case_text: addition, or in the alternative, the appellant submitted that the operation of cl 850.211 produced an absurd result and was invalid on that ground. The appellant referred the federal magistrate to the decision of the Full Court of this Court in Minister for Primary Industries and Energy v Austral Fisheries Pty Ltd [1993] FCA 45 ; (1993) 40 FCR 381 (" Minister for Primary Industries and Energy v Austral Fisheries Pty Ltd "). The federal magistrate rejected the appellant's submission, saying that cl 850.211 was not inconsistent with s 48 of the Act. He said that the fact that the rights provided by s 48 were subject to the standard visa criteria was neither unreasonable nor absurd. The federal magistrate concluded that cl 850.211 was not invalid and that the appellant had not established that the Tribunal had fallen into jurisdictional error. Issues on the appeal At the start of the hearing, the appellant sought leave to amend his notice of appeal. The application was not opposed by the first respondent and I granted leave to amend. The thrust of the amended grounds of appeal is that cl 850.211 was invalid and that the Tribunal erred in taking it into account. In the circumstances, it was an irrelevant consideration. Clause 850.211 was said to be invalid because it was not authorised by s 504(1) of the Act or any other lawful authority, or because in its terms it sought to limit the operation of s 48 of the Act, or because its promulgation was an unreasonable exercise of any regulation-making power, or for any one or more of these reasons. In Minister for Primary Industries and Energy v Austral Fisheries Pty Ltd , a management plan under s 7B of the Fisheries Act 1952 (Cth) was challenged on the ground that it was a form of delegated legislation which was capricious and irrational. The plan contained a statistical fallacy which led to unfair catch allocations. The trial judge accepted the applicant's arguments and declared that the plan was void. His decision was upheld on appeal. In the course of his reasons on the appeal, Lockhart J considered the scope of the unreasonableness ground of review. His Honour said (at 382): "Delegated legislation is not invalid on the ground of unreasonableness in the sense that the courts may form a different view as to what is reasonable. Unreasonableness in this branch of the law means unreasonable in the sense that 'a merely fantastic and capricious by-law, such as reasonable men could not make in good faith' is bad, because delegated legislation of this kind could not be regarded as an exercise of the power conferred upon the subordinate legislative body making the delegated legislation: Slattery v Naylor (1888) 13 App Cas 446 at 452." A little later, his Honour said (at 384): "Delegated legislation may be declared to be invalid on the ground of unreasonableness if it leads to manifest arbitrariness, injustice or partiality; but the underlying rationale is that legislation of this offending kind cannot be within the scope of what Parliament intended when authorising the subordinate legislative authority to enact laws." (See also the joint judgment of Beaumont and Hill JJ at 400-401). In Minister of State for Resources v Dover Fisheries Pty Ltd [1993] FCA 366 ; (1993) 43 FCR 565 , Gummow J discussed the reasonable proportionality ground of review in relation to delegated legislation and the operation of the doctrine of reasonable proportionality in the area of federal constitutional law. The proportionality principle is "differently focused" in the former case: "The fundamental question is whether the delegated legislation is within the scope of what the Parliament intended when enacting the statute which empowers the subordinate authority to make certain laws: see Austral Fisheries at 383-384, per Lockhart J". (Citation omitted.)


case_outcome: discussed

case_text: Minister of State for Resources v Dover Fisheries Pty Ltd [1993] FCA 366 ; (1993) 43 FCR 565 , Gummow J discussed the reasonable proportionality ground of review in relation to delegated legislation and the operation of the doctrine of reasonable proportionality in the area of federal constitutional law. The proportionality principle is "differently focused" in the former case: "The fundamental question is whether the delegated legislation is within the scope of what the Parliament intended when enacting the statute which empowers the subordinate authority to make certain laws: see Austral Fisheries at 383-384, per Lockhart J". (Citation omitted.)


case_text: there appear to be differences between the Australian and English approaches to the doctrines of unreasonableness, certain observations of Diplock LJ in Mixnam's Properties Ltd v Chertsey Urban District Council [1964] 1 QB 214 at 237-238 have been referred to in the authorities in this country and are of assistance: "The various special grounds upon which subordinate legislation has sometimes been said to be void—for example, because it is unreasonable; because it is uncertain; because it is repugnant to the general law or to some other statute—can, I think, today be properly regarded as being particular applications of the general rule that subordinate legislation, to be valid, must be shown to be within the powers conferred by the statute. Thus, the kind of unreasonableness which invalidates a by-law is not the antonym of 'reasonableness' in the sense of which that expression is used in the common law, but such manifest arbitrariness, injustice or partiality that a court would say: 'Parliament never intended to give authority to make such rules; they are unreasonable and ultra vires'." (Citation omitted.) On appeal, these observations were apparently approved: Chertsey Urban District Council v Mixnam's Properties Ltd [1965] AC 735.


case_outcome: referred to

case_text: summary, delegated legislation may be held invalid because it is an unreasonable exercise of the empowering provision or because the delegated legislation is not reasonably proportionate to the purposes of the empowering provision. There is considerable overlap between the two grounds of review (see De Silva v Minister for Immigration and Multicultural Affairs (1998) 89 FCR 502 at 510) (" De Silva v Minister for Immigration and Multicultural Affairs "). As the Court does not have authority to conduct merits review, the test in the case of each ground of review is a very demanding one and, in the final analysis, involves a question of whether the delegated legislation represents a real exercise of the power in the empowering section. Cases in which delegated legislation has been held invalid on either ground of review are rare. Examples of cases in which regulations under the Act have been held invalid on the unreasonableness ground are Minister for Immigration and Multicultural Affairs v Singh [2000] FCA 377 ; (2000) 98 FCR 77 and Li v Minister for Immigration and Multicultural Affairs [1999] FCA 1147 ; (1999) 94 FCR 219. Examples of cases in which delegated legislation has been held invalid on the reasonable proportionality ground of review are Re Gold Coast City Council By-laws [1994] 1 Qd R 130 , Paradise Projects Pty Ltd v Gold Coast City Council [1994] 1 Qd R 314 , Re Gold Coast City (Touting and Distribution of Printed Matter) Law 1994 (1995) 86 LGREA 288 and House v Forestry Tasmania [1995] TASSC 95 ; (1995) 5 Tas R 169.


case_title: Re Gold Coast City Council By-laws [1994] 1 Qd R 130


case_title: Re Gold Coast City (Touting and Distribution of Printed Matter) Law 1994 (1995) 86 LGREA 288


case_title: Slattery v Naylor (1888) 13 App Cas 446

case_text: Widgee Shire Council v Bonney [1907] HCA 11 ; (1907) 4 CLR 977 , a local government by-law was challenged on the ground, among others, that it was unreasonable. The challenge was rejected by the High Court. Griffith CJ referred (at 982) to the English decisions of Slattery v Naylor (1888) 13 App Cas 446 (" Slattery v Naylor ") and Kruse v Johnson [1898] 2 QB 91 and formulated (at 983) the test of unreasonableness for delegated legislation in terms of "no reasonable man, exercising in good faith the powers conferred by the Statute, could under any circumstances pass such a by-law". Isaacs J referred with approval (at 986) to two statements in the advice of the Privy Council in Slattery v Naylor (at 452-453), namely, a by-law may be struck down as unreasonable where it is "a merely fantastic and capricious bye-law, such as reasonable men could not make in good faith" and a by-law will not "be treated as unreasonable merely because it does not contain qualifications which commend themselves to the minds of judges". In Minister for Primary Industries and Energy v Austral Fisheries Pty Ltd , a management plan under s 7B of the Fisheries Act 1952 (Cth) was challenged on the ground that it was a form of delegated legislation which was capricious and irrational. The plan contained a statistical fallacy which led to unfair catch allocations. The trial judge accepted the applicant's arguments and declared that the plan was void. His decision was upheld on appeal. In the course of his reasons on the appeal, Lockhart J considered the scope of the unreasonableness ground of review. His Honour said (at 382): "Delegated legislation is not invalid on the ground of unreasonableness in the sense that the courts may form a different view as to what is reasonable. Unreasonableness in this branch of the law means unreasonable in the sense that 'a merely fantastic and capricious by-law, such as reasonable men could not make in good faith' is bad, because delegated legislation of this kind could not be regarded as an exercise of the power conferred upon the subordinate legislative body making the delegated legislation: Slattery v Naylor (1888) 13 App Cas 446 at 452." A little later, his Honour said (at 384): "Delegated legislation may be declared to be invalid on the ground of unreasonableness if it leads to manifest arbitrariness, injustice or partiality; but the underlying rationale is that legislation of this offending kind cannot be within the scope of what Parliament intended when authorising the subordinate legislative authority to enact laws." (See also the joint judgment of Beaumont and Hill JJ at 400-401).


case_text: The Mayor, Councillors and the Citizens of the City of Brunswick v Stewart [1941] HCA 7 ; (1941) 65 CLR 88 (" Brunswick Corporation v Stewart "), a local government by-law dealing with the erection and construction of buildings was challenged on the ground, among others, that it was unreasonable. The challenge was rejected by the High Court. Williams J referred (at 99) to unreasonableness as involving "oppressive or gratuitous interference with the rights of those who are subject to it as could find no justification in the minds of reasonable men".


case_text: is convenient to begin the analysis with a brief discussion of the relevant cases dealing with unreasonableness and a lack of reasonable proportionality as grounds for holding that delegated legislation is invalid. The cases before The State of South Australia v Tanner [1989] HCA 3 ; (1989) 166 CLR 161 (" Tanner ") deal principally, if not exclusively, with the unreasonableness ground of review. Tanner is the leading High Court case on the doctrine of reasonable proportionality in relation to delegated legislation. In that case it was held that delegated legislation will not be valid where it is not capable of being considered to be reasonably proportionate to the end to be achieved. It is not enough that the Court thinks the delegated legislation inexpedient or misguided. It must be so lacking in reasonable proportionality as not to be a real exercise of the power. The Court found support for the ground of review in the judgment of Dixon J in Williams v Melbourne Corporation .


