Simic & Ors v NSW Land and Housing Corporation & Ors

[2016] HCATrans 160

[2016] HCATrans 160

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S136 of 2016

B e t w e e n -

DANIEL MATTHEW SIMIC

First Appellant

HAZEL MARY DELANEY

Second Appellant

RICHARD PAUL SAPSFORD

Third Appellant

SIMIC MANAGEMENT INTERNATIONAL PTY LIMITED ACN 134 150 833

Fourth Appellant

TRACK & MACHINE OPERATIONS PTY LTD ACN 134 620 018

Fifth Appellant

and

NSW LAND AND HOUSING CORPORATION

First Respondent

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED ACN 005 357 522

Second Respondent

NEBAX CONSTRUCTIONS AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 101 054 068

Third Respondent

FRENCH CJ
KIEFEL J
GAGELER J
NETTLE J
GORDON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 20 JULY 2016, AT 10.18 AM

Copyright in the High Court of Australia

____________________

MR M.A. ASHHURST, SC:   May it please the Court, I appear with my learned friend, MR A.F. FERNON , for the appellants in that matter.  (instructed by O’Neill McDonald Lawyers)

MR G. CURTIN, SC:   May it please your Honours, I appear with my learned friend, MR D.I. TALINTYRE, for the first respondent.  (instructed by Sparke Helmore Lawyers)

MR D.F. JACKSON, QC:   If the Court pleases, I appear with my learned friend, MR S.B. DOCKER, for the second respondent.  (instructed by Kemp Strang Lawyers)

FRENCH CJ:   Yes.

MR JACKSON:   Your Honour, may I mention that there are two applications that, in a sense, need to be dealt with.  One is by my learned friend, Mr Curtin, in relation to matters of contention.  We have one, if I could perhaps deal with it ‑ ‑ ‑

FRENCH CJ:   You want to amend your notice of cross‑appeal?

MR JACKSON:   Yes, your Honour, and I seek leave to file in Court two documents, the amended notice of cross‑appeal and also the further affidavit of Mr Rodgers sworn, I think, today, which deposes to the fact that the liquidator of Nebax is familiar with it and the slight amendment that was made from the version he had previously seen.

FRENCH CJ:   Yes, is there any opposition to the amendment?

MR ASHHURST:   No, your Honour.

MR CURTIN:   No.

FRENCH CJ:   You will have leave to amend your notice of cross‑appeal accordingly.  Is there any opposition to the notice of extension – the application for extension of time for the notice of contention?

MR ASHHURST:   No.

MR CURTIN:   No.

FRENCH CJ:   Right then the notice of contention may be filed out of time.  Yes, Mr Ashhurst.

MR ASHHURST:   Your Honours, two relevant considerations are presented in this ‑ ‑ ‑

FRENCH CJ:   I should mention that so far as the question of special leave to cross‑appeal is concerned, we will hear the full argument on the cross‑appeals and deal with the question of special leave in the wrap‑up.

MR ASHHURST:   Yes, Chief Justice.  Two relevant considerations are presented in this appeal.  Firstly, the proper application of the objective theory of contract construction to the performance bonds considered in these specific factual circumstances and, secondly, the consideration of the commercial purpose of performance bonds in the construction process.  Our oral submissions are primarily focused on the former, however, we will also refer to the latter.

GAGELER J:   Mr Ashhurst, I will raise an issue with you now.  I do not expect an immediate response, but I raise it early so that perhaps you could look at it over lunch.  There is in your submission in reply a reference in paragraph 3 to a better description of the undertakings as being a promissory note payable on demand.  The question is are we concerned with something that falls within the statutory definition of a “promissory note” in the Bills of Exchange Act and, if we are, why is not the short answer to the whole case to be found in section 12(3) of that Act?

MR ASHHURST:   Yes, Justice Gageler, we shall take that question on advisement.  I expect the answer is we are not concerned with the statutory definition of “promissory note”, but we will answer your Honour’s question more fully after lunch.

GAGELER J:   Thank you.

MR ASHHURST:   Your Honours, the essential facts of this matter are described in paragraphs 5 to 20 of the appellant’s written submissions in‑chief, but if we can just briefly take your Honours to some of the critical documents.  On 4 March the New South Wales Land and Housing Corporation accepted a tender from Nebax Constructions Australia for certain demolition and construction work at a site in Bomaderry on the New South Wales South coast.  Now, a copy of that letter of acceptance is in the appeal book volume 1 at page 61.  If your Honours turn to page 62, line 20, your Honours will see the request for security in the form of original bankers’ certificates totalling $146,965.06.

Now, included with this letter were draft bankers’ certificates, which are at page 64 of the Court book and amongst other things, if your Honours could please note on that document the ABN reference numbers and the job number and matter number.

The construction contract itself between the Corporation and Nebax Constructions is in this time in volume 2 of the Court book at page 526.  Your Honours will note that document is dated 4 March 2010.  If your Honours could also note the ABN number and the contract number and the job number at about line 33.  The ANZ facility letter of offer to Nebax is dated 12 April 2010 and it appears in volume 1 at page 111.  The Bank guarantee requirements are at page 112, line 20.

On 16 April 2010, Mr Simic, a director of Nebax, asked Ms Hanna, an employee of the ANZ Bank, for two bank guarantees made out to New South Wales Land and Housing Department trading as Housing New South Wales.  The primary judge held that Mr Simic must have provided Ms Hanna with certain information regarding these guarantees in written form and that Ms Hanna then used that information to populate the undertakings but that Mr Simic did not provide Ms Hanna with either the construction contract or the draft bankers’ certificates.

Now, your Honours, I will not take your Honours to the primary judge’s reasons, but can I just give your Honours the references.  They are at paragraphs 19 and 23 of the primary judge’s reasons at court book 3, pages 897 and 900.  Nebax executed the two indemnity and application for guarantee forms on 16 April 2010, and copies of those forms are in volume 1 of the court book at pages 127 and 128.

Your Honours, throughout the rest of these oral submissions I will refer to these documents as the applications.  Importantly, your Honours, if I can draw your Honours’ attention to both the name of the entity described in the applications as New South Wales Land and Housing Department, trading as Housing New South Wales, and the ABN number.

The undertakings were prepared by Ms Hanna and signed by Ms Hanna and provided to Mr Simic who, in turn, provided them to the Corporation.  That finding is at paragraph 25 of the primary judgment, court book 3, 901.  Again, I will not go to that passage.

