Caltex Oil (Australia) Pty Limited v Ricciardello

[1991] HCATrans 207

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Perth	No Pl3 of 1991
B e t w e e n -
CALTEX OIL (AUSTRALIA) PTY LIMITED

Applicant

and

CALOGERO RICCIARDELLO and

ANNA RICCIARDELLO

First Respondents

ROBERT DAVID RICHMOND

Second Respondent

Application for special

leave to appeal

Caltex 1 8/8/91

MASON CJ
DEANE J

McHUGH J

TRANSCRIPT OF PROCEEDINGS

FROM PERTH BY VIDEO LINK TO CANBERRA

ON THURSDAY. 8 AUGUST 1991. AT 2.04 PM

Copyright in the High Court of Australia

MR D.E. HORTON, QC: If Your Honours please, I appear with

my learned friend, MR D. H. SOLOMON, for the

applicant Caltex. (instructed by Solomon

Brothers).

MR R.H.B. PRINGLE, OC:  I appear with MRS. MARTELLA, for

the first respondent who is the lessor of the

subject premises. (instructed by Martella & Co)

MR HORTON:  There was, in the court below, a second

respondent who is the valuer and he has indicated

to the Registrar that he wishes to take no further

part in the case.

MASON CJ: Yes, the Registrar has been so advised by his

solicitors, and that he will abide by the decision

of the Court.

MR HORTON:  I believe so, Your Honour, yes. Does

Your Honour have Caltex's outline of the argument?

MASON CJ: Yes.

MR HORTON:  It will be necessary for me to take Your Honours

for about five minutes to parts of the application

papers, but it might be more convenient for

Your Honours to glance at the outline first. It is

rather longer than Your Honours are used to but it

is done in this way to hopefully save reference to

a number of the cases. So, if I could have

Your Honours leave just to pause for a moment while

Your Honours glance at that.

MASON CJ:	Mr Horton, we have actually read the outline.
MR HORTON:	I am obliged, Your Honours.
MASON CJ:	When I say we have read it, we have read it very quickly so that if you want to emphasize any
matters in it by all means do so.

MR HORTON:	Yes, I will a little later then, Your Honour, and Your Honours will have read the affidavit in
support, I imagine.

MASON CJ: Yes.

MR HORTON:  May I then take Your Honours, just for five

minutes I should think, to some passages in the

appeal papers. If Your Honours will go to page 5

of the application book, that is to say the rubber

stamp page 5 in the top right hand corner.

MASON CJ: It is not very clearly stamped; it is just

discernible, that is all.

Caltex 2 8/8/91

MR HORTON: Just discernible. That is the second page of

this provision for a rent review after a

the amended statement of claim put on by Caltex, contained

certain number of years have passed.

On page 5 of the application book Your Honour

see conveniently set out the particular clause

which matters in this case.

I will not trouble Your Honour with the

subclauses (a) and (b), but if Your Honour looks at
subclause (c) of clause 1 of the lease, Your Honour

sees that the lessee may, given notice, in effect

requiring the determination of the rent increase by

a valuer and it is the last few lines on that page

and over on the next page which are important.

Your Honour sees he is a valuer who is to act

otherwise than as an arbitrator, his decision

should be final and binding on the parties and not

subject to appeal. The next sentence is the one

which has given rise to the problems in the case:

In determining a fair rental increase he may at his discretion hear the parties or receive

written submissions from them -

and these are the words, Your Honour, that caused

the problem:

he shall have regard (without limiting the

scope of his enquiry) to the rentals payable

for comparable premises in the same or

comparable areas.

As will be apparent from one or two other

passages I will come to in a moment, the valuer

took the view that the words in parenthesis that

Your Honour sees there at line 6 were a direction

to him imposing an obligation on him to have regard

to matters that otherwise he would not have had

regard to.

In short, he did not read it as making it

plain that his expertise was not to be fettered but

read it as a direction that he take into account

rents of premises that he said in his pleading and

in his valuation he otherwise would not have

considered. Can I go, Your Honour, to page 7, that

is the next page over of the application book, and

Your Honours will see - - -

MASON CJ: Just stopping there, this is not a standard form

provision, is it?

Caltex 3 8/8/91

MR HORTON:  No, I do not think it is, Your Honour, although

the evidence is, in the affidavit, there are 40-odd leases of Caltex ..... which contain the same clause.

MASON CJ: That may be, but the fact that it is not a

standard form provision is of some significance in

determining whether we are going to grant special

leave to appeal.

MR HORTON: Yes, I must concede that, Your Honour. But,

Your Honour, we will be submitting to Your Honours

that it is not really a question of construction of

this clause, important though it is for Caltex

because of its 40 leases, that raises the question

of general public importance, and perhaps I can
develop that in a few minutes.

