Facts: In 1926, the plaintiff (Pl) and defendant (D) were both corporations that were resident in Victoria, and entered into a contract. Under the contract, Pl agreed to sell and D agreed to buy a sheep station in NSW. The subject matter was immovable property in NSW. The purchase price was to be paid by instalments. The contract did not include an express choice of proper law, nor was there an inferred choice. While most of the instalments were still to be paid, there was a financial crisis in NSW.
In 1930, NSW Parliament enacted legislation called Moratorium Act 1930. This Act pertained to instalment contracts for purchase of land. The Act said where a purchaser owed money under instalments, the purchaser was discharged from any liability to make any further payment of instalments, and the rights of the vendor were limited to the rights of a secured creditor as against the land. Victoria had a similar law, but it differed in degree.
Pl brought proceedings against the D in the Supreme Court of Victoria (VSC).
Issue: What was the proper law of the contract?
Held (VSC): The proper law of the contract for the sale of land was the law of VIC, and if that was correct, then the statute law of NSW will not be relevant.
Held (HCA): It was held that if the subject matter of the contract is immovable property, and there is no choice of proper law, express or inferred, then the proper law of the contract is the lex situs (law of the place where the property is situated). Therefore, the proper law of the contract was NSW law. The Supreme Court of VIC was required to give full faith and credit to the NSW Act, and on no account could the NSW law be rejected on forum public policy grounds. Therefore, the claim was subject to the Act.