Koompahtoo Local Aboriginal Land Council & Anor v Sanpine Pty Limited & Anor

[2007] HCATrans 446

[2007] HCATrans 446

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S221 of 2007

B e t w e e n -

KOOMPAHTOO LOCAL ABORIGINAL LAND COUNCIL

First Appellant

TERRY LAWLER

Second Appellant

and

SANPINE PTY LIMITED

First Respondent

KLALC PROPERTY & INVESTMENT PTY LIMITED

Second Respondent

GLEESON CJ
GUMMOW J
KIRBY J
HEYDON J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 28 AUGUST 2007, AT 10.18 AM

Copyright in the High Court of Australia

__________________

MR B.A.J. COLES, QC:  May it please the Court, I appear with my learned friend, MR G.A. SIRTES, for the appellants.  (instructed by Bartier Perry Solicitors)

MR T.S. HALE, SC:  If the Court pleases, I appear with my learned friend, MS A.M. MITCHELMORE, for the first respondent.  (instructed by Solari Legal)

GLEESON CJ:   Yes, Mr Coles.

MR COLES:   May it please your Honours.  Your Honours, there is no appearance for the relevant company ‑ ‑ ‑

GLEESON CJ:   No, but there is evidence of service.

MR COLES:   There is evidence of service – I wanted to draw your Honour’s attention to the circumstance that there is such evidence.  Your Honours, the principal issue essentially in the appeal concerns the effect of the promisee’s conducts, said to amount to acquiescence, upon what were found to be serious breaches of a joint venture agreement by the promisor, those breaches being themselves unexcused by waiver or estoppel.  Subsidiary questions do arise, your Honour, including whether there was any justification for the conclusion of the majority of the Court of Appeal that the first appellant, the Land Council, Koompahtoo itself, knew and approved of the breaches, or at least the significant ones, at all and that involves a short factual inquiry.

Your Honours, the trial judge – if your Honours have volume 6 of the appeal book – set out at page 2193 a summary of his conclusions as to the breaches which he found to be established and did so by reference to the relevant provisions of the joint venture agreement itself.  Your Honours will have noted that the joint venture agreement, and I interpolate that appears in volume 1 of the appeal book at page 227 and in other places, was a joint venture agreement pursuant to which the participants were relevantly the first appellant, Koompahtoo Land Council, and the respondent, Sanpine, the first appellant in substance putting up land relatively recently granted to it pursuant to the 1983 Aboriginal Land Rights Act (NSW) for prospective development involving necessarily the obtaining of Council approval and eventual rezoning, those tasks being tasks assigned to the respondent, Sanpine, it being as recited by the joint venture agreement itself apparently professing some experience in the development of real property.

GLEESON CJ:   Once you embark upon a joint venture of this kind, apart from termination for breach, how do you put an end to it?

MR COLES:   I suppose these ways.  The agreement itself made provision for its termination, which was on the first event, which was its accomplishment.  Having put an end to it beforehand, there was another mechanism but that was limited by the terms expressly to a situation where one joint venturer wished, in effect, to buy the other out on the basis of the other’s breach, which it was not suggested that Koompahtoo wished to do in this case. 

GLEESON CJ:   There is no sort of just and equitable ground?

MR COLES:   There is no type of partnership winding‑up.  We would be inclined to think not but, in any event, Koompahtoo did not seek, in effect, the winding‑up of the venture on the just and equitable ground.  I think by its terms it is intended to convey the impression – that is to say the joint venture agreement – that it is not a partnership in the strict sense.  That is to say there is no community of partnership property.  Koompahtoo, for example, retains beneficially and legally its interest in the relevant land and so forth.  At least I think we can say, your Honours, that the parties have proceeded – and the case was instituted, of course, by Sanpine itself following Koompahtoo’s termination on the basis that the matter was governed by ‑ ‑ ‑

GUMMOW J:   Was the only relief being sought a declaration?  What was the nature of the suit?

MR COLES:   In substance, what was being sought – if I could just remind your Honours in volume 1 was really – what his Honour was trying was a separate question on the ‑ ‑ ‑

GUMMOW J:   I know that.

MR COLES:   The claims made by the plaintiff I think are at page 8 – what were a declaration that the joint venture was subsisting; injunctions restraining entry into, in effect, any other sort of venture – not that any was apprehended; a declaration that a certain transfer was void, and so forth; or, in the alternative, damages. 

GUMMOW J:   What about 26?  What is that about?

MR COLES:   What had happened, your Honour, although it formed no part of the debate or the conclusions either before Justice Campbell or the Court of Appeal, was that no doubt that the provisions of section 40 and section 40D of the Aboriginal Land Rights Act in mind, Koompahtoo Land Council had transferred title to the property to the entity identified as the second respondent – that is to say KLALC Property & Investment Pty Limited.  That takes your Honour back to the claim for relief in paragraph 25, namely a declaration that that transfer was void, a matter which has not ‑ ‑ ‑

GUMMOW J:   But the relief stopped short of an injunction in the nature of specific performance.

MR COLES:   Absolutely, yes.  Therefore, of course, Sanpine did not have to prove at the trial that it was ready and willing to do anything.  It simply asks, in effect, for declaratory relief that the agreement remained on foot, therefore calling into question the efficacy of the administrator’s termination in 2003.

GLEESON CJ:   What, if anything, was done about clause 26 of the joint venture agreement on page 271?

MR COLES:   Nothing, your Honour.

GLEESON CJ:   Is clause 26 on page 271 relevant to any of the issues we have to consider?

MR COLES:   It has not been contended to be so, your Honour, and we would for our part contend that it is not.  Your Honours, the conclusions expressed in paragraph 369, that is to say I am now on page 293 of volume 6 in the primary judge’s judgment, the conclusions expressed in that paragraph were as to the breaches which his Honour then summarised with references back to the various paragraphs where he had reached conclusions about the various breaches.  His Honour did so, as your Honours will see from the paragraph which precedes it, paragraph 368, on the assumption that the terms in question were themselves intermediate terms enabling therefore his Honour to put to one side any question as to whether they were essential terms of the contract.  His Honour recorded the breach ‑ ‑ ‑

KIRBY J:   Where does that phrase come from?

MR COLES:   Which phrase, your Honour?

KIRBY J:   “Intermediate terms”?

MR COLES:   I think it comes from the ‑ ‑ ‑

GLEESON CJ:   It comes from an English decision.

HEYDON J:   Lord Justice Diplock in Hong Kong Fir ‑ ‑ ‑

MR COLES:   Yes, it is Lord Justice Diplock in Hong Kong Fir Shipping ‑ ‑ ‑

GLEESON CJ:   It comes from a rejection of the fact that you can divide the world into conditions and warranties.

