Romanos & Anor v Pentagold Investments Pty Ltd & Anor S356/2002 [2003] HCATrans 623 (13 March 2003)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S356 of 2002

B e t w e e n -

JOSEPH JOHN ROMANOS

First Appellant

JOHN JOSEPH ROMANOS as Executor of the Estate of the Late TERESA ROMANOS

Second Appellant

and

PENTAGOLD INVESTMENTS PTY LIMITED

First Respondent

MAROON BROS INVESTMENTS PTY LIMITED

Second Respondent

GLEESON CJ

McHUGH J

GUMMOW J

KIRBY J

HAYNE J

CALLINAN J

HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 13 MARCH 2003, AT 2.27 PM

Copyright in the High Court of Australia

__________________

MR B.A.J. COLES, QC: May it please the Court, I appear with MR D.L. WARREN, for the appellants. (instructed by Robilliard Plowman Herat)

MR D.P.F. OFFICER, QC: May it please the Court, I appear with my learned friends, MR R.J. POWELL and MR S.W. BALAFOUTIS, for the respondents. (instructed by Bolsters Solicitors)

GLEESON CJ: I wonder if you and Mr Coles, just before Mr Coles begins, could make a quick agreement between yourselves on a convenient division of time between now and 4 o'clock so that you both get an equal opportunity.

MR COLES: May it please the Court. Your Honours, the first point of division between the parties concerns the proper characterisation of the right of termination conferred by the contract for sale. At page 211 of the appeal book in the judgment of Justice Sheller, who with Justice Mason comprised the majority, expressed his conclusion at the top of the page, that:

in accordance with what was said by Deane and Dawson JJ in Stern v McArthur, since the forfeiture provision was security for the payment of the deposit it is appropriate that there be relief against forfeiture.

The proposition being that in a contract for sale where there is a right of termination for non-payment of money, including a right of termination for non-payment of deposit money, the obligation to pay is all that is expected and the right of termination does no more than secure the vendor's right to receive payment.

That proposition, your Honours, we challenge at the outset. It owes its origin, as we would see it, to certain observations of Justices Deane and Dawson but it was not, it will be found on analysis, what their Honours really said or meant and it certainly does not represent the view of this Court in either of the decisions relevant, namely Stern v McArthur and Legione v Hateley.

May I mention to your Honours Stern v McArthur at page 528 in the joint judgment of Justices Deane and Dawson, after a discussion commencing at page 527, where their Honours observe that:

One situation in which equity has traditionally granted relief is where provision for forfeiture has been made to secure the payment of money and the party in default seeks relief upon the basis of payment of the amount owing together with the appropriate compensation.

Their Honours discuss that. At the foot of that page they say, having referred to the traditional elements of "fraud, accident, mistake and surprise", they say:

But those elements are not the basis of the jurisdiction and the circumstances which will suffice to support its exercise despite the breach of an essential term are not confined. In particular, it is not necessary . . . to show unconscientious behaviour of an exceptional kind.

Then in the next paragraph, which is the crucial one, they go back to the point about the characterisation of the termination provision and they say:

The circumstance in the present case which warrants relief being granted is not only that the forfeiture provision was by way of security for the payment of the purchase moneys, but also that the contract as it was carried into effect was essentially an arrangement whereby the appellants undertook to finance the respondents' purchase upon the security of the land. In other words, there was a close and obvious parallel . . . with the aid of a mortgage.

We would observe, your Honours, that in the comment to the effect that the relevant provision was not only a forfeiture provision by way of security, their Honours do not appear to be suggesting that if that were all that was to it that would have been enough. Rather, what they seem to be going on to say - and indeed this was the ratio of the case - that you need to have the superadded feature that the transaction in question partook of the quality of a security arrangement, a quasi mortgage.

Your Honours, if that is not right, then their Honours' very considerable analysis of the analogy between the transaction led in question and a mortgage transaction was on one view simply superfluous. If the Court of Appeal is right in what Justices Deane and Dawson are supposed to have said, then Legione v Hateley, where no one made such a suggestion, pursued in vain the entire consideration of the topic of unconscionability. In our respectful submission, the reason why necessarily the Court pursued an inquiry into the essential need for unconscionability in Legione v Hateley was simply because it would not have sufficed to characterise the right of termination as simply security for the promisors' obligation to pay.

It would follow likewise, your Honours, that what was said in Ciaverella v Balmer to the same effect, namely that unconscionability was an essential requisite of equity's intervention to relieve from non-compliance with an essential term as to time, was simply either obiter or probably unnecessary. We would submit, your Honours, not only is that unlikely but, properly understood, the decisions of this Court really do direct a different conclusion to the observation made by Justice Sheller in the short passage to which I took your Honours.

May I briefly mention those passages. May I, while your Honours still have Stern v McArthur nearby, mention the passage in the judgment of her Honour Justice Gaudron at page 539. Her Honour there says in the second full paragraph on the page:

In Legione it was pointed out by Mason and Deane JJ that forfeiture of a purchaser's interest under a contract of sale is to be distinguished from a contractual forfeiture designed to ensure performance of a principal obligation. Their Honours also pointed out that a contractual provision providing for rescission and forfeiture of the interest under the contract following breach of an essential term is neither a penalty nor in the nature of a penalty. So much must be accepted.

The relevant passage to which her Honour referred, and it is the relevant passage, is one which appears at the foot of page 445 in Legione v Hateley and is to this effect. In the joint judgment of Justices Mason and Deane in Legione v Hateley at the foot of page 445, their Honours say:

No doubt the risk of forfeiture is a strong inducement to completion of the contract, that being the primary intention of the parties, but it is incorrect to describe the rescission for which condition 5 provides -

that is the right of termination -

and the forfeiture of the purchaser's interest which it entails as a penalty or as being in the nature of a penalty.

Accordingly, therefore, your Honours, relief is not to be had, in our respectful submission, for no better reason than that the clause can be characterised as a security alone for the payment of money and reliance on it would be a penalty and it can all be made good by the tender of moneys later on.

In this regard, your Honours, may we respectfully adopt what was said in part of Lord Hoffmann's speech in Union Eagle v Golden Achievement [1977] AC. At the first full paragraph, if your Honours please, on page 520 Lord Hoffmann draws attention to something which had not, in our respectful submission, for good reason, needed analysis by this Court, namely, the differences between a contract for sale of land on the one hand and a mortgage transaction on the other. Those differences are too plain, in our respectful submission, to require very much elaboration but, plainly, a contract for sale is a contract, the object of which is not only to gain the receipt of the purchase moneys by the vendor but to pass to the purchaser the estate in land which the vendor intends to transfer. At the top of that page, your Honours - - -

KIRBY J: Which page?

