Masterton Homes Pty Ltd v Palm Assets Pty Ltd

The appeal in *Masterton Homes Pty Ltd v Palm Assets Pty Ltd* concerned a dispute arising from a building contract. Masterton Homes Pty Ltd (the appellant) sought to appeal orders made by the primary judge in the Commercial List of the Equity Division of the Supreme Court of New South Wales.

The central legal issues before the Court of Appeal were whether the trial judge had erred in failing to resolve conflicting evidence regarding the terms of the pleaded agreement, and the proper application of the parol evidence rule to contracts that were partly written and partly oral. The court also considered the admissibility of evidence of surrounding circumstances and subsequent conduct in contract interpretation, and the circumstances under which a judge might reject evidence that was not subject to cross-examination.

The Court of Appeal found that the trial judge had failed to adequately resolve the evidence concerning the agreement between the parties, particularly in relation to whether the contract was wholly in writing, partly written and partly oral, or wholly oral. The court applied established principles regarding the parol evidence rule, noting that it generally prevents the admission of extrinsic evidence to contradict or vary the terms of a written contract, but that this rule is modified in cases of partly written and partly oral contracts. The court also addressed the admissibility of surrounding circumstances in contract interpretation, noting the present state of High Court authority on whether ambiguity is a necessary precondition for their consideration. Furthermore, the court considered the weight to be given to evidence that had not been cross-examined.

The Court of Appeal allowed the appeal, set aside the orders of the primary judge, and remitted the matter for a retrial in the Commercial List of the Equity Division. The costs of the appeal were ordered to be paid by the third respondent, with a certificate under the Suitors' Fund Act 1951 to be provided if qualified. The costs of the first trial were reserved to abide the order of the judge who hears the new trial.