Windrum v Rejilo Pty Limited

[1988] HCATrans 238

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S110 of 1988

B e t w e e n -

GRAHAM MELROSE WINDRUM

Applicant

and

REJILO PTY LIMITED

First Respondent

and

D.K. & J.A. HOLDINGS PTY

LIMITED

Second Respondent

Application for special leave

to appeal

Windrum(2)

WILSON J
DAWSON J

TOOHEY J

TRANSCRIPT OF PROCEEDINGS

AT 'SYDNEY ON FRIDAY, 14 OCTOBER 1988, AT 11.43 AM

Copyright in the High Court of Australia

S1T8/l/PLC 1 14/10/88

MR P.R. GRAHAM, QC:  May it please the Court, in this matter

I appear with my learned friend, MR R.R.I. HARPER, for the applicant. (instructed by Klinger Johnstone)

MR D.P.F. OFFICER, ~C:  May it please the Court, in this matter

I appear wit my learned friends, MR P. BIGGINS and

MR-G. McILWAINE, for the first respondent. (instructed

by Walker Beer & Associates)

MR M.D. BROUN, QC:  And if Your Honours please, I appear with

MR A.J. ENRIGHT for the second respondent. (instructed

by Hills)

MR GRAHAM: If the Court pleases, may I hand up four copies

of an outline of part of the argument if that would

assist the Court with copies for my learned friends.

If the Court pleases, this is a matter in which

the application:for special leave is dated 13 September.

We move on the affidavit of Elizabeth Jess Johnstone

sworn 10 October 1988. The draft notice of appeal is

set out at pages 81 to 98.

WILSON J: Yes, the Court has read the papers, Mr Graham, and

convenient aide memoire. I see the first paragraphs of your outline is just a

MR GRAHAM: Well, yes, Your Honour. If I could take the

Court, very briefly, through the material there and

remind the Court that we are concerned here with a

property, Kiaka Station, which is situated at Dungog or
near Dungog in the State of New South Wales which is not

is approximately 300 kilometres from Sydney and the vendor's solicitor was at Gunnedah, 500 kilometres away.

far from the town of Gloucester where the agent· is

located. The vendor's solicitor was at Gunnedah.

The property is near Dungog, 300 kilometres away. The

purchaser's solicitor, the purchaser for whom I act, is

located in Chatswood, a suburb of Sydney, obviously

several hundred kilometres away from the vendor's

solicitor.

The circumstances were, as the Court knows, that the parties reached the final form of the agreement

which they desired to enter into at about mid-day on

the last day which had been fixed by the vendor for

entry into the contract. The circumstances were such

then that the problem faced the parties as to how
they could ½ring into existence the contract that day
before 5 pm in the available five hours and a procedure
was, of course, set in train. The deposit was already

held by the agent at Gloucester and he was able to, as he

did, convert it into a deposit under the contract

and cause it to be invested with the First National

Limited, part of the National Bank, as trustee for the

vendor and the purchaser, and notice of that fact was

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given to the vendor's solicitor about three hours

before the 5 pm deadline.

So far as making of the contract was concerned,

the purchaser's solicitor sent the signed copy of the

contract as requested to the vendor's solicitor's

~dney agent at about 4.34 pm in the afternoon and the

remaining issue was whether or not there was some

form of required notification of the receipt of the

contract by the vendor's solicitor's Sydney agents.

If I may move to paragraph 25 of the document

that I have just handed up, on page 6, in the

applicant's respectful submission there are, in respect

of an alleged oral contract, a series of necessary

steps in the process of legal analysis which were

not properly addressed by the learned trial judge or

the Court of Appeal. These are: firstly, a

determination as to what were the words spoken;

secondly, a determination as to whether such words

were intended to be promissory in their effect,

applying the "intelligent bystander" test that

Chief Justice Gibbs referred to in the HOSPITAL PRODUCTS'

case; thirdly, a determination as to whether by the

words the parties had exchanged what Mr Justice Mahoney

said in EYRE GREAT LAKES to be congruent promises or

were they ad idem and, fourthly, a determination of

the proper legal abstraction in terms of the

parties to the agreement and the obligations assumed

or imposed, such determination to be made from the

terms of the conversation as found and the conduct

of the parties.

WILSON J: Mr Graham, could I ask you: on what basis do you

put the application for special leave? Everything that

you have said so far, and the outline, seems to make

very clear indeed that this application is intimately

involved with questions of disputed fact and nothing

more. No matter of general importance appears to

emerge in anything either that you have said or that

appears in the outline.

MR TOOHEY:  Mr Graham, before you respond to the presiding

Judge, you might also, in answering, have regard to

the draft notice of appeal itself which seems, for the

most part, designed to argue that the Court of Appeal

simply erred in its failure to find that the trial

judge erred in his view of the facts.

