McRae v Commonwealth Disposals Commission

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Pty

'

174CLRW

e

136ALR733

ERA119

[HIGH COURT OF AUSTRALIA.]

McRAE AND ANOTHER

Appellants

Plaintiffs,

AND

COMMONWEALTH DISPOSALS COMMISSION^

Respondents,

AND OTHERS

Defendants,

Contract—Sale of goods—Non-existence of goods at time of making contract—Know-

IT. C. of A.

ledge of parties—Mistake—Breach of contract—Measure of damages.

I950-195I.

—'

The Commonwealth Disposals Commission, which was authorized to make

1950

contracts on behalf of the Commonwealth, invited tenders “ for the purchase Melbotjene of an oil tanker lying on Jourmaund Reef, which is approximately 100 mdes March 20-24,

north of Samarai. The vessel is said to contain oh.” The Commission 27, 28; ’

notified the plaintiff by letter that his tender had been accepted and that a

Sydney,

“ sales advice note ” would be sent him within a few days. The plaintiff

May 8;

subsequently received the sales advice note, which described what was sold

as “ one (1) oil tanker including contents wrecked on Jourmaund Reef

JIelbotjene,

May 23.

approximately 100 miles north of Samarai. Price £285,” and referred to

conditions, one of which was that the goods “ are sold as and where they lie

AVebb J.

with all faults ” and no warranty was iven as to “ condition description

1951.

quality or otherwise.”

The plaintiff was unable to locate Jourmaund Reef Melboxjene,

on a map and, on inquiry, was supplied by the Commission with the latitude

Feb. 23, 26-28 ;

and lontude at which the tanker was alleged to be lying.

At considerable

March

1,2,5;

expense the plaintiff fitted out a salvage expedition and proceeded to the

Aug. 27.

locality given but found no tanker there ; and in fact there was none in that

on,

locality at any material time.

JIciernau

and

Held

Fullagar JJ.

(1) The plaintiff' was entitled to recover from the Commonwealth damages as for breach of a contract which promised that there was an oil tanker at the locality given. The case was not onef a purported conract nullified by mistake. Even if the ca.se was to be rerded as containin an element of mistake, the Commonwealth could not rely on the miske, becau.se it was induced by the fault of the Commonwealth’s own servants in recklas.sly and without any reasonable ground assertthe existence of

VOL. LXXXIV.—

25

HIGH COURT

[1950-1951.

the oil tanker. The eonclition, above mentioned, of the sales advice note —if it was part of the contract—did not assist the Commonwealth ; it did not ajiply to the present circumstances, because it was a condition of the contract that an oil tanker should bo supplied.

(2) The amount the plaintiff was entitled to recover as damages was the agreed purchase price together with the expenditure wasted in reliance on the promise that there was an oil tanker at the locality given.

Couturier v. Hastie, (1852) 8 Ex. 40 [L55 E.R. 1250]; (1853) 9 Ex. 102 [166 E.R. 43]; (1856) 6 H.L.C. 673 [10 E.R. 1065]; explained and dis­ tinguished.

Decision of Webb J. varied.

Appeal from

Wehh J.

R. E. and K. McRae brought an action in the High Court against the Commonwealth Disposals Commission, officers thereof and the Commonwealth, claiming damages on the ground of breach of contract and other grounds. The various claims—together with the relevant facts—are sufficiently described in the judgments hereunder. The writ issued out of the Principal Registry of the High Court at Melbourne, and the action was tried at Melbourne by Wehh J.

0. J. Gillard K.C. and L. S. Lazarus, for the plaintiffs.

J. B. Tail K.C. and F. R. Nelson, for the defendants.

Cur. adv. vult.

Webb J. dehvered the following written judgment:—

The plaintiffs claim against the defendants damages for breach of contract, deceit and negligence. The claim arises out of the sale of an oil tanker to the plaintiffs by the defendant Common­ wealth Disposals Commission in April 1947.

The defendants offered to deliver to the plaintiffs an oil barge as being the oil tanker sold, but the plaintiffs refused to accept delivery of it as not being an oil tanker. The defendants submit that a barge is an oil tanker, or alternatively, that if it is not an oil tanker, then there was a misdescription of the thing sold, and the defendants are not liable under the conditions of tender and the conditions of the sales advice note. In the further alternative the defendants submit that, if there was not a misdescription, then there had been a mutual mistake as to the identity of the subject

matter, and therefore no contract. They also denied deceit and

neghgence.

I find that sometime before April 1945 an oil barge was wrecked on a reef surrounding Jomard Islands. Its position on the reef was latitude eleven degrees sixteen minutes forty seconds south, longitude one hundred and fifty-two degrees eight minutes east. It was still in that position when the defendants offered to give delivery of it to the plaintiffs. It was a steel vessel twm hundred feet six inches long, forty feet broad and fourteen feet deep. It contained four tanks for the carriage of liquid cargo. It was not self-propelled. It was inspected by a salvage officer on behalf of the Commonw-ealth on 9th April 1945. Nos. 1 and 4 tanks were then dry and Nos. 2 and 3 contained about 1,000 tons of oil. On 11th April 1945 the Commonwealth endeavoured to salvage the vessel by lightening the buoyance by discharging some of the oil and towing the vessel off the reef. As a result the transverse bulkheads were strained and Nos. 2, 3 and 4 tanks contained about the same amount of oil ; the hull was straining badly, and on 20th April there was a constant oil slick spreading.

In October 1946 one Jarrett, an officer of the civil administration in New Guinea, told Bowser, who was then regional manager in New' Guinea for the defendant Commission, that he wanted to make an offer for an oil tanker, which he said w'as within a radius of 200 miles of Samarai. He would not give Bow'ser a more precise position. Jarrett made an offer of £50. This offer was chiefly for the oil, but was for the tanker as w'ell. Bowser told Jarrett the offer appeared too low, and that he could not consider it until Jarrett could tell him where the tanker was. Bowser suggested that Jarrett should see Sheehan, w'ho was then the district superintendent of the defendant Commission at Port Moresby. Jarrett then saw' Sheehan and told him he knew' of an oil tanker and wanted to buy it; that it was outside Samarai, and that only he, Jarrett, knew w'here it was, and that it contained oil. Sheehan asked Jarrett what price he W'as offering. Jarrett asked Sheehan what he thought would be a fair price. Sheehan said he did not know. Then Jarrett asked w'hether £50 would be a fair price. Sheehan again said he did not know. Jarrett said he was not particularly interested in the boat; that he was more interested in the oil. Sheehan suggested to Jarrett that he should make an offer. Jarrett agreed and dictated one. In this written offer Jarrett described the goods as “ Contents of wrecked vessel situated at Jormound Islands—Fuel oil ”. Sheehan told Jarrett he would not approve of the sale, as he did not know whether the

HIGH COURT

[1950-1951.

oiler was reasonalile, and would have to try to trace the oil tanker in tlie oflico lists. The next day Jarrett told Sheehan it was an

American vessel as far as he knew.

Sheehan replied that if it was

it would not be on the Commission’s lists.

Sheehan, however, had

authority to sell it even if it were an American vessel. He did not find it on the lists. He then sent a signal to the district officer at Samarai (Exhibit (5), stating that an application had been received for the purchase of “ fuel oil said to be on reef at Jormound Islands ” and asking whether the district officer knew anything about it. On 7th November 1941) one McMullen, who was the defendant Com­ mission’s liaison officer in New Guinea, told Sheehan he knew of a wrecked tanker on Jomard Island. Sheehan replied that he had received an offer of £50 for its contents. McMullen inquired whether Sheehan meant “ that American tanker He promised

Sheehan he would see what he could find out about it.

Later he

told Sheehan he did not get any information. In the same month, November 1946, one Davis, the general manager of the defendant Commission, was in New Guinea and wrote a memorandum to Bowser reading : “ I discussed with Mr. McMullen this morning the question of the tanker lying on a reef about a hundred miles north of Samarai. Mr. McMullen was good enough to indicate that he would send out a party and I suggest that Mr. Strange go with this party to establish whether she is worthwhile for sale as a salvage job. If there is equipment of value on her, she could be offered for sale at the termination of the Rabaul Sale whilst the buyers from the South who will be interested in such vessels as the Naroota are still in the area.”

