Re Continental C & G Rubber Co Pty Ltd

The case concerned a summons taken out by the Continental C. & G. Rubber Co. Pty Ltd and its controller, seeking determination of questions arising from the winding up of the company's business. The dispute centred on a contract entered into in April 1914 between the company and W. Anderson & Sons Pty Ltd for the construction and erection of machinery, with a completion date of 1 December 1914. Progress payments were made, but the machinery was never delivered or erected. Following the outbreak of World War I, it was discovered that the company was controlled by enemy subjects, leading to the appointment of a controller under the *Trading with the Enemy Act 1914*. The High Court was asked to determine the validity of the contract, the admissibility of a claim by the contractors for compensation and loss, the entitlement to the machinery, and the recoverability of progress payments.

The legal issues before the court were whether the contract was dissolved by the outbreak of war or by subsequent legislation, whether the contractors were entitled to prove in the winding up for compensation or damages for the company's failure to perform the contract, whether the company or its controller could recover progress payments made to the contractors, and whether the company or its controller was entitled to the machinery constructed under the contract. The court considered the impact of the *Trading with the Enemy Act 1914* and the *Enemy Contracts Annulment Act 1915* on the contractual rights and obligations of the parties.

The court reasoned that the contract became null and void from the commencement of the War, irrespective of whether this was due to common law or statutory provisions. The *Enemy Contracts Annulment Act 1915* declared enemy contracts void from the commencement of the war, with exceptions for rights and obligations relating to goods already delivered or acts already performed. The court found that no further rights had accrued to the contractors beyond the progress payments already made, and therefore, their claim for compensation or damages was dismissed. Regarding the progress payments, the court held that they could not be recovered on the grounds of failure of consideration or mistake, as the payments were made under a contract that both parties believed to be binding, and any mistake was one of law, not fact. Furthermore, the court determined that as the contract was entire and had not been fully performed, neither the company nor the controller had any legal claim to the machinery.

The court declared that the contract became null and void as from the commencement of the War, that the controller should not admit the proof of debt submitted by the contractors, that neither the company nor the controller was entitled to obtain delivery of the machinery, and that neither the company nor the controller was entitled to recover the sum of £6,000 paid as progress payments. Costs were awarded to be paid by the controller out of the company's assets.