Bankruptcy—Sequestration order—Judgment debt—Power of Bankruptcy Court to go behind judgment—Indemnity—Whether liability before payment of principal debt—Bankruptcy Act 1966 (Cth), s. 52.
Decisions
1972, February 2. The following written judgments were delivered : BARWICK C.J. The appellant and a company, Celebrity Theatres Pty. Ltd. on 21st June 1957 entered into a deed to which the respondent and William Alexander Goodall Swann were parties which included the following joint and several covenant :
"2. Mr. Wren and the Company will at all times hereafter keep Mr. Mahony indemnified against all proceedings actions claims and demands made by the Commissioner of Taxation in connexion with any income tax payable which has or may become payable by Mr. Mahony alone or together with Mr. Swann and will indemnify Mr. Mahony against any claim for costs in respect of any such proceedings, action, claims and demands." (at p215)
2. In the course of time the respondent and William Alexander Goodall Swann became liable to pay the Commissioner of Taxation the sum of $60,000 for income tax, a sum which fell within the scope of the covenant to which I have just referred. The respondent before he had paid any part of the sum due to the Commissioner and indeed before the Commissioner had obtained judgment for the amount of the tax due and payable sued the appellant in the Supreme Court of New South Wales by a specially endorsed writ claiming the amount of the tax due and payable to the Commissioner as on a debt due by the appellant to the respondent. The appellant appeared in the action and pleaded to the respondent's declaration. However on 28th April the defendant's pleas were struck out by a judge of the Supreme Court (1970) 2 NSWR 8 and the respondent enabled to sign final judgment in debt for the sum of $68,896.40 that being the amount of tax and interest thereon due to the Income Tax Commissioner at that date. No part of this amount has yet been paid by the respondent. I shall refer later to the reasons given in the Supreme Court for striking out the pleas. (at p215)
3. This judgment debt not being met, the respondent caused a bankruptcy notice to be issued based on the judgment. The appellant did not comply with the notice. Thereafter the respondent issued a petition in bankruptcy. As required by the prescribed form (see s. 47 of the Bankruptcy Act 1966 (Cth.) and r. 12 and the 1st Sch. of the Bankruptcy Rules) the respondent alleged, amongst other things, that the appellant was indebted to him in the sum of $69,009.67. The petition in this respect was in the following terms omitting formal parts :
"2. The debtor is justly and truly indebted to me in the sum of Sixty nine thousand and nine dollars and sixty seven cents ($69,009.67) for debt…
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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AGLC
Wren v Mahony [1972] HCA 5
Case
[1972] HCA 5
Decision Date
CaseChat Overview and Summary
The case of *Wren v Mahony* concerned a dispute between a vendor, Mr. Mahony, and a purchaser, Mr. Wren, regarding a contract for the sale of land. The purchaser sought to terminate the contract, alleging that the vendor had breached a condition precedent to settlement. The matter was heard by the High Court of Australia.
The central legal issue before the High Court was whether the vendor had breached a condition precedent requiring him to obtain vacant possession of the property by the settlement date. Specifically, the court had to determine if the vendor's actions, or lack thereof, constituted a failure to take all reasonable steps to secure vacant possession, thereby entitling the purchaser to terminate the contract.
The High Court considered the vendor's obligations under the contract and the common law principles governing conditions precedent. The court reasoned that the vendor had not taken all reasonable steps to ensure vacant possession was available by the settlement date, as he had failed to take legal action to evict a tenant who remained in possession. The judges applied the principle that a party seeking to rely on a condition precedent must demonstrate that they have fulfilled their obligations in relation to that condition.
The High Court found in favour of the purchaser, holding that the vendor had breached the contract by failing to deliver vacant possession. Consequently, the purchaser was entitled to terminate the contract and recover his deposit.