Bowser believed Davis was referring to the same vessel as Jarrett. Bowser then spoke to McMullen, who said he was sending signals to the district officers.

In December 1946 Bowser took up a position in the Melbourne headquarters of the defendant Commission in charge of clearance of goods declared but not cleared in New Guinea.

On 5th January 1947 Sheehan wrote to the Australian Broad­ casting Commission at Port Moresby arranging for the broadcasting on 7th, 8th and 9th January of the following announcement;— “ The Commonwealth Disposals Commission invites tenders for an oil tanker wrecked on Jourmaund Reef approximately 100 miles north Samarai. The vessel is said to contain oil. . . . Tenders should be lodged not later than 25th January 1947.”

A copy of this letter was sent by Sheehan to the defendant Commission in Melbourne.

On 13th February 1947 Bowser sent a signal to Sheehan at Port

Moresby asking whether “ the vessel containing oil and approxi- 1950-I9al.

inately 200 miles off Samarai ” had been sold, and he received a

reply that no offers had been made.

On 10th March 1947 Sheehan again wrote to the Australian Broadcasting Commission arranging for a similar announcement to be made on 12th, 13th and 14th March.

Bowser referred to Currie, who was the sales superintendent of the defendant Commission in Melbourne, the copy of the Port Moresby announcement received from Sheehan. Tenders were then advertised for in the Melbourne papers from about 7th March. There were three such advertisements, the last being on 29th March. Whether the advertisements in Melbourne were all in the same terms as the Port Moresby announcement does not appear ; but the following advertisement appeared in the Melbourne Argus of 29th March 1947 ;—“ Tenders are invited for the purchase of an oil tanker lying on Jourmaund Reef, which is approximately 100 miles North of Samarai. The vessel is said to contain oil. Offers to purchase the vessel and its contents should be submitted to the Commonwealth Disposals Commission . . . and should be lodged not later than 2 p.m. March 31, 1947.”

About the middle of March the plaintiff F. E. McRae, who is a Melbourne merchant dealing in metals and chemicals in partner­ ship with the other plaintiff Keith McRae, as McRae Trading Company, and two other men saw' Currie at the Commission’s office in Melbourne. McRae said he had seen an advertisement regarding a “ wrecked tanker ” and would like to get additional information. Currie told him he had no further information than appeared in the advertisement, but that Bow'ser might know something. Currie also told McRae that from the very limited information available he did not think any considerable tender would be warranted. He then introduced McRae and the men with him to Bowser. Currie told Bowser that McRae was interested in the tanker on the Jourmaund Reef and would like additional information. Bowser said he was sorry he could not add to the information already given to McRae. He added that when he was in New Guinea he received an offer for “ the wreck and contents ” and that it was refused. McRae told Bowser either that he ŵas going or thought of going to New Guinea. He asked what surplus goods were available there, and if there were any other wrecks. Bowser replied there were wnecks in New Guinea, but he w'as not sure whether they had been sold,

HIGH COURT

[1950-1951.

and that McRae should talk to Sheehan about them when he reached

New Guinea.

Before tendering McRae looked at maps and could not find Jourmaund Reef but he found Jomard Reef. He took this to be the one with which he was concerned.

Bowser next saw the plaintiff F. E. McRae about 2 p.m. on 31st March 1947, when the latter put an envelope on the typiste’s table in the defendant Commission’s Melbourne office. Bowser asked McRae whether he had managed to get to New Guinea. McRae replied that he had not. He added “ that one often had a couple of hundred pounds on a horse on a Saturday and I might as well have a gamble on this ”. The plaintiff’s tender was as follows;—“ Offer for Vessel on Jourmaund Reef by McRae Trading Co. 345 Exhibition Street, Melbourne. 1 oil tanker as advertised ‘ Age ’ 29.3.47, ‘ Argus ’ 29.3.47. Lying on the Jourmaund Reef off Samarai. Price £285. Cheque enclosed deposit 20% £28.10.0.”

On 11th April the Commission wrote a letter to the plaintiff informing him that his tender had been accepted. The letter also stated that a sales advice note to cover the transaction would be forw’̂arded in the course of the next few days. On 15th April the sales advice note was sent to the plaintiffs by the defendant Commission. It states inter alia “ your offer to purchase, the general conditions contained in Form 0, and this acceptance shall constitute the contract ”. Form 0 contains four conditions, including Condition 3, which reads :—“ Condition of property ; The property shall be sold as and where it lies, with all faults, (if any), and save as expressly notified to the purchaser no warranty or condition whatsoever is given by the Commonwealth. While every effort shall be made to describe property correctly, the Commonwealth shall not be hable for compensation or otherwise by reason of any misdescription or alleged variation of property dehvered, from sample or property inspected. Where, however, any purchaser considers himself prejudiced by reason of any alleged misdescription or variation from sample or property inspected, the Commonwealth, at its discretion may make such adjustment as is fair and reasonable.”

During the first half of April 1947 native craft had been wrecked or blown out of their course by storms in the vicinity of the Solomons. Shortly after, Sheehan met Campbell, the Harbour Master at Port Moresby, and asked him how far along the coast the storms would extend. Sheehan added that the defendant Commission had “ a wrecked tanker for sale up Jomard way .

Campbell repbecl that it could be blown off or washed off the reef, but he could not say definitely. On 14th April Sheehan sent a signal to the district officer Samarai (Exhibit X) reading :—“ Would appreciate urgent reply details oil tanker Jourmaund Reef. Under­

stand vessel now moved under water and contents nil. Can this

be confirmed.”

Actually Sheehan had no information except what Campbell gave him. He had no understanding that a vessel had moved under water and that the contents were nil. He said he sent the signal in this form for the sake of brevity, and, with some hesitation, I beheve him. I can suggest no reason why he should be dis- beheved. The barge had not moved under water, and it is common ground that there was in fact no oil tanker there. To this signal Sheehan received the following reply on 17th April (Exhibit Y):— “ Large approx. 100 ft. barge type tanker carrying oil machinery etc. apparently drifted on reef Jomard Entrance high water during 1944. When inspected . . . 1945 large hole stern admitted sea.Machinery ruined. Understand oil still in hold but quantity

unknown, Vessel exposed low tide. Only partly submerged

high tide.Can inspect when districtvessel available........D.O.

Misima

Apparently Sheehan’s signal to Samarai was referred to the assistant district officer Misima.

'

On 15th April McRae asked Bowser whether he could give him a better position of the vessel, as otherwise he might spend some days searching for it. McRae mentioned that Jomard was more east of Samarai than north. Bowser said he would try to get some more information and would wire the district superintendent at Port Moresby, who Bowser said he assumed would obtain information from the district officers at Samarai and Misima. He also told McRae they were the people who would assist him in finding the locahty. McRae asked Bowser whether he could give the name and size of the tanker. Bowser replied that he could not. Bowser then suggested that what McRae was endeavouring to get was the latitude and longitude. McRae assented. Bowser then sent a signal to Sheehan at Port Moresby. On receipt of this signal Sheehan took it to the Harbour Master, Campbell, and asked Campbell whether he could’ give the informa­ tion. Campbell replied that he could, and appeared to work out bearings from a map and read them to Sheehan. Sheehan tele­ graphed them to Melbourne on 17th April. In this telegram the latitude was given as eleven degrees sixteen and a half minutes south and longitude one hundred and fifty-one degrees fifty-eight

HIGH COURT

[1950-1951.

minutes east. The contents of this telegram were telephoned to the plaintiffs and then confirmed by letter on 18th April. On 19th A|)ril Sheehan wrote to the Melbourne office confirming his telegram of 17th April and enclosing a copy of the reply he had received from the assistant district officer Misima about the vessel on the reef at Jomard Entrance and the ruined condition of its machinery. This letter was received in the defendant Com­ mission’s Melbourne office on 22nd April.

On 23rd April the plaintiffs paid the balance of the purchase money, £256 10s. Od.

On receipt by the j)laintiffs of the ])articulars of location the Gi'ppsland, which was then being altered for the King Island trade, was refitted for service in the tropics. A diver ŵas engaged and salvage equipment obtained.

