King v Poggioli

The appellant, King, agreed to sell a pastoral property to the respondent, Poggioli, with possession to be delivered on 31 March 1920. Poggioli sued King in the Supreme Court of New South Wales in its equitable jurisdiction, seeking specific performance of the contract and damages for King's alleged refusal to deliver possession of a significant portion of the land on the agreed date, and for King's subsequent retention and use of that portion. Poggioli sought to deduct these damages from the balance of the purchase money.

The High Court of Australia was required to determine whether possession of the entire property was delivered on 31 March 1920. It also needed to consider whether Poggioli had sufficiently demonstrated his readiness and willingness to perform his obligations under the contract, particularly in light of his insistence on deducting damages from the purchase price. Finally, the Court had to ascertain if Poggioli was entitled to compensation or damages, and if so, what measure should be applied.

Knox C.J. found that possession of the whole property was delivered on 31 March 1920, as Poggioli accepted delivery and permitted King's cattle to remain on the land for a short period by licence. He further held that Poggioli was not ready and willing to complete the contract as he insisted on a deduction for damages to which he was not entitled in equity, but rather had a remedy at law. Consequently, Knox C.J. concluded that Poggioli was not entitled to the relief sought. Higgins and Starke JJ., dissenting on the first point, found that King had refused to give possession of the property on the named day. However, Knox C.J. and Starke J. agreed that damages for breach of contract in not delivering possession were unliquidated and not recoverable by way of abatement of purchase money in equity. They also held that Poggioli was not entitled to specific performance due to his failure to prove readiness and willingness to perform the contract without the unauthorised deduction, and that damages were not recoverable in equity under s 9 of the Equity Act 1901 (NSW) in a suit where specific performance was not granted. Higgins J. dissented, arguing for specific performance with compensation for the delay.

The High Court, by majority (Knox C.J. and Starke J.), reversed the decision of the Supreme Court. The appeal was allowed, and the decree of the Supreme Court was set aside.