| | | | | | | | NCAT Legal Bulletin Issue 5 of 2015
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| The NCAT Legal Bulletin provides a summary of relevant and interesting case law of significance to the work of the NSW Civil and Administrative Tribunal.
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Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26
20 July 2016
In brief: Crown Melbourne Limited, the appellant and landlord, leased areas within the Melbourne Casino and Entertainment Complex to the respondents (the tenants). In the course of negotiations for the leases in 2005, a statement was made to the effect that the tenants would be "looked after at renewal time". The leases did not contain an option for renewal and provided only that Crown was to give at least six months notice to the tenants prior to the expiration of the lease stating whether Crown would renew the leases and on what terms, or Crown would allow the tenant to occupy the premises on a monthly tenancy, or Crown would require the tenant to vacate the premises (at [5]).
The VCAT held that the 2005 statement gave rise to a collateral contract ([9]). The VCAT's decision was set aside on appeal to the Supreme Court. The Court of Appeal subsequently dismissed the tenants' appeal save with respect to the estoppel issue (whether the 2005 statement could give rise to an estoppel), which it remitted to the VCAT for determination. A majority of the High Court (5:2) allowed Crown's appeal and dismissed the tenants' cross-appeal. The plurality (French CJ, Kiefel and Bell JJ) considered that the Supreme Court and Court of Appeal were right to hold that the 2005 statement could not amount to a collateral contract ([23], [28]) and summarised some of the principles relating to collateral contracts as follows (at [22]):
[22] In Hospital Products Ltd v United States Surgical Corporation Gibbs CJ explained that a representation made in the course of negotiations may result in an agreement collateral to the main agreement if it can be concluded that the parties intended that the representation be contractually binding. It may be so concluded if the representation has the quality of a contractual promise, as distinct from a mere representation. The question of intention is adjudged by reference to the words and conduct of the parties, but it is an objective test - of what a reasonable person in the position of the parties would necessarily have understood to have been intended.
In regards to the issue of estoppel, the plurality reasoned that the 2005 statement was not sufficiently precise and unambiguous:
[35]: It has long been recognised that for a representation to found an estoppel it must be clear. In Low v Bouverie, it was said that the language used must be precise and unambiguous. This does not mean that the words used may not be open to different constructions, but rather that they must be able to be understood in a particular sense by the person to whom the words are addressed. The sense in which they may be understood provides the basis for the assumption or expectation upon which the person to whom they are addressed acts. The words must be capable of misleading a reasonable person in the way that the person relying on the estoppel claims he or she has been misled. The statement that the tenants would be "looked after at renewal time" is not capable of conveying to a reasonable person that the tenants would be offered a further lease.
French CJ, Kiefel and Bell JJ also held that the estoppel argument must fail because the assumption identified by VCAT was not acted upon (39]-[40]). In these circumstances there was no utility in the order for remittal ([43]).
Read the decision on the High Court of Australia website.
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| Graham v The Queen [2016] HCA 27
20 July 2016
In brief: The High Court, by a 4:1 majority, dismissed an appeal from the Queensland Court of Appeal concerning a trial judge's directions to a jury. The appellant, Graham, had shot Teamo, a member of a rival motorcycle club, following a confrontation outside a shopping centre. Teamo had produced a knife in the course of the confrontation but it was unclear which man had produced his weapon first. The central issue at trial was self-defence. The prosecutor raised the appellant's consent to the confrontation as negativing self-defence, but this was not a real issue in the case. The majority of the High Court held that the trial judge had not misdirected the jury:
[34] The relevant provisions of the Criminal Code were put before the jury, including the definition of assault in s 245 which incorporated the requirement of want of consent. In the circumstances of the case, no elaboration of that issue was required nor any elaborate discussion of what counsel for the prosecution had said beyond the rather dismissive observation that it was a matter of argument and interpretation.
Read the decision on the High Court of Australia website.
