Oh, don't be so precious Nicholas! It was a joke. But yes, I would tell them to their faces what I thought of their views, as indeed I have in published writings. Mind you, we in NZ don't place our judges on the untouchable pedestals that many members of the practising profession in Australia do. I regularly tell judges to their faces that they could do with refresher courses in the law of contract. We have good laughs interspersed with vigorous debates, the kind of debates I had in mind when I jokingly said I'd love the judges in question to take my course! Furthermore, expressing disagreement in a particular area has nothing to do with intellectual superiority. I am sure both of those gentlemen have forgotten more law than I know and would more than hold their own in the anticipated debates.




David McLauchlan
Professor of Law
Victoria University of Wellington
________________________________________
From: Nick Ferrett [nick.ferrett@chambers33.com.au]
Sent: Friday, November 04, 2011 4:28 PM
To: David McLauchlan; Jeannie Marie Paterson; Gregory Tolhurst; Andrew Robertson; obligations@uwo.ca
Subject: Re: [ODG] Re: Contract Interpretation

David

I wonder if you'd have the courage to suggest to Heydon J and Mr Spigelman
that they ought to take your course rather than mouth off about them in
their absence.

Notwithstanding your obvious intellectual superiority to each of them,
they ought at least be given the opportunity to respond.

Nicholas Ferrett
Barrister

Level 33, 400 George Street, Brisbane. 4000.

Telephone: 07 3003 0440 | Facsimile: 07 3012 7811

DX950

Email: nick.ferrett@chambers33.com.au

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-----Original Message-----
From: David McLauchlan <David.McLauchlan@vuw.ac.nz>
Date: Fri, 4 Nov 2011 12:50:58 +1000
To: Jeannie Marie Paterson <jeanniep@unimelb.edu.au>, Gregory Tolhurst
<greg.tolhurst@sydney.edu.au>, Andrew Robertson
<a.robertson@unimelb.edu.au>, "obligations@uwo.ca" <obligations@uwo.ca>
Subject: RE: [ODG] Re: Contract Interpretation