MR COLE: At the top of page 520, your Honours. I perhaps do not need, in view of the time, your Honours, to trouble your Honours to have me read the entire passage but there there appears in the paragraph commencing "In the case of contracts for the sale of land", although the view might originally have been otherwise, Lord Eldon said in Hill v Barclay what is there set out and his Lordship goes on to say below the letter D:

When a vendor exercises his right to rescind, he terminates the contract.

It may be your Honours will not need me to read the passage out entirely. Certainly, at the letter F he says:

But the right to rescind the contract, though it involves termination of the purchaser's equitable interest, stands upon a rather different footing. Its purpose is, upon breach of an essential term, to restore to the vendor his freedom to deal with his land as he pleases . . . a vendor should be able to know -

where he stands -

with reasonable certainty -

We respectfully commend that to your Honour. The present case, plainly, is not an instalment contract or a transaction of an essentially quasi-security where there is a close mortgage analogy of the kind that could be recognised in Stern v McArthur.

I should, for completeness, your Honours, so far as this Court's observations on the topic are concerned, also mention a discussion that appears in the judgment of Justice Brennan in Stern v McArthur which was, we would respectfully suggest without taking your Honours' time to refer to it, a discussion which did no more than leave open the possibility - though irrelevant to the view his Honour came to - that one could categorise a clause as in the nature of a security.

If it were a security, of course, being the nature of the obligation that it is, then it may be, of course, that it is a security, to adopt something that fell from one of your Honours earlier today; it may be a security for payment but a security for payment on time. That likelihood stems from the alternative way we put our opposition to the proposition, that is to say, by drawing attention to the special role of a deposit. Apart from other things, a deposit is not, of course, a payment to the vendor; it is a payment made by the purchaser to which the vendor will in due course, if the contract is completed or terminated through the purchaser's breach, become entitled.

In our respectful submission, what this Court said in Brien v Dwyer wholly denies the observation made by Justice Sheller in the short passage which I mentioned. May I do no more, your Honour, than read to your Honour from page 392 of the decision of this Court in Brien v Dwyer [1978] HCA 50; (1978) 141 CLR 378 of a number of passages to broadly similar effect. What fell from Justice Gibbs at 392 is in point. There his Honour said:

The nature of a deposit is well understood. In Soper v Arnold, Lord Macnaghten said: "the deposit serves two purposes - if the purchase is carried out it goes against the purchase-money - but its primary purpose is this, it is a guarantee that the purchaser means business..." In the same case Lord Herschell said: "The deposit is given as a security for the performance of the contract."

The primary purpose of the deposit would not be served unless the deposit were paid at the very time when the purchaser assumed his obligations under the contract. A vendor is entitled to expect that the purchaser will be ready to show that he means business by paying the deposit no later than the time when the contract is entered into, and a security for due performance is likely to be ineffective if not available at the time when the binding obligations attach.

Here, of course, your Honour, the obligation attaching to the deposit was, in effect, two tranches. In the first instance, one tenth of the 10 per cent deposit was payable on exchange, the other 90 per cent was payable in the events that happened on 4 December, that being the identified day when that obligation became essential, according to the proper construction of the contract, an issue about which there is no dispute.

In our respectful submission, the feature - and we need, in our respectful submission, do no more than adopt the words of Lord Herschell: the deposit is given as security for the performance of the contract, a wholly different proposition, in our respectful submission, than the proposition that the termination power is given to secure the payment of the sum of money. It is because, in our respectful submission, that the deposit is paid as security for the performance of the contract, for example, that equity never intervened when it allowed relief from forfeiture of instalments of purchase money to the extent to return to the purchaser anything more than what was thought to be a reasonable or proper deposit - usually 10 per cent - and for like reasons, at law one could not claim or maintain as an action to recover a penalty a forfeited deposit provided the amount was modest and certainly ordinarily not more than the customary 10 per cent.

So, in our respectful submission, it is a mischaracterisation of the obligation of the purchaser to pay on the essential date the deposit to simply describe it as no more than an obligation to pay money, the breach of which, entitling as it does the vendor to terminate, itself gives rise to no more than an entitlement to terminate which was supposedly inserted as security for that payment. That is the way we put our first contentions, if your Honours please, in support of the appeal.

Once then one puts the question of penalty or characterisation of deposit to one side, then the only basis for any relief in such a case must be the exceptional circumstances amounting to unconscionability. We accept, of course, that if a particular provision were truly a provision in the nature of a security, then one need look no further into the question of unconscionability. But we say that the fact, of course, that this Court has done so in the past is one very good illustration of the mischaracterisation which we ascribe to Mr Justice Sheller's reasoning.

Mr Douglas, in the appeal preceding the present one, took your Honours to the important passages which it was our intention to refer, in Legione, particularly at 629 and 449, and in Stern v McArthur at 536 to 527. It is not appropriate that we should this afternoon repeat those passages to your Honours and they will be, no doubt, well known.

KIRBY J: It is fair to say, is it not, that Australian law has taken a different direction from the law as it has been stated in England in the Privy Council?

MR COLES: There is no doubt about that. We have focused on unconscionability; the English law has focused on incremental developments in the law of restitution and estoppel.

KIRBY J: Why has that come about? Can you explain why that has come about? Is it just the interests of particular judges, or is there something deeper that explains that?

MR COLES: To our minds, your Honour, the process in this country may have been influenced by a series of decisions in this Court, frequently decisions in which Justice Deane was either the author or part of the joint judgment, where his Honour evolved - and, in our respectful submission, there is no criticism in the process - a more over-embracing or unifying theme, as it were, to develop a taxonomy of inequitable conduct for the useful purposes which it continues to serve. Now, the English have chosen another view, and it may well be recognised that there are divergences between the law of this country and of that country. They may ultimately reflect the different social conditions of the respective nations, but none the worse for that, in our respectful submission.

KIRBY J: I realise that in Breen v Williams this Court said we all have to be terribly careful of Canadian decisions in equity, but have any other countries of our tradition followed us?

MR COLES: Your Honour, I could not assert that my own researches are sufficiently extensive or organised - - -

KIRBY J: Anyway, you accept that we have taken a different course.

MR COLES: We accept that the law in this country is different. We do not urge on your Honours any need to change the law, to orient itself towards the English view. We have a preference, which may, as with many things, boil down to no more than a personal inclination to - for example, the view that her Honour Justice Gaudron took in Stern v McArthur of the process by which one arrives at the remedy of specific performance. As in many things, your Honours, the judicial approach will ultimately, at the end of the day, resolve itself to questions of personal preference as to the relevant policy to be pursued.

GLEESON CJ: Mr Coles, could you just comment on paragraph 66 - it is a factual matter - in the dissenting judgment on page 217 of the appeal book? I will ask Mr Officer the same in due course.

