Alperin Technical Pty Ltd & Anor v ACI Australia Limited

[1991] HCATrans 230

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No M32 of 1991

B e t w e e n -

ALPERIN TECHNICAL PTY LTD and

JORGE ALPERIN

Applicants

and

ACI AUSTRALIA LIMITED

Respondents

Application for special leave

to appeal

DAWSON J

TOOHEY J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 30 AUGUST 1991, AT 9.30 AM

Copyright in the High Court of Australia

Alperin 1 30/8/91

MR G.R. ANDERSON, QC: If the Court pleases, I appear with

my learned friend, MS H.J. KING, for the

applicants. (instructed by Caleandro,

Guastalegname & Co)

MR A.H. GOLDBERG, QC: If the Court pleases, I appear with

my learned friend, MR R.A. BRETT, for the

respondent, ACI Australia Limited. (instructed by

Clayton Utz)

DAWSON J: Yes, Mr Anderson.

MR ANDERSON: If the Court pleases, in this application

there are two important issues which are raised.

The first is the use that may be made of extrinsic

material to aid interpretation of a commercial

agreement, and the second is the circumstances in

which an estoppel by convention arise. The factual

basis upon which they arise in this case relate to

an agreement for a pilot plant to manufacture a

building product. The agreement that was construed

by the court in this case was an agreement that was

entered into originally in 1989 and was subject to

amendments which led to an agreement which provided

for certain tests to be completed by 31 October

1989.       A series of tests were carried out in the

last week of October and on 1 November the

respondent sought to terminate the agreement on the

basis that the requirements - or the condition precedent - in the agreement had not been met.

The two issues of interpretation that arose

for determination were, firstly, whether it was a requirement that not only the trials be completed

by the end of October, but also that the testing of

the product be completed by the end of October.

The second issue that arose for determination was

whether the testing process included not only the

technical .aspects for the technical specifications,

or the properties of the product, but also whether

the product needed to comply with certain other

requirements, and in this particular case the rate

of production.

TOOHEY J:  Mr Anderson, do you not have to meet initially

the argument of the respondent as reflected in the

affidavit, that there was no great dispute between

the parties as to the principles of law to be

applied and that all that the court did was, in

effect, give effect to those principles and apply
it to the document, and that the court's decision

essentially turned upon the language of the

document itself?

MR ANDERSON:  Your Honour, when one contrasts the two

judgments, the judgment of Mr Justice Tadgell and

the judgment of Mr Justice Murphy, they adopted

Alperin 2 30/8/91

quite different approaches, and I think that raises

the issue that we say is an issue which should be

determined by this Court. Mr Justice Tadgell, he looked at the agreement itself and the particular

clauses, and the context in which they appeared in

the agreement. Mr Justice Murphy, on the other

hand, appears to have assumed that there was not

compliance with the rate of production during the

trials and has then looked at what the parties were

trying to achieve by the agreement, the commercial

realities and the other phrases that he uses, the

intention of the parties, and in that context he

then looked at the words of the agreement, and in

our submission it was not surprising that he

reached the conclusion that he did.

The specific points that are raised in our submission which, we submit, should be considered

by this Court, are the matters that were discussed

by His Honour the Chief Justice in Codelfa's case,

because although, as Your Honour says, there was no

dispute as to what those principles are, there is

considerable debate as to in what circumstances

extrinsic evidence might be used. If I might just

refer to Grigg and Davis, The Law of Contract, they

say, at page 402:

The question of the admissibility of extrinsic evidence, as an aid in the construction of a contract, is bedeviled by disputes as to the

type of evidence that can be admitted, and as

to the basis upon which such evidence might be

regarded as admissible.

DAWSON J:	What was the extrinsic evidence here?
MR ANDERSON:	The series of matters that His Honour

Mr Justice Murphy had regard to as to the

commercial purpose of the agreement. There are

five matters that we rely on, sir, and perhaps if I

could refer to those five specific matters.	The
first is whether there is a threshold question to

be answered before you may admit extrinsic evidence

as to an aid to interpretation.

DAWSON J:  Just before we go on with that. The evidence

which was admitted went to the breach of the

condition precedent in any event, did it not?

