Contract - implied terms - whether implied term as to refund of fees paid by overseas sutdents to educational institutions - whether inconsistency between implied and express terms.

Conveyancing Act 1919 (NSW) s.12

The Constitution of the Commonwealth of Australia 1901 s.75(ii)

Crown Debts Act 1609 (Eng.)

Crown Proceedings Act 1947 (U.K.) s.23, 1st Schedule

Evidence Act 1898 (NSW) s.14B

Judiciary Act 1903 ss.64, 67

Overseas Students (Refunds) Act 1990 ss.5, 6, 7, 8

Overseas Students (Refunds) (People's Republic of China) Regulations

Overseas Students (Refunds) (People's Republic of China) Regulations

Pearce DC and Geddes RS, Statutory Interpretation in Australia (3rd Ed.) para.4.31

BP Refinery (Westernport) Pty Ltd v Hastings Shire Council [1977] HCA 40; (1977) 52 ALJR 20

Barton v The Commonwealth of Australia [1974] HCA 20; (1974) 131 CLR 477

Booth v Williams [1909] NSWStRp 49; (1909) 9 SR (NSW) 421

Breadman v Coales [1792] EngR 349; (1620) Hob 253; 80 ER 399

Codelfa Constructions Proprietary Limited v State Rail Authority of New

South Wales [1982] HCA 24; (1982) 149 CLR 337

Commonwealth of Australia v Ling (1993) 44 FCR 397

Master v Miller [1791] EngR 1399; (1791) 4 TR 320; 100 ER 1042

Petelin v Cullin [1975] HCA 24; (1975) 132 CLR 355

Pollack v Commissioner of Taxation (1991) 32 FCR 40

Uther v The Federal Commissioner of Taxation [1947] HCA 45; (1947) 74 CLR 508

Wilson v Terry (1849) 2 SCR App1

Counsel for the Respondent: A.J. Sullivan QC,

H. Coonan, F. Kunc

Solicitors for the Respondent: Australian Government Solicitor

1. The appeals be dismissed.

2. The appellants pay the respondent's costs of the appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

GUMMOW, LEE AND HILL JJ These appeals were heard together. The appeals are brought from four judgments entered on 3 September 1993 by orders of a Judge of this Court (Beaumont J) which ordered the appellant ("Ling") to pay to the respondent ("the Commonwealth") $7,990,535.86, $67,482.87, $83,126.33 and $1,079,357 respectively.

2. The judgments were obtained in proceedings brought against Ling by the Commonwealth as the assignee of the contractual rights of "overseas students" under contracts made between the students and Ling for the supply of "educational services" to the students. The principal reasons for judgment were delivered by the trial Judge in the first proceeding and they are reported as Commonwealth of Australia v Ling (1993) 44 FCR 397.

3. Between 1987 and 1990 Ling was the proprietor of several businesses within Australia which offered English language study courses. Ling recruited students for those courses by distributing, inter alia, in the Peoples Republic of China ("the PRC") material which promoted the educational services offered by Ling. The study courses were described as "English" and "Business English" courses. In that promotional material, Ling advised prospective students that the fees payable for the study courses included tuition fees, accommodation expenses and health insurance charges, and that it would be necessary for those fees to be paid in advance before the Commonwealth would consider an application for a visa to enable a student to travel to Australia to undertake such a course.

4. Some of the promotional material made reference to circumstances in which fees paid in advance would be refunded if an intending student did not travel to Australia to undertake the course in which the student had been enrolled.

5. A large number of students responded to Ling's recruiting endeavours. In most cases a student became enrolled by completing a printed application form addressed to one of the businesses conducted by Ling, and by payment of fees as advised by Ling. The usual fee paid was in the order of $5,600.

6. The Court was informed that the contracts between Ling and the students could be divided into two groups. The first group contained contracts in which there were no written terms in relation to the refund of fees. In the second group were contracts which contained differing written terms in respect of the refund of fees according to which of six application forms had been completed. As will appear later in these reasons, it was contended before his Honour that a term relating to the refund of fees was to be implied in all contracts.

7. It appears to be common ground that until August 1989 the Commonwealth had regarded the provision of education services in Australia to "overseas students" as a valuable source of foreign exchange earnings for Australia and introduced "streamlined" procedures to facilitate the grant of visas to such students. By June 1989, 26,000 student visa applications had been received in Beijing and were awaiting processing. In August 1989, after the occurrence of the Tiananmen Square incident in June 1989, the Commonwealth considered the PRC to be "a high-risk country in terms of students overstaying visas". The Commonwealth instructed institutions offering educational services to cease recruiting in the PRC and introduced a more restrictive policy in respect of the grant of visas to citizens of the PRC.

