Carlin v Hamersley Iron Pty Ltd

[2003] WASCA 270

CARLIN -v- HAMERSLEY IRON PTY LTD [2003] WASCA 270

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2003] WASCA 270
Court:	THE FULL COURT (WA)
Case No:	FUL:16/2003	Heard:	22 OCTOBER 2003
Coram:	PARKER J MILLER J MCLURE J	Delivered:	14/11/03
No of pages:	37	Judgment Part:	1 of 1
Result:	Answers to questions 4, 5, 6 and 7 affirmed
Category:	B
PDF Version

Parties:	ANTHONY JAMES CARLIN HAMERSLEY IRON PTY LTD (ACN 004 558 276)
Catchwords:	Contracts Construction and interpretation of contracts Hamersley Home Ownership Plan Contract of Sale Options to repurchase and lease Turns on own facts
Legislation:	Hamersley Iron (Hamersley Range) Agreement Act 1963 (WA) Rules of the Supreme Court 1971 (WA), O 58 r 10
Case References:	Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd (2000) 22 WAR 101 Birrell v Dryer (1884) 9 App Cas 345 Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 Copperart Pty Ltd v Bayside Developments Pty Ltd (1996) 16 WAR 396 Darwil Pty Ltd v May, unreported; SCt of WA (Owen J); Library No 930038; 25 January 1993 Hamersley Iron Pty Ltd v Hancock, unreported; SCt of WA (Olney J); Library No 5195; 23 December 1983 Hawkins v Clayton (1988) 164 CLR 539 Holland v Jones (1917) 23 CLR 149 Industrial Equity Ltd v Darling Point Securities Pty Ltd (1991) NSW ConvR 55-570 Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 186 ALR 289 Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429 Woods v Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460 Allen v Carbone (1975) 132 CLR 528 ANZ Banking Group Ltd v Frost Holdings Pty Ltd [1989] VR 695 Austin v Newham [1906] 2 KB 167 Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 Australian Casualty Co Ltd v Federico (1986) 160 CLR 513 Beattie v Fine [1925] VLR 363 BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 Breen v Williams (1996) 186 CLR 71 Brown v Gould [1972] Ch 53 Clay v Clay, unreported; FCt SCt of WA; Library No 960168; 27 March 1996 Darling Point Securities Pty Ltd v Industrial Equity Pty Ltd (1991) NSW ConvR 55-589 Del Borrello v Friedman and Lurie (A firm) & Anor [2001] WASCA 348 Dellafiora v Lester [1962] 1 WLR 1208 Hamersley Iron Pty Ltd v Roberts, unreported; SCt of WA (Comm Wheeler QC); Library No 950619; 15 November 1995 Hope v RCA Photophone of Australia Pty Ltd (1937) 59 CLR 348 Humphries v Proprietors Surfers Palms North Group Titles Plan 1955 (1994) 179 CLR 597 Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 John Lee & Son (Grantham) Ltd v Railway Executive [1949] 2 All ER 581 King's Motors (Oxford) Ltd v Lax [1970] 1 WLR 426 Legione v Hateley (1983) 152 CLR 406 Mander Forklift Pty Ltd v Dairy Farmers Co-operative (1990) ATPR 46-061 Mark Mayne Pty Ltd v Suburban Centres Pty Ltd [1976] 2 NSWLR 67 May & Butcher Ltd v R [1934] 2 KB 17 McDermott v Black (1940) 63 CLR 161 Mestros v Blackwell (1974) 8 SASR 323 Morris v Sanders Universal Products [1954] 1 WLR 67 O'Keefe & McKenna v Williams (1910) 11 CLR 171 R J Mabarrak Pty Ltd v King (1971) 1 SASR 313 Raves v Fobone Pty Ltd (1991) NSW ConvR 55-564 Seaton v Mapp (1846) 2 Coll 556 South Australia v Commonwealth (1962) 108 CLR 130 South Coast Oils (Qld & NSW) Pty Ltd v Look Enterprises Pty Ltd [1988] 1 Qd R 680 Spotless Catering Services Ltd v Commonwealth of Australia, unreported; SCt of WA (Owen J); Library No 980102; 6 March 1998 Stern v McArther (1988) 165 CLR 489 Sun Alliance & Royal Insurance Australia Ltd v Brandrill Pty Ltd, unreported; FCt SCt of WA; Library No 970076; 28 February 1997 The National Mutual Life Association of Australasia v Hamersley Iron Pty Ltd, unreported; FCt SCt of WA; Library No 5642; 27 November 1984 Thorby v Goldberg (1964) 112 CLR 597 Trazray Pty Ltd v Russell Foundries Pty Ltd (1988) 5 BPR 11,232 Trustees Executors & Agency Co Ltd v Gleeson (1959) 102 CLR 334 Whitlock v Brew (1968) 188 CLR 445

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : CARLIN -v- HAMERSLEY IRON PTY LTD [2003] WASCA 270 CORAM : PARKER J

MILLER J
MCLURE J

HEARD : 22 OCTOBER 2003 DELIVERED : 14 NOVEMBER 2003 FILE NO/S : FUL 16 of 2003 BETWEEN : ANTHONY JAMES CARLIN

Appellant

AND

HAMERSLEY IRON PTY LTD (ACN 004 558 276)
Respondent

Catchwords:

Contracts - Construction and interpretation of contracts - Hamersley Home Ownership Plan Contract of Sale - Options to repurchase and lease - Turns on own facts

Legislation:

Hamersley Iron (Hamersley Range) Agreement Act 1963 (WA)

Rules of the Supreme Court 1971 (WA), O 58 r 10

(Page 2)

Result:

Answers to questions 4, 5, 6 and 7 affirmed

Category: B

Representation:

Counsel:

Appellant : Mr M G Clay
Respondent : Mr C G Colvin SC & Ms C H M Butt

Solicitors:

Appellant : Martin de Haas
Respondent : Freehills

Case(s) referred to in judgment(s):

Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd (2000) 22 WAR 101
Birrell v Dryer (1884) 9 App Cas 345
Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337
Copperart Pty Ltd v Bayside Developments Pty Ltd (1996) 16 WAR 396
Darwil Pty Ltd v May, unreported; SCt of WA (Owen J); Library No 930038; 25 January 1993
Hamersley Iron Pty Ltd v Hancock, unreported; SCt of WA (Olney J); Library No 5195; 23 December 1983
Hawkins v Clayton (1988) 164 CLR 539
Holland v Jones (1917) 23 CLR 149
Industrial Equity Ltd v Darling Point Securities Pty Ltd (1991) NSW ConvR 55-570
Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181
Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 186 ALR 289
Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429
Woods v Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460



(Page 3)

Case(s) also cited:

Allen v Carbone (1975) 132 CLR 528
ANZ Banking Group Ltd v Frost Holdings Pty Ltd [1989] VR 695
Austin v Newham [1906] 2 KB 167
Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99
Australian Casualty Co Ltd v Federico (1986) 160 CLR 513
Beattie v Fine [1925] VLR 363
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266
Breen v Williams (1996) 186 CLR 71
Brown v Gould [1972] Ch 53
Clay v Clay, unreported; FCt SCt of WA; Library No 960168; 27 March 1996
Darling Point Securities Pty Ltd v Industrial Equity Pty Ltd (1991) NSW ConvR 55-589
Del Borrello v Friedman and Lurie (A firm) & Anor [2001] WASCA 348
Dellafiora v Lester [1962] 1 WLR 1208
Hamersley Iron Pty Ltd v Roberts, unreported; SCt of WA (Comm Wheeler QC); Library No 950619; 15 November 1995
Hope v RCA Photophone of Australia Pty Ltd (1937) 59 CLR 348
Humphries v Proprietors Surfers Palms North Group Titles Plan 1955 (1994) 179 CLR 597
Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896
John Lee & Son (Grantham) Ltd v Railway Executive [1949] 2 All ER 581
King's Motors (Oxford) Ltd v Lax [1970] 1 WLR 426
Legione v Hateley (1983) 152 CLR 406
Mander Forklift Pty Ltd v Dairy Farmers Co-operative (1990) ATPR 46-061
Mark Mayne Pty Ltd v Suburban Centres Pty Ltd [1976] 2 NSWLR 67
May & Butcher Ltd v R [1934] 2 KB 17
McDermott v Black (1940) 63 CLR 161
Mestros v Blackwell (1974) 8 SASR 323
Morris v Sanders Universal Products [1954] 1 WLR 67
O'Keefe & McKenna v Williams (1910) 11 CLR 171
R J Mabarrak Pty Ltd v King (1971) 1 SASR 313
Raves v Fobone Pty Ltd (1991) NSW ConvR 55-564
Seaton v Mapp (1846) 2 Coll 556
South Australia v Commonwealth (1962) 108 CLR 130


