400 George Street (Qld) Pty Limited & Anor v BG International

[2011] HCATrans 122

[2011] HCATrans 122

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B63 of 2010

B e t w e e n -

400 GEORGE STREET (QLD) PTY LIMITED

First Applicant

TRINKAUS AUSTRALIEN IMMOBILIENFONDS NR 1 TREUHAND

Second Applicant

and

BG INTERNATIONAL LIMITED

First Respondent

LEIGHTON PROPERTIES PTY LIMITED

Second Respondent

GROSVENOR AUSTRALIA INVESTMENTS PTY LIMITED

Third Respondent

Application for special leave to appeal

GUMMOW J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

FROM CANBERRA BY VIDEO LINK TO BRISBANE

ON FRIDAY, 13 MAY 2011, AT 10.23 AM

Copyright in the High Court of Australia

____________________

MR B.W. WALKER, SC:   May it please the Court, I appear with my learned friend, MR P. KULEVSKI for the applicants.  (instructed by Freehills Lawyers)

MR B.D. O’DONNELL, QC:   May it please the Court, I appear with my learned friend, MR K. A. BARLOW, SC, for the first respondent.  (instructed by Mallesons Stephen Jaques)

MR WALKER:   There are submitting appearances for the other respondents.

GUMMOW J:   Thank you.

MR WALKER:  Your Honours, when a deed whether by an original and counterparts or on the one piece of paper comes to be executed using the time‑honoured and meaningful expression “signed, sealed and delivered” – I stress the last word “delivered” – there will be of necessity, except in fantastic cases of very large pieces of paper indeed, a sequence by which the parties thus act so as to bind themselves.  That in commerce, particularly where there is remoteness of space which leads to differences of time, such as in this very case, may lead in turn to an appreciable gap of time between the execution opposite the rubric, signed, sealed and delivered, by the first of the parties, and the same act by the last of the parties.  The law of deeds deals with that position by including the possibility of later parties declining to execute, leaving the first party bound but ceasing to be so after a reasonable time has occurred, if the intention appears that one would not be bound unless all were eventually bound.

CRENNAN J:   Well, the real point here, is it not, is the effect of the subject to contract arrangement in that context?

MR WALKER:  That is a good half of the case, yes, your Honour.  In our submission, factually, the subject to contract or not until a mutually agreed document has been agreed by the parties’ letter, almost six months before this deed, needs to be seen in this striking factual context, one where, in our submission, we have the support of the findings in the Court of Appeal, and that is this; that correspondence looked forward to the very kind of process which two of the largest and most eminent firms in this country carried out dutifully, we would submit.  They ended up preparing and agreeing, in professional terms, the form of a deed to be executed by the parties, upon the execution of which in the ordinary manner, signed, sealed and delivered, there would be binding in the fashion I had commenced to describe.

The notion that there needed to be anything other than signed, sealed and delivered for each executing party to be bound, subject to the escrow point that I am about to come to, can be dismissed as having been carried over by that letter some six months before when the intervening conduct entirely fulfilled, in every commercial understanding of that earlier letter, what it looked forward to.  There was a mutually agreed document.  It called for the execution as a deed in order that parties be bound.  The letter did not regulate that state of affairs.  The form of the mutually agreed document did.  Signed, sealed and delivered was the rubric called for by each party’s execution in order for them to be bound.

CRENNAN J:   Are you suggesting that the effluxion of time without more could alter the subject to contract arrangement?

MR WALKER:   No, not at all.  What I am submitting is that on the facts of this case, as indeed we submit effectively the Court of Appeal held, that which the letter looked forward to and called for was in fact what had come to pass, and that is why the deed upon first execution sent by one large firm to the other large firm carried out precisely that event which was looked forward to by the letter.  All that their mutually agreed document then called for was execution, signed, sealed and delivered, and that is how it was executed.  Now, oddly the difference of ‑ ‑ ‑

CRENNAN J:   Well, you accept that execution of itself does not constitute delivery.

MR WALKER:   Your Honour, execution is never of itself, it is always in circumstances.  The circumstances of this case include the negotiation in detail of a document calling for execution as a deed and the rubric signed, sealed and delivered, which is no incantation, but which is that which will provide – so long as requisite authority is had – that which will provide the binding effect of a deed.  Nothing further is called for either by reason of the earlier letter or by the form of the negotiated deed by which binding effect can be supposed.  In particular, the notion of exchange, such as the trial judge, but contra the Court of Appeal held necessary, does not readily apply with respect to the different times at which in different places parties, all of whom undertake obligations and obtain rights under a deed, come to execute against that conventional signed, sealed and delivered statement.

GUMMOW J:   I think, Mr Walker, if we can just get down to some practical realities, conveyancing practice these days I suspect no longer proceeds on a footing that perhaps gives full appreciation to the special position of execution of deeds, and the parties would probably be looking to something equivalent to an exchange, in order to trigger their mutual legal obligations.

MR WALKER:   Your Honour, as a general statement that can never be more than a general statement.  That is, it will always require to be perhaps ‑ ‑ ‑

GUMMOW J:   It goes to the general utility of a grant of leave in this case.