GORDON J:   Is there any evidence before the Court as to the circumstances in which it was accepted?  I notice that the Full Court refers twice to it having been accepted by the Corporation.  Is there evidence before the Court it was actually accepted?

MR ASHHURST:   Only the finding that I have taken your Honours to.  The actual evidence consisted only of the inference that was drawn by virtue of the fact that it was provided.  The undertakings were signed by Ms Hanna.  I think I have already said that.  We have set out a table of the differences between the construction contract and the undertakings in annexure A to our reply submissions.  I will deal with those differences in more detail later in these submissions.

On 2 October the Corporation sent a letter of demand to the ANZ Bank and a copy of that letter is at page 83, volume 1 of the court book.  It is a poor copy, your Honours, and it is the only copy available.  Can I assist your Honours at least in this respect?  In the top right‑hand corner on the letterhead, the second last line of that letterhead ‑ ‑ ‑

GORDON J:   Could you please just tell us which page you are at?

MR ASHHURST:   I am sorry; page 83, Justice Gordon.

GORDON J:   Thank you.

MR ASHHURST:   An ABN number is given in that document at about line 10, and it is the ABN number for the Corporation.  I have to take your Honours next to the undertakings, which are at pages 124 and 125.  We would ask your Honours to note the name of the favouree, the ABN number, the job number and the contract number and we will be also coming back in due course to certain terms of the undertakings. 

Now, on 9 October 2013, the solicitors for ANZ wrote to the Corporation questioning the Corporation’s entitlement to call on the undertakings and that letter is at page 85 of volume 1 of the court book.  That is again another poorly reproduced document.  Your Honours will, however, find a transcript of the contents of this letter in the Court of Appeal judgment at court book 3, page 998. 

Your Honours, the historical search for the Australian Business Number that appears in the undertakings is in Court book volume 2 at page 770.  The historical Australian Business Number search for the ABN registered to the Corporation is at page 771.  The entity described as Housing New South Wales, as Justice Emmett explains in paragraph 36 of the Court of Appeal judgment, was a division of the Department of Human Services and the Director‑General of the Department of Human Services was also the manager of the affairs of the Corporation. 

Your Honours will also note from the search at 770 that at the relevant time there were two trading names associated with that ABN, that is, with the ABN that appeared in the undertakings which is Housing New South Wales and New South Wales Department of Housing.  Neither of those trading names were formally a trading name of the Corporation, although, as Justice Emmett notes at paragraph 37 of the Court of Appeal judgment, the Corporation’s offices had, at least between October 2009 and April 2010, used the letterhead of “Housing New South Wales”. 

The trading names “NSW Department of Housing” and “Housing NSW” were, in addition to being trading names registered for ABN 45 754 121 940, also registered as trading names for ABN 84 608 917 940 and an historical search for that ABN is at page 769.

The purpose of taking your Honours to these searches is to demonstrate that if ANZ had undertaken an ABN search of the ABN appearing in the undertakings, it would not have identified the Corporation.  Justice Emmett in fact notes that such a search was undertaken by ANZ at paragraph 70 of his Honour’s judgment, and can I briefly take your Honours to that because there is a slight error in his Honour’s judgment.  It is in volume 3 of the court book at page 1015 and at line 20 his Honour said ‑ ‑ ‑

KIEFEL J:   Which paragraph number?

MR ASHHURST:   Sorry, paragraph 70, Justice Kiefel.

KIEFEL J:   Thank you.

MR ASHHURST:   At about line 20 in paragraph 70:

(In the present case, it appears that ANZ at least conducted an ABN search of the trading name “Housing NSW”:  see the letter of 1 November 2013 at [30].)

If your Honours go back to paragraph 29 of his Honour’s judgment, we understand that the relevant letter that his Honour was referring to is actually the letter of 9 October 2013 and the relevant paragraph is paragraph number 2.  So we read his Honour’s comment in paragraph 70 as should have been a reference to paragraph 29 and should have been a reference to the letter of 9 October 2013.  Your Honours, nextly we intend to provide an analysis of what we say were the errors in the primary judge’s reasons.

FRENCH CJ:   Just in terms of the relationship between the Corporation and the Department, I understand looking at the Act that the Director‑General of the Department also runs the affairs of the Corporation, is that right?

MR ASHHURST:   Yes, Chief Justice.  Your Honour, Justice Emmett deals in some detail at page 999 and over to page 1000 with precisely that issue.

FRENCH CJ:   Yes.

MR ASHHURST:   Now, your Honours, the primary judge’s construction analysis of the undertakings commences relevantly at paragraph 65 of the primary judge’s reasons, which is at court book volume 3, page 916.

KIEFEL J:   I am sorry, what was that reference?

MR ASHHURST:   It commences at paragraph 65, page 916 of court book 3, Justice Kiefel.  The first paragraph in this section that we seek to draw your Honours’ attention to is to paragraphs 68 and 69, and we respectfully agree with the comments that his Honour made at those paragraphs.  We do not, however, agree with his Honour’s statement in the last two sentences of paragraph 70.

GAGELER J:   What did his Honour mean by the guarantees being “in fact and law, unilateral contracts”?

MR ASHHURST:   We say, Justice Gageler, that it is an offer by ANZ in its own right rather than as any agent of Nebax, and it is a unilateral offer which does not become a synallagmatic contract until it is accepted by the favouree.

GAGELER J:   What is the consideration?

MR ASHHURST:   There is some issue in the authorities, Justice Gageler, as to the consideration.  There are two schools of thought.  One is the consideration by the named favouree agreeing to perform the performance bond in accordance with its terms, and that is how this one is expressed.  The other theory in the academic writings ‑ ‑ ‑

GAGELER J:   Just on that theory, what is the performance?

MR ASHHURST:   The consideration is said to be that the favouree agrees to perform the terms of the performance bond in accordance with how it is expressly described.  So it is the promise by the favouree as shown by their acceptance of the terms and the delivering up of the Bank guarantee.

GAGELER J:   What is the other theory?

MR ASHHURST:   The other theory, which seems to be holding a stronger sway, is that this is just an exception to the law of consideration and that consideration is not necessary for there to be created a synallagmatic contract between the favouree and the Bank.  We say this does not directly arise in this issue, Justice Gageler, but the issue arises in other circumstances as to the Bank’s entitlement to withdraw a performance bond before called upon.  The argument is, if there was not consideration, what would preclude the issuing bank from withdrawing the performance bond before it is called upon?

