Tipperary Developments Pty Ltd v The State of Western Australia

[2010] HCATrans 136

[2010] HCATrans 136

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth  No P34 of 2009

B e t w e e n -

TIPPERARY DEVELOPMENTS PTY LTD

Applicant

and

THE STATE OF WESTERN AUSTRALIA

Respondent

Application for special leave to appeal

GUMMOW J
HEYDON J
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

FROM CANBERRA BY VIDEO LINK TO PERTH

ON FRIDAY, 28 MAY 2010, AT 12.17 PM

Copyright in the High Court of Australia

MR B.C. OSLINGTON, QC:   May it please the Court, I appear for the applicant.  (instructed by Brennan & Co)

MR C.L. ZELESTIS, QC:   May it please the Court, I appear with MR A.J. SEFTON for the respondent.  (instructed by State Solicitor for Western Australia)

MR OSLINGTON:   Might I commence by addressing the question raised by the Court concerning what is described in the judgments as the oral release agreement.  The Court of Appeal did not hold that the respondent was released from liability by the oral release agreement nor did the Court of Appeal order specific performance of the oral release agreement.  The Court at paragraph 287 of the judgement at page 230 in the application book observed that:

The trial judge would have ordered specific performance if he had not upheld the claim for rectification.  As the order for rectification has survived the appellant’s challenge, it is unnecessary to determine this ground.

Then importantly –

However, my preliminary view is that rectification is the only available equitable remedy, where as here, an instrument in writing is purportedly made pursuant to a prior oral agreement . . . If the requirements for rectification cannot be satisfied, there seems to be no proper basis to aware specific performance.

Thus, the issue raised by the respondent at trial and on appeal, relying on the oral release agreement, was never the subject of final decision neither by the trial judge nor by the Court of Appeal.  In the present case, a release was not given, in our submission, at the time the oral agreement was made.  The terms of the oral agreement, as set out at paragraph 215 of the Court of Appeal’s judgment at page 211, recounting the trial judge’s finding:

The trial judge also found that an oral release agreement was entered into by Anderson on behalf of the appellant and himself and Wran on behalf of the State in a telephone conversation between the two on 21 December 1988.  The agreement was that those involved for the State and the State itself were to be released –

not were released, were to be released –

from all liability in relation to the appellant’s deposit in Rothwells and the agreement was to be reflected in a deed to be executed by Anderson and the appellant ‑ ‑ ‑

GUMMOW J:   So the question would become whether the deed was a performance of that promise.

MR OSLINGTON:   The deed, we accept, was purportedly entered into pursuant to that promise, but the relevant accord ‑ ‑ ‑

GUMMOW J:   If it was not a performance of the promise, the promise would be still standing, would it not, questions of limitation aside for the moment?

MR OSLINGTON:   We respectfully adopt the preliminary view expressed by the Court of Appeal that in a case such as the present where there is an oral agreement to produce a written agreement, then the rights arising under the oral agreement ‑ ‑ ‑

GUMMOW J:   They merge in some way, do they?  Is that what is being said?

MR OSLINGTON:   Well, that was an issue which was not finally decided or finally debated, but we would submit that what the appellant was willing to do and the accord he was willing to give was to execute the release prepared by the respondent or its solicitors and, as your Honours know from the references in our outline, the deed of release was prepared by solicitors acting for the Government Insurance Board and probably the respondent.  There were no negotiations about its terms.  There were drafts produced.  One draft was sent to Mr Turnbull acting for the respondent who made some changes to it. 

One change was made by a Mr Wiese, a senior of Mr Hagar, who made some changes to it, but those drafts to which changes were made were not exchanged with the appellant or its solicitors.  Instead, a final version, the version which was signed, was presented for execution and it was executed by the appellant and by Mr Anderson without any negotiation about its terms and without any discussion about its terms.  That was the written release agreement pursuant to – or the written release pursuant to the oral agreement required by the State and that is that which was executed and that represents the accord by the appellant.  There was no evidence by anyone involved in drafting, reviewing or changing the deed of release that any mistake was made in it. 

Mr Turnbull was plainly acting for the State, as held by his Honour.  He reviewed the draft, made a change to it, but did not make a change to include reference to the State as a release party.  Mr Turnbull was called to give evidence.  No evidence was led from him that he thought any mistake had been made.  Mr Hagar, who drafted the deed, said he was not instructed to include the State as a release party.  Mr Wiese, who reviewed the deed, did not say any mistake was made and Mr Dowding, the then Premier, did not give evidence that any mistake was made in the deed.  So one can only speculate what the position of the respondent was. 

One may possibly speculate that those on the State side believed that in some way the words in the deed as drafted were sufficient to release the State, but that can only be speculation because no such evidence was given.  Even if that evidence was given and accepted, it raises the issue whether rectification is available where a mistake is made as to the meaning of words deliberately chosen, but it is only speculation whether that issue arises.