>Yes, in Royal Botanic Gardens the HCA of Australia invented an ambiguity
>and resolved it by reference to the factual background including the
>parties' negotiations. One wonders whether Heydon and his colleagues
>have actually read that case! As Carter and Stewart point out in their
>JCL note, the clause in question was not in any rational sense ambiguous.
>
>As to Jeannie's final point, I imagine that the HCA woulds acknowledge
>the long-established absurdity exception to the plain meaning rule.
>
>Greg, I would never give up on Sir Anthony, only on the Codelfa approach
>(which Sir Anthony himself would qualify anyway)! Just 2 quick points.
>First, the reality is that most issues of interpretation CAN be solved by
>a reading of the words in the context of the document as a whole. There
>will usually be no answer to the solution derived from giving the words
>their ‘ordinary’ or conventional meaning. That was certainly Lord
>Hoffmann’s view. He stressed in ICS and elsewhere that ‘we do not easily
>accept that people have made linguistic mistakes, particularly in formal
>documents’. Secondly, I will reassess my view that the concern about the
>contextual or commercial approach to interpretation prejudicing third
>parties is exaggerated when I see some cases where this has actually
>happened. But many share your view of course, including Spigelman, whose
>2 rants in the ALJ read very poorly in comparison to the extra-judicial
>contributions to the subject by Lords Steyn, Nicholls, Bingham and, of
>course, Hoffmann himself. Wouldn't I love to have him and Heydon take my
>interpretation course in Melbourne next year!! Now that would be a show
>and a half. I could sell tickets!
>
>
>
>
>David McLauchlan
>Professor of Law
>Victoria University of Wellington
>________________________________________
>From: Jeannie Marie Paterson [jeanniep@unimelb.edu.au]
>Sent: Friday, November 04, 2011 3:08 PM
>To: Gregory Tolhurst; David McLauchlan; Andrew Robertson;
>obligations@uwo.ca
>Subject: RE: [ODG] Re: Contract Interpretation
>
>The lawyer’s life seems only to be made more difficult in advising
>clients on the meaning of their contracts. We now in Australia appear to
>be in some sort of zone between the ‘old’ rules and a more openly
>‘contextual’ approach.
>
>Andrew has pointed to the difficulty in following the Court's
>pronouncements on this topic.
>
>There is also the issue of what amounts to ambiguity so as to justify
>recourse to extrinsic evidence. As a number of scholars have pointed out
>the decision of the High Court in Royal Botanic Gardens and Domain Trust
>v South Sydney City Council suggests ambiguity may be found merely in
>there being plausible competing interpretations of the clause in question.
>
>In addition it seems to be that there remains a fair degree of
>uncertainty as to how a court should respond to a plain language that
>produces an un-commercial result. In Western Export Services Inc v Jireh
>International Pty Ltd the High Court approved the statement of McFarlan
>JA that:
>"A court is not justified in disregarding unambiguous language simply
>because the contract would have a more commercial and businesslike
>operation if an interpretation different to that dictated by the language
>were adopted."
>However, the High Court said nothing about the qualification that
>McFarlan JA made to that statement, namely that intervention would be
>justified if the words produced an 'absurd' result.
>
>________________________________________
>From: Gregory Tolhurst [greg.tolhurst@sydney.edu.au]
>Sent: Friday, 4 November 2011 11:58 AM
>To: David McLauchlan; Andrew Robertson; obligations@uwo.ca
>Subject: RE: [ODG] Re: Contract Interpretation
>
>I am not sure I am ready to give up on Mason yet David!
>
>I understand that widening the 'gate' better reflects how we use language
>but I am not sure how this works in practice other than at the pointy end
>of litigation when you can investigate such evidence. Given the amount of
>contracts a lawyer is required to look at in a day it does not seem
>practical to go into evidence beyond the basic matrix of facts, unless,
>of course one is driven to it by the language throwing up some
>difficulty. Often a client will flick you a few clauses and ask what they
>mean, and get upset when you have to say 'No' I need to read it in
>context so I need to read the whole contract which will take me X hours
>at a cost of $X per hour. Today do we add, 'and by the way I will also
>need to see X whilst still maintaining an objective approach. And there
>is the fact that most commercial contracts operate in a chain or network
>of contracts where third parties rely on other contracts in the chain and
>only have, at most, access to the document. I know we have never applied
>the same construction rules to contracts that we have to things like
>negotiable instruments and company constitutions, where the rules of
>construction are designed to take account of the fact that third parties
>rely on them on their face. However, the 'old' rules of construction, and
>indeed the Mason approach in Codelfa appear to at least give some
>protection to third parties and interestingly were rules that were
>operable at a time when the doctrine of privity was perhaps at its
>highest; yet today when we recognise how interconnected commercial
>contracts are, are we doing less to protect such third parties?
>
>
>
>
>
>
>GREG TOLHURST | Pro-Dean and Professor of Commercial Law
>
>THE UNIVERSITY OF SYDNEY
