Petranker v Brown

[1991] HCATrans 208

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S30 of 1991

B e t w e e n -

ROBERT PETRANKER

Applicant

and

COLIN RUSSELL BROWN and LOLA

ELSIE BROWN

Respondents

Application for special leave

to appeal

BRENNAN J
DAWSON J

GAUDRON J

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TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 9 AUGUST 1991, AT 9.33 AM

Copyright in-the High Court of Australia

MR D.M.J. BENNETT, QC:  May it please the Court, I appear

for the applicant with my learned friend,

MR N.J. WILLIAMS. (instructed by Maurice May & Co)

MR C.A. PORTER, QC:  I appear for the respondent with my

learned friend, MR R.W. SMITH. (instructed by

David Worrall & Associates)

BRENNAN J	Mr Bennett.
MR BENNETT:	If the Court pleases. Your Honours, I hand up

our outline of submissions. The first issue is the

application of the Canada Steamship and Alderslade

principle. As Their Honours indicate in the

judgments, there is some doubt as to whether those

principles have survived Photo Productions and

Darlington. The Court of Appeal seemed to have

some doubt about it but held that in any event, but

for the reasons given in relation to the second

point, the rules did not apply. We submit that

that is an important question. Those rules have

been, in many ways, the principal mainstay of the

rules in relation to exemption clauses, the rule

that if one is going to exclude negligence, one

must say so, unless there is nothing else than

negligence being excluded by the clause. That is a

rule with a long and respectable history and we

would submit it is an important question whether it

is still in force.

Photo Productions, of course, puts a very

strict approach and allows exemption clauses to
range far more widely. This Court did not go quite
as far in Darlington Futures but neither case is,

we would wish to submit, inconsistent with the

Alderslade or Canada Steamship rule.

The second issue, and perhaps the most

important issue the case raises is one which, so

far as we have been able to ascertain, is not the

subject of any authority. That is this

question - - -

BRENNAN J: Before you leave the first proposition, perhaps

we should examine the provisions to which this rule

in Canada Steamship is said to apply.

MR BENNETT:  Yes. That rule is set out in the judgment at

page 31 of the application book and Your Honours

see the relevant words are at the very bottom of

the page at line 25:

but neither the Agent nor his

servant ..... shall be responsible for any loss,

damage or expense which may be sustained by

the Subscriber -

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then these are the relevant words:

by reason of any neglect, omission, delay or

failure on the part of the Agent ..... to

properly validate a Coupon or to forward the

same to the Company.

Now, there is some discussion about whether the word "neglect" is synonymous with "negligence".

The better view seems to be that it is not. That

being so, one would have assumed that - - -

BRENNAN J:	Why is that the better view?
MR BENNETT:	Your Honour, it is a different word with a

different nuance of meaning. "Neglect" indicates a

failure to do something; possibly a culpable

failure. But the degree of culpability associated

with the word "neglect" is not necessarily

coextensive with the word "negligence".

BRENNAN J:  Mr Bennett, correct me if I am wrong but your

case must be that you suffered some loss, damage or

expense, I take it.

MR BENNETT: 

We suffered a loss, yes, Your Honour.

BRENNAN J: 

If your argument be right, you cannot rely upon

any neglect, omission, delay or failure on the part
of the agent as amounting to negligence.

MR BENNETT: Yes.

BRENNAN J:  What is it then which, not amounting to neglect,

omission, delay or failure, amounts to negligence?

MR BENNETT:  I am sorry, Your Honour, I accepted what

Your Honour said slightly too quickly. We would

submit that if there is negligence, under the rule

in Canada Steamship and Alderslade v Hendon

Laundry, those words do not apply, but where there

are general words indicative of failure or default	such as neglect, omission, delay or failure, those
words do not cover the concept of negligence unless the word "negligence" is there or unless the only
circumstance in which liability would exist, but
for the exclusion, is negligence. And that rule
has been, we would respectfully submit, a canon of
exemption clauses for many years.

DAWSON J: In relation to contracts?

MR BENNETT:  Oh yes, that is the second point. We say a

fortiori in relation to statutes, but I will come

to that when I get to it. My submission is that, particularly with the legislature, it is no doubt

conscious of the Canada Steamship rule. The rule

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has been laid down and repeated many many times.

The first rule that every junior article clerk	learns about the drafting of exemption clauses is
that if you want to exclude negligence, that is one
thing you expressly refer to. Yet the legislature,
in drafting this legislation, has not seen fit to
do so.

BRENNAN J:  What is the act of negligence which is

particularized?

MR BENNETT:  It was an act found by the jury so it is not

defined in quite the same way it would be if there

were a judgment. The act of negligence is

negligently failing to send the coupon to the

company in time for it to be able to get into the -

I think it was competition No 9.

BRENNAN J: It may be a negligent failure, but if so, it is

any failure.