MR GRAHAM:  Yes.

WILSON J: It is rather an assault, is it not?

MR GRAHAM: May I seek to address those matters. Firstly, to

answer the learned presiding Judge's question, we would

respectfully submit that this is a case not dissimilar

from that of BRAUND V HENNING in which the Court

granted special leave to appeal on 11 December 1987, a

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case where it was put to the Court that the interests
of the administration of justice required consideration

of the judgment in the court below because the Full Court

of the State of Queensland had treated the appellants in

a case which was not in accordance with law and was a

substantial departure sufficiently substantial to merit

---- the intervention of the Court.

WILSON J:  But that was a case where the Court of Appeal, the

Full Court of the Supreme Court of Queensland, reversed

the findings of the trial judge who had seen the witnesses,

of course.

MR GRAHAM: Well, may I put it this way: this

case begs the question whether there were findings
of fact favourable to my client made by the trial judge
albeit not spelt out. We would wish to argue that on a
proper construction of the trial judge's judgment

he, in fact, found favourably to my clients on the terms

of the relevant conversation concerning communication

of the fact of receipt of the signed contract.

The Court of Appeal, in effect, sought to construe

the trial judge's findings and wrongly concluded that, as a matter of onus of proof, His Honour had not been

satisfied that conversation had taken place. So that

we have this, if I may say so with respect, a conflict

between the trial judge and the Court of Appeal, the

trial judge says, "I have found an agreement.	I have
found that agreement subject to certain conditions.	I

am proceeding to construe one of the conditions which I

have found" and the Appeal Court then says, "We don't

think His Honour found the conversation out of which

the conditions arose which His Honour was seeking to

construe." In our respectful submission, it would be

wrong in the interests of the administration of justice

for the decision of the Court of Appeal to stand where
the court has attempted to construe the findings of the

were undisputed facts in relation to this particular trial judge and plainly disregarded the fact that there

aspect of the matter and the trial judge was merely seeking to construe the undisputed element of the

conversation.

If one looks at page 19 in the judgment of the

to these parts of the learned trial judge's judgment.	learned trial judge - I am sorry, may I take the Court
Up to page 15 he has dealt with the undisputed facts
and with the disputed facts and where there were areas
of dispute he has found favourably to the applicant for
speci~l leave. He then goes on to say, page 15, the
last line:

The next matter to be considered is the legal

effect of this conversation.

The Court of Appeal, I would remind the Court, took the

view that His Honour was not satisfied that the

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conversation had taken place. But we then go on to the

question of construction where His Honour states the

submissions. At page 16 he says:

Mr Graham submitted -

.and if I could then go on to line 6 -

He submitted that the words should not be construed as imposing a requirement or condition that the purchaser's solicitors

ensure that -

the agent -

made the telephone call, but rather that it was

sufficient if they requested -

them -

to do so.

He then refers to my learned friend, Mr Officer's

submissions on the construction issue and then

Mr Broun's. If I may take the Court to page 16, to

line 20:

Mr Broun submitted that there were four possibilities as to the construction to be put on this conversation.

No question of whether the conversation had taken place.

First, it could be that an agreement was reached upon the mechanics of exchange;

that the agreement laid down conditions

which, if carried out, would commence an

exchange of contracts, which would give

rise to an agreement when the exchange was

completed by the sending of the contract .....

Secondly, Mr Broun submitted, it could

amount to an agreement for the sale of land,

conditional on certain things being done.

Then His. Honour says, at line 9:

In relation to the first two possibilities,

it could be that there were either two or

three conditions to be satisfied, as discussed

earlier -'·

and if I may remind the Court what they were:	(a) was
delivery;	(b) was communication and (c), the third

possibility, was the requirement for a facsimile

to be sent of the back page. His Honour found against

the first respondent that there was no such requirement.

He then says:

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alternatively, the condition could be

rather that the document be delivered .....

and that by some means or another,

Mr Walker be provided with knowledge that

this had happened.

S,o__that what His Honour is there addressing is a possible
construction of the condition and if we go to page 18

His Honour says, at line 19:

At most, I think the conversation amounted

to a promise by the vendor's solicitors
to proceed to exchange contracts, if

certain conditions were complied with.

He then says:

I do not think Mr Walker subjectively

intended to make even this promise, but on

the whole, I consider that this was the

objective effect of the language used in
conversation.

There is no doubt in His Honour's mind as to what the

conversation was. The disadvantage that we are

confronted with and that the Court of Appeal was

confronted with is , regrettably, His Honour did not

spell out the conversation which he had found to have

occurred which he was construing. But it is clear

that what he is there saying is the objective effect
of the language used in the conversation was a promise

to proceed to exchange if certain conditions were

complied with.

