Case: Suttor v Gundowda Pty Ltd [1950] HCA 35 ; (1950) 81 CLR 418
Outcome: referred to
LCJ's words are taken from his judgment in Collins v Baltern (1767) 2 Wils 347 at 351. They reflect a principle which still runs through the common law of identifying fault as an appropriate basis for the court exercising its power to grant or withhold relief. In Suttor v Gundowda Pty Ltd [1950] HCA 35 ; (1950) 81 CLR 418 at 441, Latham CJ, Williams and Fullagar JJ discussed a contractual power to avoid a contract in circumstances where the consent of a third party, there the treasurer of the Commonwealth of Australia, had not been obtained within a particular time. They said that in that case, the event in question could be brought about by the failure on the part of either party to take certain necessary steps, or it could be brought about without default by either party. They concluded that the latter situation applied in that case, but determined that the clause made the contract not void, but voidable saying: ' The question of who may avoid it depends on what happens. If one party has by his default brought about the happening of the event, the other party alone has the option of avoiding the contract . If the event has happened without default on either side, then either party may avoid the contract. But neither need do so, and, if one party having a right to avoid it does not clearly exercise that right the other party may enforce the contract against him.' (emphasis added) Their Honours applied this reasoning as an extension of the principle that no party, directly or indirectly, may take advantage of his own wrong. In essence, Allphones' behaviour in relation to the payment of commission amounted to it evincing an intention not to take seriously its obligations to pay MTSC in accordance with cll 7.3 and 7.4 the franchise agreement. Its conduct was that of a person who evinced an intention that he was prepared to carry out his part of the contract if and only when it suited him and, in the way that it suited him. That was a repudiatory breach which continued over virtually the whole time in which Hoy Mobile was in breach: see Carr v JA Berriman Pty Ltd [1953] HCA 31 ; (1953) 89 CLR 327 at 351-352 per Fullagar J with whom the rest of the Court agreed. A party to a contract cannot act with impunity in a way which amounts to a refusal to be bound. Allphones concealed its underpayment of commission by a continuing deceit. Its action in doing that month after month, evinced an intention not to adhere to its promise to pay commission in accordance with the provisions of cll 7.3 and 7.4. This is not a case of a bona fide mistake in interpretation. No bona fide interpretation of a contract could justify Allphones' electronic manipulation of material data to disguise the true position. Here, Allphones' cumulative failures for over two years to account to Hoy Mobile for all of the commissions Hoy Mobile had earned from activations generated by its conduct of the franchise business, evinced an intention by Allphones not to be bound by the franchise agreement itself. Rather, Allphones evinced an intention to carry out that contract as and when it pleased. Mr Donnellan's evidence indicated that, as the chief executive officer, he saw it as open to Allphones to determine how and in what way it would perform its obligations in relation to the sharing of commissions. The evidence satisfies me that Allphones in fact did choose which commissions earned through activations of mobile telephone services generated by the sales of Hoy Mobile and other franchises would be shared. It did this regardless of the common understanding of Allphones and Hoy Mobile that cl 7 operated, as I have found, to cover all earnings of commissions from sales to customers in the stores of carriers' plan products, however the carriers paid those commissions (i.e. directly to the stores or to Allphones).