Could I go over to page 7 of the appeal book, and Your Honours see paragraph 8 of the statement

of claim. It was there alleged that:

On the face of the Valuation the -

valuer -

stated:

and 8.1 does not matter, then -

8.2 There are currently 2 levels of head

lease rentals applicable to service stations,

namely:-

8.21 sites which are not subject to any
current lease which attract a premium over and

above normal market rent; and

8.22 sites where head rental is being reviewed

within the term of an existing lease and the

owner is not free to offer the site on the

open market;

In the judgments and in the valuation, indeed, that

is described as being two-tier rents. In short,

there is a different rent for a service station

which is vacant and available to be taken up under

a lease by some person who wishes to operate it,

and there are lower rents in premises which are the

subject of longish term leases, where there is, to

put it shortly, a sitting tenant. And Your Honours

will be aware, of course, that the legislation
dealing with petroleum franchises possibly has some
impact upon the fact that the sitting tenant can

negotiate a lower rent than someone who is coming

in off the street, as it were.

Then 8.3 of the statement of claim says:

Caltex 4 8/8/91

But for the terms of clause 1 of the Lease,

he -

the valuer -

would have accepted the submissions of the

Plaintiff and determined a rental of

$61,000.00 per annum.

What he did was to determine a rental,

Your Honours, of $78,000 per annum. Then 8.4 says:

The passage in clause (c) of the Lease -

and it sets out that matter in parentheses I

mentioned a moment ago -

was a specific direction to him -

so he found -

not to limit the scope of his inquiry -

Your Honour sees how he has, we would submit,

misunderstood the connotation of the words "not to

limit the scope of his inquiry" -

in respect of comparable evidence; and on the

basis of all evidence (being evidence of

rentals under both of the classes -

that is, both tiers -

referred to in paragraph 8.2 above) it was his

role to determine a reasonable rental

increase.

Perhaps I can pause there just to put on one

side, Your Honours, the words "reasonable rental

increase" in fact depart from the terms of the

the trial proceeded, turns on the fact that he has	lease because it talked about a "fair rental increase" but nothing, because of the way in which
misdescribed the type of rental increase.

Then paragraph 9 of the statement of claim

says:

On its proper construction, clause l(c) of the

Lease required that the valuer shall have

regard to the rentals payable for comparable

premises in the same or comparable areas and

may have regard to any other relevant factors.

Now, if I could take Your Honours to page 16 of the

application book, one comes to the amended defence

of the valuer, who was the second defendant, and

Caltex 8/8/91

Your Honours will see at line 21 on that page,

paragraph 5:

The Second Defendant -

said he -

admits paragraph 8 of the Statement of Claim.

And in paragraph 6 he also:

admits paragraph 9 -

but says he did have regard

MA.SON CJ:  What page is this, Mr Horton?

MR HORTON:  Page 16. I apologize to Your Honours for the

state of the stamping.

McHUGH J: But do you get anything out of that because

Richmond denied paragraph 8.

MR HORTON:  Yes, we do, Your Honour, and I will develop it

in a little while when I have taken Your Honours to just one or two other passages. I am reminded this

is Richmond, the valuer, who is admitting it.

Ricciardello, the lessor, denied it.

McHUGH J: Yes, but I meant the first respondent denied it.

MR HORTON: 

I understood Your Honour to mean that and, of

course, the crux of the Full Court's decision was
that the admission by the valuer was not an

admission by the lessor and therefore could not be

taken account of.

DEANE J: 

Mr Horton, I have a problem understanding the

two-tier system.

MR HORTON:	Yes.
DEANE J: Can I ask you this: assume premises are not

leased and a lease is entered into, then that lease

will be negotiated on the basis of a fair market

rent for the premises.

MR HORTON: That is so, Your Honour.

DEANE J: Well, now, if in that lease you insert a rental

increase clause in these terms, if when you come to work out the rental increase you adopt the approach

that there is a big discount because they are

leased premises, the rent will go down

significantly.

MR HORTON:  It may well do, Your Honour.

Caltex 6 8/8/91

DEANE J: Well, that would be a strange interpretation of a

rental increase clause -

MR HORTON:	Of a rental increase, yes.
DEANE J:	- - - that you -
MR HORTON:	Or maybe there was no increase, Your Honour, in

those circumstances.

DEANE J: Well now, does that not mean that a vital factor

must be whether the rent, which has been adjusted,

was a rent calculated on the vacant premises basis

or a rent calculated on the basis that Caltex had

rights to a lease. Now I have not seen anything in

this material that explains whether that was so or

acknowledges the relevance of it.

MR HORTON:  I am afraid I have lost Your Honour there for a

moment.

DEANE J: Well you see, the point I am putting is this: this

is a rental increase clause to be applying and

adjusting rent payable under a lease.

MR HORTON:	Yes.
DEANE J:	The material in the book indicates that if the

rent is ascertained on the basis of vacant
premises, it is much higher than if the rent is
ascertained on the basis of premises already

rented.

MR HORTON: Quite so, Your Honour, yes.

DEANE J: Well now, what I am suggesting to you is if the

rent under the lease, which has to be adjusted, was

negotiated on the basis of premises that would be

vacant, it seems to me to be absurd to suggest that

f	the rental increase is to be calculated on a basis
that starts with a discount of 25 per cent at the
starting point.
MR HORTON:	It may depend, Your Honour, on the impact of

inflation and supply and demand between the date of

the grant of the lease as vacant premises and the

date when you come to the rent review.

