Pipikos v Trayans [2018] HCATrans 47 (15 March 2018)

Last Updated: 15 March 2018

[2018] HCATrans 047

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Adelaide No A30 of 2017

B e t w e e n -

LEON PIPIKOS

Appellant

and

VELIKA TRAYANS

Respondent

KIEFEL CJ
BELL J
GAGELER J
KEANE J
NETTLE J
GORDON J
EDELMAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 15 MARCH 2018, AT 10.16 AM

Copyright in the High Court of Australia

MR G.O’L. REYNOLDS, SC: May it please the Court, in this matter I appear for the appellant with my learned friends, MR M.J. O’MEARA and MR P.A.R. SCRAGG. (instructed by Peter Scragg & Associates)

MR D.M.J. BENNETT, QC: May it please the Court, I appear for the respondent with my learned friends, MR A.L. TOKLEY, SC and MR S.J. WHITE. (instructed by Aujard Lawyers)

KIEFEL CJ: Yes, Mr Reynolds.

MR REYNOLDS: I assume that your Honours have our synopsis of argument.

KIEFEL CJ: Yes. You need not wait.

MR REYNOLDS: Thank you. Your Honours, the central issue in this appeal is the correct test of part performance. The Full Court – there is no necessity, probably, to go to it – applied a particular test at paragraph 100 of the judgment, which is on page 520 of the appeal book. We submit that that test is wrong in law. We submit that the correct test is a test to be found in a decision called Caton v Caton, the relevant passage of which I will come to in a moment, is found on page 682 of this Court’s decision in Regent v Millett. I will come to that in a moment. We also submit that what I will describe as the Selborne test and its many variations and emanations is wrong, but it is a variant of that test that appears at paragraph 100 of the Full Court’s judgment.

The starting point obviously on this point is the most recent consideration by a Full Bench of this Court of this issue of the correct test and that is in, as I have already mentioned, Regent v Millett [1976] HCA 40; (1976) 133 CLR 679. I am not going to go through the facts of that case at all, but I do want to concentrate on three pages – it is probably not more than two pages – of the judgment, namely, pages 682 at about point 5 through to the end of the judgment.

Now, this is a judgment which, somewhat surprisingly I suggest when one has read the case closely, was an ex tempore judgment of Sir Harry Gibbs with whom, as your Honours will see from page 684, Justices Stephen, Mason, Jacobs and Murphy agreed. But it is clear, I submit, that when one looks closely, particularly at pages 682 to 684, that this judgment had, as it were, spent a long time on the spike before it had been delivered. The reason I say that is - - -

KIEFEL CJ: Is that a necessary comment? I mean, it says what it says. Perhaps you should concentrate on that.

MR REYNOLDS: Well, the only point that I am making, your Honours, is that – and this is the point that I want to make about pages 682 to 684 – it is very carefully drafted, I submit. It is not – and this is the point – a judgment which has been delivered, as it were, in the style of the English Court of Appeal just immediately after argument. It is a judgment which, as I have said, must obviously have been drafted and redrafted, and prepared very carefully. That is the initial point that I make about it because I submit that it is important that very close attention is given to all of the detail of these two to three pages.

Now, Sir Harry starts at page 682, at about point 5, with what we have said is the relevant principle and he says it is the principle. He refers to the decision in Caton v Caton, and says that:

“ . . . when one of two contracting parties has been induced, or allowed by the other, to alter his position on the faith of the contract –

He then gives an example:

there it would be a fraud in the other party to set up the legal invalidity of the contract on the faith of which he induced, or allowed, the person contracting with him to act, and expend his money.

He then emphasises, about four lines later, the notion of the cognisance of the other party, and I will be coming back to that. He then deals with what has usually been described as the other test, that is, the test of Lord Selborne, at the top of page 683 and he refers to it in its usual form, namely that it must be unequivocally – or the acts, I am sorry, of part performance:

“must be unequivocally, and in their own nature, referable to some such agreement as that alleged” –

He says that has been consistently accepted as a correct statement of law. He then reviews the circumstances from 683 at about point 3 over to 684 and I would submit finds that the Caton principle has been established on the facts. So that is one of the key points that I submit is that this Court in this case has really already adopted what we say is the correct principle.

Now, to make good that proposition I have to explain what all this discussion at pages 683 to 684 from Lord Selborne is about. I draw your Honours’ attention to two words which appear in three places. About seven lines down on 683, Sir Harry says that:

It is enough that –

et cetera, and at about point 5, the paragraph beginning “In the present case” he says:

the giving and taking of possession by itself was sufficient part performance –

Over the page at 684, on the last paragraph, middle line:

there were sufficient acts of part performance –

I submit that a close reading of these pages shows that what Sir Harry is doing here is treating the words of Lord Selborne as circumstances which are capable of satisfying the test that appears in Caton v Caton at page 682. The use of the words “enough” and “sufficient” indicate, I submit, clearly, that other acts may be enough or sufficient but, as he says in the middle of page 683, it is unnecessary in the present case to consider the sort of questions that were raised in Steadman v Steadman.

I also underlined the word “cognisance” at page 682 at about point 8. And, the point that I would make is that it is clear that Sir Harry is adding that requirement which indubitably appears in the Caton v Caton formulation in the words “induced or allowed” at the top of it and he is adding that requirement to what Lord Selborne says.

BELL J: I am sorry, where do we see that?

MR REYNOLDS: I am sorry, your Honour, I am about to go to that. “Cognizance” is at 682, point 8, and he then refers to acts, at the top of 683, that are unequivocally referable, and that is just all about acts. But if we go to the middle of 683, he talks about the giving, which involves an act with knowledge by the vendor, and over the page at 684 at about line 6:

if a vendor permits a purchaser –

So one of the points that I am making is that this is adding to the requirements, as it were, in the Selborne test, treating the Selborne test as a formula which is sufficient or enough to satisfy Caton v Caton provided this additional element of cognisance which is not in the Selborne formulation is added and that it is clear by his use of the word “giving” – 683 – “permits” on 684, and the underlining of this notion of cognisance on page 682.

So, the reason that I underlined the fact at the beginning that this was not the usual kind of ex tempore judgment is that I am submitting that this is extremely finely synthesised to go most of the way, if not the whole way, of resolving the problem that your Honours are addressing today and that, in short, Caton v Caton, as Sir Harry says at page 682, point 5, is the principle and he is turning around the formula that the Earl of Selborne used in an extremely deft way and in a very subtle way and a very finely drafted way so that one has to, as I said at the beginning, not treat this perhaps as one would treat the usual ex tempore judgment, but as something that must have been very much – drafted very, very carefully before it was delivered, albeit on the date of argument.

It was not necessary, as Sir Harry says at page 683, to consider, as it were, definitively what would come within the Caton test, but I submit that if one looks at the Caton test at page 682, which is a test derived from the notion of fraud, that it is a fairly standard kind of formulation of the kind – I will be coming to this later on – that we often see in estoppel cases.

The formulation in Caton v Caton is clearly different from and broader than the formulation in Maddison, first of all, by reference to this requirement of cognisance or knowledge and second of all because Caton talks about alteration of position – reliance, in effect – which is broader than mere acts of public performance. The third thing is that one does not get this kind of superadded requirement of a very high level of proof that one sees manifest in the Selborne test.

I submit that the way the issue needs to be resolved, with respect, in this Court is by reference to Caton. I submit that this decision in Regent v Millett should be understood as endorsing that formulation and as, if you like, explaining away the Selborne test simply as acts, which provided there this extra element of knowledge added in, would satisfy or were enough to satisfy the Caton v Caton test.

There are other, of course, judgments in this Court which mention, in the context that we are talking about, this notion of fraud and the Caton v Caton principle or formulations which are, in substance, much the same. I will just give your Honours some references to that – and I will not go to these judgments right now unless I am directed to. In McBride v Sandland [1918] HCA 32; (1918) 25 CLR 69, there are passages at page 79, point 3 through to 84, point 7 and 87, point 4 – that is Justices Isaacs and Rich.

In the decision in Cooney v Burns [1922] HCA 8; (1922) 30 CLR 216 there are references to it at page 222, point 3 and 226, point 2 – that is the Chief Justice, Sir Adrian Knox. At page 229 at point 2, Justice Isaacs adopts his earlier formulation that I just gave your Honours from McBride. At page 234 at about point 5, Justice Isaacs quotes Caton and at page 241, about halfway down the page, Justice Higgins compares estoppel with the relevant principles.

There is also a discussion of one final reference in J.C. Williamson Ltd v Lukey and Mulholland [1931] HCA 15; (1931) 45 CLR 282 at pages 308 to 309 per medium of Justice Evatt There are other references to fraud in this context in this Court but they are the ones that I draw to your Honours’ particular attention.

In terms of the best place to find a full analysis of this Caton v Caton principle in this Court, I submit that that is to be found – and found, on one view, in quite a surprising place. It is to be found, I wish to submit, in the judgment of Sir Owen Dixon in the decision of this Court in Birmingham v Renfrew [1937] HCA 52; (1937) 57 CLR 666. I am not going to go through the detail of this case in any detail other than to remind your Honours of a few basics.

Your Honours will see from the catchwords on the first page that it is a case about mutual wills. In the statement of facts in the headnote it notes that there was an oral agreement between husband and wife that she should:

leave her property by will to the husband, and that, in consideration thereof –

he should:

make a will leaving his property to four named relatives.

They then executed wills accordingly. The wife predeceased the husband and he took under the will but he broke the agreement. He subsequently made a will revoking his prior will and benefiting persons other than the relatives of the wife.

Now, as your Honours will recall, although it is perhaps not a doctrine that one needs to refer to that frequently these days, there are a lot of issues that arise in relation to mutual wills such as need not concern us, but just passing them by and focusing on the point of relevance, it is this. If one focuses back on those facts, at 666 to 667, one can see that this is, at least prima facie, an example of an oral agreement being made where one party performs their side – that is, part performs the bargain by dying and leaving a will in a certain form – and if one introduces the fact that the relevant property included real estate, then one has a situation which is quite close, if not identical, to the one with which we are dealing.

Now, Sir Owen Dixon looked at this particular contract and his analysis of why it was specifically enforceable, I submit, is quite telling and quite informative to the principal issue your Honours need to determine. If your Honours go to page 682, at about the middle of the page, he says that:

The evidence, if believed, could leave no doubt that the wife made her will upon the faith of assurances on the part of her husband that he would leave his will unrevoked should she die first and that he made his will as part of the arrangement –

Further down:

Gavan Duffy J. found that an agreement had been made –

Four lines from the bottom:

I think the legal result was a contract between husband and wife. The contract bound him –

Et cetera. Over the page, at 683, at about point 3, he talked about the agreement imposing on the survivor:

an obligation regarded as specifically enforceable.

But the important bit, from your Honours’ point of view, I submit, is from about the middle of 683 through to the bottom of 690. And starting at the middle of 683 your Honours will notice that this is the beginning of some very extensive quotations from a book written in 1799 by a gentleman called Francis Hargrave who, on my researches, was more of a scholar than a practising lawyer but, albeit, one who practised out of Lincoln’s Inn.

He was the editor, for example, of Coke on Littleton. But Sir Owen calls this a book of authority and then quotes extensively from it and I will be referring later on to the fact that this doctrine existed by the end of the 18th century or even earlier when we come to deal with some other issues, so I simply make that point in passing and I do commend a full reading of Sir Owen’s quotations from Mr Hargrave. But if I could take your Honours to page 685 at about point 5 he refers to these various cases of law and equity:

the plain inference seems to be, that compacts or agreements, upon the faith of which wills or settlements are either made or forborne to be made, are enforceable by both jurisdictions –

Further down the page:

So anxious also do our courts of equity appear to have been in exacting the performance of such compacts, that even verbal promises have had enforcement; the Statute of Frauds having been refined upon, to prevent the requisition of writing from operating; and entering into such engagements and then refusing to perform them having for that purpose been classed, as a fraud upon the testator or other party influenced in his conduct by the particular promise –

The middle of 686, the paragraph begins by saying:

The principles upon which Hargrave bases his argument have passed into the modern law.

The bottom of the page:

the obligations of the survivor under such a contract have always been regarded as enforceable in Chancery.

KIEFEL CJ: This case is more about the appropriateness of the remedy, is it not, rather than relating to specific enforcement of land, in fact, the land was not the property in question.

MR REYNOLDS: It is also about that, your Honour, but it is also about the notion of, I submit, fraud being the basis for part performance and fraud being a way around the Statute of Frauds which I will come to in a moment.

KIEFEL CJ: Fraud is the basis for the remedy of a constructive trust, is it not?

MR REYNOLDS: It is, and the issue of constructive trust comes in, as it were, after it is determined that the contract is specifically enforceable. If it is, that has certain consequences and you get a very difficult issue about the extent to which the surviving person is able to dispose of property, for example, taken under the other person’s will and you get this, sort of, hovering trust over property with restrictions and what have you. So, that does emerge at the end of the analysis. I am looking at an earlier stage, your Honour, which is to the proposition that in order to get to an argument that there exists a constructive trust one must first find (1) a contract, and (2) that it is specifically enforceable. Why is it specifically enforceable? Because there is part performance in accordance with the Caton v Caton principle.

A formulation almost identical to Caton is to be found at page 688, at about point 3, where he says:

The result is a disposition of property made upon the faith of the survivor’s carrying out the obligations of his contract.

Again, I interpolate “part performance”.

It is an element which brings such a case under the equitable jurisdiction for the prevention of fraud.

He then talks about:

The best known example of fastening equities upon property –

et cetera. One can read the rest of that page, but he deals with the Statute of Frauds at the bottom of page 690. He refers to the Statute of Frauds and says:

I have already cited from Hargrave’s opinion that, before his day –

that is, before 1799:

courts of equity had “refined upon” it “to prevent the requisition of writing from operating,” on the ground that the refusal to perform the promise on the faith of which the deceased had made his last will amounted to a fraud.

The editors of Jacobs, the current edition, which is the eighth, at paragraph 13.42 take that passage as one of two holdings by Sir Owen as to why the Statute of Frauds did not apply to this agreement, even though it was an agreement in relation to property and the property did include at the relevant time real property.

KIEFEL CJ: But it was not in relation to specific land. It was in relation to whatever property there was from time to time.

MR REYNOLDS: That is so, your Honour.

KIEFEL CJ: All this is concerned with is when equity will enforce an obligation of that kind.

MR REYNOLDS: In my respectful submission, that is not all it is concerned with. It is also concerned with that, your Honour, but not only concerned with that. Sir Owen makes the point elsewhere – indeed over the page, at 691 – that there are other reasons of construction of the relevant provision of the Statute of Frauds that mean that it did not apply here. That is your Honour the Chief Justice’s point, but the editors of Jacobs pick up on this page at 690 and say that that is why another holding for Sir Owen saying that the Statute of Frauds did not apply is because there was fraud.

But even leaving that to one side, there is still this notion of specific enforceability of this oral contract, wholly, I would submit, because of a principle in Hargrave which in substance is the same as the Caton v Caton principle. Sir Owen says that it goes back to the 18th century and indeed earlier.

Now, it is probably unnecessary to cite further authority, but there are some cases I will be coming to later on which pick up this notion of fraud. I will not take your Honours to them right now. They are referred to in our supplementary submission. One is Frame v Dawson [1807] EngR 387; (1807) 14 Ves Jun 386, and in volume 33 of the reprint at 569. The particular passage is at page 569 of the reprint and at page 387 of the original report.

Next, there is a case of Morphett v Jones [1818] EngR 270; (1818) 1 Swans 172 and volume 36 of the reprint at 344. The relevant passage is at 348 at point 5 and it is also at page 181 of the original. Finally, there is Mundy v Jolliffe [1839] EngR 1021; (1839) 5 My&CR 167 in the reprint at volume 41 at page 344 and the relevant passage is at page 338 of the reprint.

This principle, it has really tried to say, is but a particularisation of a doctrine that is, as your Honours know, very well-established, namely, the so-called engines of fraud doctrine. There are, as your Honours know, many manifestations of it. I submit that this is one of them and that there is not any reason in principle why your Honours should not adopt it. It is supported, as I have submitted, by Regent v Millett. It is supported by Sir Owen Dixon’s analysis, I submit, in Birmingham v Renfrew, and I am going to compare later on in the argument this test with the test of Lord Selborne, but I will be submitting later on in making that comparison that it is a much more apt and more appropriate test for determining whether an oral contract should be enforced by reason of performance.

It is also – and I will come to this in a little bit of detail later on – very similar in substance to the tests which have been adopted elsewhere, and I will be referring in particular later on to Canada, to the United States and to New Zealand. So that is, according to our synopsis of argument, the first point, which is at paragraph 2.

GAGELER J: Mr Reynolds, just so I understand, do you say the test is that stated in the first three lines of the quotation from Caton v Caton by Justice Gibbs in Regent v Millett? Is there something more to it? Where is the test most clearly articulated?