He then goes on to deal with the meaning of the conditions. At page 19 in line 2 he deals with whether

or not there was the condition concerning facsimile

copy of a back page and repeats his rejection of it,

saying that was not a condition. He then says, at

line 10 on page 19:

However, the question remains whether the

circumstance that -

the agent -

did not telephone Mr Walker with the -

correct -

information that they had received the contract,
and in fact telephoned him with the wrong

information, prevents the relevant conditions

from having been satisfied.

He then repeats the arguments on the construction of

that particular condition.

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The Plaintiff says in effect that his

solicitors did what was required, by making
the appropriate request; and the fault lay
with the First Defendant's agents in not

carrying it out.

But then I would emphasize what follows:

The Defendants say, in effect, that what was required was that the Plaintiff's

solicitors "arrange" -

and may I draw attention of the Court to the quoted

word "arrange" -

for this to be done -

and then their submission continues:

that is ensure that it be done.

Now, with great respect, the word "arrange" is the critical word in the conversation which the Court of

Appeal said, as a matter of onus His Honour was not

satisfied had been used. Our case is that it was an

undisputed fact. His Honour, at pages 7 and 8 - the

bottom of 7 and the top of 8 - stated the area of

dispute. He said at line 18:

The substantial factual dispute in this

case concerns what was said in the two

conversations ..... Mr Klinger claims that

in the last conversation, it was clearly

agreed between them that if a contract,

in the terms agreed, signed by the Plaintiff,

was delivered to Morris Hayes & Edgar by
5pm, and if there was a request for Morris

Hayes & Edgar to telephone Walker Beer &

Associates to advise them of the arrival

of the contract, then the Plaintiff could

treat contracts as having been exchanged.

Mr Walker denies this, claiming in

particular -

one -

exchange was not mentioned.

The words of his affidavit were he did not recollect

that it had been used. Two:

he said in effect that if his requirements

were complied with, the First Defendant
woµld deal with the Plaintiff -

three: in any event there was a requirement for a

facsimile of the back page.

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Now, each of those three areas of dispute were

considered by the trial judge and determined favourably

to the applicant. He rejected Mr Walker on each _of them.

So that, in our respectful submission, what the Court

of Appeal has failed to perceive is - and I must confess

they had a disadvantage in that, regrettably, the trial judge

did not state what the conversation had been but it is

clear that at least so far as the matter was proceeding

before the trial judge, there was no conflict about the
fact that the word "arrange" had been used and Your Honours
will recall that the critical conversation had been sworn

to as having taken place five days after the conversation

and on 12 October, which was no more than 17 days after

the conversation, Mr Walker had sworn an affidavit

which said "agreed", and he then went on to add his

qualification, "but I don't recollect 'exchange'.	I
think I said 'deal' and there was a requirement for

facsimile". But his affidavit said "agreed". So that

the conversation was as sworn five days after the

event:  "Your contract must be with my agents by

5 pm and you should arrange for them to phone me on

receipt of the contract." Klinger:  "So that if I don't

hear from you and providing that the contract is with

your agent by 5 pm, then I can treat the contract as

having been exchanged?" Answer: "Yes". So that in

that conversation the words were, "You should arrange

for them to phone me on receipt of the contract."

Now, Your Honours will appreciate that the learned

trial judge, in trying to construe what was meant by

"arrange",said at the bottom of page 19, line 23:

I find this a difficult question.

And he said:

Certainly, neither solicitor adverted to the

possibility that notwithstanding the making

of a request to the agents -

to ring -

not only would they not telephone Mr Walker with

the -

correct -

information, but also in fact give him the

wrong information.

WILSON J: Mr Graham, can I just ask you this: the difficult

question is the question stated at line 10 on page 19?

MR GRAHAM:  I would think so, Your Honour.

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WILSON J:  That is the difficult question, namely:

the question remains whether the circumstance

that Morris Hayes & Edgar did not telephone

Mr Walker with the information that they had received the contract, and in fact telephoned

him with the wrong information, prevents the

relevant conditions from having been

satisfied.

MR GRAHAM:  Yes, Your Honour.

WILSON J: And it was that question that His Honour answered

after stating the two opposing submissions at line 7

on page 20 that he was not satisfied with your client's

submission that it would be reasonable?

MR GRAHAM: Yes. The analysis we would put is this: His Honour

found, because it was undisputed, that the conversation

had taken place and had included the words "arrange

for them to telephone". He had found that there was a

promise objectively determined that they should proceed

to an exchange of contracts subject to conditions of

which one of them was "arrange for my agents to telephone

on receipt of the signed contract."

WILSON J: And His Honour, in the end result, was unable to

be satisfied that that condition had been complied with

and the onus was on your client.