MR BENNETT:  Your Honour, there is no doubt the Canada

Steamship rule is a rule which is contrary to the

literal meaning of the words. There is no doubt of

that, as the ejusdem generis rule is in other

contexts. But the rule says that where you have

general words you do not treat those general words

as extending to negligence unless they say so or

unless that is the only thing to be excluded.

That, we submit, is a rule of construction which is

so strong as to be almost a rule of law. It is a

rule which, whenever one applies it, is going to be

inconsistent with the strict grammatical meaning of

the words, as the ejusdem generis rule is.

If one says, "horses, oxen, donkeys and other

means of transport", "other means of transport"

would as a matter of English include cars but it

does not, because of the ejusdem generis rule. In

the same way here, certainly there has been

probably a neglect, certainly an omission,

certainly a delay and certainly a failure, but the

Canada Steamship rule says one treats those general

words as not covering negligence except in the

special circumstances.

DAWSON J:  How can you apply that to an Act of Parliament,

or legislation at least, where the exercise is to

ascertain the intention of the legislature?

MR BENNETT:  Your Honour, that brings me to the second part

of the argument.

DAWSON J: Because what you said previously was, well, quite

plainly, the Canada Steamship rule is departing

from what is probably the intention of the parties,

maybe by an application of the contra proferentum

Petranker 9/8/91

rule or some other principle, but that cannot apply

with legislation.

MR BENNETT:  Your Honour, we submit it does, for two

reasons, which perhaps are different sides of the
same coin: first, where the legislatur& chooses to

adopt the medium of contract as the means by which

it legislates for rights - in other words, instead

of saying, the following rights and liabilities are

imposed, it says, there shall be deemed to be a

contract in these terms - where one has that sort

of Act by the legislature we would submit what the

legislature has done is say, we wish to import the

law of contract so far as it is otherwise

applicable to this situation and we wish the rules
associated with contract to be applied, including,

we would submit, those rules of construction which

have been developed in relation to contracts.

Secondly, and perhaps more importantly, the

Canada Steamship rule is such a familiar rule that

one must assume it was known to the draftsmen of

the Act and of the legislature. Where it lays down

an exemption clause and it specifically uses words

which historically have been construed in a

particular way, we would submit that that is a

reason why they should be construed in that way.

DAWSON J:  I am not sure that they are historically

construed in that way in Australia.	What happens
to Darlington Futures?

MR BENNETT: Darlington Futures is not inconsistent, we

would submit, with the Canada Steamship rule. It

did not involve it, of course, because that was a

case of a deliberate act and there were rather

different questions there as to whether the

exemption clause - in fact, limitation clause -
covered it or did not cover it. As I have said in the submissions, it was referred to in argument on

one aspect but not referred to in the judgments.

But that rule says that one looks at the

surrounding circumstances, of course, and one looks

at the context of the exemption clause in the

contract as a whole, but it is not inconsistent, we

would submit, with rules of construction which have

grown up over the years and which have been

applied.

DAWSON J:  Can I take you back, though, to what you said

about the particular clause. You say that assumes

and builds on a contract, that is the exemption

provision in this instance.

MR BENNETT:	Yes.
DAWSON J:	Where does it do that?
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MR BENNETT:	Your Honour, I had thought the section of the

Lotto Act was set out in the -

DAWSON J: It is set out at page - that is the rule, yes.

MR BENNETT: There is a section which explains what the

effect of the rules have.	I think it is section 9.
Section 9 provides that:

A licensee shall not conduct a game of Lotto except in accordance with the Act, the

Regulations and the Rules.

Section 21 provides:

A person is not guilty of an offence if he

conducts the game in accordance with the

Rules.

Then one adds to that the terms of the rule itself

which provides for an exclusion of responsibility

in a contractual context where a contract is set up

between the company and the person who submits it.

DAWSON J: There may be a contract but it rather looks as if

what is laid down are the rules of the game, rather

than the conditions of the contract.

MR BENNETT:  The rules of the game, we would submit, are for

all practical purposes the terms of the contract

which - - -

DAWSON J: That is probably right, but nevertheless, it is

not as if the regulation takes and builds on a

contract; it rather lays down the rules of the game

which incidentally may be the conditions of a

contract.

MR BENNETT: Well, Your Honour, once one has, as in

section 9, a game being conducted in accordance

with the rules and, as Your Honour says, it assumes

there is a contract between the company and the

customer, we would submit that a rule such as this,

having civil consequences, is really nothing more

than the manner in which the company and the

customer play the game.	In other words, it is part
of the contract between them.	It is not the

legislature saying, we say that, as a matter of

law, when they enter into the contract there will

be no liability; it is rather the legislature

saying, the terms on which you are legally entitled to play this game are - and then one of those terms

is, there will be no liability.

DAWSON J:  In other words, you enter into the contract on

the basis of the rules, which is really putting the

horse the other way round.