MR REYNOLDS: Right there, although I would bracket the words “as for instance” through to “like acts” and probably the remainder of the quote, I would not say duplicates the other. It is an epexegesis of what occurs before, namely - - -

GAGELER J: Perhaps you could state in your own words exactly what the test is.

MR REYNOLDS: That when one of two contracting parties has been induced or allowed by the other to alter his position on the faith of the contract, the other party may not set up the legalling validity of the contract on the faith of which he induced or allowed the other party contracting with him to act.

GAGELER J: So, it is indistinguishable from estoppel except that you do not have the minimum equity required to do justice requirement. Is that right?

MR REYNOLDS: Your Honour, it is not – it is very similar to, if not identical, to the test of estoppel. It is not – your Honour appreciates that in dealing with specific performance that there are other matters, chiefly discretionary, that come into the determination via the Court of whether or not it would run relief. And, those discretionary matters – let me be very clear – are relevant in this sort of case, just as they are in other cases of specific performance.

That said, I do not incorporate, as it were, within this any specific requirement of the minimum equity to do justice. And, I would also submit, with respect, that that proposition would not be wholly unqualified in relation to estoppel either, principally because the prima facie remedy, as I recall – and I think it goes back to Giumelli v Giumelli – is to make good the – it gives an expectation remedy, that is, makes good the representation.

So that one does not, as it were, by reference to an element, confine it so that only the minimum equity will be granted. If I can turn that around a little and put it more positively; the question, ultimately, will be, in substance, if not in form, whether it is equitable and just in all of the circumstances to decree specific performance. And, the factor to which your Honour has referred will, at some level, be factored into that equation. But, it is not, as it were, a probandum that needs to be part of the test.

KIEFEL CJ: Just in relation to the quotation from Caton v Caton upon which you rely. You are accepting that, as Justice Gibbs stated, that this was stated to be a principle upon which the doctrine of part performance rests rather than equitable estoppel or do you accept that the two are distinct? That is what I am having a little difficulty following.

MR REYNOLDS: I am going to touch on this later but I will deal with it now. The trend of the elsewhere is perhaps more towards a notion of estoppel. That formulation there in Caton v Caton is actually - - -

KIEFEL CJ: Can I just – while we are just focusing on what you are relying upon in Regent v Millett for the purpose of your argument, Justice Gibbs does not seem to have any doubt that the case concerned the application of the doctrines relating to part performance and his Honour said that what was said by the Earl of Selborne in Maddison v Alderson has been consistently accepted as a correct statement of the law. Now, so you want to rely upon part of that which Justice Gibbs stated in Regent v Millett in relation to part performance but you say the Earl of Selborne was wrong in relation to that part which Sir Harry Gibbs says has been consistently accepted as correct.

MR REYNOLDS: He does say that but he does not say that he is adopting that as the test of part performance - - -

KIEFEL CJ: Well, I do not know how else one could possibly read it, Mr Reynolds, if his Honour is saying that it has been consistently accepted as a correct statement of the law.

MR REYNOLDS: I submit that is very carefully crafted, that expression, to indicate just that that many judges have accepted that as - - -

KIEFEL CJ: But that his Honour – his Honour was not accepting that. One thing Sir Harry Gibbs was famous for was the clarity of his expression.

MR REYNOLDS: I submit this is probably no exception but what he is saying is that it was enough in this case, as it were, leading for another day - this is middle of 683 - the issues raised in Steadman v Steadman, he says, in effect, we know this much or I am prepared to accept this much that it is enough or it is sufficient if one brings – to come within Caton v Caton if one satisfies what the formula of Lord Selborne provided, and this is critical, one adds in the further requirement of cognisance because that is on no view part of the Earl of Selborne’s - - -

KIEFEL CJ: Perhaps it is a question of where you put your focus in the passage from Caton v Caton. True, it is, that the reference at the beginning is to where a person alters his position on the faith of the contract but the fraud upon which would give rise - it is the fraud which would give rise to the equity, is the act in setting up the legal invalidity. So, true, it is, that in the background you have a notion of detriment perhaps operating, that is not where the equity arises or why it arises. The remedy is not given because of the alteration of a party’s position. It is given because the equity arises upon the fraud in reliance setting up the legal invalidity of the contract when there has been part performance.

MR REYNOLDS: Well, certainly, setting up the legal invalidity is part of it, but there is a premise and that is that there has been an alteration of position on the faith of the contract induced or allowed by the party that proleptically is going to plead the Statute of Frauds. So, I submit, my opponents cannot get over the fact that if one looks at the top of 683, this formulation in Maddison v Alderson, there is nothing there about giving possession. There is nothing there about the cognisance of the vendor and there is nothing there about permitting a purchaser to take possession. One can have acts of part performance, to give an example from a case I had a lot to do with some years ago, within Lord Selborne’s test, even when the vendor had gone overseas for three months and did not have the faintest idea what was going on.

What Sir Harry is saying is no, you do not – and this is implicit in his formulation at 683 – come within Caton v Caton just by showing that you have unequivocal acts referable to the agreement, full stop. You need more. You need, in addition, the cognisance of the vendor and in this case it was the giving of possession or permitting the purchaser to take possession. One simply could not say in the light of this case that if a purchaser performed acts that came within Lord Selborne’s formulation that that was the test of part performance simpliciter.

BELL J: Is not Justice Gibbs, in the passages to which you have referred us, at the bottom of page 682, going over to 683, dealing with the argument that was advanced in that case, which was that the narrower test proposed by Lord O’Hagan in Maddison should be accepted?

MR REYNOLDS: He rejects that.

BELL J: And his Honour rejects that, noting that in the way Lord Selborne put it, the test must be referable, including to some such agreement as that alleged. So, then, in the sentence on which you placed reliance initially, all Justice Gibbs is doing is paraphrasing by pointing out it is enough that the acts in their own nature are referable to a contract of the general nature alleged. It is simply explaining the acceptance of the test is the wider test adopted by Lord Selborne in Maddison. But if you go back to Maddison there is the insistence, including on a couple of cases that you referred us to, namely, Frame v Dawson and Morphett v Jones as requiring the acts relied upon to be unequivocally and in their own nature referable to some such agreement. And, as I understand it, you say that is the flaw in Lord Selborne’s test?

MR REYNOLDS: I am going to point in due course – this is the next segment of the argument – to what I submit are a lot of flaws in what Lord Selborne said. Your Honour, with respect, is quite right: what these three pages do point up is that there do seem, at least prima facie, to be these two, let me call them principles, as we have in our supplementary submission, and that duality is really at the heart of what I submit your Honours are going to need to decide in this case. Are there two principles? Is there only one? If there is only one, which is it? Why is it that the other principle is wrong? Why is it that the preferred principle is to be preferred? Is there any, as it were, dovetailing or intermingling of these two notions? That is what I want to explore.

If your Honour is putting to me, inter alia, has Sir Harry spelt out everything that your Honours are going to need to look at with complete clarity; I would agree that there is scope for interpretation. But I submit, if I may be permitted to say so, that this is a very deft and clever rationalisation of the two tests – at least arguably. It is necessary, obviously that - - -

KIEFEL CJ: What is the rationalisation, would you mind just stating it?

MR REYNOLDS: The rationalisation of it is that, provided that one adds the notion of cognisance to the requirements of the Selborne principle, then that, as it were, as a matter of fact will be enough to make good - or at least was enough in this case, to make out the principle in Caton v Caton.

KIEFEL CJ: Your interest in cognisance, so far as it applies to the facts of this case, is to bring home an equity to someone who was not a party to an agreement that was around at the time and aware of it.

MR REYNOLDS: And knew of it.

KIEFEL CJ: That is why we are going to all of this. I think you have made your point.

MR REYNOLDS: It is not the only reason, your Honour. It is more a matter of doctrine that I am going to it. Your Honour is quite right: the notion of cognisance will come up very much in this case, for the reason your Honour indicated, to make it clear, because the respondent basically knew everything - the essentials of what was happening. At any rate, that is the principle that I say - - -

EDELMAN J: Mr Reynolds, you may find some assistance in a text written by a barrister called Roberts in 1807 called the Treatise on the Statute of Frauds where, at page 135, he sets out what he sees as two principles in very similar terms to the language that is used by Sir Harry Gibbs.

MR REYNOLDS: I am very grateful for that, your Honour, and will try and chase that up over lunch or overnight. But the other thing – just before I leave Regent v Millett – is that it is very clear that, from the middle of 683, their Honours are accepting that the decision in Steadman v Steadman raises a lot of issues and they are really saying that they are issues that are or are probably for another day.

So the other thing about this is to say that it is enough – if you add in another requirement – to satisfy Caton v Caton if one brings oneself within the Selborne formulation, does not amount to an acceptance of what Lord Selborne said. This was a case which could be decided without going into the very significant and interesting issues that were raised in Steadman v Steadman.

Can I move then to the next proposition that I want to put which is that this test of Lord Selborne we have been discussing is flawed. I said at the outset that there have been a lot of different interpretations of it and those various interpretations are discussed inter alia, for example, in the latest editions of Spry on Equitable Remedies and Meagher, Gummow and Lehane’s Equitable Doctrines and Remedies.

But it is fair to say – I think this is common ground – that in one form or another a version of that has come to be treated as currency by the various intermediate courts of appeal. But there are still – the approach the intermediate courts of appeal have taken – again, I am sure this is common ground – is to say that any further rationalisation of the relevant principle or the development of it is a matter for this Court.

Now, I mentioned – and I will not go through them again – that these two principles and the notion of there being two principles raised a lot of questions, and I have also mentioned the various differences between the formulation in Caton – or the key differences between the formulation in Caton and Lord Selborne’s test. One step that has been taken along the road towards rationalisation of these two tests is to point up the proposition that when one looks at the test of Lord Selborne it looks very much like something about proof rather than a substantive doctrine of equity.

Now, that is a matter which was underlined in 2003 by Lord Hoffmann in a judgment which your Honours should have there of Actionstrength Ltd v International Glass Engineering [2003] UKHL 17; [2003] 2 AC 541, and the relevant passage is at paragraphs 22 and 23. This was a case where – it was a guarantee case. But there is a small passage where Lord Hoffmann refers to this notion of part performance. This is at the bottom of page 549. He refers to it there and he says that the doctrine of part performance was justified by a couple of things. The first was estoppel, and that has already been raised with me and he quotes from Lord Reid’s well-known judgment in Steadman v Steadman.

The second thing that he points up is at paragraph 23, namely, that the formulations focus also on the notion of proof of the existence of the contract and he says again in similar terms to what I have already put to your Honours that:

These two reasons did not cover the same ground: acts which satisfied the first –

that is, estoppel:

might fail to satisfy the second.

I interpolate, or vice versa. He then notes that the House of Lords gave priority to the notion of estoppel and relaxed the idea of proof or of acts being probative of the contract. So, that much at least is a point that has been noticed already in a number of places, particularly by Lord Reid and by Lord Hoffmann.

Now, we have filed in the last 10 days or so a supplementary written submission which your Honours I understand have and I understand that I have leave to rely on it. I should apologise to your Honours for the lateness of the submission, and to my learned friends, but it is one of those situations where something simply does not occur to one until fairly late in the piece.

KIEFEL CJ: We all have it and leave has been given, so we can move along.

MR REYNOLDS: Your Honours will have seen the gist of the argument that I want to present on this point.

KIEFEL CJ: Would I be correct in inferring from this that the point that is sought to be made is that one does not, in the first instance, look to whether or not an agreement was established but rather one determines whether or not the equity is raised by reference to equitable fraud and that, in this case, the Court of Appeal has approached it the wrong way around, so to speak. It has put the questions back to front. Is that where we are going?

MR REYNOLDS: Yes, to an extent.

KIEFEL CJ: Is there more to it - much more to it than that?

MR REYNOLDS: I would submit quite possibly a deal more because this argument is in its terms a fairly trenchant attack on this whole notion of the – what we have been calling the Selborne test - that acts must be unequivocally referable to the contract.

KIEFEL CJ: To “some such contract”. I think those words are quite important, are they not, because it is not referable to a contract which has been found to be made out on the evidence but referable to some such contract.

MR REYNOLDS: Your Honour, as your Honour appreciates there are a number of formulations and I am dealing with it historically where we find all of these versions. What I am talking about fundamentally is that that proposition of Lord Selborne has as its provenance not any matter of substantive doctrine at all, that it is ultimately simply an adjectival principle, a matter which developed from the very unusual rules and very peculiar rules which applied in the Court of Chancery to matters of pleading, proof and evidence, that, in short, this Selborne principle is not a matter at all of substantive doctrine but is purely adjectival and, furthermore, that the underlying principles upon which it was based were abolished during the mid-19th century in the UK and also abolished relevantly in South Australia.

The effect of that abolition was to totally undercut the basis for the Selborne principle and that the true substantive principles I have already submitted is this version of the engines of fraud principle to be found in Caton v Caton. But that principle was not affected by these various reforms to procedure in Chancery because it is a substantive principle not a procedural one, that there was substantial confusion, we submit, generated in the profession among the Chancery practitioners between these two principles and it is that confusion which has ultimately led to the errors in both Lord Selborne’s formulation, but perhaps more relevantly to your Honours’ task today, to the adoption of the Selborne test as a substantive test of whether or not the Statute of Frauds can be overcome.

KIEFEL CJ: Do you accept that that test has been applied by this Court in McBride v Sandland and in Cooney v Burns as well as Regent v Millett and it has never been doubted?

MR REYNOLDS: Not as ratio.

KIEFEL CJ: At some point you are going to argue that it should not be taken as accepted, which from my point of view would seem to be a rather significant hurdle. Perhaps that should be your starting point rather than your endpoint.

MR REYNOLDS: Your Honour, I am more than happy to - - -

GORDON J: As part of that analysis, Mr Reynolds, it seems to me that there is a critical passage in the judgment of Justices Isaacs and Rich in McBride v Sandland where this very point is in effect identified. They talk about the order, they talk about whether as a matter of evidence you take one rather than the other, but resolve it by reference to substantive principle, and talk about the grievous error that would follow by not doing so.

MR REYNOLDS: Yes.

GORDON J: So you would have to address that, it seems to me, and demonstrate that that is fundamentally flawed.

MR REYNOLDS: I do need to do that, your Honour.

EDELMAN J: Why, if your submission that you made at the start is correct, do you need to do that anyway? If it is correct that there are concealed within the language of “part performance” two very different principles, one which starts from the agreement – the Caton v Caton-type estoppel principle – and one which does not start with the agreement and, by definition, is a gateway before you get to the agreement, are you not really just concerned with those cases in the second category? You are not concerned to cast any doubt upon or examine the correctness of any of the cases within the first category, are you?

MR REYNOLDS: Where this all goes awry – this is the thesis, as it were – is that this Selborne principle has nothing to do with the Statute of Frauds at all. It starts off from the principle of equity pleading and proof that has nothing to do even with the law of contract necessarily. It then moves from there to the law of contract, but the principle is only related to the proof of the contract. It has no relationship at all, at least in truth or in principle, to the Statute of Frauds. What then happens is you get cases that do tend to be unclear as to exactly what is the precise principle that is applied.

EDELMAN J: The burden of your argument is not, as I understand it, to reject what you are calling the proof principle or to show that there is anything wrong with it. The burden of your argument is to establish that the estoppel-type principle did once exist, and still exists, despite the existence of these later cases.

MR REYNOLDS: Your Honour, I would respectfully submit, it is both. Of course, I do propound the Caton v Caton principle – your Honour is right. But, I am being met with questioning which, at least implicitly, indicates that I have to show why the Selborne test is wrong. And, as part of that, it is your questioning – it is being put to me, as I understand it – that I have a precedent issue that I have to overcome before I get to the issue of principle. It is being put to me, as I understand it, that there are cases that, as part of their ratio, adopt the Selborne test and that if I want to propound this fraud principle as the correct principle, then I have to take my medicine and front up to what is said in these earlier cases, if that is not an unfair paraphrase of what is being put to me. I am in your Honours’ hands but I understand that I am being invited to deal with that precedent issue - - -

KIEFEL CJ: You are indeed, Mr Reynolds.

MR REYNOLDS: - - - although, can I say - - -

KIEFEL CJ: Perhaps you could proceed to do so.

MR REYNOLDS: - - - with all due respect, your Honour, I would actually prefer to be focusing on the matter of principle but I accept that it is very much an issue which I need to deal with - - -

EDELMAN J: It is both principle and precedent on any view.

MR REYNOLDS: Yes.

EDELMAN J: But, the question is whether you need to establish that the precedents are all wrong or whether you need to establish that the precedents are still consistent with the existence of a separate principle that is based upon different requirements.

MR REYNOLDS: Sure. Let me proceed then to deal with what is put against me on the question of the precedent. The two cases that are cited are McBride v Sandland and Regent v Millett. I have dealt with Regent v Millett and your Honours know what I say about that as a matter of precedent so I will not go over that ground again. But, as I understand it, the main case that is relied upon is McBride v Sandland. There are three judges that are referred to. Let me start with the third one, Justice Higgins.