MR GRAHAM:  Yes. Your Honour, what he found, because it was

formally admitted - it was formally admitted that what

had transpired by way of request was this - the request

was admitted in these terms:  a conversation by

Mrs Oag - there were two of them. They were formally

admitted at page 132 of the transcript, and the words

were these - may I hand up a bundle of documents which

records some passages out of the - may I take Your Honours

to the second-last page of this bundle? May I remind

the Court, I think, at page 132 of the transcript,

there was a formal admission that the facts as stated

in Mrs Oag's affidavit, paragraphs 14 and 15 were

correct. Can I refer the Court in particular to what

she said in her second telephone conversation at 15:

"Shortly after 3 o'clock and after the contract had

been dispatched by courier I again telephoned

Morris Hayes & Edgar and said, 'This is Mrs Oag of

Steven Klinger & Co. I think you were the person

I talked to earlier regarding sending a contract to your

office by way of exchange~---Yes." She said, "The

courier has now left our office. You should expect to

receive the contract at about 4 pm" - it was in fact

received at 4.34 pm. "When the contract is received by

you, would you please advise Walker Beer & Associates

of Gunnedah because it's important that they know that the contract has been received before 5 pm today." It
is the second-last page in the bundle that I have just

handed up to Your Honours. "The male person said, 'Do

what to do. 111 And that was in the context of an earlier not worry, when we receive the contract we will know

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conversation also admitted where she had said, "I'm

sending the contract by courier to your office. As

required by your Gunnedah principals, Walker Beer &

Associates, please ring your principals when ·you

receive the contract. You will find the address and

telephone number in the contract itself."

~-that if I may answer Your Honour Justice Wilson's

questions this way, by saying what His Honour was saying is that that admitted conversation did not satisfy the requirement - the condition to arrange

for the Sydney agent to phone the principal on receipt

by the Sydney agent of the signed copy of the contract.

WILSON J: And therefore the vendor was not bound.

MR GRAHAM:  And therefore the condition had not been satisfied

and the contract did not come into existence or, as signed counterpart did not arrive.

WILSON J: Perhaps we have been at cross-purposes.

The difficulty we were pointing out to you was the

fact that the trial judge had been unable to find

in favour of your client on the satisfaction of the

conditions and the Court of Appeal was of the same

opinion.

MR GRAHAM:  But that is not quite, with respect, right, Your Honour.

What happened was this: the learned trial judge found the

condition; he found the conversation but did not spell it
out except for his one reference to the word "arrange"

on the bottom of page 19 and he construed the condition

in terms of whether it was, as he had adverted to it

back on page - Your Honours will recall, back on page 17

at line 11 he said:

alternatively, the condition could be

rather that the document be delivered -

well, that is element one, and, condition two:

that by some means or another, Mr Walker

be provided with knowledge that this

had happened.

(Continued on page 11)

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MR GRAHAM (continuing):  What His Honour ultimately found

was that the obligation to arrange for them to

telephone on receipt of the signed contract

amounted to a requirement, an obligation, to

ensure that personal knowledge reached the solicitor

~-ln Gunnedah that afternoon. That was the way His Honour construed it. Now, in his process

of construction His Honour took into account,

firstly, a factual matter that was not open to
him but, more importantly, he applied a test that

was peculiarly inappropriate, in our submission,

to the construction of an oral contract.

WILSON J:  Well, you say he went wrong on a question of fact.

MR GRAHAM:  On law, Your Honour, because his question of

law was this, Your Honour. If Your Honour looks

at the bottom of page 19, when he has posed that

it is a difficult question he says, as I have

indicated, nobody contemplated that the agent

would fail to do the right thing and more

appropriately, in fact, do the wrong thing and

misinform. He then says - and this is how he

comes to his conclusion - line 2 on page 20:

One approach to this question is to ask

whether it would have been reasonable

for -

the purchaser's solicitor, Mr Klinger, in Chatswood

in Sydney -

to take it -

words that the Chief Justice Gibbs used in moment -

that Mr Walker was undertaking to be bound,

mistake by the agents, he did not come even in circumstances where, through a to know that the contract had been delievered
to them.

Now, with respect, ought a trial judge construing

a promise to arrange for an agent to phone on

receipt of a signed contract, firstly, address

the question, "Are the words clear and unambiguous

and may they be given their natural meaning?" If

there is any desireability to go beyond the clear

and natural meaning of the words, does one have

to ask, "Are the words ambiguous or susceptible of more than one meaning, and if they are what

is the test with an oral contract." We know what

the Chief Justice said, as Mr Justice Mason in

CODELFA,about proper regard to surrounding

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circumstances and presumed intention in the case