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| Paciocco v Australia and New Zealand Banking Group Limited [2016] HCA 28
27 July 2016
In brief: The High Court, by a 4:1 majority, dismissed two appeals from the Full Federal Court concerning the lawfulness of late payment fees charged by the respondent bank (ANZ). A majority of the Court held that the late payment fees were not unenforceable as penalties and that the imposition of the fees did not contravene statutory prohibitions against unconscionable conduct, unjust transactions and unfair contract terms. In relation to the issue of penalties, Kiefel, Gageler and Keane JJ (in separate judgments) held that the correct approach was one which considered the impact of late payment on a range of the ANZ's legitimate interests, including loss provision costs, regulatory capital costs and collection costs. The question of whether the late payment fee was a penalty was not determined by considering what the ANZ could recover in an action for breach of contract (Kiefel J at [58] and [65], French CJ agreeing); Gageler J at [171]-[174], [176]; Keane J at [271], [279], [283]).
Read the decision on the High Court of Australia website.
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| Minister for Immigration and Border Protection v SZSSJ; Minister for Immigration and Border Protection v SZTZI [2016] HCA 29
27 July 2016
In brief: In a joint judgment, the High Court allowed two appeals from a decision of the Full Federal Court concerning procedural fairness. In February 2014, the Department of Immigration and Border Protection (the Department) published on its website a document that disclosed the identities of 9258 applicants for protection visas who were then in immigration detention (the Data Breach). The Department retained KPMG to investigate and report on the Data Breach. An abridged version of the KPMG report was made available to affected applicants. The Department then conducted "International Treaties Obligations Assessments" (ITOAs) to assess the effect of the Data Breach on Australia's international obligations with respect to affected applicants ([9]). The ITOA process assumed that all of the personal information had been accessed by all of the persons or entities from whom the affected applicants feared persecution or other relevant harm ([91]).
The High Court held that while procedural fairness was required in the undertaking of the ITOA process ([74], [78]), it had been afforded. The Court said (at [83]):
[83] Ordinarily, affording a reasonable opportunity to be heard in the exercise of a statutory power to conduct an inquiry requires that a person whose interest is apt to be affected be put on notice of: the nature and purpose of the inquiry; the issues to be considered in conducting the inquiry; and the nature and content of information that the repository of power undertaking the inquiry might take into account as a reason for coming to a conclusion adverse to the person. Ordinarily, there is no requirement that the person be notified of information which is in the possession of, or accessible to, the repository but which the repository has chosen not to take into account at all in the conduct of the inquiry.
The Court held that these requirements had been satisfied. The respondents (the affected applicants for protection visas) were not deprived of any opportunity to submit evidence or make submissions as a result of not having access to the unabridged KPMG report because:
[92] ... Even if the unabridged KPMG report might have allowed SZSSJ and SZTZI to prove by reference to the report that one or more of those IP addresses were associated with persons or entities from whom they feared harm, that proof would advance their cases for engagement of Australia's non-refoulement obligations no further than the assumption already made in their favour.
Read the decision on the High Court of Australia website.
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| | | Secure Parking Pty Ltd v Woollahra Municipal Council [2016] NSWCA 154
4 July 2016 - Beazley P, Meagher and Ward JJA
Justice Meagher (with whom Beazley P and Ward JA agreed) considered the Woollahra Municipal Council's (the Council's) claim that Secure Parking Pty Ltd (Secure) engaged in misleading and deceptive conduct by representing that, in the event that its tender was successful, its intention was to enter into an agreement to manage car parks on particular terms, when it did not have that intention. Instead, on the Council's case, it intended to modify the agreement by further negotiation. His Honour rejected the claim (at [99]), holding that there was no representation made in the terms contended:
[98] As Allsop J observed in McGrath v Australian Naturalcare Products Pty Limited [2008] FCAFC 2; 165 FCR 230 at [138]: "the divining of representations from the making of contractual promises and the entry into contracts is a task to be approached with caution and with an eye to all the facts and not be reference to implying representations mechanistically from equivalent promises". When a party enters into a contract, it does not necessarily make any representation as to its subjective understanding of the content of any of the obligations that it has undertaken. Secure's acknowledgement that it understood and accepted the terms and conditions of the tender said nothing about its understanding of the scope and content of the obligations which in law it was undertaking. It may or may not have had a correct or complete appreciation of the content of those obligations and how they were to be performed. It was not necessary, from the Council's perspective, that it have such an appreciation in order that it be bound to any contract: Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451 at [22].
