Lion White Lead Ltd v Rogers - [1918] HCA 71

LION WHITE LEAD LIMITED AND OTHERS

APPELLANTS; DEFENDANTS,

ROGERS AND OTHERS

RESPONDENTS.

PLAINTIFF AND DEFENDANTS,

ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES. Contract-Breach-Discharge-Right of one joint contractor to sue.

If A and B jointly enter into a contract with C and when the time for per- formance has arrived C commits a breach going to the root of the contract,

A has a right to refuse to proceed further with the contract notwithstanding that B desires to waive the breach and proceed with the contract.

Cullen v. Knowles, (1898) 2 Q.B., 380, followed.

A, who had discovered a process of manufacture, employed B to assist in disposing of the process in consideration of B receiving a proportion of the proceeds of disposal, but B never had any proprietary interest in the process. An agreement was afterwards entered into by which A and B purported to give an option to C to purchase the process, the consideration being a 20 per cent. fully paid up interest in a company which should be formed to work the process, which company should have a working capital of £20,000. In pursuance of this agreement a company was formed having a total capital of £20,000 in 20,000 shares of one pound each, and an agreement was entered into by it to purchase the process from C giving as consideration 10,000 of these shares as fully paid up. B became a director of the company.

Held, that as the company had not a working capital of £20,000 A was entitled in an action brought by him alone against B and C and the company to a declaration discharging him from performance of the contract made by himself and his co-contractor B with C.

Decision of the Supreme Court of New South Wales (Harvey J.) affirmed.

25 CLR 534

APPEAL from the Supreme Court of New South Wales.

A suit was brought in the Supreme Court in Equity by Charles Robert Rogers against the Lion White Lead Ltd., Jervis George Blackman, Samuel Bowen, Henry Petrie Fletcher and Catherine Fletcher in which the statement of claim was substantially as follows :-

1. The plaintiff is the original inventor of a process or invention for the manufacture of white lead known as "Process for the con version of wet precipitates into oil pastes and the removal of water therefrom without first drying."

2. On or about 20th July 1917 the plaintiff duly applied to the Commonwealth Patents Office for a patent for the said invention, and the said invention has at all material times been and is now entitled to provisional protection.

3. On or about 9th July 1917 the plaintiff and the defendant Jervis George Blackman, who had no interest in the said invention or process, gave to the defendant Henry Petrie Fletcher an option of purchase for fourteen days from the said 9th July 1917 of the said process on the following terms and conditions, namely: the purchaser to guarantee 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.

Keep reading for free

Create a free CaseChat account to read Lion White Lead Ltd v Rogers and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [1918] HCA 71
Decision Date: 28 November 1918

CaseChat Overview and Summary

In this case, Charles Robert Rogers (the respondent) brought a suit in the Supreme Court of New South Wales against Lion White Lead Ltd. and others (the appellants). The dispute concerned an agreement for the sale of a white lead manufacturing process invented by Rogers. Rogers sought a declaration that he was discharged from performing the contract due to a breach by the other parties, specifically the failure to establish a company with the agreed-upon working capital.

The High Court of Australia was required to determine several legal issues. These included whether a breach of the contract, specifically the failure to provide £20,000 in working capital for the company formed to exploit the process, went to the root of the contract. The court also had to consider whether one joint contractor, Rogers, could unilaterally seek to discharge the contract and obtain a declaration of rescission, notwithstanding that his co-contractor, Jervis George Blackman, might have wished to waive the breach and proceed.

The court reasoned that the requirement for the company to have a working capital of £20,000 was a condition precedent to the contract's performance. As this condition was not met, the breach was fundamental, entitling Rogers to treat the contract as discharged. The court applied the principle that where a breach goes to the root of a contract, any party affected by that breach can refuse further performance. Furthermore, the court affirmed the principle that a single joint contractor can sue for rescission of a contract if the other joint contractor desires to waive the breach, citing *Cullen v. Knowles*.

The High Court affirmed the decision of the Supreme Court of New South Wales. The court declared that Rogers was discharged from his obligations under the contract and granted injunctions restraining the defendants from disclosing or using the process. The register of members of Lion White Lead Ltd. was ordered to be rectified by striking out the names of Rogers and Blackman as holders of certain shares.

Orders