case_outcome: cited

case_text: leaving this brief review of the cases, I refer to the illuminating discussions of the relevant principles in De Silva v Minister for Immigration and Multicultural Affairs and Vanstone v Clark [2005] FCAFC 189 ; (2005) 147 FCR 299 at 331-343 [99] - [160] per Weinberg J. See also Pearce D and Argument S, Delegated Legislation in Australia (3 rd ed, LexisNexis Butterworths, 2005) at 253-267 [21.1]-[21.19]; Aronson M, Dyer B and Groves M, Judicial Review of Administrative Action (4 th ed, Lawbook Co, 2009) at 378.


case_text: Widgee Shire Council v Bonney [1907] HCA 11 ; (1907) 4 CLR 977 , a local government by-law was challenged on the ground, among others, that it was unreasonable. The challenge was rejected by the High Court. Griffith CJ referred (at 982) to the English decisions of Slattery v Naylor (1888) 13 App Cas 446 (" Slattery v Naylor ") and Kruse v Johnson [1898] 2 QB 91 and formulated (at 983) the test of unreasonableness for delegated legislation in terms of "no reasonable man, exercising in good faith the powers conferred by the Statute, could under any circumstances pass such a by-law". Isaacs J referred with approval (at 986) to two statements in the advice of the Privy Council in Slattery v Naylor (at 452-453), namely, a by-law may be struck down as unreasonable where it is "a merely fantastic and capricious bye-law, such as reasonable men could not make in good faith" and a by-law will not "be treated as unreasonable merely because it does not contain qualifications which commend themselves to the minds of judges".


case_text: Williams v The Mayor, Aldermen, Councillors and Citizens of the City of Melbourne [1933] HCA 56 ; (1933) 49 CLR 142 (" Williams v Melbourne Corporation "), a local government by-law dealing with the driving of cattle through public streets was challenged on the ground that it was unreasonable. Dixon J (as he then was) said (at 155) in a passage quoted many times since: "To determine whether a by-law is an exercise of a power, it is not always enough to ascertain the subject matter of the power and consider whether the by-law appears on its face to relate to that subject. The true nature and purpose of the power must be determined, and it must often be necessary to examine the operation of the by-law in the local circumstances to which it is intended to apply. Notwithstanding that ex facie there seemed a sufficient connection between the subject of the power and that of the by-law, the true character of the by-law may then appear to be such that it could not reasonably have been adopted as a means of attaining the ends of the power. In such a case the by-law will be invalid, not because it is inexpedient or misguided, but because it is not a real exercise of the power. (Compare Widgee Shire Council v. Bonney .)" (Citation omitted.) A little later in his reasons, Dixon J referred (at 156) to the question of whether a restraint embodied in the by-law could be reasonably adopted for the purpose set out in the empowering provision.


case_text: The appellant asserted that the Tribunal was obliged to contact the persons who had signed the additional documents that she provided. She submits that the Tribunal should have investigated the matter further. The Tribunal was not obliged to do so. It was for the appellant to present her case. The Tribunal was under no duty to summons the authors of the documents or to inquire into their evidence ( Minister for Immigration & Multicultural & Indigenous Affairs v SGLB [2004] HCA 32 ; (2004) 207 ALR 12 at [43] per Gummow and Hayne JJ; Minister for Immigration & Multicultural & Indigenous Affairs v Katisat [2005] FCA 1908 at [38] - [67] per Bennett J). In any event, the Tribunal simply placed no weight on the documents because of its prior finding on credibility and those documents were not, in any event, central to the decision of the Tribunal.


case_title: Minister for Immigration & Multicultural & Indigenous Affairs v SGLB [2004] HCA 32 ; (2004) 207 ALR 12


case_outcome: followed

case_text: The Tribunal did not find that the additional documents submitted by the appellant after the hearing were fraudulent. It said that, because it found the appellant lacking in credibility, it was unable to place weight on the further statements and documentation that she provided regarding her husband's accident and subsequent treatment. The Tribunal made a comprehensive finding about the appellant's credibility. It stated, with some care, the basis for that finding based upon a series of factual matters and it explained its reasons in each case. It then found that considering the evidence cumulatively, it did not accept the appellant's claims. Having made that prior finding on credibility, the Tribunal was entitled to place no weight on evidence purportedly corroborative of the appellant's case ( Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 198 ALR 59 at [12] per Gleeson CJ and [49] per McHugh & Gummow JJ).


case_outcome: considered

case_text: Federal Magistrate Scarlett concluded that there was no evidence of bias on the part of the Tribunal ( SZKRR v Minister for Immigration & Anor [2007] FMCA 1709 at [41] ). The allegation of bias was based upon the fact that the Tribunal said that the appellant's documents were false when she said they were true. His Honour rightly rejected that claim. His Honour also found that the appellant had not shown any jurisdictional error (at [42]). His Honour read through the decision himself and was unable to discern any jurisdictional error. He dismissed the application. 4 In her notice of appeal, the appellant asserts that his Honour erred in law and that he was wrong in finding that the Tribunal acted properly in its findings. The particulars to those grounds assert that the Tribunal failed to consider documentary evidence, failed to make a genuine attempt to assess the appellant's claims and made its finding based, ' on nothing but its assumption '. Further, the appellant asserts that the Tribunal ignored claims and evidence, misstated or misunderstood the claim, or made a mistake in relation to an important finding of fact. 5 In a written submission filed in support of the appeal, the appellant submits that the Tribunal did not make ' a genuine attempt to look at my important documentary evidences nor considered my important evidences '. The appellant then refers to a number of factual matters in relation to her husband's accident and what occurred after that, the medical certificates she provided in support of that event and various other factual matters. These address the same subject matter considered by the Tribunal. 6 The only matter raised in the appeal that goes to the question of procedural fairness or bias was raised by the appellant in her oral submissions on the appeal, where the appellant appeared in person assisted by an interpreter. She submits that the Tribunal acted unfairly in not believing what she had put to it and that it was not fair that the Tribunal did not take into account the subsequent documentary evidence that she had submitted to it. However, each document that had been submitted by the appellant to the Department or subsequently to the Tribunal was specifically referred to in the Tribunal's decision. Further, the Tribunal's finding with respect to the medical certificate originally submitted by the appellant was just one part of the overall adverse credibility finding. That finding featured prominently in the Tribunal's reasons for its decision to place no weight on the subsequent documents submitted by the appellant which sought to support the original medical certificate.


case_text: The starting point is the option itself. There is no doubt that an option to purchase gives the optionee an equitable interest in the property. In fact the respondents concede that it is a prior equitable interest and that the answer to the first question is yes. There are many authorities on the point. It is sufficient for me to refer to the following: London and South Western Railway Co v Gomm (1882) 20 Ch D 562 at 580-581 per Jessel MR; Carter v Hyde [1923] HCA 36 ; (1923) 33 CLR 115; Commissioner of Taxes (Qld) v Camphin [1937] HCA 30 ; (1937) 57 CLR 127 at 132-134 per Latham CJ. Although Gibbs J (as he then was) in Laybutt v Amoco Australia Pty Ltd (1974) 132 CLR 59 (" Laybutt ") at 75-76 identified the fact that an option to purchase gave rise to an equitable interest as a strong reason for characterising such an option as a conditional contract, rather than as an irrevocable offer, that 'standing controversy' as Sir Owen Dixon referred to it in Braham v Walker [1961] HCA 7 ; (1961) 104 CLR 366 at 376 has not been resolved and it is not necessary for me to take one view or the other for the purposes of answering the separate questions. It is to be noted that Gibbs J in Laybutt favoured the view that an option to purchase was a conditional contract to sell land which created a contingent equitable interest in the land.


case_title: Cook v Taylor [1942] Ch 349

case_text: In Re Crosby's Contract; Crosby v Houghton [1949] 1 All ER 830, an owner of premises granted a lease of the ground floor of the premises to a tenant and included in the lease was an option to purchase the whole premises. Before the option was exercised the owner, who occupied the upper part of the premises with her husband as a residence, leased the upper part of the premises to her husband. The tenant exercised the option to purchase the whole premises. The question was whether the lease between the owner and her husband was binding on the tenant and whether the owner made good title to the premises so long as the lease remained on foot. Romer J decided this question adversely to the owner. He said that where property is sold with an express or implied obligation to give vacant possession on settlement it is a prima facie term of the contract that the purchaser shall on settlement be put in actual (and not constructive) possession of the property. He said that whether property is sold with vacant possession to be given on settlement or subject to the terms of some tenancy or occupation is a question of the intention of the parties. Romer J referred with approval (at 833) to a statement by Simonds J in Cook v Taylor [1942] Ch 349. After referring to a statement in Williams on Vendor and Purchaser (4 th ed) p 201, Simonds J said (at 352): ... in reference to that statement he cites a number of cases which appear to support the view that where a contract is silent as to vacant possession, and silent as to any tenancy to which the property is subject, there is impliedly a contract that vacant possession will be given on completion. I may add that that appears to me to be common sense, for it would be strange if, the vendor saying nothing about the matter which lay within his knowledge and not within the knowledge of the purchaser, the purchaser were to find himself purchasing a property subject to a tenancy of which he could know nothing. Therefore I hold that as a matter of law, on a contract of this character, there is the implied term that vacant possession shall be given on completion.


case_text: The starting point is the option itself. There is no doubt that an option to purchase gives the optionee an equitable interest in the property. In fact the respondents concede that it is a prior equitable interest and that the answer to the first question is yes. There are many authorities on the point. It is sufficient for me to refer to the following: London and South Western Railway Co v Gomm (1882) 20 Ch D 562 at 580-581 per Jessel MR; Carter v Hyde [1923] HCA 36 ; (1923) 33 CLR 115; Commissioner of Taxes (Qld) v Camphin [1937] HCA 30 ; (1937) 57 CLR 127 at 132-134 per Latham CJ. Although Gibbs J (as he then was) in Laybutt v Amoco Australia Pty Ltd (1974) 132 CLR 59 (" Laybutt ") at 75-76 identified the fact that an option to purchase gave rise to an equitable interest as a strong reason for characterising such an option as a conditional contract, rather than as an irrevocable offer, that 'standing controversy' as Sir Owen Dixon referred to it in Braham v Walker [1961] HCA 7 ; (1961) 104 CLR 366 at 376 has not been resolved and it is not necessary for me to take one view or the other for the purposes of answering the separate questions. It is to be noted that Gibbs J in Laybutt favoured the view that an option to purchase was a conditional contract to sell land which created a contingent equitable interest in the land. 26 The answer to the question posed by that submission depends on the terms of the option itself. In Commissioner of Taxes (QLD) v Camphin [1937] HCA 30 ; (1937) 57 CLR 127, Latham CJ said (at 134): The equitable interest is measured by what a court of equity would decree in an action for specific performance. The right of the person who may be called the owner of the option is a right to prevent the owner of the property in question from disposing of it inconsistently with the option, together with a right, if he exercises the option, to compel the owner of the property to carry out the contract which has been made by the exercise of the option.