My learned friend, Mr Bennett, refers to paragraph – I withdraw that – page 95. With all due respect to my friends, I do not quite understand why. But, what I do say about this judgment is by reference to page 91, at about point 6, at the beginning of Justice Higgins’ judgment where he says:

In my opinion, it should be decided on the single ground that there was no contract –

He then goes on at page 94 at about point 7, the paragraph beginning:

But I prefer to rest my decision on the point that there is no contract –

et cetera. So, first of all, I do not see what is being relied upon on page 95 to adopt Lord Selborne but, more importantly perhaps, the ratio of Justice Higgins’ decision is that this was a simple point about there being no contract. So, in short, there goes the so-called majority against me.

There is also a reference – and your Honour Justice Gordon has referred to this – to pages 78 to 79 in the judgment, and I have already referred your Honours to this, the judgment of Justices Isaacs and Rich. There is reference, no doubt about it, on page 78 to Maddison v Alderson in what I will call the relevant passage from Lord Selborne. But the more important thing, relevantly I submit, is that there is a requirement – this is on page 79, paragraph (4) – that acts:

must have been in fact done by the party relying on it on the faith of the agreement, and further the other party must have permitted it –

There is our old friend “permission” again –

to be done on that footing. Otherwise there would not be “fraud” . . . and [it is] fraud, that . . . is the ground of jurisdiction -

It is, I submit, very difficult with a series of numbered paragraphs of this kind to read paragraph (4) as being anything other than a sine qua non – see the word “must” – and that by reference to this notion of permission which we have already touched on before, that it follows necessarily that the quotation from Maddison v Alderson is not being used as a stand-alone test. So that is a kind of so-called big authority on the question of precedent and ratio that is put against my argument. I submit it comes ultimately to nothing.

Your Honours have probably seen there was a letter written at my direction to I think the Registrar raising a couple of decisions of this Court and I referred to them in the context of the way that this Court might be constituted.

KIEFEL CJ: Forgive me, Mr Reynolds, speaking for myself, I am not entirely clear; why do you say what Justices Isaacs and Rich say is somehow contrary to what you are arguing or misstates matters in Alderson?

MR REYNOLDS: I am sorry, your Honour, we are looking at, as I said, ab initio, what is the test of part performance. It has been put against me that if – that the test – the stand-alone test is the Selborne test in Maddison v Alderson. So, if you tick off the requirements of that test, you have got part performance, if you do not, you have not, that is what is, as I understand it, put against me.

I say that it is clear from pages 78 to 79 that that is not a stand-alone test that has been adopted by Justices Isaacs and Rich. Why? Because in paragraph numbered (4) on page 79 they are indicating in very clear terms that there must, must be more. What is that more? Well, the act has to be done on the faith of the agreement and further the other party must have permitted it.

Now, your Honours have heard this before. Your Honours know that these notions, again, as Lord Hoffman said, these two principles are not – do not work hand in glove, they are different to some extent, this is an example of the difference. It would not be a fair encapsulation of what Justices Isaacs and Rich have said to say that they adopt the Selborne test, full stop, end of story on part performance.

KIEFEL CJ: At page 77 it is tolerably clear that their Honours are applying Maddison v Alderson and that their Honours see that it follows from what the Lord Chancellor had said that the Court is not asked to give a better remedy in aid of a legal right based on a contract to enforce an equity. That is how they see Maddison v Alderson operating and that is what their Honours are applying. Whether or not they have added another aspect to it for which you would contend is another thing but it is tolerably clear, is it not, that their Honours are applying Maddison v Alderson.

MR REYNOLDS: Again, we are only talking two judges, of course.

KIEFEL CJ: You are saying Maddison v Alderson is wrong, not that just bits have been added to it. As I understood your argument, you are saying it is wrong.

MR REYNOLDS: Absolutely.

KIEFEL CJ: Well, their Honours have accepted it.

MR REYNOLDS: Well, your Honour, plenty of judges have, but I have not done a precise list of them, but there is no issue from our part but many judges have adopted it as the test.

EDELMAN J: As I understand your submission, it is not necessarily that it is wrong but you say it was decided on the second principle and everyone forgot about the first principle in Maddison. Had the first principle been argued in Maddison v Alderson you would have a completely different result.

MR REYNOLDS: I think I am ad idem with your Honour, yes. It is this confusion which one needs to understand from the early practice of the Court of Chancery that led to this problem. There was not ultimately, that is in ultimate provenance, anything wrong with what the Court of Chancery was doing as part of its own practices in relation to pleading and proof. It was, with all due respect to them, wholly in accordance with their principles of pleading and proof, their peculiar principles, to find that if there were unequivocal acts of part performance that that would prove the contract had been the anterior question.

KEANE J: But that is precisely what the Statute of Frauds says you cannot do. You cannot enforce the contract. It is not about proof of the contract. The doctrine of part performance operates on the footing that you are not enforcing the contract. You are not proving the contract. You could have a bus load of bishops to swear that they were there when the contract was made but if it is not in writing the Statute of Frauds says you cannot force it.

GORDON J: In a sense, that is the passage at 77 of Justice Isaacs in which there is a temporal question. We are not talking about the contract; we are talking about conduct that has taken place. And we ask what are those acts referable to? What do they give rise to?

KEANE J: That is why they speak of such a contract. It is not about proving this contract; it is about proving such a contract. What sort of contract? The contract where the parties have so dealt with each other that it can be seen that they are in the midst of an uncompleted transaction, which equity requires to be completed, lest injustice be done.

MR REYNOLDS: Your Honour, I think we may be both ad idem and, on one view, parting company is in relation to what I said to Justice Edelman about proof. That is directed, or my answer was directed, to the historical position. I am not talking now in terms of saying that the principle which your Honours should adopt as the relevant test for part performance is anything to do with proof at all. Quite the contrary because Caton v Caton is a principle which is altogether a matter of substance in the same way as an estoppel principle is.

KEANE J: Except that it is not because estoppel is about detrimental reliance. Part performance in many of the cases operates without detrimental reliance. Putting someone into possession, the classic case of part performance, or allowing someone to go into possession is not an act on the part of the purchaser that is to that party’s detriment.

MR REYNOLDS: Well, your Honour, it is in reliance on there being a contract.

KEANE J: But it is something quite different – it is quite different from notions of estoppel, which depend upon detrimental reliance or which see unconscionability in resiling from a position where someone would, if the other party is allowed to resile, be confronted with a detriment.

MR REYNOLDS: Well, your Honour, I submit there would be plenty of examples where going into possession of property would amount not only to reliance but also to detrimental reliance.

KEANE J: But not necessarily so. In Regent v Millett, for example, going into possession, no one suggests – Sir Harry Gibbs did not suggest – that in any way that being let into possession was a detriment to the purchaser.

MR REYNOLDS: The substance of it is that to go into possession was to do something that was – going back to Caton v Caton – a matter allowed – that is the word in Caton v Caton – he uses the word “permitted”. He has very much in mind the principle which, he says, after all he is applying. Or, he says, these are the words which have a direct application from the present place. I think in the end, your Honour, with respect, we are going to end up with, perhaps, what is a fairly narrow debate about the notion of reliance and detrimental reliance and if your Honour will permit me to do so I will leave that issue there.

EDELMAN J: Do you suggest that the second principle – the Maddison v Alderson principle – that acts must be unequivocally referable to some agreement requires detrimental reliance or not?

MR REYNOLDS: It requires acts of part performance. I would submit that they would almost always, if not always, be acts of reliance which are detrimental.

GAGELER J: I am having difficulty with the test as you propound it. In the passage from Caton v Caton that you have taken us to, there is no reference to part performance. Those words do not appear. You have just inserted the notion of an act of part performance. What do you mean by that?

MR REYNOLDS: What I mean is that that is a species of act which will come within the Caton v Caton formulation but that part performance per se is not a sine qua non of satisfying the Caton v Caton test.

GAGELER J: All right. You just require some change of position, do you?

MR REYNOLDS: On the faith of the contract existing, let me be clear whether or not it is part performance but it will nearly always involve that as a practical matter. Otherwise, how would one show reliance on there being a contract otherwise than by going ahead in commencing to perform it. Of course, it is possible to think of things that are outside part performance.

GAGELER J: Like seeking finance?

MR REYNOLDS: That may very well be, your Honour. It will be the same sort of inquiry that your Honours are so familiar with in the section 52 and estoppel context. But, again, I come back to this statement here and - - -

GAGELER J: By the way, have you looked at Caton v Caton? Do you have a copy there?

MR REYNOLDS: I do. I do not think it is on our list of authorities but if your Honour will pardon me for a minute – I think in the many dozens of the cases that I have looked at – here we are – we do have a copy of Caton v Caton. Is this in the House of Lords, your Honour?

GAGELER J: No. It is the passage - - -

MR REYNOLDS: Sorry, your Honour. It is the passage cited - - -

GAGELER J: Yes.

MR REYNOLDS: - - - which is not from the House of Lords. It is from the Lord Chancellor. For the record, this is (1866) LR 1 Ch App 137. And, the particular passage I assume Justice Gageler is going to raise with me is at page 148.

GAGELER J: Correct. And, after the statement of principle, you see it is said that it is not applicable to the case that was being decided. Then there is a sentence which begins, “If I agree”.

MR REYNOLDS: I see, “If I agree”.

GAGELER J: The point that appears to be being made is that the change of position, in your language, or the part performance, in perhaps more precise language, has to be that of the plaintiff - it as simple as that.

MR REYNOLDS: That is one of the difficulties, I submit, in the treatment in Regent v Millett. What your Honour puts to me is consistent with a lot of authorities, but your Honour has heard me say already we have this notion of permitting possession, which is an act by the defendant, not the plaintiff. I have been underlining that and trying to make the point that that is this notion of inducing or allowing that one finds in the Caton v Caton principle.

While we are on that page, your Honour might - I just mention this by the by – at about point 7 on page 148 your Honour sees there is a distinction between strong evidence on the one hand and matters going to the validity or other of the contract.

NETTLE J: Could I just ask you one question before you go from McBride v Sandford?

MR REYNOLDS: Certainly, your Honour. Yes, your Honour.

NETTLE J: At 79, where the critical paragraph, proposition (4) appears, at least, as I read it, it seems that it is put as one of several conditions, all of which must be satisfied.

MR REYNOLDS: That is what I have put.

NETTLE J: You would say therefore wrongly, as such, would you? That is to say, in your submission, proposition (4) is in truth a freestanding alternative way home rather than an additional condition?

MR REYNOLDS: I think I have to accept that, your Honour.

NETTLE J: That is the way you put it?

MR REYNOLDS: I think so. I mean these statements that come earlier – and it is not totally clear. It is a bit like a lot of one, two, three, four summaries that one sees in judgments: “Here are the relevant principles”. It is not entirely clear how they envisage that they hang together. I do not know if this is worth anything but, at least prima facie, they appear to be suggesting that the Maddison test is a probandum. I think that is what your Honour is trying to get to, but my point, as your Honour knows, and I think your Honour provisionally embraced it, is that there is this extra probandum which we see there. The point, again to come back to it as a matter of precedent, is this case does not contain a ratio which adopts the Selborne test full stop as the test of part performance, and I submit that that is clear.

GORDON J: Is that right, at page 78 their Honours set out, and I quote: “certain elements of part performance essential to raise the equity” and then set out the requirements numbered (1) through. If one starts at the beginning one sees that we have got a classic statement of Maddison v Alderson which you have taken us to as paragraph 1 but, in a sense, it is then expanded, explained, including the idea that you take into account the circumstances in which the acts take place and so on.

MR REYNOLDS: As I think I put to Justice Nettle, they do appear to be embracing that as a proposition to some extent. My point is that that is not the be-all and end-all of it and the proposition or a version of it which was adopted by the Full Court was a Selborne simpliciter test, if I can put it that way and that is what my learned friend, Mr Bennett, defends. I am saying this does not support Selborne simpliciter.

KIEFEL CJ: What about Cooney v Burns? I am sorry, just before you pass from there, in McBride v Sandland, of course, Justice Powers also referred to Maddison v Alderson with approval, did he not?

MR REYNOLDS: Yes, it is not exactly clear - - -

KIEFEL CJ: I take your point that you say that in the joint judgment it has been added to, therefore, it has not been applied so there is a distinction ratio. What do you say about Cooney v Burns in that regard?

MR REYNOLDS: About Cooney v Burns?

KIEFEL CJ: Yes, where the whole Court refers to Maddison.

MR REYNOLDS: I am sorry, your Honour. The first thing I would say about Cooney v Burns is that it is not cited against me by my opponent in the written submissions so I am not – that sounds like a kind of captious debating point but what I mean in referring to that is that I am not able to hunker down on any particular passages which are said to be against me.

KIEFEL CJ: Perhaps if you could just concentrate on where references are made in each of the judgments to Maddison v Alderson as the classic authority in relation to part performance.

MR REYNOLDS: Your Honour, I am happy to do that.

KIEFEL CJ: I mean, do you say - you have obviously read it, do you say that it does not embrace Maddison v Alderson as a precedent to be applied?

MR REYNOLDS: I submit that it is not the ratio of Cooney v Burns, that the test of Lord Selborne is a stand-alone and the stand-alone test of part performance. If my learned friend wants to make good that proposition I, through your Honour, respectfully invite him to make it good. But what I have raised in the correspondence is the question of two other authorities of this Court which I felt that I had to refer your Honours to. The first is Thomas v The Crown [1904] HCA 29; (1904) 2 CLR 127. There is a particular passage – I will be as brief as I can - at the top of page 138 and the point that I would make is about three or four lines down is that that is not identical with the Selborne test. Although it is of a similar flavour it refers to the “alleged contract” rather than “some such contract as alleged”. A bit closer is Maiden v Maiden [1909] HCA 16; (1909) 7 CLR 727.

GAGELER J: I am sorry, what do we get from Thomas v The Crown - another authority against you?

MR REYNOLDS: It is an authority which does not embrace Lord Selborne’s test in precise terms, although it is similar. It is not the same.

GAGELER J: Does it fit with your test?

MR REYNOLDS: No, it does not. Likewise, in Maiden v Maiden, Sir Samuel Griffith, with whom Justices Barton and Higgins agreed, refers at 737 to 738 to possession not being “referable unequivocally and exclusively to such an agreement as alleged”. It is a bit closer. But the words “and exclusively” are different from the Selborne test. This is not a test that has been treated as binding in later cases and obviously, like Thomas’ Case, it is a fairly abbreviated statement although it does not appear in either case to be a mere dictum. We felt we had to front up to those two cases, which I do in that way.

But your Honours can see what the next step is going to be and that is, well, notwithstanding whatever any case says and as I stand here right now I submit that there is no clear statement by way of ratio against me but, even if there is, then I submit that, if necessary, leave to reopen the correctness of whatever decision it is that is against me should be given. I wish also to submit that, whatever that decision is, when it is identified, that it should not be followed and that the principle which we referred to from Caton v Caton is the one which should be adopted.

I think it is fair to say – and it is not the first time I have dealt with this topic in front of your Honours – your Honours as a matter of practice these days generally do not engage in a two-step process. I am happy to do that if I am so directed – that is, the question of leave to reopen first and then the question of whether overruling should occur - - -

KIEFEL CJ: I think, as you are familiar, the usual practice is that we will hear argument on that.

MR REYNOLDS: Well, I am obliged to your Honour. As your Honours appreciate, this was a matter I was going to come to later on, and it is in a sense a little bizarre - and that is not directed at your Honours - but to deal with overruling in this context. Why do I say that: because at the moment I am not – I submit that my opponent has not got to first base so I am sort of dealing with this in a vacuum.

But there are a series of reasons why I would submit your Honours would give leave to reopen and overrule such decision as is later established to be against me in this Court by way of ratio. The first is that the decision, or the test rather, of Lord Selborne is at least arguably wrong and we would submit actually wrong; secondly, that the Court in Regent v Millett very clearly marked off the issue of the appropriate test - that is their reference to Steadman v Steadman – as a matter which would be appropriate for later consideration by this Court; thirdly, this is an issue which does cry out for consideration by this Court as a matter of principle, particularly post-Steadman v Steadman; fourthly, that there is not any earlier decision my opponents have pointed to which has been acted on in a manner which would militate against reconsideration; fifthly, and I have already touched on this, most of the common law world has reconsidered this Selborne test and rejected it. New Zealand has not adopted it, Canada has not adopted it - I will come to that in a moment - and it has been rejected in the United States. It is not the view adopted, for example, in the restatement.