MR WALKER:   May I try to persuade your Honours that, yes, it does, but it demonstrates the utility, not the inutility.  In our submission, the utility of deeds proceeding to bind parties in the fashion ‑ ‑ ‑

GUMMOW J:   I mean, you speak of eminent law firms.  I would not like to conduct an examination of the partnership on the law of deeds.

MR WALKER:   I feared your Honour would say something just like that.  However, in our submission, that is a prime reason for the great usefulness of a short, sharp point of continuing utility.  If understood properly, the execution of deeds, the requirement of delivery and the statutory governing of that matter in this case is of no moment, it is materially the same as the common law.  That provides a very superior tool for the certainty of transaction, which is illustrated by the facts of this case.  It can be summed up in this fashion.  If we are right concerning the reality of signed, sealed and delivered, with or without an escrow which gives a meaning to the event of the last party to be bound executing, if we are right then the parties may proceed in different times and places to execute the deed, knowing that as each party’s execution is added that is an accomplishment which cannot be undone.  Whereas, in practical terms, the argument against us does not treat any of those executions as an accomplishment, but rather as something which is completely transient and may be undone at the uncontrolled whim of any of those parties.  So one does not progress towards the finally fully executed transactional document, as the law of deeds would have it, particularly with the escrow or condition of not being bound until all is executed.

GUMMOW J:   A deed poll might be one thing.

MR WALKER:   No, but I am talking about ‑ ‑ ‑

GUMMOW J:   Are you talking about a deed inter partes?

MR WALKER:   Yes, and I am talking about the very useful aspect of the position obtaining when it can be seen, and the nature of the transaction is such that no one party is agreeing to be bound unless all are bound.  Now, with or without the imposition of an escrow, that in our submission presents a modern, an up to date and very useful tool by which execution may proceed in only one direction to accomplishment.

Under the reasoning of the Court of Appeal the law becomes – and for deeds, not just for the exchange of contract by original and counterpart – but for deeds the law becomes that notwithstanding people have solemnly signed or executed opposite “signed, sealed and delivered” until the last has executed one or more of the earlier executing parties may renege; in short, not proceeding towards accomplishment but uncertain to the very last step.  In our submission, that is at odds with the great practical convenience that the law of deeds would provide, as recognised by the trial judge, page 13 of the application book, paragraph [46], an essential difference of continuums and likely future practical utility, particularly if this Court were to pronounce on the possible decadence in observing appropriate distinctions that Justice Gummow has raised for consideration; that kind of decadence can be dispelled and by a short, sharp decision of this Court on very straightforward facts.

In relation to the usual form of escrow by which a deed may be given, even to an opposite party upon execution in escrow calling for execution by all other parties, may we draw your Honours’ attention to what we submit is the straightforward reasoning error at pages 52 and 53 of the application book in the Court of Appeal?  In paragraph [57], Justice Muir refers to his conclusion that:

although executed . . . with the intention that it became of contractual force and that it take effect as a deed –

in other words, the extent of victory we enjoyed in the Court of Appeal –

when the other parties were bound by it –

and I would interpolate that sounds like a condition – he goes on to say –

was never delivered.

This is novel, in our submission, and intrudes a confusion and complication of a law of deeds.  This does not go to delivery; it goes to the existence of an escrow or condition.  His Honour deals with that in the next sentences, but wrongly, with respect:

There was no “intention to be legally bound either immediately or subject to the fulfilment of a condition”.  No “condition” existed.

The next sentence belies that.  The next sentence is the description of a condition, using the expression “basis”:

The basis on which the parties dealt was that no legal obligations would arise under any instruments executed by them until all were bound.

CRENNAN J:   Well, that is a reference back to paragraph [55], is it not?

MR WALKER:   Quite so.  Now, that is the classic escrow upon execution by all parties which does nothing to detract from delivery but simply operates as the condition which constitutes the escrow.  There is, as has been put in our written submissions, confusion and uncertainty introduced into the law by the notion of what we have dubbed – mockingly, I accept – this idea of a springing delivery.  The delivery is there and then.  It is subject to a condition, or his Honour puts it there, on a particular basis, calling for something in future to happen.  It is a longwinded way of saying “a condition”; it is an escrow.

In our submission, left unconsidered by this Court, the reasons of the Court of Appeal do nothing to dispel what may be some slackness in practice or understanding, but in fact add a new element of doubt and uncertainty.  Now, one has the position that one will not know when a document shows that somebody has signed opposite the rubric, signed, sealed and delivered, whether it has been delivered or not.  Rather than simply asking the question time‑honoured in the law of deeds, is this not a case where it is obvious from the transaction to be embodied by the deed that no party intends to be bound until all parties have executed, the classic escrow, upon complete execution by all parties, by which reasoning this case should have been determined straightforwardly in our favour.  It is for those reasons, in our submission, that this case does present a vehicle apt to add to the certainty of the law by dispelling what might be either endemic or recently introduced confusion.  May it please the Court.

GUMMOW J:   Thank you.  We do not need to call on you, Mr O’Donnell. 

The Court is not satisfied that there are sufficient prospects of success on what the appellant contends is the point of principle.  We say that, given the factual circumstances of this case, particularly as referred to in paragraph [55] of the Court of Appeal’s reasons.  Nor do the interests of justice call for a grant of special leave.  Special leave is refused with costs.

AT 10.38 AM THE MATTER WAS CONCLUDED