I think we got as far as saying that we disagree with his Honour’s comments in the final two sentences of paragraph 70 – that is, where his Honour posed the question:

the identity of the Principal must be answered by reference to ANZ’s and Nebax’s intention –

We say, as a unilateral contract, that what was critical was ANZ’s intention and not Nebax’s intention.  We say that that underlies the errors that were made firstly by the primary judge in construing this document and then latterly by the Court of Appeal.

We do not cavil with his Honour’s statement at paragraph 71 in relation to these particular undertakings, nor with the statement at paragraph 72.  As to the circumstances described in paragraph 73, the appellants contend, firstly, as we have just mentioned, that his Honour should have limited his Honour’s considerations to the surrounding circumstances that were known by ANZ and not have included the surrounding circumstances known by Nebax.

Further, we would add to the list that his Honour has made there those matters that appear in paragraph 13 of our reply submissions.  They are, firstly, and most importantly, ANZ had not been informed of any contract with the Corporation.  It had been advised of a contract with an entity described as the Department with a different ABN number, a different name and with job numbers and contract numbers that were not consistent with the contract between the Corporation and Nebax.

KIEFEL J:   In the process of the correspondence which took place after the demand, did the Corporation ever produce the contract between it and Nebax to ANZ?  It does not appear on the face of the correspondence that that occurred.

MR ASHHURST:   Justice Kiefel, if it did, it was not in the evidence.  There is no evidence of the Corporation ever having produced the contract to the Bank.

KIEFEL J:   So far as we are concerned, we are to proceed on the basis that the first knowledge that the Bank had of the contract and the job description, et cetera, was when pre‑litigation documents were exchanged at some point.  It is either at litigation or just before that the Bank must have known.

MR ASHHURST:   Yes, your Honour.  When the affidavits were served, I am told by my learned junior, who appeared at first instance.  Nextly, we say a critical point that his Honour should have taken into account was that ANZ was not provided with a copy of the contract between Nebax and the Corporation, which is really the point that your Honour was anticipating.

Thirdly, we say that his Honour should have taken into account that ANZ would have understood from the information it received that the undertakings were required in respect to the contract with the entity described as the Department, not the Corporation.  Finally, even if ANZ had performed the search of the Australian Business Number that appeared in the applications and in the undertakings, which it would seem that it did, it would not have identified the Corporation.

GORDON J:   Can I ask one question which, in effect, precedes and predates all of these events?  There is at least some authority that suggests that upon delivery of an instrument of this kind it is the duty of the beneficiary to inspect it to ensure that it complies with the security that has been requested under the underlying contract and if it does not, then it has its rights under the contract either to request fresh security or to identify by notice under this written contract - as I read the construction contract, they could have served notice of breach.  They could have dealt with it by way of anticipatory - why is that not a complete answer to the way in which this matter should be looked at, i.e., why is it that we are looking at it at the tail end rather than at the front end?

MR ASHHURST:   Your Honours, we would not of course disagree with that proposition and, indeed, it is a way in which that issue has been dealt with in some of the overseas authorities that we will come to in due course.

GORDON J:   There is a very good one by the Second Circuit Court dealing with Westpac Corporation where they apply Australian law.  I think they described it as dropping the ball.

MR ASHHURST:   Yes, your Honour.  We would certainly embrace that submission but it is necessary, at least at this stage, for us to track through and what we say the same result can be achieved by applying conventional contract construction principles.

KIEFEL J:   Your case, as I understand it, is that in the face of a demand by an entity with a different name that a bank is not required to make an inquiry.

MR ASHHURST:   Yes, Justice Kiefel.

KIEFEL J:   Does that mean that an inquiry as to identity can never be raised, say by an inconsistency on the face of the documents?

MR ASHHURST:   No, we would not go that far.  We say that obvious inconsistencies on the face of the document are not inconsistent with how we say these documents should be construed.

KIEFEL J:   Because otherwise the Bank would be left with the position, I suppose, where if it were only what appeared on the face of the document it would almost be a bearer document and someone could come along and say, “I am this person.”  The Bank says, “Well, we are not making any inquiry.  Here is your money”.

MR ASHHURST:   Perhaps it is necessary at this stage to take your Honours to what the undertakings actually say on that issue.  If your Honours could go back to the document at page 124 at line 30:

By accepting this Undertaking, the Principal acknowledges and agrees that ANZ may rely entirely on any demand or notice as presented to it and has no responsibility or obligation to investigate the authenticity or correctness of the matters stated in a demand or notice, the signatures on the same, the positions of such signatories or the capacity or entitlement of the Principal to give and execute the demand or notice.

Page 124 and 125.  So in answering your Honour’s question, the Bank we say expressly provides in the undertaking itself that it has no obligation of inquiry.

FRENCH CJ:   Does that beg the question who the principal is?

MR ASHHURST:   It does and, Chief Justice, you have gone to the very issue that really this appeal is about.  Can I for the moment say that I will come to a better explanation of that shortly.

KIEFEL J:   While you are interrupted, can I ask you:  if it had been the case that the Corporation had, after the demand was first rejected, produced a copy of the contract in which the name of the Corporation appears and at least the address of the job description ‑ there are some descriptions that appear there – what would you say the Bank is entitled to say?  There is not enough of a match or how was it supposed to approach the question?

MR ASHHURST:   We say the Bank is entitled to say, “That does not match the description of the favouree in the document that we have”.

KIEFEL J:   In every respect, but it does in one or two respects, does it not?  How does the Bank resolve that?

MR ASHHURST:   It requires strict compliance.  Its obligation to its customer is strict compliance.

KIEFEL J:   Is there a tension between the requirement of strict compliance, which is for the protection of the Bank, and a requirement that in commerce that documents have to be – that there should be an attempt to make them work, given that the Bank has obligations to its customer?

MR ASHHURST:   Justice Kiefel, that depends upon, when you say “to make it work”, from whose vantage point is that seen.

KIEFEL J:   To give effect to the document in its terms.

MR ASHHURST:   We say that to give effect to the document is to give effect to the undertaking.  The undertaking is to pay out to a specific entity.  One is giving effect to that purpose by paying out only to the party named in that undertaking.

KIEFEL J:   But do you accept that if the – it seems extraordinary that the Corporation did not actually produce the contract referred to in the undertaking but, assuming that for the moment to be the case, if that had been undertaken there would have been at least a doubt reasonably in the mind of the Bank as to identity.

MR ASHHURST:   Our position is that would not have made any difference and we firstly ‑ ‑ ‑

KIEFEL J:   Can you explain why, if it threw up an anomaly, potential anomaly?