MR COLES:   Yes, or perhaps an acknowledgement that that division sometimes causes difficulty.

GUMMOW J:   Is there some earlier reference by Justice Campbell to marking out the field of discourse where he says what he understands by repudiatory conduct?

MR COLES:   Yes, if your Honour ‑ ‑ ‑

HEYDON J:   Paragraph 362.

MR COLES:   He addresses himself – I think if – I can really just take your Honour no further back than paragraph 366 at 2192.  His Honour appears to instruct himself in what in point of classification is the first category of breach giving rise to the right of termination described by Sir Harry Gibbs in Shevill v Builders Licensing Board 149 CLR 620 at 625.

GLEESON CJ:   But he defines his use of repudiation in paragraph 360.

MR COLES:   Yes.  Yes, in what we would describe without criticism as, in effect, a functional way.  So it is plain in 366 that his Honour is firmly focused on the first category of repudiation enunciated in Shevill.  Without taking your Honours immediately to Shevill one can, of course, immediately observe that that first category of repudiation itself admits of some division contemplating in the first instance the situation whereby a “party renounces his liabilities under” a contract, or perhaps as an alternative where the party demonstrates an intention to fulfil those obligations “only in a manner substantially inconsistent with his obligations and not in any other way”.

The first aspect of that dual subclassification perhaps contemplates the relevantly straightforward situation where a party simply announces to the other contracting party that he will no longer perform ‑ ‑ ‑

GLEESON CJ:   That is anticipatory breach, is it not?

MR COLES:   Indeed, precisely, with respect, your Honour.

GLEESON CJ:   But the case of repudiation you were relying on, as I understand it, was not a case of anticipatory breach ‑ ‑ ‑

MR COLES:   Quite.

GLEESON CJ:   It was a case of breach of a term.

MR COLES:   Of subsisting breaches.

GLEESON CJ:   Breaches by performance.

MR COLES:   Unretracted, unremitting breaches in the course of the performance or non-performance of the contract which had accrued over the years and which, on the appellants’ case, were both repeated breaches and, importantly, for reasons we will mention in a moment, persistently pursued breaches.  His Honour really so found. 

I mention that subdivision really by reference to the first category of Shevill’s Case because it has led, in our respectful submission, in ways I have to point out shortly, to an elision really of the principles or the conclusions properly to be drawn in the one type of case where there is an anticipatory breach, in effect, sought to be established against the party who is claimed, usually contentiously, to have renounced performance before the date fixed for that performance arises on the one hand and the sort of repudiation still encompassed we think by the same first classification in Shevill’s Case, the sort of repudiation, or sometimes called renunciation in the older cases, where the party simply indicates or demonstrates by conduct that he no longer intends to perform the contract either at all or, otherwise than in a manner which is, in effect, at his own choosing or in a way that demonstrates that he will perform it only if and when the mood, as it were, takes that party. 

The importance of bearing in mind the distinction and when we respectfully think that in some respects Justice Giles may have perhaps elided the distinction, but one needs to be cautious, in our respectful submission, in applying observations, formulae or suggested techniques for the resolution of repudiation disputes, learning, or for that matter, factual instances derived from the law of anticipatory breach, on the one hand, as against – perhaps there is no bright line – those instances of repudiation which are the consequence of either a breach or, indeed, it is a question of degree, a series of breaches or a repetition or recurrence of breaches or a persistence in breaching conduct, and the relevance that has to the concept of acquiescence in a moment is one to which I will come. 

GUMMOW J:   Just looking at paragraph 362 while we are there, that little paragraph (c):

in respect of an absence of readiness or willingness to perform –

That gets a bit confused too.

MR COLES:   It does, in our respectful submission, your Honour.

GUMMOW J:   Is that the sort of question that arises in the specific performance suit?

MR COLES:   Or, in our respectful submission, a damages claim as well.  Indeed, it as much goes to remedy as to breach, yes. 

GUMMOW J:   But in a specific performance suit, it need not be a repudiation.

MR COLES:   No, quite, in our respectful submission.

GUMMOW J:   You just do not get specific performance.

MR COLES:   You are left to your own…..damages, in effect, with the contract still on foot.

GUMMOW J:   That is right.  The question would be whether the readiness and willingness not only disqualifies you from specific performance but amounts to an anticipatory breach.  That could be so and the contract is gone then.

MR COLES:   There are indications of the resolution of that question - I think Rawson v Hobbs, for example, is probably an instance where you are looking at the question whether the degree of lack of readiness and willingness amounts to total and final disablement, in effect, which again is in the context, though we would respectfully submit, of anticipatory breach rather than recurring or persistent breach.

We have drawn attention to what his Honour, the primary judge, said at page 2194, paragraph 370, in terms of the significance of the breaches.  We pointed out in paragraph 371 that the joint venture agreement itself had a clear and coherent set of procedures.  I mention that, your Honour, because it is not unimportant when one is looking at the classification of cases put against us where the court has been very happy not to conclude that there was a repudiation, but as often as not, that discourse has arisen in the context of contractual provisions which were not clear or coherent or were often confused or confusing and the issue has been, do you catch out a person in repudiation who has proffered or maintained, quite often provisionally, a particular view of a contract which happens to be not the one which the court later adopts.

It is obviously, therefore, very important to bear in mind that when one is comparing as we say – we really say that the comparison falls between the type of situation, if I can anticipate something I am about to say in a moment, you encounter where you have, in effect, a bona fide misapprehension about your contractual obligations and you proffer a view of them, usually a view I should add by the way about your future performance, so that the context in which the alleged repudiation in that scenario is said to happen is really again in the realm of anticipatory breach, on the one hand, as against the situation where, confronted with clear and coherent contractual obligations, you proceed serially, repeatedly and persistently to either ignore or contravene them.

GLEESON CJ:   What about a case where the obligations of the party alleged to be in breach are in substance to provide services and the criticism of the performance of that party is that it has been slack in providing the services?  How do you make a decision as to whether the contract can be terminated?

MR COLES:   Because all relevant conduct, of course, comes into play, you firstly look at the services.  I mean, if they are, for example, services of a highly confidential and professional kind, well, you may be able to make the decision very quickly.  If they are more basic services, perhaps of a building kind or a repair kind, I think the instruction of a case as your Honours seems to be that you look around for such indications, to quote Lord Shaw, of, for example, procrastination persistently practised or something that indicates – in other words, you look for the objective indicia of a disinclination to perform the contract according to its terms.