8. In January 1990 the Commonwealth permitted the recruitment of students in the PRC to recommence but "rigorous new visa requirements were instituted". In addition, the Commonwealth advised the recruiting institutions that they were not permitted to collect fees in advance unless there was a high probability that the intending student would be granted a visa.

9. As a result of the change in Commonwealth policy a large number of PRC citizens who had contracted with Ling to undertake English language courses in Australia and had paid fees in advance, were refused visas and sought refund of the fees paid.

10. In October 1990 the Commonwealth was aware that almost 6,000 students, the majority of whom were citizens of the PRC, had unsuccessfully requested the institutions with which they had contracted, to refund the fees they had paid. The Commonwealth decided to pay "the outstanding refunds to rejected students and pursue recovery action against those institutions which (had) not repaid the amounts owing".

11. The Overseas Students (Refunds) Act 1990 ("the Act"), the long title of which was "to facilitate the refunding of payments made by overseas students unable to undertake or complete courses of study in Australia, and for other purposes", received Royal Assent in December 1990.

12. In September 1991 the Overseas Students (Refunds) (People's Republic of China) Regulations, made under the Act, were published and amended in December 1992 by the Overseas Students (Refunds) (People's Republic of China) Regulations (Amendment) ("the Regulations"). The purpose of the Regulations was to facilitate proof of relevant matters in proceedings taken by the Commonwealth for the recovery of a debt owed by an educational institution to an overseas student and assigned to the Commonwealth, being a proceeding to which the Act applied.

13. The Commonwealth distributed to the contracting institutions copies of forms entitled "Refund Report - Rejected Overseas Student" and required the forms to be completed and returned. From those forms the Commonwealth obtained details of the number and identity of students who had paid fees in advance and had requested and were still awaiting refunds. Ling informed the Commonwealth that 1,308 citizens of the PRC had requested repayment of fees they had paid and had received no repayment.

14. The Commonwealth repaid to those students the whole of the fees paid by them to Ling and took assignments of their rights under their contracts with Ling.

15. The Commonwealth gave notice of the assignments to Ling and commenced proceedings to recover as debts owing under the contracts, the amount of fees prepaid by each student. The Commonwealth pleaded in those proceedings that it was either an express or an implied term of the contracts that Ling would refund the fees if a student was unable to obtain a visa. The evidence presented to his Honour showed that 1,223 of the 1,308 students had been refused visas.

16. Ling defended the claims and put the Commonwealth to the proof of all matters. In addition, Ling raised a number of special defences, some of which were pursued in this appeal, involving principally questions of construction of the Act and Regulations, and whether the terms of the contracts made with the students permitted implication of the term contended for by the Commonwealth.

17. We turn first to consider the matters of statutory construction.

18. The primary Judge noted the existence of the prerogative to take assignments of choses in action as a power or authority vested in the Crown in right of the Commonwealth (44 FCR at 430). His Honour determined that the prerogative power had not been curtailed by the operation of the Act. He rejected the argument advanced by Ling that, in essence, the Act and the Regulations "covered the field" so that it is not permissible for the Commonwealth to proceed in any way except under, and subject to, the statute and delegated legislation. To the contrary, it was held that the legislation is facultative only.

19. Upon the hearing of the appeals, although the submission was not put in direct terms, the substance of the argument on construction was that the legislation applied to the present actions by prescribing an exclusive and exhaustive code for the taking by the Commonwealth of the assignments in question and for their enforcement.

20. On the other hand, the Commonwealth sought to maintain the position that the Act and the Regulations did not preclude reliance by it upon the prerogative to take assignments of choses in action and did not exclude what otherwise would be the operation of procedural and substantive law for recovery on those assignments. Thus, as the primary Judge pointed out, the issue presented is essentially one of statutory construction.

21. The legislation is to be read against the general law upon the subject of Crown assignments. In Booth v Williams [1909] NSWStRp 49; (1909) 9 SR (NSW) 421 at 440, Street J accepted the proposition that it is presumed that the legislature does not intend to deprive the Crown of any prerogative, right or property, unless it expresses its intention to do so in explicit terms, or makes the inference irresistible. The same point was made, though perhaps in terms not so wide, in Barton v The Commonwealth of Australia [1974] HCA 20; (1974) 131 CLR 477. Barwick CJ (at 488) described as "extremely strong" the rule that the prerogative of the Crown is not displaced except "by a clear and unambiguous provision." Jacobs J (at 508) said that an intention to withdraw or curtail a prerogative power "must be clearly shown." Mason J (at 501) said it was well accepted that a statute will not be held to abrogate a prerogative of the Crown "unless it does so by express words or by implication, that is, necessary implication." In their joint judgment McTiernan and Menzies JJ (at 491) described the position as being that a statute might deprive the executive of part of its inherent power "either expressly or by necessary implication."

