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Reid v Moreland Timber Co Pty Ltd

Reid v Moreland Timber Co Pty Ltd

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Case Copied 10 December 1946 35 min read

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73 CLR 1

[ ] REID

MORELAND TIMBER COMPANY PROPRIE-

RESPONDENTS.

TARY LIMITED AND OTHERS

ON APPEAL FROM THE SUPREME COURT OF Real Property-Profit à prendre-Licence coupled with interest-Agreement for sale H. C. OF

of sawmilling business and of right to cut and remove timber on and from vendor's land-Right of purchaser, whether exclusive.

An agreement between R. and G. was expressed as an agreement that R. would sell to G. (a) the goodwill of R.'s sawmilling business, (b) R.'s interest in the lease of the premises on which the business was conducted, (c) the licence held by R. under the Forests Act 1928 (Vic.) to cut timber on certain Crown land (it being a condition of the agreement that the consent of the Forests Commission to the transfer of the licence be obtained), (d) the plant of the business, and (e) the right to cut timber and remove same on and from the vendor's private area of 201 acres or thereabouts adjoining the Crown land mentioned in clause (c). The agreement provided that the consideration for the sale should be £800. In addition, G. undertook " to pay monthly the sum of 1s. 4d. per 100 super feet over the saw for all timber cut on the said private area," and it was provided that "possession of the said business plant and areas shall be given and taken on payment of the money."

73 CLR 2

Held, by Starke, Dixon and McTiernan JJ. (Latham C.J. and Williams J. dissenting), that the agreement, by clause (e), conferred on G. in respect of the "private area'' the exclusive right to cut and remove timber.

Decision of the Supreme Court of Victoria (Full Court): Moreland Timber Co. Pty. Ltd. v. Reid, (1946) V.L.R. 237, affirmed.

APPEAL from the Supreme Court of Victoria.

Edward D. Reid carried on the business of a sawmiller at a mill situated on the leasehold premises referred to in clause 1 (b) of the agreement hereunder mentioned; he had a licence (referred to in clause 1 (c) of the agreement) under the Forests Act 1928 (Vic.) to cut timber on certain Crown land, and he was the owner in fee simple of adjoining land which is referred to in clause 1 (e) of the agreement. By an agreement in writing made between Reid as vendor and Herbert Grumach as purchaser it was agreed, in clause 1, that Reid sold and Grumach purchased-' (a) The goodwill of the

(b) all the right title and interest of the vendor in the leasehold premises and buildings whereon and wherein such business is conducted. (c) The licence held by the vendor under the Forests Act to cut timber on the land known as the Blackwood Gully Area (which area is as inspected by the purchaser on the 12th September 1939). (d) The whole of the plant " of the business.

(e) The right to cut timber and remove same on and from the vendor's private area of 201 acres or thereabouts adjoining…

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.

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Details

Case: [1946] HCA 48
Decision Date: 10 December 1946

CaseChat Overview and Summary

The case of *Reid v Moreland Timber Co Pty Ltd* concerned an appeal to the High Court of Australia from the Supreme Court of Victoria. The dispute arose from an agreement for the sale of a sawmilling business, which included the goodwill, leasehold interest, plant, a licence to cut timber on Crown land, and a right to cut and remove timber from the vendor's (Reid's) private land. The purchasers, through successive assignments, became Moreland Timber Co Pty Ltd. The company sued Reid for breach of contract, alleging that Reid had granted a licence to a third party, Lord, to cut timber from the private land, thereby interfering with their rights under the sale agreement.

The central legal issue before the High Court was whether the agreement conferred an exclusive right on the purchaser to cut and remove timber from the vendor's private area of 201 acres. The plaintiffs contended that the grant of a licence to Lord constituted a breach of contract, implying that their right was exclusive. The defendant argued that the right granted was merely a non-exclusive licence, allowing him to grant similar rights to others.

A majority of the High Court (Starke, Dixon, and McTiernan JJ.) held that the agreement conferred an exclusive right to cut and remove timber from the private area. Their reasoning focused on the commercial context of the transaction, which involved the sale of a going sawmilling business. They reasoned that for the business to be viable and for the purchaser to achieve the intended purpose of the agreement, the vendor must have intended to grant an exclusive right to the timber on his private land. This was to ensure that the purchaser could rely on that timber supply and that the vendor would not derogate from his grant by allowing others to deplete the resource. The majority considered that the physical realities of operating on a small timbered area and the overall business efficacy supported an interpretation of exclusivity, despite the absence of explicit words to that effect. Latham C.J. and Williams J. dissented, finding that the licence was not exclusive, as it was not expressly stated to be so and the purchaser was not obligated to cut any timber.

The High Court, by a majority decision, affirmed the decision of the Full Court of the Supreme Court of Victoria. Consequently, the appeal by Reid was dismissed, and the judgment in favour of Moreland Timber Co Pty Ltd was upheld.

Orders