DEANE J: But, I mean say 12 months ago the rent was

negotiated at the vacant rate of $90,000.	A year
later you come to rental adjustment.	As I say, it

just strikes me as untenable that you would say, in

those circumstances in approaching this clause, oh,

you calculate the rent not on the basis that it was originally fixed, but on some basis which will lead

to a decrease of 25 per cent.

Caltex 7 8/8/91

MR HORTON:  Probably the clause does not permit of a

decrease, but the consequence might be that it will

not be increased, Your Honour. I appreciate

Your Honour is giving an example of one year later,

but say it is a five year or longer rent review,

it -

DEANE J:  The point I am trying to make is I would have

thought the starting point to a construction of

this clause would be to know on what basis the rent

had originally been fixed, whether it was a

negotiation on the basis that the premises would
otherwise be vacant, or whether it was a

negotiation on the basis that Caltex had leasehold

rights to the premises.

MR HORTON:	The original rent, Your Honour?
DEANE J:	The rent that was to be adjusted.
MR HORTON:	Yes.
DEANE J:	Now, looking at the material I cannot see anything

about that. I may have missed it, but - - -

MR HORTON:  I do not think it emerges, Your Honour, from the

valuer's determination.

DEANE J:  I see. I do not want to divert you, but it is a

problem that seems to me to loom large in this

case.

MR HORTON: Well, except, Your Honour, if the valuer took

account of the problem that Your Honour raised, he

either reflected that in his money determination or

perhaps he decided not to. Whether he did or

whether he did not might be an error in valuation,

but it would not, we would submit, be such a

mistake as to nullify the effect of the mistake

that we say he laboured under. And indeed, it may

well be, depending upon which of the numerous

authorities there are going in different

directions, that one could not complain that he had

refused to take account of such a factor because it

may be said that is an error in valuation principle

or approach, Your Honour.

If I can just go back to the valuer's defence.

As I say, he admitted paragraph 8 of the statement

of claim and then in paragraph 7 of his defence he

said:

Notwithstanding the existence of the two

levels of head lease as outlined in

paragraphs 8.2.1 and 8.2.2 of the Statement of

Claim -

Caltex 8/8/91

the valuer said in his pleading that -

the passage in clause l(c) of the lease

required him to take into consideration:

(i) the rentals payable on both sites

mentioned -

in those clauses;

(ii) more than just the rental payable for

sites referred to in paragraph 8.2.2 -

that is the lower tier, if I can put it that way,

and other factors. But what he is saying in his

defence is that the clause commanded him to take

into account the second tier of rents.

If I can then go, Your Honours, to page 19 in

the application book, Your Honours will come upon

the commencement of the speaking valuation. The

first few pages I do not think Your Honours need be

troubled with. Perhaps if one could go over to

page 26, at about line 25, he refers to a Mr Dunn

and a Mr Todd. Mr Dunn was a valuer who made

submissions to him on the part of or in support of Caltex's view; Mr Todd was a valuer supporting the

position of the lessor. He says:

As an introduction to the valuation section of

his report, Mr Dunn, like Mr Todd in his
report, states that there are currently two

levels of head lease rental applicable to

service stations.	Mr Dunn categorises these
service stations as:

"Vulnerable Sites" - being those sites which

are not Oil Company owned and where there is

no existing lease encumbrance which leaves the

owner free to negotiate with ..... potential

private Lessees. Such sites attract a premium

rent over and above normal market rent.

Mr Dunn -

that is to say the Caltex protagonist -

advises the second level is where the head

lease rental is being reviewed within the
terms of an existing lease, that is the owner
is not free to offer the site on the open

market but is committed to the existing Oil

Company or private Lessee.

It is Mr Dunn's opinion that the subject

service station has an existing lease

encumbrance and so fits into this second

Caltex 9 8/8/91

category. Accordingly, the basis of his
rental valuation is a rate of 2.0 cents per

litre or an overall annual rental of $61,000.

If I can go then over to page 28 of the application

book, about line 29, Your Honours:

Mr Todd, -

this is the valuer

in assessing a rental value for the premises,

has generally looked at evidence, indicating a

wide range of rental levels, but not

necessarily comparable in lease detail.	He
has then elected to base his rental

calculations on evidence at the higher end of

the range indicated by such evidence.	The
reason for this election is not fully explained.

I will pass over the next paragraph and come to

about line 37:

Under normal circumstances -

said the valuer -

and in line with most standard service station

lease agreements, I would, on the weight of

market rental evidence, be forced to disagree

with Mr Todd and align myself with Mr Dunn's

reasoning -

that is to say, the Caltex view -

and rental assessment. However, it would seem

that for the subject premises the Lease rent

review conditions are not standard. That is,

in terms of lease detail they vary from those

of most sites leased and encumbered under long

term agreements.