22. It is appropriate to begin by ascertaining those rights which are said to have been displaced by the legislation.

23. The position at common law in England was discussed by Buller J in Master v Miller (1791) 4 TR 320 at 340; [1791] EngR 1399; 100 ER 1042 at 1053. After referring to Coke upon Littleton as authority for the proposition that choses in action could not be assigned or granted over to another, the policy of the common law being to avoid maintenance, his Lordship said that the good sense of that rule seemed to him to be very questionable and that from the earliest times the courts of equity had found the doctrine too absurd to adopt. Buller J referred to a variety of exceptions to the absolute common law prohibition and continued:

"(I)n the midst of all these doctrines on maintenance,

there was one case in which the Courts of Law allowed

of an assignment of a chose in action, and that was in

the case of the Crown; for the Courts did not feel

themselves bold enough to tie up the property of the

Crown, or to prevent that from being transferred."

The authorities to which his Lordship referred bear out that proposition. The Crown might grant or receive a chose in action by assignment. In addition, the authorities do not indicate the existence of any particular formality or procedure for the taking of assignments by the Crown.

24. There were available to the Crown special procedures for the recovery of debts due to it. The writ of extent was a summary process for the recovery of Crown debts. It issued either on a judgment or other debt of record (ordinary extent) or on an affidavit of debt and danger made on the authority of the Attorney-General (immediate extent). In England proceedings for the determination of any issue upon a writ of extent were abolished by s. 23 of and the First Schedule to the Crown Proceedings Act 1947 (UK). In Australia, s. 67 of the Judiciary Act 1903 ("the Judiciary Act") is a procedural provision designed to supplement the old procedures for the recovery of debts and property by the Crown: Pollack v Commissioner of Taxation (1991) 32 FCR 40 at 61.

25. There had been limited legislative intervention in the taking of assignments by the Crown. The Crown Debts Act 1609 (Eng.) was passed to stop a particular practice of assigning debts to the Crown for the purpose of obtaining the advantage of the procedure by way of writ of extent against the debtor. But it did not render void any assignment whereby, for example, a debtor of the Crown sought to obtain a full or partial discharge of that debt by assigning to the Crown a debt which had "grown due" to that debtor from a third party: Breadman v Coales [1792] EngR 349; (1620) Hob 253; 80 ER 399. The statute of 1609 has not been repealed but it appears to have been rendered obsolete by the 1947 legislation; see Halsbury's Statutes of England, 3rd ed., vol. 8, pp. 827-8.

26. The common law doctrine was treated as applicable to the Crown in right of the several Australian colonies and then States: Wilson v Terry (1849) 2 SCR App 1 at 7; Booth v Williams supra at 435-6.

27. The prerogative in relation to Crown debts, in its various aspects, was carried into the federal system established by the Constitution: Uther v The Federal Commissioner of Taxation [1947] HCA 45; (1947) 74 CLR 508 at 514 per Latham CJ. The assignment of choses in action became possible at law, whereby the assignee now could sue in its own name, with the enactment in England of the Judicature Act which in turn was adopted in Australia. An example is s. 12 of the Conveyancing Act 1919 (NSW). The case was conducted below on the footing that s. 12 applied (44 FCR at 432). But the Conveyancing Act is not expressed to bind the Crown in any capacity, State or Commonwealth. Nor was it contended before us that s. 64 of the Judiciary Act displaced the prerogative.

28. In Uther, the Chief Justice pointed out (at 514) that a statutory provision can be made in such terms that a statutory right is substituted for a prerogative right existing at common law. Is the Act of such a nature?

29. The long title, set out earlier in these reasons, may be referred to as an aid to construction of the statute: Pearce and Geddes, Statutory Interpretation in Australia 3rd ed., para 4.31. The central provisions of the legislation are ss. 5, 6, 7 and 8. Section 5 confers power to obtain information and documents from educational institutions. Sections 6 and 7, are designed to facilitate in recovery proceedings the proof of identity of overseas students from whom assignments have been taken by the Commonwealth. Section 8 makes certain statutory declarations by overseas students, who have assigned the debts in question, prima facie evidence of the facts stated therein.

30. The phrase "assigned debt" is defined in s. 3 as follows:

"Assigned debt" means a debt that;

(a) was owed by an educational institution to an overseas

student;

and

(b) has been assigned to the Commonwealth."