>T +61 2 9351 0243 | F +61 2 9351 0200
>
>-----Original Message-----
>From: David McLauchlan [mailto:David.McLauchlan@vuw.ac.nz]
>Sent: Friday, 4 November 2011 11:10 AM
>To: Andrew Robertson; obligations@uwo.ca
>Subject: RE: [ODG] Re: Contract Interpretation
>
>Andrew has admirably summarised the background to why the HCA's
>observations and decision to refuse leave are so baffling.
>
>Readers with a particular interest in this area may be interested to note
>that, as will be discussed in the forthcoming JCL article that I referred
>to, Sir Anthony Mason himself has said that he would not regard a retreat
>from the principles he espoused in Codelfa as a retrograde step. In his
>address to the 20th Anniversary JCLConference, Sir Anthony expressed his
>general support for Lord Hoffmann’s principles in ICS and then said:
>
>"I am not persuaded by the criticisms thus far made of them and that is
>because I do not understand them to mean that courts will readily allow
>extrinsic materials to qualify the words of the contract when those words
>are sufficiently clear and strong and do not lead to unreasonable or
>unexpected consequences".
>
>Earlier Sir Anthony, after referring to the "now favoured" approach as
>being that "ambiguity is unnecessary" so that "the extrinsic materials
>are receivable as an aid to construction, even if, as may well be the
>case, the extrinsic materials are not enough to displace the clear and
>strong words of the contract", had commented:
>
>"It was that idea that I was endeavouring to express in Codelfa, albeit
>imperfectly, because I recognised that ambiguity may not be a sufficient
>gateway; the gateway should be wide enough to admit extrinsic material
>which is capable of influencing the meaning of the words of the contract.
>The modern point of criticism is that one should not have been thinking
>in terms of gateway. At the time, however, it was natural to do so
>because it stressed the importance of the natural and ordinary meaning of
>the words used by the parties in their written instrument and it
>respected the difference between interpretation and rectification."
>
>David
>
>
>David McLauchlan
>Professor of Law
>Victoria University of Wellington
>________________________________________
>From: Andrew Robertson [a.robertson@unimelb.edu.au]
>Sent: Friday, November 04, 2011 12:27 PM
>To: obligations@uwo.ca; David McLauchlan
>Subject: [ODG] Re: Contract Interpretation
>
>I agree with David that the question whether an ambiguity must be
>identified before recourse can be had to extrinsic evidence in the
>interpretation of a contractual document is an issue of enormous practical
>importance, the answer to which remains woefully unclear in Australia. The
>HCA has taken to issuing occasional terse injunctions to lower courts to
>'follow Codelfa until we say otherwise', interspersed with statements in
>other decisions which seem to contradict what Mason J described in that
>case as the 'true rule'. One of the problems is that following what Mason
>J said in Codelfa is no easy task. The judgment is rich and interesting
>and great for teaching because it is open to different interpretations.
>But this means that it is anything but a clear code on the use of
>extrinsic evidence in interpretation.
>
>Mason J said in Codelfa that:
>"The true rule is that evidence of surrounding circumstances is admissible
>to assist in the interpretation of the contract if the language is
>ambiguous or susceptible of more than one meaning. But it is not
>admissible to contradict the language of the contract when it has a plain
>meaning."
>
>But, as Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ pointed out in
>Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 at
>[22], earlier in his judgment in Codelfa Mason J had "set out with evident
>approval the statement by Lord Wilberforce in Reardon Smith Line Ltd v
>Hansen-Tangen [1976] 1 WLR 989 at 995-996; [1976] 3 All ER 570 at 574
>that:
>ŒŒIn a commercial contract it is certainly right that the court should
>know the commercial purpose of the contract and this in turn presupposes
>knowledge of the genesis of the transaction, the background, the context,
>the market in which the parties are operating.¹¹"
>
>In a number of decisions in the last 10 years the HCA has appeared to
>endorse a more relaxed approach to the admissibility of evidence relating
>to the surrounding circumstances and object of a transaction. In Toll
>(FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 at
>[40], for example, Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said:
>"The meaning of the terms of a contractual document is to be determined by
>what a reasonable person would have understood them to mean. That,
>normally, requires consideration not only of the text, but also of the
>surrounding circumstances known to the parties, and the purpose and object
>of the transaction: Pacific Carriers Ltd v BNP Paribas at [22]."
>
>In Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 76
>NSWLR 603, Allsop P at [14]-[18] and Campbell JA [239]-[305] reviewed both
>the judicial history and substance of the point in painstaking detail and
>came convincingly to the conclusion that it was not necessary to find
>ambiguity before looking at surrounding circumstances in construing a
>contract. Numerous other Australian intermediate appellate courts have
>come to the same conclusion, and many first instance judges have followed
