Widin as Trustee of the bankrupt Estate of Wardle v Australian and New Zealand Banking Group Limited

[1991] HCATrans 121

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IN THE HIGH COURT OF AUSTRALIA	*
Office of the Registry

Sydney No Sl38 of 1990

B e t w e e n -

WILLIAM JOHN WIDIN as Trustee

of the bankrupt Estate of

ANTHONY JAMES WARDLE

Applicant

and

AUSTRALIAN AND NEW ZEALAND

BANKING GROUP LIMITED

Respondent

Application for special leave

to appeal

MASON CJ DAWSON J GAUDRON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 10 MAY 1991, AT 11.12 AM

Copyright in the High Court of Australia

Widin 1 10/5/91

MR W.F. LIBLING: If the Court pleases, I appear with my

friend, MR M.J. STEVENS, for the applicant.

(instructed by Abbott Tout Russell Kennedy)

MR c.s.c. SHELLER, OC: If the Court pleases, I appear with

my learned friend, MR H.K. INSALL, for the

respondent. (instructed by Minter Ellison)

MASON CJ: Yes, Mr Libling.

MR LIBLING: If the Court pleases, if I could hand up to the

Court four copies of the materials book and also four copies of our submissions in the matter.

MASON CJ: What is in this book, the large book, that has

been handed up, Mr Libling?

MR LIBLING: All the cases that are referred to in the

submissions, Your Honour.

MASON CJ: It is an application for special leave. It is

not the hearing of the appeal.

MR LIBLING:  I am aware of that, Your Honour. If Your

Honours please, the facts of this matter are very

brief - - -

MASON CJ:  We might have a look at your written submissions

first. They may throw some light on your argument.

MR LIBLING: Yes, Your Honour.

MASON CJ: Yes. Now, we are aware of the facts of the

matter. In the first instance, you ought to direct

your submissions to persuading us that it is a case

that has those characteristics that justify the

grant of special leave.

MR LIBLING: Yes, Your Honour. Well, in that connection

there are three submissions to be made to

Your Honours. Firstly, the Full Court said that	the granting of a bank bill facility and all that	is done pursuant to a bank bill facility, that is
the endorsing of the bills, the discounting of the bills in the market, and the crediting of a bank
account is in a relevant way different from a mere
advance of moneys and that therefore the granting of a bank bill facility may - and in this case,
there being nothing special about this case,
amounts to part performance.

MASON CJ:  Now, is that accurate? I thought that the

Full Court held that it was not the mere granting of the bank bill facility, but it was the taking, also, of the mortgage instruments in blank but

executed by one party and the taking of the

authority to complete as well.

Widin 2 10/5/91

MR LIBLING: Yes, Your Honour. That is referred to in the

written submissions as being the matters to which

the Full Court looked but, in our submission, that

is contrary to authority, being Chaproniere v

Lambert, because in that case it was held that if

the documents do not satisfy the Statute of Frauds then they are put to one side and one looks at the

conduct that is said to justify part performance,

in that case, the conduct was mere payment of

money. The documents were receipt for that payment

of money but they were not sufficient.

Now, in our case, the documents had no

reference, on the face of it, to the bank bill

facility and had no reference at all to the

mortgage of the specific property which was said to

have been mortgaged orally, that is, the documents

were wholly in blank. There was no title

particulars or any other particulars in the

documents, there was just the Bank's standard

printed form with nothing filled in except for the

bankrupt's signature.

In those circumstances, we say two things:

firstly, that documents cannot be looked at as part

of part performance and, secondly, that even if

they can be looked at, they take the matter no

further.

GAUDRON J:  What is the matter? I ask that, Mr Libling,

because in this case there was a mortgage. That is

not in dispute. The question must be from when did

it take effect and that, in turn, must in part

depend on the intention of the parties. This case

seems to have gone off on a quite different

direction, applying all those tests that would be
relevant to whether or not there was a relevant

legal relationship rather than the date at which it

came about.

MR LIBLING: Well, Your Honour, the date is, of course,

crucial for the purpose of the Bankruptcy Act.

GAUDRON J: Yes, but that did not seem to be the issue.

MR LIBLING: With respect, Your Honour, one has to test the

matter as at 5 January 1983, which is the date at

which the Bank says the mortgage came into being

and say, "On that date, was there a mortgage?"

