Computershare Limited v Perpetual Registrars Limited

38. More recently, Gillard J in Badgin Nominees Pty Ltd v Oneida Ltd and Anor (unreported judgment delivered 18 December 1998; (1998) VSC 188) expressed the matter thus: "...the court clearly has jurisdiction to stay a court proceeding on the simple basis that `a contract is a contract' and the parties should abide by it". The nature of the jurisdiction was discussed by the House of Lords in Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334. There the construction contract contained a dispute resolution procedure that had a number of tiers or layers. The first layer involved the resolution by a panel acting as independent experts but not as arbitrators. The second tier or layer involved arbitration. Lord Mustill delivered the leading speech and, at 353 observed: "...those who make agreements for the resolution of disputes must show good reasons for departing from them...".

"I believe that the proper approach to be taken in each case depends upon the construction of the particular contract: Australia & New Zealand Banking Group Ltd v Frost Holdings Pty Ltd [1989] VR 695; see note (1991) 65 ALJ 59. In many contracts it will be plain that the promise to negotiate is intended to be a binding legal obligation to which the parties should then be held. The clearest illustration of this class will be cases where an identified third party has been given the power to settle ambiguities and uncertainties: see Foster v Wheeler (1888) LR 38 Ch D 130; Axelsen v O'Brien [1949] HCA 18; (1949) 80 CLR 219 and Biotechnology (at 136). But even in such cases, the court may regard the failure to reach agreement on a particular term as such that the agreement should be classed as illusory or unacceptably uncertain: Godecke v Kirwan (at 646f) and Whitlock v Brew [1968] HCA 71; (1968) 118 CLR 445 at 456. In that event, the court will not enforce the arrangement. In a small number of cases, by reference to a readily ascertainable external standard, the court may be able to add flesh to a provision which is otherwise unacceptably vague or uncertain or apparently illusory: see, eg, Powell v Jones [1968] SASR 394 at 399; Sweek and Maxwell Ltd v Universal News Services Ltd [1964] 2 QB 699; cf Meehan v Jones [1982] HCA 52; (1982) 149 CLR 571 at 589; Jillcy Film Enterprises (at 521); Ridgeway Coal Co (at 408). Finally, in many cases, the promise to negotiate in good faith will occur in the context of an `arrangement' (to use a neutral term) which by its nature, purpose, context, other provisions or otherwise makes it clear that `the promise is too illusory or too vague and uncertain to be enforceable': see McHugh JA in Biotechnology (at 156) and Adaras Development Ltd v Marcona Corporation [1975] 1 NZLR 324 at 331."

(1950) 81 CLR 502

(1991) 24 NSWLR 1

(1949) 80 CLR 219

(1968) 118 CLR 445

(1982) 149 CLR 571