of written contracts, but what is the test in

respect of oral contracts where words of a

conversation are used, which no doubt have to

__ be taken into account with other matters of

-conduct to determine what is the content of

the contract and what is its meaning. Now, in

our respect submission, to seek to construe the

conversation by reference to a fact which has

not then occurred and which His Honour has found

could not have been within the contemplation of

the parties or, in our respectful submission,

nobody could reasonably contemplate when Mr Walker

said, "Arrange for my agent to ring me on receipt

of the contract'-', and he said inter alia, "I' 11
be ringing them anyway to find out what the position

is.", is it proper to construe those words of

agreement in respect of an arrangement made at

1 o'clock in the afternoon or shortly before - between 12 noon and 1 o'clock, by reference to

the fact that later that afternoon and up to

5 o'clock the agent misinformed and did not adhere

to the request that Mrs Oag had made and which

had been accepted in the terms that Your Honours has seen was a conceded fact, 1'Do not worry, when

we receive the contract we will know what to do.''

What His Honour has done is to apply a test

of construction to language used at midday, to have
regard to a fact that had not occurred and could

not reasonably been within the contemplation

of the parties as likely to occur. In our respectful

submission, that is a fundamentally erroneous
approach to the question of construction. Then

His Honour proceeded at line 8 on page 20 to

have regard to a ~onversation where Mr Walker made

it clear that he was concerned both that the

contract should be with the agents and that he

should know this.

If the Court goes to the first page of the

bundle of extracts from transcript that I have

referred to, the only support in the evidence

that His Honour could have relied upon for that

statement is on the first page there, which is

page 80 of the transcript, evidence which was
accepted, no dispute about it, because at page 80

Mrs Oag gave her account; at page 162, which is

the next page, Mr Walker accepted it. The

conversation was this, at about point 7 on the

page:

"I will be seeing our client today at lunch

time and we will be obtaining instructions

from him"?

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"I have been talking to the agent and he

informed me that they hold a 10 per cent deposit

and he suggested that we accept by facsimile."

Walker said:

"No, I want the contract in the hands of a

third party. I want evidence of the signed

contract today"?

That is where His Honour stops in his process of reasoning, he does not read:

"So I want the signed contract delivered

before 5 o'clock today to our Sydney

agents."

What he is really saying is, "I want knowledge,

at least through my agent, that the contract

is in my Sydney agent's hands." So that that is

the next matter that flaws the reasoning of the
learned trial judge. Now, with respect, what
the Court ;:of Appeal did was not to look at the
question of construction of this language, which
regrettably the trial judge had not spelt out,
but rather said, "Well, look, if that conversation

took place we regrettably have to agree Mr Graham

is right." Plainly those words do entitle us to

say - and Your Honoum will recall what i'I

Mr Justice McHugh said in very clear terms in

the application book at page 46.about line 17:

If I had concluded that his Honour had

found that this part of the conversation

took place in the terms to which Mr Klinger

deposed ..... I think that Mr Graham's

submission should be upheld. I say this

particularly having regard to an earlier

conversation which took place that day with

Mrs Oag.

Then he goes on to say:

However, I think that his Honour's judgment

should not be construed - '·'·

not concerned with construing the condition but

the judgment -

as meaning that he accepted that the
conversation between Mr Klinger and Mr Walker

contained those words.

If, with respect, the learned trial judge has not
made clear what the precise finding as to the

fact of the conversation was, the Court of Appeal

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had an obligation, in our respectful submission, given that it was not flagged by the trial judge

as an area of disputed fact, to have regard to

all the evidence to see whether it was indeed

___ 3n undisputed fact. If they had done so, with

respect, they would have come across - if I can

take Your Honours to this bundle of documents,

about the fifth page, I think, of the bundle,

Your Honours will see an extract from the affidavit

of Mr Klinger sworn on 30 September, five days

after the conversation. Paragraph 14 he sets

out that relevant conversation. Then if

Your Honours go to the next document it is the

affidavit of Mr Walker dealing with the affidavit

of Mr Klinger. Your Honours will see the way he

has responded:

(1) Noted.

(2) I have no reason to doubt. -

and so on. If we come to that paragraph (14) his

cormnent is:

(14) Agreed, except I do not recollect

Mr Klinger referring to an "exchange". -

which the trial judge rejected him on -

In each conversation Mr Klinger or his

office was told that my client would

deal with his client.

The trial judge rejected him on that.

I also advised him that my client's

directors would be calling at my office .....

and that they required a facsimile copy of

executed back page.

The trial judge rejected him on that so that we
are left with simply "Agreed".	If further

support were needed for it, and the Court of Appeal

did not see fit to refer to it, with respect, if

we go on to a page that has got a number 7 in the

top right-hand corner, about three or four pages

later, Mr Walker gives another version of the

conversation beyond simply saying "Agreed"; some

months later, true, on 21 March 1988, some six

months after the event. If one looks to

paragraph 3 he says what occurred was this:

I suggest you deliver the contract to our conveyancing agents ..... and ask them to

ring me as soon as it is received.