The definition thus assumes that an assignment has been taken. There is nothing in the statute which substitutes a new statutory right for a prerogative right to take assignments. Nor is there anything in the Act which displaces, rather than supplements, the substantive and procedural rights by which the Commonwealth may recover debts owed to it in proceedings being matters in which the Commonwealth is a party within the meaning of s. 75(iii) of the Constitution; see Pollack v Commissioner of Taxation supra.

"6(1) The regulations may prescribe procedures for

establishing the identity of an overseas student from

whom it is proposed that the Commonwealth accept the

assignment of a debt owed by an educational

institution.

(2) The procedures may be identified to relate to a

particular country or class of countries.

7(1) If, in proceedings to which this Act applies, it is

established that the procedures prescribed for the

purposes of section 6 were followed, the assignor's

identity is taken, for the purposes of the

proceedings, to have been established accordingly

unless the contrary is proved.

(2) In such proceedings, a certificate, signed by a person

referred to in subsection (3) and stating that the

procedures were followed, is prima facie evidence of

that fact.

(3) For the purposes of subsection (2), the certificate

may be signed by a person who;

(a) is within a class of persons

determined in writing by the

Minister for the purposes of this

section; and

(b) acted on the Commonwealth's

behalf in the assignment of the

debt concerned.

(4) If:

(a) the Commonwealth gives, to

another party to proceedings to

which this Act applies,

reasonable notice that the

Commonwealth proposes to rely on

such a certificate; and

(b) the notice is given together with

a copy of the certificate;

the other party must not, in the proceedings, call

into question that certificate unless that party

has given the Commonwealth reasonable notice of

its intention to do so."

The term "proceedings to which this Act applies" is defined in s. 3 as meaning:

"proceedings taken by the Commonwealth in connection with

the recovery of an assigned debt, being proceedings that

take place at a time when the overseas student who assigned

the debt is not in Australia."

32. Sections 6 and 7 are concerned with the facilitation, in proceedings taken by the Commonwealth in connection with the recovery of an assigned debt owed by an educational institution to an overseas student, of proof of the identity of the particular assignor. If prescribed procedures have been followed, then the identity of the assignor is taken, for the purposes of those proceedings, and unless the contrary is proved, to have been established. Furthermore, a certificate, signed by a person identified in sub-s. 7 (3) which states that the procedures were followed, will be prima facie evidence that the procedures prescribed for the purposes of s. 6 were followed, and if the Commonwealth has given the reasonable notice described in sub-s. 7 (4) of its proposed reliance on such a certificate, the other party must not, in the proceedings, call into question the certificate unless it has given the Commonwealth reasonable notice of its intention to do so.

33. None of these provisions suggests that the Commonwealth must follow the prescribed procedures for establishing the identity of an overseas student from whom it is proposed that it accept the assignment of a debt owed by an educational institution. Nor do they suggest that if those prescribed procedures are not followed an assignment, otherwise effective under the general law, will be defective, invalid, voidable or void in any respect. These provisions do not lay down the only means by which, if it is called into question in enforcement proceedings, the Commonwealth may prove the identity of an assignor. Rather, these provisions are concerned with advancing the position of the Commonwealth by facilitating enforcement of assignments.

34. In addition to sub-s.6(1) which states that the Regulations may prescribe procedures "for establishing the identity of an overseas student from whom it is proposed that the Commonwealth accept the assignment of a debt owed by an educational institution", s.11 empowers the Governor-General to make regulations, not inconsistent with the Act, which prescribe all matters necessary or convenient to be prescribed for carrying out or giving effect to the statute.

35. Regulation 4 states that for the purposes of sub-s. 6 (1) of the Act, the procedures for establishing the identity of an overseas student "are prescribed by these Regulations". Regulation 3 provides for certain persons performing duties at a diplomatic mission to administer the procedures prescribed in the regulations. Regulation 5 obliges the overseas student to provide to an authorised person certain documents and for the signature by the authorised person of a certificate and translation. The regulation states that these steps must be taken "before a decision is made, on behalf of the Commonwealth, to accept or refuse the assignment of the debt."

36. It was submitted by counsel for Ling that the phrase in reg.5 "before a decision is made, on behalf of the Commonwealth" did not merely lay down a temporal procedure. Rather, it was submitted, the effect of non compliance was invalidity of the assignment.

37. In our view reg.5 is concerned with the procedures for establishing the identity of an overseas student for the purposes of sub-s.6(1), which provision, in turn, is adjectival in nature and is not concerned with displacing any substantive rights of the Commonwealth to take assignments. Indeed, as Counsel for the Commonwealth emphasised, it would be an extreme and unsafe construction of the regulations to treat them as abrogating or curtailing the substantive rights of the Commonwealth when the Act itself is not of that character.