(Page 4)

South Coast Oils (Qld & NSW) Pty Ltd v Look Enterprises Pty Ltd [1988] 1 Qd R 680
Spotless Catering Services Ltd v Commonwealth of Australia, unreported; SCt of WA (Owen J); Library No 980102; 6 March 1998
Stern v McArther (1988) 165 CLR 489
Sun Alliance & Royal Insurance Australia Ltd v Brandrill Pty Ltd, unreported; FCt SCt of WA; Library No 970076; 28 February 1997
The National Mutual Life Association of Australasia v Hamersley Iron Pty Ltd, unreported; FCt SCt of WA; Library No 5642; 27 November 1984
Thorby v Goldberg (1964) 112 CLR 597
Trazray Pty Ltd v Russell Foundries Pty Ltd (1988) 5 BPR 11,232
Trustees Executors & Agency Co Ltd v Gleeson (1959) 102 CLR 334
Whitlock v Brew (1968) 188 CLR 445


(Page 5)

1 PARKER J: I have had the advantage of reading in draft the reasons of McLure J. Her Honour has set out the issues raised in this appeal and the relevant terms of the contract which gives rise to them. I will not do so again.

2 The appellant was employed by the respondent ("Hamersley") at the time the contract was concluded in 1996. It was a contract for the sale by Hamersley as "vendor", and purchase by the appellant as "purchaser", of a house at Dampier. The contract, however, contains provisions which are most unusual.

3 The appellant has since ceased employment with Hamersley. There is apparently an issue between the parties whether that cessation was in circumstances that came within cl 20(c) of the contract, which deals with permanent and total disability of the purchaser, or whether cl 20(e) applies. That is not an issue to be resolved in this appeal.

4 What is a live issue is whether, notwithstanding cl 20(c) or cl 20(e), whichever should prove to be applicable, Hamersley may exercise the option to repurchase the property for which cl 18(a)(i) of the contract provides.

5 It also appears that Hamersley contemplates reliance on cl 20(h) which makes provision for an option exercisable by Hamersley to lease back the house. The appellant contends that this provision is void for uncertainty.

6 I propose to make brief observations on only a few of the issues raised in this appeal.

7 I turn first to the issue of the reliance by Wheeler J at first instance on judicial knowledge for the purpose of construing the contract.

8 McLure J identifies the basis on which reliance may properly be made on judicial knowledge for this purpose, by reference to Holland v Jones (1917) 23 CLR 149. This led McLure J to conclude that the historical origin and purpose of Dampier, as a company town of Hamersley, would come within the scope of judicial knowledge, but that judicial knowledge might not be relied on for the purpose of determining whether Dampier remained a company town in 1996, when the contract was entered into.

9 For my part, I am not persuaded that the nature and purpose of Dampier in 1996 may not properly be regarded as the subject of judicial knowledge. It appears to me that this would be a notorious fact, at least

(Page 6)

in the locality, and that "all persons in the relevant locality" would be aware of it within the meaning of the statement of the test in Holland v Jones.

10 That having been said, however, it is not apparent that this should lead to any different outcome in this appeal. It does appear that Wheeler J, at first instance, may have had some regard to the nature and purpose of Dampier as a company town in 1996 in propounding what she saw to be the objects of the contract. Whether those objects led her Honour to the construction she favoured, or whether her Honour merely saw that the construction suggested by the provisions themselves was consistent with such objects, is less clear.

11 For my part, I prefer to approach the difficult question of the reconciliation of cl 18(a)(i) with cl 20(c) and cl 20(a) of the contract as a matter of construction of the contract itself, unaided by any such appreciation of its objects.

12 The contract is entitled "Hamersley Home Ownership Plan Contract of Sale". It is an apparently common or standard form contract, designed for use by Hamersley in respect of houses it owns at Dampier and also at Tom Price, Paraburdoo and Karratha (cl 16), all of which are in the same geographical region of the State. Incidentally, although I do not rely on it for the purposes of construing the contract, it is notorious in this State and certainly in that locality that these towns are utilised by Hamersley in connection with its major iron ore mining and processing works. Karratha, however, is primarily a regional centre.

13 A primary contention of the appellant, one on which critical submissions of the appellant depended, was that this common form contract was used, or designed for use, not only for sales of houses to employees of Hamersley and of its related companies, but also for non-employees whose presence in a company town supported the operations of Hamersley. Examples are teachers, police and shopkeepers. In particular, cl 18(a)(i) was seen to demonstrate this because of the words in the proviso "… if the Purchaser is an employee of the Vendor …". The word "if" was seen to demonstrate that the purchaser need not be an employee of Hamersley or of an associated company.

14 As I understand the reasons of McLure J, and of Wheeler J at first instance, their Honours approached the issues in this case on the assumption, in the appellant's favour, that this may well be so. There is no evidence on the point. The terms of the common form contract are

(Page 7)

relied as speaking for themselves. When the contract is considered as a whole, however, it appears to me that there is no adequate foundation for that assumption. In my respectful view, the form of contract as a whole is one which is clearly designed only to be used in respect of employees of Hamersley and its associated companies. I see no reason to accept, even as an hypothesis relevant to the construction of its terms, that the form of contract was intended for use if and when a house was sold to a non-employee. It is not apparent that Hamersley would have reason to sell to a non-employee, rather than lease, but if it did quite different terms are to be expected.

15 As the name of the contract and many of its terms indicate, it is intended to facilitate a measure of home ownership by its employees in the towns identified in the contract. Quite critically, in my view, the provisions for the payment of the purchase price, cl 3 and the second schedule, only allow for payment by deduction from the salary/wages of the purchaser commencing on the first pay date after execution of the contract. (There are also provisions for payment in respect of "improvements", there being none in the present case, and provisions for payment of the balance of the Purchase Price in certain events involving a cessation of employment.) Equal monthly instalments of capital over 15 years are provided for. There are, however, no provisions to authorise or facilitate deductions from salary or wages paid by other employers to a purchaser, and no provision for payment in respect of a self-employed purchaser. In my view, it is clear from this rather fundamental provision alone, that the contract only provides for the case of a purchase by an employee of Hamersley or of one of its associated companies. Similar provision is made in the fifth schedule in respect of the repayment of loans, for which cl 34 makes provision. There are also detailed provisions that operate upon the cessation of the purchaser's employment by Hamersley. Many of the provisions of the contract reveal an ongoing concern for the purchaser and benevolence by Hamersley in respect of a number of potential future events, and in respect of price and charges. In particular, there is no provision for the payment of interest on the outstanding purchase price. In respects such as these the contract makes unusual provisions which are of a kind explicable in a contract between an employer and an employee who is working in a remote location, but not in a contract of sale in usual circumstances.

16 With respect to the phrase in the proviso to cl 18(a)(i) "… if the Purchaser is an employee of the Vendor …", I agree with McLure J, and with Wheeler J at first instance, that this is properly to be read as

(Page 8)

directed to the time at which the option contemplated by cl 18(a)(i) is exercised, not, as the appellant contends, at the time of entering into the contract.

17 On these bases, the common form contract is in respect of a purchaser who is an employee of the vendor at the time it is entered into and, in cl 20, it makes specific provision for various circumstances in which that employment may cease during the effective operation of the contract, including resignation, dismissal, retirement, disability and death of the employee/purchaser. Clause 20(a) makes provision for all other circumstances in which the purchaser "ceases to be employed" and this provision also applies to resignation and dismissal, cl20(a).

18 Not surprisingly the provisions made in respect of these various possible future events vary. It may be said that cl 20(b) – retirement, and cl 20(c) – permanent and total disability, are the most favourable to the purchaser. Each of these uniquely contain a provision, in what may be called the settlement proviso, ie cl 20(b)(i) and cl 20(c)(i), in the following terms:

"Settlement shall not affect the continued operation of the restrictions on assignment and sale herein contained or other obligations expressed to survive settlement."