case_outcome: applied

case_title: Crosby's Contract, Re; Crosby v Houghton [1949] 1 All ER 830


case_title: Fowler v Willis [1922] Ch D 514

case_text: I am not concerned here with an interest qualifying the owner's estate or interest at the time the option to purchase is granted (see, for example, Fowler v Willis [1922] Ch D 514). The only relevant interest in existence at the time the option was granted was the lease held by the applicant itself and it merges with the fee simple acquired by the applicant pursuant to the option and is extinguished.


case_text: The effect of Mercantile Credits is that, in addition to being a prior equitable interest, the option or right to purchase, being in a registered instrument, has the benefits of indefeasibility or priority as against the Gunabee Lease. In view of the concession and indeed the effect of s 117 of the RPA, it is not necessary for me to consider the principles relating to priority between two equitable interests (as to which see, for example, Rice v Rice (1853) 2 Drew 73; 61 ER 646; Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) [1965] HCA 17 ; (1965) 113 CLR 265; RP Meagher, JD Heydon and MJ Leeming, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies (4 th ed, 2002) at [4.150]-[4.175]).


case_title: Laybutt v Amoco Australia Pty Ltd (1974) 132 CLR 59


case_title: London and South Western Railway Co v Gomm (1882) 20 Ch D 562


case_text: The significance of the fact that an option to purchase is in a registered instrument was considered by the High Court in Mercantile Credits Ltd v Shell Co of Australia Ltd [1976] HCA 9 ; (1976) 136 CLR 326 (" Mercantile Credits "). That case concerned an option to renew a lease but in the course of their reasons each Justice of the High Court referred to options to purchase in registered leases and the effect of s 117 of the RPA. Reference was also made to s 119 of the RPA and it is convenient to set out the terms of that section as well: Every registered dealing with land shall be subject to any prior unregistered lease or any agreement for lease or for letting for a term not exceeding one year to a tenant in actual possession thereunder: Provided that no right or covenant to purchase the freehold contained in any such unregistered lease or agreement, nor any right or covenant for renewal of such lease or agreement shall be valid as against any subsequent purchaser of the reversion, lessee, mortgagee, or encumbrancee, unless such lease or agreement be registered or protected by caveat. 16 Barwick CJ defined the question before the Court in the following terms (at 336): The question is whether by dint of the registration of the memorandum of lease containing the rights of renewal, the mortgagee under the subsequently registered memorandum of mortgage is bound by the unregistered extension of the lease effected in pursuance of the exercise of the rights in a registered memorandum of lease. 17 Barwick CJ first said that it was appropriate for a covenant conferring a right of renewal to appear in a registrable instrument being a lease of land, and that a covenant giving a right of renewal "forms part of the delineation of the lessor's total interest in the land" (at 338). The covenant created an interest in land and obtained the priority conferred by s 56 and the indefeasibility conferred by s 69. Section 56 of the RPA accords priority to registered instruments according to the time at which they are registered, and s 69 is the standard indefeasibility section. 24 The effect of Mercantile Credits is that, in addition to being a prior equitable interest, the option or right to purchase, being in a registered instrument, has the benefits of indefeasibility or priority as against the Gunabee Lease. In view of the concession and indeed the effect of s 117 of the RPA, it is not necessary for me to consider the principles relating to priority between two equitable interests (as to which see, for example, Rice v Rice (1853) 2 Drew 73; 61 ER 646; Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) [1965] HCA 17 ; (1965) 113 CLR 265; RP Meagher, JD Heydon and MJ Leeming, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies (4 th ed, 2002) at [4.150]-[4.175]). 27 To similar effect are the words of Barwick CJ in Mercantile Credits as follows (at 338): The interest in the land derived from the covenant will be coextensive with the extent to which the covenant could be ordered to be specifically performed.


case_title: Rice v Rice (1853) 2 Drew 73; 61 ER 646


case_title: Allen v Tobias (1958) 98 CLR 36

case_text: suggested that the benefit received by Mr Hoy may have been greater than he claimed. It pointed to the fact that Mr Hoy had destroyed the handwritten receipt books containing the records from which his profit could be calculated. Where a person deliberately destroys a document that, depending upon which its contents may have been, would have told strongly either for or against the person, the strongest possible assumption arises that if it had been produced, the document would have told against the person. This is so even if there was no intention to destroy evidence. The principle is that the person is in the position that they would have been in without the corroboration which might otherwise have been expected: Allen v Tobias [1958] HCA 13 ; (1958) 98 CLR 367 at 375 per Dixon CJ, McTiernan and Williams JJ, applying The Ophelia [1916] 2 AC 206 at 229-230.


case_text: am satisfied that Allphones was responsible for the diversion of calls from Hoy Mobile's territory of Eastgardens because of, first, the inappropriate programming by Zintel from March 2006 and, secondly, from October 2006 its own failure to correct what it knew was a problem. I am satisfied that Hoy Mobile lost the opportunity to make some sales from calls to the 138000 number during the period of the diversion. I am also satisfied that this loss had some value. Where there has been an actual loss of some sort, the common law does not permit difficulties of estimating the loss in money to defeat an award of damages: see Sellars v Adelaide Petroleum NL [1994] HCA 4 ; (1992) 179 CLR 332 at 349-350 per Mason CJ, Dawson, Toohey and Gaudron JJ. However, it is not possible to make any precise calculation of the value of this loss, which included payments under cll 7.3 and 7.4 and the ongoing right to receive MTAC. Doing the best I can, I find the value of this to be the loss of about 1% of the sales of the Randwick store made during the period of the diversion. That results in a past loss of about $900, but this amount excludes any MTAC which Hoy Mobile would have earned after March 2007 on those sales. Although there is some guesswork involved, I find the total loss of Hoy Mobile as a result of the diversion to be $1,500: see generally Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10 ; (2003) 196 ALR 257 at [37] - [38] per Hayne J with whom Gleeson CJ, McHugh and Kirby JJ agreed: Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd [2007] FCAFC 40 ; (2007) 157 FCR 564 at 569-570 [35] - [36] per Black CJ and Jacobson J, at 581 [99]-[101] per myself.


case_text: process of construction is intended elucidate and give effect to what the parties by their words or actions objectively conveyed to one another was their agreement. Courts seek to avoid being the destroyers of bargains and should be reluctant to find agreements void for uncertainty. The process of construction will result in a meaning which the court decides is the proper construction of the contract. As Barwick CJ emphasised in Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd [1968] HCA 8 ; (1968) 118 CLR 429 at 436-437, in the search for the parties' intention, no narrow or pedantic approach is warranted, particularly in the case of commercial agreements. Unless parties have expressed themselves in such a way that their terms are so obscure or incapable of any definite or precise meaning so that the Court cannot attribute to them any particular contractual intention, the Court will find a meaning which an objective person in the position of the parties at the time they entered into the contract would have understood them to have intended: see also Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (in liq) [2000] HCA 25 ; (2000) 202 CLR 588 at 599 [15] per Gaudron, McHugh, Gummow and Hayne JJ; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia ( CEPU ) v Australian Competition and Consumer Commission [2007] FCAFC 132 ; (2007) 162 FCR 466 at 510 [164] - [166] , 511 [171], 512 [174] per Weinberg and Bennett JJ and myself.


case_text: said that the question was whether the conduct of the corporation complained of was 'unconscionable' according to the natural and ordinary meaning of that term having regard to the list of statutory considerations in ss 51AC(3) and (4): National Exchange 148 FCR at 142 [39]. And their Honours said that the section was not, of course, intended to protect the reckless or the unreasonable. They approved what Spigelman CJ had said in Attorney General (NSW) v World Best Holdings Ltd [2005] NSWCA 261 ; (2005) 63 NSWLR 557 at 583 [121] that '[u]nconscionability is a concept which requires a high level of moral obloquy'.


case_text: all that, Hoy Mobile was overcharged and underpaid by Allphones. While Hoy Mobile could talk or send letters, it received an insouciant reception from Allphones. Whatever they 'batted back' was not scoring runs. And Allphones persisted throughout the litigation to force Hoy Mobile to prove its monetary claims. As I have found, Allphones not only evinced an intention to not to be bound, it acted in that way. Hoy Mobile could complain as much as it liked, but Allphones had the substantive power in the relationship and used it. This was evident not just in its financial breaches, but, as Mr Harkin said in his May 2006 meeting with Mr Hoy, (before his fraud had come to light) he was going to make an example of Hoy Mobile to show other franchisees what would happen to them if they opposed Allphones as the Hoys had. No justification existed, at that time, to treat Hoy Mobile in accordance with 'the Admiral Byng principle', viz: 'pour encourager les autres' (in order to encourage others): see Attorney-General v Guardian Newspapers Ltd [1987] UKHL 13 ; [1987] 1 WLR 1248 per Lord Oliver Aylmerton at 1317; Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd [1987] HCA 45 ; (1987) 75 ALR 461 at 464 per Deane J. Nor was Allphones able to advance any legitimate reason for refusing to credit Hoy Mobile with the $1,100 which Optus had allocated to defray the cost of the store refresh. I am satisfied that Allphones was acting vindictively in refusing to give Hoy Mobile that credit. I have found that Allphones had not proved that it was entitled to make the $10,000 charge (as opposed to a reasonable charge) but its conduct in relation to the Optus payment indicated that Allphones considered that it could make a profit at Hoy Mobile's expense without justification. 33.1 Principles


case_title: Attorney-General v Guardian Newspapers Ltd [1987] UKHL 13 ; [1987] 1 WLR 1248


case_text: is necessary to construe an agreement so as to avoid making it commercial nonsense or working commercial inconvenience: Zhu v Treasurer of NSW [2004] HCA 56 ; (2004) 218 CLR 530 at 559 [82] per Gleeson CJ, Gummow, Kirby, Callinan and Heydon JJ. In Australasian Performing Rights Association Ltd v Monster Communications Pty Ltd (2006) 71 IPR 212 at 235-237 [103]-[108] I referred to the principles applicable to the construction of contracts. I am of opinion that the genesis of the franchise agreement, the background context and market in which the parties were operating were all relevant, as known to both of them, for the purpose of construing what was intended to be referred to by the use of 'N/A' in describing the territory. There is no evidence that the terms of the franchise agreement as settled between the parties was the subject of drafting, before execution, by lawyers.