Read the decision on the NSW Caselaw website.
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| Caringbah Investments Pty Ltd v Caringbah Business and Sports Club Ltd (in liq) [2016] NSWCA 165
18 July 2016 - Bathurst CJ, McColl and Macfarlan JJA
Chief Justice Bathurst considered a number of authorities relating to rectification and ruled that rectification requires a mistake as to the words used or their legal effect. It is not sufficient that rectification "avoid[s] unconscientious departure from the common intention of the parties" without there being a mistake:
[40] The need to establish a mistake has been emphasised constantly in the cases: Ryledar at [122]-[129] (Tobias JA), [314] (Campbell JA); NSW Medical Defence Union Ltd v Transport Industries Insurance Co Ltd (1986) 6 NSWLR 740; The Club Cape Schanck Resort Co Ltd v Cape Country Club Pty Ltd [2001] VSCA 2; 3 VR 526 (Club Cape Schank Resort) at [10], [37]-[39]; Pukallus v Cameron [1982] HCA 63; 180 CLR 447 at 452; Newey v Westpac Banking Corporation [2014] NSWCA 319 at [168]; Mayo v W & K Holdings (NSW) Pty Ltd (in liq) (No 2) [2015] NSWCA 119 at [56]-[57].
[41] Whilst it has been said that the remedy can apply where there is discrepancy between the form or effect of the document and the intention of the parties, including mistake as to the legal effect of the words used (Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329 at 336, 340, 345), it is essential that there is a mistake as to the meaning or effect.
Read the decision on the NSW Caselaw website. |
| Zhang v BM Sydney Building Materials Pty Ltd [2016] NSWCA 166
19 July 2016 - McColl and Ward JJA, Sackville AJA
Justice McColl (with whom Ward JA and Sackville AJA agreed) summarised the principles of construction of commercial contracts ([41]-[46]); footnotes omitted):
[41] The primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. This is an objective exercise in which regard may be had to the "text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose." The "legal rights and obligations of the parties turn upon what their words and conduct would be reasonably understood to convey, not upon actual beliefs or intentions."
[42] The document must be construed as a whole. That is to say, "every passage ... must be read, not as if it were entirely divorced from its context, but as part of the whole instrument ... in order to collect from the whole one uniform and consistent sense, if that may be done; or, in other words, the construction must be made upon the entire instrument, and not merely upon disjointed parts of it".
[43] In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable business person would have understood its terms to mean. That enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract. Unless a contrary intention is indicated, a commercial contract is to be construed to avoid "making commercial nonsense or working commercial inconvenience".
[44] In Hillas v Arcos, Lord Wright observed that "[b]usiness men often record the most important agreements in crude and summary fashion: modes of expression sufficient and clear to them in the course of their business may appear to those unfamiliar with the business far from complete or precise." In that context, his Lordship continued (footnote added):
"It is accordingly the duty of the Court to construe such documents fairly and broadly, without being too astute or subtle in finding defects, but, on the contrary, the Court should seek to apply the old maxim of English law, 'verba ita sunt intelligenda ut res magis valeat quam pereat.'* That maxim, however, does not mean that the Court is to make a contract for the parties, or to go outside the words they have used, except in so far as there are appropriate implications of law, as, for instance, the implication of what is just and reasonable to be ascertained by the Court as matter of machinery where the contractual intention is clear but the contract is silent on some detail."
[45] Where a commercial transaction is implemented by several contracts or documents, all of the contracts or documents may be read together for the purpose of ascertaining their proper construction and legal effect, at least where the contracts or documents are executed contemporaneously or within a short period. [30] As Lewison and Hughes observe, the rationale for this proposition as explained in Manks v Whiteley is that "[e]ach [deed] is executed on the faith of all the others being executed also and is intended to speak only as part of the one transaction, and if one is seeking to make equities apply to the parties they must be equities arising out of the transaction as a whole."