MR COLES: We wholly, with respect, endorse that paragraph as a correct statement of the facts so far as it deals with the facts found by Justice Windeyer and the application of the relevant legal principles to those facts.

GLEESON CJ: It seems to say that at the time the vendors terminated the contract, they did not have the faintest idea whether the failure to pay the deposit on time was the result of contemptuous disregard of their contractual obligations by the purchasers, or what.

MR COLES: That is right. The evidence, your Honour, does not enable a conclusion about those matters at all.

KIRBY J: Even now?

MR COLES: Even now. Inferences may be drawn from the contractual package that crucial for the purchasers was the necessity to demonstrate why it was that they did not pay the deposit on time, and on the findings of Mr Justice Windeyer they did not so demonstrate.

That finding, if we may respectfully say so, your Honour, produces a number of conclusions. If one does simply not know why the purchasers did not pay the deposit, because their evidence was deficient in exposing the circumstances, then it makes it all the harder - indeed, in this case, it makes it, we submit, impossible - to ascribe unconscionability to the vendor because how can you be unconscionable by causing or contributing to someone's breach of contract when you do not know why it was that they breached the contract?

GLEESON CJ: I may not have read the judgments with sufficient care yet, but that finding of fact referred to in paragraph 66 may explain why the majority of the Court of Appeal dealt with the case, not on the basis of unconscionability, but on the basis of the function of the deposit.

MR COLES: We think, your Honours, that that must have a great deal to do with it, with respect, and we suggest that those circumstances thereby led the majority into error. But, your Honour, I think we do return to that topic when I come to analyse some of the other matters which appear to have actuated the majority's final conclusion. If I could ask your Honours to go back to page 211. At the very foot of the page at line 55, the last sentence going over the page:

To refuse such relief -

that is to say relief against forfeiture -

would leave the vendors with land which no doubt has increased in value and which now has the benefit of the development approval, and with the whole of the deposit.

That seems to be the next major reason in forming the majority view. I should say, your Honour, the reference to the "whole of the deposit" may be ambiguous. The only deposit available and sought to be forfeited by the vendors was the one-tenth of the deposit, that is to say the 1 per cent deposit, which had grown by an intermediate dealing to the precise amount of $50,000, so that perhaps the court was under the misimpression that the total of 10 per cent, that is to say some $187,000 worth of deposit, was going to be the result or consequence of the forfeiture.

HAYNE J: Had the contract been terminated without any protest by the purchaser, could the vendor have brought an action for the balance of the deposit?

MR COLES: Yes, it could. There was an express contractual provision, to which I can take your Honour immediately, which - - -

HAYNE J: But even without that, could it not have brought an action for recovery of the whole of the deposit?

MR COLES: I am inclined to think so, your Honour. The matter was put beyond doubt in the present case by the provision of the contract which is on page 30 of the appeal book and provides that:

Should the deposit paid . . . be less than ten per cent . . . then . . . in addition to other remedies available to the Vendor . . . the Purchaser will be liable . . . for the full ten per cent.

In the events that happened the purchaser was not sued for that sum and the precise fate of the moneys that are paid later to the agent are not really in question in the present appeal.

Your Honours, we say as to their Honours observations commencing at the bottom of page 211 and continuing to page 212, that is say the references to the increase in value of the land and the benefit the development approval, these matters, firstly, of course, if the vendors had the right to terminate, then that right itself, of course being conferred by the contract, could not of itself be an unconscionable right in its exercise, one would need other circumstances.

The increase in value of land is, of course, by no means an inevitable matter between exchange and completion, although it may be an ordinary consequence of inflation. It is impossible to suppose that a vendor who terminates for a purchaser's breach can do anything more than get his land back and it is ultimately irrelevant, therefore, we suggest to make comparisons or inquiry about whether the land has gone up in value or not.

In the present case, your Honours, there was no real evidence that the land had gone up in value at all. One may suppose it might have but the purchasers produced no evidence to show whether that was the case or not and, if it was the case, whether that was the case by reason of their exertions, which were apparently considerable, in obtaining the development consent.

CALLINAN J: A lot can happen in the volatile Sydney land market in the space of a year.

MR COLES: That is right.

CALLINAN J: There are risks both ways, I would have thought.

MR COLES: We would so submit, your Honour.

CALLINAN J: And those risks must always be there and always apparent to the parties where you have a contract which is not due for completion for a fairly long time.

MR COLES: Yes. We would say that in that very situation, your Honour, that must mean that parties to the contract from the outset take the risk that forfeiture to the vendor will leave the vendor with land of increased value.

CALLINAN J: A long term contract like this with an opportunity to obtain development approval is really very like an option. You would often pay 10 per cent of the fair value of the land to buy an option for a year.

MR COLES: We respectfully adopt that observation, your Honour. We would add to it these further considerations. When you are tying up your land for 12 months, or in the case in this contract I think close to 15, you are doing so on terms, particularly here, a very small deposit initially. You are in the meantime preventing yourself from dealing with any other prospective purchaser no matter whether the market should rise and particularly if it rises only temporarily in the meantime, add to that one is in the meantime paying the rates, land tax, and so forth on the land, that being all to the vendor's own account pending completion, one is then left with the situation that when one takes the land back in consequence of a termination, inevitability must be that any increases, or for that matter any decreases - - -

CALLINAN J: That is why I have a problem with this proposition of a windfall. If you look a the net position and the value of an option and you set that against what the purchaser had, I do not know what the net result would be.

MR COLES: We would submit, your Honour, that - - -

CALLINAN J: There is no evidence in this case, is there?

MR COLES: There is no evidence of a windfall, your Honour, in our respectful submission.

KIRBY J: Would not judges sitting in the Court of Appeal in Sydney be entitled to take note that in Harris Park three suburban properties would on the whole generally go up?

HAYNE J: I thought the notion that the property market generally rose was an idea much promulgated by vendors and those who act for them and those who practised during a few credit squeezes in this country.

MR COLES: The notion that property markets only ever go up is as much as anything the creation of the real estate market.

KIRBY J: Well, during the period we are talking about - 1999 to date - I mean, with low interest rates, that has been the general pattern in Sydney, has it not?

McHUGH J: The state of the market was often evidenced by who was the plaintiff in a summons for specific performance - - -

MR COLES: Just so. All we would say, your Honours, is it cannot be per se unconscionable for a vendor with a contractual right to take his land back merely because it may in the meantime have increased in value. That, a fortiori, must be so when the purchaser who complains of this leads no evidence at all to show what the extent of that increase in value is.

