The Commonwealth Disposals Commission sold McRae a shipwreck of a tanker on the "Jourmand Reef", near Samarai supposedly containing oil.
It later became clear that the Commission officer had made a 'reckless and irresponsible' mistake in thinking that they had a tanker to sell (the Court found that they had relied on mere gossip).
A general ruling that can be gleaned from the court's judgment is that in circumstances where parties have equal knowledge as to the existence of the subject matter, and it turned out to be false, then it would justify the implication of a condition precedent.
In that case, the contract would be void for the failure of the condition precedent, and parties would be restored to their original position.
In opposition to CDC’s argument that McRae’s expenditure was not wasted, Dixon and Fullagar JJ stated: “They [McRae] can say: (1) this expense was incurred; (2) it was incurred because you promised us that there was a tanker; (3) the fact that there was no tanker made it certain that this expense would be wasted.