Ryledar Pty Limited & Anor v Euphoric Pty Limited [2007] HCATrans 698 (16 November 2007)

Last Updated: 21 November 2007

[2007] HCATrans 698

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S233 of 2007

B e t w e e n -

RYLEDAR PTY LIMITED

First Applicant

AZIR MAGAR SIDHOM

Second Applicant

and

EUPHORIC PTY LIMITED

Respondent

HAYNE J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 16 NOVEMBER 2007, AT 10.01 AM

Copyright in the High Court of Australia
MR B.W. RAYMENT, QC: May it please your Honours, I appear with my learned friend, MR M.V. SAHADE, for the applicant. (instructed by Mallesons Stephen Jaques)

MR B.A.J. COLES, QC: If the Court pleases, I appear with my learned friends, MR M.A. ASHURST, SC and MR S.B. DOCKER, for the respondent. (instructed by Thomson Playford Lawyers)

HAYNE J: Yes, Mr Rayment.

MR RAYMENT: Your Honours, may I please begin by drawing attention to the principal communications which we say cross the line between these parties which present both findings and context in which the special leave application arises. Your Honours, the last solicitor’s draft between these parties is set out in the application book relevantly at page 292 where the “Contractual Rebate” is defined, halfway down the page, by reference to the “Reference Schedule”, at page 299 where clause 4.1 appears making the contractual rebate a credit against purchases of petrol and then at page 307 where the solicitors prepared the reference schedule so as to comply with the written terms of the document and Item 4 had “6.0 cents per litre for outside Sydney Metro locations” and the same for diesel.

Then laymen altered the document and one sees how they did so, relevantly, at page 357 of the application book. There was a new item put in Item 5, “Freight”, which has no reference in the body of the document, and each of the other items in the schedule has been renumbered although the typing refers back to the earlier numbers, so Item 10 should be Item 9 and so on. In Item 4 the draftsman has now put a different expression about “6.0 cents per litre for Wollongong, Central Coast and Newcastle”. Then, under “Freight” it says:

Deliveries outside areas defined under the Contractual Rebate will be charged freight as per Mobil’s Price Book less the freight applicable to Newcastle.

The performance under that form of document was that all country deliveries, whether for Wollongong, Central Coast and Newcastle or not, were recorded 6 cents per litre rebate and that I am talking of before the variation to the document. Justice Tobias says that at paragraph 57 at page 112 of the application book. He says that there were four non-contractual rebate area country areas where the rebate was just accorded by the defendant to the plaintiff.

Then, your Honours, the variation to the document was negotiated and we have sought to summarise the communications which were relevantly all in writing in the reply at page 375 of the application book. Your Honours, perhaps I could assume a reading of it and go to the particular documents. They are at 229 in the application book and particularly at page 232. At 229 there is a fax letter of 9 February 1999 from applicant to respondent. It deposes language which ultimately found its way into the variation agreement of 31 March but it goes on to say over the page at 232, “Typical Delivered Prices For Each Zone” and it takes three towns, Wagga, Queanbeyan and Coffs Harbour, each of which was outside the contractual rebate areas. So it assumes and it allows for each of them a 6 cent rebate so it proceeds on the principle that all country deliveries will attract, as they were attracting, a 6 cent rebate.

HAYNE J: In the Court of Appeal at page 154 of the application book, paragraph 165 it is said that even leaving aside the rejection of certain oral evidences, the belief:

neither the documentary evidence nor the conduct . . . taken jointly or severally, satisfies the onus –

What do you say as to that finding?

MR RAYMENT: We say it is clearly wrong and that when it seemed to be clearly wrong the issues that we seek to propound here arose. That was really why I was seeking to begin with the - - -

HAYNE J: But is it not the case that there are concurrent findings that there is no disconformity between objective and subjective states of mind which is a premise for the proposition you advance as a ground for leave?

MR RAYMENT: Whether it is a concurrent finding or not may be doubted, with respect, because the trial judge - - -

HAYNE J: Leave aside the description.

