Tam v Mannall

In the case of Tam v Mannall, the High Court of Australia was asked to determine whether a written contract for the sale of land could be supplemented by an inconsistent oral contract concerning the incidence of Goods and Services Tax (GST). The dispute arose between the purchasers, who sought specific performance of the written contract, and the vendors, who sought specific performance of the contract as allegedly supplemented by the oral contract. The case originated in the Supreme Court of New South Wales, was appealed to the Court of Appeal, and ultimately reached the High Court.

The central legal issues before the court were whether the written contract could be modified by a collateral oral contract and whether the parol evidence rule precluded the introduction of evidence to support such a modification. Additionally, the court had to consider whether the vendors had demonstrated a common intention inconsistent with the terms of the written contract, which could warrant rectification of the written contract in equity. The vendors contended that the words spoken at the auction sale constituted an agreement that the purchasers would bear the GST, but the purchasers argued that there was no evidence they had heard or intended to adopt these words.

The High Court found that the written contract was not supplemented by the alleged oral contract. The court held that the vendors had not shown convincing proof of a common intention inconsistent with the terms of the written contract. The vendors' reliance on the words spoken at the auction was insufficient, as there was no evidence that the purchasers had heard these words or intended to adopt them. The court emphasised that, in equity, the vendors must prove a common intention that is inconsistent with the written contract, and the words spoken at the auction did not meet this threshold. Consequently, the purchasers were entitled to specific performance of the written contract.

In its final orders, the court affirmed the decision of the Court of Appeal, dismissing the vendors' appeal and ordering the vendors to complete the sale of the property in accordance with the terms of the written contract. The purchasers were entitled to specific performance of the contract, and the vendors were precluded from asserting the alleged oral contract as a defence. The court's decision underscores the importance of clear and unequivocal evidence of a common intention when seeking to supplement or rectify a written contract in equity.