GLEESON CJ:   That is puzzling me.  Why is it that you go in such a case looking for, as it were, an unwillingness to perform the contract according to its terms?  Why is it not the case that you go looking for a lack of capability to perform the contract according to its terms?

MR COLES:   One reason for that is that lack of capability is not a requirement or, indeed, in one respect not even necessarily relevant to what I will call general repudiation because one may have lots of ability – and I will come to compare in some respects this case with, for example, the lessor in the Laurinda Case.  One may have lots of ability but simply be utterly unserious about one’s contractual obligations in a way that, although you have plenty of capacity to perform, you just do not choose to perform according to the terms of the contract and all the ability in the world will not save a person in breach in that situation.  Conversely, and this is perhaps the Universal Cargo sort of situation, all the enthusiasm in the world to perform will not save the party in breach if the breach is itself inability to perform. 

So the courts, in our respectful submission, have focused not so much on the ability or lack of it as what are the steps, in effect, that – or how does the conduct of the party said to be in breach represent itself objectively to the innocent party.  Of course, a declaration of inability, whether true or not, would amount to a repudiation whether or not actually – and there will be no room in that eventuality, in our respectful submission, for a subsidiary inquiry as to whether the capability existed or not.  If a person says “I cannot perform this contract”, then that will in most cases be sufficient for the other person to say, “Well, if you are telling me that, you are really repudiating and I’m going elsewhere to buy my goods or collect my shipment”.

So you just would not be inquiring, in our respectful submission, as to whether underlying the renunciation there was a subsisting capacity to perform any more than you would inquire, as I say, as to the enthusiasm otherwise or the motivation otherwise which the contract breaker might subjectively, and even on an objective view, maintain when there was an underlying ability.  One simply looks, I suppose – and, indeed, in that respect the type of functional test which his Honour posed for himself may indeed at the end of the day be the best way of looking at it.

GLEESON CJ:   One of the complaints that were made against Sanpine seems to have amounted in substance to complaints of incompetence, whereas other complaints seem to have amounted to complaints of a wilful determination not to comply with certain requirements, particularly in relation to keeping accounts.  Running together those two different types of complaint can be a little confusing when you come to ask what is repudiatory conduct.

MR COLES:   Yes.  Can I take the opportunity in seeking to deal with your Honour’s proposition to come to a point I was going to make later, but I will deal with it now – which we found, in effect, on Sir Wilfred Fullagar’s observations in Carr v Berriman.  It is what do you make of that situation where you have what I might call a subordinate or inferior breach which, standing alone, might not have fussed people that much, but travelling in tandem with it is a very strong repudiatory breach.  To recollect to your Honours, the short facts in Carr v Berriman were of course that the - - -

GUMMOW J:   You had better put the citation on the transcript. 

MR COLES:   I am terribly sorry; I have it here.  It is 89 CLR. 

CRENNAN J:   At 327 – (1953) 89 CLR 327.

MR COLES:   I am grateful to your Honour.  Briefly, of course, the breaches ascribed to the proprietor under a construction contract were, firstly, that he did not clear or excavate the site as he promised to do to enable the contractor to come onto the site and build the factory; were still he had written to the contractor and said, “As to an important part of your contract, I am going to employ another builder.  So you are only going to be able to do two-thirds of the work that you are contracted to do and you just will not get the profit from that part of the work”.

KIRBY J:   Yes, but the suggestion is that you have to look at the conduct in the context of all of the facts - - -

MR COLES:   Absolutely.

KIRBY J:   - - - and that, if you look at the facts, many of the facts help to explain these breaches – for example, the difficulty of raising finance.  I think they went to 50 financiers, so they say.  So you cannot just pluck some feature out of the air; you have to look at all the facts. 

MR COLES:   Quite.  I have to return to deal with that.  To answer the Chief Justice’s observation just for the moment, if I may, the point about the situation you get into where you have, in effect, a subordinate – that is my word – breach travelling in tandem, as it were, with rather more radical breaches, what do you make of it.  In our respectful submission, it seems to follow, or it seems to have been recognised in Carr v Berriman at least that you can, in effect, ascribe colour to the subordinate breach as, in effect, part of the – as your Honour Justice Kirby says – whole program of activity.

In effect, you can take a view of the inferior or subordinate breach which is affected by the attitude, I think Sir Garfield Barwick called it, of the repudiator when he committed the more serious breach.  In other words, not only did he commit a serious breach but you can confirm that attitude by seeing how he behaved in relation to the subordinate breach, and so understood the inferior or subordinate breach itself takes the colour and becomes of itself evidence of that repudiatory intent objectively, which is the basis of the threshold of the entitlement to ‑ ‑ ‑

KIRBY J:   I must say that I have been affected by reading that list of authorities where mainly English judges have said over and over again that it is a very serious thing to infer repudiation because mostly people who go into a formal contract do not intend it and therefore it has to be very clear that that is what they intended. 

MR COLES:   Can I deal with that in a moment.  That is a very important point, if I may respectfully - - -

KIRBY J:   In a sense you have to get the theory of the law of contract of repudiation clear in your mind before you plunge down into the chasm of the facts of this case. 

MR COLES:   For completeness, can I give your Honours – I have given your Honours the reference to Carr v Berriman.  Can I particularly refer, without extensive reading to what - - -

KIRBY J:   We have to think of this case not just as the battle between you two, but how, in the whole law of contract, the principles of repudiation operate in Australia. 

MR COLES:   That is why, in our respectful submission, we wish to trouble your Honours a little more extensively than might otherwise be necessary with the proposition often cited and frequently called into play that repudiation is not likely to be inferred because we say, properly understood, that has a relevance to circumstances that intersect less exactly with the position in this case.

GUMMOW J:   Is there a particular passage in Justice Fullagar in Carr?

MR COLES:   Yes, if I could, your Honour.  I refer to page 349 from the middle of the page over the page.  His Honour is there discussing what he calls the “first breach”.  To take your Honours over to page 351 at the middle of the page - and this is what I have called the subordinate breach, his Honour calls the “second breach” and that is the breach about failing to do anything to get the site ready or excavate and so forth - his Honour says:

But, when this second breach is viewed alongside the existing position with regard to the site, the case does not seem to admit of doubt.  An election not to rescind for failure to deliver the excavated site on the due date could not deprive that failure of all significance.  When a second breach occurs, the two combined may have a significance which it might not be legitimate to attach to the first alone. 

I read the balance of the paragraph in explication of that. 

GLEESON CJ:   Before you leave page 351, there is a sentence that says:

A reasonable man could hardly draw any other inference than that the building owner does not intend to take the contract seriously, that he is prepare to carry out his part of the contract only if and when it suits him.

How do you apply that test to a case of alleged incompetence?