[46] The process of contractual construction ordinarily proceeds by reference to the contract alone. However recourse to events, circumstances and things external to the contract may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding of the genesis of the transaction, the background, the context and the market in which the parties are operating, or in determining the proper construction where there is a constructional choice. Where such materials may be considered, the court may have regard to events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating, but not to evidence of the parties' statements and actions reflecting their actual intentions and expectations.
Read the decision on the NSW Caselaw website.
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| | | Armstrong Strategic Management and Marketing Pty Limited v Expense Reduction Analysts Group Pty Ltd (No 9) [2016] NSWSC 1005
22 July 2016 - Ball J
This decision summarises the relevant legal principles relating to misleading and deceptive conduct (at [81]-[88], fiduciary duties (at [135]-[136]) and termination (at [170]-[178]). The summary of the principles relating to termination included the following:
[170] A party is entitled to terminate a contract in accordance with an express term in the contract: Suttor v Gundowda Pty Ltd [1950] HCA 35; 81 CLR 418 at 441-2. A party may also be entitled to terminate the contract for breach of an essential term (a condition) of the contract or a serious breach of an intermediate term: Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; (2007) 233 CLR 115. Lastly, a party may be entitled to terminate the contract if the other party repudiates the contract. Repudiation occurs where one party evinces an intention "no longer to be bound by the contract . . . or shows that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way": Shevill v Builders' Licensing Board [1982] HCA 47; (1982) 149 CLR 620 at 625-6 per Gibbs CJ, referred to with approval in Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623 at 634; see also Koompahtoo at [44].
[171] A party who gives reasons for termination is not bound by those reasons. The termination is effective so long as a basis for termination existed at the time of termination: Sunbird Plaza Pty Ltd v Maloney [1988] HCA 11; (1988) 166 CLR 245 at 262.
[172] A party in breach of a non-essential term is not prevented by that breach from terminating the contract for a fundamental breach or repudiation by the other party. An exception exists where the breach or the repudiation was caused by the terminating party's breach. A party whose breach causes a breach by the other party or makes performance by the other party futile is not entitled to terminate the contract for non-performance by that party: Nina's Bar Bistro Pty Ltd v MBE Corporation (Sydney) Pty Ltd [1984] 3 NSWLR 613 at 632; Roadshow Entertainment Pty Ltd v (ACN 053 006 269) Pty Ltd (Rec and Mgr apptd) (1997) 42 NSWLR 462, 479ff per Gleeson CJ, Handley JA and Brownie AJA.
Justice Ball noted that there is conflicting authority on the question of whether a party may terminate a contract where the terminating party has itself repudiated or breached a fundamental term of. In Emhill Pty Ltd v Bonsoc Pty Ltd (No 2) [2007] VSCA 108, Warren CJ "concluded that a party who had breached a fundamental term of a contract was not entitled to terminate the contract for breach of a fundamental term by the other party". In contrast "other cases have taken a different view, on the basis that it makes no sense to treat both parties as bound by a contract which neither is willing to perform in a fundamental respect" (at [174]). These other cases include Roadshow Entertainment Pty Ltd v (ACN 053 006 269) Pty Ltd (Rec and Mgr apptd) (1997) 42 NSWLR 462 and Highmist Pty Ltd v Tricare Ltd [2005] QCA 357. In Highmist at [61] Keane JA explained the principle in these terms:
It makes commercial sense to allow a party to recover damages for loss of bargain only where that party was itself in a position to perform its side of the bargain. If it were otherwise, it could not sensibly be said that it was the other side's conduct which caused the loss of the profit involved in the bargain. That advantage could not have been obtained even if the other side had fulfilled its obligations. On the other hand, it does not make much sense to say that, where both parties to a contract declare to each other their fixed resolve not to perform their contract, the contract continues in existence in some legal limbo for the reason that neither party is ready, willing and able to perform the contract. Such a proposition may be intelligible to metaphysicians, but it is of little use in terms of the regulation of commerce according to the reasonable expectations of honest people.
Justice Ball favoured the principle in Roadshow and Highmist, for the reasons given by Keane JA in Highmist.
Read the decision on the NSW Caselaw website.
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