Dean-Willcocks v Commissioner of Taxation

Local Court of NSW|2007-04-13

CITATION: Travelex Ltd V Hamilford Pty Ltd [2010] NSWLC 21

PARTIES: Travelex Limited Hamilford Pty Limited

Dean-Willcocks v Commissioner of Taxation [2008] NSWSC 1113 Fox Entertainment Precinct Pty Limited -v-Centennial Park and Moore Park Trust (2004) 11 BPR 21,629 CASES CITED: Leibler v Air New Zealand Ltd (No 2)[1999] 1 VR 1 Misiaris-v-Saydels Pty Limited [1989] ANZ ConvR 403 Queensland Bacon Pty Limited -v- Rees (1966) 115 CLR 266 Taylor -v-Johnson (1983) 151 CLR 422

REPRESENTATION: Mr. McDonald instructed by Linton Pitt Lawyers Mr. O'Conner instructed by Crowley Calvert & Associates

IN THE LOCAL COURT OF NEW SOUTH WALES DECISION

Travelex Limited ("Travelex") is a company that provides foreign exchange and payment services. Between December 2002 and April 2007, Hamilford Pty Limited ("Hamilford") entered into a number of contracts with Travelex for the sale and purchase of overseas currency ("the Previous Contracts"). The Previous Contracts were all "spot deals" which required Hamilford to settle the transaction within 2 days of entering the deals. The Previous Contracts are not the subject of this litigation.
It is alleged by Travelex that: a) on 13 April 2007, Mr. Spriggs on behalf of Hamilford had a telephone conversation with an employee of Travelex where he instructed Travelex to purchase sixty million Japanese Yen at an Australian Dollar/ Japanese Yen exchange rate of 97.00 to be settled on 12 July 2007; b) That the total amount that Hamilford was required to pay to Travelex on 12 July 2007 based on the exchange rate on 13 April 2007 was $618,556.70; c) A confirmation of the Hamilford's purchase order was faxed to Hamilford on 13 April 2007 it stated as follows:

" Upon receipt of confirmation, please verify all information, sign and return via fax No. (02 8585 7476

Trade Date : 13 April 2007 TRAVELEX CONFIRM SELLING : JPY 60,000,000.00 Value Date : 12 July 2007

TRAVELEX CONFIRM BUYING : AUD 618,556.70 Exchange rate : 97.0000

Fixed Delivery contract under which delivery will be made only on the last day of the contract period (earlier delivery may be arranged but a marginal adjustment to the rate may apply)

The agreement entered into under this Forward Contract is subject to the Travelex Terms & conditions for Foreign Exchange Trading.

                  Authorised signature
                  Pacific machinery parts sales and

ISSUES: 4) Accordingly the issues I need to determine are: (A) Was there a mistake at the time of entering the contract dated 13 April 2007? (B) Did Travelex have knowledge of the mistake? (C) Can the contract to purchase 60 million Japanese Yen be rectified? (D) Is the Plaintiff estopped from seeking to enforce the contract pursuant to representations made? WAS THERE A MISTAKE AT THE TIME OF ENTERING THE CONTRACT AND DID TRAVELEX HAVE KNOWLEDGE OF THE MISTAKE?