MR COLES:   I should have read that, yes.  I suppose a person who performs incompetently – one does not stay, in our respectful submission, to look at more than the activity.  One does not, for example, examine the qualifications or the experience of the person involved.  One looks simply at the product or outcome and one says, “This faulty plumbing work indicates to me that this person, a plumber, intends not to take the contract seriously and is only ‑ ‑ ‑

GLEESON CJ:   That is highly artificial, is it not?  The faulty plumbing work might be the result of the fact that he is a very, very bad plumber, not the fact that he is unconscientious.

MR COLES:   Absolutely.

GLEESON CJ:   Can you not terminate a contract with a plumber on the ground that he is a very, very bad plumber?

MR COLES:   No, not per se, for the self‑evident reason I suppose, with respect to your Honour, that even very bad plumbers have good days.

GLEESON CJ:   But it is an implied term of a contract of engagement of a plumber that he will carry out his work with diligence.

MR COLES:   That he will bring to bear all due care, skill and diligence on the task engaged.  That is right.

GLEESON CJ:   What does that have to do, in the case of incompetence, with a lack of intention to take the contract seriously?  He might be trying very hard.

MR COLES:   The answer to that on the authorities, in our submission, is that one is never looking at the subjective intention of the diligent muddler.  One is looking at the outcome that the diligent muddler produces in terms of what that activity or what that performance, in the realm of contract, conveys to the other contracting party.  It is slightly linguistically artificial, your Honour is right, but if one accepts these propositions, and I think it is uncontroversial, that one is not looking at the state of mind subjectively of the repudiator, one is looking at how their conduct, or more accurately how the steps taken in purported performance, which is probably the same thing, of the contract would appear to the other party to the contract.

As I say, for that reason, it does not matter at all whether they had all the diligent aspirations in the world to do a better job or to do a faster job or to do a more complete job if their production showed that they did not do the job contracted for and the circumstances of that non‑performance or misperformance were such as to generate the impression – we do rely on the last five lines very much of what Sir Wilfred Fullagar said.  You could come to the conclusion, or a reasonable person would come to the conclusion that this plumber, however enthusiastic he is, however bright‑eyed and bushytailed his efforts may be, just does not intend objectively to take the contract seriously and is prepared to carry out the contract only if and when it suits him, whether the disability which compels that outcome is his lack of talent or whether the disability which compels that outcome is his own subjective disinclination to do the job properly.  One does not state or distinguish, in our respectful submission, between the two.  It is the production that is ‑ ‑ ‑

GUMMOW J:   How does this notion of intention get into this realm of discourse, outside anticipatory breach?  I am looking at Shevill, for example, is that an anticipatory breach case?  I have forgotten.

MR COLES:   No, not really.

GUMMOW J:   No.  Well, you look at Chief ‑ ‑ ‑

MR COLES:   Can I remind your Honour, the discourse in Shevill was no more than this, that the tenant did not pay the rent and the landlord
re‑entered pursuant to an express right of re-entry in the usual form.  It was then said by the lessor, “I want loss of bargain damages because any clause in a lease based on breach which gives me the right to terminate the contract”, in this case by re-entry, “must be an essential breach and therefore I get loss of bargain damages if I accept the repudiation which I have”.

The Court said that cannot be right because what brought the contract to an end was not the acceptance of a breach of an essential term.  Indeed, the re-entry clause might have been offended, or enlivened I should say, by all manner of breaches, some essential, some not.  So that threw the respondent in Shevill back on a subsidiary question that non‑payment of rent on the relevant days that were happening was not unlike, let me say, the progressive Mailing v Tabali situation where there was much more protracted and persistent non-payment, but the acts of non-payment, or late payment as often as not in Shevill, were not simply in the whole context sufficient to convey the notion or convey the impression that the lessee was intending not to take the contract seriously, et cetera.

GUMMOW J:   What I am trying to put to you, Mr Coles, relates to what the Chief Justice has been putting to you.  This reasoning is fine when you are talking about payments, the obligation is making payments.  You say it evinces an intention not to be bound, and I can understand that.  What do you do when a contract does not want to make payments in that sense but to provide a pattern of services over time?

MR COLES:   Well, I can only say, your Honour, our ‑ ‑ ‑

GUMMOW J:   And how does this notion of having to show that there is what has been evinced as an intention to fulfil the contract in a manner substantially inconsistent with the obligations if he is trying his hardest but he is just hopeless?

MR COLES:   Yes.  Well, as I say, just where intention came in – one can trace these observations back to obviously earlier cases and Lord Coleridge is probably an early author – one could necessarily say the first begetter, but one of the earlier describers of the notion – things in terms of intention.  Probably one can speculate and say the idea arose because people came along to court and said, “No, no, no, I am intending to perform this contract, I have just done a bad job”, and the courts have had to grapple with that and say diligent intentions and diligent muddling will not save a bad workman from the fate of his breach, and therefore they have had to eradicate the notion – what one supposes courts have been astute to try and do is suppress the notion that subjective intention on the part of the repudiator has anything to do with the accrual of the other party’s rights to terminate, or to be relieved of the contract.  I mean, the traditional idea was ‑ ‑ ‑

KIRBY J:   It sounds like a bit of a fiction.

MR COLES:   It is what conduct enables the other person to say, “I am relieved of my obligations to perform”.

KIRBY J:   It sounds like a fiction.  We are not really looking into the mind of intention of the contracting party, but in a sense we are really.  This is one of the problems.

MR COLES:   Well, no, no, but in the abstract and artificial sense that it would convey itself to – I mean, when I take your Honours to Laurinda v Capalaba there is a very stark example of that rather I suppose in one sense a nominal state of affairs.  But I have strayed a little, your Honour, and the matters your Honour has ‑ ‑ ‑

GLEESON CJ:   If a plumber turns up on day one without his tools and on day two he puts a piece of equipment through your gas pipeline, and day three he runs over your dog, and day four he lets the chooks out or something like that, there comes a time at which you can say, “Get out of here”.

MR COLES:   That is right.

GLEESON CJ:   And that is not because of any lack of serious intention on his part, it is because of a breach of an essential term, which is that he will perform his contract with due skill and competence.

MR COLES:   Well, quite, but we are then getting, your Honour – of course, thus far, your Honour, the discourse has been about category one of Shevill.  We are now getting into category two, and I think in your Honour’s example plainly category three where it says simply a breach of an essential term.  Could I invite your Honours just to notice Shevill – I am sorry, before I do let me just finish what I wanted to say about Carr v Berriman in one sense.  What we do say, your Honour, is that the passages in 351 and following do mean that you can combine or aggregate breaches – and this is not a remarkable proposition – for the purposes of adducing the inference that the promisor’s intention is not to take the contract seriously or to perform it only in a way as and when he chooses.