And now we come to the part where we say error, in

the relevant sense, is disclosed:

It is my belief that the subject lease differs

from most standard lease agreements in that it

specifically directs the appointed valuer "not

to limit the scope of his enquiry" in respect

of comparable evidence. This directive to me,

so he calls it -

indicates that in my position, I am to

consider all rental evidence including that

Caltex 10 8/8/91

for premises classed as encumbered by leases

and those as named by Mr Dunn as being

"vulnerable". My further role, is then to

consider this evidence and reach a conclusion

as to a reasonable rental increase to apply to

the premises for the review period.

Now, Your Honours, that was the nub of the

complaint at first instance, and before the the valuer.

MASON CJ:  You ..... before the primary judge.

MR HORTON: Before the primary judge, indeed, Your Honour.

Or my learned junior did, I should say, perhaps.

MASON CJ: Yes.

The learned primary judge took the view that this was not a valuation in accordance with the

contract, picking up a phrase used by Your Honour

Mr Justice McHugh in Legal & General case, when

Your Honour was on the Court of Appeal. The

primary judge did not so much describe it as a

mistake, but he said that we had not got what the

contract entitled us to get; that was a valuation

done in accordance with the terms and not one done

under a misapprehension as to the meaning of the

words used. So that the valuer thought he was

forced, directed, to take into account matters that

he would not have otherwise not have taken into account merely by the words in parenthesis, and Your Honours will recollect that on the pleading of

the valuer, he has admitted that he so regarded himself, that is to say, is compelled to depart

from the course of valuation he otherwise would

have adopted from the words of the lease.

Now, can I then take Your Honour to a passage

or two in the Chief Justice's judgment, which

Your Honours will find at page 60 of the

application book; perhaps I ought to start at

page 59. The Chief Justice wrote a short

additional judgment, although he agreed with the principal judgment of Mr Justice Rowland, but he said he wished to add some comments concerning the

distinction between "market rent" and a "fair

rent", and on page 59, at line 25, he says:

In the context of rental valuation or

assessment there is a well-established

distinction between "market rent" on the one

hand and a "fair rent" on the other. In the

former case the rent is determined on the

basis of the rent the premises would bring on

the open market having regard to the rents

Caltex 11 8/8/91

paid for comparable premises in the same or a

comparable area. The test is objective.	In
the latter case the rent is ..... subjective.

And he refers to two or three cases to that effect.

And over on page 60, His Honour here, we submit,

fell into error:

In my opinion the relevant portion of the text

of the valuation shows that the valuer

properly appreciated the distinction. He was,

without limiting the scope of his inquiry,

required to have regard to the evidence

relevant to a determination of a market rent.

Well now, Your Honour, the lease simply does not

say that.

That evidence is much narrower in scope than

an enquiry into what would be a reasonable

rent for these two parties to have agreed,

having regard to all the circumstances. Had

the second respondent been determining the

market rental he would have accepted Mr Dunn's

approach. He was, however, required to go

further and determine a fair rental.

Now, with all respect to the Chief Justice,

Your Honour, we have some difficulty in reconciling

what he says at lines 25 and 26, with what

His Honour said at lines 17 and 18 and we submit

that His Honour the Chief Justice was in error in

thinking that the lease required a determination of

market rent but, even if that were so, the determining a market rent, he would have accepted

Caltex's approach. So that, were we to get leave,

we would wish to discuss rather more fully what we

see as possibly an error there. Your Honour, can

we - - -

MASON CJ: That is not the type of question which would

customarily engage the attention of this Court,

Mr Horton.

MR HORTON:	No, Your Honour. That is why I said, if we are granted leave, Your Honour, we would want to debate
that.

Mr Justice Rowland, if I can take Your Honours

to page 68 merely to identify the ground of appeal
at line 25 because His Honour wrote his judgment by

reference back to that and one cannot follow what

he is saying and this one looks at that first -

that particular ground was that:

Caltex 12 8/8/91

The learned Trial Judge was in error in

holding that the Second Respondent's -

this is the valuer's admission of paragraph 8 of

the Statement of Claim -

governed the construction of the valuation in

the proceedings brought -

about the valuation.

Then one goes from there to page 73. At

line 20 Mr Justice Rowland says:

His Honour -

the trial judge -

in fact, accepted as a matter of pleading that

the valuer acted in accordance with the -

allegation, it must be -

contained in paragraph 8 of the statement of
claim which the valuer admitted. His Honour

did, however, state that this admission was

supported by the valuer's report. He said:

"Even if the pleadings did not contain these

admissions I would come to the same

conclusions on a reading of the valuation

report."

It is difficult -

said Mr Justice Rowland -

to see why the present appellant should be in

any way bound by the valuer's pleading. The

valuer is not an agent of the appellant, but

is entirely independent and has a function

under the lease to perform as an expert,
rather than an arbitrator.	I will return to
this.

Can I then go ahead, Your Honour, to page 74, only to indicate that His Honour referred to the

Full Court of Queensland decision, and he has

extracted probably the principal relevant passage

in the middle of the page, to the effect that the

Queensland Full Court took the view that "speaking

valuations", if they could be attacked at all - and
they expressed the view that they could not be -
the attack must be made from a reading of the

valuation, not from cross-examination of the valuer

and answers elicited therein, which the appellant

had attempted in the Mayne Nickless case.

