Waterhouse Jnr & Anor v Unilever Australia Limited

The applicants, John Knight Waterhouse Jnr and Joracilla Manufacturing Pty Limited, sought special leave to appeal to the High Court of Australia from a decision of the Court of Appeal. The dispute concerned the interpretation of a letter agreement, specifically the meaning of the expression "agreed net asset/liability value" which was intended to define the consideration for a complex commercial transaction.

The central legal issues before the High Court were whether the trial judge and the Court of Appeal had correctly determined the intention of the parties to create legal relations, and whether the expression "agreed net asset/liability value" was sufficiently certain to be enforceable. The applicants argued that once an intention to create legal relations was established, a court should not readily find such a term to be uncertain, except in exceptional circumstances.

The trial judge had dismissed the claim on the primary ground that there was no intention to create legal relations. The majority of the Court of Appeal, while finding an intention to create legal relations, held that the expression "agreed net asset/liability value" lacked sufficient certainty in the circumstances. This was further complicated by an ancillary issue of fact regarding whether the parties had reached an antecedent agreement on the value of the net assets and liabilities. The applicants contended that the approach taken by the courts below was inconsistent with the principles established in cases such as *Hall v Busst*, and that a preferred approach, as seen in American jurisprudence, would uphold the certainty of such terms once an intention to be bound was found.