Admittedly, there was a mortgage on 23 September

1983 but that does not assist the respondent. So,

one has to ask, "Was there a mortgage on

5 January 1983?", and, of course, "Was there a

mortgage on that date which satisfies the tests in

the Conveyancing Act, ie, that was sufficiently

evidenced in writing or not being so evidenced, was

Widin 3 10/5/91

so part-performed on that date as to establish that

there was a mortgage on that date?"

Now, as of the January date, there was no

mortgage which is evidenced in writing and, in our submission, there was inadequate part performance.

Now, it is a matter of vital importance to the

banking community whether the mere grant of a bill

facility, something that is done every day in the

normal course of business in this community -

whether that alone, together with documents which

do not satisfy the Statute of Frauds and which are
not referable, on their face, to that bill

facility, overcomes the Conveyancing Act because,

if it does, that is a novel proposition of great

significance to the business operation.

MASON CJ:  Was the bill facility drawn upon on 5 January?

MR LIBLING: If not on the 5th, immediately thereafter,

Your Honour. I think it was on the 6th.

MASON CJ:  On the 6th?

MR LIBLING: Yes, Your Honour. Now, the importance, if I

may address that, of this point lies in that: in

the commonness of the bill facility and how
commonly it is granted in the financial system of

this country and the novelty of the proposition

that the grant of a bill facility, that is, a

manner of payment of money can amount to part

performance, and the overruling, in our submission

wrongly, of the decision in Chaproniere v Lambert

which has stood since 1917.

MASON CJ:  Now, where do we find that decision in the

authorities you have handed up?

MR LIBLING:  The one at pages 124 to 130, Your Honour.

MASON CJ:	Now, to what page in the judgment do you direct
us?

MR LIBLING: There is no specific passage in the judgment we

rely on. We rely on the facts of the decision

which concerned the alleged grant of a lease

together with an option to purchase. That was by

way of an oral agreement. Then there was a payment

of some 25 pounds, being a part-payment of a

quarters rent and a receipt which said, "Payment of

rent, 25 pounds". That receipt was said not to

satisfy the Statute of Frauds and then the question

was whether the payment of money satisfies the

Statute of Frauds and it was held not to.

GAUDRON J: Did the lease thereafter come into effect or

take effect?

Widin 4 10/5/91

MR LIBLING: Well, it could not, Your Honour, it was

not - - -

GAUDRON J:	No.
MR LIBLING:	No.

GAUDRON J: That is the difference between this case and the

case to which you refer.	The mortgage did,
undoubtedly, take effect.

MR LIBLING: Well, with respect, Your Honour, if it took

effect in September it did not take effect against

us.

GAUDRON J:  I know what you say about that but there may

well be reason to think that the position is quite

different when something does take effect and the

only question is at what date it took effect.

MR LIBLING: That is so, Your Honour. It could be different

but it is not different by way of the doctrine of

part performance because the filling in of the

mortgage document with the title particulars and

the execution by the respondent Bank cannot be said
to be part performance. Usually the acts of part

performance one points to are the acts that make it

inequitable for the other side to deny that the

agreement took place, some alteration of the

lender's, in this case, position which makes it

unfair for us to say that there was no mortgage.

So, with respect, yes, this is a clear case

where we all know that there must have been a

mortgage but the issue as to when it takes effect

is a vital one.

DAWSON J:  It is not only a case where there must have been

a mortgage but there certainly was an intention

that there should be a mortgage to secure a

particular advance.

MR LIBLING: Well, it is an all-moneys mortgage,

Your Honour.

DAWSON J: Yes.

MR LIBLING:  It does not matter whether it secures that

advance or some other advance.

DAWSON J:  And the advance was made in January.

MR LIBLING:  One of the advances, yes. The bank bill

facility was granted in January, Your Honour.

There were other dealings between the Bank and the

bankrupt and this is an all-moneys mortgage. But,

yes, the advance was made the day after the

Widin 5 10/5/91

bankrupt executes the mortgage in blank. But that

does not detract, in our submission, from the

importance to the general commercial community of
the question of whether the granting of a bank bill
facility together with, on the face of it, some

unrelated documents and documents which do not

satisfy the Statute of Frauds can be said to be

part performance and, in our submission, that is a
point of great importance and the Full Court has

departed from the law as it has always been

understood, namely, that the payment of money does

not, as a general rule, amount to part performance

and cannot, as a general rule, amount to part

performance.