Sixthly, although the Selborne test has often been referred to with approval by individual Justices of this Court, it is certainly not a test that has commanded universal acceptance. Just to take one example, one that your Honours would take a deal of note of is the judgment of Sir Owen Dixon in the decision of J.C. Williamson 45 CLR that I have already referred to. The particular passage is at page 300 about point 7 where he uses a formulation about acts being:

consistent only with the existence of a contract –

A contract, not some such contract as alleged, and consistent. That appears to me to be a quote from the speech of Lord Blackburn in Maddison v Alderson at page 488 at about point 7. The point obviously I am making is that Sir Owen Dixon and others have felt that they do not have to adopt Lord Selborne as the test. Seventhly, that the - - -

GAGELER J: I am sorry, would Justice Dixon assist you? Would his formulation assist your test?

MR REYNOLDS: I am sorry, your Honour?

GAGELER J: I am just trying to understand your argument. Would Justice Dixon’s formulation in J.C. Williamson support your test?

MR REYNOLDS: What I am trying to extract from there is – I know this is not a direct answer to your Honour’s question which I will come to in a moment – what I am trying to get to is that that is not an adoption of Lord Selborne.

GORDON J: Can I ask a different question? How is it different from it?

MR REYNOLDS: From Lord Selborne?

GORDON J: Yes.

MR REYNOLDS: I do apologise, your Honour, I will try and come back to your Honour’s question. Would your Honour please remind me because I am getting old and may not remember it after I have finished answering your Honour Justice Gordon’s question? But, perhaps, if I can deal with that first – how is it different? If you go to the words:

such as to be consistent only with the existence of a contract between the parties –

that is way off the formulation in Selborne and I note he talks further down the page about “acts done upon the faith of the contract”. So, that is my response to Justice Gordon. Your Honour asked me whether this formulation assisted or is consonant with what I am espousing. Can I – and, again, I will come back to this passage – I say it is clear from Birmingham v Renfrew that Sir Owen Dixon was ad idem with the test that we propound and that was in 1937 – this is in 1931.

Your Honour’s question is will this sit with the Caton principle? Yes, to the extent that it does not amount to an adoption of Lord Selborne. So, there is that much. The difficulty – there is one bit that it is sort of in our favour and it is the reference to acts done upon the faith of the contract. But the earlier bit does not sit in complete conformity with what I am suggesting because it appears to be directed to a slightly different formulation from Caton v Caton.

Your Honour, not surprisingly, is looking to see what Sir Owen thought about all this and I suggest that when – one of the difficulties with J.C. Williamson is that there are a lot of issues in the case and there is part performance which is kind of on the edge – needed to be addressed – but there are a lot of other issues which Sir Owen goes into in great detail.

It is kind of on the tail end of the argument that he deals with this, and it has been noticed before, but the test that he espouses at about point 3 on page 297 is a different one again from the one we have just gone to at the bottom of page 300. It is an issue which he does not dig into and dive deep into and really roll his sleeves up and articulate fully exactly what the principle is. He is content to state it, obviously, in the terms that he has, but I submit that if one wants to know what Sir Owen Dixon thought was the appropriate test of part performance then one goes to Birmingham v Renfrew.

The next point – I think it is the seventh on the, as it were, checklist on reopening and overruling – is the proposition that the argument we have put in the supplementary submission, the historical argument, if you like, is one which at least warrants some consideration and is not, albeit far from coming from some able legal historian, it is the best that we have been able to do with the proposition, picking up on it late, but I do submit that there is enough in it to make it apt that your Honours at least address it, it not being a matter which, if I may say so, is something which does not warrant even a response.

Eighthly, the various intermediate courts of appeal have raised, as your Honours appreciate, various issues and concerns about the correct principle but have said that it is a matter for the High Court. You get various different formulations, you get critiques of it and you get statements of dissatisfaction with the principle in those various decisions.

KIEFEL CJ: Would we be right in thinking that intermediate appellate courts have regarded the High Court as having endorsed the test laid down in Maddison v Alderson?

MR REYNOLDS: Can I say up to a point, but what they have done is they have tended to engage in quite extended refinement or interpretation or epexegesis of it. You get, for example, Justice Mahoney saying in Millett v Regent that he takes the expression “unequivocally” – I think Justice Hutley does as well – and reads it right down so it does not mean what we would normally think “unequivocally” meant. I think Justice Hutley said it cannot mean unequivocally because then you would never be able to prove part performance – that kind of discussion. Yes, your Honour, in general terms it has been the axis around which the whole debate has occurred in the intermediate courts of appeal – I should not say “the whole debate”; it is the principal axis that has been.

But finally we say that the Selborne principle, as we have been calling it, is wrong in principle and that is really where we - if I may, it deals with points I wanted to raise on precedent which is what your Honour - - -

KIEFEL CJ: Are you relying upon Steadman v Steadman in support of your restated principle?

MR REYNOLDS: Your Honours will have noticed already that Lord Hoffman picks up on - - -

KIEFEL CJ: Is the answer yes or no? Are you relying upon it?

MR REYNOLDS: Your Honour, the answer is in an eclectic fashion, yes I do.

KIEFEL CJ: Well, if that is the case, at some point, I would be greatly assisted by your ability to analyse ratio by pointing out to me what the ratio of that case is.

MR REYNOLDS: Well, your Honour, if I may, I will take that under advisement. Your Honour is smiling at me and I would suggest that one reason may be that your Honour knows the acute difficulty of that particular task. The various speeches are a bit all over the place, a deal of support in the speeches for a version of the Caton v Caton principle, for example, by Lord Reid, Lord Hoffman having called it a form of estoppel which is much the same as principle that I am relying on in Caton v Caton.

There is also, secondly, particularly by Lord Reid and again Lord Hoffman has said this, there is an appreciation that underlying this Selborne test is a notion of proof rather than doctrine. The final thing I would say at this stage about Steadman v Steadman is that it does exhibit what might be called a deal of dogmatic drag. By that I mean that their Lordships, except the dissenting Lord, Lord Morris, are reluctant to embrace Lord Selborne’s test as the test and indicate various things about it and they are moving towards a principle of estoppel but they do not, unlike the various other countries we will be going to a little later on, feel – they do not seem to be able to totally shake off Maddison v Alderson – by dogmatic drag I mean that notwithstanding that the dogma has been shown to have difficulties, it still, as it were, dampens the smouldering fires of their search for jurisprudential truth, if I can put it that way.

But there is no doubt that it is still a live question in the debate that they have about what the correct principle is, but I would submit that they are most of the way there towards a principle of estoppel and most of the way there at least towards discarding Lord Selborne’s test.

Your Honour Justice Nettle at the special leave hearing raised the question of what the current position is in the United Kingdom, no doubt appreciating that in 1989 there was a new Act that came in and your Honour referred to there being cases which circumvent the Statute of Frauds style provision by reference to estoppel and constructive trusts. That was in 1989. There has not been another important decision in the Lords or the UK Supreme Court since Steadman, in part for that reason.

But whilst I am on that topic, may I say, your Honours, that that does at least manifest a couple of things. One is a desire, notwithstanding the clear words of the section, to allow equities to override them, much as one gets with the various Real Property Acts where personal equities are upheld, notwithstanding the principle of indefeasibility. Also, the second point is this development of this estoppel principle, again not dissimilar to the principle that I am attempting to espouse.

KIEFEL CJ: Will you be identifying the cases upon which you rely that you have spoken of generally in response to Justice Nettle’s question, English cases which were raised which have circumvented, as I understood you to say, the requirement of the Statute of Frauds which would seem to have the effect that contracts would be void?

MR REYNOLDS: Your Honours, we have done some work on that.

KIEFEL CJ: The statute following the – the legislation following Steadman.

MR REYNOLDS: I am not in a position right now to do that. I could do that fairly shortly because we have done the work.

KIEFEL CJ: Perhaps if you could just produce it in a note at some point if it is not meant to be part of your general submission.

MR REYNOLDS: Thank you, your Honour.

KIEFEL CJ: This is a convenient point perhaps to raise with you, Mr Reynolds, where you are in the scheme of things. I understand that you will probably be addressing the cross-appeal later rather than not in-chief.

MR REYNOLDS: Quite.

KIEFEL CJ: So, in relation to where we are in-chief, I think your time estimate was two to two and a half hours and I think the areas you have left to consider are where you would gain support from other jurisdictions for the principle for which you espouse, and then applying the principle for which you espouse to the facts of this case.

MR REYNOLDS: If I can take you back to the outline - - -

KIEFEL CJ: I did not know where we were in relation to the document called outline or “Synopsis of Argument”.

MR REYNOLDS: Your Honour invited me to look at what I have numbered number 19.

KIEFEL CJ: I am sorry?

MR REYNOLDS: Number 19, “Respondent’s reliance on High Court precedent”, so I have just dealt with that. I was going to deal with that at that point.

KIEFEL CJ: Where are we otherwise?

MR REYNOLDS: We are otherwise at paragraph 4 and paragraphs 5 to 13 are a - - -

KIEFEL CJ: I thought we had traversed quite a lot of what appears after 4.

MR REYNOLDS: Well, your Honours, we have and I am happy – I withdraw that.

KIEFEL CJ: I am just drawing to your attention, Mr Reynolds, that there were time estimates given.

MR REYNOLDS: And my learned friend has estimated two days.

KIEFEL CJ: Well, we are referring to your time estimate. I do not think you should assume – neither party should assume that we are sitting for a full two days and adapt your argument to that. The estimate you gave of your submissions in-chief were two to two and a half hours. And the extension, beyond what the parties had indicated for what they needed in-chief, was given because of what appears in the cross-appeal. That is quite a different point.

MR REYNOLDS: Well, can I respectfully point out that paragraphs 5 to 13 deal with the matters in the supplementary submission, which was made - - -

KIEFEL CJ: Mr Reynolds, how much longer will you be in-chief is really what I am asking you? How much longer and how much in addition to the time which you estimated to the Court?

MR REYNOLDS: Well, your Honour, what I was intending to do and I am, as always, in your Honour’s hands, is to talk to your Honours – this is paragraphs 5 to 13 - about the matters I have raised in the supplementary submission. Now, your Honours could take and could have taken any number of views about what we have put there, but I was going to develop these various principles and I am content to do that at greater or less length, depending on the Court’s attitude to the matter. But, provisionally, I had planned on at least covering those propositions in some form – that is, 5 to 13.

Now, if one goes to the application of the facts, I was not going to say a great deal more about that. So I could possibly finish before lunch, which would be, despite the fact that I am dealing with a large, other issue, in conformity with my estimate.

KIEFEL CJ: If you need a little longer after lunch, Mr Reynolds, there would be no difficulty with that. I am simply concerned that we have had two hours of argument and it was not clear to me that – not a large part of it was taken up with High Court precedent and we have not proceeded very far. But if you require a little more beyond your estimate, then of course you may have that to develop the argument in relation to your supplementary historical argument.

MR REYNOLDS: Thank you, your Honour. Your Honours, I have been handed a note that says, “Reply submissions, page 3, footnote 11” and I think that is on the 1989 Act where it has been, at least, touched on.

KIEFEL CJ: Are they the cases to which you were referring Justice Nettle?

MR REYNOLDS: At least some of them – one of them.

KIEFEL CJ: I see, yes. Thank you.

MR REYNOLDS: Your Honours have, of course, seen the supplementary submission and it may help if your Honours have that to hand. But let me, because I do not want to - I both wish to put the argument and also to face up to any difficulties that your Honours perceive in it. Let me just walk through the basic propositions and perhaps ad lib slightly on them and if your Honours wish to engage me further, of course that is a matter for your Honours. Paragraph 5 of our synopsis picks up paragraph 4 of our supplementary submissions which is, in short, the humdrum proposition that the Court of Chancery did determine factual issues but it had its own procedures for doing so and it was reluctant to move outside evidence in documentary form.

It would usually farm out issues to the Common Law Courts and have them determine issues of fact first. There was a problem with doing that that I need to mention briefly in a case where there was an oral contract which was not in conformity with the Statute of Frauds and that is that the Common Law Court would find that the agreement was unenforceable. So, the Court of Chancery came to deal with a fair few cases involving issues of fact in specific performance suits but dealt with it, if I can put it this way, in its own way.

What was its own way? Well, this is proposition 6 in our outline. It had its own very unusual or some very unusual principles of pleading proof in evidence. Your Honours would take as a given that there were different pleading rules from common law without needing much substantiation of that but it is important for me to emphasise that the principles relating to proof in evidence were to some extent different and we have given your Honours the first three pages of Professor Wigmore’s major work on evidence but I have given you the 3rd edition, the last one, I think, done by him.

Your Honours will notice that his book is entitled, Evidence in Trials at Common Law and like many authors he indicates at the beginning the things that he is not dealing with. He makes the point - this is at page 14, that:

The system of evidence in the Chancellor’s court would form of itself a subject of broad scope . . . it is independent of that of the common law in jury trials. It was built upon the ecclesiastical or canon law.

Over the page, at page 15 at about point 2, the Court of Chancery generally followed the law in accordance with the “maxim that Equity follows the Law” and it accepted the common law rules. But in the middle of page 15 that broad proposition is subject to various qualifications. The first one is letter (a):

taking testimony in writing –

which is – I have already referred to but the important one is paragraph (b):

The chancery court enforced the tradition of the canon law requiring two witnesses to every material allegation; and this not only gave rise to the general rule about overcoming the defendant’s oath –

which we are about to come to:

but also led to a few specific rules for characteristic chancery issues –

So that point about two witnesses is important. The next proposition is in paragraph 7, that a peculiar practice arose in Chancery in relation to proof of a plaintiff’s case, at least, where that had been specifically denied on oath by the defendant in the answer, and basically the defendant - this is in our supplementary submissions paragraph 5 - was bound by that answer.

There were two qualifications, one we already touched on, which is the two witnesses rule, the plaintiff could call two witnesses who would gainsay and attempt to prove that what the defendant said in the answer was false, but this is the critical point, there was a refinement of that principle whereby provided the plaintiff call one witness the plaintiff could overcome the defendant’s denial by what was called “circumstances”, “proof of circumstances”.

The reason I am stressing this is that it underlies what I say is the origin of the principle eventually adopted by Lord Selborne. What was necessary? Well, it is dealt with in paragraph 5 and I will not repeat it but there needed to be, certainly on some authority, special circumstances showing – this is paragraph 5 of our supplementary submissions - it was highly and morally probable that the truth was with the plaintiff, the rule of evidence being different, and that one needed many concurring circumstances et cetera, and there are a great many cases that make clear that that was a position in Chancery.

The fourth point - and this is paragraph 8 of our outline - is that that is what led, we submit, to a particular principle that is very germane to this case. In short, that this principle of the plaintiff proving circumstances led to a particular example of this principle of pleading and proof in Chancery, namely, that one needed – I withdraw that. One could prove, in a contract case where there was a dispute about the existence of a contract, you could prove that the contract existed if you established circumstances – what circumstances – part performance of that contract proved unequivocally in a way that would prove the contract and would also prove the terms of it. So, it is simply a species or exemplification of this principle of pleading and this principle of proof, but, obviously, it relates – and relates only – to proof of the contract. It does not relate at all to anything to do with the Statute of Frauds.

Can I refer your Honours, just briefly – and your Honours would be assisted by this reference more generally – there is a book by a Mr Smith called A Treatise on the Practice of the Court of Chancery and it is valuable because there are editions early in the 19th century and also later. And, can I refer your Honours to volume 1 of the 1842 edition for the US and the UK, at pages 490 to 491, where he refers to this principle of circumstances and proof of that by part performance. I note that that principle is not referred to in the edition - of the 6th UK edition published in 1857 which is after the first of the Acts that I have referred to in 1852.

So, this is a key proposition in the argument, that it is just a matter of pleading and proof – that it is an emanation of this more general principle – that it relates only to proof, namely, proof of the contract, and has got nothing to do with the Statute of Frauds, nothing. Your Honours – and this is the fifth point which is in paragraph 9 of our written submissions – is that your Honours know – we have touched on it today from Sir Owen Dixon in Birmingham v Renfrew – that in the 18th century there was a particularisation of the engines of fraud principle which we have been calling the Caton v Caton principle.

So, that principle also existed in the 18th and 19th century before all these reforms. But, obviously, that principle had nothing to do with proof of a contract. It did, however, unlike what we have been calling the “proof principle”, relate to the Statute of Frauds. As we have noted already, one species of coming within the Caton v Caton principle would be to prove acts of part performance. The sixth proposition is self-evident in the light of - - -

BELL J: I am sorry to interrupt you for a moment, but did you say that the fraud principle had nothing to do with contract?

MR REYNOLDS: No, nothing to do with proof of contract.

BELL J: I may have misunderstood you.

MR REYNOLDS: If I said nothing to do with contracts or I, as the Americans say, may have misspoken, but I am not intending to say it has nothing to do with contract. It has got to do with Statute of Frauds but nothing to do with proof that there is a contract, nothing. Caton v Caton, you do not rely on that to prove there is a contract between A and B. You rely on it to get over the Statute of Frauds.

BELL J: I am just coming back to the facts in Maddison and why it was that the decision went the way it did.