MR ASHHURST:   Yes.  Firstly, we say that the contract that they had produced would not have been the contract described in the undertaking because it had a different job number and a different contract number.  So it would not have been that contract, in any event.  But, even if it had – and this is really where we move from the specific to the more general – but even if it had, it is no part of the Bank’s obligation when issuing a letter of credit to have to investigate these measures and to take into account what evidence is put before it.

The way letters of credit and performance bonds operate is that they provide for the Bank – sorry, I withdraw that.  The Bank has made a promise to its customer to only pay out specifically on either the documents or the named favouree, and close enough is not good enough.  These documents are and may be the equivalent of cash, they may be transferred between other parties, and if the Bank were to take on the role of investigating, firstly, it would be inconsistent with the purposes of performance bonds and, secondly, where would the line be drawn?  Does the Bank have to carry out an investigation only when the information provided to it is provided within a short period of time, or is it that the Bank, as in this case, becomes subject to legal proceedings?

KIEFEL J:   In practical terms in day to day commerce, how does a bank satisfy itself as to the identity of the principal or the favouree nominated in an undertaking of this kind?

MR ASHHURST:   It would request a notice under seal or under execution by the entity described as the favouree.

KIEFEL J:   A notice?

MR ASHHURST:   A demand.

KIEFEL J:   And whoever made the demand, if they had the right letterhead, they would be paid?

MR ASHHURST:   If they could establish that they are the entity described ‑ ‑ ‑

KIEFEL J:   Well, that is the point.  How in practical terms do banks do this?

MR ASHHURST:   That may be a better question for Mr Jackson who appears for the Bank, your Honour, but I expect the short answer is that the banks consider the form of the demand that arrives and match it with the undertaking that they have.  Presumably, there is always a possibility of fraud but, outside fraud, the Bank is entitled to – for a start, and probably the major ‑ ‑ ‑

KIEFEL J:   Well, they would be holding the document.  That would be 75 per cent of it, I suppose.

MR ASHHURST:   Yes, I was just about to say the number one indicator would be the fact that they hold the ‑ ‑ ‑

KIEFEL J:   Although this is not a holder in due course document, is it?

MR ASHHURST:   No, it is not.

GAGELER J:   Why do you say the undertaking can be transferred?

MR ASHHURST:   Justice Gageler, you are quite right.  This particular one says it cannot be transferred, but in certain circumstances performance bonds and letters of credit can be.  I accept in this one it cannot be.

GORDON J:   The other interesting thing about the aspect of this – while you are interrupted – is that it could be presented at any branch of the Bank.

MR ASHHURST:   Yes, Justice Gordon, it could.

GORDON J:   If you are looking at the commercial realities of determining the steps to be taken by the Bank, it is interesting that the authorities – which no doubt you are going to come to – which deal with presentation of the instrument to the beneficiary all seem to have as its underpinning that it is the beneficiary who is in a better position to determine whether or not the instrument satisfies the underlying requirements.

MR ASHHURST:   You can understand the practical effect of that.  The Bank says, “We don’t want to be the arbiter of determining whether or not this document complied with your contractual entitlements.  You make that determination and then all we have to do is to determine that there has been a notice or demand given in accordance with the document that we have issued”.  The important aspect – and we say this in more detail later on – to take out of this instrument is, firstly, of course, that it is a unilateral undertaking but, secondly and critically, it is not given as the agent of Nebax.  It is an independent undertaking given by the Bank.

GAGELER J:   While you are interrupted, is it a consequence of your argument that this undertaking has never been accepted by the principal?

MR ASHHURST:   Yes.

GAGELER J:   Does that mean in its terms there is no unconditional promise to pay?

MR ASHHURST:   To any party.

GAGELER J:   To anyone.

MR ASHHURST:   There is still the unilateral undertaking but, given the fact that there is now a finding that no such entity exists, then the answer is this unilateral undertaking never became a synallagmatic contract.

GORDON J:   There is a twist to that.  That may be right, although the other consequence is – that is why I asked you whether there was evidence of acceptance, because the underlying authorities seemed to suggest that the beneficiary has three courses open to it.  It can accept it by either waiver, by saying, “It is not correct, but I will not in effect require you to produce it”.  It can ask for change, or it could serve notice to Nebax that they were in breach of the underlying requirement under the principal contract.  So the question is the findings by the Full Court seemed to be presumed acceptance.  I do not know by whom or by what.  That is why I asked you.  There is no evidence that indicates what happened when it was delivered.

MR ASHHURST:   No, there is not.  Justice Gordon, that would correct if the errors in the performance bond were in respect of the terms.  But if the errors in the performance bond are in respect of the name of the favouree, we say that the favouree never gets those opportunities because they are not the party who is named.

GORDON J:   That is not right though, is it, because under the underlying construction contract the Corporation would say, “You are obliged to deliver an instrument to me in the form of security named to me.  It is not named, I reject it”.

MR ASHHURST:   We do not disagree with what your Honour says in respect of its entitlement to reject the bond or to demand an amendment.  Where we differ with what I understood your Honour said earlier is that in this instance it was not an alternative of the Corporation to have accepted the bond in that form because the bond was not addressed to the Corporation.

We say, then, that his Honour’s conclusions at 74 are erroneous.  Firstly, contrary to his Honour’s statement in that paragraph, the job number and contract number that had been reproduced from the undertakings in that paragraph do not appear in the construction contract between Nebax and the Corporation.  The contract number and the construction contract is S1384, whereas in the undertakings it is described as BG278.  The job number in the undertakings is P0409021, which does not appear anywhere in the evidence.  The job number in the construction contract is BG278‑C‑71561.

Nextly, we say, your Honours, for the reasons we have previously mentioned, that the reasonable person in the position of the ANZ Bank could not possibly have known from the information it had been provided with that Nebax had intended to describe the Corporation in the applications and for ANZ to issue the undertakings to the Corporation rather than to the entity described in the undertakings.

Now, this is critical because it means that ANZ does not make any error.  We will come to the importance of that in a moment.  But we say that it is essential when construing these documents for the purposes of misnomer and, for that matter, for the purposes of rectification that no error is made by ANZ.  It is complying with its contractual instructions.

We also say that the primary judge’s analysis of what the reasonable person would have taken into account when construing the undertakings was deficient insofar as it failed to take into account the critical contractual obligation that ANZ had to Nebax to pay out to the favouree as described in the applications and the undertakings.  And on this issue we say that it is not to the point that no such entity existed.  ANZ did not know that fact and it was no part of ANZ’s commercial purpose in issuing the undertakings to have known that fact.