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Now, if one has, with respect, plainly an undisputed

fact on the evidence, the Court of Appeal should

have referred to this evidence and noted the fact

that it was an undisputed fact, that at the highest
the obligation was to arrange and, indeed, the

-reason perhaps why the trial judge did not spell

it out was because it was simply not in dispute.

That is clear, in our respectful submission, from

that quote of the word "arrange" on page 19 of

His Honour's judgment.

WILSON J:  What cannot be in dispute, Mr Graham, is the

trial judge's statement on page 20:

I am not satisfied that the terms of the conversation were such that the vendor

was to be bound to exchange contracts even
though the solicitors did not know that
the contracts signed by the purchaser

had been received by the agents.

With respect, I must point out, I think remind you,

in the detail that you are addressing to them.

that this is an application for special leave and

MR GRAHAM:  Yes, Your Honour. Well, may I respectfully

submit that what His Honour was doing there - one

has to go back in his judgment to realise that he

has got the factual issues out of the way, he is
now on, as he said, the legal effect of the

conversation and he has made a finding of an

agreement, he has made a finding that there were

conditions to be satisfied and he is seeking to

construe the conditions.

DAWSON J: 

But you see, Mr Graham, there is no avoiding

the conclusion that this case turns on its own
peculiar facts, is there? What is the point of

general importance you get out of all this?

MR GRAHAM: Well, Your Honour, may I answer that by saying

firstly this: in the interest of the administration

of justice the Court is not bound to find a
question of general importance for it to grant

special leave. It is bound to have regard to

whether there are questions of law of general

importance but it is not bound to say, "No leave

unless there is such a question." In our respectful

submission, one has to remember that the Court of

Appeal did not entertain a full appeal of this
matter. It started the appeal by confining the

parties to the question of construction of this

condition. It then delivered a judgment, not

on the issue that it invited consideration,

construction of what was meant by "arrange". Did

it go so far as to require, as the learned presiding

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judge has said His Honour found quite rightly,

that the performance necessary was communication
of knowledge to Mr Walker. Their Honours did not

consider construction, they proceeded to make a

_jinding that they doubted whether the trial

-- judge had found the conversation to have taken

place or not proven. Your Honours will recall

there are several references to onus of proof in

the judgments of the Court of Appeal. They simply

address the appeal. They asked for submissions

on construction and dealt with it on whether or

not there had been a factual finding out of which

the construction issue wo.uld have arisen.

Now, in our respectful submission, the

interests of the administration of justice

require that error of approach to be rectified

in circumstances where - - -

DAWSON J:  Certainly you would say the interests of your

client require that but whether that is the same

thing as the interest of the administration of

justice is another thing?

MR GRAHAM:  Well, Your Honour, we put it that if the trial

judge finds facts and seeks to construe a

conversation and simply proceeds, in our respectful
submission, applying wrong principle to construction,
that is the issue that the Court ought to have
addressed as what was the proper approach to

construction, what ought His Honour's finding.: to have been applying the correct principle of construction. One principle would be not to take

into account matters that had not occurred.

Your Honours will recall that the intelligent

bystander test is one which is peculiarly suited

to determine whether by conversation parties

intended to have~ their conversation to have

promissory effect. One asks, "Might the intelligent
bystander take it,	ie, the conversation as one

intending pranissory significance?" It is to

that issue that the intelligent bystander and

what he might take it is, in our submission,

relevant in relation to an oral contract, it is

not to the issue of construction. In our respectful

submission there is a fundament flaw in the process

of reasoning of the trial judge on construction.

Now, Your Honour Mr Justice Dawson asked

me the question of what questions of law of general

importance are involved. This case, with respect,

is one which bristles with questions of law of

general importance and as Your Honour will

appreciate - Your Honours, section 35A of the

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JUDICIARY ACT does not require that the questions

of law of public importance arise from the

irmnediate judgment appealed from but rather that

those questions of law of public importance

:..._-~rise in the proceedings in respect of which the

judgment appealed from has been given. Now,

Your Honours, this is a case with, if I may say

so, some fascinating questions of law of general

importance.

If I can come back to what constitutes an

oral contract and how one deals with its construction,
there are these. If this contract came into

existence in this way we contend, of course, that by doing the things we did, the parties

intended to make their contract. So one question

that arises is this: is whether or not as a matter

of principle a contract comes into existence in

the manner in which the parties intend to become

bound and the question then is, when is this

ritual of exchange of contracts displaced by the

partier intention? I appreciate that in

SINDEL V GEORGIOU and ATJ..EN V CARBONE and other

cases the court has considered tli.is matter

briefly but it has not really addressed what

was said in the English court in ECCLES V BRYANT

and SMITH V MANSI about the ritual of exchange,

as to whether or not it is so necessary that

one cannot necessarily find a contract without

it. That is one issue.