MR RAYMENT: - - - seemed to proceed on the basis of an amalgam of the subjective and the objective and the Court of Appeal seems to deal with those two separately.

CRENNAN J: But at the end of the day - - -

MR RAYMENT: Even if it is a concurrent finding we would respectfully submit that - - -

CRENNAN J: I was going to say, at the end of the day there is no satisfaction that there was common accord.

MR RAYMENT: I was really seeking to begin with the communications for the purpose of seeking to show your Honours that that is not so, with respect. It will take me a very short time to finish it but could I just bring it forward to the consensus because we submit that when you look at it the issues that we propound do truly arise on the facts as plainly they should be understood, with respect. I was about to say, if you look at 232 there are the examples cited in the very letter which proposes the language which is ultimately used, so we give delivered prices at page 232.

Then, they prepare – and when I say “they”, Mr Coles’ client – prepares the document at 235 which is the language by which they confirm the principle because they take three other towns, each of which is also outside the contractual areas. They take Forster which is up near Taree, Wandandian which is below the area and Forbes which is again outside the area.

CRENNAN J: Did the primary judge deal specifically with these two documents?

MR RAYMENT: He does and I will come to it, if I may, in just a moment?

CRENNAN J: Yes, certainly.

MR RAYMENT: So, they prepare that. They may not send it until a little later when we insist on it. I will come to it. Your Honours, at 242 the other side has prepared a letter of 31 March which contains the language of the variation without the examples and they sign it at 244 and send it to us for signature. They do not quote the examples back to us when they prepare that document but we write to them at 246 before we sign it and we say:

We have received your letters dated 31/3/99 in our office on 12/4/99.

Please confirm the examples of Ryledar’s delivered prices for each zone are correct as demonstrated in our letter dated 15/3/99.

So, we ask them, “What about those examples?” before we sign. Then they fax to us 235 which is their earlier document of 24 February and your Honours see it written at the top “Faxed 13/4/99”, so the day we ask them to confirm our examples they fax us that. It is after they do so that we sign the 31 March letter and that appears in paragraph 82 of the trial judge’s judgment at page 27. He there finds that “On 13April” we sent our fax asking them, “What about the examples?” His Honour says:

Mr Hobbs responded by sending by facsimile his letter of 24 February 1999.

That is the one we just looked at:

Mr Magar says that he executed the 31 March 1999 letter of variation shortly after 13 April 1999.

Now, all of this seems to have been noticed in the Court of Appeal. At page 128 in the judgment of Justice Tobias, paragraphs 100 and 101 his Honour refers to our having asked for this fax and then says that it was responded to by re-faxing the letter of 24 February. Let me add to it. The performance immediately afterwards is that 31 – starting immediately afterwards – 31 further service stations are opened in country areas, not in the rebate areas, and all of them get the 6 cent rebate without any debate or discussion or special arrangement and that your Honours see it in Justice Tobias’s judgment by combination of what he says in paragraph 19 at page101 which sets out the numbers involved and then paragraph 101 at page 128 sets out that each of those was, it was common ground, provided with a 6 cent rebate.

CRENNAN J: Then the primary judge’s finding is explained at 103.

MR RAYMENT: Yes. His Honour seems to have taken the 31 March letter and ignored the fact that it was in the context of the priced examples being exchanged, and our insisting on being given them, and said, well, on their plain meaning there was to be no rebate except in the contract zones, but you cannot say that, we submit, when that chronology is looked at. It is plainly wrong, we would respectfully submit, and if there is a concurrent finding about it, it is the sort of one that this Court may disregard, we submit, because it is clearly wrong. It is clearly wrong on those communications which all cross the line.

HAYNE J: Demonstrating error in the respect you have identified is an essential step in your argument, is it not?

MR RAYMENT: I am afraid it is. I do not submit otherwise, that is why I have had to begin with it. But, your Honours, then you get to the questions in the case, we submit. If you look at the matter those ways – and we submit it is very plain that you do because these are the only relevant communications which lead to the variation. They are not accompanied by any meetings or anything like that. If you then look at the matter that way then you have, we submit, an ideal case to give consideration to Mr Smith’s article in the Law Quarterly Review which we have given your Honours a reference to.

