non-commencement of operations.