Kavanagh v State of Tasmania

[2001] HCATrans 86

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Hobart  No H4 of 2000

B e t w e e n -

WILLIAM DUDLEY KAVANAGH

Applicant

and

THE STATE OF TASMANIA

Respondent

Application for special leave to appeal

HAYNE J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT HOBART ON THURSDAY, 5 APRIL 2001, AT 2.59 PM

Copyright in the High Court of Australia

MR W.D. KAVANAGH:  May it please the Court, I appear on my own behalf.

MR T.J. ELLIS:  May it please the Court, I appear for the respondent.  (instructed by the Director of Public Prosecutions (Tasmania))

HAYNE J:   Yes, Mr Kavanagh.

MR KAVANAGH:   Thank you, your Honour.  If your Honours please, adverting to the first ground on which this application is based, which is paragraph 2(1)(a) and appears at page 61 in the application book, it is evidence, in my submission, from the Full Court’s own words that all of the issues on the record were not considered in deciding the appeal.  Breach of the deed was pleaded and was an issue on the record contrary to the Full Court’s conclusion, which appears at lines 15 to 26 on page 57 of the application book.

In Blay v Pollard and Morris [1930] 1 KB 628, Lord Justice Scrutton, at page 634, laid down the principle or rule that cases must be decided on the issues on the record. The question which now arises here, in my submission, is whether or not Blay is applicable or is it the state of the law that cases can be decided without all of the issues on the record being considered? A corresponding question arises, I submit, from the second round of this application, paragraph 2(1)(b), which is at pages 61 and 62 of the application book.

From the language used by the Full Court at lines 35 and 36 on page 57, it is apparent that evidence on which there had been reliance was not considered by the Full Court.  This evidence is particularised in paragraph 2(1)(b) and in the summary of argument.  It is included in item 11 of the material provided for this hearing.  It is on the last page.  This evidence is the only tangible evidence of an act of reliance leading to the execution of the deed.  It occurred in the difficult period following what the learned trial judge himself described as the respondent’s volte-face on 30 October 1991.

It is explainable only, in my submission, by reference to, and in reliance on the respondent’s representations, as particularised in the summary.  It was not raised in cross-examination and no other explanation than this has ever been suggested.  This evidence, in my submission, is critical to the justice of the outcome.  In my submission also, this situation is distinguished from one where evidence has been rejected or where it has been considered and found wanting.  Here, from the language used, the evidence apparently does not exist at all.

I submit it is fundamental to our system of justice that all of the issues on the record and all evidence relevant to those issues be considered when a case or appeal is decided.  These two questions, I submit, satisfy all of the requirements of section 35A of the Judiciary Act, being of public importance, which involve the state of the law and the administration of justice.  In my submission also, other questions of law of public importance are raised by the appeal decision and which are the basis for the remaining grounds of this application.

The finding that clause 2(e) was neither a condition precedent nor a condition breach of which repudiates the contract as a whole - and I refer to lines 19 to 20 on page 56 of the book - means that a clause upon which the accord and satisfaction itself was contingent - and I refer to lines 5 and 6 on page 39 - has been treated as being in some way collateral to the discharge agreement and not as a term and condition of it.  It has effectively been severed.  In my submission, a discharge by accord and satisfaction is inherently an entire contract.

That, I submit, is the plain meaning to be taken from Justice Dixon, as he then was, his judgment in McDermott v Black (1940) 63 CLR 16, in the passage cited by Justice Underwood in paragraph 32 of his reasons which appear at page 57 of the application book. At lines 8 and 9 on that page, Justice Dixon said, “The accord is the agreement or consent to accept the satisfaction”. In clause 2(b) of the deed, which is at page 34 of the book, the agreement was to accept “the redundancy payment in full accord and satisfaction” subject to clauses 1(b) and 2(e). Each of these is a clause to protect releasor entitlements.

“Subject to” does not, in my submission, mean “except for”, which is the construction the Full Court has placed upon them.  There are no words in the deed which support this interpretation which, if applied to clauses 2(c) and 2(d) produces the result that either the same words, when used in the same place, have different effects, unless it is argued that not even non‑payment of the redundancy sum would repudiate the deed, which I suggest is an improbable situation.  If, on the other hand, the word “subject to”, as used in clauses 2(c) and 2(d), can only have one meaning, that must be that each of clauses 1(b) and 2(e), together with the redundancy payment, are essential terms and conditions.

HAYNE J:   But how do you say that clauses 1(b) or 2(e) were engaged in the events that happened?  What is the significance we should attach to 1(b) and 2(e)?

MR KAVANAGH:   Clause 1(b) is not relevant other than as far as interpretation of the deed is concerned, your Honour, but clause 2(e) which protects release or entitlements - in clause 2(e)(ii)  ‑ ‑ ‑

HAYNE J:   Is “make good the underpayment of wages”, et cetera.

MR KAVANAGH:   That is correct, your Honour.  The fact that there was an underpayment - it was found as a fact by both the trial judge and the Full Court.

CALLINAN J:   How much was that underpayment?

MR KAVANAGH:   The underpayment in this case, as found by the Court, was two days, your Honour.

HAYNE J:   And in money, that amount to - - -?

MR KAVANAGH:   In money terms ‑ ‑ ‑

CALLINAN J:   Thirty-eight dollars, something like that, was it not?