38. Regulation 6 is concerned with the completion of the identification procedure by acceptance by an authorised person on behalf of the Commonwealth. The regulation sets out various steps which must be taken by the overseas student and by the authorised person. One such step is that the authorised person must inspect the invitation to the overseas student to come to the diplomatic mission specified in the invitation (reg. 6 (3)(a)). It is hardly to be supposed that non- compliance with any one of these criteria has the effect of nullifying any assignment taken by the Commonwealth. Like reg.5, reg.6 is in aid of the provisions in the Act for establishing the identity of assignors.

39. We have referred to ss. 6 and 7 of the Act. There remains s. 8. This is concerned with the admission of certain statutory declarations in evidence in proceedings taken by the Commonwealth in connection with the recovery of assigned debts. The section provides:

"8(1) In proceedings to which this Act applies, a statutory

declaration, by the overseas student who assigned the

debt, that complies with the requirements of the

Statutory Declarations Act 1959 is prima facie

evidence of the facts stated in the declaration.

(2) For the purposes of this section, a declaration that

is made before an Australian citizen, or a permanent

resident, who is:

(a) a member of the staff of an

Australian Embassy or Consulate;

and

(b) a person of the kind specified in

the regulations;

is taken to have been made before a person of a

kind referred to in section 8 of the Statutory

Declarations Act 1959.

(3) If:

(a) the Commonwealth gives, to

another party to proceedings to

which this Act applies,

reasonable notice that the

Commonwealth proposes to rely on

a statutory declaration of a kind

referred to in sub-s. (1); and

(b) the notice is given together with

a copy of the declaration;

the other party must not require the person who

made the declaration to be available for

cross-

examination on the declaration in the proceedings

unless that party has given the Commonwealth

reasonable notice of its intention to do so."

40. The effect of s. 8 is that where there has been compliance with paras (a) and (b) of sub-s. 8 (3), the other party to the proceedings taken by the Commonwealth in connection with the recovery of an assigned debt does not have the right to require the Commonwealth to have the declarant available for cross examination on the declaration, unless it has given the Commonwealth reasonable notice of its intention to do so. The provision is not concerned with the giving of any procedural, let alone substantive, advantage to the other party to the proceedings by the Commonwealth. Rather, that party has its position weakened. The bar preventing a party sued by the Government relying upon an expectation of the opportunity to cross-examine a declarant, is lifted only if that party has given to the Commonwealth, after the Commonwealth has advised that it intends to rely on the declaration, reasonable notice of the requirement that the declarant be available for cross-examination.

41. Counsel for Ling also submitted that the phrase in para. 8 (3)(a) "that the Commonwealth proposes to rely on a statutory declaration ..." meant that the section laid down exclusively the steps by which a statutory declaration of the kind described in the section might properly be admitted into evidence. The word "rely" was said to mean "rely for any purpose or by any means". Ling sought to elevate the meaning of the words used in sub-s.8(3) to the grant of a statutory right to cross-examine a declarant where the party sued had given notice to the Commonwealth in the terms of the sub-section.

42. This construction of s. 8 proceeds from the basic proposition contended for by Ling as to the scheme of the Act. As we have indicated, in our view the legislation is facultative in nature and is not concerned to displace or curtail the rights, including the prerogative rights, of the Commonwealth in relation to the taking and enforcement of assignments. The object of the Act is to assist the Commonwealth in proving its case in such proceedings, not to diminish any reliance the Commonwealth may make on the common law or s.14B of the Evidence Act 1898 (NSW), or like statutory provisions applicable in other States in that regard.

43. We now turn to the question of the implied term.

44. His Honour found that there should be implied into each contract between Ling and a student an implied term to the effect that:

"... the fees paid by the student would be

refunded in full by the First Respondent to the

student concerned if the student was unable to

obtain a visa in order to undergo the said

course of study."

45. There is no dispute between the parties that the conditions necessary to imply a term into a contract are those set out in the judgment of Mason J in Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337, by reference to the summary contained in the majority reasons in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council [1977] HCA 40; (1977) 52 ALJR 20 at 26, namely:

"(1) it must be reasonable and equitable; (2)

it must be necessary to give business efficacy

to the contract, so that no term will be implied

if the contract is effective without it; (3) it

must be so obvious that `it goes without

saying'; (4) it must be capable of clear

expression; (5) it must not contradict any

express term of the contract."

