Resch's Limited v Allan

The case of Resch's Limited v Allan involved a dispute arising from a written contract for the sale of a hotel. The purchaser, Allan, paid £500 as part of the purchase money. The contract stipulated that if the transfer of the licence was refused by the Licensing Bench due to objections to the purchaser, the vendor, Resch's Limited, would be entitled to deduct the agent's commission from the moneys paid and refund the balance. The sale fell through because the licence transfer was refused due to personal objections to the purchaser. The purchaser then sued to recover the £500 paid. The vendor paid £450 into court, asserting a right to retain £50 as agent's commission. The matter proceeded to the Supreme Court of New South Wales.

The central legal issue before the Full Court of the Supreme Court of New South Wales was whether there was sufficient evidence from which a jury could determine a reasonable amount to be deducted as agent's commission, given that the sale had gone off due to objections to the purchaser. The purchaser contended that the amount of commission was a matter for the jury to decide, while the vendor sought to retain a fixed sum representing 5% of the purchase money as commission. Evidence was led by the purchaser from hotel brokers regarding customary commission charges in such circumstances, which suggested significantly lower amounts than that claimed by the vendor.

The Full Court reasoned that the contract, by referring to "agent's commission," did not necessarily fix a specific sum but rather contemplated a deduction for the commission earned by the agent. The Court found that the evidence presented by the hotel brokers, detailing customary or nominal fees in cases of licence refusal due to purchaser objections, was admissible. This evidence allowed for an inference by a jury as to what constituted a reasonable or customary commission in such a scenario, rather than a predetermined contractual amount. Consequently, the Court held that the nonsuit entered at trial was improper, as there was evidence upon which a jury could make a determination regarding the quantum of the agent's commission.

The Full Court of the Supreme Court of New South Wales set aside the nonsuit and ordered a new trial. Subsequently, the High Court of Australia refused special leave to appeal from this decision, affirming the outcome of the Supreme Court.