On 24th April Sheehan received a letter from the general manager of the defendant Commission stating that payment for the oil tanker had been effected and that a copy of the sales advice note had been forwarded to Port Moresby. Sheehan then advised the assistant district officer, Misima, that the vessel had been sold, and that the inspection referred to in the latter’s telegram to Sheehan of 17th April, was not required.

In May 1947 Lindsay McRae, a brother of the plaintiffs, produced a copy of the sales advice note to Sheehan at Port Moresby. He had flown there with one Johnstone. Lindsay McRae said he had bought the tanker. Sheehan told him he could not personally deliver the tanker as he had never seen it, and that Lindsay McRae would have to go down to the district officer at Samarai or Misima and show him the sales advice note. He also told Lindsay McRae that Jarrett had made an offer earher, but that he did not know where Jarrett was. Further conversation followed, which is now rejected. It was admitted under the impression at the time that the McRae who produced the sales advice note to Sheehan was one of the plaintiffs. Lindsay McRae asked for the bearings of the tanker and Sheehan showed him the letter he had sent to Melbourne on 19th April containing the bearings. He told Lindsay McRae he had obtained them from Campbell, and introduced him to Campbell.

On 28th June the Gippslami left Sydney for Port Moresby and foundered on 24th July. The plaintiffs were on board, but they and the master and crew reached Port Moresby, where the Betty Joan was chartered by the plaintiffs for salvage operations. On 15th August 1947 Johnstone and Lindsay McRae proceeded in the Jessie from Port Moresby to the location given by the defendant

Commission. They went ashore and walked around the reef there. They saw no boat or ship or any sign of wreckage ; but they saw a log sixty feet long.

In October plaintiff F. E. McRae saw Bowser at the latter’s office in Melbourne and told him a cable had been received from New Guinea that a thorough search had been made for the tanker at the location given by the defendant Commission ; and that only a log was found ; but that there was a barge eleven or twelve miles away to the east. Bowser said he would signal New Guinea and endeavour to get some information. He then sent the following signal to Civil Administration Port Moresby, dated 17th October (Exhibit E) ;—“ Commission sold oil tanker located Jourmaund Reef to McRae Trading Company Melbourne. Grateful you check bearing suppUed by District Officer Misima April 1947, latitude eleven degrees sixteen and half minutes south longitude one hundred and fifty one degrees fifty eight minutes east. Previous advices indicated location approximately one hundred miles north Samarai. Firm alleges thorough search made for oil tanker in area specified but unable locate. Understand barge containing oil and machinery located approximately twelve miles from bearing specified. Appreciate advice indicating whether barge was con­ fused with oil tanker and any further details enable firm locate oil tanker. .. .Disposals ”.

On 11th December 1947 the acting general manager of the defendant Commission wrote to the plaintiffs (Exhibit I) setting out the following information received from the Acting Administrator of the Territory in reply to the defendant Com­ mission’s signal :—“ Investigation into the matter contained in the attached signal has disclosed that on the last maintenance trip to Jomard Reef Light on 29.7.47, a search was made for the tanker in question. The search was carried out by Mr. B. M. Ritchie of this Department and Lieiit. Sahsbury, R.A.N.R. (S) of H.M.A.S. Tarangau. No trace of the wreck was found, but a number of objects resembling ship’s frames were sighted in the position given by the District Officer Misima, and, as the barge (which is in fact an L.S.T. loaded with oil drums) was also sighted in its accepted position, there seems no doubt that the tanker has disintegrated and shpped into deeyjer water. There has been definitely no confusion between barge and tanker.”

After some correspondence between the solicitors for the parties the Commonwealth Crown Solicitor for the defendants wrote to the plaintiffs’ solicitors on 29th October 1948 (Exhibit R) stating that at the date of sale the vessel was located approximately in

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[1950-1951.

the ])o.sition mentioned in the defendant Commission’s letter to the plaintiffs of 18th April 1947 and that it was still there in May 1948. The letter proceeded to say the confusion that might have ai'isen from the Acting Administrator’s letter of 11th Decem­ ber was regretted and that the defendants were jirepared to make a refund or to make the vessel available.

However, 1 do not think that this oil barge ŵas an oil tanker as that term was understood in shipping circles in Melbourne and by the parties. In the American book by Day, published in 192.3, there is a glossary of terms used in the petroleum industry, and the term “ oil tanker ” is defined to include an oil barge. This book was said by Johnstone, an expert witness for the plaintiffs, to be authoritative, although Johnstone did not agree with that defini­ tion. But whatever may have been the meaning of “ oil tanker ” in America in 1923 I am satisfied that in 1947 in Australia an oil tanker was understood to be a vessel not merely specially con­ structed for the carriage of oil in bulk but also self-propelled and ocean-going. Currie thought an oil tanker would be self-propelled. When Bowser on 17th October inquired whether the oil tanker had been confused with the barge he indicated his understanding that they were different types of vessel. Therefore the defendants cannot rely on the barge being an oil tanker. Nor can they set up that the barge was sold but was misdescribed as an oil tanker and that they are expressly exempted from hability for misdescrip­ tion under the conditions of contract. If the defendants, knowing what the vessel they advertised was like, yet wrongly described it as a barge, it might be a case of misdescription, because an oil tanker and an oil barge are vessels and also have in common the feature of special construction for the carriage of oil in bulk, although a barge is not self-propelled or ocean-going. But neither Bowser nor Currie, nor any other servant of the defendants having any power or duty in connection with this transaction, thought that an oil barge was an oil tanker. What both the plaintiffs and the defendants had in mind throughout was an oil tanker as distinct from an oil barge. But there was no oil tanlcer to sell, and so there was no contract {Couturier v. Hastie (1) ). It was conceded by counsel for the plaintiffs that, if Jarrett had told the plaintiffs and the defendants that there was an oil tanker on the reef at Jomard Islands and thereupon the plaintiffs and the defendant Commission agreed on a sale, there would be no contract. But counsel also submitted that this was not the position because on 15th April 1947 the plaintiffs asked for the location of the vessel,

(1) (1856) 5 H.L.C. 673 [10 E.E. 1065].

and it was pin-pointed by giving latitude and longitude. Counsel submitted that the plaintiffs could assume from this that there was something valuable at the location, and that, as the plaintiffs acted upon this information to their prejudice, the defendants were estopped from denying the existence of an oil tanker there. But, to furnish ground for an estoppel the statement must have been made as an inducement. It was not made to induce a contract, as the tender had then been accepted. The inducement, if any, could only have been to pay the balance of purchase money, which was still unpaid on 15th April, and to proceed to talre delivery of the vessel at the location given. But I find that the only purpose the plaintiffs had in asking for the exact location, and that the defendant Commission had in giving it, was to save the time of the plaintiffs in looking for the vessel on the reef. The plaintiff, F. E. McRae, told Bowser as much on 15th April 1947. He admitted he had a conversation with Bowser on those lines.

Then as to the claim for damages for deceit or neglect of duty : The plaintiffs submit that the information in the telegram from the assistant district officer Misima to Sheehan on 17th April, stating that the vessel was a 100 ft. barge-type tanker and its machinery ruined, should have been disclosed to the plaintiffs forthwith or at latest on 22nd April 1947 when it was received in Melbourne. The balance of the purchase money was not paid until 23rd April. This information revealed that the vessel was not an oil tanker of a type the parties had in mind. Bowser then had a duty to inform the plaintiffs on 22nd April of the mutual mistake of the parties. But he remained silent and has failed to give a satisfactory explanation why he did so. Even if he thought that the plaintiff F. E. McRae had gone to New Guinea he could still have communicated with him or with the other plaintiff or with the office of the McRae Trading Company in Melbourne. The natural consequence of his silence was that the plaintiffs paid the balance of the purchase money, and went to the expense of searching for the oil tanker. But the relitting and equipment of the Gippsland and her dispatch to the wreck before it was surveyed was not a natural consequence. I find that Bowser, in keeping silent, intended these natural consequences, and that the defendant Commission is liable for the resulting damages to the plaintiffs. I assess the damages at £756 10s. Od.

1 find no further deceit or negligence.

1 give judgment for the plaintiffs for £756 10s. Od. As to the

costs I desire to give the parties an opportunity of being heard.

1 will hear argument if necessary in Melbourne on May 23rd at

9.30 a.m.

HIGH COURT

[1950-1951.

