W&R Pty Ltd v Birdseye

[2009] HCATrans 79

[2009] HCATrans 079

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Adelaide  No A37 of 2008

B e t w e e n -

W & R PTY LTD

Applicant

and

NICHOLAS BIRDSEYE

Respondent

Application for special leave to appeal

HAYNE J
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

FROM CANBERRA BY VIDEO LINK TO ADELAIDE

ON FRIDAY, 1 MAY 2009, AT 12.48 PM

Copyright in the High Court of Australia

MR M.C. LIVESEY, QC:   If the Court pleases, I appear with my learned friend, MR B.J. DOYLE, for the applicant.  (instructed by Sydney G Maidment)

MR W.J.N. WELLS, QC:   May it please the Court, I appear with my learned friend, MR D.J. BLIGHT, for the respondent.  (instructed by Illes Selley Lawyers)

HAYNE J:   Yes, Mr Livesey. 

MR LIVESEY:   Thank you, your Honour.  Your Honour, it is submitted that in this case the majority judgment invoked and applied conventional estoppel in a way which risks supplanting the law of contract and the other varieties of estoppel.  The majority decision ignored the literal effect of reasons of this Court in Con‑Stan Industries and adopting an undemanding approach to detriment, bound and then enforced a general assumption about whether the parties were in a contractual relationship. 

The majority made that finding in reliance on essentially two matters.  First, the applicant’s unnecessary and misconceived attempts to terminate contracts which had already been validly terminated.  Second, Mr Birdseye’s unilateral payment of moneys not required by the terms of the contracts nor requested by the applicant into a trust account.  It is submitted that this was a surprising conclusion and an unjust one because there is a perversity associated with defining that the applicant was precluded from denying enforceable contracts on the basis of its unnecessary attempts to bring those contracts to an end. 

Conventional estoppel has been applied, it is submitted, in this case in a broader way than traditionally suggested.  Conventional estoppel typically precludes departure from a clear and unambiguous assumption clearly and mutually adopted by the parties as forming the basis for entry into a binding contract, or the basis for the actual exercise of rights.  In this way conventional estoppel traditionally supports contracts but does not create them.

KIEFEL J:   Could I just query your use of terminology?

MR LIVESEY:   Yes. 

KIEFEL J:   You are saying conventional estoppel.  You seem to be referring to promissory estoppel which might lead to a contract.  Are we here not concerned with estoppel by convention which has regard to an assumed state of affairs which the parties have developed between themselves in their dealings with each other?

MR LIVESEY:   With great respect, I am content to accept your Honour’s approach to the taxonomy of – it is the common law variety of estoppel.

KIEFEL J:   Whether or not there was an estoppel by convention in this case is the central plank of your application, is it not?

MR LIVESEY:   That is so, your Honour.

KIEFEL J:   Is the point simply whether or not the finding was really one of an assumed state of law – of a legal quality to the parties’ actions – is that really the point?

MR LIVESEY:   That is the extent the essential criticism which is made on the basis that the Chief Justice, with respect, declined to literally follow the decision in Con-Stan Industries.

HAYNE J:   Do you accept that an estoppel precluding a party from denying it is bound by an agreement is a common place?

MR LIVESEY:   The difficulty here, with great respect, your Honour, is that the estoppel applied in a situation which is all to common, namely, that there was an effected termination of the contracts.  What followed was a finding based on confused dealings between the parties and the matters which have been raised about that not only extend to whether Con‑Stan Industries should still be followed, but also the absence of any mutuality.  There was no mutual adoption by the parties clearly and unequivocally, to borrow from the language of Justice McPherson in the Queensland Independent Wholesalers Case which was consistent with the parties mutually adopting the very same thing. 

HAYNE J:   But that is a submission about the particular facts of the case.  The submission, as I understood it, from the written arguments which you sought to propound was that the world is to be divided into estoppels of law and estoppels of fact and that this estoppel was of the former kind and beyond the pale. 

MR LIVESEY:   Yes, your Honour, but it arises in this way, which is an important point in my submission, that the estoppel, whatever it might be characterised as, has been used after the termination of valid agreements and has been used to resurrect a contractual relationship. 

KIEFEL J:   That is its result.  Do you not have to attack the challenge, the finding that the facts gave rise to an estoppel by convention rather than point to the result that follows from the estoppel because if an estoppel is found, the consequences are not really the issue.  Do you not really have to challenge the Chief Justice’s finding at paragraph 48 on special leave book 48 that the existence of a contract, being the assumed state of affairs between the parties, whilst in a sense may be said to be a matter of law, is also a matter of fact.

MR LIVESEY:   Yes.

KIEFEL J:   That is the fact upon which the estoppel by convention was founded.

MR LIVESEY:   Your Honour, if the matter is to be characterised as one of fact, a statement of existing of fact would not have assisted Mr Birdseye.  Mr Birdseye’s reliance was in fact on a statement predicated on what might occur in the future at the time when settlement for the contracts came, namely, at that future date the notices of termination would not be relied upon by the applicant.  That is a matter which goes to the future.  It is a matter which is akin to a promise and it is a matter which has been hitherto not found to come within conventional estoppel or estoppel by convention.  It is a matter which is more naturally seen as coming within the law of contract or equitable or proprietary estoppel.

That is the difficulty, with respect, to the decision made in this case, that it uses conventional estoppel in a new way, a broader way, than has traditionally been the position and it does so by ignoring as a first step the distinction drawn in Con‑Stan Industries and as a second step the necessity to identify an existing matter, ordinarily an existing statement of fact.  It ought not be overlooked that in this case what occurred is that the parties on the basis of the assumption did not enter into any contract relations.  There was no consensus.