ANZ’s commercial purpose is reflected in the fourth paragraph of the undertakings, which is the one that I read to your Honours earlier.  If I can take your Honours back to the applications, which are at page 127, volume 1 of the court book?  As we briefly opened on, the definition of the “favouree” is NSW Land and Housing Department, with the incorrect ABN number, and there is a contractual obligation that appears at about line 28:

In consideration of the Bank giving such a guarantee or security, I/we ask you to pay to the Favouree and to debit to my/our account without prior reference to me/us any sum or sums –

So what is unique when it comes to construing performance bonds is the situation that the issuing bank is in.  It has both a contractual obligation to its customer to issue the performance bonds in the term that it was requested to issue it and to pay out strictly in accordance with those terms, and it would be in breach of its contractual obligation to its customer to do otherwise.  After there is acceptance of the performance bond, then there is also then an additional contractual obligation of the issuing bank to the favouree.

The appellants say that taking into account ANZ’s contractual obligation to pay out the entity described in the applications and the undertakings, even though no such entity exists, is consistent with a statement made by Justice Chao Hick Tin at paragraph 40 of United Bank Ltd v Banque Nationale de Paris, and your Honours will find that decision at item 10 of the appellant’s list of authorities.  Whilst those copies are being sought, can I just say to your Honours that we place considerable importance on this decision because factually it is the closest to our current situation.

What occurred in this matter was that the performance bond was issued in accordance with the instructions of a customer where the favouree was described as Pan Associated Ltd.  The situation was that there was in fact no such entity and that what there was was an entity described as Pan Associated Pte Ltd and there was evidence that the two entities could not co‑exist, therefore that the performance bond should have been issued in the name of Pan Associated Pte Ltd.  Notwithstanding that, the Bank was held to be entitled to have rejected the demand that was made upon it.  If your Honours go to paragraph 40 of this judgment, his Honour had considered a series of authorities on the issue of misnomers and errors and then at 40 says this:

Having considered all the authorities referred to above and the circumstances of this case, I would, though not without some hesitation, follow the approach adopted by Lord Goddard in Rayner v Hambro’s Bank –

And his Honour explains shortly beneath that that was the distinction between the reference to “Coromandel groundnuts” or “machine‑shelled groundnut kernels”, which was the way the bills of trading were provided, and in that case, that is, in Rayner v Hambro’s Bank, Lord Goddard held the acceptance of the tender and whether or not the tender:

is good or bad cannot depend on whether the banker –

is aware either that:

“Coromandel groundnuts” is another name for “machine‑shelled groundnut kernels” –

or, as in this case, that the company name “ABC Pte Ltd” should have been the correct name and not another company name, “ABC Ltd”.  His Honour says a few lines further down:

A negotiating bank can only be certain of the position if it makes a search at the Registry of Companies.  But I seriously doubt that the bank is expected to make such inquiries, bearing in mind all that should be looked at are the documents.

Your Honours, we also rely upon a statement made in Tradax Petroleum Inc. v Coral Petroleum Inc.  It is at item 13 of our list of authorities.  This is a case which we will return to in more detail when we get to the issue of rectification, but at page 832, second column, Circuit Judge Reavley, at about point 5 on the page said this:

While the issuer ‑

referring to the issuing bank:

is required to act in good faith and to observe any general banking usage, it is not charged with knowledge of any usage of the trade in which the beneficiary and customer are involved.

That then brings us to our critique of the primary judge’s determination of the issue of misnomer.

GAGELER J:   Can I just mention this about both of the cases you have taken us to?  They both appear against a particular statutory background.  The Singapore case is concerned with the uniform customs and practice for documentary credits and the fifth circuit Court of Appeal case appears to have been concerned with the uniform commercial code.

MR ASHHURST:   Yes, Justice Gageler.

GAGELER J:   The passages, or at least passages around the passages that you have taken us to, seem to draw significantly from that statutory context.  Is there a statutory context in the present case?

MR ASHHURST:   No, there is not.  The Court of Appeal held as much and the parties have accepted that.  I would say this, though, your Honour.  The authorities that are drawn upon for those conclusions to be made are, for the large part, not subject to the statutory requirements.  In any event, the statutory requirements are really a codification of what we say the common law is in any event and that is really the primary point.

I am now getting to the issue that the Chief Justice raised with me earlier which is the question of really the misnomer issue that arises at the forefront of this appeal.  The primary judge’s consideration of that issue is importantly from paragraph 75 to 78 of the first instance decision, which commences at page 919 of volume 3 of the court book.  There is also importantly paragraph 49. 

The reason why paragraph 49 is important is because that is where his Honour refers to the decision of Kingstream Steel v Stemcor.  We say Kingstream Steel v Stemcor is distinguishable.  It was a case concerning personal guarantees, not unilateral undertakings that are performance bonds.  That is, it was a synallagmatic contract, which meant the court was considering the objective intention of the two parties to those contracts of guarantee rather than from construing the objective intention of ANZ.

Now, the primary judge’s reasons on this misnomer, where we point to error, we say, commences at paragraph 76.  His Honour says in that paragraph that:

Ms Hanna, unwittingly, perpetuated that mistake –

that is, the mistake made by Mr Simic when he ordered the form of the undertakings:

in both the Indemnity and the guarantees produced pursuant to the Indemnity.

Now, your Honours, the appellants contend that this statement fails to recognise the contractual obligation of ANZ to Nebax.  Ms Hanna did precisely what she was requested to do by Nebax.  Therefore, from the perspective of ANZ, there was no mistake in the formation of the undertakings.

We say a similar point was made by Circuit Judge Reavley in Tradax, which is the authority that I just took your Honours to. If I can just briefly take your Honours back to it, this time at page 834? I should just say this about Tradax v Coral Petroleum Inc.  This was a case about absurdity where the requirements of the letter of credit required for bills of lading to be provided, which were inconsistent with the very description of the requirements of the performance bond.  One required a sweet oil and one required sour.  Notwithstanding that apparent error, his Honour at page 834, second column, at point 6 on the page, said this:

We agree with the district court’s determination that there was no mutual mistake here.  Any mistake made was made by Tradax –

that is, the customer:

and Coral only –

the favouree:

not by FABC –

FABC being the issuing bank:

without knowledge of the meanings of the technical designations included, prepared the letter of credit precisely in compliance with Coral’s request.  Tradax then failed to recognize that the letter of credit’s terms did not reflect its agreement with Coral.

I will just mention briefly, because I am here, the next statement which is relevant to the question of whether or not there could be any rectification in respect of the synallagmatic component between the Corporation and ANZ:

In addition, there is no prior agreement between FABC and Tradax to which this letter of credit could be conformed.