It is alleged by Hamilford that Mr. Spriggs made a mistake at the time of entering the contract with Travelex in that he ordered 60 million Japanese Yen as opposed to 6 Million Japanese Yen on 13 April 2007.
The evidence in chief of Mr. Neil Spriggs Exhibit 4 in the proceedings can be summarised as follows; a) On or about 27 March 2007 he had a conversation with Mr. Michael Pears from Travelex and that: (i) Mr. Pears was his usual contact with Travelex; (ii) He had advised Mr. Pears that he had received faulty goods to the value of approximately $AUS57,000.00 from his Japanese supplier. Those goods had to be modified prior to sale and as a result of the rectification work he was unsure how much he would require to pay his supplier until after the modification work was carried out; and (iii) He was advised by Mr. Pears that the company could enter into a forward order contract and the rate could be locked in for either 30, 60 or 90 days. b) On 13 April 2007: (i) he had a further conversation with Mr. Pears. (ii) He told Mr. Pears that he "would go ahead with a forward order contract. He gave me a rate and we went ahead with the deal"; (iii) He received a fax from Travelex that same day which he signed and faxed back the fax stated as follows: c) Annexed to exhibit 1 in the proceedings are a bundle of documents referred to by him as "Exhibit A". It includes his diary entries for the relevant period. Many of the conversations alleged to have taken have place were recorded in his diary see paragraphs 15, 17 and 31-33 of exhibit 1 in the proceedings; .
In cross examination by Mr. McDonald Counsel for Travelex, Mr. Spriggs conceded that: a) His decision to enter into a "forward contract" was not rushed upon him; b) That when he placed the order in April 2007 he wanted a particular amount of Japanese Yen; c) He thought he had ordered enough Japanese Yen to cover approximately $AUD67,000; d) That on his diary entry for 15 April 2007 the figure "618,556.70" appears; e) That the numbers written in his diary around 15 April 2007 were written at or around 15 April 2007; f) The figure that appears in his diary accords with the number found on the back page of the contract with Travelex; g) That he had written down the Australian dollar figure of commitment, namely $AUD 618,556.70; h) That he thought adding zeros to a number made it smaller not larger;
There is no evidence in the proceedings from Mr. Pears.
The primary issue to be determined in these proceedings is whether there was a mistake by Mr. Spriggs who was acting on behalf of Hamilford at the time of its entering into the contract on 13 April 2007.
The starting point in relation to the law of mistake is the High Court decision of Taylor -v-Johnson (1983) 151 CLR 422 where it was held Mason ACJ, Murphy, Deane at page 433: "It is that a party who has entered into a written contract under a serious mistake about its contents in relation to a fundamental term will be entitled in equity to an order rescinding the contract if the other party is aware that circumstances exist which indicate that the first party is entering the contract under some serious mistake or misapprehension about either the content or subject matter of that term and deliberately sets out to ensure that the first party does not become aware of the existence of his mistake or misapprehension . What we have said is sufficient to demonstrate the broad basis of support which the authorities provide for that proposition. Moreover, and perhaps more importantly, it is a principle which is best calculated to do justice between the parties to a contract in the situation which it contemplates. In such a situation it is unfair that the mistaken party should be held to the written contract by the other party whose lack of precise knowledge of the first party's actual mistake proceeds from wilful ignorance because, knowing or having reason to know that there is some mistake or misapprehension, he engages deliberately in a course of conduct which is designed to inhibit discovery of it. Our comment can, for present purposes, be limited in its application to the case where the second party has not materially altered his position and the rights of strangers have not intervened."[emphasis added]
Accordingly, a unilateral mistake by a contracting party however fundamental by itself has no legal effect. There must be something more, namely, awareness or knowledge by the other party to the contract of the mistake of its counterpart such that to insist on the contract would be unconscionable.
It was submitted by Mr. O'Connor, Counsel for Hamilford that the unmistaken party need not have actual knowledge of the mistake as it is enough if they have a strong suspicion, pursuant to the decision of Young J in Misiaris-v-Saydels Pty Limited [1989] ANZ ConvR 403 "that the defendant strongly suspects that the plaintiff has made a mistake of a fundamental nature about the contact for the Court to provide the remedy of rectification";
The issue therefore becomes what level of awareness or knowledge is required in order that the contract can either be avoided or rectified. This issue was further clarified in the decision of Kenny JA in Leibler v Air New Zealand Ltd (No 2) [1999] 1 VR 1 where he held at paragraph 36: " The principles which govern an application for rectification of a contract on the ground of unilateral mistake can be briefly stated. If (1) one party, A, makes an agreement under a misapprehension that the agreement contains a particular provision which the agreement does not in fact contain; and (2) the other party, B, knows of the omission and that it is due to a mistake on A's part; and (3) lets A remain under the misapprehension and concludes the agreement on the mistaken basis in circumstances where equity would require B to take some step or steps, depending on those circumstances, to bring the mistake to A's attention; then (4) B will be precluded from relying upon A's execution of the agreement to resist A's claim for rectification to give effect to A's intention"
Furthermore, Barrett J. in Fox Entertainment Precinct Pty Limited -v-Centennial Park and Moore Park Trust (2004) 11 BPR 21,629 considered the issue in more depth, where he held: "I have referred to the requirement for "clear and convincing proof" where common mistake is alleged. The same requirement applies in a case of alleged unilateral mistake. In such a case, this requirement extends not only to the making of the mistake but also to precise correspondence between the mistake made and the mistake identified by the plaintiff for the purposes of the rectification claim - in other words, the plaintiff must show, by convincing proof, that a particular mistake was made and that it is precisely that mistake and no other that was known to and unconscientiously taken advantage of by the defendant . These matters are emphasised in the judgment of Kenny JA in Leibler v Air New Zealand Ltd (No 2) , above.
In considering the meaning of "suspicion" Mr. McDonald submitted that the court will be assisted by the insolvency cases. In particular the oft cited decision of Kitto J. in Queensland Bacon Pty Limited -v- Rees (1966) 115 CLR 266 at p.303 where he found: "In the first place, the precise force of the word "suspect" needs to be noticed. A suspicion that something exists is more than a mere idle wondering whether it exists or not; it is a positive feeling of actual apprehension or mistrust, amounting to "a slight opinion, but without sufficient evidence", as Chambers's Dictionary expresses it. Consequently, a reason to suspect that a fact exists is more than a reason to consider or look into the possibility of its existence. The notion which "reason to suspect" expresses in subs (4) is, I think, of something which in all the circumstances would create in the mind of a reasonable person in the position of the payee an actual apprehension or fear that the situation of the payer is in actual fact that which the subsection describes - a mistrust of the payer's ability to pay his debts as they become due and of the effect which acceptance of the payment would have as between the payee and the other creditors ."

