Neal v Ayers [1940] HCA 21

524 HIGH COURT {1940.

[HIGH COURT OF AUSTRALIA.)

NEAL . F ' z 'i 3 , z . APPELLANT ; PLAINTIFF, AND AYERS . : : ; i : 3 4 . Responpenr. DEFENDANT, t

ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES.

H.C. or A. Fraud—Contract—Illegality—Purchase of hotel—Takings—Fraudulent misrepre-

1940. sentation — After-hour " trading. genet The plaintiff sued the defendant for damages for deceit in respect of the Pen 1: purchase from the defendant of the lease, licence, goodwill and furniture of Sept. 2. a hotel. 'The plaintiff alleged that she was induced to enter into the contract upon the defendant's false representation that the hotel takings were about Stare, DON £100 a week, of which at the most the takings derived from after-hour trading

were £15 or £20 a week. On an application for nonsuit the trial judge found that the defendant had so represented the takings and that the plaintiff " took on that representation knowing and intending to continue at any rate for even as little a time as possible with the after-hour trading," and entered a judgment of nonsuit upon the ground that the action was based on illegality, although illegality had not been pleaded.

Held, on appeal, that the cause of action was not founded on illegality: The representation was material as an inducement to a purchaser buying the hotel rather for the sake of lawful than unlawful trading ; the subject matter of the con- tract was the sale and purchase of a hotel in the ordinary course of business ; the fact, known to the vendor, that the plaintiff intended to continue for a time the practice of unlawful trading was not enough to stamp the whole transaction with unlawfulness ; and, therefore, the appeal should be allowed and a new trial ordered.

Decision of the Supreme Court of New South Wales (Full Court): Neal v. Ayers, (1940) 40 S.R. (N.S.W.) 16; 57 W.N, (N.S.W.) 45, reversed.