Now, turning to the estoppel point. The

development of that doctrine is one of great

significance.

MASON CJ: But this is just a throw-away line at the end of

the judgment, is it not, Mr Libling?

MR LIBLING: Well, it may be but it is a little bit more

than a throw-away line. It occupied a whole

paragraph and, with respect - - -

MASON CJ: Well, it is a throw-away paragraph.

MR LIBLING: Well, if it could only be thrown away and

disregarded, all would be well but

Mr Justice Hill's judgment was agreed to by
Mr Justice Foster, Your Honour, and we are now left

with the proposition that there is, in our

submission, a conflation of two doctrines which
ought not to be mixed because the doctrine of
estoppel depends on what was done by the party not

relying on the doctrine, that is, I say, "You are

estopped from denying this because you said this to

me" or "you did that", whereas, the doctrine of

part performance depends on what was done by the

party who is relying on the doctrine of part

performance. It is a clear error of law, in our

submission; one that influenced the judgment of the

court below and one which, if left uncorrected, may

well influence the course of the law into a wrong

channel, if I may put it that way and, as such, we

submit, it is a matter of importance.

Now, the Stamps Act arises in two ways: one

is a conventional argument on illegality and we say

that in the course of their proofs, in the course

of the respondent's case, it had to, of necessity,

disclose its illegal act. It tendered a document

for stamping dated 23 September where, on its case,

that document was first executed within the meaning

of section 2 6 of the Stamps Act on 5 January. No.w,

section 26 - - -

Widin 6 10/5/91

MASON CJ: But the document, as such, was not an operative

document at that time, was it? It contained

nothing in it.

MR LIBLING:  No, Your Honour, but they cannot have it both

ways. Section 26 of the Stamps Act does not depend

on whether a document was operable but depends on

when it was first executed. Now, it was

undoubtedly first executed by the bankrupt on

5 January 1983.

MASON CJ: In terms of having his signature appended to it.

MR LIBLING: Well, section 3 defines "execution" as being

just that, the signing of a document.

MASON CJ: But what was the document?

MR LIBLING:  The form of mortgage.

MASON CJ: But it was only a form of mortgage, was it not?

MR LIBLING: Yes, Your Honour, but it is the respondent's

case to say that form of a mortgage amounted to, in

equity, to a mortgage as of 5 January 1983. It is

our case that it was in September.

Now, the way the argument runs is this: we

say that on 5 January 1983 or, indeed, in

December 1982, the bankrupt offered the Bank a

mortgage and the Bank chose to take the mortgage in

September 1983.

GAUDRON J: But that is a factual case that seems to have

got lost long ago.

MR LIBLING: Yes, Your Honour, I do not dispute that but the

matter becomes very relevant for the purposes of

the Stamps Act because if - - -

GAUDRON J: But you did not run the case on the basis of the

facts, really, in the Federal Court, you just ran

it on the application of the doctrine of part

performance and these other matters.

MR LIBLING: Well, with respect, Your Honour, we did make

submissions on the Stamp Duties Act in the

Full Court but they are not referred to in the

judgment, but they were in the submissions, and it

is certainly in the transcript of the proceedings

before Mr Justice Davies that the stamp duties

point was taken in the submissions.

GAUDRON J:	Does the Stamp Duties Act still preclude the tender of documents? It was stamped.	Of course.
Widin	7	10/5/91

MR LIBLING: It was stamped. It is a question of whether it

was stamped correctly and it is a question of
whether, in the course of their case the respondent

reveals any illegality. If I may just pursue - - -

GAUDRON J: With what consequence though?

MR LIBLING: With the consequence that they cannot, in

equity, rely on their own illegality as assisting

them. The court will lend them no assistance and

therefore the court should not have held the

mortgage to have been valid on 5 January.

GAUDRON J:  I understand all that but you still do come back

to the case where you have to find out whether or

not things happened on certain dates and what

happened and you have tried, it seems to me, to

fill all these questions in or to answer these
questions by application of legal principles rather
than by ascertaining the facts and the intentions

of the parties.