His Hojmouk awarded tlie plaintiffs lialf the costs of the action. From tlie above decision in so far as it was unfavourable to them the ])laintilfs a])pealed to the .Full Court of the High Court, and the defendants cross-appealed.

0. ,]. Gillard K.C. (with him L. S. Lazarus), for the ap])ellants. 1. The Conmiission agreed to sell and the plaintiffs agreed to puriFase “ an oil tank'er lying on Jourmaund Reef ” for the sum of i'285 on the terms and conditions indorsed on the tender foi'm on Exhibit R. 2. The agreement is com]msed of the following documents ;—(a) Advertisement in Argus 29/3/47, incorporated l>y reference in .Exhibit H. (b) Tender Form, Exhibit B. (c) .Letter dated 11 th A|)ril 1947 from the Commission to the plaintiffh. 3i. (a) The Court is bound to look at the whole corres])ondence between the jiarties to discover if and when the parties entered into contractual relations {Hussey v. llorne-Fayne (1); Williams V. Brisco (2), ])cr Jessel M.R.). (6) But, tliere being a clear acceptance of the tender by letter dated 1 Lth April 1947, any corresjjondence thereafter was otiose {Perry v. Suffields Ltd. (3) ; LjCnnon v. Scarlett dh Co. (4) ). (c) If any new term were intended to be introduced into the contract by reference to the “ sales advice note ” so as to defeat the clear acceptance of the tender, then the expression of such intention should have been clear and unambiguous {Proprietors &c. of the English c& Foreign Credit Co. Ljd. V. Arduin (5), per Lord Westbury). {d) The mere reference in the letter of 11th Ayiril to the forwarding of a sales note was at the most an ambiguous introduction of a new term into the con­ tractual relations, {e) By the letter a definite contract of sale consisting of an accepted tender, the notiheation of acce])tance thereof and the conditions therein set out was exjnessly established. 4. The contract so established requires the Commission to deliver “ an oil tanker ”, and a failure to do so is a breach of condition, at least {Couclrman, v. Hill {(>) ) : cf. s. 18 of the Goods Act 1928 (Viet.). 5. The exonerating clause in clause 8, Exhibit B, only covers “ wa.rranty or guarantee ”, not “ condition ”, a-nd accordingly does not exonerate the Commission from delivering “ an oil tanker ” {Wallis, Son & Wells v. Pratt & Haynes (7) ; Baldry v. Marshall (8) ; Andrews Liras. {Bourne­ mouth) Ltd. V. Singer & Co. Ljd. (9); Nicholson & Venn v. Smith

(1) (187!)) 4 Ai>p. Gas. 311.(6) (1947) K.B. .554

(2) (1882) 22 Gh. I). 441, at p. 448.(7) (1911) A.G. 394.

(3) (1916) 2 Gh. 187.(8) (1925) 1 K.R. 260.

(4) (1921) 29 G.L.R. 499.(9) (1934) 1 K.B. 17.

(5) (1871) L.R. 6 H.L. 64, at p. 79.

Marriott (1) : cf. Hope v. R.C.A. Phototone of Australia Pty. Ltd. (2) ; UEstrange v. F. Graucob Ltd. (3). 6. The provision that the goods are sold “ as and where they lie with all faults (if any) ” means “ an oil tanker ” with all faults and does not exonerate the Commission from delivering “ an oil tanker ” {Shepdierd v. Kain (4) ; Taylor v. Bullen (5); Coivdoy v. Thomas (6) ; Robert A. Munro A Co. Ltd. v. Meyer (7), per Wright J.) : cf. CJoumîoN.

Champanhac A Co. Ltd. v. Waller A Co. LmI. (8), per Slade J. 7. Alternatively by the terms of reference in the letter of 11th April 1947 the contract is comprised of the documents mentioned in clause 2 above, together with the sales advice note. 8. In the absence of proof the the plaintiffs received or knew of Form 0, it is submitted that they are not bound by the conditions. There was no proof that Form 0 was ever sent to or received by the plaintiffs, and until the conclusion of the case no reliance was placed on this document in the pleadings. [He referred to Cheshire A Fifoot, Law of Contracts, 1st ed. (1945), p. 87 ; Olle v. Marlborough Court Ltd. (9).] 9. If Form 0 is incorporated, then ;—[a) In order to relieve the Commission from habihty for non-delivery, it must be expressed in clear and unambiguous terms. “ An ambiguous document is no protection ” (per Iiord Macnaghten in Flderslie S.S. Co. L,td. v. Borthwieh (10)): see also MAllis, Son A Wells v. Pratt A Haynes (11), per Fletcher Moulton L.J. ; s.c. in House of Lords (12) ; Chartered Bank of India, Australia A China v. British India Steam Navigation Co. IJd. (13); Szymonowski A Co. v. Beck A Co. (14). (6) Form 0 was devised alio intuitu and was never intended to relieve the Commission from its responsibility to carry out the fundamental condition of delivering an oil tanker ; see Tigers Bros. v. Sanderson Bros. (15) ; J. Aron A Co. V. Comptoir Wegirnont (16); Szymonowski s Case (17); Green v. Arcos (18) ; Wilensko Ac. v. Fenwick A Go. {West Hartlepool) IM. (19). 10. To evade responsibihty to deliver an oil tanker the defendants aver there is no contract because—■

(a) the parties were under a mutual mistake of fact as to the existence of an oil tanker on Jourmaund Reef, or (6) alternatively it was an implied condition that there was an oil tanker lying on

(1) (1947) 177 L.T. 189.(10) (1905) A.G. 93, at p. 96.

(2) (1937) 59 G.L.R. .348.(11) (1910) 2 K.B. 1003, at p. 1016.

(3) (1934) 2 K.B. 394.(12) (1911) A.G. 394.

(4) (1821) 5 B. & Aid. 240 [106

(13) (1909) A.G. 369, at p. 375.

E.R. 1180].

(14) (1923) 1 K.B. 457, at pp. 464,

(5) (18.50) 5 Ex. 779, at p. 784 [155

466 ; (1924) A.G. 43, at p. 48.

E.R. .341, at p. 343].

(15) (1901) 1 K.B. 608.

(6) (1877) .36 L.T. 22.(16) (1921) 3 K.B. 435.

(7) (1930) 2 K.B. 312, at p. 327.(17) (1923) 1 K.B., at p. 467.

(8) (1948) 2 AU E.R. 724, at p. 726.(18) (1931) 47 T.L.R. 262, at p. 3.36.

(9) (1949) 1 K.B. 532, at p. 549.

(19) (1938) 3 All E.R. 429.

HIGH COURT

[1950-1951.

tlie reef.

11. As to the mutual mistake :—(a) There was no mutual

mistake on the facts. There was a vessel which the Commission and Bow'ser chose to describe as an oil tanker, and this was the subject of tlie contract. The nature of the vessel which Bowser or Currie intended to sell is irrelevant; the vendor was the Com­ mission (or Commonwealth). [He referred to Clare v. Lamb (1); Earlier v. Janson (2).] (6) The defendants Bowser and Currie and the Commission were negligent in representing that there was an oil tanker on Jourmaund Reef which induced the plaintiffs to enter into contract; they cannot rely upon any mistake induced by their own carelessness {Anson on Contracts, 19th ed. (1945), p. 159 ; Pollock on Contracts, 12th ed. (1946), pp. 400-402). Bowser on behalf of the Commission assumed the risk of the ability of the Commonwealth to perform the contract entered into with the plaintiffs. [He referred to Williston, Law of Contracts (1938), vol. 1, p. 31. s. 20 ; Smith v. Hughes (3); Raffies v. Wichelhaus (4); Scott V. Littledale (5).] (c) Assuming that there was no contract initially, then after the representation imphed in the letter of 18th April 1947 written by the defendant Currie on behalf of the Commission and the conversation wuth Bowser at that time, the Commission is estopped from denying the existence of the contract or of the oil tanker {Low v. Bouverie (6), per Kay L.J. ; Cornish V. Ahington (7) ; Smith v. Hughes (8); Sullivan v. Constable (9); Balkis Consolidated Co. Ltd. v. Tomkinson (10) ; Consensus <&

Estoppel, by Prof. Hughes, 54 L.Q.R. 370 ; Cheshire and Fifoot, Law of Contracts (1945), pp. 194-196; Salmond d Williams, Law of Contracts, 2nd ed. (1945), p. 239; Pollock, Principles of Contract, 12th ed. (1946), pp. 421, 501). {d) Since Bell v. Lever Bros. Ltd. (11) the proper analysis of the law is that the fact of non-existence does not bring about an avoidance on the ground of mistake, but results in non-performance of an implied condition as to the continued existence of the subject matter (per Denning L.J. in Solle v. Butcher (12) ) : cf. Barr v. Gibson (13) ; and Couturier v. Hastie (14) ; ss. 11,

12, Goods Act.

