Hensley v Reschke

The case of *Hensley v Reschke* involved an appeal to the High Court of Australia from a decision of the Supreme Court of South Australia. The plaintiff, Ms. Reschke, was the holder of a perpetual Crown lease and had sub-let the land to the defendant, Mr. Hensley. Ms. Reschke subsequently agreed to sell the land to a Mr. Gunson, who paid a deposit and was to receive possession upon payment of the balance of the purchase money. Mr. Hensley wrongfully held over possession of the land after his sub-lease expired. Ms. Reschke claimed damages from Mr. Hensley, including a sum she had paid to Mr. Gunson as compensation for the loss of beneficial use of the land during the period Mr. Hensley wrongfully retained possession.

The central legal issues before the High Court were whether Ms. Reschke was entitled to recover the £250 paid to Mr. Gunson as damages from Mr. Hensley, and what legal principles governed such recovery. Specifically, the court had to determine if Ms. Reschke had established that Mr. Gunson was continuously entitled to possession of the land during the period in question, which would require proof that he was ready and willing to pay the balance of the purchase money. The court also considered whether the prohibition against transferring Crown leases without the Commissioner's consent affected the ability of a lessee to grant possession to a purchaser, and whether the rule in *Bain v. Fothergill* applied to preclude recovery of damages for loss of possession.

The High Court, in allowing the appeal, reasoned that to recover the damages paid to Mr. Gunson, Ms. Reschke was required to prove that Mr. Gunson was ready and willing to pay the balance of the purchase money. The court found that the evidence presented did not establish this crucial element. While Mr. Gunson had paid a deposit and the Commissioner of Crown Lands had eventually consented to the transfer, there was no proof that Mr. Gunson was prepared to pay the remaining purchase money at the relevant times. The court distinguished the situation from cases where a defect in title prevents completion, noting that a failure to give vacant possession due to a tenant's wrongful holding over is not an inability to show a good title. The court also clarified that a perpetual leaseholder can grant possession to a purchaser before obtaining the Commissioner's consent, provided the lease itself is transferable.

Consequently, the High Court held that Ms. Reschke had not discharged her onus of proving the necessary precondition for her claim against Mr. Hensley, namely, that she was under a legal liability to Mr. Gunson for damages. Therefore, she could not recover the £250 from Mr. Hensley. The appeal was allowed, and the judgment of the Supreme Court of South Australia was reversed in relation to the £250 damages.