CALLINAN J: And the increase in value is all relative, because if the vendor wants to sell it to somebody else and replace it, he probably has to replace it on that very high market anyway. So the net - I just have terrible problems with this idea of a windfall, because - - -

MR COLES: Well, even if there had been what some may call a windfall - maybe the land had doubled in value - if the contracted-for benefit is that the inevitable result of a termination is you must take your land back, then that is not a windfall. That is the inevitable result of a legitimate exercise of an agreed contractual right. We have, with respect, the greatest difficulty in seeing how a benefit which the parties have agreed shall be the result of a particular set of circumstances can ever be classified as a windfall, whatever that expression may mean. We complain, your Honour, that the expression ultimately lacks content.

CALLINAN J: It is the same with "hardship". You do not know what the relative hardships are unless you know the matters that I have talked about - the value of options, the relativity of other land values, replacement costs, all sorts of things - and that makes discussion of hardship and windfall in any confident way difficult.

MR COLES: We would respectfully - - -

KIRBY J: You are addressing these arguments to us - being as we are a national Court with Judges from other parts of the country, in New South Wales, you would be addressing the Court of Appeal, where they sit there having some little idea about Harris Park, Sydney. I thought - I may be wrong, and I may be confusing it with the other case - that you made a concession that the Court was able to draw an inference that there was an increase in the value of the property.

MR COLES: I do not believe we made a concession, your Honour, but I have said to your Honours here it may be supposed that the land may well have gone up. But we have said that that cannot really contribute to the factors that must be established to found a conclusion of unconscionability. The same may be said - - -

CALLINAN J: I acted for a developer in Sydney who wanted to get out of a contract because the land had gone down 30 per cent in the space of about 18 months.

KIRBY J: It must have been built on a tip.

CALLINAN J: No, it was not, it was on the North Shore. It was apparently very attractive land.

McHUGH J: If you were in the Sydney property market between 1987 and 1994 or 1995, you might have a different view as to whether or not markets go up or down.

KIRBY J: We are talking about the facts of 1999 to date.

MR COLES: But your Honours will not have overlooked that in the cases between, I suppose, about 1980 and 1990 much conveyancing litigation was about notices to complete which purchasers could not comply with for various economic reasons. That was because things were not quite so good. Now, one cannot, in our respectful submission, have one view of a "windfall" in one set of economic circumstances and a different view in another. We want to make this point particularly specifically with respect to the complaints made against us, that we somehow acquired the value or benefit associated with the grant of the development application.

KIRBY J: Well, your first answer is, so what?

MR COLES: The first answer is, so what? The second answer is, there is no evidence that the vendors themselves - although they undoubtedly knew that a development application was being sought - had the slightest idea what it cost in terms of time, effort and money. Thirdly, there is no evidence and no supposition - they were, after all, selling their house properties - that they had any particular necessary supposition that they would gain any benefit for themselves from somebody else doing development applications on their land.

KIRBY J: And there was no evidence - - -

MR COLES: Fourthly, as Justice Giles pointed out, the fact that the land had a development approval potential no doubt was a factor that contributed originally to the working out of the contract price when the transaction was entered into.

KIRBY J: And there is no evidence in this case that they had a tame purchaser waiting to pick up the bonanza at a huge increasing cost.

MR COLES: And no evidence, for that matter, that as householders selling residential property in which they lived - I think Mr Romanos lived in one property, his mother lived in the adjoining property, and I suppose the third must have been let - but no indication in the evidence that either of them had the slightest inclination to pursue careers as land developers, or, for that matter, that having had one bad experience with developers, they necessarily wanted to sell the property to the next round of land developers, as opposed to retaining it, for example, as their home.

Now, we do not know these matters, your Honour, but the fact that the property acquired a development approval is of no moment, in our submission, for the principal reason - apart from the factual matters I mentioned - of course, it is not the cost, effort and expense involved in gaining the approval that matters in the slightest degree. It is the extent to which, if at all, the party terminating the contract benefits unconscionably by appropriating that value to himself.

As I say, here no effort was made, as his Honour Justice Windeyer found, to really establish the proper value to the vendor of the approval, and his Honour's comment that in this case you could not compare loss with gain must be destructive of that component of an analysis of unconscionability which allows that to be an integer.

A notable feature of this contract, of course, was the fact that the parties made express contractual provision for what was to happen in the event of the purchasers defaulting and they made express contractual provision that if that happened then - I should take your Honours to the special condition. It is No 22 at appeal book page 32. At the foot of appeal book page 32 your Honours will see special condition 22:

Should this Contract not be completed for any reason other than the Vendor's default -

(a) the Vendor is to have the use and benefit of all engineering, architectural and survey plans available including those lodged with and approved by the local Council in connection with any application made in relation to the subject property . . . and all consents relating thereto; and

(b) the Purchaser warrants that all fees for such plans -

and the like, have been:

paid by the Purchaser, and that the Vendor will have the benefit of all such fees and will not be liable to reimburse the Purchaser for same.

Now, your Honours, that is part of the agreed consideration for the vendors tying up their land for this long period of time. That is its first function. It is not a penalty. Indeed, if anything, it probably goes in alleviation of the defaulting purchaser's liability for damages in the event, for example, that the vendor should be required to resell at a deficiency because the vendor can then resell in a market where he can transfer the benefit of these consents and plans.

That goes to the defaulting purchaser's benefit rather than to the defaulting purchaser's disadvantage, in our respectful submission, because it may readily be seen that that could reduce his exposure to damages representing the deficiency between the resale price and the contract price.

KIRBY J: All of these submissions are put within the paradigm of the law - of the obligations at law - but then you have to add the conundrum around that of the obligations or the change of those or relief from them that equity provides.

MR COLES: But here we want to say, your Honour, just this about such a situation, that it might be said in certain circumstances that clauses which produce forfeitures to the vendor in events of breach could well be penalties. That could not, I respectfully submit, for reasons I have mentioned, be said about this clause and whether or not it is a penalty does not matter in this case because the purchaser seeks specific performance. But, in any event, in our respectful submission, it is one thing to say that a contractually agreed loss is a penalty. It is another thing to say that a contractually agreed loss is a forfeiture because it cannot, in our respectful submission, ever be unconscionable to give effect to the terms of the bargain the parties made for themselves, bargaining freely at the outset, making express consideration or express forecasting of the very event that each of them supposed was capable of happening.

GLEESON CJ: Are there not cases that deal with the question of a deposit in excess of 10 per cent being a penalty?

MR COLES: Certainly, your Honour. Yes, indeed. For example, McDonald v Dennys Lascelles is the, I suppose, best-known example and probably is the case that supports the proposition I was describing briefly before, namely, that you just do not stigmatise either as a penalty or a forfeiture a 10 per cent deposit and that is why, really, the purchaser is entitled to keep it. It is an onus to bind the bargain and security for performance of the contract, not something that when seen in the context of a contractual right of termination is simply security for the payment of money and that is the way we put the first set of submissions.