MR ANDERSON:  Your Honour, in our submission, the evidence

that was considered by -

DAWSON J: Well, perhaps you could identify what the

evidence is that you say was extrinsic.

MR ANDERSON:  The four areas, first, are that

Mr Justice Murphy took into account ACI's

Alperin 3 30/8/91

subjective view, what he perceived as the parties'

expectations and aspirations, but in two passages

he referred to what he regarded as what ACI

expected to get out of the contract. The second

area was where His Honour identified what he

perceived as the shared common intention of the

parties. The third matter was, he referred to the

subject-matter of the agreement and from it,

imputed the intention of the parties. Perhaps

there are those three issues, and then the more

general issues are, as I mentioned, whether there

is a threshold question to be answered before you

admit - - -

DAWSON J:  The last two matters are not a matter of

evidence; that was a matter of inference on

His Honour's part, was it not, what was the shared

common intention and what was the subject-matter of

the agreement?

MR ANDERSON: Well, save for the last matter that I referred

to, Your Honour, having regard to the

subject-matter of the agreement, His Honour said - well, Your Honour is correct, that it was a matter of inference from the fact that His Honour said

that there was a large sum to be paid as the

purchase price and therefore one would expect that

the rate of production would be made a sine qua

non, and in another passage where he referred to

the fact that both parties had technical expertise

and therefore they could have expected that they

would have turned their mind to the question that

rate of production would be central to what they

were trying to achieve by their agreement.

DAWSON J:  Was the rate of production met?

MR ANDERSON: Well, Your Honour, there is a difficulty in

the judgment. Mr Justice Tadgell did not need to consider it because of the way he interpreted the contract, but he said that for the purposes of the

argument he would assume that it had not been.

Mr Justice Murphy referred to that passage, but

then at the end of his judgment Mr Justice Murphy

said - he concluded that the rate of production had

not been met, and -

DAWSON J: But in any event, from the point of view of

Mr Justice Murphy's judgment, the specifications

had not been demonstrated within the time, I

suppose.

MR ANDERSON:  No, Your Honour, that is a matter that was

unresolved and a matter that was certainly in

contention and in respect of which there was

conflicting arguments, so that - - -

Alperin 4 30/8/91

DAWSON J: Well, there is no doubt that the analysis was not

completed until after the date which

Mr Justice Murphy found to be the completion date.

MR ANDERSON: That is so, Your Honour.

DAWSON J:  And in that sense he found the condition

precedent had not been met.

MR ANDERSON: That is so, but in relation to the rate of

production, the rate of production could only be

measured from the trials which occurred during

October, but the conclusions that were drawn from

the records kept at those trials were something

which there was conflicting evidence, and

Mr Justice Tadgell did not reach a view and
Mr Justice Murphy seems to have reached a view,

although he refers to the fact that

Mr Justice Tadgell did not, and there is no

discussion of the evidence upon which he relied.

DAWSON J: Thank you.

MR ANDERSON:  But, in our submission, and perhaps if I could

just speak generally in relation to Codelfa's case,

in Codelfa's case, Mr Justice Mason, as he then

was, referred to the statements of

Lord Wilberforce, and he referred to them in the

Codelfa's case.
course of developing an argument in statements of Lord Wilberforce, and they referred

to the fact that they had been referred to by

Mr Justice Mason in Codelfa. But that is as far

as - it is not clear as to whether His Honour was

referring to those statements in a general way, or

was referring to them with approval.

The English position seems to be that the use

of extrinsic evidence might be used for a variety of purposes, whereas the Australian view was more

restricted until Codelfa's case.	So that the
threshold question that arises when one considers

the use of extrinsic evidence is, do you look at
the agreement first, or, as Mr Justice Murphy did,

do you look at the general context, or the factual

matrix, before you go to look at the contract

itself. And really this case raises that question

in a fundamental sense, because Mr Justice Murphy

went to the factual background and then to the

agreement and it was almost as though he had a

preconceived view and his interpretation was made

to fit the view that he had formed, and

particularly the conclusion that he reaches right

at the end in relation to rate of production.