MR LIBLING: But, if Your Honour pleases, the findings are

there.	We have lost, as Your Honour put it, on the
question of fact.	It now cannot be disputed by us

that as a matter of fact there was agreement by the

parties on or about 5 January 1983 that this

mortgage be granted. Now, if that is the case

then, under section 26 of the Stamp Duties Act,
that mortgage became stampable then and under

section 25 of the Stamp Duties Act, if it was not

stamped within two months, additional duty was to

be levied and under section 129B it was an offence

to tell the commissioner that the mortgage came

into being on 23 September.

It is because we have lost the factual issue -

and we must accept that - that these points of law

arise.

GAUDRON J: But I still do not follow. Are you saying the

facts should not have been found that way because

of the stamp duties consideration?

MR LIBLING:  No. I am saying that the fact, having been

found that way, the court should not have granted

relief to the respondent -

GAUDRON J:  What relief did it - it should deny it the legal

consequences of the factual situation. Is that

what you say?

MR LIBLING: Yes, Your Honour.

GAUDRON J: In that case, what, it should have been that

their appeal was dismissed?

Widin 8 10/5/91

MR LIBLING: Dismissed. It is not a - - -

GAUDRON J:  Or the appeal was incompetent, perhaps. I mean,

is there authority for this?

MR LIBLING: No. There is ample authority, Your Honour, for

the proposition that if, in the course of your

proofs, you rely on an act which is illegal or

otherwise -

GAUDRON J: But that goes to the admissibility of the

evidence. You might, perhaps, have tried to keep

out the mortgage document.

MR LIBLING: No, Your Honour, with respect. It does not go

to admissibility of evidence but it goes to success

or not in the case. The position is that if a

person - in the Great Berlin Steamboat Company, an

1890 decision - I am sorry, I cannot give

Your Honours a full citation - but the facts of

that case were that a man wanting to promote a

company put moneys on trust with the company in

order to make its bank account look better for any

prospective inquiries. He then sued on the trust

and said, "This is my money" in competition with

the creditors, and failed because that, in the

course of his proofs, he necessarily disclosed that

his actions were illegal and improper.

So it is here. In the course of their proofs,

the respondent had to necessarily disclose that it

misinformed the Commissioner of Stamp Duties and

committed an offence under section 129B of the

Stamp Duties Act. That is the common penalty, if I

may put it that way, for any legality, that you

cannot rely on it even though your cause of action

would otherwise succeed.	Your defence would
otherwise succeed.
Now, the other way in which the Stamp Duties Act arises is on a much broader point of policy.

Now, as a matter of public policy, we submit that a

court will not allow a party to maintain a position

which is a fraud upon the law. The leading

authority of that is an English decision of

Gascoigne v Gascoigne, (1917) 1 KB 223, and the particular passage we would rely on is at page 227, and all that is to be found at page 210 of book

that Your Honours have.

MASON CJ: Yes.

MR LIBLING:	Now, it is of vital importance whether a person can maintain one position, vis-a-vis, a taxing
authority, in this case, say, to the stamp duties office. This mortgage came into being on
23 September and therefore a smaller amount of tax

Widin 9 10/5/91

is due, and then come to a court and say, "Well,

no, actually this mortgage came into being on

5 January and even though I evaded a larger amount

of tax by saying something else successfully to the

Commissioner of Stamp Duties, I am at liberty to

disappoint" - using the language of Gascoigne v

Gascoigne - "the provision of the legislature."

Now, the High Court authority on this point is

Martin v Martin. It is in similar vein but it does

not go as far as Gascoigne v Gascoigne, and the

passage in the joint judgment of

Chief Justice Dixon, Mr Justices McTiernan,

Fullagar and Windeyer that I would rely on appears

at page 220 in the materials book. The case itself

is a 1959 decision of this Court, 110 CLR 297.

Now, in our submission, it is vital that, in

modern society, a person should not be in a

position to say one thing to the Commissioner of

Taxation or the Stamp Duties Commissioner and then

come to a court, invoke its equitable jurisdiction

on the basis of completely contrary facts. These

are our submissions.

MASON CJ: Yes, thank you, Mr Libling. Yes, Mr Sheller?

MR SHELLER: May I hand up to Your Honours an outline of

argument?

MASON CJ: Thank you.

MR SHELLER:	Your Honours, relevantly to this part of the appeal, the question was whether or not there was
created orally an equitable mortgage in
January 1983.  The way in which it was sought to
defeat that was by saying that such an oral contract could not be specifically performed
because of the provisions of the Statutes of
Frauds.  Your Honours, the answer to that was that
there was part performance.