46. Ling submits that such a term should not be implied because it would be inconsistent with the express provisions in the various forms of contract. It is further submitted that the implication of such a term would not be reasonable or equitable, nor would it be necessary to give business efficacy to the contracts, nor would it "go without saying". Not surprisingly, the submissions did not concentrate on either reason or equity. It would be a brave submission that there was something inequitable about a term which ensured that a person unable to obtain a visa to pursue a course of study, the cost of which had been pre-paid, was entitled to a refund of that which had been paid.

47. The real thrust of Ling's submission was that the implied term was inconsistent with the express terms of the various forms of contract between the individual students and Ling. It may be noted that the formulation of principle in BP spoke of the need for the implied term not to "contradict" an express term, rather than of the two not being "inconsistent", but any shade of difference in meaning between these two concepts may be put to one side in the present case as immaterial.

48. The judgment below was also criticised upon the basis that his Honour had taken what was described as a "global approach" rather than concentrating on the specific contractual terms which applied in the case of each individual student.

49. The difficulty presented by the facts is readily apparent. The case for the Commonwealth concerned over 1,300 students. For whatever reason, discovery by Ling did not bring to light any form of writing which could be identified as forming part of a contract between Ling and a student in 712 cases, and in 295 cases the application form used contained no terms relating to the refund of fees. These contracts together form the first group referred to earlier in these reasons. The contracts contained within the second group, as stated earlier, involved six different application forms with varying terms as to the refund of fees. It is thus necessary to consider these two groups of contracts separately.

Contracts where no application form was tendered or the application form contained no terms relating to the refund of fees

50. It was said that colleges conducting intensive courses in English for overseas students were accredited by the Commonwealth. There appears to have been no statutory authorisation for this accreditation. In applying for accreditation Ling, as his Honour records, stated that his refund policy was as follows:

"1. Refunds caused as a result of the

student failing to obtain a visa or

passport - full refund of all

monies.

2. Other refunds student cancelling,

etc. other than exceptional

circumstances such as death or

serious injury to himself or

immediate family - full refund of

all monies less $200 processing

fee."

5l. While there is no suggestion that students would have seen this application, the statement is of some assistance because it permits an inference to be drawn that, if asked, Ling would have informed students in a way consistent with this policy. It also goes some way to demonstrating the reasonableness and equity of the term.

52. Next, from the evidence of a Mr Fenton who was employed by Ling from February 1989 to November 1989, it appears that in that period there was considerable promotional activity by Ling which included the distribution of promotional brochures to prospective students and the holding of public meetings in China to attract students. Prospective students who made enquiries received a letter accompanied by the then current form of application. There is no evidence that any particular student received the promotional brochure, received a letter or attended the meetings in China. The brochure was silent on the question of refunds. One form of the letter, however, stated:

"The student, if having special circumstances

(that is, the Chinese Government does not allow

the student to study in Australia or the student

has got the passport but the Australian Embassy

refuses to issue the student visa), will get a

full refund of his/her tuition fee."

53. Other forms of letters admitted in evidence also stated expressly that a full refund would be given if the student "fails to obtain his/her visa from the Australian Embassy for some reason." There is no evidence of any letter or promotional material in use after Mr Fenton left the employment of Ling.

54. Again while these letters do not assist in establishing the terms of contract between a particular student and Ling, they do indicate both the reasonableness of implying a term in an open contract as to refunds and show that there was nothing in the letters, if received, which was inconsistent with the implied term found by his Honour.

55. If the terms of the contract between the student and Ling are completely silent as to the question of refund, then it must of necessity follow that there is nothing in those contracts which is inconsistent with the term implied by his Honour. In such cases we are in agreement with his Honour and for the reasons given by him that there should be implied in each such contract a term that:

"the fees paid by the student would be refunded

in full if the student was unable to obtain a

visa in order to undergo the said course of

study."

Contracts where the application forms contained terms relating to the refund of fees

56. Where a student completed a written application form, that form would constitute an offer by the student to Ling to be accepted by the enrolment of the student in the appropriate course of study. The terms of the contract between the parties would include any term to be found in the offer. It follows that there could be no implication of a term, at least in the form set out above, if such a term were inconsistent with the provisions of the application form. Accordingly, it is necessary to consider each application form in use to determine whether there is an inconsistency as alleged by Ling. But that enquiry is not the end of the matter, for it might yield not the conclusion that no term should be implied, but rather the conclusion that a term, differently stated, should be implied. We turn now to these matters, considering the various application forms in the order in which the forms were dealt with in argument by counsel for Ling.

57. This form was used in six contracts only. It provided as follows:

"REFUND POLICY

Cancellation and Fees Refund:

1. It is the student's responsibility to inform

the College of cancellation or probable

cancellation.

