Swan v Rawsthorne

The case of Swan and Another v Rawsthorne concerned a dispute arising from the sale of a pastoral property held under a Crown lease. The vendor, Rawsthorne, agreed to assign the leasehold and stock to the purchasers, Swan and Wheatley. A key condition of the sale was that Rawsthorne would be entitled to retain a portion of the leasehold area, approximately 10,240 acres, by way of a sub-lease from the purchasers. The original contract stipulated completion by a fixed date, with provisions for the purchaser to take possession as a tenant pending completion if delays occurred. Subsequently, a further agreement was made, delaying the execution of the sub-lease until the vendor erected certain improvements on the remaining portion of the property. The purchasers initiated an action at law claiming trespass and wrongful impounding of stock, while the vendor sought specific performance of the sub-lease agreement and an injunction to restrain the legal action. The matter was heard on appeal from the Supreme Court of New South Wales.

The central legal issues before the court were whether the delay in the vendor completing the agreed improvements affected his right to specific performance of the sub-lease, and whether the vendor was entitled to an injunction to prevent the purchasers from proceeding with their action at law for trespass and wrongful impounding. The purchasers contended that the delay in completing the improvements meant the vendor had lost his right to the sub-lease and that they were entitled to exclusive possession of the entire property. The vendor argued that the delay was a matter for compensation and did not go to the substance of the contract, and that he retained a right to possession of the 10,240 acres.

The High Court, by majority, held that the delay in completing the improvements did not go to the substance of the transaction and was a matter for compensation. The vendor, having completed the improvements before the hearing, was entitled to a decree for specific performance of the sub-lease agreement. However, the court varied the Supreme Court's decision regarding the injunction. While the vendor had a good defence at law to the trespass claim as he had not surrendered possession of the 10,240 acres, the purchasers may have had a claim for damages for wrongful impounding based on a verbal agreement allowing them to use certain improvements on the vendor's retained portion. As the purchasers did not seek an inquiry into damages but were content to rely on their judgment at law, the court found it was not a case for the exercise of its discretionary power to grant an injunction to restrain the legal action. Therefore, the injunction was refused.