The settlement referred to is the transfer to the purchaser of title to the property following payment of the balance of the purchase price and any other moneys due to Hamersley under the contract, which is one of the possible courses provided for in the event of retirement or of the permanent and total disability of the purchaser.

19 I respectfully agree with McLure J that these provisions of the settlement proviso in cl 20(b)(i) and cl 20(c)(i) do not expressly or impliedly preserve the vendors option to purchase pursuant to cl 18(a)(i).

20 The view I have reached that the form of contract is intended for use only in respect of a purchase by an employee of Hamersley or its associated companies may affect the force of some matters relied on by McLure J, for the view that cl 20(b)(i) and cl 20(c)(i) are properly construed as excluding the option to repurchase pursuant to cl 18(a)(i). Nevertheless, I respectfully agree with her Honour that this is the preferable construction of these provisions in the context of this contract. The express, but limited terms, of the settlement proviso in cl 20(b)(i) and cl 20(c)(i) are not adequately regarded, in my respectful view, as merely included out of an abundance of caution, as Wheeler J

(Page 9)

saw them, but are preferably seen as indicating an intention to make specific and exclusive provision.

21 Such a view appears to me to be consistent with the general beneficial tenor of each of cl 20(b) and cl 20(c), dealing as they do with retired and disabled former employees, whereas the alternative view is not. On the alternative view, for which the appellant contends, cl 18(a)(i) would prevail and enable Hamersley to exercise an unfettered option to repurchase at any time during the Restricted Period, ie during the 15 years from the date of the contract.

22 The appellant also sought to call in aid the contra proferentem rule to deny the continued existence of the option of Hamersley to repurchase the property pursuant to cl 18(a)(i) in the circumstances of this case. The rule is one of last resort when other principles of construction do not resolve any ambiguity: Birrell v Dryer (1884) 9 App Cas 345; Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 389. In my view, for the reasons indicated, resort to the rule is not justified in the present case as any ambiguity is resolved by the application of ordinary principles of construction.

23 Subject to these observations, otherwise I would generally agree with the reasons of McLure J and with her conclusions that Wheeler J was correct in the answers she gave to questions 4, 5, 6 and 7, which are the issues raised by this appeal.

24 That leaves the further issue of the answer given by Wheeler J to question 3. Wheeler J answered "No: to question 3, which asked whether the appellant was entitled to receive a transfer of the title to the property free of the respondent's rights under cl 18 where, on cessation of his employment under cl 20(c) in circumstances of disability, he had paid the balance of the purchase price and other moneys owing under contract. For reasons already given I am persuaded to the opposite view on this question.

25 This possibility was expressly raised with counsel for the appellant during argument, on more than one occasion, by members of the Court. Despite this, no application was made to amend the grounds of appeal to include a challenge to the correctness of the answer to question 3.

(Page 10)

26 Because of this, I would normally be disinclined to take this issue further. However, I am persuaded, that, by virtue of the significance to appellant of this answer, given his failure in respect of the present grounds of appeal, that the interests of justice are better served by allowing one further opportunity to the appellant to move for an amendment and should he so move, to hear the parties on whether that amendment should be allowed at this late stage.

27 MILLER J: I have had the opportunity of reading in draft the reasons for judgment of McLure J in this matter. I agree with the conclusions reached by her Honour and that the appellant should be given the opportunity to make application for leave to amend the notice and grounds of appeal in order to challenge the learned trial Judge's conclusion on question 3.

28 I agree generally with the reasoning which has led McLure J to the conclusion she has reached, save that I do not consider the learned trial Judge erred in the conclusion she reached about the historical basis upon which the town of Dampier was formed and its continued categorisation as a "company town".

29 In her reasons, McLure J sets out the learned trial Judge's conclusions on matters in relation to which judicial notice may be taken and it is unnecessary for me to repeat the passage. In essence, the learned trial Judge concluded that the tenor of the various agreements the subject of the Act and the subject of ratification and approval under the Iron Ore (Hamersley Range) Agreement Act 1963, together with matters of notoriety, made it clear that towns developed pursuant to agreements of that kind were essentially "company towns", although they might at some future stage develop into towns serving the broader community. The learned trial Judge explained what she meant by a "company town", pointing out that the purpose of those towns is to house those who work for or provide services to the company, the housing being developed in circumstances where it is probable that there will be no or only limited accommodation otherwise available. The learned trial Judge said that unlike general housing developments, housing in company towns is not developed on a speculative basis by developers, but for the special purposes of providing accommodation for those who work for the company in question.

(Page 11)

30 McLure J has concluded that the learned trial Judge was entitled to take judicial notice of the historical origin and purpose of Dampier as a company town, but her Honour is of the opinion that this is of no assistance in interpreting a contract entered into in 1996 unless it can be inferred that some 40 years later it remained a "company town". McLure J does not consider this inference to be open.

31 The doctrine of judicial notice has recently been stated by McHugh J in Woods v Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460 at [64] – [70]. Although dissenting in relation to the conclusion reached by the Court in that case, McHugh J's exposition of the doctrine of judicial notice is uncontentious. At [64] his Honour put it this way:

"As a general rule, facts in issue or relevant to a fact in issue must be proved by admissible evidence. The doctrine of judicial notice is an exception to this rule. A court may judicially notice a fact whenever it 'is so generally known that every ordinary person may be reasonably presumed to be aware of it'. The information which the court acquires by taking judicial notice of facts is not 'evidence strictly so called'. Facts that may be judicially noticed fall into two categories: facts that can be judicially noticed without inquiry and facts that can be judicially noticed after inquiry. Facts that can be judicially noticed also fall into two other categories: (1) adjudicative facts and (2) legislative facts.

An adjudicative fact is a fact in issue or a fact relevant to a fact in issue. A legislative fact is 'a fact which helps the court determine the content of law and policy and to exercise its discretion or judgment in determining what course of action to take'. In contrast with adjudicative facts, which always relate to the issues between the parties, legislative facts generally relate to the law-making function of the judicial process."

32 Although there is a difference of judicial opinion on the extent to which Judges can apply their own views and make their own inquiries in relation to matters like social ethics, psychology, politics and history without requiring evidence or other proof (see, for example, Woods v Multi-Sport Holdings (supra) per McHugh J at [65] and per Callinan J at [165]) there is no doubt that many facts have been judicially noticed

(Page 12)

without inquiry. Some examples were given in Woods v Multi-Sport Holdings Pty Ltd (supra) by McHugh J at [66] in the following terms:

"Facts that have been judicially noticed without inquiry include: that cancer is a major health problem in the community and, despite research, little progress has been made in controlling it; that HIV is a life-endangering disease; that a child victim of sexual assault may be reluctant to resist, protest or complain about the sexual assault, due to fear of punishment or rejection; and that many lawyers now charge hundreds of dollars an hour for their services, that legal aid is often unavailable to litigants in tort cases and that the cost of those services is substantially increased when lawyers cannot give advice to their clients because the law is unpredictable."

33 In an address Finding Facts Without Evidence, Curial Practices and their Legitimacy, delivered at Murdoch University on 20 October 2003, Heydon J eloquently made the point that there is a wide range of matters which come from human experience and knowledge which the courts will take into account in the course of judgment. His Honour said (at pages 9 - 11):

"There is a mass of human experience which it is expected that courts will take into account, and which they cannot avoid taking into account. There is the English language itself: the testimony and the documents received in evidence cannot be understood if that language is not understood. There are numerous features of the physical world: natural phenomena like the weather; the relations between water and land (which creates slipperiness and various other dangers ranging from the dangers of diving to the dangers of swimming); the dangers inherent in the elements and in insects and animals; the risk of falling from heights; the ordinary operations and dangers of houses and industrial premises and footpaths and roads and sporting recreation. There are features of human health - how to protect it, how to respond to medical advice. There are features of driving - driving while drunk or tired or in wet weather or at high speed. Then there are numerous conventional social symbols - warning signs like red lights or sounds like sirens. There are features of human nature. One is the existence of mutual love between parents and children, which makes infanticide or parricide or matricide unlikely. Another is the possibility of

(Page 13)

adverse inferences being drawn against people who remain silent when they are called on for, or might be expected to give, a denial or an explanation but do not; or lie; or flee; or destroy evidence; or interfere with witnesses. Another is that persons who habitually act in a particular way will follow that habit on an occasion in issue. Another is that people normally respond to instincts of physical self-preservation, so that suicide is an unlikely explanation' of physical injury; and financial self-advancement. So citizens learn about how the world works, and bring that knowledge to the task of fact finding. They also learn about difficulties in perceiving how the world works."