As we say in our written submission, the

Full Court, in the judgment of Mr Justice Hill, accurately stated the test in its orthodox terms

and applied it and, Your Honours, when one comes to

acts of part performance which we have

page 58 of the application book one finds various

listed in paragraph 2 of our written submission and

amongst those, of course, if it matters, in

particular, is that this bill line facility

involved the bankrupt giving to the Bank a
negotiable instrument which it could take out into

the market and which it did take out into the

market and, either by virtue of endorsement or

Widin 10 10/5/91

acceptance, raised money on it and money was paid

to the bankrupt by way of loan.

Now, Your Honours, that, of course - the acts

have to be looked at in the circumstances of the

case and that led His Honour, at page 59 to say, we

would submit, dealing with the factual situation,

that:

The acts of the bank, seen in this context,

lead to the conclusion that they are

unequivocally -

and so on and he there states the test.

MASON CJ: But, stopping there, Mr Sheller, in order to

constitute acts of part performance, do the acts

not have to be acts by way of performance of the

party's obligations under the conduct?

MR SHELLER:  No, Your Honour, it is sufficient, we would

submit, that they be consistent with the contract,

not contrary to it. Certainly it does not have to

be an obligation under the contract but, in any

event, Your Honour, we would respectfully submit

that these are acts that are in performance.

MASON CJ: Well, have a look at (b), for example, and (c).

Are they acts that are in performance of

obligations cast upon the Bank by the contract?

MR SHELLER:  Not obligations, Your Honour, but they are

consistent with such a contract. Your Honour, we

would respectfully submit that - and this is

referred to in Francis's case which we give Your Honours the reference - that taking of

documents as part of a contractual arrangement,

even if it be not an obligation to do so, is

something that can be taken into account as an act

of part performance.

MASON CJ: Could you take us to Francis's case.
MR SHELLER:	I do not know whether it is in the bundle that

has been handed up. I hand up to Your Honours

copies of the case. It is reported, Your Honours,

in (1952) VLR 321. The particular passage,

Your Honours, that I wanted to invite attention to is found at page 339 at about point 2 on the page.

Your Honours will see that about five lines down,

it is said:

the decisions relating to equitable mortgages

by deposit show that, in the case of a parol

agreement to grant a legal mortgage of land,

delivery of possession of the title deeds is

ordinarily a sufficient answer to a plea of

Widin 11 10/5/91

the Statute, though there be no act on the

part of the mortgagee other than this

acceptance of delivery of the deeds.

Now, Your Honours, here, if one accepts for present

purposes that one is dealing with an equitable

mortgage in January 1983, we would say that,

_similarly, the handing over to the Bank of a blank

form, together with an authority to complete, is an

act that is consistent with, although it may not be

a matter of obligation, such a contract.

MASON CJ:  I see in the judgment on page 339,

Mr Justice Smith goes on to consider in detail the

objection that equitable deposit of title deeds

does not rest on part performance and proceeds to

answer that objection.

MR SHELLER:  Yes. Your Honours, what we would submit here

is that one is ultimately concerned with acts and

one is concerned with the very question that was

posed, we would submit correctly, in the

Full Court, namely, whether the acts relied upon were unequivocally reparable to some contract of a general nature of that alleged. Your Honours, we
would submit that His Honour, having reviewed the

facts as a matter of fact, came to the conclusion

that they were and we would submit that there is

simply no contentious point of law involved.

MASON CJ:  The Court need not trouble you further,

Mr Sheller.

MR SHELLER: If Your Honours please.

MASON CJ:	Do you wish to reply, Mr Libling?
MR LIBLING:	No, Your Honour.

MASON CJ:  The Court is not persuaded that the applicant's

prospects of success in the proposed appeal are

sufficiently substantial to warrant the grant of

special leave to appeal.	The application is
therefore refused.

MR LIBLING:	As Your Honour pleases.
MR SHELLER:	Would Your Honour order costs, please, if

Your Honours please?

MASON CJ:  Yes. You do not oppose that, Mr Libling?

MR LIBLING:	No, Your Honour.
MASON CJ:	The application is refused with costs.

AT 11.51 AM THE MATTER WAS ADJOURNED SINE DIE

Widin 12 10/5/91