Barrett J. affirmed that decision in Dean-Willcocks v Commissioner of Taxation [2008] NSWSC 1113. 16) Mr. O'Connor argued on behalf of Hamilford inter alia that: a) The real issue in these proceedings was not the evidence of Mr. Spriggs and accordingly Hamilford but the lack of evidence on behalf of Travelex; b) These proceedings arise as a result of the oral contract entered into on 13 April 2007 by Mr. Spriggs and behalf of Hamilford and Mr. Pears as representative of Travelex; c) The witnesses called on behalf of Travelex did not make the decision on its behalf to enter into the contract; d) There must be a consequence as a result of Travelex's failure to call Mr. Pears, that is Mr. Spriggs evidence must be accepted in its entirety as to what occurred in his conversation with Mr. Pears in March 2007 and 13 April 2007; 17) It is clear that in raising the defence or the allegation of mistake the onus shifts to Hamilford, namely the Defendant in these proceedings. Travelex is entitled therefore to put Hamilford to proof. Accordingly, for the defence of Mistake to be made I must satisfied on the balance of probabilities that: a) Firstly, Mr. Spriggs made a mistake when he entered the contract of 13 April 2007 on behalf of Hamilford; and if that is proven then b) Secondly that Travelex, strongly suspected that Mr. Spriggs had made a mistake of a fundamental nature about the contract at the time it was entered into, namely that it had ordered 10 times the amount of Japanese Yen that it required. 18) Having considered all the evidence in the proceedings I am not satisfied on the balance of probabilities that Mr. Spriggs had made a mistake when he entered into the oral contract on behalf of Hamilford on 13 April 2007 for the following reasons: a) That he received the fax confirmation of the oral contract he entered into with Travelex shortly it was entered into. The document read as follows:

" Upon receipt of confirmation, please verify all information, sign and return via fax No. (02 8585 7476

Trade Date : 13 April 2007 TRAVELEX CONFIRM SELLING : JPY 60,000,000.00 Value Date : 12 July 2007

TRAVELEX CONFIRM BUYING : AUD 618,556.70 Exchange rate : 97.0000

Fixed Delivery contract under which delivery will be made only on the last day of the contract period (earlier delivery may be arranged but a marginal adjustment to the rate may apply)

The agreement entered into under this Forward Contract is subject to the Travelex Terms & conditions for Foreign Exchange Trading.