34 Heydon J points out (page 16) that there is a difference between judicial notice and common experience. The difference is that judicial notice is commonly taken of matters which are narrow and specific, while the lessons of common experience, powerful though they may be, are usually much vaguer. In this case I consider the learned trial Judge to have correctly taken judicial notice of matters which can be properly described as "narrow and specific".

35 McLure J has pointed out that certain information about Dampier would be generally known to inhabitants of the north-west. However, her Honour is of the opinion that the historical origin and purpose of the town is of no assistance in interpreting a contract entered into in 1996 unless it can be inferred that some 40 years later Dampier remains a "company town" with the attendant attributes identified by her Honour. McLure J expresses the view that this is a matter for evidence, not judicial notice.

36 I respectfully disagree. In my view, people who have lived their life in Western Australia and observed the development of the north-west of the State can be taken to know the immediate and long-term purpose of the settlement of towns like Dampier and the immediate and long-term purpose of the agreements of the type ratified and approved by the Iron Ore (Hamersley Range) Agreement Act 1963, particularly those in relation to housing. It is a notorious fact that Western Australia prides itself upon its north-west development. It has been the centrepiece of the State's recent history and, in my view, the matters to which the learned trial Judge referred are truly matters of notoriety in respect of which she was entitled to take judicial notice.

(Page 14)

37 In any event, it seems to me that the determination of the present appeal does not necessitate a conclusion that the learned trial Judge was wrong in taking into account the history and development of the town of Dampier as she did. The answers to the questions which were the subject of the construction summons depend upon the construction of the contract itself and, in my view, the conclusions that the learned trial Judge reached in relation to the history and development of the town of Dampier and its housing, correct though they were, were not vital to a determination of the questions in issue.

38 Although McLure J has concluded that the learned trial Judge, by having regard to inadmissible background material in determining the object of the Contract, placed undue weight on the background material in identifying the contractual object without due regard to the terms of the Contract itself, I am not persuaded that her Honour did this. Rather, it seems to me that it was the case (as identified by McLure J) that the learned trial Judge failed to pay sufficient regard to the terms of cl 20 of the Contract, particularly cl 20(c)(ii). This error is identified by McLure J in her reasons and I respectfully agree with the conclusions that she has reached in that regard.

MCLURE J:

Introduction

39 This appeal is from the determination by Wheeler J of questions on a construction summons under O 58 r 10 of the Rules of the Supreme Court 1971 (WA) ("Rules") in relation to an instrument described as the Hamersley Home Ownership Plan Contract of Sale ("Contract").

40 The Contract provides for the purchase by the appellant from the respondent of a property in Dampier ("Property"). At the time of entry into the Contract, the appellant was employed by the respondent.

41 The issues in the appeal concern the construction of provisions of the Contract that give to the respondent an option to repurchase the Property (cl 18) and an option to lease the Property (cl 20(h)).

42 The construction summons contained eight questions. The appellant appeals from the answers given by her Honour to four questions (4, 5, 6 and 7). Those questions relate to the applicability and enforceability of the option to lease and the applicability of the option

(Page 15)

43 to repurchase in circumstances where the appellant had ceased to be employed by the respondent.

44 The grounds of appeal raise four issues. They are whether her Honour erred in:

(a) determining that the object of the Contract was to provide housing at a reasonable cost to employees and in doing so :

(i) had regard to the terms of the Hamersley Iron (Hamersley Range) Agreement Act 1963(WA) ("Agreement Act"); and

(ii) took judicial notice that the property was located in a "company town" and what that entailed (grounds 1.1, 1.3 and 2.1);

(b) failing to find that, on a proper construction of the Contract, the option to purchase did not apply to the appellant because he was an employee at the date of entry into the Contract (grounds 1.5, 2.2, 2.4 and 2.5);

(c) failing to construe the option to repurchase provision of the Contract by applying the contra proferentem rule in favour of the appellant (ground 2.5(e));

(d) failing to find that the option to lease was void because the essential term of duration was not expressed and could not be implied (ground 1.4 and 2.3).

Background

45 There is very little factual material before the Court. There was no agreed statement of facts. The appellant relied on two affidavits sworn by himself. The respondent objected to a number of annexures to the appellant's first affidavit and to his second affidavit in its entirety. It appears the objection was not ruled on. I infer from her Honour's reasons that the basis of the respondent's objection to the evidence was that the Contract had to be construed by reference to its terms alone and without regard to any material extraneous to the Contract. It seems the parties have misunderstood the purpose and effect of a construction summons under O 58 r 10.

46 I respectfully adopt the observations made by Olney J in Hamersley Iron Pty Ltd v Hancock, unreported; SCt of WA (Olney J); Library No 5195; 23 December 1983 that (at 4):

(Page 16)

"The procedure contemplated by the rule is one appropriate to cases where there is no disputed question of fact and where the Court has before it an instrument the construction of which is capable of determination by reference to the instrument itself. In my view, the authority of the Court is to make a declaration of right and not to declare the construction of the instrument. If it were otherwise, the Court's order would be in the nature of an advisory opinion. The rule contemplates that the Court will determine the construction of the instrument as a preliminary to it declaring the rights of the parties."

47 The question of construction is to be determined by reference to facts that are not in dispute. It is not intended that the questions of construction be answered in a factual vacuum or in the absence of relevant facts because the construction questions are preliminary to a declaration of the rights of the parties.

48 In this case the only undisputed factual material before the Court was that the appellant was employed by respondent in 1995; the Contract was entered into in or about May 1996; the respondent had terminated the appellant's employment; the appellant paid the balance of the purchase price under the Contract on 10 April 2001; and the respondent had not transferred the Property to the appellant. It is not clear from the affidavit as to when and why the appellant's employment was terminated.

49 The questions, a number of which are hypothetical, were answered in that factual context. As no objection was taken below or in the appeal to these irregularities, I propose to deal with the appeal. The questions and answers the subject of the appeal are as follows:

4. If the [appellant] ceased to be employed by the [respondent] under cl 20(e) or 20(c), then on payment of the balance of the purchase price, and upon registration of the transfer of title:

4.1 does the [respondent] have rights under cl 20(f)? Answer – there is no evidence before me of circumstances which might give rise to such rights.

4.2 does the [respondent] have rights under cl 20(h)? Answer – Assuming that the

(Page 17)

purchaser has acquired title or is entitled to acquire title and wishes to lease or otherwise part with possession of the property or has ceased to be an employee of the vendor due to his or her resignation (other than by reasons of retirement under cl 20(b) or dismissal), yes.

5. Is the [respondent's] option to lease under cl 20(f) void or unenforceable for uncertainty? Answer – No.

6. Is the [respondent's] option to lease under cl 20(h) void or unenforceable for uncertainty? Answer – No.

7. If the rights conferred by cl 18(a)(i) survive settlement, then on the true construction of the instrument, do the words "if the Purchaser is an employee of the Vendor" in cl 18(a)(i) cover the [appellant] who was an employee at the time of entering the instrument? Answer – Assuming the [appellant] is not an employee at the time which the vendor purports to exercise the option, no.

50 As may be apparent from the formulation of question 7, it arises as a result of the answers to other questions, in particular questions 2 and 3. Those questions were to the effect that if the appellant ceased to be employed by the respondent under either cl 20(e) (question 2) or cl 20(c) (question 3), whether on payment of the balance of the purchase price and other moneys owing under the Contract, the appellant was entitled to receive a transfer of the title to the Property free of the respondent's rights under cl 18. Her Honour answered both of those questions in the negative. The appellant does not appeal from those answers. After some equivocation, an application to amend the notice and grounds of appeal was not proceeded with by the appellant.

