Morley v Richardson

65 CLR 512

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(Decision by: Rich J)

Between: Morley
And: Richardson

Court:

Judges: Rich J
Starke J
McTiernan J
Williams J

Subject References:
BETTING, GAMING AND LOTTERIES
Commercial contract
Whether speculative transaction by way of gaming or wagering

Legislative References:
Gaming and Betting Act 1912 No 25 - s 16

Hearing date: 13 April 1942
Judgment date: 30 April 1942

Sydney

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Decision by:
Rich J

This appeal is brought by the bankrupts against an order of the Federal Court of Bankruptcy refusing to annul the sequestration orders made against them. The basis of their applications, which were consolidated and treated as one motion, was that the judgment debts upon which the bankruptcy petitions were founded were "obtained in respect of contracts and/or agreements by way of gaming and wagering within the meaning of the Gaming and Betting Act 1912, s. 16." The applications were heard together, and the main evidence, apart from the documentary evidence, consisted of the public examinations of the bankrupts, their affidavits, upon which they were cross-examined, and the affidavit and cross-examination of the respondent Brown, the judgment creditor and petitioner. The learned trial judge who saw and heard the witnesses disbelieved the evidence of the bankrupts, who attempted to show that they were wagering with Brown on the rise and fall of the wheat market, and believed the evidence of Brown. The transactions between the parties were the subject of written contracts of which the following is a sample:

"Contract. Wellington, 20th October 1936.

R. A. Brown, Lee Street, Wellington sells and E. J. Morley, `Rose Hall,' Maryvale, buys the undermentioned N.S.W. Government Grain Elevator Warrants of Season 1936/37 on the following terms and conditions:

Warrants: Equivalent to approx. Five thousand (5,000) bushels of F.A.Q. wheat of 1936-37 season, weight, quality and condition to be final as per Government Grain Elevator Warrants.

Delivery: The tendering by seller of correctly endorsed Warrants at his option during December-January, 1936-37 to constitute delivery.

Price: Five shillings and twopence half-penny (5s. 2½d.) net per bushel, less freight as endorsed on Warrants and Country handling charge.

Payment: Prompt net cash in exchange for Warrants.

 

This contract shall be read to embody the regulations under the N.S.W. Wheat Act, 1927, and any amendment or addition thereto. Confirmed: R. A. Brown, Wheat Buyer, Wellington. (Sgd.) R. A. Brown."

Contracts in similar terms were entered into between E. J. Morley and Brown during the period October 1936 to 1st March 1938, and between E. H. Morley and Brown between 18th December 1936 to 18th March 1938.

The transactions, no doubt, were speculative transactions. But were the contracts in question "by way of" gaming or wagering, which "means contracts `for' gaming and wagering, and relates only to contracts which are of themselves contracts by way of gaming and wagering" (Ellesmere v Wallace (Earl), ^[F1] at p. 33, and see p. 48, where the distinction is said to be subtle)? In Thacker v Hardy ^[F2] Cotton L.J. says:

"The essence of gaming and wagering is that one party is to win and the other to lose upon a future event, which at the time of the contract is of an uncertain nature-that is to say, if the event turns out one way A will lose, but if it turns out the other way he will win". ^[F3]

This definition was approved by Lord Herschell in Forget v Ostigny. ^[F4] The English decisions on s. 18 of the Gaming Act 1845, which is the prototype of the New-South-Wales s. 16, are to be found in Halsbury's Laws of England, 2nd ed., vol. 15, pp. 492-494. In considering questions of this kind one must ascertain the real nature of the transaction as to whether the contracts are genuineor are merely camouflaged contracts by way of gaming or wagering. In his direction to the jury Cave J. said that "in order to be a gambling transaction such as the law points at, it must be a gambling transaction in the intention of both the parties to it" (Universal Stock Exchange Ltd v Strachan, ^[F5] approved by Lord Halsbury L.C.). ^[F6]

"But what are called time bargains are, in fact, the result of two distinct and perfectly legal bargains, namely, first, a bargain to buy or sell; and, secondly, a subsequent bargain that the first shall not be carried out; and it is only when the first bargain is entered into upon the understanding that it is not to be carried out, that a time bargain, in the sense of an unenforceable bargain, is entered into" (Thacker v Hardy, ^[F7] per Lindley J.).

If there be a stipulation in the contract between the parties that the balance at the foot of the account will be settled by the payment of differences it is immaterial that one party or the other, by the express terms of it, can ostensibly require delivery of the article sold (Halsbury's Laws of England, 2nd ed., vol. 15, p. 494). The respondent Brown in his evidence, which the learned trial judge has summarized, emphatically denies that there was any such stipulation:

"When the Morleys entered into the contracts with him he intended that the terms of the contracts should be adhered to-he thought that they intended to buy wheat and take delivery of the warrants, possession of which would give them control of the wheat at the Government silo."

The learned judge having accepted Brown's evidence was justified in his conclusion that the contracts stood as written contracts and that under the terms of them the buyers were entitled to require delivery and the seller to call for payment. The contracts, although they dealt with speculative transactions, imposed legal obligations and were capable of legal enforcement.

In support of his contention that the contracts in question were contracts of gaming or wagering counsel for the appellants cited See v Cohen. ^[F8] The decision, however, in that case was based on different facts from those in the present case, and would require consideration in any case where similar facts occurred.

In my opinion the appeal should be dismissed.