Mr Justice Tadgell adopted a different approach.

Alperin	30/8/91
TOOHEY J: Are you suggesting, Mr Anderson, that the

Full Court used the extrinsic evidence in a way

that simply overrode the plain language of the

agreement?

MR ANDERSON: Yes, Your Honour. It is always a fine line.

Mr Justice Mason, in Codelfa, certainly discusses

what precondition needs to be present before you

consider extrinsic evidence and he seems to suggest

there must be a genuine inability on the face of

the document to give the words a clear meaning.

DAWSON J:  I rather got the impression that if a literal

view were taken of the agreement, it was the view

of Mr Justice Murphy, rather than

Mr Justice Tadgell.

MR ANDERSON: Well, Your Honour, not in our submission,

because -

DAWSON J:	He took the completion date as being immovable and as being, as it was, stated, in the extended
sense, in the agreement.
MR ANDERSON:	If Your Honour concentrates on the completion

date, and that is one of the - - -

DAWSON J: That was the crucial thing, was it not?

MR ANDERSON: Well, Your Honour, Mr Justice Murphy said it

was crucial. Normally completion dates - time is

not necessarily of the essence in relation to

completion dates or time limits of that sort.

DAWSON J:  I am just taking up Justice Toohey's suggestion

that, in fact, if Justice Murphy did have regard to

extrinsic evidence, it did not seem to have any

effect on his interpretation of the contract.

MR ANDERSON: Well, save that Mr Justice Murphy was of the

view that this was a commercial transaction where a

and that would come to be concluded on the	large amount of money was to be paid for a process,
completion date when the money was handed over and
the process was handed over. Now, Your Honour, if one looks at the passages, or the parts of the
contract that Mr Justice Tadgell concentrated on, those passages were related to the fact that there
would have to be the trials over a period of five
days, the taking of samples during those trials,
the testing of the samples, and then, if a party requested, alternative testing of the samples, the obtaining of the results of those tests and then the results of those tests might meet the absolute
specification, or the reduced specification, and
therefore that would determine what the purchase
price was and it was not until that happened that

Alperin 6 30/8/91

there could be a settlement or a completion of the

contract.

Now, what Mr Justice Murphy did was to say,

"The 31st October is the completion date, the

settlement date, and that is immovable." What

Mr Justice Tadgell said was, "The 31st October is

the date by which the trials are to be completed

and if settlement has to be put back, it can be put

back, as it can in any other contract where time is

not made specifically of the essence".

TOOHEY J:  When you put it that way, Mr Anderson, it seems

to point up the fact that what we are concerned

with here is a commercial document of a particular

sort, between particular parties, the

interpretation of which differed between the

primary judge and the Full Court. Now, where does

one find a special leave point if that is all that

can be said about the case?

MR ANDERSON:  In our submission, the basis is that the

different approach taken by four judges to reach

different conclusions was purely because of the

approach that they took. One looked at the factual

context and then went to the document; the other

looked at the document first and considered where

that led and, in our submission, Mr Justice Murphy,

by looking at the factual context, considered
matters which were irrelevant; matters such as the
subjective intention of one of the parties or what
he perceived to be the intention of both parties,

taken not from the words of the contract, but taken

from what he saw as the commercial reality of the

agreement, and it was the fact that he followed

that process that we say led to error and, in our

submission, that is a matter of fundamental

importance for the courts to have some guide,

because a number of judges - or all judges, when

they have to consider the interpretation of a

commercial contract, have regard to what His Honour

the Chief Justice said in Codelfa's case.

Now, it is not clear, and it was not clear in

this case, whether His Honour was adopting

wholesale what was said by Lord Wilberforce from

the English experience. In a decision of the Court of Appeal of New South Wales, after Codelfa's case,

they have said one can read a restrictive meaning

or a liberal meaning into the words of the Chief using a restrictive meaning. That is an issue

which, in our submission, is a fundamental issue
which is open and is highlighted by the approaches

of the judges in this case.

Alperin 7 30/8/91

The second issue which is raised in this case

is the question of estoppel, and again Your Honours are hampered that there is not a clear statement of the facts in this case, but, in our submission that is something - the facts are not in dispute, and it

is something that could be attended to by an agreed

statement of facts if special leave was granted.