51 The respondent has filed a notice of contention that if cl 20(f) and (h) are void for uncertainty they cannot be severed from the Contract.

The Contract

52 The Contract provides for the purchase of the Property by the appellant for $45,000 payable by instalments over 15 years to be deducted from the appellant's salary/wages. Clause 9 deals with settlement. It provides that settlement shall take place on the date when the purchaser pays to the vendor the balance of the purchase price, any

(Page 18)

interest outstanding thereon and any other moneys payable by the purchaser under the Contract. The purchaser is entitled to pay the balance of the purchase price outstanding at any time subject to a proviso in cl 9(b) that "early settlement shall not affect either the continued operation of the restrictions on assignment and sale herein contained or the vendor's option to lease under clause 20 unless expressly provided to the contrary in this Contract of Sale".

53 The Property remains at the risk of the vendor until title is transferred to the purchaser. Clause 4 deals with the transfer of the Property. It provides that upon payment of the balance of the purchase price and other moneys due and owing under the Contract, the vendor "as soon as reasonably practicable thereafter shall execute and deliver to the purchaser a registrable transfer of the Property, free from all encumbrances other than", inter alia, "the restrictions and covenants set out in this Contract of Sale in respect of the Property or any part thereof which are expressed to survive settlement."

54 Clause 18 contains the option to repurchase. It materially provides:

"18. RESTRICTION ON DISPOSITION

(a) (i) The Vendor shall have the option, exercisable by notice in writing to the Purchaser given at any time during the Restricted Period, to repurchase the Property for the then current Surrender Value PROVIDED HOWEVER that if the Purchaser is an employee of the Vendor such option shall not be exercisable unless the Purchaser shall first have advised the Vendor by notice in writing that he or she wishes to sell the Property. The Vendor's option shall continue throughout the Restricted Period notwithstanding final settlement of the purchase of the Property during the Restricted Period.

(ii) The Purchaser shall not sell or otherwise dispose of the Property without first giving to the Vendor the notice referred to in paragraph (i) of this sub-clause 18(a).

(iii) If the Vendor exercises its option to purchase, the Purchaser shall give vacant possession of

(Page 19)

the Property to the Vendor within a period of TWENTY EIGHT (28) days after the option is exercised whereupon the Vendor will pay the Purchaser, or as he or she shall otherwise direct, the then current Surrender Value subject to any adjustments required by the terms of this Contract of Sale.

(b) The Purchaser shall not during the Guarantee Period sell lease or otherwise part with the possession of the Property or any part thereof to any third person without first giving by written notice to the Vendor the right of first refusal to purchase lease or acquire possession of the Property or that part of the Property at the same price and on the same terms which are offered to the third person within a period of TWENTY EIGHT (28) days from the date of receipt by the Vendor of such notice.

In the event of the Vendor electing not to purchase lease or acquire possession of the Property or that part at the price and on the terms specified in the notice the Purchaser will not sell lease or otherwise part with possession of the Property or part thereof to any third person at a lesser price or on more advantageous terms and conditions than those specified in that notice without first giving the Vendor a further notice in terms of this sub-clause. The rights and obligations set out in this sub-clause shall survive settlement of the purchase of the Property by the Purchaser under this Contract of Sale."

55 The Restricted Period is 15 years and the Guarantee Period is 20 years. By cl 19, the purchaser is given in effect a put option. At any time during the Guarantee Period the purchaser can by notice request the vendor to repurchase the property for a sum equivalent to the Surrender Value prevailing at the time of the notice.

56 Clause 20 makes provision for what is to occur with the Property on cessation of employment or death. Clause 20 materially provides:

(Page 20)

"20. CESSATION OF EMPLOYMENT, DEATH ETC

(a) Resignation, Dismissal


If at any time during the Restricted Period the Purchaser ceases to be an employee of the Vendor due to his or her resignation (other than by reason of retirement under paragraph (b) of this clause 20) or dismissal (the date of resignation or dismissal in this paragraph (a) being called the 'Relevant Date') the Purchaser may elect to terminate this Contract of Sale by giving notice in writing to the Vendor prior to the date of his or her resignation, within SEVEN (7) days of the date of his or her dismissal or within such further period as the Vendor permits. The Purchaser will vacate the Property within TWENTY EIGHT (28) days of the Relevant Date and as soon as reasonably practicable after receipt of vacant possession of the Property the Vendor will pay to the Purchaser the Surrender Value calculated to the Relevant Date less any Outgoings and other amounts due and payable under this Contract of Sale.

(b) Retirement

If the Purchaser ceases to be an employee of the Vendor during the Restricted Period due to his or her retirement then he or she shall notify the Vendor prior to his or her retirement date whether he or she wishes to remain in occupation of the Property after his or her retirement. Upon retirement either of the following shall apply:


(i) if the Purchaser wishes to remain in occupation of the Property he or she shall pay to the Vendor the balance of the Purchase Price and any interest due or other moneys payable under this Contract of Sale within TWENTY EIGHT (28) days of the retirement date and the Vendor shall as soon as practicable thereafter transfer the title of the Property to the Purchaser. Settlement shall not affect the continued operation of the restrictions on assignment and

(Page 21)

sale herein contained or other obligations expressed to survive settlement; or

(ii) if the Purchaser does not wish to remain in occupation of the Property this Contract of Sale shall terminate on his or her retirement date and the Purchaser shall vacate the Property within TWENTY EIGHT (28) days of the retirement date. On the Purchaser vacating the Property, the Vendor shall pay to the Purchaser the appropriate Surrender Value calculated as at the retirement date. If the Purchaser fails to notify the Vendor of his or her intentions prior to the retirement date he or she shall be deemed to have elected not to continue in occupation and this clause 20(b)(ii) shall apply.

For the purposes of sub-clause 20(b) "retirement" has the same meaning that it has under the rules of a Relevant Fund.

(c) Disability

If the Purchaser being an employee of the Vendor becomes permanently and totally disabled during the Restricted Period then:
EITHER:

(i) the Purchaser shall within TWENTY EIGHT (28) days of the date of ceasing to be an employee of the Vendor pay to the Vendor the balance of the Purchase Price and any interest due or other moneys payable under this Contract of Sale and the Vendor shall as soon as practicable thereafter transfer the title of the Property to the Purchaser. Settlement shall not affect the continued operation of the restrictions on assignment and sale herein contained or any other obligations expressed to survive settlement;

OR

(Page 22)

(ii) if the Purchaser does not give notice in accordance with paragraph (i) of this sub-clause this Contract of Sale except to the extent of the continuing rights and obligations referred to in this sub-clause shall terminate. The Purchaser may give notice within TWENTY EIGHT (28) days of the date of ceasing to be an employee of the Vendor that he or she desires to continue in occupation of the Property whereupon he or she will do so rent free PROVIDED THAT he or she complies for the duration of his or her occupancy with the Purchaser's obligations relating to maintenance and where appropriate payment of Outgoings contained in this Contract of Sale.

If the Purchaser does not wish to remain in occupation of the Property and this Contract of Sale terminates under this paragraph (ii) of this sub-clause, the Surrender Value payable to the Purchaser shall be calculated as at the date the Purchaser gives the Vendor vacant possession of the Property and shall be paid to the Purchaser at that time.

For the purposes of clause 20(c) 'permanent and total disability' means a condition or injury which is or would be accepted as being a permanent and total disability by a Relevant Fund.

If a disabled Purchaser elects to take the course of action referred to in paragraph (ii) of this sub-clause and subsequently dies whilst still in occupation of the Property the Spouse of the deceased Purchaser may remain in occupation of the Property PROVIDED THAT the Spouse agrees to comply for the duration of his or her occupancy with the continuing obligations which were imposed upon the Purchaser in this Contract of Sale relating to maintenance and where appropriate to payment of Outgoings.

(d) Death

If the Purchaser dies (the 'deceased') whilst in the employment of the Vendor and the Purchaser has not at the date of his or her death paid the balance of the Purchase Price to the Vendor this Contract of Sale

(Page 23)

except to the extent otherwise stated in this sub-clause shall be terminated as at the date of death. The amount due to the estate of the deceased shall be the Surrender Value as at the date vacant possession is given to the Vendor and such sum will be paid to the deceased's estate on the date the Vendor receives vacant possession of the Property. The Spouse of the deceased shall be entitled to remain in occupation of the Property rent free indefinitely PROVIDED THAT he or she agrees to comply for the duration of his or her occupancy with the continuing obligations which were imposed upon the Purchaser in this Contract of Sale relating to maintenance and where appropriate to payment of Outgoings.