Caltex 13 8/8/91

If I can go over to page 78. At line 11

His Honour was discussing Mr Justice Bryson's

decision in the Howitz Grahame Books case in

New South Wales. At line 11 he said that

Mr Justice Bryson:

decided that if it can be shown that the

valuation is not in accordance with the
contract, there would appear to be no reason
in principle to limit the available factual

material to prove that there has been a

mistake. I have some doubts -

says Mr Justice Rowland -

about this approach. It is true that

McHugh JA -

he is speaking of Your Honour's judgment in the

Legal and General case -

did not seek to draw any such distinction, but

that does not mean that one may not exist and

where, as in the present case, there is a

speaking valuation, then it seems to me that

it should be construed as any other document and its proper construction will decide what

it means. This is consistent with the

approach of the Full Court of the Supreme

Court of Queensland in Mayne Nickless Ltd v

Solomon already cited. I would accordingly

uphold ground 1 -

which we looked at earlier -

but that, of course, does not resolve this

appeal, because His Honour found that the

relevant mistake was apparent from a reading

of the valuation report.

Then if one goes over to page 81, line 22,

But it seems to me that His Honour was wrong

when he assumed that but for that provision -

Mr Justice Rowland said:

that is l(c) -

the valuer would have allowed the value

endorsed by Dunn as a fair rental.

Now, of course, the valuer's admission was

that but for clause 1 he would have allowed it.

The valuation report stated that the valuer

would have been prepared to accept that as a

Caltex 14 8/8/91

market rental, but for the provisions in the

lease.

Your Honour, were we to get leave we would want to criticize that, because the valuer did not

say that he would accept it as a market rental.

Those words simply do not appear there.

It seems to me -

says His Honour -

there is little doubt that the valuer was

fully aware of the distinction between market

value and fair rental value which he was to
assess in order to obtain the fair rental

increase. In effect, what the valuer has done

is to broaden his enquiry to take into account

all matters that are relevant to rental

valuations, and that is certainly, in my view,

not contrary to the requirements of the

contract.

Now we would not want to dissent from that,

Your Honour, if that accurately reflected what the
valuer said he did, but we would submit that it

does not.

In my view, that is not a fundamental mistake,

if in fact it be a mistake.	He was employed
as an expert -

Then His Honour said -

He refused to accept the submissions from

either expert put forward by the parties - Now, with all respect to His Honour, that is not

right. He did accept the submissions and took them

into account and gave weight to them and he said,

the Caltex submission but thought he was compelled	if that was all in the case he would have adopted
by a directive not to do so. His Honour goes on -

and he determined a fair rental for the

ensuing three years which necessarily leads to

ascertaining the fair rental increase.

Then if I can go towards the foot of the page,

Your Honour, about line 38, then he says:

His Honour has, with respect, paid attention

to the valuer's pleading instead of his

valuation and when considering the latter

ie the valuation -

Caltex 15 8/8/91

he has mistaken the valuer's reference to

Dunn's "market value" as a reference to "fair

value".

And His Honour would allow the appeal and the third

member of the court merely agreed with

Mr Justice Rowland's judgment.

Now, Your Honour, what we wish to submit is

that - and this is for the purpose, of course, of

endeavouring to persuade Your Honours it is a

matter proper for Your Honours to grant leave, for reasoning and so on in the judgment, I am not going

to attend to that except to show that there is an

arguable case if Your Honours were to give us
leave.

What you have, Your Honour, is the author of the document has said solemnly, "When I wrote this

document I meant it to reflect this, that and the

other meaning and I construed the lease as imposing

an obligation by way of direction upon me to do

what otherwise I would not have done".

Now, it is true, Your Honour, that that is not

an admission that one can, as it were, sheet home

to the lessor but it is an admission as to the

meaning of the document which is the subject of the

litigation and it is the author's document which

the court was construed to examine to see whether a

mistake, to use the jargon, had been made in it,

and whether or not the lessor admitted or disputed

or called evidence to the contrary is entirely by

the way, we would submit. If the author says he

meant that, that is the end of the matter.

Now, Your Honours, we gave a reference, and

Your Honours will find it in the bundle of papers, to a case in the House of Lords called Rutherford

that were given to Your Honours, and Your Honours v Richardson. It is the ninth case in the papers

will find it at page 62 of the bundle of cases.	It
was a divorce case which went to the Lords and if
Your Honours would go to page 6 of the report,
which is at page 65 in the stamped pagination, and
Your Honours will see in Viscount Birkenhead's

speech a passage starting just below His Lordship's

name in the margin:

There is some independent evidence against

both B. and c., but not sufficient to justify

a positive adverse conclusion. B., however,

makes full confession -

This being, I should have said, a divorce case

involving a co-respondent -

Caltex 16 8/8/91

Here the Court may very reasonably pronounce a decree against B., while concluding that the matter is not established as against C -

the co-respondent -

Indeed, to hold otherwise would be to lay it

down that the admission or confession of

B. - which may be quite untrue, and which may

be induced by hidden and private motives - is

to be treated as good evidence against c. And

so it happens that the Court may quite
reasonably conclude that it is proved that B.

has committed adultery with c., but not that

C. has committed adultery with B. The law -

and so on.