The test is ; On w^hat basis did the parties intend

(1) (1875) L.R. 10 C.P. 334, at p.

(8) (1871) L.R. 6 Q.B. 597, at pp. 606,

338.  607.

(2) (1868) L.R. 3 C.P. 303.(9) (1932) 48 T.L.R. 267, at p. 369.

(3) (1871) L.R. 6 Q.B. 597, at p. 606.

(10) (1893) A.C. 396, at pp. 407, 410,

(4) (1864) 2 H. & C. 906 [159 E.R.

412.

375].

(11) (1932) A.C. 161.

(5) (1858) 8 El. & Bl. 815, at p. 821.

(12) (1950) 1 K.B. 671, at p. 691.

[120 E.R. 304, at p. 306].

(13) (1838) 3 M. & W. 390, at pp. 399,

(6) (1891) 3 Ch. D. 82, at p. 111.400 [150 E.R. 1196, at pp. 1200,

(7) (1859) 4 H. & N. 549, at p. 556

1201].

[157 E.R. 956].

(14) (1856) 5 H.L.C. 673 [10 E.R.

1065].

to contract ? Here Bowser and the Commission intended to sell the vessel on the reef of Jourmaund Island and represented it as an oil tanker. The plaintiffs purchased the vessel so described. No implication can be made in these circumstances that it was fundamental to the contract, or there was a condition precedent thereto, that an oil tanker existed. 12. The duty of the Com­ mission or the Commonwealth was to deliver an oil tanker. What was tendered was an oil bajge, not an oil tanker. Even if there was formal delivery of the barge qua tanker at Port Moresby, the plaintiffs are not to be taken to hav^e accepted until they have had a reasonable opportunity of examining the vessel (ss. 39 and 41, Goods Act 1928 (Viet.) ). 13. The plaintiffs are entitled to the estimated loss directly and naturally resulting in the ordinary course of events from the seller’s breach of contract (s. 55 (2), Goods Act 1928). 14. In the alternative, the plaintiffs sue for damages for deceit arising out of—(a) the advertisement Exhibit A; (6) the letter Exhibit D. 15. The Commission and the Commonwealth were vicariously guilty of deceit through their officers, as at least McMullen knew of the oil barge and deliberately described it as an oil tanker. The others were so ignorant of the true position that with the knowledge they possessed they could not reasonably have believed that “ an oil tanker ” was lying on Jourmaund Reef 100 miles north of Samarai. [He referred to Derry v. Peek (1), per Lord Herschell; Kerr on Fraud and Mistake, 6th ed. (1929), p. 33.] They were recklessly careless as to whether the statement was true or false. 16. In the alternative, knowledge of the true facts must be imputed to the Commonwealth, which (having this knowledge) made a false representation to induce persons to purchase an oil tanker. See Pearson & Son Ltd. v. Dublin (2); London County Freehold & Ljeasehold Properties Ltd. v. Berkeley Property Investment Co. Ltd. (3). 17. “ There is a duty upon a seller to disclose to a buyer the fact that material representations true when made have become false before final consummation of the sale ” {Williston, Law of Contracts (1938), vol. 5, p. 4187, s. 1499 ; Davies v, London & Provincial Marine Insurance Co. (4); Dalgety & Co. Ltd. v. Australian Mutual Provident Society (5); Brownlie v. Campbell (6) ; With v. O'Flanagan (7) ; Bradford Third Equitable Benefit Building Soc. v. Borders (8); Robertson

(1) (1889) 14 App. Gas. 337, at p. 376.

(6) (1880) 5 App.Cas. 925, at pp. 949,

(2) (1907) A.C. 381.

950. .

(3) (1936) 2 All E.R. 10.39.(7) (1936) Ch. 575.

(4) (1878) 8 Ch. D. 469, at p. 475.(8) (1941) 2 All E.R. 205, at p. 220.

(5) (1908) V.L.R. 481, at p. 506;

14 A.L.R. 299, at p. 308.

HIGH COURT

[1950-1951.

fe Moffat V. Belson 1) ; Salmond & Williams, Law of Contracts, 2ned. (1945), p. 247 ; Cheshire and Fifoot, Law of Contracts (1945), p. 173). See also per Rower L.J. in Sco v. Coulson (2); cl. Arkwright v. Newhold, (3). 18. As to damas for deceit, the plaintiffe are entitled to such expenses as they have incurred by reason of the misreprentation, setti off any benefit gained by them {Halsb'ury, 2nd ed.vol. 23, p. 60; Mullett V. Mason (4) ; Nicholls v. Taylor (5) ; Neal v. Ayers (6) ; Potts V. Miller (7) ; McAllister v. Richmond Brewing Co. A.̂/S.IL. Pty. Ltd. (8); Milne v. Marwood- (9); Burrows v. Rs (10); Barley v. Walford (11) ). 19. As to the action for negligence, it is submitted that, because of the relationship created by the tender and its acceptance, both parties were under a duty to co-operate in doing such things as were necessary to carry out the teims of the contract {Mackay v. Dick (12), per Lord Blackburn

Marshall v. Colonial Bank of Australasia (13); Mona Oil Equipment & Suj>ply Co. V. Rhodesia Railways Ltd. (14); Luxor {Eastbourne) Ltd. V. Cooper (15), per Viscount Simon L.C.). As there was great doubt as to the true location of the subject matter, the Commission, in order to give effectual delivery, was under a duty to give a better location than set out in the advertisement and sales advice note. 20. In carrying out this co-operation the law would treat the Com­ mission and the plaintiffs as “ neighbours ”, thereby requiring the Commission to exercise proper care in giving the location of the sub­ ject matter of the contract. Heaven v. Pender (16); M’Alister (or Donoghue) v. Stevenson (17) ; Le Lievre v. Gould (18) and Old Gate Estates Ltd. v. loplis (19) are dtinguishable. [He referred to Grant v. Australian Knitting Mills 0).]. See also Winfield, Law of

Tort, 3rd e

(1946), pp. 377-379 ; International Products Co. v. Erie

R.R. Co. (21). Cf. een Seed Co. v. Hong Kong & Shghai Banking Corporation (22) ; Halsbury, 2nd ed., vol. 7, p. 147. 1. As to damas for breach of contract, omnia praesumuntur contra spolirum (Wilson v. Northampton K Banbury Junction Railway Co. (23) ). 22. What was ]iurchased andsold was an oil tanker.

V.L.R. 555. Ap

as. 251, at p. 263.

192 Ch. 249, at p. 252.1 C. 632, at pp. 647,

18T Ch. D. 301.

.R. 1 C.P. 659.All E.R. 1

4, at p. 1017.

93V.L.R. 119.A.C. 108, at118.

943 C.L.R. 524.11 Q.B.D. 5

64 C.L.R. 282, at p. 294.A.C. 562.

42 S.R, (N.S.W.) 187; 1 Q.B. 491.

.N. 147.3 All E.R.

9.

A.C. 85, at. 103.

(9) (

15 C.B. 778 [139 E.R.

244 N.Y. 331.

Q.B. 816, at p. 834.245 N.Y. 377.

Q.B 197 [115 E.R. 1249].

L.R. 9 Ch. App.

and the plaintiffs should be compensated for the failure to deliver, remembering that the contract provided for delivery at some far distant place, thereby requiring the plaintiffs to incur expense [Monarch. S.S. Co. Ltd. v. Karlshanms Oljefabriker (1) ; Victoria Laundry [Windsor) Ltd. v. Newman Industries Ltd. (2) ). Assum­ ing “ foreseeability ” to be necessary for an award of substantial damages (see per Denning J. in Minister of Pensions v. Chennell (3), the nature of the contract required the plaintiffs to take delivery, involving salvage operations. The plaintiffs were bound to accept delivery, which required them to undertake expensive provision therefor. It was “ on the cards ” that the plaintiffs, having acquired such a valuable thing cheaply, would make all prepara­ tions to recover it. 23. Difficulty in assessing damages is no reason for refusing substantial damages. It is necessary to distinguish between cases where there is no proof of loss at all and those in which there is difficulty in proving the value of the loss [Chaplin V. Hicks (4); Hoive v. Teefy (5)); Cf. Sapwell v. Bass (6); Fink V. Fmk (7).