(e) Other

If the Purchaser ceases to be employed by the Vendor in any circumstances not covered by paragraphs (b) to (d) inclusive of this clause 20, then the Purchaser shall within TWENTY EIGHT (28) days of the cessation of employment pay to the Vendor the balance of the Purchase Price and any interest due or other moneys payable under this Contract of Sale and the Vendor shall as soon as practicable thereafter transfer the title of the Property to the Purchaser. If the Purchaser does not pay the balance of the Purchase Price and any interest due or other moneys payable within TWENTY EIGHT (28) days of cessation of employment this Contract of Sale will be terminated on the twenty-eighth day after the cessation of employment and the Purchaser will immediately vacate the Property. Upon receipt of vacant possession of the Property the Vendor will pay to the Purchaser the Surrender Value calculated as at the date of termination of this contract of Sale.

(f) Death after Settlement


In the event that the Purchaser dies (the 'deceased') during the Restricted Period and has at the date of the death paid the balance of the Purchase Price of the Property under this Contract of Sale then the Spouse of

(Page 24)

the deceased may continue to live in the Property on the same conditions as set out in this sub-clause 20(d) PROVIDED however in the event that the Spouse of the deceased does not wish to live in the Property or vacates the Property prior to the expiration of the Restricted Period the Vendor shall have the option to lease the Property from the personal representatives of the deceased or any person to whom the title of the Property may have passed or been transferred on the same terms and conditions as are referred to in sub-clause 20(e).

The Vendor at its sole discretion may require the Purchaser to cause the personal representatives of the deceased and/or the beneficiary of any will or under any intestacy of the deceased or any other transferee (together the 'Covenantor') to enter into a deed of covenant to be prepared at the Vendor's expense and by the Vendor's solicitors whereby the covenantor covenants to observe and perform and be bound by all the obligations of the Purchaser which survive settlement upon the terms and conditions contained in this Contract of Sale.

(g) Substituted Property

…

(h) Lease

If at any time during the Restricted Period the Purchaser has acquired or is entitled to acquire legal title to the Property and wishes to lease or otherwise part with possession of the Property or ceases to be an employee of the Vendor due to his or her resignation (other than by reason of retirement under clause 20(b)) or dismissal the Vendor shall have the option to lease the Property from the Purchaser and such lease shall include the terms and conditions set out in the Fourth Schedule.

If the Vendor exercises its option to lease, the Purchaser shall deliver vacant possession of the

(Page 25)

Property to the Vendor within a period of TWENTY EIGHT (28) days after the option is exercised.

For the purposes of this clause 20 'Purchaser', except where the context otherwise requires, includes his or her personal representatives, successors in title and permitted assigns."

57 Clause 28 is also relevant. It provides:

"28. CONTRACT TO CONTINUE TO HAVE EFFECT AFTER SETTLEMENT

Unless expressly provided to the contrary herein and save and except to the extent that they have been performed the provisions of this Contract of Sale shall continue in full force and effect notwithstanding the settlement of the sale and the purchase and the transfer of the Property to the Purchaser."





Extrinsic Evidence and Construction

58 The first issue raises a number of subsidiary questions. Firstly, whether there was a proper evidentiary basis for admission of the background material on which her Honour relied. Secondly, whether her Honour erred in having regard to background material in determining the object and construction of the Contract. Thirdly, whether the material supported her conclusion as to the object and construction of the Contract. This final aspect is best considered together with the particular issues of construction that arise.

59 The appellant complains in particular of her Honour's reliance on the Agreement Act and the features of a "company town". She said at [3-5]:


"It is not appropriate, pursuant to O 58 r 10, to determine disputed facts, but certain background circumstances may be of relevance, and I set out therefore my understanding of the context of this Contract. Pursuant to the Iron Ore (Hamersley Range) Agreement Act 1963 as amended, a number of agreements and variations of agreements between the [respondent], companies associated with it, and the State of Western Australia, are variously ratified and approved. The agreements take broadly the form of those to be found in other Agreement Acts dealing with the development of large natural resources of the State. In agreements of that kind, a

(Page 26)

corporation or consortium of corporations is granted certain exclusive rights, principally in relation to minerals, but also in relation to lands, and incurs very extensive obligations to develop the mineral resource and to carry out works and activities associated with that development.

Relevantly to the present case, the agreements in question here oblige the State to grant to the company in fee simple or for terms and conditions to be determined, land, including townsite lots which are to be provided for nominal consideration. The company is to construct railways, make roads, construct a wharf, and to lay out and develop a townsite and provide housing and other appropriate facilities and services. The first of the ratified agreements requires the company to allow inhabitants for the time being of the port townsite who are employees, licensees or agents of the company or persons providing a legitimate and normal service to it or to its employees, licensees or agents, to make use of water, power, recreational, health and other services and facilities provided or controlled by the company. The agreement provides that any State legislation for the time being in force relating to the fixation of rentals does not apply to houses belonging to the company, and that in relation to each house the company shall have the right to include as a condition of its letting that the company may take proceedings for eviction if the occupant ceases to be employed by the company. Provision is made for sale of houses to employees engaged in the company's operations and exempting such sale from certain provisions of the Sale of Land Act.

As is apparent from the tenor of the agreements, and as is in any event a matter of such notoriety in this State that I think judicial notice may be taken of it, towns developed pursuant to agreements of this kind are essentially 'company towns' although at some stage they may develop into towns which serve a broader community. By 'company towns', I mean that the purpose of the town is to house those who work for or provide services to the company, which housing is developed by the company in circumstances where it is likely that no, or very limited, other accommodation would be available. Because of the nature of the towns and the remoteness of the locations, it is not easy for those unconnected with the

(Page 27)

company to obtain accommodation. Unlike areas elsewhere in the State, housing is not developed on a speculative basis by developers hoping to attract people to make their homes there."

60 As I understand it, the appellant does not challenge the correctness of her Honour's summary of the provisions of the agreements the subject of the Agreement Act. The first question is whether there is a proper foundation for the conclusions that Dampier was developed by the respondent (or an associated company) pursuant to the agreements and is a company town by which is meant that its purpose is to house those that work for or provide services to the respondent in circumstances where it is likely that no, or very limited other accommodation would be available, and where it was not easy for those unconnected with the respondent to obtain accommodation.

61 The Agreement Act and the agreements are in general terms and do not as far as I can see expressly identify Dampier as a greenfield site for a new town or at all. I am not persuaded that the Agreement Act supports the finding that Dampier was developed as a company town under the Agreement Act or at all.

62 In order to take judicial notice of a fact it should be of a class that is so generally known as to give rise to a presumption that all persons, or all persons in a relevant locality, are aware of it: Holland v Jones (1917) 23 CLR 149 at 153 per Isaacs J. Insofar as her Honour's comments refer to the historical origin and purpose of Dampier as a company town, I am satisfied that information would be generally known to the inhabitants of the North West. However, the historical origin and purpose of the town is of no assistance in interpreting a contract entered into in 1996 unless it can be inferred that some 40 years later it remained a "company town" with the attendant attributes identified by her Honour. In my view, that inference is not open. Dampier's housing situation in 1996, in particular the availability and source of supply of accommodation, is a matter for evidence and not a matter of which judicial notice can be taken. Whether and how this error impacted on the construction of the Contract will be addressed in that context.

63 As to the second question, there is no dispute as to the relevant legal principles. Extrinsic evidence is admissible to assist in the interpretation of a contract if its language is ambiguous and the evidence is of objective background facts. The classic statement of the

(Page 28)

law is that of Mason J in Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 352:

"The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. … Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, … if the facts are notorious knowledge of them will be presumed."

64 See also Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 at 188; Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5 at [39]; (2002) 186 ALR 289 at 301 [39]. It follows that if the test of judicial knowledge had been satisfied, the evidence would have been admissible as an aid to construction. Otherwise the facts would have to be proved in the usual way.




