Pang v Bydand Holdings Pty Limited

[2010] HCATrans 337

[2010] HCATrans 337

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S186 of 2010

B e t w e e n -

VINCENT PANG

Applicant

and

BYDAND HOLDINGS PTY LIMITED

Respondent

Application for special leave to appeal

GUMMOW J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 10 DECEMBER 2010, AT 11.16 AM

Copyright in the High Court of Australia

MR D.H. MURR, SC:   May it please your Honours, I appear with my learned friend, MR C.L. LONERGAN, for the applicant.  (instructed by William Chan & Co)

MR P.T. RUSSELL:   May it please the Court, I appear for the respondent.  (instructed by Barringer Leather Lawyers)

GUMMOW J:   Yes, Mr Murr.

MR MURR:   Thank you, your Honours.  Your Honours, the argument that the applicant wishes to put to this Court, if special leave is granted, may be clarified by an analogy which I wish to put to your Honours.  The analogy is with a cheque duly executed and otherwise complete but with the amount of the payment missing.  The absence of a sum certain from the cheque means that that document simply is not a cheque and it is not a cheque notwithstanding the most compelling evidence of what it was intended to be and it is not a cheque notwithstanding the fact that it is associated with other documents ‑ ‑ ‑

GUMMOW J:   Cheques are negotiable instruments which are designed to come into the hands of third and fourth parties.

MR MURR:   Yes, your Honour.

GUMMOW J:   This is not a negotiable instrument.

MR MURR:   It is not a negotiable instrument.  I am relying on this simply to illustrate the argument which we seek to put, your Honour.  The argument is that the omission of something from a document which is essential to its validity is exactly that and it means that the document is not what it purports to be.  In the case of a cheque with that information omitted, it may well be that other rights are available.  It does not mean that the document is a complete nullity.  It may operate, for example, as evidence of a promise or an acknowledgement of debt or things of that kind, but the legal effects it has and the rights and obligations to which it gives rise are not those that derive from it having the characteristic of being a cheque. 

In a similar way, what we say in this case is that a deed which is incomplete when it is executed is not a deed and whatever rights and obligations to which it gives rise are rights and obligations which cannot derive from it having the characteristics of being a deed.  A further implication that we draw from this is that the issue of whether or not it is a deed is not something that can be resolved by a process of construction of the words that are contained.  Just as a cheque cannot be made into a cheque by construing the words “the amount” to mean a specific amount, so, in the present case, it is our submission, that this document cannot be made into a deed by construing the words “the purchaser” to mean a particular purchaser.

Your Honours, our submission is that an application of those principles to the facts of the present case should have led to a conclusion that the guarantee in the present case was not a deed and, accordingly, was not binding as a deed.  That, in turn, should have led the Court of Appeal to consider the issue of whether it could take effect in other ways, for example, as a simple contract and for the reasons that we submitted to the court below, we would say it could not take effect as a simple contract.  The consequence to the applicant in this case is that he has now a judgment against him for a very large amount of money in respect of a sum for which, we say, he has not and never has been legally liable. 

The Court of Appeal reached its conclusion by treating the deed and the contract for sale to which it was attached as, in the words of Justice Handley, a single competent document and then sought to construe those two documents together.  In doing so, the Court of Appeal relied heavily on authorities in the area of the Statute of Frauds and authorities relating to the issue of whether documents can be read together so as to form a note or memorandum for the purposes of the Statute of Frauds.  It is our submission that cases on that issue and in relation to the Statute of Frauds do not provide a close analogy to the issue that must be considered in the relation to the issue of completeness of deeds. 

We say that because Statute of Frauds cases commence with an assumption that there is a valid contract between the parties and that is rendered unenforceable by statute, except in circumstances where the terms of the contract are authenticated by a signature on a piece of paper.  The question that is before the Court in those circumstances is, what terms are authenticated by a signature which in the premises exists, and the policy of the law as it has evolved through the cases has been to give a fairly expansive answer to that question.  In the case of a deed and the issue of completeness of a deed, however, our submission is that it is a very different issue. 

The starting point is not a contract between the parties otherwise enforceable but rather, the starting point is a promise by one party which, on its face and without more, is unenforceable but which the law makes enforceable if certain formalities are observed.  The issue for the Court in cases of that kind is whether those formalities have been observed and that, in our submission, is an issue which the courts have construed fairly strictly.  There is simply no reason to think that the same answer should be reached in relation to a document as to whether it satisfies the requirements with the Statute of Fraud or as to whether it is sufficiently complete to constitute a deed.  They are different questions, different issues of policy are involved and different answers may well be given to them. 

In the present case, the two cases to which Justice Handley gave most attention illustrate, in our submission, the reason why the contract in this case should not have been taken into account in construing the deed.  The first of those cases is McEwan v Dynon (1877) 3 VLR(L) 271 where a guarantee was executed to which an invoice was attached, the two documents together being taken to constitute a sufficient note or memorandum for the Statute of Frauds.  But in that case what happened was that the invoice was actually physically attached to the guarantee by the guarantor by folding the corners together and returning it in that condition to the person to whom the guarantee – or the agent of the person to whom the guarantee was to be given. 

It is clear in those circumstances the purpose of annexing the invoice to the guarantee was to record or to better record the terms that were being guaranteed.  That is not the case in the present case where, first, the contract is not in any meaningful sense annexed to the guarantee and, secondly, where there could be no justification for saying that the fact that the two documents were physically associated was brought about by the fact that there was an intention on the part of the guarantor that the contract document provide or supplement terms of the guarantee which is drafted in terms which are intended to be self‑standing and in which the identity of the purchaser was clearly intended to have been supplied by writing in that contract itself. 

The other case to which Justice Handley referred was Lawrence v Fordham [1922] VLR 705. That was a case in which again a contract for the sale of land – this is also a Statute of Frauds case.  It was a case for the sale of land where it was a walk in, walk out sale of an orchard in Victoria which included chattels as well as the land itself.  The chattels were to have been identified by way of a schedule to be attached to the contract.  The contract was written and executed before the inventory was prepared.  The inventory was then prepared and attached to the contract.  The contract referred to the sale as including documents in the list attached. 

The Court again, with what you might regard as a fairly benevolent construction, construed the words “list attached” to mean the list to be attached as part of this transaction and, accordingly, held that the contents of that list were sufficiently authenticated by the signature on the contract.  Again what distinguishes that case from the present case is that in that case there was an express incorporation of the subsidiary document into the primary document and again in the present case, there is no such incorporation.  On the contrary, as I have already submitted, the plain intent

to be drawn from the guarantee and from the terms of the guarantee is that it was intended to be a complete and self‑sufficient document which contained within its four corners all of the terms necessary to form a binding guarantee. 

Our submissions therefore are that the reasoning of the Court of Appeal in finding that these two documents should be read together was faulty, that the result of that is that the plaintiff has had enforced against him a liability which, in our submission, is not legally enforceable against him.  It is for a very large sum of money and obviously is of very great consequence to him.  It is for that reason that we submit it is an appropriate matter to be reviewed by this Court.  Those are my submissions. 

GUMMOW J:   Yes, thank you, Mr Murr.  We do not need to call on you, Mr Russell.

There was no error in principle in the reasoning of the primary judge affirmed by the New South Wales Court of Appeal and no error in the application of principle to the facts and circumstances of this case.  Nor is there injustice in that outcome of the litigation.  Special leave is refused with costs.

AT 11.29 AM THE MATTER WAS CONCLUDED