case_text: argued that I should follow the Court of Appeal's decision in Ketchell [2007] NSWCA 161 on the construction of Commonwealth legislation in accordance with the principles in Farah 230 CLR at 151-152 [135]. However, I am of opinion that the Court of Appeal's decision should not be followed for three reasons: First, that decision was on a different legislation, namely an earlier version of the Code that was not in force at the time when Hoy Mobile and Allphones entered into the franchise agreement. The subsequent decision of the High Court in Australian Competition and Consumer Commission v Baxter Health Care [2007] HCA 38 ; (2007) 237 ALR 512 demonstrates that the approach to construction adopted by the Court of Appeal was wrong (see below). (I note that special leave to appeal from the decision in Ketchell [2007] NSWCA 161 was granted by Gummow and Crennan JJ: Master Education Services Pty Ltd v Ketchell [2008] HCA Trans 89.) I am convinced that the decision of the Court of Appeal is plainly wrong. In Baxter Health Care 237 ALR at 527-528 [44]-[48], Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ noted that there was nothing unusual about legislation providing for a circumstance in which making or giving effect to a contract involves an offence by one party to the contract, but not by the other. In that case their Honours were also construing the operation of the Trade Practices Act . They said that the consequences of such illegality for the rights of the respective parties would not necessarily be the same and, they continued ( Baxter Health Care 237 ALR at 527 [44]): 'Furthermore, there is nothing unusual about the Act applying to one party to a transaction, or proposed transaction, but not to the other. Leaving aside the extended operation given by s 6 , ss 46 and 47 according to their terms apply to conduct by corporations, not sole traders or partnerships. In a transaction between a corporation and an individual, the provisions may apply to the corporation but not to the individual. Differential application of legislation to parties to a contract is commonplace, although working out the legal consequences may be complex.' Here the very prohibition in cl 11 of the Code is directed to the conduct of the franchisor. Clause 11 does not in its terms seek to affect adversely the position of the franchisee; rather its aim is to protect the franchisee. The Code did not prohibit a franchisee from entering into or enforcing a franchise agreement with a franchisor where cl 11 had not been observed. It would be an unusual result if beneficial legislation, intended to protect persons in the position of a franchisee, were to destroy the legal validity of a franchisee's bargain and then throw upon it the burden of having to apply to a court and take on the risk of litigation, in seeking to establish a franchise agreement against a defaulting franchisor, errant in its compliance with cl 11 of the Code. A franchisor would be entitled, as Allphones suggests here, to say that it was not bound by a franchise agreement because of its own default. That consequence tends to suggest that non-compliance with the Code was not intended to avoid the contract, but rather to give rise to rights under the Act to have the contract varied or made void so as to remedy the consequence of a non-compliance with the Code. Indeed, the language of cl 5(1) provides that the Code applies to a franchise agreement entered into on or after 1 October 1998. That suggests validity rather than invalidity of the franchise agreement even where some provision of the Code has not been complied with. Moreover, the purpose of the Code in cl 2(1) is said to be the regulation of 'the conduct of participants in franchising towards other participants in franchising'. The clause is silent as to any intention to destroy franchisees' rights in certain circumstances. A franchisee who does not obtain statements required by cl 11 and provide them to the franchisor may nevertheless be entitled to protection or relief. Protection of the interests and rights of a franchisee in such a case is not likely to ensue from the destruction of the very agreement that the franchisee has apparently sought to enter. As Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ said in Baxter Health Care 237 ALR at 527 [46] (citing Phoenix General Insurance Co of Greece SA v Halvanon Insurance Co Ltd [1988] QB 216 ; [1987] 2 All ER 152 at 175-176 per Kerr LJ), when a statute contains a unilateral prohibition on entry into a contract, it does not follow that the contract is void. They said: 'Whether or not the statute has this effect depends upon the mischief which the statute is designed to prevent ; its language, scope and purpose; the consequences for the innocent party ; and any other relevant consideration. Ultimately, the question is one of statutory construction. As was pointed out in SST Consulting Services ([Pty Ltd v Rieson (2006)] [2006] HCA 31 ; 225 CLR 516 at 527 [30] ), the Act is far from being silent on the question of the consequences of illegality, but, rather, contains elaborate provisions. That is not to say that the express provisions of the Act answer all questions that may arise, but they answer many of them, and set the context in which others are to be resolved.' (emphasis added) I am of opinion that the Code does not evince a legislative policy of striking down every franchise agreement entered into by a franchisor who fails to comply with any provision in cl 11. To the contrary, I am of opinion that the intention of the Code is to place an obligation on a franchisor by setting a norm of conduct with which it is to comply. Failure to comply with that norm of conduct gives the franchisee rights to rely upon that failure in order to seek the setting aside of the agreement, if that relief is appropriate, and also to seek relief because of the unconscionable conduct such non-compliance by the franchisor may evidence: see ss 51AC(3)(g) and (4)(g) of the Trade Practices Act . But I am satisfied that it cannot have been the purpose of the Code to make void a franchise agreement for any failure, especially one by the franchisor, to comply with cl 11, however trivial, without any consideration of the franchisee's position. The starting point for the enquiry as to the effect of the Code, as identified by the passage I have emphasised in Baxter Health Care 237 ALR at 527 [46], was not addressed by Mason P because he said there was no need to seek guidance from implications in the legislative framework. That enquiry includes the mischief which the statute is designed to prevent and the consequences for the innocent party. Here cl 6A of the Codes elucidates the purposes of the disclosure document. And cl 11(2) shows that a purpose of the requirement for the written statements is to provide the franchisee, at the very least, with the opportunity to be informed by appropriate independent advice, if he or she wishes to obtain it. Importantly, cl 11(2)(b)(ii) makes it plain that the franchisee can choose not to seek such advice. In such a case, the mere oversight to obtain a signed statement that the franchisee had been told that he or she could seek advice but had chosen not to, when he or she had told the franchisor of that decision, could not have been intended to avoid a franchise agreement. No protective purpose would be achieved by such pedantry and much commercial inconvenience could result. In my respectful opinion, although his Honour did not have the benefit of the reasoning in Baxter Health Care [2007] HCA 38 ; 237 ALR 512 , which was delivered subsequently to the reasons in Ketchell [2007] NSWCA 161 , the reasoning of Mason P is plainly wrong. In addition, Ketchell [2007] NSWCA 161 was decided on different legislation: see McNamara 221 CLR at 661 [40]; Walker Corporation 242 ALR at 391 [31]. I am of opinion that the non-compliance by Allphones with its obligations under cl 11 of the Code did not make the franchise agreement void. That non-compliance is a factor which, had Hoy Mobile wished to do so, could have been raised by it to seek relief under s 87 of the Act. It would defeat the evident purpose of the Code if Allphones were entitled to rely on its own breach of its obligation imposed under cl 11 to deny a franchisee with whom it had entered into a contract, the entitlement to enforce that contract against it or to seek a variation of it or relief from it under the Act. For these reasons I reject Allphones' argument that the franchise agreement is void.


case_title: Australian Competition and Consumer Commission v Simply No-Knead (Franchising) Pty Ltd (2000) 104 FCR 25

case_text: 22 May 2006, Mr Birch wrote to Mr Donnellan. The letter stated that there was a signed contract between Allphones and Hoy Mobile dated 27 June 2003. Mr Birch pointed out that there had been no agreement to any modification, alteration or amendment of that contract, and that Hoy Mobile was not prepared to sign the amended version which had been sent by Allphones. He said that Mr Harkin's assertion at the quarterly review meeting that there was no contract was incorrect. Mr Birch then asserted that the franchise agreement needed rectification because of the entry 'N/A' after the word 'territory'. He pointed out Allphones' contraventions of cl 11 of the Code, prior to entering into the franchise agreement. He said that the territory represented and warranted by Allphones was an exclusive territory with a radius of 5km from the location of the business premises. The letter asserted that the opening of the Randwick store within the radius of 5 km from the Eastgardens store was a breach of Hoy Mobile's exclusive territory. He complained about the 'bullying' style adopted by Mr Harkin and Mr Donnellan in dealing with Hoy Mobile, and referred to the decision of Sundberg J in Australian Competition and Consumer Commission v Simply No-Knead (Franchising) Pty Ltd [2000] FCA 1365 ; (2000) 104 FCR 253 at 268 [43] . On the next day Mr Donnellan wrote an email back to Mr Birch with a copy to Mrs Hoy saying that he had just read Mr Birch's letter and that it was '[p]riceless stuff'. He said that if Hoy Mobile was in breach of the agreement and did not remedy, it would be terminated like any other franchisee and that he did not care who was told. He said that Mr Harkin would respond and that Allphones was 'ready'. No other response was ever made by Allphones to Mr Birch's letter. Nor did Mr Donnelan identify any breach of the franchise agreement that he then alleged against Hoy Mobile. Until this time, (late May 2006) Allphones had no knowledge that Mr Hoy had been committing a fraud over the previous two years. I will now deal with how the fraud arose and Mr Hoy's assertions that Allphones had condoned it before returning to the narrative of events. 15.1 Conversations with Mr Clarke Allphones was not willing to carry out the franchise agreement honestly or in good faith according to its terms. Both parties have been in default of their obligations, both contractual and moral, towards one another in the conduct of the relationship. I have had regard to all of the circumstances, including Allphones' conduct leading up to the notice of intention to terminate, and the consequences on Hoy Mobile of a termination. I am of the opinion that it would be unconscientious for Allphones to insist upon its strict legal rights to force an immediate termination in all the circumstances where the performance of its own obligations under the franchise agreement has been lamentably and dishonestly short of the standards that it ought to have followed. It engaged in unjustified bullying and oppressive conduct: cf Simply No-Knead 104 FCR at 270 [51]. I am of opinion that Allphones should be restrained under s 87 of the Trade Practices Act from relying on the fraud of Hoy Mobile effect a termination of the franchise agreement. The appropriate course is to require the parties to agree upon orders to give effect to these reasons. The orders should also provide for the amount of the damages to be awarded for the breaches of contract that I have found, less the amount of profit that I have found Hoy Mobile to have retained. Interest will need to be added. The interest on Hoy Mobile's receipts from its fraudulent trading should offset some of that due by Allphones. It may not be possible to be mathematically exact, and the parties may need to adopt a practical position of halving each year's interest in respect of the new amount for that year to approximate its progressive accrual over that period. And the parties will need to address the question of costs.