But still another case requires consideration.

He says:

Supposing that the case presented and the

impression made by C. upon the Court is of

such a character that the judge, summarising

his impression, may record it in this way:

"Not only -

the judge might say -

has C. convinced me that I must give him the

benefit of the doubt because the admissions

are not evidence as against him, but he has

positively satisfied me that no adultery was

ever committed at all between the parties

charged."

Such a conclusion, if plainly reached by

a judge or a jury, makes it impossible for any

purpose whatever to act upon the admissions

which would otherwise have been a reliable

"	guide in relation to him or her who made them.
For in the case supposed, that which has been proved by C. is, as my noble and learned
friend, Lord Dunedin, suggested in the course of the argument, absolutely destructive of the
case made by B. and, therefore (inter alia),
of the admissions upon which and upon which alone that case depended.
Now, we only give Your Honours that reference

to show the contrast between that type of case

where plainly it is alleged that Band C were

parties to a particular transaction or act, both
being involved in it but not as partners or

anything of that nature, and B admits the act

saying that he committed it with C.	That is
plainly not an admission that C did the act.	But

Caltex 17 8/8/91

that is because an admission by one actor, that he did the act, does not prove by way of an admission

that the other actor was a party to it. But that is far removed from the sort of case that we have

here where the question is, "What is the meaning of

the document and how did the valuer construe the

direction in the lease?"

Now, Your Honours, also in the bundle of

cases, Your Honours will find, right at the back on
the last page, an extract from the 4th edition of

Halsbury in volume 32, the topic dealing with

mistake. The reason that we offer that to

Your Honours is - and I have not brought the cases

because they say no more than the publication says.

Your Honours will see at the foot of paragraph 24:

A deed poll may also be rectified on proof

that it is not in accordance with the

intention of the person who executed it.

And the cases are set out in the footnote.

The unilateral document prepared by the valuer

is akin, we would submit, to a deed poll. If,

through infirmity of expression or some other error

it does not plainly display his meaning and

intention, then he would be entitled, we would

submit, to have it rectified were it of sufficient

importance to him to bring an equity suit for the

purpose. If he is entitled to rectify it then it

ought to be read, we would submit, by the

Western Australian courts as if it had been

rectified so that the document is to be read as if

the equity which the author has to have it

rectified have been enforced by some court and it

is to be read as explained by the pleading, that is
to say, by his admission of paragraph 8 and 9 of

the statement of claim.

Now, if that be right, and we would submit

that it is, then there is no justification for

denying to the pleading a, as it were, modification

or gloss upon the valuation and to administer the
rights of the parties, as the Full Court has done,
on the basis that the valuer meant what he did not

mean, because that is the affect of the decision.

McHUGH J: Well, whatever other problems you might have, the

case that you are now putting on this point falls

down on the fact that it is an admission on a

pleading. It might have been different if you had

called the valuer and he had given evidence on

oath.

MR HORTON:  Yes, Your Honour, I concede that. That would have then been evidence in the case but the

Caltex 18 8/8/91

submission I was just putting to Your Honour is put

in order to overcome that problem. That is to say,

if it can be seen that there was equity to rectify

the document and no one could gainsay him that

right - the Ricciardellos, if I have pronounced

that - - -

McHUGH J: Again, no equity can be seen so far as the

respondent to these proceedings is concerned.

MR HORTON:  So far as the lessor is concerned, Your Honour

means?

McHUGH J: So far as the lessee is concerned. All you are

relying on is an admission by the valuer in a

pleading.

MR HORTON:	Yes, Your Honour, but - - -
McHUGH J:	Now, that is admissible against him, but that is

the beginning and end of it.

MR HORTON:  No, it is the beginning of it, Your Honour, but

it is not the end of it because he would have an

enforceable equity which he could bring a suit, ex

parte, to have the valuation rectified if it

mattered to him, and nobody could gainsay him that

right.

McHUGH J: That is the point I am taking up with you, that

the statement about the equity is no stronger than

the admission in his pleading - - -

MR HORTON:	Yes, it is
McHUGH J:	- - - which, so far as the present respondent of

this application is concerned, is of no effect

whatever.

MR HORTON: Well, Your Honour, may I put it this way: say,

before the litigation - - -

McHUGH J: Could I just ask you this: what evidence of an

equity is there?

MR HORTON:  The admission in the pleading that he

meant -

McHUGH J: Well, that is the end of it.

MR HORTON:  No, Your Honour, that is a statement

McHUGH J: That is not any evidence against the present

respondent.