They did not conclude anything and they did not agree about anything.  They were in dispute following September 2003 and yet it is on the basis of that dispute that the court has found that there was a conventional estoppel which precluded resiling from the notices of termination, precluded rejecting the notion that there was still effective and enforceable contracts on foot.  Those matters take the case well beyond the traditional bounds of estoppel by a convention, beyond the bounds of the common law estoppel as it is normally understood. 

If I might deal with two submissions.  The first relates to the decision in Con‑Stan Industries.  It is submitted that, strictly applied, the decision in Con‑Stan Industries required the conclusion that any assumption made is one of law and therefore the finding of estoppel by convention is not open.  The learned Chief Justice at application book 50, paragraph 52 said that “If the decision in Con‑Stan is to be taken literally”, then the earlier conclusion he expressed was wrong and it was for this Court and not for the Full Court to decide whether or not what was “said in Con‑Stan is to be modified”.  With respect, that is the wrong approach.  The correct approach was that the decision in Con‑Stan ought to be followed unless and until this Court said otherwise. 

There have been other decisions in other intermediate appellate courts where Con‑Stan Industries has not been followed, seemingly on the basis of following what was said by the Court in Verwayen’s Case.  Examples include the decision by the New South Wales Court of Appeal in Eslea Holdings in a decision which was described by Mr Bennett as judicial insubordination.  Justice McHugh dissented in that case and following the traditional approach to estoppel by convention rejected estoppel by convention.

Likewise, in Riseda’s Case the Victoria Court of Appeal said that the decision in Con‑Stan was so plainly inconvenient it cast doubt on whether it is indeed the law.  Then more recently in Equuscorp the Victorian Court of Appeal again doubted whether estoppel by convention was limited to matters of fact.  Of course, in Agricultural and Rural Finance this Court described the evident danger in divorcing what was said in Verwayen’s Case from its context and attempting to apply it in the radically different context of contractual relations.  So it is submitted that it is appropriate that this Court clearly state whether an early decision of this Court should still be followed.

My second submission, if Con-Stan should no longer be followed, this case provides a suitable vehicle to determine the elements of conventional estoppel.  In the aftermath of Verwayen’s Case, intermediate appellate courts have been confused as to the elements of estoppel by convention.  Examples include the decision of the New South Wales Court of Appeal in Roche where it was assumed that estoppel applied not only to facts but also rights, but the detriment or disadvantage element was determined having regard to Verwayen’s Case, and the court speculated as to whether the minimum equity test applied.  Likewise, in Equuscorp the Victorian Court of Appeal decided the issue of detriment by reference to minimum equity in Verwayen.

It is submitted that the majority in this case recognised binding contracts on a state of affairs which is very common in this country, namely, that the parties brought their dealings to an end in law but because of confusion, incorrect legal advice and disagreement continued to deal with one another.  It is submitted that that is an unsatisfactory basis to find the existence of an estoppel by convention.  Two illustrations will suffice.

The majority in this case did not identify conduct, even if one has regard to the passage your Honour Justice Kiefel referred me to a moment ago at application book 48 which was clearly if not unequivocally

identifying the assumption put forward as the conventional basis of relations.  These parties were in dispute about such basic things as the dates for settlement.

Second, the majority adopted what was in truth an illusory detriment requirement.  Detriment can be more readily seen where the assumption made by the parties results in a binding agreement or the actual exercise of legal rights, but here the Chief Justice, although he did refer to Thompson v Palmer and other decisions of Justice Dixon, at application book page 51, the last few lines before point 10 on the page, merely said that it was:

not easy to see why either one of them should thereafter be permitted to resile from the common assumption –

That comes very close, if not exactly the same as, requiring enforcement of a voluntary promise.  There is nothing there which identifies the relevant detriment which might be sustained by the parties sufficient to warrant the invocation of estoppel by convention.  Of course, insofar as the Chief Justice referred to payments made into a trust account, they were matters which could be repaid.  Insofar as his Honour referred to litigation, that is to say, these proceedings, these proceedings were only launched after the applicant had made clear for a second time that the notice of termination was going to be relied upon and that is quite different, in my submission, from the situation in Verwayen’s Case where the sailors commenced their actions only at a time when the Commonwealth had not made its position clear about whether it would plead the limitation of actions.

In my submission, the Chief Justice in that passage reveals that a wrong approach to the question of detriment has been taken.  This is not a case where there has been a subsequent binding contract and where one can see that a change of position is necessarily detrimental.  It is submitted that in those circumstances it is necessary that this Court identify the elements and scope of conventional estoppel in a way which ensures coherence with contract and with the other varieties of estoppel.  If the Court pleases.

HAYNE J:   Yes, thank you, Mr Livesey.  We will not trouble you, Mr Wells.

This application concerns contracts for the sale of land in respect of which orders for specific performance have been made.  Those orders were upheld on appeal.  The Full Court of the Supreme Court of South Australia held that, despite an attempt to terminate the contracts, the parties thereafter conducted themselves on the basis that the contracts continued in existence.  That assumption was held to found an estoppel by convention.

No sufficient reason is shown to doubt the correctness of the court’s decision in that respect or concerning the balance of the grounds for special leave.  Those other grounds do not raise any question of law or principle such as would warrant a grant of special leave to appeal.  Special leave is accordingly refused.  It must be refused with costs.

MR LIVESEY:   May it please the Court.

AT 1.01 PM THE MATTER WAS CONCLUDED