Packer v Babidge

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.