                  Authorised signature
                  Pacific machinery parts sales and

This contract is transmitted automatically from our system and is therefore unsigned. This contract is entered into subject to the agreed Travelex Terms and Conditions for Foreign Exchange Trading. If any discrepancy is identified in this confirmation, it must be immediately notified to us. IMPORTANT GST STATEMENT - This supply is input Taxed and GST has not been charged." b) Mr. Spriggs signed and returned back the fax confirmation. He noted the due amount of Australian Dollars namely the sum of $AUD618,556.70 in a diary entry on 15 April 2007; c) Mr. Spriggs's diary note of 15 April 2007 makes reference to the exact Australian Dollar payout amount/ settlement amount that was to be paid to Travelex at the settlement date; d) Mr. Sprigg's evidence that he thought the adding of extra zero's to the number made it smaller is in my view simply implausible; 19) Furthermore, I am also not satisfied on balance that Travelex, despite the lack of evidence of Mr. Pears, strongly suspected that there was a mistake as to a fundamental term of the contract for the following reasons: a) Travelex had no actual knowledge of the mistake; b) Mr. Sprigg's conceded in cross-examination that he had supplied no financial information to Travelex in relation to Hamilford and its financial position. Accordingly, Travelex had no material upon which to assess the Hamilford's financial position in which to ultimately pay for the purchase of the foreign currency; c) In the past Hamilford had entered into "spot deals" with Travelex so that the contract entered into on 13 April 2007 was in itself unusual therefore there no reason to conclude that the amount sought just because it was higher than earlier transaction would strongly suggest or create a strong suspicion in the mind of Travelex that it was a mistake;

Can the contract to purchase 60 million Japanese Yen be rectified or rescinded? 20) As set out in paragraphs 18 and 19 of this decision I am not satisfied on balance that: a) there was a mistake on the part of Hamilford; and b) Mr. Pears and/ or Travelex strongly suspected that there had been a mistake as to a fundamental term of the contract, that is the amount of Japanese Yen purchased; 21) Accordingly, there is no basis for either the rectification or rescission of the Contract dated 13 April 2007. 22) However, for the sake of completion I note the following: a) By virtue of paragraph 10 of the Defence filed 26 February 2009 Hamilford pleads in effect the rescission or unenforceability of the contract dated 13 April 2007; b) Hamilford conceded that it made payment to Travelex of $AUD62,116.08 on 12 July 2007; c) That payment was in part performance of the contract dated 13 April 2007; d) Accordingly, in my view the contract dated 13 April 2007 is not able to be rescinded.

Is the Travelex estopped from enforcing the contract of 15 April 2007?

Paragraph 11 of the Defence filed 26 February 2009 pleads " that the Plaintiff is estopped from seeking to enforce the contract of 13 April 2007".
The objective of the doctrine of estoppel has been defined by J.W Carter as: "… to protect a person (the person invoking the estoppel) against the harm which would otherwise flow from the change of position involved if another (the person sought to be estopped) were permitted to contradict the assumption which is the basis for the estoppel. Estoppel may operate in respect of an assumption arising from the words or conduct of the person sought to be estopped, in the form of a sufficient representation or promise by that person which has been relied upon to the detriment of the person invoking the estoppel." Chapter 7, Carter On Contracts page
Mr. O' Connor made no submissions on behalf of Hamilford in relation to the issue of estoppel, despite it being clearly pleaded in his client's defence.
In this case, Hamilford is the party invoking the estoppel against Travelex. I can only assume that it alleges that if Travelex is not estopped from enforcing the contract of 13 April 2007, harm will flow to it, as a result of Travelex being permitted to contradict an assumption arising from the words or conduct of Mr. Pears who acted on behalf of Travelex at all times leading up to the entry into the contract by the parties.
There is no evidence in these proceedings from Mr. Pears. The only evidence before the Court in relation to any pre contractual conduct or representations made by Travelex is from Mr. Spriggs.
If I take Mr. Spriggs evidence in relation to his conversation with Mr. Pears on 27 March 2007 at its highest, in my view there is nothing to indicate there was either conduct or represenatations made that would indicate that Travelex should be estopped from enforcing the contract of 13 April 2007. Accordingly, on balance this defence fails.

Accordingly for the reasons set out in this decision I make the following orders:

Judgment and verdict for the Plaintiff as against the Defendant in the sum of $51,226.00 together with interest thereon from 26 July 2007 pursuant to section 100 of the Civil Procedure Act to date to be calculated by the registry;
In relation to costs I propose that the Defendants pay the Plaintiff's costs of the proceedings as assessed or agreed ("the Proposed Orders"). In the event that any of the parties wishes to make submissions in relation to costs, they may approach the registry within 28 days to have the proceedings re-listed before me failing which the proposed order will be executed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

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