MR KAVANAGH:   No, it was in excess of 500, your Honour.

CALLINAN J:   For two days?

MR KAVANAGH:   Four-forty for two days.  But if I could suggest, your Honour, that the amount in this case is not relevant.  The deed is a standard form document, as is evidenced in the use of the words “his/her” in it.  It was widely used in the public service at that particular time and the relative amounts of the redundancy payment which was based on years of service and underpaid entitlements could vary quite considerably and, in fact, approach parity, depending on the years of service and the amount of leave.  If I could go back to the relative importance of clauses 2(c) and 2(d), your Honour.  It is apparent, in my submission, that the Full Court did not interpret these words in the context of the deed as a whole, and I refer to Bettini v Gye [1876] 1 QBD 183, Lord Blackburn at 188.

HAYNE J:   But what do you say follows from the fact, as you would have it, of underpayment?  What is the consequence that follows from that fact in relation to the deed?

MR KAVANAGH:   The consequence of the breach of clause 2(e), in my submission, is a breach of the deed.

HAYNE J:   Clause 2(e) is not, in terms, an obligation.  Clause 2(e) is an exception from the otherwise generality of the release, is it not?

MR KAVANAGH:   What 2(e) says, your Honour, is that the respondent retains a liability to meet underpayments.  That is the plain meaning of the words.  It is a condition which, along with clause 1(b), protects releasor entitlements existing as at the time of the execution of the deed.  In this particular case, the Crown was aware of the underpayment prior to its execution of the deed and it denied it ab initio and, in my submission, it entered into the deed in bad faith.

CALLINAN J:   You say the Crown acted in bad faith because it owed you some money that you had been underpaid, in respect of which there had been underpayment.  Is that right?

MR KAVANAGH:   The Crown acted in bad faith, in my submission, your Honour, because it had a liability which it denied from the beginning ‑ ‑ ‑

CALLINAN J:   But the deed had the effect, did it not, of allowing you to recover that?  It did not release the Crown from any obligation to make good any underpayments, did it?  Is that not the effect of 2(e)?

MR KAVANAGH:   When the Crown itself executed the deed, your Honour, it accepted that it had a liability which I submit one of the definitions of liability being an obligation which, in turn - if I could, your Honour ‑ ‑ ‑

CALLINAN J:   Do you understand what I am putting to you?  Is that your submission that because the Crown owed you the $400-odd dollars, or whatever the amount was, and knew that it owed you that amount, it acted in bad faith in entering into the deed?  Is that your submission or have I misunderstood it?

MR KAVANAGH:   It is not my primary submission, your Honour.  My primary submission ‑ ‑ ‑

CALLINAN J:   But it is one of your submissions?

MR KAVANAGH:   It is one of them.  My primary submission is that the acceptance of the redundancy payment in full accord and satisfaction was clearly conditional upon two clauses, 1(b) and 2(e).  As I said, if the words “subject to” are used with the same meaning that the Full Court has given to them, in other words that clause 2(e) is not a condition precedent nor a condition which leads to repudiation of the deed, if that interpretation is used in clauses 2(c) and 2(d), either you have a situation where none of the clauses referred to there, which are 1(b), 2(e), and the payment of the redundancy sum, none of them would be conditions breach of which would repudiate the deed.  Or, alternatively, the same words would have two different effects depending on which clause they were referring to which, in my submission, is contrary to all of the rules of interpretation.

The questions which, in my submission, flow from this situation are, firstly, is a discharge agreement by way of an accord and satisfaction ipso facto an entire contract, and, secondly, do the words “subject to” when used in an agreement create an overriding condition or can they have different effects when used in the same place and context, which, as I have said in my submission, is what has happened here.

Finally, in my submission, the Full Court’s finding that there was no misrepresentation by the respondent’s officers, which can be found at lines 13 and 14 on page 58, leads, in my submission, to an anomalous situation.  Given the nexus between statute and contract, which is identified in ground 2.3 of the application and which is particularised in the summary of argument, pages 72 and 74, there follows, in my submission, a presumption that the respondent’s officers did know that material representations made by them were not true.  The question then arises, I submit, as to whether a person can knowingly make an untrue representation but be innocent of misrepresentation or even negligent misstatement.

Concluding, it is my submission that this application raises questions and issues which satisfy the criteria laid down in section 35A and the principles enunciated by Justice Dawson in Morris v The Queen (1987) 163 CLR 454 at 475. I respectfully request that this honourable Court favourably exercise its discretion and grant leave. Thank you.

HAYNE J:   Yes, thank you, Mr Kavanagh.  We need not trouble you, Mr Ellis.

The applicant submits that the trial judge made erroneous factual findings and erred in law in construing a deed of release and otherwise and he submits further that because the deed excepted certain kinds of obligations from the otherwise general words of release it contained, the payment of the sum agreed in the deed did not constitute satisfaction under the accord recorded in it.

The Full Court carefully considered each of the applicant’s contentions, which are substantially repeated here, to conclude the primary judge was entitled to make the findings and to draw the conclusions that he did and that he did not fall into error in construing the deed.  The applicant has not shown that an appeal to this Court has any reasonable prospect of success, no point of principle is raised in the application.  For these reasons, it is dismissed with costs.

AT 3.15 PM THE MATTER WAS CONCLUDED