When I say that the facts are not in dispute, facts and, not surprisingly, Mr Justice Tadgell refers to other salient facts, but there does not appear to be a dispute as to the facts that are relevant to the issue of estoppel.

Mr Justice Tadgell did not even consider the question of estoppel, because he said he did not

need to. Mr Justice Murphy referred to it over

three or four pages, but basically the issue was

this: the parties carried out - or the testing, the

trialing, the operational tests, were carried out

in the last week of October. There was no way that

the testing of the samples could be completed by the end of October once those dates were set for the operational tests. Now, Mr Justice Tadgell, in

his judgment, refers to facts such as the fact that

in September and October ACI's representatives were

anticipating that they would carry out testing in

the last week of October, or the first week of

November. So he emphasizes the facts that ACI

themselves were anticipating the testing of samples

after 31 October. Mr Justice Murphy, on the other

hand, points to facts such as that it was the

Alperins who were not ready to conduct the tests

any earlier, and he also refers to the earlier

testing in May 1989 which, in our submission, would

support the view, because in that case, again, the

tests were not to be conducted until 1 June, which

was after the 31 May completion date.

But those are the two sets of facts that the

judges refer to, but, in our submission, the

overriding factor in this case is that the

agreement itself provided that the tests were to be

conducted at a mutually agreeable time, and

secondly, that ACI were to monitor the reports and

were to have the ability to take samples, which

they did, so in the last week in October they
agreed to those dates; it was a mutually acceptable

date. Secondly - - -

DAWSON J:	What you are doing is going to the facts of the case, and there is no point of principle involved
in that. It is just a construction of this
particular contract in these particular
circumstances.
Alperin	30/8/91
MR ANDERSON:	Your Honour, that is so but, in our

submission, there are facts that were interpreted

by Mr Justice Murphy in a particular way - - -

DAWSON J: Yes.

MR ANDERSON:  - - - but they raise issues in relation to the question of estoppel, which are important issues.

DAWSON J: Well, but factual issues in relation to the

question of estoppel, not questions of principle.

MR ANDERSON: Well, Your Honour, there must always be a

factual basis for any consideration of the law, and
in our submission the whole issue of estoppel is a

matter which requires attention, and the - -

DAWSON J: Well, some aspects of estoppel may, but is this

one?

MR ANDERSON:	In our submission, what the facts in this case give rise to is an argument in relation to estoppel
by convention, and estoppel by convention was
considered by Mr Justice Dixon in Grundt's case,
and Grundt's case is really the starting point for
the line of cases including Legione v Hately,
Wal tons Stores v Maher, Foran v Wight and Verwayen v The Commonwealth, and yet - - -
DAWSON J:	They are all cases of promissory estoppel, you

are not suggesting that promissory estoppel arises

here?

MR ANDERSON:  No, Your Honour, but the important

consideration - it is not clear whether the

High Court is moving in the direction of doing away

with the distinction between promissory estoppel,

equitable estoppel, common law estoppel, and

whether there is some overriding principle in the

law of estoppel which goes to the conduct of the

parties, and whether there is some aspect which is

unconscionable. Now, it can be said that that is

one interpretation, as far back as 1937 in Grundt's
case. It certainly appears to be that principle -

or an overriding principle of there being one breed

of estoppel seems to be what the Chief Justice and

Mr Justice Deane seem to be moving towards,

where - - -

DAWSON J: That is a long way away from this case, is it

not? You are talking about estoppel by convention,

which is a particular terminology. Is there any

difference between that and the variation of a

contract by conduct?

MR ANDERSON: Perhaps it is - or a waiver. Perhaps they are

all species of the same -

Alperin 9 30/8/91

DAWSON J: But the moment you raise those questions here,

you just get back to the facts of the case, do you

not?