Now, we rely on that when we get to the question of rectification raised by our learned friend’s cross‑appeal.  There was no prior relationship between the Corporation and ANZ against which it could be said that the undertaking should be conformed.

GORDON J:   In relation to both those aspects – that is, the aspect of the failure of the beneficiary to recognise that its terms did not reflect its agreement and also what they call a refusal to reform the agreement – I would be very grateful if you could have a look, over lunch, at the decision in Mutual Export Co, the second circuit decision of 1993, which seemed to deal with both those aspects and deals with it in the context of Australian law.

MR ASHHURST:   Yes, Justice Gordon.  Your Honours, the primary judge refers to the decision of Nittan (UK) Ltd v Solent Steel Fabrication at paragraphs 55 to 58 of his Honour’s reasons.  We note that the Corporation has placed this decision on its list of authorities in this appeal.  We consider a brief comparison between the contractual situation described in that authority and in the present matter illustrates the error that the appellants contend the primary judge made on the issue of misnomer.

Your Honours, the contract in consideration in Nittan was an insurance contract and the matter under consideration was the wording of an exclusion clause in the product liability section of that insurance contract.  The error was in the name of the division of the insured that produced electronic timers and the error occurred because the insurer had used the name of the entity that the insured had acquired this business from rather than the name of the division itself.  The Court of Appeal held that it was clear from the surrounding circumstances that the insurer had intended the exclusion clause to apply to the division of the insurer that sold or supplied the electronic products and the error was only in the name used for that purpose.

Now, the principles described in Nittan would be applicable to the current situation if what was presently under consideration was some form of personal security being provided by Nebax to the Corporation pursuant to the terms of the construction contract, such as a mortgage over real property, but misdescribed the Corporation.  In those circumstances it could be said that from the objective evidence, which would include of course the terms of the underlying contract, Nebax clearly intended to provide that security in favour of the Corporation.

That, however, is not the situation when what is being provided is not any undertaking by Nebax but the independent undertaking by ANZ.  Unlike Nebax, ANZ had no contractual obligation to provide any security for the construction contract to the Corporation and, therefore, the undertakings it provided cannot be construed against the construction contract.  Further, not only did ANZ not have any contractual obligation in favour of the Corporation, it had a conflicting contractual obligation to Nebax to issue the undertakings to the entity described as the department.

The appellants also contend, as they have said in their written submissions in‑chief, that ANZ cannot be considered as the agent of Nebax for the purposes of construing undertakings.  I highlighted that point before and I come back to it again because on the question of misnomer it is critical that what is being construed is ANZ’s intention, not Nebax’s.  Neither can it be claimed that the applicant should – the applications, I should say, themselves should be ‑ ‑ ‑

FRENCH CJ:   I suppose what is being construed is the document.

MR ASHHURST:   Yes, with respect to justice, it is the document.

FRENCH CJ:   How does the application of constructional approach undermine the policy considerations served by the strict compliance requirement?

MR ASHHURST:   Because – twofold, perhaps, firstly ‑ ‑ ‑

FRENCH CJ:   In this context, I mean.

MR ASHHURST:   In this context, we say the strict compliance provision is in relation to ANZ’s contractual obligation to its customer.  If it was to pay out to the Corporation it would be breaching that contractual obligation.  In other circumstances where the performance bond is issued in the name of a party – existing party, but the error is in the terms of the performance bond, then there would also be a breach of the contractual obligations that the Bank owes to the favouree.

Nextly, we say, your Honours, that neither can it be claimed that the applications, that is, the application indemnity documents that Nebax signed, should themselves be construed as if they were directions to ANZ.  Now, these contracts are, of course, unlike the undertakings themselves, synallagmatic contract between ANZ and Nebax.  However, ANZ did not know when executing that document that there existed an underlying contract between the Corporation and Nebax and nothing in what it was provided could have informed ANZ of that fact. 

We say, therefore, that it is irrelevant to construing the application as if it was somehow a direction to ANZ to make out the performance bond in the name of the Corporation - it is irrelevant that ANZ would, if properly instructed, have drafted the undertakings in favour of the Corporation.  What is relevant is what it was instructed to do.  It is also irrelevant to this issue that ANZ had no personal interest in whose favour the undertakings were drafted.  What matters and the only thing that matters is that on no reasonable consideration of the surrounding circumstances as known to ANZ, could the applications be seen as a direction to ANZ to draft the undertakings in favour of the Corporation.

Now, the appellants also contend, your Honours, that from ANZ’s perspective it is also apparent that there is no ambiguity that would necessitate the construction of the undertaking so as to result in an interpretation favouring it to the corporations.  On that issue, the appellants rely on what this Court said on the process of construction for unambiguous contracts in Mount Bruce Mining v Wright Prospecting.  I will not take your Honours to it.  It is paragraph 48 that we rely on and it is authority 2 on the second respondent’s supplementary list of authorities.

FRENCH CJ:   I suppose if you see an entity called a department you might ask yourself – it might depend upon stated knowledge, I guess - is a department actually a body, a corporate entity or just a collection of people reflecting the Crown?

MR ASHHURST:   Yes, Chief Justice, but we say ANZ’s obligation is not to ask itself any such questions.  It is just to comply with a direction given to it by its customer and, most importantly, to take on that contractual obligation.

GAGELER J:   Sorry, what contractual obligation?

MR ASHHURST:   To firstly issue the undertakings as it was directed to do and, secondly, if the favouree named calls upon it to pay out on it.

GAGELER J:   Who is that a contractual obligation owed to?

MR ASHHURST:   Issuing the undertakings is a contractual obligation owed to the customer.  To the extent that the undertakings are issued in a correctly named favouree then they also become a contractual obligation to that named favouree. 

GAGELER J:   We have probably been over this before, but at what point?

MR ASHHURST:   Your Honour has gone to perhaps the most difficult question in all of the academic writings.  It would seem at least at the stage when the favouree has had the opportunity to review the performance bond and has accepted it.

GAGELER J:   All right.

GORDON J:   Can I just ask one factual question that I cannot quite recall?  The applications which are put against you to be construed as directions to the ANZ, were they accurate?

MR ASHHURST:   Accurate in which respect?  Accurate as in Ms Hanna accurately recorded her instructions?

GORDON J:   No, sorry; accurate in terms of names and numbers?

MR ASHHURST:   No, they are ‑ ‑ ‑

GORDON J:   No?  Where do I find those again, I am sorry?

MR ASHHURST:   The applications are 127 and 128.