Could I just say one other thing – I am sorry to impose on your Honour’s patience – but before I move to the general matters of concern.  Could I just direct attention to what appears at the bottom of 351.  Your Honour the Chief Justice kindly took me to the passage which I have indicated we rely upon.  This is a subsidiary observation about that passage:

A reasonable man could hardly draw any other inference than that the building owner does not intend to take the contract seriously, that he is prepared to carry out his part of the contract only if and when it suits him.

There has been added on to that passage a gloss much, I think, relied upon by Justice Giles.  You add on to the – you will see this in Shevill in a moment – proposition “he is prepared to carry out his part of the contract only if and when it suits him” and then there is added on by way of gloss on those words “and not in any other way”.  That is the way the formulation comes to be expressed in category one, I think, of Justice Gibbs’ judgment in Shevill.  We would simply wish to emphasise that that is but, in effect, an intensification of the adverb and really adds nothing to the proposition that if one indeed indicates one intends to do it only if and when it suits one, then adding on the words “and in no other way”, in our respectful submission, is, if not actual, bordering upon mere surplusage or intensification.

May I then, your Honours, ask your Honours to look at Shevill 149 CLR 620 and invite your Honours’ attention to the ‑ ‑ ‑

KIRBY J:   Just before you leave Carr, I notice that Chief Justice Dixon sat in the matter but does not appear to have given his opinion.  Can you explain that?

MR COLES:   I did notice that myself, your Honour. 

HEYDON J:   Justice Fullagar at page 352 said:

The Chief Justice has authorized me to say that he agrees with this judgment.

MR COLES:   That is right.  You will find that towards the end of – it is the very last line, I think, of Justice Fullagar, from memory.

HEYDON J:   Page 352.

MR COLES:   Yes, it is.  It is the foot of page 352, if your Honour please.

KIRBY J:   Yes, thank you.

MR COLES:   Of course, Justice Kitto concurred. 

GUMMOW J:   The Chief Justice was off to the Coronation, that is why.  Look at the dates.  Judgment is on 5 June.

KIRBY J:   That is absolutely right.  His Honour had more pressing obligations.

MR COLES:   Your Honour must be right.  At page 333 I notice that Sir Garfield Barwick, if he was so knighted, appeared as QC in the case.  So it may be that the Coronation – or I suppose the Queen had ‑ ‑ ‑

GUMMOW J:   That would be true from February 1952, Mr Coles.

MR COLES:   If I could ask your Honours to look at Shevill v Builders Licensing Board 149 CLR 620. I have sketched the facts. The important passage or, I suppose, your Honour, the passage that your Honours will want to examine is, of course, in the relatively oft cited observations of Sir Harry Gibbs commencing at 623 with which, importantly, Justice Brennan agreed. I say importantly because Justice Brennan sat in the trilogy of cases which have been ‑ ‑ ‑

GUMMOW J:   There was a big debate about landlord and tenant covenants, was there not?  That made Shevill news, I suppose, at the time.

MR COLES:   It came as a shock to the profession and probably the community that a covenant to pay rent was not considered an essential term of the lease, but that was because one just has to think a little more deeply and compare – and, of course, that was not what the case really held.  The case held that it was not, as a matter of construction, made essential by the operation of the re‑entry clause which is what the case really held.

The important passage commences at the last paragraph of page 625 commencing by the reference to Lord Wright in Heyman v Darwins Ltd.  The first sentence is uncontroversial.  Then his Honour says, “Such a contract may be repudiated” and your Honours have read that passage in the instruction contained in the learned trial judge’s judgment, so there is renouncing or showing – renouncing, I have suggested, being the ‑ ‑ ‑

GUMMOW J:   This word “intend”.

MR COLES:   Your Honour, when I come back to Ross T Smyth shortly, I want to say some more that I have not already said about the first category.

GUMMOW J:   I can understand intention being vital in cases of anticipatory repudiation, but how it got into non‑anticipated repudiation I just do not understand.

MR COLES:   Because there has been, in effect, a rather relaxed approach towards eliding the notions to be drawn from anticipatory breach.

GLEESON CJ:   I do not know that Chief Justice Gibbs elided it.  If you go to page 626 ‑ ‑ ‑

MR COLES:   No, he did not, with respect.  He put in “or”.  He put an alternative.

GLEESON CJ:   He put the word “however” about a quarter of the way down page 626.  What he says is that evincing an intention not to perform is one form, however, there is another form and that is by default in performance, if the breach, that is the default, goes so much to the root of the contract that it makes further commercial performance of the contract impossible. 

MR COLES:   Yes.  It is a little unclear in one sense.  If your Honour goes back to the bottom of 625 it is made clear that the first category ‑ ‑ ‑

GUMMOW J:   It is based on Suisse Atlantique I think, is it not, to some degree?  I may be wrong.

MR COLES:   What I have called the first category of repudiation described at the bottom of page 625 appears, we would suppose advisedly, to be formulated by his Honour as an alternative and we would respectfully say it is a true alternative because it envisages the twin ‑ ‑ ‑

GUMMOW J:   Was not Justice Mahoney on to the point?

MR COLES:   In Honner v Ashton.

GUMMOW J:   Look at 626:

Mahoney J.A. said that he thought that the right to terminate for fundamental breach should be seen as, in principle, distinct from the right to terminate for repudiation.

MR COLES:   That, in our respectful submission, is not only unobjectionable but has much to commend it.  It is again an issue which this Court found unnecessary to decide in Progressive Mailing v Tabali which was the case which found that non‑payment of rent was in the circumstances a repudiatory breach because unlike Shevill – in Shevill the tenant was a bit late and cheques bounced and so forth, but in Progressive Mailing the tenant wilfully and intentionally asserted that “I will not pay the rent”.

GLEESON CJ:   The law of contract got itself into an awful muddle for a long time because of the word “rescission” and confusion that arose in applying that to different kinds of termination.

MR COLES:   Yes.

GLEESON CJ:   I wonder if a similar problem has arisen in relation to the word “repudiation” which, as a matter of ordinary English, carries with it this notion of evincing an intention, but yet has been used to apply to cases, like the extremely incompetent plumber who is doing his best but his best is not good enough?

MR COLES:   The point your Honour makes is really captured in the fourth line of what Sir Harry Gibbs says on page 626:

It is convenient to say that the injured party in these circumstances rescinds the contract –

and he cites Johnson v Agnew as indicating that if one wants to go on calling it rescission, one has to, in effect, recognise that it is not rescission ab initio.