J. B. Tail K.C. (with him P. Murphy), for the respondents. Logically the first question is whether any enforceable contract arose out of the circumstances of this case. It is submitted, in the first place, that—unless the barge is to be regarded as a “ tanker ”—Webb J. was right to the extent to which he decided, on the authority of Couturier v. Hastie (8), that the purported contract was void. If, however, it must be assumed that there was a contract, the conditions of the sales advice note are neces­

sarily a jiart of it.

It may be that the letter of 11th Ajiril 1947

advising the plaintiffs that their tender was accepted fixes the day of acceptance ; but this letter refers to the sales advice note. It is submitted, therefore, that the note fixes the date ; and this note is not pleaded as part of the contract. It may well be that great difficulty could occur in reconciling and applying provisions of the various documents which would have to be looked at as constituting the contract; but the parties themselves (including the plaintiffs) are to blame for that. If they will incorporate documents in stereotyped form which are not appropriate and then add further provisions by correspondence, they take on

(1) (1948) A.C. 196, at pp. 204, 210.(6) (1910) 2 K.B. 486.

(2) (1949) 2 K.B. 528.(7) (1946) 74 C.L.R. 127.

(3) (1947) K.B. 250.

(8) (1856) 5 H.L.C. 673 [10 E.R.

(4) (1911) 2 K.B. 786.1065].

(5) (1927) 27 S.R. (N.S.W.) 301 ;

44 W.N. 102.

VOL.

LXXXIV.—26

HIGH COURT

[1950-1951.

tliemselves the burden of difficulties of interpretation; but that does not mean that, when they do incorporate a particular document which presents difficulty, the Court can treat it as not being part of the contract. If there was a contract, the sale was by descrip­ tion, and what the plaintiffs got was an “ oil tardier ” within the description of the thing sold. The test is whether the thing delivered (or tendered) differs so greatly from the thing described that they are really different things. That is not so here. There is no implication that what is sold is of any substantial value ; indeed, the tender price suggests otherwise. The only implication is, under the Goods Act (Viet.), that the thing sold shall be of merchantable quality. Whatever provisions of the documents may be inappropriate, the exception relating to misdescription is certainly not so. It precisely meets this case. If the barge was not a “ tanker ”, then the exception applies. Such an exception is clearly intended to put the responsibility on the buyer. It is the sort of provision one would expect to find in contracts of sale made by the Disposals Commission. The proper measure of damages for non-delivery of the thing contracted to be sold is the estimated loss directly and naturally resulting in the ordinary course of events {Pollock on Contracts, 12th ed. (1946), p. 529). Regard must be had to such consequences as may reasonably be supposed to be in the contemplation of the parties at the time the contract was made. The buyer is entitled to be put in the position in which he would have stood if the thing sold had been delivered {Williams Bros. V. Ed. T. Agius Ltd. (1) ; Benjamin on Sale, 7th ed. (1931), p. 1001 ; Goods Act (Viet.), s. 51 (3) ). See also Hasell v. Bagot Shakes & Lewis IM. (2). The true practical measure of damages here on the assumption that there was non-dehvery is at most the sum the plaintiffs were prepared to pay for what they expected to get—the tender price of £285. An objection to many of the items of damage claimed by the plaintiffs is that they were not proved in the sense of having been shown to flow from the non­ delivery. Moreover, the loss of the ship Gifpsland could not have been within the contemplation of the parties. As to the expense of the salvage expedition as a whole, it does not appear that this was lost because there was no tanker at the place specified. If there had been a tardier there but it had proved not worth the expense of salvage, the plaintiffs would have had the same loss, but it would not have been due to any breach of contract. As to deceit, it is submitted that there is no warrant in the evidence for the decision of Webb J. against the defendants. The most

(1) (1914) A.C. 510.

(2) (1911) 13 C.L.R. 374, at p. 381.

that appears from the evidence is innocent—not fraudulent—• Weld-Blundell v. Stephens (2).] There is no parallel between this case and Chaplin v. Hicks (3). In the latter it was certain that a prize of fixed value would go to someone. In the present case it cannot be shown that the plaintiffs would have received anything of value under the contract.

misrepresentation. As to the claim on the basis of negligence, it 1950-1951.

does not appear that at the relevant time the defendants were

under any duty of care in relation to the plaintiffs. See Charlesworth

on Negligence, 2nd ed. (1938), p. 14. In any event the observation

aheady made as to the loss of the expense of the salvage expedition

would apply similarly on the question of damages under this

head. [He referred to Mayne on Damages, 11th ed. (1946), at

pp. 75 et. seq., and, in particular, as to damages in tort, to Re

0. J. Gillard K.C., in reply.

Cur. adv. vult.

The following written judgments were delivered ;— awarded the plaintiffs one-half of the costs of the action. The plaintiffs appeal, asserting that they are entitled to damages far in excess of £756 10s. Od. The defendants cross-appeal, asserting that the maximum amount recoverable by the plaintiffs on any view of the case was £285. The amounts actually claimed by the statement of claim were, on the basis of one set of allegations, some £250,000, and, on the basis of another set of allegations, some

Dixon and Fullagar JJ. This is an appeal from a judgment

of Webb J. in an action in which the plaintiffs claimed damages

on three causes of action alleged alternatively—-breach of contract,

deceit and negligence. The judgment, as passed and entered, was

in favour of the plaintiffs against the Commonwealth Disposals

£10,000.

The case presents serious difficulties, the facts being in some respects of an extraordinary character. Some aspects of them are probably not fully explained by anything that appears in the evidence. They are summarized chronologically in the judgment of Webb J., and that summary need not be repeated here. Though it may be necessary for some purposes to go back in point of time, we think that, for the purposes of this appeal, the proper starting-

(1) (1921) 3 K.B. 560.(3) (1911) 2 K.B. 786.

(2) (1920) A.C. 956, at pp. 983, 984.

HIGH COURT

[1950-1951.

point is the acceptance by the Commission of a tender by the l>laintiffs for the purchase from the Commission of a wrecked or stranded oil tanker. It would be premature to speak of that acceptajice as creating a contract, because the defendants have contended throughout that the “ contract ” was “ void ”, or, in other words, that no contract was ever made. Only one thing need be said before jnoceeding to the starting point. In the assumed background of the case lay the facts that during the war a considerable number of shi])s, including “ oil tankers ”, became wrecked or stranded in the waters adjacent to New Guinea, that after the war the C(jmmission had the function of disposing of these as it thought fit, and that a purchaser from the Commission of any of these wrecked or stranded vessels might, but not neces­ sarily would, make a very large profit by salving and selling the vessel, or the materials of her hull and equipment, or her cargo. The realization of a profit in this way (and the evidence suggests that a purchaser would not contemplate a realization of profit by an immediate resale of what he had bought as such) could, of course, only be achieved after the expenditure of large sums of money. Such a purchaser would naturally regard himself as acquiring, at best, a chance of making a profit. But he would not regard himself as acquiring a certainty of making a loss.

In the Melbourne newspapers, Affe and Argus, of 29th March 1947, appeared an advertisment inserted by the Commission. The advertisement read:—“ Tenders are invited for the purchase of an OIL TANKER lying on JOURMAUND REEF, which is approximately 100 miles NORTH OF SAMARAI. THE VESSEL IS SAID TO CONTAIN OIL. OFFERS TO PURCHASE THE VESSEL AND ITS CONTENTS should be submitted to the COMMONWEALTH DISPOSALS COMMISSION, Nicholas Build­ ing, 37 Swanston Street, Melbourne, indorsed ‘ OFFER FOR VESSEL ON JOURMAUND REEF ’, and should be lodged not later than 2 p.m., March 31, 1947.” In response to this advertise­ ment, the plaintiffs, who are brothers trading in partnership, submitted a tender dated 31st March 1947. The tender was on a printed form. It was headed “ Offer for vessel on Jourmaund Reef ”. The form was divided into columns. In a column headed “ Description of Goods ” the words “ 1 oil tanker lying on Jourmaund Reef as advertised Age, Argus, 29/3/47 ” were inserted. In the next column, which was headed “ Location of Goods ” the words “ On Jourmaund Reef, off Samarai ” were inserted. The price quoted was £285, and a cheque for £28 10s. Od. being the required deposit of ten per cent, was forwarded with the tender.