2. For New Zealand, a full refund will be given

to applicants who notify the College of

their withdrawal from the course within 7

days of the date on the

College's Acceptance Advice Form.

3. If the College is notified of a cancellation

of all or part of the course 2 weeks or more

before the course start date, and before the

student has received his/her visa, all fees

are refundable, less $200.00 cancellation

fee.

4. If the College is notified of a cancellation

less than 2 weeks before the start of the

course unit, and before the student has

received his/her visa, all course fees up to

the time of notice plus the next succeeding

unit fees are forfeited.

5. For students from P. R. China, the school

automatically postpones the start date until

the students arrives. (sic) No postponement

charge applies.

6. Cancellation, transfer of fees, or refund is

not possible under any circumstances after a

student's visa has been issued."

58. It is submitted by counsel for Ling that the term implied by his Honour is inconsistent with the specific provisions of this form. The submission stresses the need for notification referred to in para.3, the cancellation fee referred to in the same paragraph and the express provisions of paras.4, 5 and 6. It is said that the Commonwealth had not proved a notification of cancellation in each case and that the express terms would permit postponement, presumably on an indefinite basis, of the course for which students had prepaid the entirety of the fee.

"The school will enrol the student accord (sic)

to the preference listed. Should the student

have difficulty in obtaining a visa, or not

satisfy requirements for the 1st preference, the

school will automatically enrol the student in

the next preference."

60. Accordingly, counsel submits that this provision entitles Ling to allocate the student among other places of study shown on the form which include establishments in New Zealand, the United States, Mexico, Ireland or the Philippines. It does not appear that any student ever nominated a second preference and we would not interpret the form as permitting Ling arbitrarily to nominate an establishment not chosen by the student.

61. In our view the express terms on the form (other than the clause dealing with the right to enrol automatically students at other places, which, having regard to the failure of students to nominate a preference should be treated as having no application) should be construed as covering only a "cancellation" in circumstances where the grant of a visa is practically obtainable by a student. This seems especially to be the case with students from the PRC where there could be no course start date as there is an automatic postponement of such a date. So construed these terms tell nothing about what is to happen if a visa can not be obtained from the Australian government.

62. We are thus of the view that the implied term found by his Honour does not in any way conflict with the express term.

63. This form was used by eight students. It provides:

"Refund Policy

1. It is the student's responsibility to inform

the College in all cases of cancellation or

probable cancellation.

2. If the College is notified of cancellation

of all or part of the course 2 weeks or more

before the course start date, and before the

student has received his/her visa, all fees

are refundable, less $200.00 cancellation

fee.

3. If the College is notified of cancellation

less than 2 weeks before the start of any

course Unit, and before the student has

received his/her visa, all course fees up to

the time of notice plus the next succeeding

Unit fees are forfeited.

4. For student (sic) from P.R. China, the

school would automatically postpone the

start date until the student arrives. No

postponement charge applies.

5. Cancellation, transfer of fees, or refund is

not possible under any circumstances after a

strudent's (sic) visa is issued."

64. Essentially this form is in similar terms to the Form 1, save that it omits the second condition which concerned New Zealand. For the reasons already given in respect of Form 1, the term implied by his Honour to the contract formed by acceptance of the application form is not inconsistent with the express terms set out in that form.

65. This form was used in 33 cases. It provided relevantly:

"ENGLISH COURSE: Full refunds are only issued

if the student is declined the necessary travel

documents (ie. passport-visa). Supporting

documents are required. All other requests for

refunds are subject to handing (sic) charge."

66. It is clear that the implied term would be inconsistent with this provision in the sense that the express term would cover the field in cases, at least, where there had been an application for a visa which had been refused. The express terms do not touch upon the case where there had been no application for a visa because such an application would be futile. Even in the case of those students whose application had been "declined", the argument would presumably be that no refund would accrue under the express term because supporting documents had not been provided.

67. While we agree that Ling should succeed in setting aside the finding that there was an implied term which was inconsistent with the express terms of the contract between the parties, it does not follow that no term at all should be implied. In our view, if the parties had turned their attention to the matter of a change in government policy in issuing visas it would have gone without saying that they would have agreed that if a student was practically unable to obtain a visa under Australian government policy as a result of a change of policy, a refund would be given. It is unnecessary to decide whether the implied term would deal with the provision of evidence of the circumstances as, on the facts of the present case, on the balance of probabilities the students whose rights to a refund had been assigned were practically unable to obtain a visa.