Another issue is if, indeed, there is an

oral contract made,is the statute of frauds

satisfied. Here we had a situation where the

secretary of the vendor company, who happened to

be the solicitor, a few days afterwards wrote

a letter, as is set out in the papers, saying,

"Rejilo Pty Limited and Windrum" - to the agent -

"you are hereby authorized to refund the deposit

or return the deposit paid." The question

arises, is that a sufficient note or memorandum

in circumstances where there has been a payment

of a deposit and the deposit has been invested

in accordance with the provisions of the contract.

It js not merely cash in the agent's hands, it is

now, as required by a special condition of the

contract, invested in the names of the vendor

and the purchaser under an arrangement whereby

interest should, on their deposit, as so invested,

should be shared 50/50 under special condition 3

of the contract.

Now, Your Honours, there is a fascinating

question, in our respectful submission, as to whether

or not such a letter, not repudiating an agreement -

although there are cases in England that speak of

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a letter repudiating an agreement can be a

sufficient note or memorandum but rather a

letter perhaps trying to bring an agreement to

an end or dealing with a question of a deposit paid some four days previously and authorizing

---~ts return can constitute a sufficient note of

memorandum and what is the principle concerning

the right to go to the transaction and the other

documents which are, by inference, referred to

in that very, very short letter.

TOOHEY J:	Mr Graham, how did that question get before us even if we were to grant special leave? It was
not a question that was answered by the Court of
Appeal?
MR GRAHAM:	No, with respect, it was a question that was

dealt with by the trial judge, if Your Honour

pleases.

TOOHEY J:  Yes, I appreciate that but presumably it would go back.

MR GRAHAM: Well, we would respectfully submit that it

is a proper case where Your Honours should take

on board that particular question because if

Your Honours were favourably disposed to the other argument that the Court of Appeal selected

as sufficient to deal with the appeal, then it

would be, in our respectful submission, appropriate

for the Court to consider that issue. It raises -

if I may say so, if I can go to the next point -

the question of part performance. This Court has not previously dealt with the sufficiency

of a mere payment of money, can it constitute

sufficient part performance? We would wish to

argue that whatever may be said merely by the

payment of a deposit, where a deposit is ·paid

and invested, as the contractual provision require~

that can constitute sufficent part performance.

As Justice Toohey has indicated, thirdly

there is a very real problem, if I may say so,

with respect, in the State courts in fully

understanding the decision of this Court in

WALTONS STORES V MAHER, and we would respectfully

submit that this is a classic case for the

application of the principles there enunciated.

Your Honours would know that in the Court of

Appeal and many other places in New South Wales - SILOVI V BARBARO is one such case - the New South Wales Court of Appeal has sought to distil what

it ~s perceived this Court was saying concerning

pra:mssory estoppel and equitable estoppel in

WALTONS STORES V MAHER and, in our respectful

submission, this case provides a very· suitable

forum for considering whether or not in these

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circumstances - and Your Honours are seized of the facts -

a binding agreement would be enforced notwithstanding

compliance with section 54A of the CONVEYANCING ACT,

if that were found to be the case. In our

respectful submission, that is a very appropriate ---matter for consideration by this Court, given the

state of uncertainty in the State courts concerning

this Court's judgment in that matter.

TOOHEY J:	What you are saying, Mr Graham, is that if you made out some sort of a case in relation to what
I might describe as your primary proposition, then
this Court should embark upon a consideration
of a whole range of matters that were not considered by the Court of Appeal without the benefit of any
judgment from that court on those matters?

MR GRAHAM:  We would urge that view, Your Honour. I appreicate

that that is a difficult proposition for us to put

but may I come back to the fact: that ther-e is

a general principle of law in relation to the very
discrete matter that the Court of Appeal selected out.

There is an issue as to what the obligation of

a trial judge is in the case of an oral agreement,

to state what the conversation is that he finds

to have taken place. The Court will note that the

trial judge did not say, as the Court of Appeal

read him as having said, "I am unable to be
satisfied as to what the conversation was·." That

is the effect of the Court of Appeal's judgment.

There is an issue of what a trial judge ought

to do in terms of making a primary finding and
then what are the steps to which it is relevant
to have regard in terms of matters of intelligent

bystander, objective intentions, subjective

intention, meaing of words that are clear and

unambiguous, the meaning of words that are

ambiguous or susceptible of more than one meaning,
in the context or an oral agreement.	In the

case of EYRE GREAT LAKES in the New South Wales

Court of Appeal I think this Court granted special

leave, but the leave not being taken up. The

leave really was granted to consider these very

questions. In that case Mr Justice Hope indicated

that he had a certain view and that if the view

was wrong this Court, the High Court, was the

right place to resolve those issues.