MR REYNOLDS: Yes. Well, your Honour, I think it would be decided differently these days. The sixth point, which is in paragraph 10, is that these two principles we have just been talking about obviously have very different areas of operation. One is about proof, it is adjectival, it is only about proof of contracts, it does not relate to the Statute of Frauds. The other one, the fraud principle, is a substantive doctrine, not adjectival, it has got nothing to do with pleading or evidence and it does not relate to proof of the contract but it does relate to the Statute of Frauds.

What I am attempting to do here, obviously, is to try and deal with what we call this duality problem, that there are these two principles that appear to be operating at some level in the same area. I am submitting that, if one looks back to the origin of these principles, it is clear that there is only one which deals with the Statute of Frauds and that is what we have been calling Caton v Caton.

What happened - and this is the seventh proposition which is in paragraph 11 - we submit is that in practice these two principles were out to be confused one with the other, notwithstanding that they have quite different spheres of operation, provenances, and that one is adjectival and one is substantive.

There is likely to be confusion engendered for a number of reasons. One is that they are both generally talking about acts of performance - in the case of what we are calling the proof principle, as a matter of necessity; in the case of the fraud principle, although to come within it one does not need to rely on acts of part performance, normally it would be acts of part performance that would be relied upon by a plaintiff trying to rely on that fraud principle.

Secondly, they are both very likely, as a matter of both experience and commonsense, to arise in the same case, if you have an oral contract and that is going to engender (a) a dispute about whether there is a contract and, if so, what are its terms, and second of all, it is likely to engender a plea of the Statute of Frauds. So, at one level, cases are going to emerge – would have to emerge, and they did emerge – which involve both of these two notions arising in the same case.

Now, if one looks at – and this is my next point – if the contract was found by the judge not to have been established, then all the judge would look at would be this proof principle, similar to Lord Selborne, and would not deal with any further question because the case was over. If, on the other hand, the judge found that, in accordance with the proof principle, that the contract had been established, then it would probably – my estimate, in 99 cases out of 100 - also be the case that the fraud principle was also satisfied. Why? You have got a higher level of proof on the first issue than you do on the second. That is the first point.

Second of all, as we have already said, most of the time you prove actual part performance; within the Selborne test you also prove the Caton v Caton principle. This, of course, is a different era. There were textbooks but most of them tended to be practice books and there was a lot of pawn book learning and a lot of learning of law via what was the relevant practice, and in this case the Court of Chancery. So you have got these two principles, both of which could conveniently be referred to as part performance, or even as a doctrine of part performance, either one.

Your Honours have all, as has everyone at the Bar table, as a matter of experience, practised in some areas more than others. Your Honours know from areas that your Honours know particularly well that there are within that area of practice there is shorthand talk and there is reference to expressions both obliquely and in short form in a manner where the practitioners understand each other but, frankly, those who do not know the jargon do not. We are all used to this kind of argot of a particular area of practice, although we tend to know, obviously, more about those areas where we have practised more than those we have practised less.

This is an area where there is bound – and the reports have demonstrated – to have been a lot of cases on this particular issue we are looking at; namely, where there is an oral contract and one which, at least provisionally, would come within the Statute of Frauds. What happens, I submit, and I submit that it is the key to understanding what has happened in this area, is that you get confusion among the practitioners which is, to some extent, manifest in the judgments between these two principles, so they will talk shorthand about: “What sort of case is this, Mr Smith?” “It is a part performance case, my Lord.” “On what you are going to establish?” “Yes, I am.” Et cetera, and where they will tend to talk in terms of that particular formula.

The more able lawyers will, as in the areas in which each of your Honours practised, know that there is a shorthand that is being used and that some of the practitioners are glossing over what we would call doctrinal differences between various things. But most of the – or a great many of the practitioners are not going to appreciate that particular thing.

The better ones are, and we have cited as an example in our submissions in paragraph 8 Lord Cottenham as an example of a judgment where it is manifest, we submit, from a consideration of the judgment, and we refer to other cases here obviously where the same thing happens, as elsewhere in our note, where it is clear that the judge does understand that these are two different things and that there are two different rules. One is a principle of engines of fraud and the other is a principle of proof. On the other hand – and I concede this – there are also cases where there is a measure of befuddlement manifest in the judgment, at least as it is reported in the nominate reports.

The eighth principle I rely on, which is in paragraph 12 of our outline, is that between 1852 and 1873 there are a number of Acts, and we have referred to the main ones. This is an area of vast reform of the procedure of the Court of Chancery. Your Honours would perhaps remember Bleak House which Professor Holdsworth dates to 1827, although composed in 1853.

That is in his chapter on Bleak House in his book Charles Dickens as a Legal Historian. That is the era we are talking about where there was this huge concern about these procedures in Chancery leading to commissioners’ reports which are in the first half of the 19th century and then leading to these series of acts which, in short, brought about the changes that have given us the law that we have today relevantly where, if the issue is has a contract been proved, you say you need to establish it on the balance of probabilities. You do not have to prove it by reference to part performance and unequivocal acts thereof.

The reason is that these acts totally reformed Chancery procedure, did away with the procedures that generated, I have submitted, this particular practice and in so doing rendered obsolete, not only the practice – not only the procedure, but also the doctrine which emanated from it, namely what we have been calling the Selborne test.

No one would suggest that one needs to prove a contract these days by unequivocal acts of part performance. My learned friend does not suggest that. Indeed, the South Australian Full Court found there was a contract here and they did not use those – apply those principles in determining there was and my learned friend does not say there is anything wrong with that.

Now, these Acts in the UK were replicated – can I give your Honours just a couple of references? The South Australian history in equity is well summarised in the 5th edition of Meagher, Gummow and Lehane at pages 21 to 23. Can I also give your Honours a reference to an article by a gentleman called Greg Taylor entitled “South Australia’s Judicature Act Reforms of 1853” 2001, Volume 22 Legal History 55. I mention that because things in South Australia were slightly different from elsewhere but not relevantly different, the bottom line being that the effect of those reforms was to abolish the underlying principle of procedure and proof that gave rise to this Selborne principle, as we have been calling it or as I have called it in the submissions, the proof principle.

When those procedural Acts came in, they were mostly procedural, as your Honours know, it did away with the whole basis for that principle but it did not, of course, affect matters of substance. We all know that certainly as a sort of 99 per cent proposition that the Judicature Acts did not affect matters of substance in the law of equity, they affected matters basically of procedure. That is why we - - -

GAGELER J: Mr Reynolds, are you at some stage going – we may be running out of time, but it seems to me you just do not engage in any way with the reasons given by Lord Selborne for stating the test in the way that he did.

MR REYNOLDS: Well, your Honour, what I am trying to do is to demonstrate – and he refers on the key page to these cases.

GAGELER J: He builds up to that by looking at the statute - - -

MR REYNOLDS: He does.

GAGELER J: - - - and the relationship between the courts and the statutes, between equity and statute. I mean, there is quite a lot of quite sophisticated reasoning.

MR REYNOLDS: There is but all built upon these earlier cases before the Judicature Acts and all proceeding, at least implicitly, upon the assumptions that – I withdraw that – making an error as to the way these principles operated pre-Judicature Act or, put another way, not appreciating the ultimate provenance of these principles as stated in the cases that he has referred to.

KIEFEL CJ: Are you able to demonstrate in what his Lordship said in Maddison v Alderson that he has proceeded upon the basis that you contend for, or are you asking us to assume that he would have been imbued with this historical knowledge and that we may therefore take it that he was proceeding from the viewpoint for which you contend?

MR REYNOLDS: Well, your Honour, I submit first of all Roundell Palmer, as he was then known, practised at the Chancery Bar, on my research, from 1837 to 1847, and he later became Lord Selborne. One may reasonably infer that he would have had some knowledge about the things that we have been talking about before 1852.

KIEFEL CJ: Thank you for the biographical note. The answer to my question is?

MR REYNOLDS: Well, your Honour, that is by way of preface to the question that your Honour has asked. But the key passage from Maddison v Alderson, if I can take your Honours to that, is at page 479 at about point 3 and the - - -

GAGELER J: The key passage to understand that really begins at 474, about point 6:

By this it cannot be meant that equity will relieve against a public statute of general policy in cases admitted to fall within it -

and then the discussion at 475 through to 476 about the scope and limitations of the statute itself. You cannot understand what is said at 479 without understanding the reasoning that lies behind that limitation.

MR REYNOLDS: Your Honour, we can start at 481, at about point 3 – the proposition that, at the end of the paragraph, there was no binding contract. There must be some reasoning leading to that. I submit that it is clear from the key passage on page 479, at about point 3 – and your Honours will have noticed some familiar cases that have been cited there that I have referred to in my supplementary note – that this sets up the discussion that then follows leading to the conclusion at 481, point 3.

This reasoning at 479, I submit, is leading to the conclusion that a contract has not been established. For example, the headnote starts off – the first thing – this is on 467 after the note held – there was no contract. So, there has to be some reasoning there which gets to that line.

What I am submitting is that this passage at page 479 is the lead-in to that and that what his Lordship is saying, well, is posing the question, has a contract been proved – one. Proposition two – the test that I apply is, has the plaintiff demonstrated acts that are unequivocally and in their own nature referable to some such agreement as that alleged? Proposition three – answer, no, at page 481 at point 3.

What is wrong with that? The problem with it is that it does not acknowledge the effects of these acts. The effect of these various acts that we have been talking about is that the question his Honour should have asked is, has the plaintiff established the contract on the balance of probabilities and in exactly the same way as the South Australian Full Court posed that question and exactly as your Honours would do it as otherwise advised.

BELL J: But, Mr Reynolds, was not the point that his Honour was explaining throughout the reasons in Maddison v Alderson why the court had taken a wrong turning in Loffus v Maw in a case very similar to the present? There was no contract. The housekeeper could have left the engagement with her employer at any time. Had he made some provision in a will, he could have revoked it at any time. That was the essential difficulty. It has nothing to do with arcane questions of proof in Chancery. It was a response to the wrong turning, as his Lordship perceived it, in Loffus v Maw.

MR REYNOLDS: Your Honour, that is part of it, but his Honour had to give reasons for whether or not a contract had been proved, because he makes that finding at 481 at point 3. He did not pull that out of the sky. He got there by a process of reasoning. What was that reasoning? I submit he looked at the question of whether or not these acts were unequivocally and in their own nature referable to some such agreement as that alleged. I interpolate: look at these cases that he refers to, the same cases that I am relying on for the argument that I am trying to put.

What I am trying to say, I hope, clearly, is that there are two basic mistakes. The first is the less serious one, and this is the less serious one. The less serious mistake is to assume, post all of these acts, that the way you determine whether a contract has been proved is you ask have there been acts of part performance unequivocally referable to the contract? I say that is wrong, because that went out the window at least by 1873, and probably earlier.

That is the mistake which I submit underlies Lord Selborne’s judgment. There is a more serious error, which is the more important one so far as your Honours are concerned, and that is to treat this unequivocally referable test as the substantive test for determining whether or not the Statute of Frauds applied. That probably is not an error made here, but it is an error that has been made elsewhere.

For example, it was made in Alderson v Maddison in the Court of Appeal which led to this case, and very clearly made because Lord Justice Baggallay says in that judgment has this case been taken out of the Statute of Frauds? Answer, no. Why? Because there are no acts unequivocally referable to the contract. I say that is wrong. It is wrong as a matter of principle because the correct principle is the substantive principle based on the engine of frauds which we see in Caton v Caton.

That is ultimately what leads to the position that this Court is in today. Why? Because Lord Selborne, as we all know, was a very famous figure in his day and early on in the history of this Court – and we have gone to a few of the authorities – at a period when decisions of the House of Lords and the Privy Council were taken as holy writ and where this principle we see at page 479 has got into the jurisprudential groundwater of this Court and this country, and because it got an early start and because of the great reverence both for Lord Selborne and for the various decisions of those two tribunals, it ended up being, although I have submitted not ratio, at least, as Sir Harry Gibbs said, a widely accepted principle, and ultimately that is the position the various courts of appeal have adopted.

KIEFEL CJ: That might be a convenient time, thank you. Just before we adjourn, Mr Bennett, I take it that you might be revising your time estimate as it appears in the written outline?

MR BENNETT: That depends, your Honour, on the approach the Court takes for the cross-appeal.

KIEFEL CJ: Well, I am not quite sure what that means, but you have heard my discussion with Mr - - -

MR BENNETT: Your Honour, I would be surprised if the matter were capable of finishing today.

KIEFEL CJ: I am not suggesting that. It is just a question of how much of tomorrow is to be engaged with it.

MR BENNETT: I would think less than half of it, your Honour.

MR REYNOLDS: I would agree.

KIEFEL CJ: Yes, thank you. The Court will adjourn until 2.15.

AT 12.46 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.15 PM:

KIEFEL CJ: Yes, Mr Reynolds.

MR REYNOLDS: Thank you, Chief Justice. Your Honours, I expect to be about 15 more minutes subject to any assistance from your Honours.

KIEFEL CJ: Yes, thank you, Mr Reynolds.

MR REYNOLDS: May I conclude that segment of the submissions relating to the – what we have been calling the Selborne test by noting briefly some other difficulties we submit with it which I will state shortly. One is that the test privileges - adds a public performance to the exclusion of any other form of reliance. We submit that there is no basis for a restriction to mere acts of part performance.

Next, we have noted before, principle in its terms does not contain any reference to knowledge, encouragement or inducement. That also is potentially productive of injustice. It is true that in the usual case the vendor will normally have knowledge of the relevant or mostly acts of part performance but that is not always necessarily the case.

Next, it has generated, this test, a multiplicity of interpretations, for example, as to what “unequivocally” means and that has been heavily watered down or raised up, depending on the individual judge – it raises issues as to what “some such contract” means – how one defines the genus – and as to what particular acts will qualify and there have been, as your Honours know, a variety of cases about things like payment of money, payment of rent when there is an improvement constituted by performance, et cetera.

That relates to the next point which is that fundamentally we submit that there is not, in terms of equitable principle, any true or basal substantive equitable principle underlying the test. When one looks to the various interpretations that have been given to the test, it is, we submit, impossible to say that one interpretation should necessarily be preferred over another.

The only way one can debate the issue is by reference to, primarily, one precedent – which we have been doing today – and second of all, matters of common sense such as Justice Hutley mentioned. There is not any fundament of principle that one can hunker down on and draw on in order to point to what the correct test should be.

Next, it has the capacity, for reasons I have already mentioned, to lead in its application to arbitrary, capricious and unjust results. I have already just touched on them. But, for example, other acts of reliance other than part performance, we submit, ought to be both relevant and applicable.
Next, as I have just said a minute ago, the principle does not contain any reference to the vendor’s knowledge or inducement. Finally, there are situations where the proof may be very good but not amount to unequivocal proof. We submit that that is also potentially productive of unfairness and injustice.

Next, the principle – if your Honours focus on the text of it, we do not need to do it again – is, I submit, very odd in terms of the way an equitable principle would normally be couched. There is no nuance in it, no flexibility in it, certainly as originally stated. It is true that some judges, as I remarked a minute ago, have watered it down and given it a degree of nuance, but it is, I submit as a matter of equitable principle, a queer thing.

I can remember Justice Gummow some years ago delivered a paper where he used a colourful phrase. He talked about common lawyers and the brutish simplicities of their craft. The point that he was making is the way that common law principles tend to operate in a very hard and fast way, in contrast to the more nuanced application of equitable principles.

This principle really, I submit, does stick out in that respect unless it is of course watered down as it has been by some judges. Next, it has been the subject of a great deal of criticism from being called “erroneous” to “Delphic”, what have you, and that criticism has led to the rejection of the Selborne principle almost – pretty much in every other common law country, notwithstanding that in I think all cases, that is at least in Canada, in New Zealand and in the United States there were earlier decisions that adopted the Selborne test in terms. It has now been discarded.

Can I deal very briefly with the status quo in terms of principle in those three jurisdictions? So far as Canada is concerned the most recent word on our researches is a case called Hill v Attorney-General of Nova Scotia - your Honours have it but I am only going to go to it very briefly. It is in (1997) 142 DLR (4d) 230 and at pages 233 to 234 your Honours will see or see in due course that the principle formulated by Lord Simon in the Steadman Case at page 558 is embraced which is a principle that is either identical with or very close to the principle in Caton v Caton.

So far as New Zealand is concerned, the position has been reached which can best be explained by reference to another case your Honours have of Mahoe Building Ltd v Fair Investments Ltd [1994] 1 NZLR 281. I think the only passage that I need take your Honours to, albeit briefly, is at page 287 at about line 10 where their Honours refer to an earlier decision of Justice Tipping, later of the Supreme Court, New Zealand, where he formulated three points and they said – this is at line 28:

We are satisfied that for the purposes of this case that is a helpful analysis -

but without going through it all your Honours will see that that involves a very clear departure from a stark principle such as the formulation of Lord Selborne, albeit one that is not identical with Lord Simon’s and that adopted by the Canadian Supreme Court.