We submit that it proposes for the law of rectification a view of the law which ought to be adopted, we submit, with respect, in this Court and which ought to be adopted in order to overrule what was said, for example, in this case in Justice Campbell’s separate judgment which depends wholly on whether rectification is subjective/objective. That is the very view which Mr Smith argues is wrong in the article that we have referred to and, in our respectful submission, it merits consideration here. Mr Smith says, and your Honours have it, that in effect the cases establish two propositions which have been overlooked in cases following Mr Bromley’s article:

The first is that the parties’ subjective intentions . . . not “crossing the line”, are irrelevant for the purpose of determining whether a contract should be rectified.

That would bring the law of rectification into line with the law of contract.

HAYNE J: Would it not deny the equitable roots of rectification?

MR RAYMENT: No, we submit, because what it gives effect to when you look at the old cases is common intention in the relevant sense. Common intention actually was said. Interestingly, in this Court’s judgment in Alphafarm common intention for the purposes of the law of contract was said to be discerned by what the parties told each other. We submit that the same is true for the common intention required in rectification.

Mr Smith so argues and we submit that first of all his research is correct. That is in Part I of his article and, secondly, that the reasons of principle which he advances for the proposition which would bring the law of contract relevantly into line with the law of rectification in a critical respect because you do not interfere in contracts to fix up subjective intentions in other respects. We submit that, in other words, it is appropriate for this Court to adopt what said by Lord Justice Denning in Rose v Pim which really has been overruled in the New South Wales Court of Appeal in Carlenka and in this case and it would be appropriate, we submit, for this Court to lay down what Lord Justice Mustill – his Lordship said, as he then was, in The Olympic Pride which we have given a reference to. Your Honours I think have it. It is his Lordship’s third proposition at page 72 of the report:

The prior transaction may consist either of a concluded agreement or of a continuing common intention. In the latter event, the intention must be objectively manifested. It is the words and acts of the parties demonstrating their intention, not the inward thoughts of the parties, which matter.

That shortly states the thesis of Mr Smith’s article, in our submission. It follows a long history of such statements in earlier English authority and we
submit it is correct. What has really happened is that with Mr Bromley’s article the law has taken a wrong turn, we would submit. Your Honours, we submit when you look at those transactions which cross the line in those communications you get, contrary to what has been said below, in all the courts, both courts, you are getting, we submit, a proper case for rectification and a proper case for conventional estoppel.

You cannot find a better example of the parties having agreed to a convention than I just showed your Honours, we submit, with the request before we sign that they agree to the examples that we had worked and they quote us back similar examples and we then signed. That, in our submission, would be a classic case for the application of the doctrine of conventional estoppel. And, it may be said, it is difficult to understand why these communications which preceded the variation contract were not to be taken into account if one sits in the armchair of the parties, that is, I now speak only of construction. Why was it so clear that the construction of this contract was otherwise than we submit.

Your Honours, those are the reasons why we respectfully submit this is an appropriate case for a grant of special leave. There are some miscellaneous matters for which we had sought the leave to be extended which we have referred to in paragraph 26 of our submissions in-chief. They do not merit the grant by themselves but we submit that they are appropriate to be added and I do not notice any contrary submission in our learned friend’s case but that is how we respectfully put the matter.

HAYNE J: Yes, thank you, Mr Rayment. We will not trouble you, Mr Coles.

An essential premise for the applicant’s arguments is to overturn findings made at trial about facts and about construction of documents which were findings not overturned on appeal. There are insufficient prospects of the applicant succeeding in overturning those findings to warrant a grant of special leave to appeal. Special leave is accordingly refused.

MR COLES: With costs, if your Honours please?

HAYNE J: With costs.

MR RAYMENT: May it please the Court.

AT 10.21 AM THE MATTER WAS CONCLUDED