MR ANDERSON: Well, save, Your Honour, that the facts might

be - and we submit that the facts are straight

forward - but it is the legal principles that are
applied to those facts which are the important

issues. It is the important issue in this case and

certainly there might be a different conclusion

reached by different judges, but the difficulty

that there is is that there is no - what are the principles that they are to apply? What are the

considerations that they are to give? What is the

guidance that they are to derive from the very

significant developments that there have been in

recent years in the area of promissory estoppel,

or - - -

DAWSON J: Well, not much I should have thought, in this

case.

MR ANDERSON: 

Or, as we would suggest, Your Honour, from

what Mr Justice Deane and the Chief Justice - the
more general principles and the more overriding

principle where all these estoppels, equitable

estoppel, promissory estoppel, common law estoppel

all seem, to be part of the same general principle

where the overriding consideration is one of

looking at the conduct of the parties.

TOOHEY J: 

Mr Anderson, for that sort of consideration to give rise to special leave, you really need very favourable findings of fact, and then a rejection

of that form of estoppel by reason of the
particular view of the law taken by the court

below. That is the sort of situation that might

trigger off a special leave application, but you

have not really got that here, have you? There is

no rejection of the notion of estoppel by

convention by the Full Court; they simply did not

think it was applicable and on the facts of the

present case?

MR ANDERSON: 

And the difficulty is, Your Honour, that there

was no consideration of the matter by the trial

judge who was to find the facts. He found - - -

TOOHEY J:	But there was by the Full Court.
MR ANDERSON:	Your Honour, the difficulty is that the trial

judge, not having found facts, the facts that were
referred to by the Full Court were, in our

submission, not entirely adequate for them to

consider the issue, and the consideration of the

issue of estoppel was really supplementary to their

consideration of the interpretation points.

Alperin 10 30/8/91

TOOHEY J: Well, that perhaps, would make it all the more

difficult for this Court to take the question of

estoppel by convention on board in this case.

MR ANDERSON: Well, save, Your Honour, that it appears that

there is no dispute as to the basic facts that

would be relied on to found an estoppel, and those

matters - - -

TOOHEY J: That takes you back through the same door you

came in, because if there is no real dispute about

the facts, then what is there in the view of the

Full Court applying principles of law to those

facts that would warrant a grant of special leave?

MR ANDERSON:  Your Honour, Mr Justice Murphy thought that it

was appropriate that there be a representation,

some encouragement or some holding-out by ACI, and

in our submission that is not an appropriate

consideration in this case, because there was a
contractual requirement that the tests be conducted

at a mutually convenient time. So that the

consideration of whether there should be a

representation as a condition of an estoppel

existing is, in our submission, not an appropriate

approach. The better approach is to look at the

conduct of the parties, particularly the conduct of

ACI, and to consider whether that conduct gives rise to expectation, or an assumption, on the part

of the applicants that, if the tests were conducted
in the last week of October, that at the end of
that period ACI would not come along and say,

"Alright, well you have conducted the trials, but

we have not had time to carry out our tests,

therefore we can bring the contract to an end".

So there is a concentration on looking for a

representation and not on looking at the conduct
and whether that gives rise to an assumption upon

which the other party, or the parties, act, and it

is perhaps a narrow point, but it raises those

general questions in respect of which I have

attempted to address Your Honour. the general

question that, what is the nature of estoppel as a
concept in this country, and particularly -

promissory estoppel has been dealt with in detail,

but what about common law estoppel, what about

estoppel by convention, particularly as the primary

consideration of estoppel by convention was by

Mr Justice Dixon back in Grundt's case, which seems

to have been the fount from which the doctrines

that was applied in Waltons Stores v Maher came

from. Those are the submissions for the

applicants.

DAWSON J:  Thank you, Mr Anderson. We need not trouble you

Mr Goldberg.

Alperin 11 30/8/91

This application involves the construction of

a contract in the particular circumstances of the

case. It does not raise any point of principle in

such a way as to warrant the grant of special

leave. Special leave will be refused.

MR GOLDBERG:  We seek an order as to costs, if the Court

pleases.

DAWSON J:	Mr Anderson, can you say anything about that?
MR ANDERSON:	No, Your Honour.

DAWSON J: With costs.

MR GOLDBERG: If the Court pleases.

AT 10.04 THE MATTER WAS ADJOURNED SINE DIE

Alperin 12 30/8/91