Repurchase Option (cl 18)

65 The parties contentions in the appeal and before her Honour focussed on whether the words "if the Purchaser is an employee of the Vendor" in the proviso to cl 18(a)(i) refer to the purchaser's relationship with the vendor at the time of entry into the Contract or at the time of the exercise of the option. Her Honour concluded that the proviso only applied if the purchaser was an employee of the vendor at the time of the exercise of the option in which event the option is not exercisable unless the purchaser has first advised the vendor that he or she wishes to sell the Property.

66 Her Honour's conclusion was based on a number of grounds. Firstly, the Contract contemplated that purchasers will, as at the date of the Contract, always be employees of the vendor. (If that is so, the respondent's construction of the proviso would be compelling, it being accepted that the contract was in a standard form.) Secondly, nothing in the Contract (apart from cl 18) addressed the situation of a person becoming an employee after entry into the Contract or never becoming an employee. Thirdly, the appellant's contention was inconsistent with the object of the Contract. Fourthly, as a matter of ordinary useage of language because the option may be exercisable at any time it is logical that the proviso be understood as looking at the time of the exercise of the option. Fifthly, on the appellant's construction cl 18 would have an illogical and unlikely operation in a situation where a person became an

(Page 29)

employee after entering into the Contract in which case the option could be exercised even if the person was still an employee at the time of its exercise. On the other hand, if a purchaser were an employee for even a short time and resigned the option to repurchase could not be exercised unless the purchaser had given the relevant notice. Finally, that non-employee's rights under cl 20 may be rendered less valuable but would not be rendered nugatory.

67 The factors on which her Honour reached her conclusion were canvassed in the appeal albeit on the basis that the outcome depended solely on whether the proviso applied if the purchaser was an employee at the time of entry into the Contract or at the time of the exercise of the option.

68 Her Honour's first ground appears to be contradicted elsewhere in her reasons. Later she said that, having regard to the background circumstances and the terms of the Contract, in the "usual" case the person entering into the contract as purchaser will be at that time an employee of Hamersley. I am not persuaded that the terms of the Contract mandate a conclusion that it is a standard form contract for employees only. In particular, I am not persuaded that the terms and terminology of the contract are inapplicable to independent contractors which are now a common feature in workforces in this State. She continued (at [38]):


"If it is the case that purchasers will always or almost always be employees of the vendor at the time of entering into the Contract, the interpretation contended for by the [appellant] would have the result that the option would in the usual run of circumstances only be able to be exercised where the purchaser had advised the vendor that he or she wished to sell the property. If that were the case, then there would over time be a significant number of ex employees, whether they ceased employment by retirement, disability or whatever cause, who were able to purchase their properties and remain in possession of them until such time as they determined that they wished to sell the property. This appears to me to be inconsistent with the objects of the contract as I understand them."

69 Her Honour had previously identified the object in the following terms at [31]:

(Page 30)

"The object of the contract as a whole, read in the light of the factual context which I earlier described, appears to be to make provision for the purchaser as an employee of Hamersley, so that Hamersley employees are able to live at a reasonable cost in an area of Hamersley's choosing. Once a person ceases to be an employee, that object is no longer served by the Contract."

70 It is apparent from these passages that her Honour had regard to the inadmissible background material in determining the object of the Contract. Further, in my respectful opinion, her Honour has attached undue weight to the background material in identifying the contractual object without due regard to the terms of the Contract itself, in particular to cl 20.

71 It is necessary to closely consider the scheme of cl 18 and cl 20. If the proviso in cl 18(a)(i) does not apply, the vendor has an option to repurchase the Property during the 15 year restricted period for its then Surrender Value. If the vendor exercises its option, the purchaser is required to give a vacant possession of the Property within 28 days (cl 18(a)(iii)). Further, during the 20 year guarantee period the purchaser is prevented from selling, leasing or otherwise parting with possession of the Property to any third person without first giving the vendor the right of first refusal to purchase, lease or acquire possession of the Property on the same terms as that offered to the third person.

72 Clause 20 expressly deals with an ex-employee's rights in relation to the Property after cessation of employment whether by way of resignation, dismissal, retirement, disability or otherwise. That is, the Contract makes detailed provision for what is to happen to the Property in the event that at any time during the restricted period the purchaser ceases to be an employee of the vendor. Those provisions apply in terms to ex-employees whether or not they were employees at the time of entry into the Contract. They do not apply to persons who are not employees. The paragraphs of cl 20 relating to death ((d) and (f)) do not expressly refer to cessation of employment.

73 The scheme of cl 20 is as follows. Paragraph (b) deals with a purchaser who ceases to be an employee during the restricted period due to retirement. If the purchaser notifies the vendor that he or she wishes to remain in occupation of the Property after his or her retirement then "upon retirement either of the following shall apply":

(Page 31)

(i) if the purchaser wishes to remain in occupation, he or she shall pay the balance of the purchase price and other moneys owing under the Contract and the vendor is required as soon as practicable to transfer the title of the Property to the purchaser in which case "settlement shall not affect the continued operation of the restrictions on assignment and sale herein contained or other obligations expressed to survive settlement" (the "settlement proviso"); or

(ii) if the purchaser does not wish to remain in occupation, the Contract shall terminate.

74 In my view, the prima facie contractual intention is to give a retiree the right to remain in occupation of the Property after employment has ceased and that is facilitated by the transfer of the title to the purchaser. That right would however be defeated if the vendor exercised the option to repurchase the Property which triggers an obligation under cl 18(a)(iii) to give vacant possession.

75 The prima facie contractual intention is made even more manifest in cl 20(c) which deals with disability. Where a person ceases to be an employee because of a disability (as defined) he or she has the option of either:

(i) paying the vendor the balance of the purchase price and other moneys due in which event the vendor is required to transfer title to the Property and the settlement proviso is stated to apply; or

(ii) in the event that the purchaser does not take the first option and if he or she gives notice within a specified period that he or she desires to continue in occupation of the Property he or she has the right to continue in occupation rent free.

76 It would be a very odd result if a person who paid the balance of the purchase price and received title to the Property could be involuntarily deprived of a right to possession of the Property by the exercise of the option to repurchase whereas a person who elected to continue in occupation rent free under cl 20(c)(ii) cannot be involuntarily dispossessed.

77 Further, her Honour's statement and application of the contractual object is inconsistent with the express (and non-contentious) terms of cl 20. In particular, cl 20(c)(ii) is inconsistent with a contractual object

(Page 32)

that gives to the respondent the power to obtain possession of its ex-employee's Property as and when it desires for its current workforce. So too are the paragraphs relating to death. If the purchaser dies whilst still in employment the Contract terminates but the spouse of the purchaser is entitled to remain in occupation of the Property rent free indefinitely: cl 20(d). Similarly where death of the purchaser occurs during the restricted period but after settlement, the spouse is also entitled to remain in the Property rent free indefinitely: cl 20(f). On its proper construction, cl 20 seeks to balance the conflicting interests of the vendor and its ex-employees.

78 Against that background it is necessary to construe the settlement proviso in each of cl 20(b)(i) and 20(c)(i). It is clear that the restrictions on assignment and sale in cl 18(b) and cl 20(h) survive settlement. The question is whether cl 18(a)(i) is an "obligation" expressed to survive settlement. In context that must refer to an obligation on the purchaser. Her Honour, in determining question 3 suggests that although the vendor's option in cl 18(a)(i) is not itself such an obligation, there is an obligation on the purchaser to vacate if the option is exercised and accordingly the settlement provision did not exclude cl 18(a). I agree that the vendor's option to purchase is not an "obligation" on the purchaser within the meaning of the settlement proviso. However, regard cannot then be had to obligations that would only arise if the vendor's option to repurchase survives. Accordingly, I conclude that the settlement proviso does not expressly preserve the vendor's option to purchase.

79 Clause 20(a) and (e) deal with the position where the purchaser ceases to be employed in any circumstances not covered by retirement, disability or death – that is, where the purchaser has resigned or been dismissed. In those circumstances the purchaser can elect to terminate the Contract (in which case the vendor is required to pay the Surrender Value) or to pay the balance of the purchase price and any other moneys owing in which case the vendor is required to transfer the title of the Property to the purchaser. However, even if the purchaser elects to pay the balance of the purchase price and obtains title, the vendor has the option of leasing the Property: cl 20(h). Further, there is no settlement proviso in cl 20(e). In my view, there is nothing in cl 20(a) and (e) that is inconsistent with the vendor's option to obtain title to (and thus possession of) the Property surviving settlement.