GUMMOW J:   Yes, that is that point, yes.

MR COLES:   Then to come down, after the brief reference to Justice Mahoney’s observations which are perhaps impliedly approved, his Honour says – I am just pointing to about the eighth last line on the page:

A third situation in which a right to rescission arises is where there has been a breach of a fundamental or essential term of the contract -

and sets out Suisse Atlantique.

GLEESON CJ:   Was Suisse Atlantique a case about exception clauses?

MR COLES:   I think it was.

GLEESON CJ:   And that was why they were at pains to distinguish between fundamental breaches and other breaches because the exception clause would not get you out of a fundamental breach.

MR COLES:   Yes, under that theory then, things may have moved a little on.  It was said you could not contract out of a fundamental breach at one stage.  I am not sure that is the law now.  Indeed, it is not after perhaps this West v Sydney Council, I suppose.

GLEESON CJ:   Photo Production v Securicor put an end to that.

MR COLES:   Yes, and we were thinking of probably West v Sydney Council perhaps and Darlington Futures.  Anyway, things have obviously moved on in that realm of discourse.  The importance of it being a breach of a fundamental or essential term is of course one does not even stay to consider notions of what impression or what message that sends to the innocent party so far as the repudiator’s intention is concerned.

There you are not of course - and this really harks back to your Honour’s observations about the diligent plumber - concerned with his intentions at all or, indeed, what effect on the innocent party the demonstration of incompetence would have if the breach is one of an essential term.  The only inquiry is, is this, as a matter of construction, an essential term if you have breached it.  End, in our respectful submission, of further need to analyse.

That is hence the difference between, or sometimes the importance of classifying the term as an essential one as opposed to either an intermediate one or indeed a non-essential one.  One can in theory, in our respectful submission, have persistent breaches of very minor terms and still eventually produce a repudiation.

GLEESON CJ:   You can have a mode of performance of the contract that the other party no longer has to put up with.

MR COLES:   Yes.  Again, I think, to borrow from Lord Shaw in  Forslind v Bechely-Crundall Case, to which I will come, the 1922 Scotch case, it is in effect saying, “That’s all I can put up with, I can’t take any more, that’s the end”, your patience is exhausted and you are entitled to bring the contract to an end.

KIRBY J:   But is that classified as repudiation?

MR COLES:   Yes.  Indeed, when I come to ‑ ‑ ‑

KIRBY J:   As distinct from some other breach permitting rescission?

MR COLES:   No, it is put as repudiation.  Indeed, I rely on it as part of the answer to the problem presented by the notion of what Justice Giles described as “acquiescence”, but I anticipate myself, your Honours ‑ ‑ ‑

KIRBY J:   By a fiction you are attributing to the other contracting party a repudiation even though it may in its muddled way be intending to affirm the contract.

MR COLES:   But you do not need to stay to consider whether in its own muddled way it is if its conduct – its conduct speaks louder than anything else, in our respectful submission, and if the reasonable inference for the innocent party from the conduct is that, again to adopt the Sir Wilfred Fullagar description, the other party is just not taking the contract seriously or is professing an inclination to perform it only as and when it chooses that it is convenient to that party to do so ‑ ‑ ‑

KIRBY J:   There must be quite detailed academic writing on this problem, one would think, that tries to bring together the judicial attempts to have a formula and to solve individual cases.  For example, there must be something in the UNCITRAL Conventions that deal with this issue.

MR COLES:   I confess I have not come across that, your Honour, but your Honour of course will readily accept that every textbook writer who has ever put pen to paper on the law of contract has his own or her own taxonomical set of classifications, not always for reasons similar to those your Honour Justice Gummow identified, necessarily very illuminating.  The effort really is better expended in a court, in our respectful submission, by looking at the occurrences that have taken place in the performance or otherwise of the contract and saying – and this is really the basic test – “Do I have to put up with this any longer”, in effect.

KIRBY J:   If there is a nice, neat judicial statement to that effect, especially in this Court, then that gives a nice, neat principle, but as far as I am concerned muddling along through a thousand instances is not as good as looking at a proper conceptualisation of the problem and analysis of the problem, because we have to always look behind the individual case.

MR COLES:   Absolutely.

KIRBY J:   We have to look at how this operates in the law of contract in this nation and a whole variety of circumstances.

MR COLES:   Well, your Honour will find I am ‑ ‑ ‑

KIRBY J:   You are going to get there you tell me?

MR COLES:   Well, your Honour will find I am extremely supportive of that proposition, and indeed I suppose in a general sense our complaint, or part of our complaint about the majority in the Court of Appeal was that they perhaps did not come to grips with the ‑ ‑ ‑

KIRBY J:   Yes, well, I read that you said that but I still would want some help on what the correct concepts are.

MR COLES:   Anyway, can I just to finish what I wanted to say about Shevill?  The description of the discussion of the third situation goes over the page.  That, in our respectful submission, probably still remains the classification or the conceptual body of disparate principles as collected to this day as in effect the statement by this Court of how one seeks to analyse these problems.

Can I, your Honours, go then next to – I have mentioned in passing and I do not think I need take your Honours in detail to Progressive Mailing v Tabali, suffice to say, of course there, looking at the lessee’s conduct, unlike the lessee’s conduct in Shevill, the lessee in Tabali said, “I am just not going to pay the rent at all because I am maintaining an inappropriate or a wrong‑headed view of the contract that says I do not have to because you have not finished doing some building works, the need to complete which only arose on a certain mode of performance of a contract which had not in that situation been engaged at all”.

So I pass over that except to point out, your Honour, that this – the next case to which I am referring, Laurinda v Capalaba Park Shopping Centre (1989) 166 CLR 623, is in effect a third of the relevant trilogy, and the composition of the Court had – as your Honours will see – to some degree changed, but the unifying theme or unifying thread I suppose was Justice Brennan who your Honours will recall had agreed with Justice Gibb in Shevill and had sat also in Progressive Mailing v Tabali.

Can I just make some observations about Laurinda?  Capalaba was the shopping centre developer, proprietor.  Laurinda was a tenant who made an agreement to lease a shop in the shopping centre.  It was, as the Court found, a term of the contract that the lessee would either deliver a lease in registrable form or indeed even arrange for the lease to be registered, the stamp duty and registration fees for that purpose having been paid by the lessee to enable that to happen.

What caused the problem factually is – and this is not unimportant – the lessor’s solicitors who had the function of performing the lessor’s obligation on its behalf were also engaged it would seem in a refinancing exercise on behalf of the lessor, and it would have been quite inconvenient to go and get the lease registered having regard to such matters as mortgagee’s consents and the like, so for that reason they sat on their hands and did nothing.