The next area where it seems their Honours in the Court of Appeal held against the vendors was an adverse view taken of the vendors apparent failure to warn the purchasers before they exercised their right of termination. We simply say as to that, your Honour, there was contractually no duty to warn. It is difficult to see how there could have been a duty to warn of a breach which would be tortious under the general law. The parties were not fiduciaries. There is in any event not the slightest evidence that had these people been warned it would necessarily have made any difference. That is because we do not know why they did not pay.

If they did not pay because they did not have the money, then warning them would not have done any good. If they did not pay because they had the money but for some reason wanted to keep onto it, warning them might simply have generated I suppose another level of brinkmanship. One just does not know, your Honour, why they did not pay, so one therefore does not know whether it would have been other than a futility to warn them. In any event, your Honours, the - - -

KIRBY J: Mr Officer is saying you can draw inferences from certain of the evidence. This is a curious point of distinction between this case and the earlier appeal, that we do not have that explanation in plain terms and we are forced to draw inferences. What do you say are the correct inferences?

MR COLES: We suggest those propositions are marred by the absence of that evidence and your Honours should not - after all, may we remind your Honours of something that was read to your Honours this morning, that is to say that there must be a strong case made out, it was said in the passages in Legione v Hateley and Stern v McArthur which Mr Douglas read to you, to depart from the general approach, that is to say that people must be held to their bargains. If the standard the law demands is a strong case, then why should the court in seeking to discharge its function be asked to draw inferences about matters which the purchasers in default chose to adduce no evidence themselves?

KIRBY J: It is a little bit like a - what is that decision where if you bear the onus - - -

MR COLES: Jones v Dunkel.

KIRBY J: Jones v Dunkel.

MR COLES: Well, indeed.

GLEESON CJ: Mr Coles, if you are right about the absence of any explanation of how this failure to pay the amount on time occurred, is there anything more to this case than a case in which there has been an unexplained failure to pay the deposit on time coupled with evidence that the amount was available very shortly thereafter but after termination had occurred?

MR COLES: That is right. There is nothing more to the case than that, apart from the principle of law which Justice Sheller purported to derive from Stern v McArthur about the deposit being no more than security - the right of termination being no more than to secure the payment.

GLEESON CJ: How would this apply in the common or garden case of a contract for the sale of real property providing for a 10 per cent deposit and providing that the deposit had to be paid by a certain date otherwise the vendor can terminate, and failure to pay by that date?

MR COLES: Your Honour, that is what the contract provides, in our respectful submission, and that is the right it confers and that is just the contractual position which is so universal, your Honour, that it is the position found expressed in the standard-form contract, which was the contract in this case.

GLEESON CJ: Except that I suppose that in the ordinary case of a contract of sale of real estate the 10 per cent deposit is payable on contract.

MR COLES: That is right. Now, here, your Honour, it is a fair distinction that the parties, no doubt for the purchaser's benefit, allow 90 per cent of the deposit to remain unpaid for, in the events that happened, the better part of, I think, more than 12 months. But, your Honour, that does not mean that one treats, as our learned friends suggest in their submissions one perhaps should, the next tranche or the 90 per cent balance of the deposit as if it were not a deposit at all, but - - -

GLEESON CJ: Are you entitled to treat it as though it was a holding deposit?

MR COLES: We say, your Honour, it has the character the parties by their agreement gave to it, namely the deposit. It is just a deposit pure and simple with the qualities and purposes that Lord Herschell identified.

GLEESON CJ: But if you paid a holding deposit, which is typically significantly less than 10 per cent, there would not be any doubt, would there, that failure to pay the balance of the deposit on time would lead to loss of the purchase?

MR COLES: Certainly not. If one treated - - -

GLEESON CJ: That is what a holding deposit is.

MR COLES: Yes, that is right.

GLEESON CJ: I will hold it for you for a certain time.

MR COLES: It is a species of option fee really.

GLEESON CJ: Yes.

GUMMOW J: Before you sit down, Mr Coles - I am sure you are about to - could you go to Stern v McArthur 165 CLR 503 for a minute?

MR COLES: Yes, your Honour.

GUMMOW J: The paragraph in the middle of the page there, beginning at the second sentence really where Sir Anthony Mason says - I realise he was dissenting in that case, but I do not think it matters for present purposes:

The doctrine is a limited one -

and following.

MR COLES: Yes, we respectfully embrace that passage.

GUMMOW J: I would have thought so.

MR COLES: Yes, we wholly adopt it and we say, indeed, although Sir Anthony was in the minority in the decision, if you took away what was described as the close mortgage analogy - - -

GUMMOW J: Yes, that is right.

MR COLES: - - - then there is really no dispute at all between the principles Sir Anthony Mason was expounding and the principles of the majority. We respectfully commend that passage as a proper statement of the law, absent the penalty situation or the security - - -

GUMMOW J: Or the accident situation.

MR COLES: Or the accident situation, yes.

GUMMOW J: Which would not fall within that.

MR COLES: No. Well, here, your Honour, there was a notice of contention relating to inadvertence and I merely want to say three things about that. The issue there, we would maintain, is this, that inadvertence does not, with respect, seem like a promising start to a case on unconscionability. "I forgot" or "The cat got my homework" is not a sort of supposition that readily implies that the person taking advantage of their contractual rights is somehow morally delinquent or guilty of some species of moral turpitude equivalent to the exploitation of a known disability on the other party's part.

Rather, your Honour, inadvertence, in our respectful submission, is a disqualifying feature rather than a qualifying one. I appreciate what Justices Deane and Mason said in Legione v Hateley was that amongst other indicia or other what they describe as subsidiary questions was a question which included inadvertence.

GUMMOW J: Yes, but I think Sir Anthony pulled back from that.

MR COLES: Yes, and, with respect, very correctly so. May we say the reasons why we claim that that is right. Firstly, it was, of course, part of a rolled-up concept, the two elements of which were: is the breach trivial or slight; and was the breach inadvertent or wilful? Everyone agrees wilfulness wholly disqualifies, but inadvertence, at least in the Justices Mason and Deane formulation, also disqualifies unless the breach was trivial.

Here, your Honours, we cannot assent to the view, even if it be inherent in some of the cases in passing, that where parties have, by agreement, declared that a particular contractual provision would be essential, that it is therefore ever open to classify that essential term as trivial. The parties have made their own agreement about that. It is not open, in our respectful submission, and no court should be ever asked to declare a breach trivial when the parties, by solemn agreement, have declared it essential.

KIRBY J: What about the heart attack case?