Petranker 6 9/8/91

MR BENNETT:  We would say enter into the contract on the

terms of the rules, because if they do not play in

accordance with the rules, they do not have the

protection. So the rule is really something they

have to agree contractually so as not to be in

breach of the legislation.

BRENNAN J:	One cannot then pick up, as it were, rules for the construction of the contract in order to
determine what are the rules by reference to which
the contract must be made.
MR BENNETT:	We say you can, Your Honour, because what the

legislature is doing is saying, you shall play on

these rules, and the basis on which you play is the

basis of an agreement.

DAWSON J:  So you have to find out what the legislature is

saying before you can determine what the contract

is.

MR BENNETT:  Oh yes.

DAWSON J: That is the nature of the exercise, is it not,

this construction of legislation, not of a

contract.

MR BENNETT:  Let me put an extreme case to Your Honour.

Suppose an Act of Parliament were to say, when the

parties play the game of Lotto, there shall be

deemed to be a contract between them on the

following terms. The terms are then set out. In

that case one would clearly say the rules of

contract apply to the interpretation of that, not

the rules of statutory construction, because the

legislature has clearly adopted the law of contract

by saying that is the way you will do it. Here, it

has not done so in language as clear as that, but

that is the effect of what -

DAWSON J: It has not done it at all. It has laid down

rules and if you enter into contract, those are the

rules which apply.

MR BENNETT:  No, but it has not said, we impose these rules

on you. What it has said is, the licensee shall

not conduct the game except in accordance with the

rules - section 9. In other words, the licensee

must conduct the game by entering into contracts in

accordance with the rules.

DAWSON J: What it does is to legalize a game which would

otherwise be illegal and it does so by requiring it

to be played in a particular manner.

MR BENNETT:  No, Your Honour, with respect, it does not

require; what it does is say it is not illegal if

Petranker 7 9/8/91

you enter into a contract in this form. It is not

illegal if you carry it out in accordance with

these rules. It is not the legislature saying,

this rule has the force of law and it is a

provision which must be obeyed on pain of some

penalty; it is rather saying, you will oe excluded

from the common law of gaming if you observe these

rules by playing the game in accordance with them.

And that is, we would respectfully submit,

requiring the parties to enter into a contract in

the terms of the rules.

But, Your Honours, even if I am wrong on that,

as a matter of statutory construction, we would

submit that the field of exemption clauses is one

which is more familiar to contract then statute and
where the legislature uses language like this,
which is clearly the language of standard exemption

clauses, we would respectfully submit that it has

thereby adopted rules of law which have been applied or rules of construction which - - -

DAWSON J:  Do we not have to adopt a purposive approach in

these modern times?

MR BENNETT: That is purposive, because it assumes that the

legislature had in mind that the normal contractual

rules were certain rules and adopted them and

therefore intended that result to follow.

Your Honour, a purposive approach does not really

take a very different rule. A purposive approach

does not say that because there is a general

objective in the statute one must take that to the
extreme. That is not what a purposive approach

requires. What it requires is that one see that

the legislature has intended to draw some sort of line and say, what is the line it has intended to

draw. One looks at the surrounding circumstances

and, no doubt, what was said by Their Honours about

the very small fee and the very substantial prize

and so on are factors which one can look at to make
it likely that one view might be taken.	But that
is only a factor to be added to the scales.	The

other side of it is that why would one assume that

the legislature wished to abrogate the law of
negligence - and the common law of negligence, of

course, is something which one would not assume

abrogation of unless it is made clear - why would

one assume that without clear words.

One might equally say the purpose was to

prevent any contractual obligation specifically to

submit the coupon for a specific result as being

excluded, but a general contractual obligation not

to be negligent as remaining, and certainly general

tortious obligation not to be negligent. Now, why

would one regard that as excluded merely because

Petranker 9/8/91

one discerns in this section a desire to exclude

some sort of liability in general words.

Your Honours, that is the first part of the

case.

BRENNAN J:  Does the second part of the case arise if you

fail on the first part?

MR BENNETT:	No, Your Honour.
BRENNAN J:	Have you anything further to say on the first

part?

MR BENNETT:	No, Your Honour.
BRENNAN J:	Mr Bennett, we think we would be troubling you

unnecessarily if you were to proceed.

MR BENNETT: If the Court pleases.

BRENNAN J: There is insufficient reason to doubt the

construction attributed by the Court of Appeal to

rule 16(e) of the rules for Lotto to justify the

grant of special leave to appeal. Accordingly,

special leave to appeal will be refused.

MR PORTER:  We ask for costs, if Your Honours please.

MR BENNETT: If the Court pleases. There is nothing I can

add.

BRENNAN J: It will be refused with costs.

AT 9.54 AM THE MATTER WAS ADJOURNED SINE DIE

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