MR HORTON:  I concede that, Your Honour. I was not

suggesting it was. Can I put this to Your Honour:

Caltex 19 8/8/91

say before the litigation started the valuation had

been furnished to Caltex and to the other side, and

the valuer, either because somebody said something

to him or he read it again, thought, "Heavens

above, I have not made it clear.	My intention is
not reflected properly in the document."	He could

if he wished go to the Equity Division, if they

have that in Western Australia, and commence a suit

to rectify his valuation, and nobody could deny

him. There would be no defendant, and he must

win.Now, then the valuation as rectified would be

the valuation which would be the speaking

valuation.

Now, if that be right, and we would submit it

plainly is, Your Honour, then it is not a question

of admissions. It is a question of what does the

valuation really mean. And if he has an equity,

then it means what the equity says it means.

McHUGH J:  No, the valuation means what it would mean to a

person reading it, and at the moment it means what

it says in the form it is expressed.

MR HORTON:  But, Your Honour, if it had been rectified by a

decree of the equity court, then it would mean what

the equity court said it meant.

McHUGH J: Well, that may be, but the point is it has not

been rectified and there is no other evidence here

except an admission.

MR HORTON: Well, Your Honour, that is the only evidence you

would need because the author who made the

admission, that is to say -

McHUGH J: But that is not evidence. I have been saying

that to you.

MR HORTON:	But it is, Your Honour.
McHUGH J: It is not evidence at all. It might be evidence

against the valuer -

MR HORTON: That is what matters, Your Honour, with all

respect.

McHUGH J: It is not evidence in the case against the

respondent at all.

MR HORTON:	Your Honour, if the valuation were rectified, that would be the end of the matter, and it is
plain that the valuer has a right to have it
rectified.  So one has got to read it as rectified.
And the lessor could not gainsay him that right.
So the result is that the valuer having the right
to rectify his valuation, and having said it is

Caltex 20 8/8/91

mistaken in the expression, the courts are

proceeding to resolve the issue between the parties

on the basis of a valuation which does not properly

record what he meant, which is extraordinary,

Your Honours.	So that is the way we put that,
Your Honours.

Now, if that be right then, we would submit,

one comes to these other somewhat vexed questions

as to whether a speaking valuation can be modified

by extrinsic evidence and the cases are both ways.

I do not want to take Your Honour's time, but

Your Honour will see in the sort of table we have

put in that there are cases both ways.

The next thing is that a number of the cases - indeed, Your Honour, Mr Justice McHugh, I

think, said as much - have suggested that you can
only take advantage of a relevant mistake in equity

proceedings.

McHUGH J:  No, I did not say that at all. I noticed that in

your written submissions, and it completely

misrepresents what I said in my judgment.	I said
"in terms" in my judgment.

MR HORTON:  I am sorry, I would not have misrepresented

Your Honour deliberately.

McHUGH J:  I said in terms that you can take account of a

mistake in proceedings at law, but it depends

whether the mistake is something done contrary to

the terms of the contract.

MR HORTON: Well, Your Honour, may I adopt Your Honour's

interpretation of Your Honour's judgment with

gratitude.

MCHUGH J: Yes.

MR HORTON:  But there are other statements in the cases

which suggest that it can only be brought in	equity, which is extraordinary, and when one
considers the situation in New South Wales back, how long, 20 years ago, one would have, if one were sued at law, have put on an equitable defence
claiming a right to a permanent and unconditional
injunction to restrain, say, ejectment, if that was
how it arose, arising out of failure to pay the
rent.

So that we would submit that those cases - and

I do not suggest that Your Honour

Mr Justice McHugh's is among them, I resile from

that - - -

Caltex 21 8/8/91

McHUGH J: 

No, what I said, and it is set out at page 76 in

the appeal book, at about line 24 - among other
things I said:

the mistake may be of a kind which shows that
the valuation is not in accordance with the

contract.

MR HORTON:  Yes. Of course we accept that, Your Honour, and

Your Honour's view has been followed in one or two

other cases since.

McHUGH J: Yes. What I said was that the defences of which

Sir John Romilly spoke of in Collier's case were

equitable defences to an equitable remedy, and they

were not available in a common law action. They

included fraud and mistaken conclusion. But that

is different to the other question.

MR HORTON: Well, Your Honour, we would wish, if we had

leave, to examine the theory that equitable

defences are not available in a common law action

because we would submit that if one were entitled,

in the days before fusion in New South Wales, to

raise an equitable defence and claim a permanent
and unconditional injunction, then that would mean
that mistake would be a defence, raised by way of

an equitable plea, to a common law action. And

there is the decision of Mr Justice Giles, if I

have it from memory, in which in an ejectment

action, he in fact allowed a mistake as a defence,

which was clearly an action at law.

So that we would want to say that nowadays the

courts must administer the law in accordance with
the rules of equity, and if there has been a
mistake of the relevant type, then that will

provide a defence to an action at law, Your Honour.

McHUGH J:  ...... law in equity is used or whether you take

the - - -

MR HORTON:	I noticed Your Honour is embracing Mr Meagher's view and Mr Gummow's view, which some may think a
little extreme, but the other thing is,
Your Honour, that in some of the English cases, for example, Lord Denning in Campbell v Edwards, who
resiled from his view in Dean v Prince, said that
he resiled from it because in the meantime he had
addressed the question of whether or not a valuer
could be sued in negligence, and the Lords had
upheld him.  He was in dissent.

