Newey v Westpac Banking Corporation

In *Newey v Westpac Banking Corporation*, the New South Wales Court of Appeal considered an appeal and cross-appeal concerning the interpretation of a deed and the availability of rectification. The dispute arose from the parties' differing understandings of the effect of a restraint clause within the deed.

The Court was required to determine whether a literal construction of the restraint clause led to an absurdity or inconsistency, thereby justifying an examination of surrounding circumstances to ascertain the parties' true intentions. Furthermore, the Court had to consider whether there was clear and convincing proof of a common intention between the parties, which was consensually and expressly manifested by their words or conduct, to warrant rectification of the deed.

The Court held that the identification of ambiguity in a contractual provision is not a prerequisite to examining legitimate surrounding circumstances. The scope of such circumstances should be understood by reference to what the parties knew in the context of their mutual dealings. Applying this principle, the Court found that the surrounding circumstances did reveal an absurdity or inconsistency in a literal construction of the deed. Consequently, the appeal was allowed, the cross-appeal was dismissed, and the declarations and orders made by the primary judge were set aside. The proceedings were dismissed, with the plaintiff ordered to pay the defendants' costs at first instance and the respondent ordered to pay the appellants' costs in the Court of Appeal.