Morley v Richardson - [1942] HCA 7

EDWARD JOHN MORLEY

RICHARDSON AND ANOTHER

RESPONDENTS.

ERIC HOPETOUN MORLEY

RICHARDSON AND ANOTHER

RESPONDENTS.

ON APPEAL FROM THE FEDERAL COURT OF Gaming and Wagering-Commercial contract-Whether transaction by way of gaming

or wagering--Speculative transactionsPurchases from and resales to broker- Payment of differences-Gaming and Betting Act 1912-1937 (No. 25 of 1912- SYDNEY,

No. 39 of 1937), sec. 16. April

Prima facie a commercial or other agreement operates according to the 13,30.

legal effect of its terms: it must be taken to be what it appears to be. The terms, however, of such an agreement may sufficiently show that it is an agreement by way of gaming or wagering, or it may be proved, notwithstand- ing the form of the agreement, that the transaction was colourable and not a commercial or other contract but an agreement by way of gaming or wagering, for example, an agreement for the payment of differences only.

Contracts were made for the sale of grain elevator warrants for wheat at a price per bushel of wheat: delivery at option of seller of correctly endorsed warrants. No warrants or wheat was ever delivered. Contracts, however, were made between the purchasers and the vendor whereby grain elevator warrants for equivalent quantities of wheat were sold back to the vendor at prices which on the whole resulted in a loss to the purchasers. Adjustments of the differences in price were made at intervals. The estates of the purchasers were sequestrated in bankruptcy. The Judge in Bankruptcy found that the

65 CLR 513

transactions between the vendor and the purchasers were not by way of H. C. OF gaming and wagering for the payment of differences only, but commercial transactions, in the way of business, though of a speculative nature.

Held that the evidence supported the finding of the Judge in Bankruptcy. See v. Cohen, (1923) 33 C.L.R. 174, distinguished. Decision of the Federal Court of Bankruptcy (Judge Lukin) affirmed.

APPEALS from the Federal Court of Bankruptcy (District of New South Wales and the Australian Capital Territory).

Applications under sec. 124 of the Bankruptcy Act 1924-1933 were made by Edward John Morley and Eric Hopetoun Morley to the Federal Court of Bankruptcy that the sequestration orders made against them on 15th April 1940 be annulled on the grounds (a) that the judgment debts upon which the respective bankruptcy petitions were based were obtained in respect of con- tracts and/or agreements by way of gaming and wagering within the meaning of the Gaming and Betting Act 1912 (N.S.W.), and (b) that in the circumstances the sequestration orders ought not to have been made.

The petitioning creditor, Raymond Arthur Brown, opposed the applications.

The petitioning creditor was a commission agent and produce merchant who carried on business at Wellington in New South Wales. During the period October 1936 to March 1938 he sold to the bankrupt Edward John Morley grain elevator warrants for 455,000 bushels of wheat, and during the period December 1936 to March 1938 to the bankrupt Eric…

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 Morley v Richardson 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: [1942] HCA 7
Decision Date: 30 April 1942

CaseChat Overview and Summary

The appellants, Edward John Morley and Eric Hopetoun Morley, sought to annul sequestration orders made against them. Their primary contention was that the judgment debts, upon which the bankruptcy petitions were founded, arose from contracts and agreements that constituted gaming and wagering within the meaning of the *Gaming and Betting Act 1912* (N.S.W.). The petitioning creditor, Raymond Arthur Brown, a commission agent and produce merchant, opposed these applications. The Federal Court of Bankruptcy dismissed the applications, and the bankrupts appealed to the High Court.

The central legal issue before the High Court was whether the transactions between the bankrupts and Mr. Brown, which involved the purchase and resale of grain elevator warrants for wheat, were genuine commercial dealings or colourable agreements for the payment of differences, thereby constituting gaming or wagering. The bankrupts alleged that there was an understanding that no actual delivery of wheat or warrants would occur, and that the contracts were merely a mechanism to settle price differences. Mr. Brown, conversely, maintained that the contracts were genuine commercial transactions, and he was prepared to deliver the warrants as per the written agreements.

The High Court, affirming the decision of the Federal Court of Bankruptcy, held that the evidence supported the finding that the transactions were not by way of gaming and wagering. The Court emphasised that, prima facie, agreements are presumed to operate according to their legal effect. While acknowledging the speculative nature of the transactions, the Court found that the Judge in Bankruptcy had accepted Mr. Brown's evidence and disbelieved the bankrupts' accounts of the conversations and intentions. The Court reasoned that for a contract to be considered gaming or wagering, the intention to wager must be common to both parties, and the essence of the transaction must be that one party wins and the other loses based on a future uncertain event, with no other interest in the contract. In this case, Mr. Brown's evidence indicated he intended to conduct genuine commercial transactions, aiming to earn a commission, and was prepared to deliver the warrants. The Court distinguished the present case from *See v. Cohen*, which involved different factual circumstances.

The appeals were dismissed.

Orders