MR COLES: That is a classic case of accident which does not require any further demonstration of unconscionability than - and that is why we accept that it is probably right that fraud, accident, mistake and surprise, in a sense, may stand apart from another territory of unconscionability. For example, that territory of unconscionability which embraces the exploitation of known disabilities or that area of unconscionability which involves causing or contributing to the defaults of others.

KIRBY J: Cases of mistake can get quite close to cases of inadvertence.

MR COLES: Yes.

KIRBY J: The articled clerk who puts it in the wrong pigeonhole and fails to go to the right place or gets lost or - - -

MR COLES: We would accept, your Honours, that fraud, accident, mistake and the like. perhaps because an established traditional category and properly so, do not necessarily require contribution from or causation on the part of the person exercising the contractual right, whereas in unconscionability, it is impossible to see how any conduct of the vendor, or any, for that matter, omission by the vendor - if we are looking, for example, at failure to warn - could ever be unconscionable unless it did cause or contribute to the purchaser's default.

As I say, we commend to your Honours the view that accident, perhaps, and mistake and all that stand apart from that, and may be things that equity will relieve from, even though time essential, even if the - I am doing no more, I think, your Honour, than expressing a view which is probably, at the end of the day, a subjective one, and it may be, your Honour, that rigour requires the recognition that even fraud, mistakes and accident require contribution by the vendor. Your Honours, I am anxious to ensure that Mr Officer has a fair share of the time. Your Honours, we supplied two articles - - -

HAYNE J: Not as anxious as he is, Mr Coles.

MR COLES: Your Honours have been supplied over the luncheon adjournment, I think, with Dr Hossein Abedian's and Mr Michael Furmston's article in volume 12 of the Journal of Contract Law called "Relief Against Forfeiture after Breach of an Essential Time Stipulation in the Light of Union Eagle" and a copy of Professor Butt's article in the ALJ which we are constrained to confess exhausts the extent of our further, apart from those matters that were raised this morning, delving into the literature on the topic.

The one matter I have not dealt with, your Honour, is the importance apparently ascribed to the fact that there are a couple of conversations between the parties. They are set out, your Honour, in the appeal book, principally, I think, commencing at page 11. It is our respectful submission that these, as Justice Windeyer found, led to nothing, but we draw your Honours' attention to them - - -

KIRBY J: What pages of the appeal book are they?

MR COLES: If your Honour would look at page 11. On 1 December, at around 11.00 am, Mr Maroon said he met with Mr Romanos and they had a discussion that he sets out there. The point to note about that, having regard to paragraph 11, is that at that time Mr Maroon did not - and so far as the evidence supports, Mr Romanos did not - know that the council had sent to the developer the notice which Mr Maroon says, in paragraph 11, he received at 5.00 pm on 1 December. In any event, the conversation is inconsequential.

Between then and the 11^th, there must have been some discussion either between the parties or their solicitors about another property Mr Romanos was interested in buying, but nothing came of that. Paragraph 17 records a conversation where Mr Romanos told Mr Maroon that he is looking for another place because "Alice Street is too expensive", and the deponent, Mr Maroon, said:

Let me know . . . so we can arrange an early settlement -

That was happening in between the time when it had become the purchasers' obligation to pay the balance of the deposit, although there is no evidence that Mr Romanos - and a fortiori no evidence at all that Mrs Romanos, the other vendor - knew that the events which had given rise to the obligation of the purchasers to pay, which on the proper construction of the contract was found to be the obligation to pay on 4 December, in consequence of their receipt at 5.00 pm on 1 December, of council's notice. Nothing to suggest that Mr Romanos, let alone his mother, knew that that event had happened, and the contractual machinery designed to ensure that the Romanos' interests should know that the balance of the deposit was payable, namely, the obligation on the purchasers to notify the vendor of the fact of the council's consent had not been performed.

KIRBY J: Can it be said that Professor Butt, who is a professor of land law, who favours your view has, as it were, upheld the utility and the principle of rules, if only he had been a professor of equity he might have come along there and written a similar article upholding Justice Sheller's view. This is the tension here.

MR COLES: We do not necessarily see, your Honour, a great tension between property lawyers and equity lawyers. The age of specialisation may not have so far advanced as to compel that distinction. In short, we say, your Honour, that these intervening conversation or conversations - there seems to be only one, the one on 11^th - produced no consequence at all. Your Honours will bear in mind that waiver was not asserted, at least not relevantly here, and estoppel was not relied upon, and there is nothing otherwise in the conversations that suggests unconscionability.

Again, we come back to the same answer. If we do not know why these people did not pay the deposit, how can we conclude adverse to the vendors that it was for some reason associated with some conduct or some omission such as something Mr Romanos said or something Mr Romanos failed to say, namely, "Please pay the deposit" if he knew, which the evidence does not support, the deposit was then payable. May it please the Court.

GLEESON CJ: Yes, thank you. Yes, Mr Officer.

MR OFFICER: Thank you, your Honour. The reason perhaps why there was no explicit proof of the reason why the balance of the deposit was not paid and the reason why the notice of contention is before this Court, as it was before the Court of Appeal asking the court to draw inferences, was because of the course that the trial took. The course which the trial took was one where the respondent by its summons was seeking specific performance of a contract which had been terminated. It was, therefore, abundantly clear that the issue was relief against forfeiture. But there had been no express claim in the summons to that effect.

Now, when the matter came on for hearing, as appears on page 6 of the appeal book, his Honour no doubt quite clearly from what appears at lines 20 to 26 at the urging of my learned friend in objecting to relevance, granted leave to amend the summons to include an express claim for relief against forfeiture. But what appears clear - and the amended summons appears at appeal book page 1 - what appears clear though from Mr Justice Windeyer's decision on a matter which I want to come back and make a reference to at the moment, at page 164 line 5, that amendment was allowed but on condition that no further evidence would be adduced.

What then happened, if one then goes back to appeal book page 6, was that in very short time the affidavits were read and some objections were made and upheld. Could I take your Honours to appeal book page 7 line 15 where there is an objection to a document which appears at appeal book page 157, that is JM13?

This was the explanation that was sought to be put forward, albeit in the solicitor's letter.

KIRBY J: This letter was admitted into evidence, was it?

MR OFFICER: Subject to a restriction that was as a result of the objection. What had happened prior to this letter being sent, as is referred to in the judgments, was that the respondents' solicitor rang up the appellants' solicitor and said, "What is the basis for the termination? What is the basis for it?", and he was then informed that the basis was non-payment of the balance of the deposit and what he was saying in that letter at page 157 line 30, is "You have made no such demand".

Such demand would have alerted the purchasers to the provision in the contract requiring them to pay the extra amount.

So it is perfectly clear in the letter what was being asserted was inadvertence. What happened then, if one goes back to the appeal book at page 7 - - -

GLEESON CJ: There is no suggestion that the vendors were aware of the inadvertence at the time of the termination.