Now, let me say at the outset, your Honour, this is the clearest type of example I think you would ever find in any case of a party found to have repudiated who cannot have had otherwise than a complete subjective aspiration, and indeed on one sense an objective aspiration, to complete the contract in the sense that the last thing it wanted was for its tenant to walk.

The lessor had as much interest in having the lease registered as the lessee, and indeed the shopping centre seemingly in the particular circumstances was not particularly over-tenanted as it was so there was a – you would suppose, and you can understand the lessor’s argument, you should not say, “I have repudiated, because I am the lessor I want all these leases registered, it is in my interest to have them registered, and I know I have an obligation to do so but I am just not going to do it, I am not going to do it yet because it does not suit me”, was the problem.

The question was, is it enough to say “I do not want to do it yet because it does not suit me” to constitute a repudiation in the face of the obvious subjective facts and plain subjective circumstance that the lessor had every motive and every commercial aspiration to make sure, in due course, the leases of the premises – and there are many of them, of course – were registered? 

The judgment of Chief Justice Mason commences at page 626 and his Honour held, or his conclusion was that a repudiatory intention could be identified inasmuch as the lessor only intended to perform in a manner substantially inconsistent with his own obligations.  He went on to say that there was no breach of any essential term because time within which performance would have been required was not made by adequate notice, an essential term.  I will just give your Honours the page references, 633, including the adoption of Justice Fullagar’s view over to and up to and including the middle of page 634.  If your Honours go to the conclusion at page 636 in Chief Justice Mason’s judgment, he points out, at the foot of the page:

Based on Capalaba’s unwillingness to deliver a registrable lease to Laurinda, it seems to me that Capalaba’s intention was only to perform the contract in a manner substantially inconsistent with its obligations, such as would allow Laurinda to treat Capalaba as having repudiated the contract. 

That conclusion, of course, is reached in the context of a situation where the tenant is in possession.  The lessor is supplying to the tenant the physical advantages of occupation and the like.  Again, it might be said, and no doubt was said with some vigour on the part of those appearing for the lessor, that you would hardly infer repudiation.  But, again – this is the importance of the case – he emphasises that one must focus with clarity and precision on the lessor’s performance and examine whether the lessor is just not taking the contract seriously whatever its wider aspirations may be.  Justice Brennan’s judgment, which is an important one, commences at the foot of page 640.  He held that the term was breached. 

His judgment raises, in some respects, another problem because his judgment includes a value of the discussion commencing at page 641 under the heading “The right to rescind” of whether the interface between a term which under the general law, a term at common law which would be an essential term, and a term which has a time for performance component which would receive the construction and equity that at that time was not an essential term.  So you may have an essential promise at law in the agreement but its essentiality in point of the time for performance is subtracted from by the overlay of equitable principle in the sense that equity may still enforce the promise despite the breach as to the time stipulation. 

His Honour deals with that, but we mention it and the discussion proceeds through page 642 and following, because plainly it would be incorrect to say that merely because an essential term in a contract is given a specific time by which it must be fulfilled, it ceases for that reason to become an essential term.  Its importance must be evaluated in looking at the – this is the only point I am making, really – one does not cease to regard a condition in a contract, or an important term in a contract, as lacking essentiality if it is otherwise, in our respectful submission, to be understood as an essential term for repudiation purposes – one does not cease to regard the term as an essential term merely because of equities relief or equities approach to the stipulation as to time which is made a component of the promisor’s performance. 

His Honour points out, by reference to authority, including authority of this Court, at page 643 – I just draw attention in the first four paragraphs to – this time referring to delay, “delay may be so serious as to amount to a refusal to perform” ‑ ‑ ‑

GUMMOW J:   This is all in the context of time stipulation, Mr Coles, which we know has a lot of baggage about it.

MR COLES:   That is right.

GUMMOW J:   Was there any necessity in this case to explore what is meant by “repudiate” and “evincing an intention”?

MR COLES:   Analytically, seemingly not.  Forensically, obviously there was, but the court solved – forensically for the factual reasons I have described.

GUMMOW J:   Yes.

MR COLES:   But in point of principle or underlying rationale it seems to us, with respect, the court was content to adopt the Carr v Berriman proposition and, indeed, the Shevill position.  Can I just draw attention, just some further reference to Justice Brennan, the paragraph we would draw attention to on page 647 commencing:

Repudiation is not ascertained by an inquiry into the subjective state of mind of the party in default; it is to be found in the conduct, whether verbal or other, of the party in default which conveys to the other party the defaulting party’s inability to perform the contract or promise or his intention not to perform it or to fulfil it only in a manner substantially inconsistent with his obligations and not in any other way.

It was that formulation which I was perhaps rather inexactly seeking to paraphrase in my attempted response to your Honour the Chief Justice’s earlier inquiries.  He refers then to Lord Coleridge and Lord Selborne in Mersey Steel again perhaps making clear, on page 648, that much of this discourse has arisen in the arena of anticipatory breach or enunciation, but coming down at the middle of 648 to pose this test:

The question whether an inference of repudiation should be drawn merely from continued failure to perform requires an evaluation of the delay from the standpoint of the innocent party.  Would a reasonable person in the shoes of the innocent party clearly infer that the other party would not be bound by the contract –

et cetera.  If I can just mention then the observations of Justices Deane and Dawson in a joint judgment commencing at page 650.

KIRBY J:   At some stage you will try to bring all these threads together and say what the principles are.

MR COLES:   I want to do so in the context of what your Honour asked me about the Ross T Smyth sort of line of country, too.  If your Honours just note the paragraphs commencing in the joint judgment of Justices Deane and Dawson.  This really touches on something of importance which your Honour Justice Kirby has raised already and that is this might be as convenient a way into that as appropriate.  If your Honours then would look at page 657:

Lord Wright’s oft‑quoted admonition that “repudiation of a contract is a serious matter, not to be lightly found or inferred” (Ross T. Smyth & Co. Ltd. v. T. D. Bailey, Son & Co.) is, no doubt, a wise one.  It should not, however, be allowed to cloud the fact that an allegation of repudiation of contract in a civil case does not involve an assertion that the alleged repudiator subjectively intended to repudiate his obligations.

GUMMOW J:   Where are you reading from, Mr Coles?

MR COLES:   I am reading, your Honour, in the last paragraph on page 657.

GUMMOW J:   Thank you.  Yes, I see.

MR COLES:   He says, so you should not cloud the fact that we are not asserting subjective intention to repudiate.  Here as a factual matter, as I have sought to emphasise, the subjective – indeed, it was almost – you could almost say it was an objective fact that subjectively the lessor would have intended to register the lease but he just did not want to get on with it there and then.