GUMMOW J:   Would one not ordinarily construe the deed, if possible, so that it did conform to the oral agreement, putting questions of rectification aside?

MR OSLINGTON:   The oral agreement, in our respectful submission, would be regarded as prior negotiation and illegitimate means of construing the deed.  The construction of the deed, we respectfully submit, depends upon an examination of its terms and, in our submission, there is no ambiguity in its terms and neither the trial judge nor the Court of Appeal suggested there was an ambiguity.  That is the starting point and in the absence of ambiguity, one does not have resort to prior negotiation, because the trial judge and the Court of Appeal, in deciding what were the terms of the oral agreement, did not do so with reference to findings of what, in fact, was said during the conversation between Mr Wran and Mr Anderson. 

That was a conversation of which Mr Wran had no memory at all.  Mr Anderson’s version of the conversation was quite brief, set out at paragraph 223 of the appeal judgment at page 214.  His Honour rejected at least that part of Mr Anderson’s version at just below line B where Mr Anderson claims he said, “but I’m not letting the State off the hook”.  His Honour did not specifically make findings of acceptance or rejection of the other parts of the conversation.  Mr Anderson does recall about line C Mr Wran saying:

We want it in writing.  We’ll get a document drawn up.  Further, unless you sign the release then the purchase of Westralia Square won’t go ahead”.

There does not seem to have been at least any express promise by the State to make sure the sale of Westralia Square would go ahead.  The promise was by the State not to exercise a right or a power it had to prevent the sale going ahead if the appellant still wished the sale to go ahead.  So we would respectfully submit that on the point raised by the Court the proper analysis is that the relevant accord was the accord represented by the deed of release and the satisfaction, having obtained the deed of release answering the description of the document drawn up referred to by Mr Wran, having received that, the respondent then came under an obligation to honour its promise not to prevent the sale of Westralia Square going ahead.  That is our submission on the point raised by the Court. 

The two points we raise on the special leave application, first the construction of the deed of release.  We would submit, in the present case, applying McDermott v Black in order to construe the deed was unwarranted.  McDermott v Black was a case in which there was an oral withdrawal of claims of misrepresentation in connection with the contract for sale of land in exchange for which the person alleged to have made the misrepresentations agreed to grant an extension of time for three weeks to complete.  In other words, there was an immediate accord and satisfaction. 

The point was later taken by the person alleging the representations that his agreement had only evidentiary value, namely, it was some evidence to establish that the representations had not been made, but, nevertheless, did not preclude him from bringing action on the representations.  In other words, he had not released the vendor from a claim based on the representations.  It was in that context the High Court in McDermott v Black filled in an obvious gap and construed the withdrawal of the making of representations as a release. 

In the present case, that difficulty does not arise with the deed because the deed itself, which is set out at page 219 of the application book, plainly in terms grants a release and, in particular, in paragraph 5 at the top of page 220 identifies the persons entitled to the benefit of the covenants in the deed.  So the problem which led the Court in McDermott v Black to decide as it did is not a problem which arises in the present case. 

Turning now to rectification, we make three points.  First, the respondent whose onus it was to establish rectification failed to prove either a common intention or that a mistake was actually made.  Indeed, so far as the respondent’s intention is concerned, the very best evidence of that is the deed prepared by it which went through vetting by persons on its behalf and was presented to the appellant, combined with the absence of any evidence that any mistake was made in its drafting.  A finding to that latter effect is made at page 229 of the application book in paragraph 282. 

The second point is that if a mistake was made, of which there is no evidence by anyone on the respondent’s side claiming any mistake was

made, the words used in the deed are quite plain.  It is inconceivable, in our respectful submission, that the mistake – or if there was a mistake it must be a mistake in believing those plain words in some way had the effect of releasing the respondent, which ‑ ‑ ‑

GUMMOW J:   What do you say about paragraph 285 of Justice McLure’s reasons on page 230?

MR OSLINGTON:   We challenge that, with respect, your Honour, because the compelling inference, in our respectful submission, is that either it was changed by the care that went into drawing the deed of release or our alternative answer is that one cannot rely on the terms of the oral release agreement in deciding the rectification issue.  The terms of the oral release agreement are terms found on the objective theory of contract. 

There is no finding of what words were actually spoken between Mr Wran and Mr Anderson and it is the subjective intention of the parties which is important to rectification and not an objectively determined view of what their intention was.  That is the third error, we respectfully submit, that was made by the Court of Appeal in ordering rectification, namely, by looking at the objectively found intention of the parties through the oral release agreement and failing to examine and deciding whether the court could be satisfied of a common subjective intention to release the State.  Those are our submissions, if your Honours please.

GUMMOW J:   We are not satisfied that there arises any issue of principle upon which the applicant has reasonable prospects of success in any appeal to this Court.  Nor do the interests of justice call for any grant of special leave in this matter.  Special leave will be refused with costs.

We will adjourn to reconstitute.

AT 12.38 PM THE MATTER WAS CONCLUDED