Indorsed on the printed form of tender were a number of con­ ditions. On 11th April 1947 the Commission wrote to the plaintiffs a letter saying ;—“ With reference to your tender of 31st March 1947, I desire to advise that your offer of £285 net has been accepted. A sales advice note to cover this transaction will be forwarded in the course of the next few days.” This letter was followed by another letter of 15th April 1947, which says :—“ I wish to inform you that your offer to purchase dated 31.3.47 is accepted for the quantities, the items, and at the price set out hereunder and/or in the attachment hereto bearing the same sales advice number as this acceptance ”. Below appear the words “ One (1) Oil Tanker including Contents wrecked on Jourmaund Reef approximately 100 miles north of Samarai. Price £285.” Then come some provisions as to payment and delivery, followed by the signature on behalf of the Commission. After the signature come the words “ Your offer to purchase, the general conditions contained in Form 0, and this acceptance, shall constitute the contract. Kindly acknowledge receipt of this communication by return post ”. Finally, certain further “ terms ” are set out. The plaintiffs apparently did not, by return post or otherwise, acknow­ ledge in writing the receipt of this remarkable “ communication

Form 0 is a printed form which contains a number of “ con­ ditions of sale ”, most of which are entirely inappropriate to the particular case.

The contention of the Commission that no contract ever came into existence between itself and the plaintiffs was based on extrinsic facts which will have to be considered in a moment. It was not denied that, apart from those facts, a contract would have been made, and, on the assumption that a contract was made, a good deal of argument took place as to what were the terms of that contract. It will be convenient to deal with this

matter at this stage.

No less than five documents are involved—■

the advertisement, the tender, the letter of 11th April, the letter of 15th April, and “ Form 0 ”. Mr. Gillard, for the plaintiffs, contended that the terms of the contract made were to be found in the first three documents only. He said that the letter of 11th April was an unequivocal acceptance of the offer contained in the tender, that the reference to “ sales advice note ” was not to be under­ stood as contemplating the addition of further terms so as to make the letter in effect a counter-offer, and that the letter of 15th April was merely an ineffective attempt to add further terms to a contract which was concluded on the receipt of the plaintiffs’ letter of 11th April. He referred to a well-known line of cases

HIGH COURT

[1950-1951.

of which Bellamy v. Debenham (1) and Lennon v. Scarlett & Co. (2) are good examples. Mr. Tait, for the Commission, contended that the plaintiffs must be taken to have accepted the terms set out and referred to in the second letter, and that the terms of the contract were to be found in all five of the documents. He admitted that in the terms so found there was overlapping and inconsistency, and that some of those terms were entirely inappro­ priate to the subject matter of the contract, but he said that these facts merely meant that difficult problems of construction might arise. We are disposed to accept the view put by Mr. Gillard, but the question does not seem to us to matter, and for this reason. The only condition on which Mr. Tait affirmatively relied was a condition which is contained in clause 8 of the terms indorsed on the tender form. That clause provides that the goods “ are sold as and where they lie with all faults ” and that no warranty is given as to “ condition description quality or other­ wise ”. This clause cannot, in our opinion, help the Commission in this case. What the Commission sold was an “ oil tanker ”. It was, therefore, a condition of the contract that what was supplied should conform to the description of an oil tanker, and it is settled that such a clause as clause 8 has no application to such a con­ dition : see, e.g., Wallis, Son <£ Wells v. Pratt Haynes (3) and Robert A. Munro & Co. Ltd. v. Meyer (4) : and cf. Shenherd v. Kain (5).

There was, however, another communication from the Com­ mission to the plaintiffs, which is of considerable importance. The accepted tender described the subject matter as an “ oil tanker lying on Jourmaund Reef as advertised Age, Argus, 2913/4:7 ”. The advertisement described her as “ lying on Jourmaund Reef, which is approximately 100 miles North of Samarai ”. Now there appears to be no reef anywhere in the locality which is charted or officially known as “ Jourmaund Reef ”. There is a channel between two islands or reefs charted as “ Jomard Entrance ”, and a few miles to the east of that channel is an island or reef charted as “ Jomard Island ”. Jomard Island, however, is not approximately 100 miles from Samarai, but approximately 170 miles from Samarai, and its bearing from Samarai is not North but a little South of East. The plaintiffs, having bought as they thought, their tanlcer, looked for “ Jourmaund Reef ” on a map. They, of course, failed to find it, but they found Jomard

(1) (1890) 45 Ch. D. 481.(4) (1930) 2 K.B. 312.

(2) (1921) 29 C.L.R. 499.

(.5) (1821) 6 B. & Aid. 240 [106 E.R.

(3) (1911) A.C. 394.

1180].

Island, and thereupon, not unnaturally, asked the Commission to give them the precise latitude and longitude of the tanker. The Commission gave a latitude and longitude by telephone on 18th April, and confirmed this by a letter written on the same day. The letter read ;—“ Confirming our telephone conversation of this morning, in connection with the location of the Oil Tanker on Jourmond ” {sic) “ Reef, I wish to advise it is located as follows :—Latitude 11 degrees 16-| minutes South : Longitude 151 degrees 58 minutes East ”. The result of this letter was to resolve any ambiguity in the description of the locahty of the tanker and to identify with precision, as against the defendant Com­ mission, the place referred to in the relevant documents as the place where the thing which they were purporting to sell was

lyiiig- __

_

Now, the simple fact is that there was not at any material time any oil tanker lying at or anywhere near the location specified in the letter of 18th April. There was, at a point about eleven miles east of the location specified, a wrecked vessel described as an “ oil barge ”. Some years before 1947 strenuous but unavailing efforts to salve this vessel had been made by a fully equipped expedition sent out by the Commonwealth Salvage Board. It was contended before Webb J., and also, though faintly, before us, that this vessel was a tanker and that dehvery of her to the plaintiffs would constitute performance of the contract by the Commission. Webb J. rejected this contention, and the evidence clearly establishes that a “ tanker ”, according to common under­ standing, is a self-propelled, ocean-going vessel, fully equipped both for navigation and for the carriage of oil in bulk. A barge is merely a floating repository for oil, adapted to be towed, but not otherwise capable of movement under control. The existence of the wrecked barge in question here is not, we think, a directly relevant factor in the case, though it may serve to explain to some extent how a rumour that there was a wrecked tanker somewhere began to circulate in the offices of the Commission.

We say advisedly that such a rumour began to circulate, because there was indeed no better foundation for any supposition on the part of the officers of the Commission that they had a tanker to sell. They had no more definite information than was derived from an offer by a man named Jarrett to buy for £50 the contents of a wrecked vessel, which he said was within a radius of 200 miles from Samarai, and from what can be quite fairly described as mere gossip. The reckless and irresponsible attitude of the Com­ mission’s officers is clearly indicated by the description in the

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[1950-1951.

advertisement of the locality of the tanker. In an even worse light appears an attempt wliich was made later, without any foundation whatever, to suggest that at the time of the making of the contract there had been a tanker in the place specified but that she had since )>een washed off the reef in a storm. Unfortunately the plaintiffs, for their part, took the matter seriously. They believed, and there is evidence that they had some reason for believing, that an oil tanker wrecked at the place indicated was likely to prove a profitable proposition, and accordingly they paid on 23rd April the balance of their purchase money, and then proceeded to fit up a small ship, which they owned, with diving and salvage equipment, and they engaged personnel, and proceeded from Melbourne to New Guinea. It is sufficient at this stage to say that they expended a large sum of money in discovering that they had bought a non-existent tanker.