GORDON J:   Thank you.

MR ASHHURST:   Now, our point, Justice Gordon, is that the ANZ did precisely what it was instructed to do and its contractual obligations arise in those applications and it did what it should have.  Now, construing the undertakings from ANZ’s perspective as the party responsible for creating the unilateral undertakings rather than from the perspective of Nebax or the Corporation also answers the absurdity argument raised in paragraph 77 of the primary judge’s reasons.  It is not self‑evident from ANZ’s perspective that the undertakings were absurd, because it is no part of ANZ’s commercial purpose in issuing the undertakings that there must be an entity as described to ANZ by its customer.

Just pausing there, that is really the critical issue that separates the absurdity cases in the synallagmatic contracts to this.  It is of course absurd if two parties sit down and agree on certain matters if the construction of that contract gives no effect to it.  But with an undertaking of this type, with a performance bond, it is important to understand what the commercial purpose of ANZ is. 

The commercial purpose of ANZ is not to issue a performance bond that necessarily answers the Corporation.  It is to issue the performance bond that it was asked to issue by its customer.  That is its commercial purpose and it is not absurd when it does that simply because it turns out that there is not an entity as described by its customer.

In addition to the authorities that we have also taken your Honours to, could I briefly take your Honours to Beyene v Irving Trust Co, which is item 11 in our notified list of authorities, and in particular I want to take your Honours to ‑ ‑ ‑

FRENCH CJ:   Can you give us the citation to that?

GORDON J:   Is that Dessaleng Beyene?  Is that the one you want us to go to?

MR ASHHURST:   No, it is – yes, sorry, Dessaleng Beyene and Jean M Hanson v Irving Trust Co, and it is the United States Courts of Appeal, Second Circuit, 7 March 1985.  Does your Honour require the citation for that as well?

FRENCH CJ:   It is all right, I have that, thank you.

MR ASHHURST: It is 762 F.2d 4 (1985). It should be on our list of authorities. Circuit Judge Kearse at page 6, point 5 on the page:

Literal compliance is generally “essential so as not to impose an obligation upon the bank that it did not undertake and so as not to jeopardize the bank’s right to indemnity from its customer.”

We have also provided, your Honours, in paragraph 35 of our written submissions in‑chief the authorities that say it is “no part of the” issuing “bank’s function when considering whether to pay” on a performance bond or letter of credit “to speculate about the underlying facts”.

Now, your Honours, if the undertakings had been issued in the name of an existing entity, albeit not the entity intended by the construction contract, ANZ would have no obligation to investigate the intended favouree.  The appellants contend that there should not be implied into the undertakings a term that if the intended favouree is held not to exist that ANZ then has some form of implied duty to investigate the correctly named favouree.

Such a conclusion, we say, would be inconsistent with the principle, or at least the statement made by Justice Cresswell regarding implied terms in performance bonds and that authority, your Honours, is in item 5 in our notified list of authorities.  The relevant page for the passage we rely on is page 7.

GORDON J:   Which authority is this?

MR ASHHURST:   It is Cauxell Ltd v Lloyds Bank. It is item No 5 in the appellant’s list of authorities. What was at issue in this matter was the question of whether or not a condition precedent to performance that had been identified in the performance bond was to be an implied term as to a positive obligation on behalf of the issuing bank. His Honour said this:

The alleged implied terms would impose an uncertain and confusing burden on Lloyds.  For example, how often was Lloyds supposed to make enquiries?  How far did the enquiries have to go before Lloyds could safely make no more.  How could Lloyds be sure at any one time ‑ ‑ ‑

FRENCH CJ:   You are not facing an argument about an implied term, are you?

MR ASHHURST:   Chief Justice, the reason we raise this point is we are drawing the analogous situation on the question of absurdity.  If there had been another entity ‑ incorrectly named, but another entity – there would be no suggestion that the Bank had to carry out inquiries to determine whether that was the correct party.  It is put against us that that is different because this party did not exist and we say why, why would you imply a term that the result is different because the party does not exist?  That is what that point leads to.

Your Honours, nextly I want to move to what we say are the challenges to the Court of Appeal’s decision.  Firstly, can I identify a very minor point that we say is an error in the statement made by Justice Emmett at paragraph 88 of the Court of Appeal judgment, volume 3, page 1023.  At line 30, his Honour had considered Griffin Energy Group Pty Ltd v ICICI Bank Ltd.  His Honour concludes that:

In reaching its conclusion –

that is, the New South Wales Court of Appeal:

the Court had regard to the provisions of the underlying sale agreement in order to determine whether a claimed amount was “due and payable” -

Your Honours, we say that is an erroneous reading of that judgment.  We say that the proper construction of “due and payable” was based not on the terms of any underlying agreement but on what the Court of Appeal considered was the ordinary meaning of that term and we direct your Honours to paragraph 53 of that decision.

Indeed, we say that such a finding would have been inconsistent with the judgment.  If we can take your Honours to page 1024 of this Court book, the next page over.  The Court of Appeal actually noted in Griffin Energy Group Pty Ltd v ICICI Bank Ltd at paragraph 47, after referring to the sale of agreement and letters of credit in the last sentence:

It is to be noted that the language, surrounding circumstances and commercial purpose or objects of the Sale Agreement are different from those of the Letters of Credit.

We say that is the principle of autonomy.  We say that is the error that was made by the primary judge in construing the letter of credit as if Nebax was a party to it or indeed, for that matter, as if the Corporation was a party to it.

Now if I can move on to the more substantive errors that we say appear in the Court of Appeal’s judgment.  The appellants challenge the Court of Appeal’s determination that the principle of strict compliance only applies to the undertakings after those instruments have been construed, and that is paragraph 98 of the Court of Appeal judgment.  The appellants contend that there is a conceptual error in that reasoning because it fails to take into account that the issuing bank has an independent contractual obligation to the customer to strictly pay out in accordance with the terms of the letter of credit and, therefore, the letter of credit cannot be construed without taking into account that independent contractual obligation.

As we have previously advised, in this matter the independent contractual obligation is in the form of the application, and I have taken your Honours to that document.  We contend that the undertakings cannot be construed without taking into account ANZ’s contractual obligation to comply with that contract and issue the undertakings to the favouree as described in that contract.

The appellants contend, further, that it is this principle of strict compliance that is necessary for the commercial operation of performance bonds.  We rely upon the statements made by Justice Stephen in Wood Hall in this Court, at page 458 of the reported judgment, and we also say, your Honours, that that underlies the three misnomer decisions that the appellants refer to in their written submissions of United Bank Ltd v Banque Nationale de Paris and Beyene v Irving Trust that I have taken your Honours to, but also Hanil Bank v PT Bank Negara Indonesia that I have not yet taken your Honours to, and I am about to.