case_text: Australian Securities and Investments Commission v National Exchange Pty Ltd [2005] FCAFC 226 ; (2005) 148 FCR 132 at 140 [30] Tamberlin, Finn and Conti JJ said that s 51AC , and its analogue s 12CC of the Australian Securities and Investments Commission Act (ASIC) 2001 (Cth), were not to be read down by limiting its operation only to circumstances where the common law would grant relief in respect of unconscionable conduct. They said that the section was intended to build on, and not be constrained by the common law. Their Honours said ( National Exchange 148 FCR at 140 [33]): '... "[U]nconscionable conduct", on its ordinary and natural interpretation, means doing what should not be done in good conscience'. They said that the question was whether the conduct of the corporation complained of was 'unconscionable' according to the natural and ordinary meaning of that term having regard to the list of statutory considerations in ss 51AC(3) and (4): National Exchange 148 FCR at 142 [39]. And their Honours said that the section was not, of course, intended to protect the reckless or the unreasonable. They approved what Spigelman CJ had said in Attorney General (NSW) v World Best Holdings Ltd [2005] NSWCA 261 ; (2005) 63 NSWLR 557 at 583 [121] that '[u]nconscionability is a concept which requires a high level of moral obloquy'. Tamberlin, Finn and Conti JJ held that the analogue of s 51AC required the Court to focus primarily on the unconscionable conduct of the corporation and to determine whether that conduct was contrary to the norm of conscientious behaviour. They held that the conduct in that case insisted of a carefully formulated and systematic approach which clearly offended against basic notions of good conscience and fair play: National Exchange at 148 FCR at 143 [44]. Although their Honours were speaking of s 12CC of the ASIC Act , their remarks apply equally to the notion of 'unconscionable conduct' in its analogue, s 51AC: Cannon Australia Pty Ltd v Patton [2007] NSWCA 246 at [43] per Campbell JA, with whom Harrison J agreed. Campbell JA had referred ([2007] NSWCA 246 at [40]) to the earlier decision of a Full Court of this Court in Hurley v McDonald's Australia Ltd [1999] FCA 1728 ; (2000) ATPR 41-741 at [21] - [22] . There Heerey, Drummond and Emmett JJ said that for conduct to be regarded at an unconscionable, serious misconduct or something clearly unfair or unreasonable had to be demonstrated. They found that the term carried with it the meaning given by the Shorter Oxford English Dictionary, namely '... actions showing no regard for conscience, or that are irreconcilable with what is right or reasonable', relying on Qantas Airways Ltd v Cameron [1996] FCA 1483 ; (1996) 66 FCR 246 at 262. One purpose of s 51AC(1) was to set a norm of conduct for corporations acting in trade or commerce in the context in which the section operates: cp Compomar Sociedad Limitada v Nike International Ltd [2000] HCA 12 ; (2000) 202 CLR 45 at 85 [103] . The second reading speech stated that this norm of conduct had the purpose of protecting the legal rights of small businesses and ensuring that they could confidently deal with large firms: see National Exchange 148 FCR at 143 [48], 144 [50]. Here the supply or possible supply of services to Hoy Mobile included the rights, benefits and privileges which Allphones had to provide to it under the franchise agreement. That congeries contained an entitlement to be paid all amounts of commission due in accordance with the franchise agreement, as well as other valuable rights, such as Hoy Mobile's right to assign its interest under the franchise agreement with Allphones' consent (cl 8.1).


case_text: Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22 ; (2007) 230 CLR 89 at 151-152 [135] , Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ said that intermediate appellate courts and trial judges in Australia should not depart from decisions in intermediate appellate courts in another jurisdiction on the interpretation of Commonwealth legislation or uniform national legislation unless they are convinced that the interpretation is 'plainly wrong': see too Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15 ; (1993) 177 CLR 485 at 492 per Mason CJ, Brennan, Dawson, Toohey and Gaudron JJ. And, where an intermediate appellate court holds itself free to depart from an earlier decision it should do so cautiously and only when compelled to the conclusion that the earlier decision is wrong: Nguyen v Nguyen [1990] HCA 9 ; (1990) 169 CLR 245 at 250 per Brennan J, at 269 per Dawson, Toohey and McHugh JJ and at 251 per Deane J agreeing.


case_text: is a balance of deductions from Hoy Mobile's commissions that comes to $3,581.49, which the experts agreed related to the credit charge fees, EFTPOS fees, IT fees, or late banking fees. However, they were unable to allocate that sum among the individual categories. In my opinion, it was for Allphones to justify its deductions. Hoy Mobile has established that Allphones made substantial deductions from commission amounts it was paid without a contractual basis. Mr Nicoll could have given evidence as to any basis for reducing the unallocated balance but did not. And, in their reports neither Mr Nicoll nor the two expert accountants could allocate the sums involved. Hoy Mobile has discharged any onus on it: Blatch v Archer [1774] EngR 2 ; (1774) 1 Cowp 63 at 64; [1774] EngR 2 ; 98 ER 969 at 970; Weissensteiner v The Queen [1993] HCA 65 ; (1993) 178 CLR 217 at 225 per Mason CJ, Deane and Dawson JJ and see too at 233 per Brennan and Toohey JJ; R v Burdett (1820) 4 B & Ald 95 at 161-162 per Abbott LCJ at 140 per Holroyd J; 106 ER 873 at 898 and 890. Since Allphones did not justify any portion of this balance as a fee payable by Hoy Mobile, the whole amount claimed by it should be paid by Allphones.. 25.5 Retention canvassing


case_text: common law, a party who brings an action for breach of contract must show that he is ready and willing to perform his part of the concurrent acts: Cohen & Co 24 CLR at 298 per Isaacs J. Where, at least in English law, both parties to a contract are in breach of a mutual obligation owed by each to the other, neither can rely upon the other's breach as giving him a right to terminate, following the decisions of the House of Lords in Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corp Ltd [1981] AC 909 at 978-988A per Lord Diplock, with whom Lords Edmund-Davies and Russell of Killowen agreed; Paal Wilson & Co v Partenreedere Hannah Blumenthal [1983] 1 AC 854 at 908H-909F per Lord Brandon of Oakbrook with whom the other members of the House agreed in separate speeches.


case_text: Finn and Conti JJ held that the analogue of s 51AC required the Court to focus primarily on the unconscionable conduct of the corporation and to determine whether that conduct was contrary to the norm of conscientious behaviour. They held that the conduct in that case insisted of a carefully formulated and systematic approach which clearly offended against basic notions of good conscience and fair play: National Exchange at 148 FCR at 143 [44]. Although their Honours were speaking of s 12CC of the ASIC Act , their remarks apply equally to the notion of 'unconscionable conduct' in its analogue, s 51AC: Cannon Australia Pty Ltd v Patton [2007] NSWCA 246 at [43] per Campbell JA, with whom Harrison J agreed. Campbell JA had referred ([2007] NSWCA 246 at [40]) to the earlier decision of a Full Court of this Court in Hurley v McDonald's Australia Ltd [1999] FCA 1728 ; (2000) ATPR 41-741 at [21] - [22] . There Heerey, Drummond and Emmett JJ said that for conduct to be regarded at an unconscionable, serious misconduct or something clearly unfair or unreasonable had to be demonstrated. They found that the term carried with it the meaning given by the Shorter Oxford English Dictionary, namely '... actions showing no regard for conscience, or that are irreconcilable with what is right or reasonable', relying on Qantas Airways Ltd v Cameron [1996] FCA 1483 ; (1996) 66 FCR 246 at 262.