68. It is important to note here that the change in the Australian government policy on granting visas to persons from the PRC who decided to study English was motivated by a concern that students would come to Australia and then remain here. Accordingly the policy became one where applicants under 18 or, for the most part, over 35 were to be rejected outright. Students wishing to acquire a visa were sent an information package setting out the eligibility criteria, known as a "self assessment guide" prior to their actually applying for a visa. A fee of $160 was payable for the visa application. If an application for a visa was filed the student was then sent a pre-visa assessment package to enable him or her to "assess realistically their chances of being accepted."

69. The self assessment guide made it clear that it was likely that no visa would be issued unless the applicant had a minimum education level equivalent to Year 12 in Australia, was working and the employer was supporting the studies. Applicants with relatives in Australia or who intended studying on a part time basis were told that it was likely that they would not be approved.

70. It may readily be inferred that students who had prepaid amounts in excess of $5,000 for fees (a not inconsiderable sum for residents of the PRC at the time) would not lightly be deterred from proceeding to apply for a visa if they had a chance of obtaining it, notwithstanding the $160 fee. It may also be inferred that those who received their self assessment packages or who withdrew their applications after receiving their pre visa assessment packages recognised that their application was bound to fail. We thus agree with the learned Judge below that the inference should be drawn that those students who did not proceed with visa applications to the point of rejection "recognised that it would be futile to proceed further."

71. This form was used by 138 students. It contained the following:

"ELICOS ENGLISH COURSE: Full refunds are only

issued if the student is declined the necessary

travel documents (ie. passport - visa).

Supporting documents are required. All other

requests for refunds are subject to a A$200.00

processing fee deduction."

72. The term is similar to that used in Form 3. The express term relates only to cases where students are declined a visa. To that extent the term implied by his Honour may be said to be inconsistent with the express terms of the contract. However, for the reasons expressed in relation to the terms used in Form 3, we think that it is necessary to imply a term in the contract to the effect that where students are unable to obtain visas (in the sense that it is pointless their proceeding with an application) a full refund should be allowed.

73. This form was used by 31 students. It provided relevantly:

"ELICOS: Refunds are only issued if: (1) the

student is unable to obtain his/her passport (2)

the student is unable to obtain his/her visa."

74. It will be observed that the express term here is identical to the implied term. No doubt it is correct to say that no term should be implied in this case, but the Commonwealth is in any event entitled to judgment by reference to the express term.

"ELICOS ENGLISH COURSE: REFUNDS are only issued

if the student is declined the necessary travel

documents (i.e. passport, visa). Supporting

documents are required."

76. For the reasons already discussed in regard to form 3, there should be implied into the contract formed by the acceptance of this application form a term to the effect that a refund will be given where the student is practically unable to obtain a visa to enter Australia.

77. It follows, in our view, that while we would not agree with his Honour that it was necessary in each and every case to imply a term in the form his Honour did, the result remains the same. The Commonwealth was entitled to have judgment entered in its favour in respect of all assignments.

78. The Commonwealth both before Beaumont J and before us relied alternatively upon frustration. His Honour, having implied a term into the contracts, found it unnecessary to consider frustration and so do we. Logically it is necessary to determine the terms of a contract before an issue arises as to whether performance of that contract has been frustrated. As each contract, by either express or implied terms, entitled the students to a refund, no question of frustration arises.

79. Ling also submitted that his Honour erred in failing to uphold Ling's further special defence that the deeds of assignments signed by the students were void because the "students did not understand what they were doing".

80. As his Honour stated, Ling had to discharge a heavy onus to make out that defence, namely, to show that each student signed a deed of assignment in the belief that it was radically different from what it was in fact. (See: Petelin v. Cullin [1975] HCA 24; (1975) 132 CLR 355 at p 360.)

81. It was submitted by counsel for Ling that part of the evidence presented by the Commonwealth consisted of statutory declarations written in English, declared by students who could not read English and, therefore, the statement in the declaration that the declarant "read and understood the Deed of Assignment before signing it" made it transparent that the "students did not understand what they were doing" when making the declaration and, by inference, when executing the deed of assignment.

82. The logical fallacy is obvious but in any event the onus was on Ling to show that when the students signed the assignments they believed they were signing a document of radically different import. No evidence adduced by Ling went to that issue.

83. His Honour noted that the evidence before him showed that each student who had sought a refund from Ling had been forwarded a Chinese translation of the deed of assignment and went on to say (44 FCR at 432):

"Although the student may not have been able to read

the deed in English, it does not follow that the

student signed a document in the belief that it was

'radically different' from what it was in fact. On

the contrary, the inference is open here that the

student correctly believed that what he or she signed

was an assignment of his or her claim to the

Commonwealth."

84. We agree with his Honour that the defence was not established.