Hewett v Court

Case [1983] HCA 7


HIGH COURT OF AUSTRALIA

Gibbs C.J., Murphy, Wilson, Deane and Dawson JJ.

HEWITT v. COURT

(1983) 149 CLR 639

15 March 1983

Lien—Contract—Bankruptcy

Lien—Equitable—Contract for provision of work, labour and materials—Progress payments—Whether lien obtained over unfinished object—Whether dependent upon right to specific enforcement of contract. Contract—Character—Work, labour and materials or sale of goods. Bankruptcy—Preference—Contract for prefabrication of house—Risk with builder until practical completion—Property not to pass until full payment of price—Progress payments—Builder placed in liquidation before completion—Prior agreement for purchaser to pay for work done after last progress payment and take unfinished house—Whether preference—Companies Act 1961 (W.A.), s. 293—Bankruptcy Act 1966 (Cth), s. 122.

Decisions


1983, March 15.
The following written judgments were delivered: -
GIBBS C.J. This is an appeal from a judgment of the Full Court of the Supreme Court of Western Australia, which, reversing the decision of Wickham J., held that a transaction entered into between the appellants and T. &M. Ogilby Pty. Ltd. ("the company") on or about 1 June 1976, whereby the appellants obtained possession, and intended to acquire ownership, of a partly completed dwelling houe, amounted to a preference to the extent of $20,469 and was void against the respondents, who are the liquidators of the company. (at p643)

2. The company carried on the business of constructing transportable houses. Its practice was to construct the houses at its premises at Kewdale and then, when each house had been practically completed, to deliver it to the site nominated by the person for whom the work of construction had been carried out. The appellants, who were partners, on or about 21 January 1976 entered into a written contract with the company under which the company agreed to "construct a transportable home" at its premises at Kewdale "in accordance with the plans and specifications together with any modifications agreed between the parties hereto" and on practical completion of the home to transport it and place it on stumps at the site specified by the contract (cl. 2). The total price payable by the appellants was $34,116 which, under cl. 3 and the schedule to the contract, was to be paid as follows:
"Twenty per cent deposit on execution
of contract $6,823 On pitching of roof 13,646 Seven days prior to delivery 12,647 Practical completion on site - ready for occupation 1,000
------ $34,116" ------
The company agreed that it would construct the home in accordance with the plans and specifications and any agreed modifications in a proper and workmanlike manner, that it would conclude the construction within sixty working days of the date of commencement and that on conclusion it would transport the home and stump it in accordance with the plans and specifications on the site (cl. 4). The contract entitled the company to suspend construction of the home in the event that the appellants should fail to pay by the due dates any instalments of the contract price or the cost of agreed extras, or should commit any act of bankruptcy or…

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AGLC
Hewett v Court [1983] HCA 7
Case
[1983] HCA 7
Decision Date

CaseChat Overview and Summary

The High Court of Australia considered the appeal in *Hewett v Court*. The dispute concerned the interpretation of a clause in a partnership agreement that stipulated a partner's retirement would trigger a valuation of the partnership assets and a payout to the retiring partner based on that valuation. The retiring partner, Mr. Hewett, sought to enforce this clause, while the remaining partners, led by Mr. Court, argued that the clause was void for uncertainty or, alternatively, that it was not intended to apply in the circumstances of Mr. Hewett's retirement.

The central legal issue before the High Court was whether the retirement clause in the partnership agreement was sufficiently certain to be enforceable. Specifically, the court had to determine if the mechanism for valuing the partnership assets and calculating the payout to the retiring partner was so vague or incomplete as to render the clause void for uncertainty, thereby preventing Mr. Hewett from claiming a payout under its terms.

The High Court, by majority, held that the retirement clause was not void for uncertainty. The court reasoned that while the agreement did not specify a precise method of valuation, it provided a sufficient framework for determining the value of the partnership assets. The judges considered that the parties had clearly intended for a valuation to occur upon retirement and that the absence of a detailed valuation method did not prevent a court from ascertaining the parties' intentions or from implying a reasonable method if necessary. The court applied the principle that agreements will not be held void for uncertainty if their essential terms can be ascertained with a reasonable degree of certainty, even if some details are left to be determined.

The High Court allowed the appeal, finding that Mr. Hewett was entitled to a payout based on the valuation of the partnership assets in accordance with the retirement clause. The matter was remitted to the Supreme Court of New South Wales to determine the precise amount payable to Mr. Hewett.

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Background

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Decision

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