case_title: Champtaloup v Thomas [1976] 2 NSWLR 264

case_text: Tropical Traders Ltd v Goonan [1964] HCA 20 ; (1964) 111 CLR 41 at 55 Kitto J said that the person with the choice might keep the question open '... so long as it did nothing to affirm the contract and so long as the [other party's] position was not prejudiced in consequence of the delay'. He said that when the vendor in that case told the purchaser that it would not rescind a contract for the sale of land before a particular date if the purchaser paid an additional sum for interest, costs and expenses, the vendor was doing no more than promising that it would not elect to rescind the contract before that date if the conditions were complied with. Kitto J said that in that case a grant of an extension of time was not an election to affirm but, rather, amounted to an announcement of an intention to refrain from electing either way until the money had been paid or the extended time for performance had elapsed: see too Champtaloup v Thomas [1976] 2 NSWLR 264 at 268C-269B per Glass JA; 273D-274D per Mahoney JA; Street CJ agreeing with both at 266: Hunter BNZ Finance v GC Maloney Pty Ltd (1988) 18 NSWLR 420 at 435C-436B per Giles J: GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50 ; (2003) 128 FCR 1 at 89-92 [356] - [364] per Finn J. And, as the judgment of the Exchequer Chamber written by Blackburn J (see Scarf 7 App Cas at 360) established, this principle applies to a party to a contract who discovers his entry into it was induced by the fraud of the other: Clough v London & North Western Railway Co (1871) LR 7 Ex 26 at 34-35. 22.2 Consideration


case_title: Clough v London & North Western Railway Co (1871) LR 7 Ex 26


case_text: course, at common law the courts cannot make a contract for the parties which they did not make for themselves (cp: s 87(2) of the Trade Practices Act ). But commercial contracts '... ought to be construed fairly and liberally for the purpose of carrying out the object of the parties': Duncan v Koster; The Teutonia (1872) LR 4 PC 171 per Mellish LJ at 182, applied by Isaacs J in Cohen & Co v Ockerby & Co Ltd [1917] HCA 58 ; (1917) 24 CLR 288 at 300. Isaacs J went on to hold that expressions in a mercantile contract are not to be read narrowly, but as the Court would suppose two honest business people would understand the words they actually used with reference to their subject matter and the surrounding circumstances: Cohen & Co 24 CLR at 300. And the Court construes a commercial contract to avoid it making commercial nonsense or working commercial inconvenience: Zhu 218 CLR at 559 [82] per Gleeson CJ, Gummow, Kirby, Callinan and Heydon JJ. At common law, a party who brings an action for breach of contract must show that he is ready and willing to perform his part of the concurrent acts: Cohen & Co 24 CLR at 298 per Isaacs J. Where, at least in English law, both parties to a contract are in breach of a mutual obligation owed by each to the other, neither can rely upon the other's breach as giving him a right to terminate, following the decisions of the House of Lords in Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corp Ltd [1981] AC 909 at 978-988A per Lord Diplock, with whom Lords Edmund-Davies and Russell of Killowen agreed; Paal Wilson & Co v Partenreedere Hannah Blumenthal [1983] 1 AC 854 at 908H-909F per Lord Brandon of Oakbrook with whom the other members of the House agreed in separate speeches.


case_title: Collins v Baltern (1767) 2 Wils 347

case_text: LCJ's words are taken from his judgment in Collins v Baltern (1767) 2 Wils 347 at 351. They reflect a principle which still runs through the common law of identifying fault as an appropriate basis for the court exercising its power to grant or withhold relief. In Suttor v Gundowda Pty Ltd [1950] HCA 35 ; (1950) 81 CLR 418 at 441, Latham CJ, Williams and Fullagar JJ discussed a contractual power to avoid a contract in circumstances where the consent of a third party, there the treasurer of the Commonwealth of Australia, had not been obtained within a particular time. They said that in that case, the event in question could be brought about by the failure on the part of either party to take certain necessary steps, or it could be brought about without default by either party. They concluded that the latter situation applied in that case, but determined that the clause made the contract not void, but voidable saying: ' The question of who may avoid it depends on what happens. If one party has by his default brought about the happening of the event, the other party alone has the option of avoiding the contract . If the event has happened without default on either side, then either party may avoid the contract. But neither need do so, and, if one party having a right to avoid it does not clearly exercise that right the other party may enforce the contract against him.' (emphasis added) Their Honours applied this reasoning as an extension of the principle that no party, directly or indirectly, may take advantage of his own wrong.


case_text: his examination in chief on this topic, Mr Donnellan said that Allphones had asked Optus to ensure that it was allowed to offer different incentives to different franchisees in order to promote performance, in the hope that the bonus payments would continue. He said that Optus had agreed to pay the $150 bonuses as per connection 'on a budget basis', meaning that Allphones had to modify its marketing, order stock and ensure that franchisees knew that they could make money over the three month period. He was not asked what the supposed conditions were for the payment of this commission to franchisees. His vague and general assertions do not fit with Mr Lim's insistence in his email of 3 May 2004 that if the payment of the $150 commission appeared on the stores' RCTIs, Allphones would expect the same money to be paid to it in full. The most natural inference to draw (as I do) from Mr Donnellan's failure to give any evidence on this aspect of the topic in chief, is that any such evidence as he might have given would have exposed facts unfavourable to Allphones' case: CEPU 162 FCR at 525 [230]; Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418E-G per Handley JA. Hoy Mobile called no evidence of any actual lost sales. However, it is difficult to establish a precise basis for assessment of the value of the loss of a chance to earn revenue resulting from the erroneous diversion of 138000 calls to the Randwick store. Mr Hoy did not give evidence about what sales the Eastgardens store achieved from or as a result of telephone inquiries. I infer that he could give no evidence helpful to Hoy Mobile's case: Ferrcom 22 NSWLR at 418. Significantly, Allphones considered the 138000 as commercially useful in generating sales opportunities. Indeed, at the franchisee forum on 6 October 2006, where Mrs Hoy first discussed with Mr Pompeii the problems that the Eastgardens store was experiencing with the 138000 number, he said that the number was an important tool for sales generation. Mr Pompeii showed Ms Hoy a number of Zintel documents on his laptop computer. These showed that the Eastgardens store had five calls diverted to it by the 138000 number in March 2006, but only one in September that year. Mr Hoy had said that he had noticed a drop from 10 calls per day to only one or two. While I am not satisfied that the number of calls at the Eastgardens store was as high as 10 call per day before the drop, I infer that once Allphones began publicising the 138000 number, customers began calling it rather than the individual stores' phone numbers. As that happened, the number of calls that the Eastgardens store received fell. Mr Pompeii's Zintel files recorded only the calls diverted to the Eastgardens store, not those which were generated in the suburb of Eastgardens, or the ones made directly to Hoy Mobile's phone number. And, as Mr Hoy's experience showed, even calls from Hoy Mobile's store itself were diverted to the Randwick store. Zintel had programmed the 138000 number to divert calls from the Rose Bay, Vaucluse and Edgecliff telephone exchanges to the Eastgardens store. The areas served by those exchanges were well away from Eastgardens and, indeed, Randwick was closer to them. Only in February 2007 did Allphones advise Zintel that those areas belonged to the catchment area for the Randwick store, and then it required them to be changed urgently.


case_text: too applied what Dixon CJ had said in Rawson 107 CLR at 481, see Foran 168 CLR at 425. When Brennan J referred to an entitlement to rescind, he used 'rescind' in the sense of one party electing to terminate for breach or repudiation by the other, as explained in Commissioner of Taxation v Reliance Carpet Co Pty Ltd [2008] HCA 22 at [2] per Gleeson CJ, Gummow, Heydon, Crennan and Kiefel JJ.


case_text: process of construction is intended elucidate and give effect to what the parties by their words or actions objectively conveyed to one another was their agreement. Courts seek to avoid being the destroyers of bargains and should be reluctant to find agreements void for uncertainty. The process of construction will result in a meaning which the court decides is the proper construction of the contract. As Barwick CJ emphasised in Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd [1968] HCA 8 ; (1968) 118 CLR 429 at 436-437, in the search for the parties' intention, no narrow or pedantic approach is warranted, particularly in the case of commercial agreements. Unless parties have expressed themselves in such a way that their terms are so obscure or incapable of any definite or precise meaning so that the Court cannot attribute to them any particular contractual intention, the Court will find a meaning which an objective person in the position of the parties at the time they entered into the contract would have understood them to have intended: see also Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (in liq) [2000] HCA 25 ; (2000) 202 CLR 588 at 599 [15] per Gaudron, McHugh, Gummow and Hayne JJ; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia ( CEPU ) v Australian Competition and Consumer Commission [2007] FCAFC 132 ; (2007) 162 FCR 466 at 510 [164] - [166] , 511 [171], 512 [174] per Weinberg and Bennett JJ and myself. In his examination in chief on this topic, Mr Donnellan said that Allphones had asked Optus to ensure that it was allowed to offer different incentives to different franchisees in order to promote performance, in the hope that the bonus payments would continue. He said that Optus had agreed to pay the $150 bonuses as per connection 'on a budget basis', meaning that Allphones had to modify its marketing, order stock and ensure that franchisees knew that they could make money over the three month period. He was not asked what the supposed conditions were for the payment of this commission to franchisees. His vague and general assertions do not fit with Mr Lim's insistence in his email of 3 May 2004 that if the payment of the $150 commission appeared on the stores' RCTIs, Allphones would expect the same money to be paid to it in full. The most natural inference to draw (as I do) from Mr Donnellan's failure to give any evidence on this aspect of the topic in chief, is that any such evidence as he might have given would have exposed facts unfavourable to Allphones' case: CEPU 162 FCR at 525 [230]; Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418E-G per Handley JA.


case_text: purpose of s 51AC(1) was to set a norm of conduct for corporations acting in trade or commerce in the context in which the section operates: cp Compomar Sociedad Limitada v Nike International Ltd [2000] HCA 12 ; (2000) 202 CLR 45 at 85 [103] . The second reading speech stated that this norm of conduct had the purpose of protecting the legal rights of small businesses and ensuring that they could confidently deal with large firms: see National Exchange 148 FCR at 143 [48], 144 [50]. Here the supply or possible supply of services to Hoy Mobile included the rights, benefits and privileges which Allphones had to provide to it under the franchise agreement. That congeries contained an entitlement to be paid all amounts of commission due in accordance with the franchise agreement, as well as other valuable rights, such as Hoy Mobile's right to assign its interest under the franchise agreement with Allphones' consent (cl 8.1).


case_title: Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 30

case_text: principle of election operates to hold a party to a position it has communicated to the other party as the choice that it has made between two inconsistent rights. Communication of the choice cannot occur in a factual vacuum. The circumstances and context of the communication affect how a reasonable person in the position of the other party would understand it. A landlord accepting rent ( Matthews v Smallwood [1910] 1 Ch 777 per Parker J) or a fire insurer, exercising rights to take possession of the insured's damaged premises ( Craine v Colonial Mutual Fire Insurance Co Ltd [1920] HCA 64 ; (1920) 28 CLR 305 per Knox CJ, Isaacs and Starke JJ) acting unilaterally, could not say that it was acting 'without prejudice'. Allphones also argued that cll 15 and 16 operated to prevent Hoy Mobile relying on any election, by Allphones to keep the franchise agreement on foot, which was not in writing. Because of my findings above it is not necessary to consider the application of R v Paulson [1921] 1 AC 271 at 282-283 to cll 15 and 16 on which Hoy Mobile relied. However, their Lordships indicated that the issue depends on the facts for they said, as Owen J pointed out in Owendale Pty Ltd v Anthony [1967] HCA 52 ; (1967) 117 CLR 539 at 610, that '[i]t may well be that many cases may occur to which the clause as to waiver would be applicable' before saying that, in that case, it was not: see too Owendale 117 CLR at 590 per Taylor J with whom Barwick CJ agreed on this issue at 569; per McTiernan J at 581; per Kitto J at 581-582. And, in any event, contractual provisions like cll 15 and 16 are strictly construed: Craine 28 CLR at 325-326; affirmed in Yorkshire Insurance Co Ltd v Craine [1922] 2 AC 541 at 546; (1922) 31 CLR 27 ; see too Melbourne Harbour Trust Commissioners v Hancock [1927] HCA 26 ; (1927) 39 CLR 570 at 584 per Knox CJ and Gavan Duffy J; 589 per Isaacs J; 590 per Rich J; and 594 per Starke J.