Your Honours will recall that in granting

leave, with respect, Your Honours were propos.ing
to address the very issues that we see ought to

be addressed by the Court in relation to the

exercise before us. Can I indicate, with respect,

the flaw in the reasoning - I will conclude with this if I may - of the Court of Appeal by taking

Your Honours to what Justice Clarke said in his

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book:

judgment in which Mr Justice Samuels concurred.

The critical issue in the case was whether

the appellant had established, the onus being

on him, that the conditions had been complied

with.

Then he went on to say at line 18:

This question depended upon the definition of the condition which in turn was

dependent upon an evaluation of conflicting

oral evidence of the relevant witnesses.

Now, His Honour then says:

The essence of the dispute was whether the

agreed condition -

which they later find never to have been agreed -

imposed upon the appellant's solicitors

the obligation of -

et cetera. Then if one goes to page 37 at line 22
His :Honour said:

In respect of the first conversation the learned judge preferred the evidence of

Mrs Oag and in respect of the latter he

preferred Mr Klinger's version.

He says, quite rightly:

There has been no challenge to the~e

findings -

yet they proceeded to say,"Well, there had not

been such findings." Then we have this consideration

of matters which appears at page 40. His Honour

said at page 40 line 29:

The subjective views -

and,with respect, can I just flag His Honour

refers there to"subjective views'!. He then goes

on to "objectively ascertained".	He then goes
on to "objective meaning".	He then goes on to

say that he "is not strictly construing a contract."

He then goes on to "objective intention". He then

goes on to different principles applying but for

construction of written contracts from oral contracts,and then makes an observation that

where there are oral contracts there is always

an element of unreliability in the accounts of

the conversation.

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In our respectful submission, this is not

a proper statement of principle for the State of

New South Wales to be left with in terms of how

one addresses finding what was the conversation,

whether the parties intended a contract, whether

~· -there were congruent promises, they were ad idem,

and what was the contract and the meaning of

the words. His Honour said:

The subjective views ..... however, only

of relevance insofar as they may throw light
on the intention of the parties objectively
ascertained. The court is not concerned
to ascertain the subjective views of the

various parties ..... but to glean the objective

meaning of the words used or, to put it in

a way that is often put, to ascertain the

presumed intention.

Then he refers to His Honour's judgment in CODELFA

concerning the meaning of ambiguous words.	Then
His Honour goes on to say at line 35:

It seems to me that in the present case

notwithstanding that one is not strictly construing a contract, the search is for the objective intention of the parties.

With respect, His Honour started out by saying

it is a question of construing the contract, he

then says they are not doing that.	He then
goes on to say:

I should add also that there is a marked

distinction between the construction of

written contractual documents and the

determination from oral evidence concerning

conversations during which a contract or an

arrangement is said to have come into

existence and in which there is no written

record. In the latter case, whilst the

court is obliged to reach its conclusions

on the basis of accepted evidence, there

is necessarily likely to be some element

of reconstruction inthe oral accounts

given.

In our respectful submission, that does not serve

as a sufficient analysis of the steps involved
in finding what is an oral contract and what is

complete confusion of a variety of principles

the meaning of the words of the oral contract.

which are relevant to separate and discreet steps

along the way in dealing with that issue. If I
could indicate to the Court, in summary, what

we put at paragraph 25 of the document I handed

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up this morning, we there set out what we

respectfully consider are the necessary steps

and the statement of principle adopted by

Mr Justice Clarke at the pages I have referred

to, is by no means adequate to deal with those

--=-"'--separate steps as a guidance to litigants in

New South Wales as to the finding and meaning

of oral contracts. If the Court pleases.

WILSON J:  Thank you, Mr Graham. The Court need not

trouble you, Mr Officer or Mr Broun. The

decision in this case is so intimately connected

with its own facts as not to raise, in a

satisfactory form, the questions of law that

the applicant would seek to agitate and in the
view of the Court the case is not a suitable
case for the grant of special leave in order

to consider those questions. Furthermore, the

applicant has based his application on the

terms of section 35A of the JUDICIARY ACT

requiring the Court to consider whether the

interests of justice, either generally or in

a particular case, warrant the grant of special

leave to appeal. The Court has given consideration

to that aspect of the matter and has come to the

conclusion that in this case the interesm of

justice, either generally or in the particular

case, are not such as to warrant the grant of

special leave. Special leave will therefore

be refused.

MR BROUN:	We would ask for an 'order for costs.
MR OFFICER:	Likewise.
WILSON J:	I do not suppose you can dispute that, Mr Graham? Very well, the application for special leave is
refused with costs.
AT 12.43 PM THE MATTER WAS ADJOURNED SINE.DIE

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