Packer v Babidge - [1950] HCA 50

BABIDGE AND ANOTHER

RESPONDENTS. DEFENDANTS,

ON APPEAL FROM THE SUPREME COURT OF

SOUTH AUSTRALIA. Vendor and Purchaser-Land sales control-Recovery of excess consideration

Landlord and tenant-Obligation of landlords under tenancy agreement to make payment of money to tenant " if and when (premises) sold"-Construction Sale to tenant-Contract providing for specific purchase price and release of landlords' obligation-Consent of delegate subject to price stated in contract as maximum selling price-Proceedings for recovery of benefit of lease-National Security (Economic Organization) Regulations (S.R. 1942 No. 76-S.R. 1946 No. 192), reg. 6AB.

Clause 10 of an agreement for the tenancy of certain land provided that, "if and when the said premises were sold ", the landlord would pay to the tenant out of the proceeds of the sale the sum of £500 paid by the tenant under a cancelled agreement for the purchase of the land. Subsequently, while the tenancy was still in existence, the landlords agreed to sell the land to the tenant for £3,500. The contract of sale, after referring in a recital to the vendors' obligation under clause 10, provided that on completion of the sale all rights and liabilities of the vendors and purchaser under the tenancy agreement should merge and no moneys should be payable or allowable by the vendors to the purchaser by reason of the sale having been effected. The application made to the delegate of the Treasurer, pursuant to reg. 6 of the National Security (Economic Organization) Regulations, for his consent to the sale was accompanied by a copy of the contract of sale and a statement by the vendors that " the sale price and terms '' were " £3,500 cash, existing tenancy to purchaser to merge in the purchase" and that the full selling price of the land was £3,500. It was also accompanied by a valuation of the land as at the requisite date at £3,527. The delegate gave his consent to the sale "subject to the maximum selling price of £3,500 (including Agent's Com- missions, if any) " The purchaser paid £3,500 to the vendors. He claimed

83 CLR 604

to recover, under reg. 6AB of the Regulations, the sum of £500 as having been received by the vendors in excess of the consideration provided for in

Held, that there was no excess consideration within the meaning of reg. 6AB, on the grounds, by Latham C.J. and Kitto J., that, even assuming that in the circumstances the vendors were liable under clause 10 to pay the purchaser the sum of £500, the consent of the delegate had been given to the whole transaction, including the release of any such liability and, by Fullagar J., that on the execution of the contract clause 10 automatically ceased to operate so that the true consideration for the sale was £3,500.

Held, further (by Latham C.J. and Fullagar J.), that, on its proper con- struction, clause 10 of the tenancy agreement did not apply to the case of

Per Latham C.J. and Fullagar J.:…

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.

Continue reading Packer v Babidge

Details

AGLC: Packer v Babidge [1950] HCA 50
Case: [1950] HCA 50
Decision Date: 22 November 1950

CaseChat Overview and Summary

The case of Packer v Babidge involved a dispute between Arthur Nathaniel Packer, the purchaser of land, and Richard Foord Babidge and Jack Hansford Babidge, the vendors and executors of the estate of Ellen E. Babidge. Packer sought to recover £500, which he alleged was excess consideration received by the vendors in a land sale, under regulation 6AB of the National Security (Economic Organization) Regulations. The matter reached the High Court of Australia on appeal from the Supreme Court of South Australia.

The central legal issues before the High Court were: firstly, whether a clause in the tenancy agreement, which stipulated a payment of £500 to the tenant upon sale of the premises, applied to a sale of the land to the tenant himself; and secondly, if it did apply, whether the release of this obligation in the subsequent contract of sale constituted "excess consideration" within the meaning of regulation 6AB, given that the sale had received the delegate of the Treasurer's consent subject to a maximum selling price of £3,500.

The High Court, by majority, held that there was no excess consideration. Latham C.J. and Kitto J. reasoned that even if the vendors were liable under the tenancy agreement, the delegate's consent had been given to the entire transaction, which included the release of any such liability. Fullagar J. concluded that on the execution of the contract of sale, the relevant clause of the tenancy agreement automatically ceased to operate, meaning the true consideration for the sale was simply £3,500, and therefore regulation 6AB was inapplicable. The Court also clarified that the liability created by regulation 6AB is personal and not one that can be defended by a plea of *plene administravit* by executors.

The appeal was dismissed with costs, varying the decision of the Supreme Court of South Australia.

Orders