case_text: Paal Wilson [1983] 1 AC at 915C-916D Lord Diplock discussed the entry of both parties to an executory contract into a 'new contract' which he styled 'the contract of abandonment'. He explained that in such a case, each party promises by words or conduct to release the other from further performances of obligations on its part which remain to be performed, including the obligation to pay damages. And in Australian law the parties to a contract can so conduct themselves that they can be seen to have mutually abandoned or abrogated the contract; for example where neither takes any steps to perform over a period: see Summers v The Commonwealth [1918] HCA 33 ; (1918) 25 CLR 144 at 151-152 per Isaacs J; DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12 ; (1978) 138 CLR 423 at 434 per Stephen Mason and Jacobs JJ; Foran 168 CLR at 422-423 per Brennan J. In DTR Nominees 138 CLR at 433 Stephen, Mason and Jacobs JJ held that for a party to be entitled to rescind for anticipatory breach, he must be at the time of rescission himself be willing to perform the contract on its proper interpretation. They said: 'Otherwise he is not an innocent party, the common description of a party entitled to rescind for anticipatory breach, and indeed could profit from his misinterpretation of the contract, as the appellant seeks to do in this case when it claims forfeiture of the deposit and damages.' 29.4 Findings regarding Allphones' entitlement to terminate I am of opinion that a similar principle must apply in a case like the present, where both parties were, at the time at which Allphones sought to terminate, in breach in a way amounting to repudiation of their obligations. Allphones was not an innocent party, any more than Hoy Mobile. I am satisfied that Allphones considered itself to be free to account for commission as and when it pleased and in the way it pleased, regardless of its contractual obligation pay the whole amount of MTSC due to Hoy Mobile on the construction of the franchise agreement I have found. Each had engaged in dishonest conduct towards the other in a way which evinced an intention not to be bound. The deliberate concealment from the franchisees, including Hoy Mobile, of the true amounts paid to Allphones as commission for those activations is evidenced in the various emails to which I have referred and the conduct described by Mr Nicoll in his evidence. That conduct places Allphones' behaviour outside that of a party who is seeking to perform the contract according to its terms, but acting on an incorrect interpretation of it: cp DTR Nominees 138 CLR at 432 per Stephen, Mason and Jacobs JJ. The intention to conceal payments from the franchisees demonstrated a consciousness on Allphones' part that the revelation of what it was doing would be seen, correctly, by the franchisees as a fundamental departure from the conventional understanding of how their commissions were earned. Allphones was not seeking to perform the contract according to its terms, but rather was seeking to perform it as and when it pleased and in the manner it pleased. Thus, at the time at which Allphones learnt of Hoy Mobile's fraudulent conduct, Allphones itself was evincing an intention not to be bound and to perform the franchise agreement as and in the manner it pleased. Although it was carrying out some of its obligations, it was concealing the existence of other obligations from Hoy Mobile, conscious that Hoy Mobile was asking for more detail about the way in which its commission had been calculated.


case_text: course, at common law the courts cannot make a contract for the parties which they did not make for themselves (cp: s 87(2) of the Trade Practices Act ). But commercial contracts '... ought to be construed fairly and liberally for the purpose of carrying out the object of the parties': Duncan v Koster; The Teutonia (1872) LR 4 PC 171 per Mellish LJ at 182, applied by Isaacs J in Cohen & Co v Ockerby & Co Ltd [1917] HCA 58 ; (1917) 24 CLR 288 at 300. Isaacs J went on to hold that expressions in a mercantile contract are not to be read narrowly, but as the Court would suppose two honest business people would understand the words they actually used with reference to their subject matter and the surrounding circumstances: Cohen & Co 24 CLR at 300. And the Court construes a commercial contract to avoid it making commercial nonsense or working commercial inconvenience: Zhu 218 CLR at 559 [82] per Gleeson CJ, Gummow, Kirby, Callinan and Heydon JJ.


case_text: Emhill Pty Ltd v Bonsoc Pty Ltd (No 2) [2007] VSCA 108 at [68] - [69] Warren CJ, with whom Buchanan and Ashley JJA agreed said: ' [68] N C Seddon and M P Ellinghaus state in Chesire & Fifoot's Law of Contract (8th ed, 2002) [at 943]: A party need only be ready and willing to perform the contract in substance. A party who is in breach may nevertheless have the right to terminate, so long as the breach is not repudiatory or of an essential term or such as to deprive the other party of the substantial benefit of the contract. This is the view espoused by the learned judge below and supported by Roadshow Entertainment Pty Ltd v CEL Home Video Pty Ltd (1997) 42 NSWLR 462 at 470 480 [sic]. [69] The question then becomes whether Emhill had repudiated the contract, breached an essential term of the contract or deprived the other party of the substantial benefit of the contract.' (emphasis added)


case_text: Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22 ; (2007) 230 CLR 89 at 151-152 [135] , Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ said that intermediate appellate courts and trial judges in Australia should not depart from decisions in intermediate appellate courts in another jurisdiction on the interpretation of Commonwealth legislation or uniform national legislation unless they are convinced that the interpretation is 'plainly wrong': see too Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15 ; (1993) 177 CLR 485 at 492 per Mason CJ, Brennan, Dawson, Toohey and Gaudron JJ. And, where an intermediate appellate court holds itself free to depart from an earlier decision it should do so cautiously and only when compelled to the conclusion that the earlier decision is wrong: Nguyen v Nguyen [1990] HCA 9 ; (1990) 169 CLR 245 at 250 per Brennan J, at 269 per Dawson, Toohey and McHugh JJ and at 251 per Deane J agreeing. Allphones argued that I should follow the Court of Appeal's decision in Ketchell [2007] NSWCA 161 on the construction of Commonwealth legislation in accordance with the principles in Farah 230 CLR at 151-152 [135]. However, I am of opinion that the Court of Appeal's decision should not be followed for three reasons: First, that decision was on a different legislation, namely an earlier version of the Code that was not in force at the time when Hoy Mobile and Allphones entered into the franchise agreement. The subsequent decision of the High Court in Australian Competition and Consumer Commission v Baxter Health Care [2007] HCA 38 ; (2007) 237 ALR 512 demonstrates that the approach to construction adopted by the Court of Appeal was wrong (see below). (I note that special leave to appeal from the decision in Ketchell [2007] NSWCA 161 was granted by Gummow and Crennan JJ: Master Education Services Pty Ltd v Ketchell [2008] HCA Trans 89.) I am convinced that the decision of the Court of Appeal is plainly wrong.


case_text: Fitzgerald v Masters [1956] HCA 53 ; (1956) 95 CLR 420 at 437 McTiernan, Webb and Taylor JJ said: 'It is trite law that an instrument must be construed as a whole. Indeed it is the only method by which inconsistencies of expression may be reconciled and it is in this natural and common sense approach to problems of construction that justification is to be found for the rejection of repugnant words, the transposition of words and the supplying of omitted words (cf Norton on Deeds 2 nd ed (1928), p 91)' (emphasis added)


