Banque Nationale De Paris v Falkirk Developments Ltd

HIGH COURT OF AUSTRALIA

Barwick C.J., Mason and Jacobs JJ.

BANQUE NATIONALE DE PARIS v. FALKIRK DEVELOPMENTS LTD.

(1977) 136 CLR 177

4 March 1977

Deeds

Deeds—Alteration and cancellation—Production from proper custody in cancelled condition—Prima facie evidence of cancellation—Delivery under mistake by obligee for cancellation by obligor—Effect.

Decisions

1977, March 4.
The following written judgments were delivered: -
BARWICK C.J. The first named appellant ("the bank") was sued in the Supreme Court of New South Wales upon a deed by which it promised to pay to the respondent on demand a sum equal to the amount which, at the date of the demand, would have been held by the respondent as a retention fund under a building contract between the respondent with a company named Citra Constructions Ltd. ("Citra"), the second named appellant, such sum in any event not to exceed $164,144. By reason of the terms of the building contract and the course of its performance, the sum of $82,070 was the sum which at the date of the respondent's demand on the bank for payment under the deed the respondent would, but for the execution and delivery of the deed, have held in a retention fund under the building agreement. The Supreme Court gave judgment for the respondent for $82,070. (at p179)

2. On production of the deed to the Court from the custody of the bank, it clearly bore the word "cancelled" upon its face. That circumstance afforded prima facie evidence that it had been duly cancelled and its obligation terminated. (at p179)

3. However, evidence before the Supreme Court established to the satisfaction of the learned trial judge, Sheppard J., that the respondent had not agreed to the cancellation of the deed, its delivery by the respondent to the builder, Citra, and thence to the bank having taken place under a mistake, and in any case doubtfully with the authority of the respondent. That finding of fact resulted from the oral examination of witnesses and the consideration of the probabilities. There is no ground for disturbing the finding. Consequently, the cancellation not having been with the consent of the obligee, the respondent, it was nugatory. The obligation of the deed none the less remained. (at p179)

4. The details of the significant points in the case are set out in the reasons for judgment prepared by my brother Mason which I have had the advantage of reading. Also there, and in the reasons for judgment of the Supreme Court, were such references to the decided cases as support the two propositions I have mentioned: first, the prima facie consequence of the word "cancelled" on the face of a deed produced from the appropriate custody and, secondly, the necessity of the consent of the obligee to the cancellation of a deed if it is to be effective to terminate the obligations of the deed. (at p179)

5. I agree with the reasons expressed by my brother Mason, both as to the effect of the purported cancellation of…