MR OFFICER: No, but by insisting on the otherwise legal termination, the insistence upon it can be unconscionable if the circumstances turn out to be so, just as the solicitor being run over on his way to the settlement.

HAYNE J: But what is the proposition? "I did not know what I had agreed to"? That is at the core of it, is it not?

MR OFFICER: No, the core of it is twofold, with respect. What I am seeking to put to your Honours is this, that there is no explicit reason given for non-payment of the balance of the deposit but in these circumstances, and in these circumstances, we submit, contrary to, as it were, an intentional election not to call any evidence on the question, the Court would be, in our submission, willing to and would draw the inference that the non-payment of the balance of the deposit was due to inadvertence; to negative any suggestion that it was wilful and to negative any suggestion that there was no explanation for non-payment.

GLEESON CJ: Inadvertence in the sense that they had just forgotten to what they had to agreed to?

MR OFFICER: It was being put forward on the basis of inadvertence.

HAYNE J: That is a grand way of saying, "I didn't think about my contractual obligation", is it not? Is it any more than that?

MR OFFICER: It was not being put any higher than that and it has never been suggested that it was being put any higher than inadvertence.

GLEESON CJ: On page 157 line 30, it said that if demand had been made that "would have alerted the purchasers to the provision in the contract". It is usually the solicitor for the purchasers who alerts the purchasers to the provision in the contract.

MR OFFICER: That, no doubt, is normally the situation, your Honour.

GLEESON CJ: So what it really means is "would have alerted us".

MR OFFICER: That is a fair reading, with respect, of the letter.

GLEESON CJ: Yes.

MR OFFICER: And it was in the circumstances of, if one goes back - - -

KIRBY J: It would depend a bit on the terms of the contract between the parties as to whether a notice had to be given or whether there had to be a demand but that did not apply here. It would depend upon two factors, it seems to me. First, that. Secondly, if there were evidence on it, any comity between the particular solicitors or comity between solicitors generally in the practice of this area of legal practice, I do not know, but there is no evidence of that kind here. It is just that the solicitor is saying, "You should have given us warning about this".

MR OFFICER: But it is coupled with one other factor and could I come to that in a moment? It is coupled with the factor as found by the Court of Appeal that the conversations that took place between the parties between 1 and 11 December after the time for payment of the balance of the deposit had arisen were such as to only lead to the inference that the vendors were proceeding on the basis of the contracts still being on foot and that such a perception would have been encouraged in the vendor. That appears at appeal book page 213, line 40:

The actions of Mr Romanos succinctly described in the judgment are only consistent with his proceeding on the footing that the contracts were still on foot. Mr Romanos' statement "we want to vary the terms of the contract" which was not denied, would encourage that perception by Mr Maroon. It is of course true that there is no evidence that at the date of that conversation Mr Romanos was aware . . . though that was stated in the letter -

to which I have just taken your Honours, and which was not denied. Again, what he said could only be said on the basis that the contract was still on foot.

KIRBY J: But what is the precise limitation of the admission of the letter at page - - -

MR OFFICER: The limitation is as appears on the transcript at page 7, namely, evidence that the letter was written. It does not prove the facts stated in it.

HAYNE J: Apropos of this, page 32, clause 19, obliged your client, did it not, to "keep the Vendor advised as to the progress" but more relevantly inform "the Vendor immediately approval is received"? Is that right?

MR OFFICER: That is the provision of the contract.

HAYNE J: Did it?

MR OFFICER: No, your Honour.

HAYNE J: It seems a bit much, does it not, Mr Officer, to turn around - - -

MR OFFICER: There is no evidence - - -

HAYNE J: Let me finish - to turn around and to say, "We did not advert to our contractual obligation. True it is we were bound to tell the other party that the time had arrived. We did not, and because we had some conversations with them in the intervening period we somehow turned that to our advantage."

MR OFFICER: In circumstances where it was asserted to the vendor and implicitly admitted by them that they in fact had been aware of the approval of the development consent at least before we were. That certainly appears, in our submission, out of the correspondence that appears at appeal book 157 and the reply that was given that appears at page 160. Not only is there no denial of the proposition - and this is what their Honours were referring to at page 213 - not only was there no denial that the vendor was in daily contact with the council and knew of the approval before the purchaser, the response that was given carries with it, in our submission - "notwithstanding the matters raised" is the phrase used - the admission that that assertion is correct.

Now, if I could perhaps go back briefly for a second to the question of explanation. It was then at appeal book page 7, line 20, that an application to reopen was made for the very purpose as described by his Honour Justice Windeyer in his decision on this aspect of the matter and that decision appears at page 163:

The purpose of reopening was to elicit the evidence as to why the balance deposit . . . was not paid.

So it is in that context where there was, at least on the correspondence, an assertion of the reason why it had not been paid and, at least on the correspondence, apparently an acknowledgment even if that is so, when it came to the actual hearing and the limited effect was given to that letter, then it was sought to, as it were, call someone directly to put that matter before the court, and it was not allowed.

So it is in that circumstance where we submit, with respect, as we do, that, in the written submissions at paragraph 28 and following, the Court would clearly infer that the non-payment was due to inadvertence, in the circumstances not only of the conversations that I have alluded to, but also in the circumstances where the respondent had given a notice making the completion time as required as 1 March and in circumstances where the balance of the deposit was, in fact, paid the next day.

So we would submit, with respect, that it is a situation where the Court ought fairly to draw the inference that the circumstance of non-payment was inadvertent and, in addition, it was a situation where, as the Court of Appeal found, the conversations that took place were such that would have been only on the basis that the appellant was proceeding and that the contract was on foot, and that perception would have been encouraged in the eyes of the vendor.

HEYDON J: In your notice of appeal with the Court of Appeal you attacked Justice Windeyer's evidentiary rulings. Your present argument does not depend on maintaining that attack?

MR OFFICER: No, it does not.

KIRBY J: So the end of the line is: you did not explain it. You were the onus-bearing party insofar as producing the explanation of why, in your camp, there was the failure, and you rely on inferences being drawn by the primary judge or the Court of Appeal and upheld in this case by us. The foundation for the inferences is pretty flimsy, really, but given that the letter was admitted only on the basis of the proof that it was sent, not on the basis of proof of the truth of the matters contained in it - it is a very flimsy case. There is an irony in this, that yours is the case where you have won, where you have not proved what happened, and the others' is the case where they lost, where they proved that it was really an accident.

MR OFFICER: But ours is a case where, on their Honours' findings, there was encouragement or behaviour by the vendor in the conversations that the court refers to between 1 and 11 December. There is no such suggestion in the other case that there was any contributing behaviour by the vendor. That is the basis really upon which the majority in the Court of Appeal thought those conversations ought to be put and the weight that ought to be put to them. It is also the basis upon which his Honour Justice Windeyer said at page 172 line 25:

I have come to this conclusion with considerable reluctance because it is impossible to express any enthusiastic approbation for the conduct of the vendor/defendants.