>suit. This is an issue that, not surprisingly, comes up in case after case
>and the controversy was widely thought to have been settled, so it is
>baffling that Gummow, Heydon and Bell JJ would deal with the point in the
>way they did. In the course of a very short judgment refusing special
>leave to appeal, they insisted that intermediate appellate courts are
>bound to follow the 'true rule' and that 'it should not have been
>necessary to reiterate the point here.' There are 70 paragraphs in
>Franklins v Metcash explaining clearly and convincingly why reiterating
>the point simply will not do.
>
>
>Regards to all,
>Andrew
>
>_____________________
>Andrew Robertson
>Professor of Law
>Melbourne Law School
>University of Melbourne
>Parkville, Victoria
>3010
>Australia
>
>T: +61 3 8344 0379
>
>
>
>
>On 3/11/11 7:45 PM, "David McLauchlan" <David.McLauchlan@vuw.ac.nz> wrote:
>
>>Neil
>>
>>
>>
>>As a non-Australian, not surprisingly I am unaware of similar instances.
>>What is particularly alarming to me is that the High Court has refused to
>>take an ideal opportunity to clarify the most practically important area
>>of contract and commercial law. In a nutshell, the lower courts have
>>simply been instructed yet again - the same message was delivered a few
>>months earlier in Byrnes v Kendle [2011] HCA 26 - to follow Codelfa until
>>they are told otherwise. And, contrary to what is said in the leave
>>judgment, the appeal had considerable merit. Indeed, in my not
>>particularly respectful view, a substantial miscarriage of justice has
>>been done. I am not alone in this view. When I covered the NSWCA decision
>>in an LLM class in Sydney earlier this year, the students were shaking
>>their heads in astonishment. Not that everything is rosy with the more
>>enlightened UK ICS principles. There are signs in some recent English
>>cases of a retreat from those principles to an approach not all that
>>different from Codelfa! But that is another story. So too is the much
>>more liberal view of the NZ courts, particularly to receiving evidence of
>>prior negotiations and subsequent conduct. On the surface at least, the
>>law relating to the mundane task of contract interpretation is
>>substantially different in each of NZ, Australia and the UK. It should
>>not be so hard.
>>
>>
>>
>>Regards
>>
>>
>>
>>David
>>
>>
>>
>>
>>David McLauchlan
>>Professor of Law
>>Victoria University of Wellington
>>________________________________
>>From: Neil Foster [Neil.Foster@newcastle.edu.au]
>>Sent: Thursday, November 03, 2011 6:11 PM
>>To: David McLauchlan
>>Cc: Jason Neyers; obligations@uwo.ca
>>Subject: Re: Contract Interpretation
>>
>>Dear Colleagues;
>>I must say that the approach of the UKSC does seem to commend itself
>>above the approach summarised as still being binding in Australia by the
>>High Court. But I speak of that whereof I do not know, not being across
>>contract law.
>>What does puzzle me is probably trivial but seems odd- I have not before
>>seen a High Court of Australia decision refusing special leave to appeal
>>with its "own" medium neutral citation reference. In most cases a
>>decision of this sort would have appeared in the HCATrans series- indeed,
>>now that I look I see this one does as well: Western Export Services Inc
>>& Ors v Jireh International Pty Ltd [2011] HCATrans 297 (28 October
>>2011). So we have the somewhat odd situation that there are two separate
>>electronic references to the same decision. (The HCATrans one contains
>>the comments of the court on argument, so one can see what was concerning
>>their Honours, one part of which seems to have been the suggestion that
>>inferior courts in Australia should follow decisions in the UK which were
>>arguable contrary to Codelfa.) It seems that the three members of this
>>special leave bench decided that this trend to "loose" reading of
>>contractual terms was such a potential problem that their decision here
>>needed to be brought to the professions' attention more clearly than an
>>"ordinary" refusal of special leave. Is anyone aware of other such
>>examples of special leave decisions being highlighted in this way?
>>From a precedential point of view, a special leave decision seems fairly
>>clearly not binding (even one that has been "elevated" in this way.) But
>>from a pragmatic perspective I suppose this means that anyone wanting to
>>argue that a more "commercially oriented" view of interpretation should
>>be adopted knows they will have some strong resistance from at least some
>>members of the High Court.
>>Regards
>>Neil
>>
>>On 03/11/2011, at 7:42 AM, David McLauchlan wrote:
>>
>>And for an interesting contrast in approaches, see the High Court of
>>Australia's refusal to grant leave to appeal from the appalling decision
>>of the NSWCA in Jireh International Pty Ltd v Western Export Services Inc
>>[2011] NSWCA 137: http://www.austlii.edu.au/au/cases/cth/HCA/2011/45.html
>>
>>
>>
>>The traditional "plain meaning" approach is alive and well in Australia.
>>The High Court has ruled that the NSWCA was correct when it held that a
>>court must give effect to "unambiguous" language "unless to do so would
>>give the contract an absurd operation". It is not enough that the
>>contract has an uncommercial or unbusinesslike operation. An article
>>discussing the NSWCA's decision and other recent developments in
>>Australia will shortly appear in the Journal of Contract Law.
>>
>>
>>
>>David
>>
>>
>>
>>
>>David McLauchlan
>>Professor of Law
>>Victoria University of Wellington