So far as the United States is concerned, we have referred in our submissions in reply – this is not the supplementary submission, just the ordinary reply – by the appellant, dated 23 November 2017, at paragraph 7 on page 4. At the top of page 4 the relevant passage from the current restatement is quoted. Without reading it to your Honours, your Honours will see that it is very similar to the principle which we say should be adopted by this Court.

The United Kingdom position, as we have discussed earlier, was never wholly resolved because of the advent of a statutory amendment but, so far as one can read the tea leaves there, the embracing of the principles of estoppel and constructive trust in relation to the new Act tend to suggest for these other authorities, I submit, that that is the way that the courts in the United Kingdom, the Supreme Court or the House of Lords, would have ended up. Of course, your Honours remember the discussion by Lord Hoffmann.

The challenge to my friends is, we submit, to answer the question. If this Selborne principle – as we have been calling it – is so good, why has it been rejected either everywhere else or almost everywhere else? And, why is it that a principle which is substantially the same as the one we advocate, or identical, has been adopted in all of these other jurisdictions?

Your Honours, the next section is an application to the facts – this is paragraph 16 of our outline of the relevant principle. We submit that if your Honours are with us on the principle which we articulate and adopt, then there is not much doubt that we would satisfy the contract found by the Full Court and my client has altered his position on the faith of it by his purchase of the land at Penfield Road and his payment of the extra owners contribution and he has been – on the findings of fact below – induced or allowed by – as we have called them – both Velika and George to, thus, alter his position in the knowledge of both a contract and his alteration of his position. Just very briefly, there are three or four other points that I would make in - - -

EDELMAN J: Mr Reynolds, at what point did Velika become a party to the contract, on your submission, and how?

MR REYNOLDS: The subject of the findings of the Full Court, at appeal book, goes from about page 494 through to 512. The essential way that the Full Court reasons is to find the contract which we have set out at the beginning of our submissions in-chief by reference to the acceptance by both George and Velika of the contract which my client – was the subject of evidence from my client.

Now, as to exactly the point, I think your Honour’s question was directed to, there is – the evidence does not enable a crisp answer to be given to that question. What it does deal with - and this is the subject of the reasoning of the Full Court - is to point to various statements made by Velika as to her knowledge of the essentials of the agreement.

EDELMAN J: You accept that the agreement as orally made and as found by the Full Court was an agreement between Leon and George but not Velika?

MR REYNOLDS: Your Honour, it certainly was an agreement between Velika and George. As to exactly when it became an agreement to which Velika was a party, the evidence does not enable me, as I said a moment ago, to nominate a precise point but what the evidence does show is that Velika agreed that she knew about it before the purchase of the Penfield Road and the transfers went ahead.

NETTLE J: Do not the Full Court put it at the time that she accepted the interest with the knowledge of what had gone before?

MR REYNOLDS: Yes, they do.

NETTLE J: That is paragraph 80. That is the very point.

MR REYNOLDS: Yes.

EDELMAN J: The point becomes that her acceptance of an interest with knowledge of a contract amongst others makes her a party to that contract.

MR REYNOLDS: At least knowledge of the dealings and arrangement between George and Leon and it is not necessarily – one does not have to break it down to (a) a contract between A and B, then C comes aboard with knowledge, which is the way your Honour is putting it to me. I am baulking at that analysis because it does not have to be put in those stark terms. It is capable of being viewed as discussions between A and B where C is the relevant owner of the property and becomes aware of those discussions at some stage which I cannot precisely nominate before the relevant transaction went through, that is the transfer of Penfield Road together with a payment by my client of the extra contribution.

NETTLE J: So you do not embrace the Full Court’s analysis of there being a contract to which she subsequently bound herself by conduct?

MR REYNOLDS: I do, but I do not confine myself to that analysis because particularly - this is, I suspect, going to end up or may end up being what Justice Handley used to call a notice of contention on a notice of contention, by which I mean my friends are going to apparently make an attack on the reasoning of the Full Court.

At the moment, I do accept exactly what the Full Court has said, but I do not tie myself to it and the evidence is capable, I submit, of either construction, namely, that there is, using the same parlance as before, a contract between A and B and C comes aboard with knowledge at some point before the relevant events, or it is put in a slightly more nuanced way. But that is technically, as I say, a notice of contention on their notice of contention; I accept that. Your Honours, there are just three or four brief things that I would like to say before I leave the facts.

BELL J: Before you do that then, Mr Reynolds, can I just ask one matter going back to the New Zealand authority that you referred us to? You took us to Mahoe Buildings v Fair Investments which is - - -

MR REYNOLDS: I have it, your Honour.

BELL J: - - - [1994] 1 NZLR 281. At 287 there is the quotation from Justice Tipping in the earlier decision of TA Dellaca Ltd v PDL Industries and that sets out three requirements for the operation of the doctrine. Am I right in understanding from something you said a few moments ago that you would accept that the statement that one finds there at 287 in Mahoe Buildings is a fuller statement but consistent with what you have described as the Caton principle?

MR REYNOLDS: Well, it may be narrower to some extent - - -

BELL J: Yes.

MR REYNOLDS: - - - in the sense that the focus of the discussion is apropos a case where part performance is relied upon, so that is the facts, as it were, and the principle is confined to a statement in those terms. That is in paragraph 2. But it is not a – the point that I would try to make about it is that it is certainly not an adoption of what Lord Selborne said. It would be putting it too high to say that this amounts to a precise adoption of the principle I have been working on, which is Caton v Caton, because it is slightly different and I do not think I can submit, and I did not intend to submit, that it is an adoption in terms of Caton v Caton, because it is not. But it is both inconsistent with what Lord Selborne said and also consistent with a wider approach, albeit not necessarily the one that we have espoused.

BELL J: I suppose one could see the New Zealand court and, for that matter, some of the statements in Steadman as building on Lord Selborne in Maddison, but in a way that introduced a greater degree of flexibility, whereas your contention, really the starting point is the analysis of each of their Lordships in Maddison is misconceived.

MR REYNOLDS: I would certainly say that the US position and the Canadian position per medium of the Hill Case is certainly pretty much on all-fours with the principle that we seek to adopt. Your Honour is right, this Mahoe statement is a little bit more oblique and it has a vestige of the flavouring, if you like, a nuance of Lord Selborne but not much more than that. At any rate, it is not a principle which my learned friends seek to rely upon and it would obviously involve a departure from the position that they have been putting, namely, that there is a hard and fast, clear principle that has been adopted in earlier decisions of this Court.

Now, if they want to come on board – and it has only been accepted, as it were, provisionally – that is line 28 on that page – if they want to come on board and say, “Well, okay, we are happy with that”, then perhaps if I could deal with that in reply, but I accept I think pretty much what your Honour says.

Just very briefly on the facts, without my client’s money neither Velika nor George would ever have had any interest at all in Penfield Road. That is clear. They could not afford it; they did not have any money. And they have now got – particularly Velika has the capital gain from that investment. Indeed, as part of a marriage settlement, as I understand it, she owns not only the whole of Penfield Road but the whole of Clark Road and also the whole of Taylor’s Road.

Next, my client, for his part, had the wherewithal financially to purchase Penfield Road completely on his own. And he could well have done that, in which case he would have had the whole of the capital gain associated with that investment. The respondent seeks to deny him even the capital – any capital gain at all vis-a-vis the money that he contributed over and above the notion of any half share.

Next and finally, if my client had not formulated and sought to rely upon the agreement which was ultimately found by the Full Court, there would have been, at least presumptively, a resulting trust in his favour in relation to the additional amount of $75,000, which he contributed to the purchase of Penfield Road. And, obviously, if that had happened the presumptive resulting trust would have carried with it any capital gain from that. So I would ask your Honours - - -

EDELMAN J: If you had pleaded the resulting trust, that would have been met, perhaps, by a response that there was a contract and then you would have writing signed by a party or their lawyer.

MR REYNOLDS: Your Honour is quite right. We have run a case that says there was a contract and that it would be inconsistent to say that there is a presumptive resulting trust because the contract rebuts the presumption. I accept that. The point I am making is that their bottom line is they are seeking to deny my client any form of proprietary interest in either of these two properties which is referable to the extra money which he paid.

That is the end of the discussion about the facts, except for one thing, and that is this. So far as the Selborne test is concerned, I probably, as a matter of fairness, should indicate that on the evidence I cannot satisfy that test. My client cannot satisfy that test – at least if the Selborne test is not attenuated to some degree. But, the submission that I do wish to make is that what I have been calling, if you like, a watered-down version of the Selborne test, is a test that my client can satisfy. Can I just briefly address that?

The acts relied upon by him were a performance of the contract found by the Full Court. That still leaves the question of unequivocally – the “unequivocally” element, if I can put it that way, or the “unequivocality” element – and, also, the acts being referable to some sort of agreement.

So far as the unequivocality element is concerned, we would – if we are forced to adopt a medium of – I withdraw that. If we have to rely on a form of the Selborne test, we would adopt that relied upon by Justice Mahoney in the Millett v Regent Case and that formulation is quoted in our reply submissions at paragraph 6 – in particular footnote 6 – where he talks about it being necessary that there be an appropriate degree of cogency to establish the intervention of equity.

So far as the other element of the acts being referable to the agreement, or a similar formulation, we would adopt the test to be found – which is a test from Fry on specific performance – which is to be found in the Kingswood Estate Case which is on your Honours’ trolley or tablet, Kingswood Estate Co. Ltd v Anderson [1962] 2 QB 169, at page 189 at about point 5 where there is a quote from Fry – it is only four lines if your Honours do not have the page – but I paraphrase:

“The true principle . . . [is] only to require that the acts in question be such as must be referred to some contract, and may be referred to the alleged one; that they prove the existence of some contract, and are consistent with the contract alleged.”

So we submit we can make that out but we cannot, taking the Selborne test at its highest, make that good on the facts.

The only other two matters that I need to deal with to conclude - the first is that your Honours should have a copy of some orders that we have formulated which your Honours have and which I was not proposing to address your Honours on other than to indicate that they are the orders, at least in substance, which we seek.

The final matter is this. My learned friend, in a supplementary list of authorities that I believe were delivered to the Court yesterday – that is not a complaint, by the way – referred to a number of authorities that seemed to deal with the issue of admissions and a proposition that, as I understand it, they have to be within the personal knowledge of the party making the alleged admission. We have given your Honours a copy of the relevant segment of the 11th edition of Cross on Evidence, at pages 1275 to 1277. We suggest that there may be some matters in there which my learned friends are going to have to deal with on that particular point. If the Court pleases, those are my submissions.

KIEFEL CJ: Yes, thank you, Mr Reynolds. Yes, Mr Bennett.

MR BENNETT: May it please the Court, subject to anything your Honours may say about this, we propose the following division of labour. My learned friend, Mr Tokley, will deal first with the legal arguments my learned friend has put. I will then deal with the leave to cross-appeal and the cross-appeal itself, if leave is granted. Mr White will then deal with the questions of forms of orders and accounts and costs and matters of that sort. I ask Mr Tokley to - - -

KIEFEL CJ: Just before you sit down, am I right in thinking that if the respondent is successful in having the appeal dismissed – this is in relation to the cross-appeal – then the only relevance that the cross-appeal would have would be with respect to costs?

MR BENNETT: Yes, your Honour, and in those circumstances I would not press the application for leave. The point of the cross-appeal, it is in substance a notice of contention. It is a cross-appeal because there is a minor effect on an order for costs.

The purpose of it is to remove the basis for the appeal because if there is no contract between the parties then the issues of part performance and so on do not arise. It is on that basis that we wish to put the cross-appeal.

KIEFEL CJ: But would you be contending that there has to first be found, as a matter of fact, a contract in the terms alleged as distinct from a process whereby the Court takes evidence of a contract so that it may measure part performance against the terms of the proposed contract which may then be enforced if the equity is seen to arise?

MR BENNETT: I am sorry, your Honours, if your Honours were to dismiss the appeal, we would not seek leave to cross-appeal. Does that sufficiently answer your Honour’s question?

KIEFEL CJ: No, not really, but perhaps we can come to it when you deal with the cross-appeal – the application for leave. Yes, Mr Tokley.

MR TOKLEY: Thank you, your Honours. Your Honours, I think, have received our outline of oral submissions. Your Honours will appreciate that they begin at paragraph 5 with the argument on the cross-appeal but I will be dealing with the arguments on the appeal which begin at paragraph 12 of the outline. There is one mistake, unfortunately, in paragraph 16. It should say the appellant’s “first” principal submission and not the appellant’s “second” principal submission.

Your Honours, could I by way of overview say that our principal submission, obviously, is that this Court has in previous decisions of this Court accepted as authoritative the statement or the test stated by the Earl of Selborne in Maddison v Alderson. That test has been applied by this Court in various judgments of this Court from at least 1907 onwards and it was given significant consideration by their Honours, Justices Isaacs and Rich, in the McBride v Sandland Case to which your Honours have been taken.

It has also been approved, if I may use that expression, by this Court in Regent v Millett and your Honours have been taken to that judgment and, in particular, to the statements by the Honourable Harry Gibbs as a Justice of this Court as he then was and also to the fact that four other Judges of this Court agreed with his judgment.

Although my learned friend’s written submissions suggested that the decision of the House of Lords in Steadman v Steadman clarified Maddison v Alderson, in truth your Honours are being asked to depart from Maddison v Alderson and your Honours have not been taken this afternoon or this morning to Steadman v Steadman for a consideration of the judgments by the Law Lords.

May I just make this observation in relation to that case? As your Honour the Chief Justice mentioned earlier today, it is difficult to discern a ratio from that case. There are five separate judgments in the case, one in dissent, Lord Morris of Borth-y-Gest, and each of the other Law Lords clearly took an opportunity to approach the questions that were before them in different ways with different expressions. It is, in my respectful submission, very difficult to distil out of that decision any clear ratio and, indeed, it is difficult to distil out of the decision any clear approach to the questions that arise.

What is clear though from the decision in Steadman v Steadman, and I will come to it very briefly, is that there is an acceptance of the authority of Maddison v Alderson. Indeed, even – and I will take your Honours to this passage – even his Lordship Lord Reid accepts that Maddison v Alderson has been the law for such a long time that he would not depart from it.

Your Honours know – and I think it fell from a question that your Honour Justice Gordon asked early this morning – that in the United Kingdom the equivalent of section 4 of the Statute of Frauds has been repealed by the United Kingdom legislature in 1989, so that today contracts for the sale or disposition of interest in land must only be in writing.

Again, by way of overview and by way of contrast, this Court, as in Regent v Millett, had five judges clearly accept the basis of part performance, and your Honours have been taken to that in Caton v Caton. There is clear acceptance of the test laid down by the Earl of Selborne in Maddison v Alderson. In my respectful submission, it would be appropriate for that case to be followed by this Court as stating the law for Australia.

Your Honours, in my respectful submission, the decision in Regent v Millett is neither wrong in principle, nor is it wrong in policy. The appellants in their supplementary submission have raised what I think is a false distinction between, on the one hand, the fraud principle and, on the other hand, what they call the proof principle. In my submission the two of them go hand in hand and the cases need to be understood as the two going hand in hand. Whatever test is applied, the acts relied on here for part performance do not satisfy those tests.

Your Honours, I would like to first of all go to – without going over ground that has been covered - some of the authorities that my learned friend mentioned in his submissions. Can I take your Honours, first, please, to Regent v Millett and invite your Honours to turn to page 682 of the judgment.

What I wish to demonstrate to your Honours is that the statements by his Honour Justice Gibbs as he then was are to be read in the context of the argument put to the Court concerning the acts of part performance and hence the emphasis upon the taking of possession. If your Honours would, please, go first of all to page 682 to about point 2 on the page, your Honours will see in the paragraph beginning “In the action the appellants pleaded the Statute of Frauds” and halfway through that paragraph, the statement:

The acts of part performance on which the respondents relied were (1) the taking of possession; (2) the effecting of repairs before December 1972; (3) the doing of work on the renovations and additions in January 1973; (4) the making of the mortgage repayments.

His Honour Justice Gibbs then says:

The learned trial judge held that these acts amount to sufficient part performance –

His Honour then goes on to say and your Honours were taken to this part:

The principle upon which the doctrine of part performance rests was stated by Lord Cranworth –

but it is these words I wish to emphasise:

in words which appear to have a direct application to the present case. He said -

He then quotes but the words which my learned friend omitted from his statement of the test are these:

as for instance by taking possession of land, and expending money in building or other like acts, there it would be a fraud –

and so on. This particular case, as your Honours know from the facts, the house was in bad repair. So, the acts of possession, the acts of part performance that were relied upon were the act of moving into possession and effecting repairs to the building to the house in question. That is why, I think, in my submission, his Honour said “in words which appear to have a direct application to the present case” because the quote from Lord Cranworth had the words.....by taking possession and “expending money in building or other like acts”.