KIRBY J:   Just pause for a moment.  Why is repudiation not likely to be found or inferred?  Why is it not a neutral matter just looking at ‑ ‑ ‑

MR COLES:   Because the law is very protective of parties to contracts who suddenly find themselves the victims of snapped‑on repudiations resulting from incautious statements or accidental, trivial departures from performance, is the short reason.

In other words, to point to a breach merely provokes the next inquiry, does that breach itself or does that intimation of future non‑performance, as often as not, indicate that I am not going to perform?  I am about to develop that in a just a moment if I could just complete the reference to what appears at 657.  Their Honours say:

Thus, it is of little assistance in the present case to identify reasons why the lessor was unlikely to have subjectively desired to repudiate its agreement to grant a lease.

GUMMOW J:   It is the last sentence of that paragraph:

It suffices that, viewed objectively, the conduct of the relevant party has been such as to convey  . . . repudiation or disavowal –

It is still a notion of intention objectively ascertained.

MR COLES:   It is saying, what would a reasonable person who perhaps knows nothing of the motives, aspirations or factors personal to the parties, what would he infer from or what would he conclude from the mode of performance in the case of breaches or include from the announcements or expressions of possible renunciation in the case of an anticipatory breach?  Can I just do one more thing though before I come to that because that is really at the nub of the appeal, if I can assure Justice Kirby.

GUMMOW J:   Just before you do that, what is the significance of a contract that goes wrong because it stipulates something to be done by a third party which is not done?  Justice Mahoney referred to that in Honner v Ashton.

MR COLES:   If the contract properly construed is to use one’s best endeavours to procure the third party to do something, then there may be no breach at all.  If the contract on the other hand, I suppose, is that it is conditional upon the third party doing something, then the contract may fail for want of conditions subsequent being fulfilled.  If there is a warranty on the part of the promisor that the third party will do something and the third party does not, then that may produce yet another consequence.

GUMMOW J:   There are notions of frustration running around, too, are there not?

MR COLES:   And lurking there is whether that produces a frustration.  With respect, it is a little hard to give a universal answer to the proposition.

GUMMOW J:   I am sorry, I took you off your course.

MR COLES:   I did just want to draw attention to the approval of something I have in passing mentioned already about Lord Shaw and Lord Dunedin.  In the last full paragraph, if your Honours please, their Honours in the joint judgment, Justices Deane and Dawson say:

It is not necessary for repudiation of a contract that the repudiator make plain that he will never perform his contractual obligations at all.  What Lord Dunedin described (Forslind) as the assumption of “a shilly-shallying attitude in regard to the contract” and what Lord Shaw of Dunfermline called “procrastination . . . persistently practised” can, in some circumstances, reach the stage of repudiation –

we would place some emphasis on this –

even though accompanied by assurances of ultimate performance at some future time.  In that regard, the law was correctly stated by Lord Shaw in the following extract from his judgment in Forslind –

that is Forslind v Bechely-Crundall.  It is perhaps not convenient to read the whole, your Honour, but I should just take your Honours to the first part of it:

If, in short, A, a party to a contract, acts in such a fashion of ignoring or not complying with his obligations under it, B, the other party, is entitled to say: ‘My rights under this contract are being completely ignored and my interests may suffer by non-performance by A of his obligations –

What Justice Campbell did not actually advert to – and we will expand upon this in the submissions in respect of which we have leave - what Justice Campbell did not do is identify what the tests were as to the seriousness of the breach as would entitle termination for breach of an intermediate term and did not advert to the seriousness of the breaches which would be anticipated by reason of the repudiatory conduct which must in both cases be breaches which would go to the root of the contract, the very nature of the ‑ ‑ ‑

HEYDON J:   It would not matter what the tests were, would they?  If you take paragraphs 371 and 372 side by side and set out how the joint venture should have been run and then he said:

The departures from this way of running the joint venture have been gross and repeated.

What would be more likely seriously to cause damage than that?

MR HALE:   He said they were gross and repeated, although in other parts of the judgment he does refer to them being not trivial, but he refers to them as gross and repeated but the authorities would rather suggest – and it may well be that gross and repeated might come within that test - but the authorities certainly would indicate that the extent of breach must be such which goes to the very root of the contract as distinct from necessarily gross, and that is something he did not direct attention to.

As your Honours will see at page 2294 in the Court of Appeal there is the reference to Hong Kong Fir, and the test that seemed to be accepted as being the relevant seriousness of breach for an intermediate term.  In a sense it goes back to the concept often referred to as the fundamental breach.  Now, the fact that there is a finding that they are gross and they are repeated would not, we would submit, fit within the accepted tests ‑ ‑ ‑

GLEESON CJ:   But that is related to the fact that Mr Lawler terminated this joint venture almost a year after he was appointed.

MR HALE:   Yes.

GLEESON CJ:   According to Justice Campbell what he spent a large part of that year doing was trying to find out information about the financial

affairs of the joint venture.  On page 2148 under the heading “Mr Lawler’s Difficulties in Ascertaining Information” Justice Campbell treated the attempts over months to find out the financial position in relation to the joint venture as evidence of those breaches that he characterised in the way Justice Heydon just mentioned.

MR HALE:   Yes.  Although it must be said, and I think Mr Coles made that point and this might be beside the point, that the actual conduct of the respondent during the period of May 2003 and December 2003 was not conduct which was said to found any repudiatory intent.

GLEESON CJ:   No, but what was going – it is not as though Mr Lawler was appointed and immediately said “snap”.  He spent several months after his appointment trying to find out the financial position of the joint venture, and Justice Campbell seems to conclude not only was he unable to find it out, no one will ever know.

MR HALE:   What he was doing was asking for information.  Information was being supplied.  There was some dispute about what information was sought and what information was being supplied, but that was the nature of what was occurring during that period of May to December 2003.

GLEESON CJ:   Perhaps it might suit you to come back to that tomorrow morning.  I am only asking you this question for the benefit of the next case in the list, Mr Hale.  How long do you think you will be?

MR HALE:   I had not intended being more than about half an hour unless I can answer some of your Honour’s questions without – so shorten the writing that we will provide within 14 days.

GLEESON CJ:   Then we will adjourn until 10.15.  How long do you think you will be in reply, Mr Coles?

MR COLES:   About 15 minutes, your Honour.

GLEESON CJ:   We will say that the next case will be not before 10.45 am.

AT 4.17 PM THE MATTER WAS ADJOURNED
UNTIL WEDNESDAY, 29 AUGUST 2007