What he was referring to was this conduct in carrying on these discussions and then without any warning serving a notice of termination in circumstances where, true it is, there was no contractual obligation to serve the notice, and in circumstances where a case could not be made of waiver or estoppel. But nevertheless he took that view of their behaviour and clearly the Court of Appeal took that view of their behaviour. So, to answer part of your Honour's question, there was that element in this case which there was not in the other one.

The other element, of course, which is present in this case which there is not in the other one - or perhaps the other way around - is the history of the matter, in that the contracts in this case were entered into in September 1999, and in the ordinary conditions of the contract that appear in the appeal book at page 21, clauses 2.3 and 2.5, were the conditions which gave rise to the termination, in distinction to the other case where there was, a month before the completion date, an express deed entered into which expressly set out all the matters which your Honours have been taken to. The requirement for the additional deposit, of course, is at page 32 of the appeal book, which required it to be paid upon approval of the development application rather than certainly any specific date.

So we would submit, with respect, that the unconscionability in this case ought to be viewed in that context, and in the context where their Honours characterised the requirement to pay not the deposit itself, but the balance of the deposit as a provision for security for payment. We would submit, with respect, that if one goes back to - could I just perhaps give your Honours a reference to it - Stern v McArthur at page 527 to 528, it is certainly not clear, we would submit, in those provisions that it is necessary for relief to be granted for the transaction to be in the nature of a financing arrangement. Certainly, Justices Deane and Dawson at page 527 at about point 4 on the page refer to the Equity Court traditionally granting relief where the provision for forfeiture has been made to secure payment.

Now, in one sense, we would submit that it is certainly not analogous to the Brien v Dwyer type contract deposit. It is certainly a case here where on any view of it the respondents had undertaken their contractual obligations in all sorts of ways by making development applications, by paying not only the initial deposit but further deposits under the September deeds. They gave a notice of intention to complete, they lodged the development applications as required by the contract and employed their surveyors and so forth, with all the cost that that involved. All that was required was the payment of the deposit, and in one sense the forfeiture provision, we would submit, was correctly characterised as a security for payment provision.

Even if it were not properly categorised, it is still nevertheless, we would submit, a factor to be taken into account in determining whether relief ought to be given. It is not in the nature of an initial deposit. It is certainly not in the nature of a final payment on completion which carries with it not only the obligation to pay but the obligation to accept title, and we would submit as the Court of Appeal found, no one was either worse or better off once payment had been made certainly the day after.

One of the other factors which the court took into account was the nature of the benefits that flowed to the vendor on termination. That consideration they characterised as a windfall, and in one respect that characterisation may have been overgenerous if one considers that the windfall is something not contractually expected, but it is certainly a matter which this Court in Legione v Hateley and the subsidiary questions certainly envisaged ought to be taken into account in determining whether or not relief ought to be given on the basis of unconscionability. It is a measure of the magnitude of the vendor's gain and certainly the magnitude of the vendor's gain carried in this case not only the benefit of the development approval and the clause 22 plans, but also the benefit of what were found to be quite significant sums expended on the development approval.

It is true that there was no direct evidence of the increase in value of the property as a result of the development consents. No one was contending before the trial judge and no one contends here that the mere fact that the land went up in value was a relevant consideration, but it was contended below and his Honour was prepared to assume, as he did at appeal book page 171, line 45, that the value of the properties had increased as a result of the development consent.

We would submit, with respect, the Court of Appeal correctly took that into consideration in determining that relief ought to be granted. They are the submissions, with respect, your Honour.

GLEESON CJ: Thank you, Mr Officer. Yes, Mr Coles.

MR COLES: Our responses to the various factual matters to which our learned friends have referred are in the main, I think, already covered in our written outline and unless there is any specific matter relating to those, it is unnecessary to repeat them.

One matter I do apologise for not raising earlier, your Honours, concerns - and this is something I should have raised in chief and I would ask your Honours' indulgence for a few moments to mention it now - we became aware when we read our learned friend's submissions that the parties are not agreed as to what should be the result if the appeal were allowed in this sense, that if the appeal were allowed, as we understand the purchasers' contention, it is that the orders of Mr Justice Windeyer would revive, including an order relieving the purchasers from the forfeiture of the $50,000 deposit.

The curiosity is, your Honour, that all three judges in the Court of Appeal said that Justice Windeyer was wrong in making that order, and we had not assumed that we would need to include a prayer for relief about that in the matters of appeal to cover that eventuality on. I wish to say no more about it. May I have your Honours' leave to file an amended notice of appeal - - -

GLEESON CJ: Is that opposed, Mr Officer?

MR OFFICER: Not in principle, your Honour.

GLEESON CJ: All right. We will grant the leave in principle.

MR COLES: It adds but one more prayer for relief, your Honour, declaring the deposits to be forfeited in accordance with the Court of Appeal's unanimous conclusion.

MR OFFICER: The only matter which I would raise, your Honour, if I might, is this question - it had been foreshadowed before and I am not quite clear what relief is being sought. It was suggested at some point of time that the relief against - could I start again. The deposits were paid as to $18,750 on exchange. A further $31,250 was paid pursuant to the September deeds, making a total of $50,000, and then a further amount of $137,500 was paid after termination on 20 December. I am not clear, as a result of what has passed before, whether the amended notice of appeal as to relief in relation to the deposits is intended to apply to the whole 187,000 or only some part of it, and of course, the consideration under section 55(2A) would vary.

MR COLES: Your Honour, we have never received more than the $50,000 and we have never sought to forfeit more than that sum. It may be that that confusion was what his Honour Justice Windeyer may have had in mind when he made the observation, to which your Honour has been referred, about the lack of disapprobation, but his Honour may have been under the same misapprehension. That is the only basis upon which we can explain his Honour's observation, but I make - - -

HAYNE J: Then is the point cured if the 9A that you put forward in this amended notice were to read, "Declared at the sum of $50,000 paid as deposit under the respective contracts for sale are forfeited"? Or, "is forfeited", it would be.

MR COLES: Precisely, your Honours. I ask leave to make that further amendment.

GLEESON CJ: Are you happy with it on that basis, Mr - - -

MR OFFICER: No objection.

MR COLES: May it please the Court.

McHUGH J: You will have to sue for the rest if you succeed in this appeal.

MR COLES: One can imagine some of the defences, your Honours.

GLEESON CJ: All right, you have that leave. We will reserve our decision in this matter.

AT 3.54 PM THE MATTER WAS ADJOURNED