So there was a direct reference to such matters. In the next paragraph his Honour then goes on to say:

The books are full of cases in which it has been held that the entry into possession alone . . . may amount to part performance -

and the theme of possession is then carried on to page 683 where, about point 5 of the page, your Honours will see:

In the present case the giving and taking of possession by itself was sufficient part performance of the contract -

So what his Honour is not doing is he is not, with respect, doing what my learned friend said he was doing. What he is doing is saying well, in this case the argument is that they have taken possession, they have done building works. The quote which he refers to talks about the taking of possession, expending the money on buildings, but possession alone is sufficient and that is why he uses the words:

In the present case the giving and taking of possession by itself was sufficient part performance –

and it is therefore unnecessary to consider whether the other acts relied upon would also either alone or together amount to part performance. Going down to point 8 on that page, his Honour says:

However, in the present case the circumstances under which possession was given indicate contract, to echo the words in McBride v Sandland and the possession was unequivocally referable to some such contract as that alleged.

Now, your Honours will see straightaway that is an application of the words quoted earlier in the page, at the top of page 683, where his Honour was quoting from the Earl of Selborne:

that the acts relied on as part performance “must be unequivocally, and in their own nature, referable to some such agreement as that alleged” -

which, as your Honour the Chief Justice pointed out, has been consistently accepted as a correct statement of the law. His Honour then went on to add some qualifications, but they are not germane to the matters under discussion.

So, your Honours, far from Regent v Millet being a case in which his Honour was seeking to, sub silentio, introduce only the principle – which is referred to on page 683 – it was an orthodox application of the test stated by the Earl of Selborne by his Honour and agreed to by four Judges of this Court.

Your Honours were taken to the case of Cooney v Burns [1922] HCA 8; (1922) 30 CLR 216. Could I simply take your Honours to the various pages which the Judges of that Court referred to Maddison v Alderson and to the statements by the Earl of Selborne without going to every single reference.

NETTLE J: Mr Tokley, could I be a pain and ask you to speak up a little, please?

MR TOKLEY: I am sorry, your Honour.

NETTLE J: That is my fault, not yours, but if you would it would be of assistance.

MR TOKLEY: Of course, your Honour, thank you. Your Honours, I am taking your Honours to Cooney v Burns and to particular references in the judgment of the Judges in that Court to Maddison v Alderson and in particular to the test stated by the Earl of Selborne. The first is at the top of page 222 in the decision of his Honour Justice Knox. Your Honours will see at about the first line:

The acts relied on must be unequivocally and in their own nature referable to some such agreement as that alleged (Maddison v. Alderson) –

At page 231, in the judgment of his Honour Justice Isaacs – at about point 7 of the page, your Honours will see the paragraph beginning:

In McBride v. Sandland an attempt was made to formulate some of the elements that are required to raise the necessary equity.

Your Honours will recall that this morning your Honours were taken to McBride v Sandland where their Honours, Justices Isaacs and Rich, set out in, I think, seven or eight paragraphs the various elements that were required to raise the necessary equity – including quoting from the Earl of Selborne. At page 239 in the judgment of his Honour Justice Higgins, at about point 2 on the page:

The cases on the subject cannot be all reconciled. Lord Selborne made an heroic effort in 1883, in the case of Maddison v. Alderson, to bring order to the chaos, to give system to the unsystematic; and perhaps for practical purposes, it would be well to treat that case as being, at all events prima facie, a complete exposition of the law -

and so on. Then at page 243 your Honours will see at about point 4 of the page that his Honour Justice Gavan Duffy agreed with Justice Higgins, and then at the bottom on that page, in the decision of his Honour Justice Starke, about point 9:

Numerous cases have been cited to us, but the principle which governs the present case is stated in the following propositions contained in the speech of Selborne L.C. in the House of Lords, in the well-known case of Maddison v Alderson –

His Honour then quotes from the test there. Your Honours, that is yet another example of where this Court has accepted the correctness of the test stated by the Earl of Selborne.

EDELMAN J: Was that the leading authority at the time that section 26 of the Law of Property Act was enacted?

MR TOKLEY: I would say yes, your Honour, because from memory the Law of Property Act is a 1925 or 1926 Act.

NETTLE J: 1925.

MR TOKLEY: Thank you, yes. It would have been, yes. As your Honour knows, subsection (2), I think it is, of section 26 has the exception, the law of part performance. Thank you, your Honour. Your Honours, the other case - - -

GAGELER J: I note that Justice Higgins, at page 239, says:

Lord Selborne made an heroic effort in 1883, in the case of Maddison v. Alderson, to bring order to the chaos, to give system to the unsystematic –

It would seem a shame to scramble it all up again and start again.

MR TOKLEY: Yes, your Honour. In my respectful submission, that is what their Lordships did in Steadman v Steadman. In fact, I think there are some journal article references which I think are mentioned in one of the New Zealand cases, Mahoe, where they refer to some articles where some very learned academics have been critical of Steadman v Steadman. There is a reference. I have a copy for your Honours of the article. It has been provided to my learned friend. It is a copy of an article written by his Honour Sir Anthony Mason in the University of Queensland Law Journal. If I may provide a copy to your Honours.

I do not wish to delay long in this article, your Honours. It is entitled “Declarations, Injunctions and Constructive Trust; Divergent Developments in England and Australia” and the relevant part is on page 131 and in the paragraph on that page beginning “In the course of his judgment”:

Holland J. dealt with the plaintiff’s alternative claim for specific performance which inevitably rested on part performance. In this respect his Honour declined to apply the remarkable decision of the House of Lords in Steadman v. Steadman because the High Court has twice endorsed the test laid down in Maddison v. Alderson. In Steadman v. Steadman the House of Lords, in the face of much authority to the contrary, held that (1) payment of money could be a sufficient act of part performance and (2) it was sufficient of the acts of part performance indicated some contract and either showed the nature of, or were consistent with, the oral agreement alleged. Their Lordships rejected the test hitherto accepted the acts of part performance must be referable to some such contract as that alleged.

Your Honours will recognise that the last sentence and the words are a statement from the Earl of Selborne’s statement on the matter. Your Honours, without taking your Honours to it because your Honours have already been taken to it, I was simply going to give one additional reference to those pages your Honours were taken to in McBride v Sandland and that was to page 99 and that was because, as her Honour the Chief Justice mentioned, in the decision of his Honour Justice Powers he also referred to the test laid down by the Earl of Selborne at page 99 about point 7 of that page.

Your Honours were taken to page 300 in the case of J.C. Williamson v Lukey and Mulholland [1931] HCA 15; (1931) 45 CLR 282 and to the judgment of his Honour Justice Dixon, as he then was, on page 300 about point 7 of the page and I think I remember your Honour Justice Gordon asked a question about whether the test was the same as that which the Earl of Selborne had stated. But if one goes to page 301 and to about point 8 on that page your Honours will see the sentence beginning:

But, however this may be, in this case there are no acts of part performance which are referable unequivocally to the existence of anything more than some contract enabling the plaintiffs to sell confectionery and the like in the theatre.

Of course, the words “which are referable unequivocally to the existence of” are a paraphrase of what the Earl of Selborne said in Maddison v Alderson.

GORDON J: I think it is also picked up – reference to that idea starts on page 297.

MR TOKLEY: Yes, your Honour, thank you. Could I take your Honours to Maddison v Alderson (1883) 8 App Cas 467? My learned friend was asked some questions about the contract in the matter and I recall your Honour Justice Gageler saying that one had to consider what was being said at page 479 in light of earlier comments which began, I think, at 474. In relation to the contract point – and this is where I thought I may be of some assistance to your Honours – if your Honours would please go to page 472, your Honours will see that the paragraph beginning at about point 6 of the page:

The case, thus presented, was manifestly one of conduct on the part of the appellant (affecting her arrangements in life and pecuniary interests).....rather than one of definite contract, for mutual considerations, made between herself and him at any particular time. There was certainly no contract on her part which she would have broken by voluntarily leaving his service at any time during his life; and I see no evidence of any agreement by her to serve without, or to release her claim to, wages. If there was a contract on his part, it was conditional upon –

and so on. Then that is picked up again at page 480, at the very bottom of the page – the very last sentence on the page:

Her mere continuance in Thomas Alderson’s service, though without any actual payment of wages, was not such an act as to be in itself evidence of a new contract, much less of a contract concerning her master’s land.

Your Honours, I do not propose to go through Maddison v Alderson for the reason I am sure (a) your Honours are familiar with it and (b) your Honours would have read it in some detail.

Your Honours, although my learned friend, Mr Reynolds, has not taken your Honours to Steadman v Steadman, what I would like to do is to demonstrate that although their Lordships discuss the law of part performance it seems clear that they all are seeking to apply Maddison v Alderson, or at least they accept the authority of Maddison v Alderson, which was the principal case on which our law is based. That can be seen - it is [1976] AC 536. First of all, in the speech of Lord Reid, at page 542, opposite letter C:

But it was strenuously argued that such a view is inconsistent with the decision of this House in Maddison v. Alderson (1883) 8 App.Cas. 467. That decision is now so embedded in the law that I would not depart from it even if I thought it wrong: it would be impracticable to foresee all the consequences of tampering with it.

At page 546, opposite letter D, in the dissenting judgment of Lord Morris of Borth-y-Gest, where he quotes from Lord FitzGerald, at page 491, but the quote there is identical to the statement by the Earl of Selborne at the earlier paragraph, and Lord FitzGerald expresses agreement with the Earl of Selborne. At page 552, in the speech of Viscount Dilhorne, opposite the letter G, he quotes from the Earl of Selborne:

“All the authorities show that the acts relied upon as part performance must be unequivocally, and in their own nature, referable to some such agreement as that alleged -

At page 559, opposite the letter C, in the speech of Lord Simon of Glaisdale, where he again quotes from the Earl of Selborne and the relevant test and finally, Lord Salmon at page 567, opposite letter G, where again he quotes from the Earl of Selborne and to the relevant test.

KEANE J: Mr Tokley, looking at Lord Reid’s speech at page 541 at the bottom of the page:

unless the law is to be divorced from reason and principle, the rule must be that you take the whole circumstances, leaving aside evidence about the oral contract, to see whether it is proved that the acts relied on were done in reliance on a contract: that will be proved if it is shown to be more probable than not.

MR TOKLEY: Yes, your Honour.

KEANE J: Do you accept that if that is the test, Mr Reynolds’ side wins on this point?

MR TOKLEY: No, your Honour, we do not accept that they would satisfy that because, as I understand it, the acts of part performance they rely upon are the payment of the balance of the purchase price for what is called the Penfield Road property. There has been no payment in respect of the Clark Road property. As the Chief Justice said in the judgment in the court below, from memory it is about paragraph 100, the acts of part performance relied upon do not relate in any way to the Clark Road property.

NETTLE J: But they relate to the contract alleged, do they not?

MR TOKLEY: Sorry, your Honour?

NETTLE J: I am sorry, they relate to the contract which is alleged, that is, the contract to pay money in order to acquire an interest in the other property.

MR TOKLEY: They relate to the contract to acquire Penfield Road, your Honour.

NETTLE J: Yes.

MR TOKLEY: Yes.

NETTLE J: Must they relate to the contract to acquire the property the subject of the claim?

MR TOKLEY: Yes, your Honour, and the reason why I say that is because I understand that the words “some such contract as alleged” must mean to purchase an interest in the subject matter of Clark Road.

NETTLE J: Why cannot it be some such contract as is alleged as would be a contract to acquire a proprietary interest in property A by contributing money towards property B?

MR TOKLEY: Well, your Honour, because, based on the authorities, the underlying principle is that the purchaser has entered into an agreement with a vendor for a disposition of an interest in that person’s property.

NETTLE J: So you say the principle goes no broader than that?

MR TOKLEY: Yes, your Honour.

NETTLE J: And you will show us why by reference to authority?

MR TOKLEY: Yes, your Honour, but if I can just take up one point apropos your Honour’s question. What my learned friend called the principle of fraud and the proof principle really focus on different actors in the transaction because, if one looks at the principle of fraud, it is where the defendant seeks to set up the statute in opposition to the claim that the purchaser has performed acts of part performance; whereas the proof principle, as he calls it, are the acts of part performance on behalf of the plaintiff, not the defendant.

NETTLE J: Do not worry about that. Assuming McBride v Sandland is correct and is followed, it is not restrictive, is it, to a contract only for the purchase of an interest in a property under a contract of sale for that land?

MR TOKLEY: That is my understanding, your Honour. When one reads the authorities, it has to be for a purchase of an interest in a contract in land, but it has to be the land of the defendant.

KEANE J: I mean, it is possible – it is conceivable, I suppose, that you might have a contract that is not accurately characterised as a contract for the sale of land because it may be that it encompasses various transactions that are interdependent so that one might say that the contract in question is not one for the sale of the Clark Road land. It is conceivable that one might have a contract like that, but this case has not been argued on the footing that the contract we are concerned with is not within the statute at all.

MR TOKLEY: Correct, your Honour, yes. And your Honour’s proposition is a good one. The example that Lord Reid gave was one for where the – at page 541, opposite letter G, he said that:

The transfer of the personal property or the performance of the obligation would indicate the existence of a contract but it would not indicate that that contract related to that or any other land.

But when one goes through the speeches of the other Law Lords it is fairly clear that at least a majority of them confined their comments to contracts concerning land.

NETTLE J: But this contract plainly does – the alleged contract plainly does relate to land.

MR TOKLEY: Yes, your Honour, I was just merely picking up on his Honour Justice Keane’s point that sometimes you can have a contract which has obligations that are unrelated to land. And that was the illustration that his Lordship Lord Reid gave in the judgment and I was simply responding to that point.

NETTLE J: You persist, do you, in the contention that, assuming there have been sufficient acts of part performance to satisfy Lord Selborne’s test in the performance of this contract - - -

MR TOKLEY: Yes.

NETTLE J: - - - it would still not be within the doctrine of specific performance.

MR TOKLEY: Yes, your Honour, I do. And your Honour will recall that it is the words “some such contract as that alleged” so the alleged contract was with the defendant, the respondent to the appeal for an interest - - -

NETTLE J: For which the lady was alleged to be a party by reason of her conduct?

MR TOKLEY: Exactly. Yes, your Honour.

NETTLE J: Why can it not be a tripartite contract?

MR TOKLEY: Well, your Honour, that is the subject of the cross-appeal.

NETTLE J: Put aside the facts: assuming them in your favour or against you, as it were.

MR TOKLEY: Okay.

NETTLE J: Assume there is a tripartite contract, constituted with the two men and the lady, why can that not be, at least in theory, a contract which was within the scope of the doctrine of part performance?

MR TOKLEY: Well, your Honour, it would depend upon the precise terms of the agreement between the parties as to which of the parties was the moving party in terms of the acquisition of the interest in land, which was the party that was selling or disposing of the interest in the land, which of the parties would set up the statute in opposition to the claim for enforcement and precisely what acts of part performance were relied upon? As a generalisation I understand your Honour’s point.

NETTLE J: And accept it, at a level of generalisation which you say does not apply here on the facts? But, assuming it did, would you accept it?

MR TOKLEY: As a generalisation, I cannot see something wrong with it in principle but I think that the statements of the various Judges in this Court have made it plain that some such contract as that alleged is the particular contract in question. And, in this case, it is - - -

EDELMAN J: But, in the circumstances where there was only one interest in land that was involved.

MR TOKLEY: If there was only one interest involved in a tripartite contract.

EDELMAN J: But, that is the circumstances in which the statements have been made.

MR TOKLEY: I take your Honour’s point. I had not given thought to that issue. I would have to check the authorities but I think your Honour is correct.

NETTLE J: I had not appreciated until now that this point was in issue. That is to say, that the doctrine was said to be incapable of application, assuming there were sufficient acts of part performance to satisfy the stringent test put down by Lord Selborne. That has always been an issue, has it?

MR TOKLEY: Yes, your Honour, I understand it to be so, yes. And, partly because of the way – in the case of Maddison v Alderson itself the Earl of Selborne refers to the actual contract in the circumstances of that case. So, as I understand it, the application of the principle is in respect of the particular land that is the subject matter of the application for specific performance. It cannot just be another piece of land.

NETTLE J: Yes.

KEANE J: And, you are relying on the observations that his Lordship made in relation to a necessity for a change of position in relation to “the land”, the subject of the action.

MR TOKLEY: Yes, your Honour. Otherwise, as your Honours know, I can speak generally – and as his Honour Justice Gageler picked up earlier today – and it comes through in Justice Higgins’ decision – the Earl of Selborne was trying to reconcile competing approaches to matters because, as your Honour Justice Keane has said, you cannot enforce the contract. It is the very thing you cannot do because of the Statute of Frauds. So, what you do is, you look at the acts of part performance that gives rise to the equities as they are called. It is those acts of part performance in relation to that land which we are then seeking to – which then form the basis of the grant of a remedy – in some cases, the grant of specific performance.

