30 The principles enunciated in British Empire Films and Placer Developments have been approved or applied in more recent authorities[13].
31 The caveator sought support in the decision of Moynihan J in the Supreme Court of Queensland in Oasis Dalby Pty Ltd v Sovereign Capital Ltd[14]. However, in my opinion, the case does not assist the caveator, for the following reasons. In a letter of offer, which was duly accepted by the borrower, the lender reserved the right to vary or withdraw the loan offer at any time before settlement. The loan was to be secured by a mortgage over real property. The letter of offer provided that a formal loan agreement and mortgage would be prepared and executed, which duly occurred. The borrower subsequently said that it would not be proceeding with the transaction.
32 The question which arose for determination was whether the mortgage (not the letter of offer or the loan agreement) could be enforced, because no money had actually been advanced by the lender and there was therefore no consideration for the mortgage. Moynihan J held that upon the acceptance of the letter of offer, the parties intended to be immediately bound to the performance of its terms, but acknowledged that full or more precise documentation, including the mortgage, was necessary to give it effect; that is to say, the case fell into the first category in Masters v Cameron[15]. The judge expressly noted that no issue had been raised as to the binding effect of the letter of offer; that is to say, the court was not required to consider whether the consideration for the letter of offer (or indeed the mortgage) was illusory in the sense discussed in British Empire Films and Placer Developments.
33 I turn to consider the caveator's "promise" to advance money, in the light of those principles. Obviously, the lending of money is at the core of the transaction the subject of the loan documents. The first reservation expressly states that the offer is not to be construed as an agreement binding the caveator to make an advance, and that "such agreement shall only come into existence on the making of the advance which may be delayed, or may not occur at all". It is hard to imagine a clearer statement of the fact that the caveator has made no binding promise to do anything. Coupled with additional reservations which entitle the caveator to withdraw the offer at any time up to and including settlement, including for any reason whatsoever "without being obliged to explain or justify the decision", it is in my opinion clear beyond doubt that the consideration offered by the caveator is illusory.
34 The third reservation also purports to reserve to the caveator the right to unilaterally impose additional terms and conditions at any time, should it become aware of other matters which are unknown, unclear or unverified at the time of the offer. That matter was raised before me in the context of the argument about consideration. It may be that the third reservation also makes the loan documents objectionable on the more general ground of uncertainty[16], but as the issue was not argued before me on that basis, and given my finding as to consideration, I need not consider the uncertainty issue.
35 The caveator raised an alternative argument. If the consideration was found to be illusory, then the caveator says that the loan documents were made enforceable by reason of the steps which the caveator had taken to be ready for settlement. Those steps include such matters as obtaining a valuation, conducting searches, corresponding about proposed contract variations and possible settlement dates and taking internal steps to have the loan moneys available for settlement. Although the caveator's counsel consistently referred to these as acts of "part performance", the use of that expression seems unhelpful and likely to mislead[17]. It seems to me that the more appropriate enquiry is to determine whether a binding contract has "sprung into existence" by reason of any subsequent conduct.
36 This was an issue which arose in British Empire Films. It may be recalled that O'Bryan J held that the consideration was illusory because the film distributor was under no obligation to ever supply a film to the exhibitor. However, the distributor had in fact subsequently offered the exhibitor two films, which the exhibitor had accepted.