It is worth noting that in the third of those decisions – that is, in the Hanil decision – the United States District Court went so far as to find that, even if the misnomer in the name of the beneficiary was caused by the issuing bank, the letter of credit would not be construed in the beneficiary’s favour.  It is item 12 in our list of authorities.  Perhaps the best passage is in paragraph 3 on the second page, the second column, about point 6 on the page.

The plaintiff argues that Beyene is distinguishable from the present case because in Beyene the beneficiary made the error, while in the present case the issuing bank made the error.  However, the Second Circuit Court has made it clear that, under letter of credit law, the beneficiary must inspect the letter of credit and is responsible for any negligent failure to discover that the credit does not achieve the desired commercial ends, which I expect is the issue that your Honour Justice Gordon was raising with me earlier.

The second challenge to the Court of Appeal’s conclusions is in the finding in paragraph 106 that the court was entitled to take into account the name of the parties to the construction contract for the purposes of construing the undertaking.  This is really the misnomer error.  The appellants contend that this finding fails to properly take into account the principle of autonomy and fails to take into account that what is being

construed was a unilateral undertaking by ANZ that is independent from any contract between Nebax and the Corporation.  We rely upon the passage by Griffin Energy Group v ICICI Bank that I took your Honours to earlier.

Finally, your Honour, the appellants say that by taking into account information not known to ANZ, the Court of Appeal was not construing the undertakings but was instead construing what Nebax’s instructions should have been to the ANZ rather than what those instructions were.  They are the appellant’s submissions in‑chief.

FRENCH CJ:   Yes, thank you, Mr Ashhurst.  Mr Jackson.

MR JACKSON:   Your Honour, we have agreed I should go next.

FRENCH CJ:   Yes, seems sensible.

MR JACKSON:   Your Honours, there are several issues as the Court will have seen and they are the correctness of the course taken by the Court of Appeal and, of course, the primary judge.  Secondly, the question of rectification and, thirdly, the orders that should follow in consequence of either allowing the appeal or dismissing the appeal.  Could I deal first with the question of the course taken in that court?

Your Honours, there has been some discussion in the parties’ written submissions about the approach to be taken to interpretation of documents such as the undertakings in this case and it is said that one must first interpret the undertaking to see what is required to establish compliance with its terms, then one goes to see whether compliance has occurred, in fact. 

Your Honours, that is correct, at least when stated at a relatively high level of abstraction but it does not counter, in our submission, two difficulties.  One is that determination of what is required for compliance does not arise in litigation unless there is a question whether in the events which have occurred there has been compliance.  At that point, the two issues, ambit of the requirement for compliance and the fact of compliance, are not easily separated. 

The second difficulty, we would submit, is that the submissions on behalf of the first respondent do not give full force to the criteria required to be applied to the interpretation of obligations which are contractual in nature.

I say “contractual in nature”, your Honour, because there is a difficult question to which your Honours have adverted about the precise method of classification of undertakings of this kind, whether they are contractual or not, but no doubt we would say in terms of their construction they are to be construed in effect in the way in which is discussed in Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at 656, paragraph 35. Your Honours, I know, have been taken to that many times, but may I go to it for just a moment.

Your Honours will see in paragraph 35 the various matters there set out.  I will not read out the passage.  Could I just say, though, that obviously one matter that the application of the test requires, in the first place, is consideration of the actual words that are used in the document being construed.  That is a matter which was emphasised by three of your Honours - the Chief Justice and Justices Nettle and Gordon in the case to which my learned friend referred, Mount Bruce Mining Pty Limited v Wright Prospecting 89 ALJR 990 at 998, paragraphs [46] to [49]. The present case, in our submission, is one where it will be submitted the language of the undertakings that we have used is clear. Indeed, we would submit, with respect, very clear. May I come back to that in just a moment?

Your Honours, one of the features that emerges from paragraph 35 of the Electricity Generation Case is that one looks to see the circumstances known to them, the expression they use – that is, to the parties.  Here, what we knew about the underlying contract was what we had been told by Mr Simic.  We did not know the terms of that contract and, in particular – I think I am repeating myself – all we knew about the parties to it was what we had been told by the first appellant.

FRENCH CJ:   I suppose questions of carelessness by a beneficiary really go to the issue of a support for a strict compliance rule on the basis that it is commercially realistic because there is an incentive for the beneficiary, as it were, to ensure that all is in order before the beneficiary accepts the document ‑ ‑ ‑

MR JACKSON:   Indeed, your Honour.

FRENCH CJ:   ‑ ‑ ‑ rather than a punishment.

MR JACKSON:   Bearing in mind that this is a document which is to be presented for payment at any one of a number of places, persons who had nothing to do with its creation.

KIEFEL J:   Mr Jackson, in relation to rectification, the primary judge took into account as a matter in favour of the exercise of discretion that there would otherwise be a document out there that was not addressed to anyone, was ambiguous or likely to cause confusion.  It seems to be a matter which concerns the Bank.

MR JACKSON:   Your Honour, we would like to have the documents back.  We do not want there to be – who knows, there may be – litigation brought by the Crown, for example, in which it then claims ‑ ‑ ‑

KIEFEL J:   Probably what the primary judge had in mind.

MR JACKSON:   Yes, well, maybe, your Honour.  But if in that unpleasant circumstance, the situation would be of course that the question would be whether the Crown might be a privy to the first respondent.

FRENCH CJ:   Thank you, Mr Jackson.  Mr Curtin, do you place any reliance upon the Bill of Exchanges Act?

MR CURTIN:   No, your Honour.

FRENCH CJ:   You do not?  I think in those circumstances there will not be any need for a note on that, Mr Jackson or Mr Ashhurst.

MR CURTIN:   Your Honours, could I just correct one misleading footnote.  In paragraph 11 of our short outline we gave references to the various authorities in other jurisdictions which have held in those jurisdictions no requirement for the constructional choice et cetera.  The footnote for the Hong Kong case is incorrect.  Your Honours can delete that, so it is footnote 8.  But we have given you the correct case in our supplementary list of authorities that was provided yesterday, I think.

FRENCH CJ:   Yes, thank you, Mr Curtin.  The Court will reserve its decision.  The Court adjourns until 9.15 tomorrow morning for pronouncement of orders and otherwise until 10 o’clock.

AT 4.13 PM THE MATTER WAS ADJOURNED