It is not always necessary either in this case or in other cases for there to be acts that are consistent – so just because there is a suggestion, as there is in this case, that the appellant paid for the balance of the purchase price of the Penfield Road property, you do not have to infer the contractual agreement in this situation because it is always possible for two persons to purchase a piece of land together. The law will adjust the rights as between them depending upon how much they pay for that land or their respective contributions towards it. It does not necessarily indicate the existence of a contract between the two purchasers. That is part of the argument that will be dealt with by my learned leader, Mr Bennett, and the authorities that we have got on our list of authorities.

If I may move on, your Honours were taken to the decision of the Court of Appeal in Kingswood Estate v Anderson [1963] 2 QB 169 and, in particular, to the judgment of Lord Justice Upjohn at page 189 where Lord Justice Upjohn quotes from Fry on specific performance. Your Honours, in some ways, this is an unusual judgment, it is also remarkable for the absence of authorities being cited but nowhere in this judgment is there reference to Maddison v Alderson which you would think was and has been said to be the leading case on this area of the law. There is no reference in Lord Justice Upjohn’s judgments to Maddison v Alderson. There is the reference to Fry on Specific Performance at page 189 but there is no attempt to square what is called the “true principle” with the decision in Maddison v Alderson.

Your Honours, I will not take your Honours to the various passages but scattered in parts of Steadman v Steadman there are references by some of their Lordships to the Kingswood Estate judgment as the basis for justifying their departure from what is sometimes called the traditional view or the strict view in Maddison v Alderson. But in truth when one looks at Kingswood Estate v Anderson, it is not, with great respect to their Lordships, an authority that justifies the departure and the basis for any such departure. Your Honours, in addressing all those cases, I think I have dealt with paragraphs 12, 13, 14, 15, 16, not quite fully 17, 18, and I have dealt with 19.

Although my learned friend’s - the appellant’s reply submissions suggested that he did not need to satisfy your Honours that – did not need to satisfy the requirements in John v Federal Commissioner of Taxation, I think it is clear from his oral submissions this morning that he is saying that the test that has been approved by this Court is flawed in principle. So, in my respectful submission, he does have to satisfy those requirements. In my respectful submission, he does not satisfy those requirements. As we say in paragraph 18 of our outline, the authority of Maddison v Alderson and McBride v Sandland have respectively stood for 134 years and 100 years. There is no reason to not follow those cases and the statement - the test in those cases.

There may be, as your Honour Justice Nettle has raised with me, questions of application. Often, statements of principle at a fairly general level will give rise to problems of application. Although it is not on our list of authorities, I am reminded of the fact that - I think it was in Cole v Whitfield - the Judges of this Court articulated a test regarding section 92 of the Constitution. On the same day that Cole v Whitfield was handed down, Bath v Alston was also handed down. Their Honours were unanimous in Cole v Whitfield, and split 4:3 in Bath v Alston. It is always possible for judges to differ in the way in which they apply the relevant principle to the particular facts. That does not mean that the principle is unsound or needs to be re-expressed; it is simply a question of the way in which it is applied to the particular facts and the emphasis that is - - -

KEANE J: In Cooney v Burns, Chief Justice Knox stated the test of Lord Selborne from Maddison v Alderson, and the other Justices all did the same and reached different results.

MR TOKLEY: Yes, your Honour.

KEANE J: I suspect it will be said against you that, so far as the John test is concerned, the fact that you have got a test that leads to those sorts of split results in its application may suggest there is something wrong with the test.

MR TOKLEY: If it is, your Honour, it would suffer the same – I will give the same response as no doubt was given in relation to Bath v Alston, that there is nothing wrong with the principle, it is simply the way in which it has been applied in particular circumstances.

KEANE J: Do you accept that the decided cases do suggest sometimes that part performance looks like a rule about proof and evidence, and in other aspects of the formulation it looks like a substantive rule about the equities and enforcing the equities?

MR TOKLEY: I accept the latter position, your Honour.

KEANE J: Do I take it from that that you say the latter is the true view?

MR TOKLEY: Yes, your Honour.

KEANE J: But do you accept that there are suggestions that do sound or look like they are talking about proof?

MR TOKLEY: I do, and in particular in some of the speeches of the Law Lords in Steadman v Steadman that talk about - - -

KEANE J: Yes.

MR TOKLEY: But, with great respect to their Lordships, it is not clear when one reads those passages whether they are identifying Maddison v Alderson as an example of that, or they are talking about earlier decisions. As a generalisation, your Honours, I mean no disrespect in saying this to my learned friend, but the historical aspects are of interest perhaps to those steeped in equity law, but the law today has moved on in the last 200 years since some of those decisions were decided and, as was demonstrated in Regent v Millett, it is possible for the test as it was applied by his Honour Sir Harry Gibbs in that case to be applied and for the other judges to agree to it. So, yes, there may be times when other judges express some difficulty with the application of the test but equally there are examples where the test can be stated and applied and all judges can agree to it.

KEANE J: But I take it you are agreeing with your opponent that, so far as the rationale, the principle that sustains the test, it is a concern about the enforcement of the equities that arise from performance; it is not a matter of trying to prove by the circumstances that one can infer there must be a contract?

MR TOKLEY: No, I agree with that, your Honour, yes, because it is clear from all the authorities that the basis of equity’s intervention are the acts of part performance which give rise to the equities, as they call them, and that is also clear from the decision of his Honour Justice Dixon, as he then was, in the J.C. Williamson Case when he talks about the acts of part performance being the equities.

KIEFEL CJ: And the acts of part performance are subsequent to the bargain between the parties.

MR TOKLEY: Yes, your Honour.

KIEFEL CJ: Evidence is led in relation to the bargain between the parties, not by way of determining whether there is an enforceable

agreement, because that begs the question about the acts of part performance, but merely to show the nature of the bargain so that the acts can be tested against some such agreement as is alleged.

MR TOKLEY: Yes, your Honour, that is correct. I think your Honour asked my learned leader, Mr Bennett, a question about that at the start of my submissions. I think our answer is that it was a correct application of the test in this by the Chief Justice in the court below. Your Honours, those are my submissions.

KIEFEL CJ: Yes, Mr Bennett.

MR BENNETT: Your Honours, we seek leave to cross-appeal. I am not sure if that is opposed or not.

KIEFEL CJ: I think you can take it from that murmur that it is.

MR BENNETT: Yes. Your Honour, the cross-appeal is, in substance, a notice of contention because it goes to the ability of the appeal to succeed. It is a cross-appeal rather than a notice of contention because it does, if it succeeds, involve a minor adjustment to an order for costs.

KIEFEL CJ: When you say it is essential to the appeal, the cross-appeal relates to findings of evidence about what was a bargain.

MR BENNETT: Yes.

KIEFEL CJ: It is not the ultimate decision about whether there is a contract enforceable in all of its terms. That does not happen until much later in the process, does it?

MR BENNETT: Her Honour found that there was no contract and that if there was a contract it was too uncertain to – if there was a form of agreement it was too uncertain to be a binding agreement.

KIEFEL CJ: What I am really trying to say, Mr Bennett, is that what we are looking at here, in the context of part performance, is not ultimate decisions about the enforceability of an agreement and all of its terms. We are looking – what the cross-appeal is concerned with is findings of evidence about a bargain of the nature alleged which might be referable to part performance. So the findings about the agreement at this point would be made, usually, by reference to the acts of part performance alleged. That is as far as one would get at this point.

MR BENNETT: Yes, your Honour.

KIEFEL CJ: It may be that the Full Court here has gone further. But, in the normal context of part performance, that would be how one goes about it. Is that not right?

MR BENNETT: The courts only needed to deal with part performance because it dramatically altered the findings of the trial judge and found that the parties had entered into, in effect, a verbal agreement, a unilateral contract – I will come to that – and, therefore, one had to test it against the Law of Property Act and the question of part performance. But, if I am correct in saying that her Honour was correct in finding either there was no contract or even if there was the form of one it was too uncertain to be a contract, if her Honour was correct in that, then one never gets to part performance because there simply was no agreement. Therefore, the appeal fails. That is why we say it is, in substance, a notice of contention which goes to the root of the whole appeal and the root of the litigation.

There was a similar case where this Court did grant leave to cross-appeal. I will not take your Honours to it. It is a decision in Raftland v Federal Commissioner of Taxation where your Honour the Chief Justice was the judge at first instance. In a tax case your Honour found that there was a sham. The Full Court found for the taxpayer on another basis and that there was no sham and then there was a cross-appeal in order to endeavour to restore the finding that there was a sham.

The importance of it was that the Court granted leave to cross-appeal on the basis that the findings sought to be reinstated went to the root of the subject matter of the appeal and that, we say, is the same situation here. I will not take your Honours to it. I will give your Honours the reference. It is Raftland v Federal Commissioner of Taxation [2008] HCA 21; (2008) 82 ALJR 934 at paragraph [78].

Now, the two findings of the trial judge which we seek to restore are at page 472 of the appeal book at paragraph 104 where, after going through the oral evidence, her Honour says:

Taking all of these matters into account, I find that there was no oral agreement to sell an interest in the Clark Road land between the plaintiff and the defendant.

She also says in paragraph 104:

It is my view that even on the plaintiff’s case, there is no enforceable agreement for sale of an interest in the defendant’s property. As outlined above, the plaintiff was unable to state the actual words of the alleged oral agreement. The best he could do was express an alleged statement by George to the effect that “We’ll do a deal with you where we will sell you half our property. Then we could be equal partners on all three properties”. The agreement does not identify its subject matter, is vague and ambiguous and in my view, unenforceable.

Then she goes on to the Law of Property Act. Now, the Full Court found there was a contract in – and there are two relevant passages. The first is at page 512, paragraph 80 where the Chief Justice says:

Despite the distracting reference to the doctrine of ratification, the Judge ought to have dealt with the simple question of whether Velika, by her knowledge of the agreement by Leon and George, and her subsequent conduct in taking an interest in the Penfield Road property, had contracted to sell on a half interest –

So it is a bit of a unilateral contract that is being alleged here, that you could accept my offer by taking the carbolic smoke ball and still getting influenza. You could accept my offer in relation to Clark Road if you go ahead and sign a transfer to take your share of Penfield Road. Your Honour, there is no evidence that it was ever put to Velika in anything like that form and, of course, we would submit that it is a very artificial contract to find it in that way. The other place where it is referred to is page 491, at paragraph 6, where the Chief Justice says:

Velika denied in her evidence-in-chief, but conceded in cross-examination that, before she and George accepted a transfer to themselves of a legal interest in the Penfield Road property, she knew that George had agreed to finance their purchase of that interest by transferring to Leon a half interest in the Clark Road property. Velika’s admission is determinative. The Judge should have found that Velika’s admission proved that Leon and George had concluded an agreement to that effect, and that by her conduct in taking an interest in the Penfield Road property, Velika bound herself to that agreement.

Now, your Honours, we simply say: how can an admission in the witness box have that effect? Certainly it is an admission that she was told certain things, but it is not an admission of the truth of those things as to which she does not know. That finding, we submit with respect, is simply flawed. Now, I will come to - - -

EDELMAN J: In any event, it would have to be matters to which Leon and George had also agreed.

MR BENNETT: Yes. I am coming to that, your Honour.

GAGELER J: Mr Bennett, are you still arguing the leave to appeal point?

MR BENNETT: I am sorry, your Honour?

GAGELER J: Have you moved on to argue the appeal?

MR BENNETT: Have I what?

GAGELER J: Are you still dealing with the reasons why you should have special leave to cross-appeal?

MR BENNETT: I see.

GAGELER J: I just wanted to know.

MR BENNETT: No, your Honour; I am sliding into it.

GAGELER J: I thought you were.

MR BENNETT: I dealt with the reasons why we should have special leave.

KIEFEL CJ: I think at that point we might adjourn for a moment and consider the course we will take.

AT 3.47 PM SHORT ADJOURNMENT

UPON RESUMING AT 3.51 PM:

KIEFEL CJ: The application for leave to cross-appeal is refused and reasons will be given in the judgment or judgments to be given.

MR BENNETT: If the Court pleases.

KIEFEL CJ: I think that then leaves Mr White to touch upon briefly the question of orders. I think Mr White was to address us in relation to orders.

MR WHITE: If your Honours please. Your Honours, I will be as brief as I possibly can. The orders sought in the appellant’s draft are essentially firstly that – I look at orders 2(b)(i) - that the appellant deliver a bank cheque to the respondent in the amount of $8,000. That is effectively an order that the appellant complete the contract alleged by him some 13-odd years after he should have completed it. There is no reference to how that is to be adjusted or otherwise dealt with in the context of the time that has passed or, indeed, in the interest in the property he asserts.

Secondly, the second order sought is that the respondent execute a transfer of one undivided moiety but excluding the fixtures. Quite how that is to work is not explained. There are two things that are wrong with that. The first is it is not the interest to which he says he is entitled under the agreement he asserts. He asserts an interest in half effectively of the bare land or unimproved value of the land.

The second thing that is wrong with this is that the land is, and at all times has been, subject to a registered mortgage to a financier. The mortgage changed in the course of the proceedings – in the course of the history of the matter. But the appellant has always been aware of that fact and, indeed, the interest which was held by the respondent has always been subject to that prior mortgage. So that mortgage cannot – well, a transfer cannot simply be registered without the agreement of the mortgagee.

Further, in this matter in 2014 the parties agreed in the District Court before trial for an order for the sale of Clark Road. That is, there is an order that is still on foot that Clark Road be sold, that the mortgage be paid out and that the moneys be paid into court.

That order is, I submit, an acknowledgment by the appellant that his interest in this property has never been any more than an interest after the prior registered interests of the mortgagee. The relief that has been sought in these orders, and indeed in the proceedings as a whole, has never been relief that is capable of specific performance. Whilst I am sure that equity will bend or shape any relief, circumstances of the matter - this is essentially a monetary claim, not a claim for specific performance.

The other matters which I mention briefly are in relation to relief and potentially in relation to costs. Those matters are raised in the submissions. On 25 August 2014, the respondent lodged and served a rules offer of settlement, offering to pay the plaintiff, as he then was, the sum of $75,000, inclusive of interest, and to pay his costs.

That offer is referred to in the costs judgment of the District Court which was a judgment by consent against the plaintiff, and of course it is referred to in the Full Court judgment. Any question of whether the monetary relief effectively sought in these proceedings exceeds that offer, taken back to 2014, is moot. If the issue of costs arises, that issue may well have to be addressed.

One other matter I should say is that at all times there is a process of accounting going on in respect of the proceeds of the sale of Penfield in the District Court. That process of accounting has been adjourned pending this appeal because the outcome of this appeal clearly affects the account to be taken from - - -

KIEFEL CJ: Well, we do not really need to get into this, do we?

MR WHITE: No. Well, your Honours - - -

KIEFEL CJ: These submissions go way beyond what are usually argued in relation to the orders to be made and, really, for the future, the parties ought to understand that these submissions should be made in a very concise form at the end of their written submissions and hardly addressed orally at all.

MR WHITE: Your Honour, I will say no more.

KIEFEL CJ: Thank you, Mr White. Is there anything in reply, Mr Reynolds?

MR REYNOLDS: I feel I should deal with what Mr White has just been raising. Offers of settlement, I do not know anything about this. The normal way that would be dealt with would be to flag the - - -

KIEFEL CJ: I think you can take it that anything in relation to these orders may be dealt with subsequently by written note, as is usually the case if there is any disagreement of the orders.

MR REYNOLDS: Quite, but it is a bit worse than that. It amounts to an attempt to prejudice your Honours by the sorts of things that - - -

KIEFEL CJ: I think really at this level, Mr Reynolds, you can take it that we are not easily influenced by these matters.

MR REYNOLDS: No, I am not suggesting otherwise. Next this business of this mortgage - we have said in our submissions that we take subject to it. There is no issue about that, nor could there be. Then there was mention about a sale of Clark Road by order of the court. That does not affect the orders that we are talking about. If we get our orders, then the sale will go ahead and no doubt the proceeds will be distributed in accordance with the various entitlements.

As to this business of my client having a moiety in unimproved land, that is what we are asking for - complies entirely with the agreement. That

is the way we have drafted it. So far as interest on the $8,000 is concerned it is the first - I mean I stand to be corrected - I have heard of any suggestion that interest should be paid on that amount. If it had been suggested earlier, we would have been happy to have incorporated something like that in the order, if it was appropriate.

In terms of the matters raised by Mr Tokley, the only matter that I wanted to put, perhaps reiterate by way of reply is this, that there simply is not, in my submission, a case in this Court which stands or has as its ratio the proposition that the test of part performance is the test of Lord Selborne and if that test is satisfied there is part performance and if it is not satisfied there is no part performance. There is simply no such judgment, nor has my learned friend established that there is. It comes down, I submit, to dealing with the matter as a matter of principle. If the Court pleases, those are my submissions.

KIEFEL CJ: Yes, thank you, Mr Reynolds. The Court reserves it decision in this matter and adjourns until 10.15 am next Tuesday.

AT 4.01 PM THE MATTER WAS ADJOURNED