case_text: party here referred to the somewhat problematic (in this context) decision in Foran v Wight [1989] HCA 51 ; (1989) 168 CLR 385 to support its case. There, the time for completion of a contract for the sale of land had been made of the essence. Two days before the contractual date for completion, the vendors' solicitor told the purchasers' solicitor that the vendors would not be in a position to complete on the appointed day. Neither party attempted to settle on the due date, but two days afterwards, the purchasers gave a notice of rescission. Brennan, Deane, Dawson and Gaudron JJ, in separate judgments, held that the purchasers could rescind and were entitled to the return of the deposit. Mason CJ dissented. A number of the justices discussed, in obiter dicta, the position where there was an actual breach of contract entitling the other party to treat that breach as a repudiation. Mason CJ said that the principle established by the earlier decisions was that ( Foran 168 CLR at 408): '[I]n relation to termination for actual breach ... the plaintiff is required to show that he was ready and willing to perform the contract if it had not been repudiated by the plaintiff. In other words, the requirement is that the plaintiff be ready and willing to perform except to the extent that the defendant dispensed with his performance. ... [I]n the case of actual breach the requirement of readiness and willingness is more stringent; it continues through to the time of performance. That is because the termination of the contract does not antedate the time for performance.' Mason CJ applied what Dixon CJ had said in Rawson v Hobbs [1961] HCA 72 ; (1961) 107 CLR 466 at 481 (see Foran 168 CLR at 405-406). Dixon CJ had said in Rawson 107 CLR at 481 (Windeyer J agreed at 107 CLR at 492): 'One must be very careful to see that nothing but a substantial incapacity or definitive resolve or decision against doing in the future what the contract requires is counted as an absence of readiness and willingness. On the other hand it is absurd to treat one party as tied to the performance of an executory contract although the other has neither the means nor intention of performing his part when his turn comes, simply because his incapacity to do so is not necessarily final or logically complete.' Mason CJ said that Dixon CJ's reasoning applied to the entitlement of a party to terminate a contract for breach. Mason CJ continued ( Foran 168 CLR at 406-407): 'A party who is disabled from suing for damages because he is not ready and willing to perform in the sense discussed above cannot exercise a right to treat himself as discharged from the contract on the ground that the other party is in breach of an essential term or is otherwise in fundamental breach of the contract.' Brennan J ( Foran 168 CLR at 424) said: 'Where a party claims to be entitled to rescind an executory contract on account of the other party's repudiation (whether by way of anticipatory breach or incapacity), the first party must show not only the other's repudiation but his own readiness and willingness up to the time of rescission to perform his essential obligations under the contract: [ Rawson 107 CLR at 480-481] ... Since a party's right to rescind an executory contract for the other party's repudiation is limited to cases where the first party is ready and willing to perform, neither party is treated as without fault where both would be at fault were the contract to continue until the time for performance arrives .' (emphasis added) He too applied what Dixon CJ had said in Rawson 107 CLR at 481, see Foran 168 CLR at 425. When Brennan J referred to an entitlement to rescind, he used 'rescind' in the sense of one party electing to terminate for breach or repudiation by the other, as explained in Commissioner of Taxation v Reliance Carpet Co Pty Ltd [2008] HCA 22 at [2] per Gleeson CJ, Gummow, Heydon, Crennan and Kiefel JJ. Brennan J identified the principle to be applicable in the case of an anticipatory breach of mutually dependent and concurrent obligations, occasioned by one party informing the other that he would not be able to perform at the time for performance. His Honour said that, unless the other party were ready and willing at the time when that intimation was given, the first party's failure to perform was not a breach of contract. Thus, where the party to whom the intimation had been given was itself substantially incapable of future performance of its obligation, or had already definitively resolved or decided not to perform it, that party was also not ready and willing. Thus, he could not treat as a breach the other's intimation that performance would not be given on the future day for performance. If that be so, it must follow that neither party could have terminated for the failure of the other on the appointed date to offer performance (see Foran 168 CLR at 427). Brennan J said ( Foran 168 CLR at 246-427): 'Of course, it is possible that a party who is not disposed to perform or capable of performing in any event may not be dispensed from his obligation by receipt of an intimation of non-performance: he may not have acted in reliance on the intimation at all. But, whether or not he placed some reliance on the intimation in abstaining from performance of his own obligation, a disposition not to perform or an incapacity to perform when the intimation was given denies the character of breach to a failure to perform by the party giving the intimation .' (emphasis added) Deane J decided the case on the basis of an estoppel being created by the intimation that a party would not be in a position to complete on the appointed day. He then expressed the obiter view that, while the absence of the other party being able to show that it was ready and willing would preclude it from seeking an order for damages or specific performance, that other party could terminate based on the intimated repudiation: Foran 168 CLR at 437-438. He said that if the position were otherwise, the law would require useless and futile expenditure by innocent parties of whatever time, effort or money was necessary to place themselves in a position where they could positively demonstrate actual or potential ability to perform a contract in order to be able to bring it to an end on the ground that it had already been repudiated by the other party. He said ( Foran 168 CLR at 438): '... it is difficult to see why the law should insist that, even though both parties to a contract have repudiated it, the contract must hang like an albatross around their necks unless and until they can reach a new agreement about its termination.' Dawson J said that readiness and willingness included capacity ( Foran 168 CLR at 451). He cautioned against carrying too far the principle that repudiation of a contract by one party could absolve the other party from the obligation of tendering useless performance. He said that when the principle applied, it could reduce the extent or alter the nature of the readiness and willingness which a plaintiff was required to show, but there was no reason why it should be eliminated as a requirement entirely. His Honour continued ( Foran 168 CLR at 452): 'A party should not be able to sue for breach if he is unable or unwilling to carry out his part of the bargain; where, in other words, he is not the innocent party. Even where a party has been absolved by the repudiating party from performing his future obligations under the contract he must show that at the time of the repudiation he was ready and willing to complete the contract had it not been repudiated. But in proving his readiness and willingness where he has been absolved from tendering performance he may not have to prove a great deal.' But nonetheless, in order to be able to terminate, Dawson J held ( Foran 168 CLR at 454): 'All that the purchasers were required to show was that at the time of the repudiation, that is, at the time they were absolved from future performance, there was not a "substantial incapacity" on their part or a "definitive resolve or decision" against the performance of their obligations.' Gaudron J analysed the position as being one in which the contract had come to an end because neither party performed on the day made essential for performance, and that was confirmed by the notice of rescission ( Foran 168 CLR at 459). In Highmist Pty Ltd v Tricare Ltd [2005] QCA 357 at [61] - [62] , Keane JA (with whom Jerrard JA at [1] and Cullinane J at [66] agreed) expressed the obiter view that it did not make much commercial sense to say that where both parties had expressed a firm resolve not to perform the contract, the contract continues 'in existence in some legal limbo' for the reason that neither party is ready, willing and able to perform. His view is similar to that of Deane J in Foran 168 CLR at 438. Keane JA said that in such circumstances, the case could be characterised as one of termination by mutual consent, although he recognised that his was a tentative view and that the issue did not need to be resolved in order for him to decide the case: Highmist [2005] QCA 357 at [62] . Keane JA did not examine the authorities. In Paal Wilson [1983] 1 AC at 915C-916D Lord Diplock discussed the entry of both parties to an executory contract into a 'new contract' which he styled 'the contract of abandonment'. He explained that in such a case, each party promises by words or conduct to release the other from further performances of obligations on its part which remain to be performed, including the obligation to pay damages. And in Australian law the parties to a contract can so conduct themselves that they can be seen to have mutually abandoned or abrogated the contract; for example where neither takes any steps to perform over a period: see Summers v The Commonwealth [1918] HCA 33 ; (1918) 25 CLR 144 at 151-152 per Isaacs J; DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12 ; (1978) 138 CLR 423 at 434 per Stephen Mason and Jacobs JJ; Foran 168 CLR at 422-423 per Brennan J. Gleeson CJ, Handley JA and Brownie AJA also referred to what Ipp J had said in Geraldton Building Co Pty Ltd v Christmas Island Resort Pty Ltd (1992) 11 WAR 40 at 50-51 (Pidgeon ACJ and Franklyn J agreeing). The Full Court there was dealing with an appeal from the entry of summary judgment. Ipp J noted that the argument concerning the question whether a party in breach was entitled to terminate was faintly argued and had not been canvassed fully by counsel. He distinguished Foran [1989] HCA 51 ; 168 CLR 385 and Lombok Pty Ltd v Supetina Pty Ltd (1987) 14 FCR 226 from the facts of case before the Full Court saying that the terminating party's rights to payment of money were independent of, and not concurrent with, the obligations alleged to have been breached by it. He said that there was nothing in the principles in those cases to prevent the party allegedly in breach from relying on non-payment of progress claims to terminate the contract. While the dicta of the Court of Appeal in Roadshow Entertainment 42 NSWLR at 481B-C are of great weight, I am of opinion that on analysis, they are inconsistent with the considered, albeit equally obiter dicta views of three of the justices: Foran 168 CLR at 405-408 per Mason CJ, 424, 427 per Brennan J and 452, 454 per Dawson J. I am of opinion that in the contractual position which I have found, where each party was in default and acted dishonestly in respect of its financial accountability to the other, neither party was able to rely upon its contractual or common law rights to terminate the franchise agreement in late August 2006. While that may create a situation which Deane J described in Foran 168 CLR at 438 of making the franchise agreement 'hang like an albatross around their necks', I prefer the views of Mason CJ, Brennan and Dawson JJ that a party who wishes to terminate must be ready and willing to perform at the time at which the right is sought to be exercised. Each party was in breach of the franchise agreement in a way which, had the other known of or appreciated that breach prior to late August 2006, would have entitled it to terminate, subject to it not being in any relevant breach itself. That is, Hoy Mobile was in breach of cl 9.3(viii), because it it had been fraudulent in connection with the operation of the franchised business through the unlocking and sale of mobile phones and its failure to account for the illicit profits that it had made from that activity. Likewise, Allphones was evincing an intention not to be bound by its obligation to pay the MTSC in the various manners in which I have found. Each party's conduct amounted to an assertion by it of the freedom to act as and when it pleased in respect of fundamental obligations to the other. Each party was behaving quite dishonestly towards the other in relation to the performance of its obligations under the franchise agreement. Although Hoy Mobile did not plead that Allphones had committed fraud, Allphones' behaviour, in misrepresenting what carriers were paying as MTSC and keeping the difference, was every bit as dishonest as Hoy Mobile's fraud. In my opinion, for the reasons given by Mason CJ in Foran 168 CLR at 408, Allphones was not entitled to exercise its rights under cl 9.3(viii). In August 2006, Allphones was not ready or willing to perform the franchise agreement. Nor has it proved that it is now ready or willing, so its cross-claim must fail. Hoy Mobile argued that Allphones acted in a fiduciary capacity in collecting commission for franchisees and that it had to account in respect of the MTSC. Allphones contended that their relationship was entirely contractual, and that Allphones did not hold or receive money in a fiduciary relationship, but rather pursuant to the terms of the franchise agreement.


case_text: cognate transaction between Vodafone, through the agency of Allphones and Hoy Mobile, and the customer, involved the ultimate sale of the 'free' phone. The phone was not, in fact, 'free' to the customer but was part of the consideration provided by Vodafone under the plan it entered with its customer. The use of the word 'free' in this context is apt to mislead: cp Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 at 483B-G per Black CJ, von Doussa and Cooper JJ. Mr Nicoll's description of Allphones' internal accounting, in the absence of any documentary evidence, was also revealing of the nature of the relationship between Alllphones and Vodafone. He said that Allphones could determine what the 'rebate', or amount it attributed to the sale price of the phone, would be. That is, Allphones could determine the amount of profit made on the transactions, as between itself and Vodafone, by selecting both the phone to be supplied to the customer, and the price to be attributed to it in accounting to Hoy Mobile. Mr Lynch and Mr Bell characterised Allphones' accounting treatment of the transaction between it and Vodafone as a sale of goods. I accept their evidence and find that this was, indeed, a sale of goods. Allphones' internal accounting showed that it was treating the receipt from Vodafone as part of the calculation of the cost of goods sold, and not simply as the payment of commission by Vodafone. Allphones' gross profit would depend on the price it chose to attribute as the 'cost' of the phone in the transaction.