80 In summary, the intention of cl 20 is to enable a purchaser who has ceased his employment with the respondent because of retirement or

(Page 33)

disability to remain in possession of the Property until he chooses to leave. It follows that the provisions of cl 20 relating to retirement and disability are inconsistent with the vendor having an option to repurchase and obtain possession of the Property under cl 18. Clause 20(f), which deals with death in the restricted period but after settlement, is prima facie also inconsistent with cl 18(a). However, it is unnecessary to resolve that matter on the facts of this case. As cl 20 deals specifically with what is to occur after employment has ceased, it should prevail over the general provision in cl 18 to the extent of any inconsistency.

81 However, it does not follow that her Honour should have accepted the construction of cl 18(a)(i) contended for by the appellant. As her Honour observed it would operate illogically and unfairly. Clause 20 applies to all ex employees regardless of whether they were in that relationship at the time of entry into the Contract. However, on the appellant's construction, cl 18(a)(i) would apply where a person who became an employee after entering into the Contract retired or ceased employment by reason of disability. Further, as her Honour pointed out, on the appellant's construction a person who although employed at the time of entry into the Contract ceased employment a short time thereafter would be in a better position than a long term employee who was not in that position at the time of the Contract. These outcomes are inconsistent with the contractual intention reflected in cl 20.

82 In my opinion, cl 18(a) should be read as "subject to" cl 20 so that the latter prevails to the extent of any inconsistency. For the reasons given, the vendor's right to repurchase is inconsistent with cl 20(b) and (c) but not cl 20(e). It follows that cl 20(b)(i) and cl 20(c)(i) are to be construed as excluding the option to repurchase in cl 18(a)(i). The practical effect of this construction is that:

(a) the proviso in cl 18(a)(i) applies if the purchaser is an employee at the time of the exercise of the option;

(b) clause 18(a)(i) does not apply if an ex employee (regardless of whether the person was an employee at the time of entry into the Contract) retires or ceases employment because of a disability;

(c) clause 18(a) prevails over cl 20(e).

83 It also follows that in my opinion her Honour's answer to question 7 is correct but that her answer to question 3 is not.

(Page 34)

84 The appellant also claimed that her Honour erred in failing to apply the contra proferentum rule in construing the proviso in cl 18(a)(i). I accept the appellant's contention that having regard to the character and substance of the Contract as a whole, the rule of construction would in principle operate in favour of the purchaser not the vendor. However, it is a rule of last resort to be applied when other principles of construction do not resolve an ambiguity: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (supra) at 389.

85 The contra proferentum rule does not support the appellant's construction of the proviso. On the assumption in the appellant's favour that the Contract is a standard form contract applying to employees and others, it would operate unfairly against ex-employees who commenced employment after entering into the Contract. Further, the ambiguity as to the interrelationship of cl 18 and cl 20 can be resolved by the application of usual construction principles.

86 All relevant matters relating to the construction of cl 18 and cl 20 had to be canvassed in the appeal in order to determine the answer to question 7, including the meaning of the settlement proviso, I would give the appellant a further opportunity to make an application to amend his notice and grounds of appeal and hear from the parties on any such application.

Option to Lease – Questions 4, 5 and 6

87 It follows from my reasons in relation to the proper construction of cls 18 and 20 that her Honour's answer to question 4.2 is correct. That is, assuming the purchaser acquired title or is entitled to acquire title and wishes to lease or otherwise part with possession of the Property or has ceased to be an employee of the vendor due to his or her resignation, (other than by reasons of retirement) or dismissal the respondent has rights under cl 20(h).

88 The next question is whether cl 20(h) is void for uncertainty. Clause 20(h) refers to an option to lease which "shall include the terms and conditions set out in the Fourth Schedule". There is no express provision relating to the term (duration) of the lease in the Fourth Schedule or elsewhere in the Contract.

89 It is accepted that the duration of the lease is an essential term: Darwil Pty Ltd v May, unreported; SCt of WA (Owen J); Library No

(Page 35)

930038; 25 January 1993; Industrial Equity Ltd v Darling Point Securities Pty Ltd (1991) NSW ConvR 55-570.

90 There are two limbs to the law of contractual uncertainty. The first is that there is no concluded contract where an essential or critical term is omitted or expressly left to be settled by future agreement of the parties. The second is that there is no binding contract where the language used is so obscure and incapable of any precise or definite meaning that the contract is unable to attribute to the parties any particular contractual intention: Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429 at 436-437 per Barwick CJ; Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd (2000) 22 WAR 101. This case raises only the first limb of the law. Unless the duration can be inferred or a term implied, the clause must be void for uncertainty. Inferred terms are those inferred as a matter of actual intention of the parties (Hawkins v Clayton (1988) 164 CLR 539 at 570) which overlaps to some degree with implied terms.

91 The appellant says her Honour erred by focussing on the principles that apply to the second limb of the test for contractual uncertainty rather than the first limb. There is merit in that submission. At the hearing below the appellant submitted there was nothing in the Contract that enabled the court to determine the duration of the lease. He postulated that it might be any period during which the purchaser wished to lease or part with possession of the Property; the balance of the Restrictive Period; the balance of the Guarantee Period; the period for which the vendor wished to lease the Property; or some other period. Her Honour, relying on statements in Copperart Pty Ltd v Bayside Developments Pty Ltd (1996) 16 WAR 396 and Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (supra) at 436-437 referring to the second limb, concluded that a contract of which there can be more than one possible meaning or which when construed can produce more than one result is not therefore void for uncertainty provided it is capable of a meaning which the courts decide is its proper construction. Her Honour concluded it was possible to select one of the four specific meanings identified by the appellant but herself came down in favour of (without deciding) either the period for which the purchaser wishes to lease the Property or part with possession of it or the balance of the Restrictive Period.

92 The appellant's submission was intended to convey that the uncertainty arose because there was no proper basis on which to imply

(Page 36)

any particular duration. By focussing on the second limb of the test, her Honour did not address that contention. However, in my view, the appellant's contention is wrong. The starting point is that there being contractual intention and part performance, the courts do their utmost to uphold the bargain: Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd (supra).

93 Clause 20(h) deals with two separate types of situation. The first is where the purchaser is desirous of leasing or otherwise parting with possession of the Property. The second is where the purchaser ceases to be an employee because of his resignation or dismissal. Different considerations apply to each category. In the first category, the triggering condition for the exercise of the option is the wish of the purchaser. The purchaser's motivation will be situation specific to each purchaser and impact on the appropriate term. The vendor has a discretion as to whether or not it exercises the option to lease. It has an effective fall back position under cl 18(b) if it chooses not to exercise the option under cl 20(h). Having regard to these matters, I infer that it was the parties intention that the term be for the period for which the purchaser wishes to lease the property.

94 The second category is different. The right to exercise the option is triggered by the cessation of the employment relationship. The wishes of the purchaser are irrelevant. The outcome can be unilaterally effected. Accordingly, I see no basis in which it can be inferred or implied that the term is a matter for the vendor's discretion. In my view, the proper inference is that the term be for the balance of the Restricted Period. That is the period during which the Contract permits the vendor to unilaterally deprive the purchaser of title to and possession of the Property. Clause 18(b) which is in force during the Guarantee Period only applies if the purchaserproposes to sell, lease or otherwise part with possession of the Property. For the sake of completeness I should say I am satisfied that these terms as to duration also satisfy the test for implied terms in Codelfa Construction Pty Ltd v State Rail Authority(NSW) (supra) at 347.

95 For those reasons I agree with her Honour's answers to question 4, 5 and 6. Having regard to the outcome it is unnecessary to consider the respondent's notice of contention.

Conclusion

96 In summary, I find that her Honour erred in admitting the background material and in her identification of the object of the

(Page 37)

Contract. Although the errors did not vitiate the correctness of the answers to questions 4, 5, 6 and 7, the answer to question 3 is erroneous. I would give the appellant the opportunity to apply for leave to amend the notice and grounds of appeal and hear the parties on any such application.