Hewett v Court [1983] HCA 7

Hewett v Court [1983] HCA 7

A purchaser under a building contract for work and materials, where a specific building has been identified and appropriated to the contract and payments made for progress, is entitled to an equitable lien over the property to secure amounts paid if the contract cannot be completed due to no fault of the purchaser. Therefore, when the company became insolvent and the appellants took the house upon payment of an adjusted balance with the amounts previously paid, those amounts did not amount to a voidable preference because the appellants were secured by an equitable lien.

Jurisdiction
Australia
Procedural Posture
Appeal / High Court of Australia Appeal From Full Court of Supreme Court of Western Australia
Outcome
Appeal allowed
Legal Topics
['equitable Lien' 'preference in Liquidation' 'contracts for Work and Materials' 'sale of Goods' 'specific Performance' 'building Contracts']
['equity' 'insolvency Law' 'contract Law'] ['equitable Lien' 'preference in Liquidation' 'contracts for Work and Materials' 'sale of Goods' 'specific Performance' 'building Contracts']

Case Brief

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Procedural Posture

Appeal / High Court of Australia Appeal From Full Court of Supreme Court of Western Australia

Legal Issues

  1. 1 ['Whether the appellants had an equitable lien over a partially completed dwelling house constructed under a contract for work and materials, entitling them to priority over other creditors in the liquidation of the building company; Whether the transaction whereby appellants took possession of the house constituted a voidable preference under the Companies Act 1961 (WA) and Bankruptcy Act 1966 (Cth); Whether the nature of the contract (work and materials, not sale of goods) affected the existence of an equitable lien']

Ratio Decidendi

A purchaser under a building contract for work and materials, where a specific building has been identified and appropriated to the contract and payments made for progress, is entitled to an equitable lien over the property to secure amounts paid if the contract cannot be completed due to no fault of the purchaser. Therefore, when the company became insolvent and the appellants took the house upon payment of an adjusted balance with the amounts previously paid, those amounts did not amount to a voidable preference because the appellants were secured by an equitable lien.

Court Disposition

Appeal allowed

Orders

  • ['Order of the Full Court of the Supreme Court of Western Australia set aside' 'In lieu thereof, order that the appeal to that Court be dismissed with costs.' 'Appellants awarded costs.']