So when he came to deal with Campbell v

Edwards he said, "Well, earlier days we had to

allow valuations to be attacked for mistake because

you could not sue the valuer for negligence. Now,

Caltex 22 8/8/91

since I have revealed that you can sue the valuer

in negligence, there is no occasion to worry about

mistake any more". Now, we would want to have

something to say about that to Your Honours, if

Your Honours were to give us leave. That clearly

it is not right. It cannot be so.

And indeed, in that very same case, they

refused leave to join the valuer because one of the
other of Their Lordships said, "You only want to

join him so you can get discovery. Then you want

to use the discovered material to attack his

valuation, and we don't think we're going to let

you do that.", which means that they were of the

view that extrinsic evidence was admissible.

And in the case that Your Honour was in in the

Court of Appeal, Mr Justice Mahoney made several

observations, which we have referred to in our

notes and I will not go to them unless Your Honours

wish me to, which - - -

MASON CJ:	No, there is no occasion to do that, Mr Horton.
MR HORTON:	No, which indicated that he took the view that

extrinsic evidence was admissible, and

Mr Justice Priestley in that same case took the

view that the lessee had not discharged the onus of lessor, the lessor may not discharge the onus of
proof. But he also said that there was a mistake.

proof, therefore there should be no estoppel.	Now,
we would submit that His Honour could only have
expressed himself thus on the basis that there

would be some evidence outside of the valuation

which might be adduced by one of the other parties.

MASON CJ: But this is all at the fringe of the case really

Mr Horton, is it not? The real question here turns

on the construction of the document itself.

MR HORTON: That is true, Your Honour, yes, and what, we

would submit, is the plain error of the valuer and
the question is, whether - another way in which - perhaps I have not said, but I meant to - another way in which we put what is called the pleading

point for short, although I do not want that label

that I give to it to damage my prospects before

Your Honours, is that that is equivalent to a

letter written by the valuer, perhaps, saying,

"When I wrote thus I meant that", which was exactly

what happened in the case of Dean v Prince. When

the disappointed party complained, the valuer wrote

a letter saying what he had done and what he had

taken into account and it was that that caused the

trouble and allowed Mr Justice Harman and the

Court of Appeal to examine whether he had made a

Caltex 23 8/8/91

mistake, and we would submit one can look at the

pleading here in that light also as part of the

speaking valuation, leaving aside my excursion into

equities and so on altogether.

MASON CJ:  Now, we have spent a good deal of time on this

case.

MR HORTON:  I know, Your Honours. I do not think I want to

take much more of Your Honours' time except to urge

upon Your Honours one further consideration from

the special leave point of view, and that is that

nearly all of the cases that we have mentioned in

our note could be said to result in obiter

statements of the law - nearly all of them - and

yet the situation can only be described as somewhat

chaotic and it may be that Your Honours would think

that it would be an opportunity for this Court to

reduce into order what that chaos has produced,
even if, at the end of the day, and it does happen:

Your Honours grant leave and the result is not conclusive and much of, if I may say to with all

respect, Your Honours, a lot of the learning that

this Court has developed amongst the profession, is

to be found in obiter statements. One is conscious

of that. And the mere fact that this Court, if it

were to grant leave, would, when examining this

jumble into which the law has fallen, might

ultimately result in much of the observations of

this Court being obiter, would still be a very good

thing and not by any means a misapplication, we

would submit, of the Court's function.

MASON CJ:  You are more optimistic than most people are,

Mr Horton.

MR HORTON: Well, Your Honour has not been so long away from

the bar that Your Honour will not remember the way

in which one sought to find a judgment of

Sir Frederick Jordan, even approximately on the

point or Sir Owen Dixon.

MASON CJ:	He is not with us now.
MR HORTON:	No, but Your Honours, those are considerations

which we would urge upon Your Honour as being

something Your Honours may take into consideration

in deciding, in your discretion, whether to grant

leave. It does not matter, in a way, in a special

leave case, whether the result is good, bad or
indifferent for the parties, but it does matter

that the chaotic situation be sorted out and there

is no one else who can do it except Your Honours.

We are much obliged, Your Honours.

MASON CJ: Yes, thank you, Mr Horton. The Court need not

trouble you, Mr Pringle.

Caltex 24 8/8/91

It appears that the present case turns on the construction of a particular provision in a lease

which is not in standard form and of the valuation

which is in dispute and on its own particular

circumstances. No question of general principle is

involved, nor is the question sought to be argued

one of public importance. Accordingly, the case is

not appropriate for the grant of special leave.

The application is refused.

MR PRINGLE: If you please, Your Honours, I move for an

order for costs of the application.

MASON CJ:  Yes. You do not oppose that, Mr Horton?

MR HORTON:	No, Your Honour.
MASON CJ:	The application is refused, with costs.

AT 2.59 PM THE MATTER WAS ADJOURNED SINE DIE

Caltex 25 8/8/91