The plaintiffs, as has been said, based their claim for damages on three alternative grounds. They claimed, in the first place, for damages for breach of a contract to sell a tanker lying at a particular place. Alternatively they claimed damages for a fraudulent representation that there was a tanker lying at the place specified. In the further alternative, they claimed damages for a negligent failure to disclose that there was no tanker at the place specified after that fact became known to the Commission. The second and third of these alleged causes of action depend wholly or partly on certain further facts which have not so far been mentioned. On 19th April 1947 a telegram was sent from the District Officer at Misima to the Port Moresby office of the Commission, which read : “ Your S4382 stop Large approx. 100 ft. barge type tanker carrying oil machinery etc. apparently drifted on reef, Jomard Entrance high water during 1944 stop When inspected by Lieut. Middleton 1945 large hole stern admitted sea Machinery ruined stop Understand oil still in hold but quantity unknown Vessel exposed low tide only partly submerged high tide Can inspect when district vessel available ”. This unquestionably refers to the wrecked barge. How and why this telegram came to be sent is one of the minor mysteries of this case ; no Port Moresby message numbered S4382 was produced. It seems reasonable to infer that the plaintiffs’ request for a precise “ fix ” for their tanker prompted the making of inquiries which ought to have been made much earlier, and that the missing “ S4382 ” was a belated attempt to find out whether the Commission had really had anything to sell to the plaintiffs. On 14th April the Port Moresby office of the Commission had telegraphed the District

period. There is no evidence as to her earnings in the past. To allow £50 per week does not seem unreasonable, and at that rate the plaintiffs should be allowed £500 under this head.

The next four heads of claim are heads under which we think that the plaintiffs are entitled to recover damages. But, whereas one would have expected that the claim in each of these four cases would be capable, if not of precise computation, at least of a close approximation, we find that the evidence is for the most part of the vaguest kind. In most cases it is not possible to do more than make an estimate as best one can.

The fourth claim is made under the head of travelling expenses. It is difficult to avoid the conclusion that better evidence could have been given about this. It is said by Mr. Laird to include £200 for the cost of searching for the wreck, and, as such, may be taken to include the cost incurred by McRae and Johnstone in going from Port Moresby to Samarai and the hire of the Jessie. We know also that McRae and Johnstone travelled by air from Melbourne to Port Moresby, and it seems proper to allow a further sum of £200 in respect of this expense. Beyond this, either the evidence is too vague to justify any claim or it shows that the claim is unjustified or made under another head. The plaintiffs should recover £400 under this head.

The fifth claim is made under the head of “ Ship’s Stores, etc.”. The plaintiffs would, we should think, be entitled to the value of coal and other stores consumed before the Gippsland foundered but not for what went down with the ship. So far as coal is concerned, an invoice in Exhibit NN shows that about sixty tons was loaded at Bowen at a cost of about £100, and a note on the invoice states that the balance on board when the ship went down was twenty-five tons. Since Bowen is about half-way between Sydney and Port Moresby, this probably justifies an estimate that the ship had used about seventy tons between leaving Sydney and foundering and an allowance of £120 for coal consumed may be made. Beyond this, there is no real material on vffich to found any estimate. Exhibit NN consists simply of a mass of invoices, which include a host of articles which are not ship’s stores in any relevant sense, and for which no claim could be made. The best that can be done seems to be to make a rough man-day estimate for two months, and allow (say) £720. We would allow £840 under the fifth head of claim.

The sixth head of claim relates to special expenses of Mr. Johnstone, which are itemised in Exhibit PP. The account has only been paid in part by the plaintiffs. Mr. Johnstone’s

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[1950-1951.

travelling e.xpenses have already been allowed at £100 under the fourth head of claim. It is not clear why he spent eight weeks in Port Moresby, though the amount claimed in respect of these eight weeks seems moderate enough. He had some undefined financial interest in the venture, and no clear evidence was given as to his contract or arrangement with the plaintiffs. Mr. Johnstone, however, had very sjiecial qualifications and experience in matters of salvage. It was certainly reasonable to engage his services, and his claim cannot be narrowly scanned. The sum of £400 should be allowed under this head of claim.

The seventh head of claim relates to “ crew’s wages ”. Here at last we get something like definite evidence, though it reveals that the amount of the claim is again exaggerated, and the evidence is still defective; However, it finally appeared from evidence given by Captain Guthrie that a total sum of £],400 was paid in wages. This sum apparently includes Captain Guthrie’s own salary, and it covers a period commencing on 13th November 1946 and ending on the dates on which the members of the crew arrived back at their home ports. But, while this figure may be taken to represent the whole wages bill of the Gi])psland for the period mentioned, it cannot be taken to mean that all the members of the crew who sailed from Sydney were paid from 13th November 1946, because Captain Guthrie gave the monthly rate of pay of each man, and, if every man were paid at the rate stated for the whole period mentioned, the total sum paid would be very much larger than £1,400. The monthly rates of pay given by Captain Guthrie seem reasonable and it seems proper to allow a wages bill at those rates for two months. On this basis we arrive at a figure of £768.

Nothing can be claimed under either of the next two heads of claim. The eighth is “ Claims by Crew ” and represents amounts claimed by the crew in respect of clothing and other property lost when the ship foundered. These claims appear to have been, in part at least, covered by insurance and met by the insurers, but the Commission cannot in any case be resjionsible for conse­ quences of the sinking of the ship. The ninth claim is for insurance premiums. The carrying of insurance is an ordinary incident of the ownership and operation of a ship, whatever she is doing. The tenth and last claim is for £150 for office expenses. It seems reasonable to suppose that some office expenses were incurred and wasted, and, though nothing much better than a guess is possible, it is probably fair enough to add £100 for these.

The total amount now arrived at is £3,008, and we may fairly take the figure of £3,000 as representing, as nearly as can be estimated on the very defective evidence, the loss suffered by the plaintiffs for which damages are recoverable. To this must be added the sum of £285 paid by the plaintiffs.

For convenience we have throughout treated the Commission as the party responsible to the plaintiffs. But, in our view, the cause of action lies in contract, and reg. 7 of the National Security {Disposal of Commonwealth Property) Regulations provides that the Commission may make contracts on behalf of the Commonwealth. Accordingly we think that the judgment should be against the Commonwealth.

The appeal should be allowed and the judgment of Wehh J. set aside. In lieu thereof there should be judgment for the plaintiffs against the Commonwealth for the sum of £3,285 as damages for breach of contract. There is no reason why the plain­ tiffs should not have the full costs of the appeal. With regard to the costs of the action, Wehh J. gave no reasons for allowing the plaintiffs only one-half of their costs, but it was doubtless because he considered that the costs had been increased by the raising of matters (whether technically “ issues ” or not) on which the plaintiffs had failed and by the generally extravagant nature of their claim. We think that the costs may have been to some extent increased by the raising of unjustifiable claims. On the other hand, the whole case was one of very exceptional difficulty, the plaintiffs were fully justified in raising alternative bases of claim, and the extent to which costs were necessarily increased by the claim based on the supposed value of a tanker and by the unwarranted claims in respect of expenditure would be proportion­ ately very small and hardly such as, in our opinion, to justify any attempt to apportion costs either by direct order or on taxation. It may be added that the conduct of the Commission’s officers throughout, including their attitude when a claim was first made, is not such as would incline any court readily to exercise any discretion in favour of the defendants. We think that the plaintiffs

should have their costs of the action. The cross-appeal shoidd be

dismissed with costs.

McTiernan J. I concur in the conclusions that there was a contract, that it was not void for mistake and that the plaintiffs should recover from the Commonwealth Disposals Commission the sum mentioned in the order of the Court as damages for breach of

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[1950-1951.

H. C. OF A.

contract; that the appeal should be allowed and the cross-

I9o0-i9i)i. appeal dismissed, in each case with costs.

Mo Rats

V.Appeal allowed with costs.

Discharge judgment

Common-

WKAI/ni

of Wehh J., and in lieu thereof adjudge

Disposals

that plaintiffs do recover from the defendant

Commission.

Commonwealth of Australia the sum of £3,285 as damages for breach of contract-. Order that defendant Commonwealth pay pdaintiffs’’ taxed costs of action. Cross­ appeal dismissed v:ith costs.

Solicitors for the appellants, Gavan Duffy <h King.

Solicitor for the respondents, K. C. Waugh, Crown Solicitor for

the Commonwealth.

E. F. H.