Port of Portland Pty Ltd v State of Victoria [2009] VSCA 282

1 I have had the considerable advantage of reading in draft the respective reasons for judgment of Buchanan JA and Nettle JA. Like Buchanan JA, I would dismiss the appeal and refuse leave to appeal against the order for costs. Subject to what follows, I would do so for the reasons which his Honour has given.

2 As will appear, the Court is unanimously of the view that cl 11.4(b) of the asset sale agreement is void, on the ground that it would (if enforced) grant to the appellant (the purchaser company) a dispensation from land tax payable by it under the Land Tax Act 1958 (Vic). The point of difference between Buchanan and Nettle JJA concerns the enforceability of cl 11.4(a), which contains the State's promise to effect the legislative amendments necessary to secure the specified tax change.

3 Read literally, cl 11.4(a) embodies a promise by the State to amend the land tax legislation. More accurately, the executive arm of the State promised to take a step - 'effect an amendment to statutes' - which lay within the exclusive province of the legislative arm of the State. Like Buchanan JA, I would regard such a promise as simply unenforceable.

4 As Robertson J said in Rothmans of Pall Mall (NZ) Ltd v Attorney-General:[1]

It is elementary that the executive may not restrict the legislative competence of Parliament by contract. As it is said in Currie, Crown and Subject (1953) at pp 52-53:

"However amply the executive Government may purport to bind the Crown, its contracts, like those of a subject, are liable to be overridden by subsequent legislation. ... Any moral obligation arising from the circumstance that under a parliamentary system the executive Government in power effectively controls the course of legislation does not create a legal obligation. Moreover, there can be no distinction between an undertaking to refrain from promoting legislation and one to promote legislation; 'in a legal sense, there can be no such thing as contracting for the future exercise of a legislative power.' [Holmes v Rolleston (1873) 2 NZCA 287 at p 294]."[2]

5 The same issue was considered more recently by the Full Court of the Western Australian Supreme Court in Re Michael; Ex parte WMC Resources Limited.[3] That case concerned the enforceability of provisions of an agreement under which the State of Western Australia had purportedly promised that, if certain laws were later enacted by the State Parliament, they 'shall have no effect' to the extent that they adversely affected the relevant business interests of the commercial parties to the agreement. The Court declared that the provisions had no binding contractual effect:

As a matter of fundamental constitutional principle, no parties, not even the State acting by its Executive Government, can purport to bind the Parliament in respect of legislative action. Effect cannot be given to these provisions as a matter of contract by this or any court. ... [W]hatever the intention of the parties, [the provisions] can only be seen as expressions of comfort as between the parties to the contract, as to what they each then expected or hoped would be the course of future events. No doubt these provisions ... may reflect some degree of moral commitment by each of the parties to the future courses contemplated, but in no sense can it be accepted that a legally binding obligation to give effect to what is contemplated by the [provisions] was intended, or achieved as a matter of contract.[4]

6 On this view, cl 11.4(a) did not impose any enforceable legal obligation on the State. Nettle JA would, however, read down the clause so as to impose on the State an enforceable obligation 'to do whatever it can lawfully and effectively do' to procure the necessary legislative amendments. In his Honour's view, it would be contrary to the public interest to refuse the appellant a remedy in damages for the State's failure to procure those amendments.

7 In my respectful opinion, to treat cl 11.4(a) as giving the appellant a right to damages for breach would be to produce by other means the very result which was (impermissibly) promised by cl 11.4(b). Clause 11.4(b) was of course directed at the eventuality now under consideration, namely, that the State failed to secure amendments which achieved the specified tax result for the appellant. In that event, so the clause provided, the State would compensate the appellant for the amount of additional land tax payable in consequence of the failure to secure the necessary amendments.

8 For the Court to enforce cl 11.4(a) in an action for damages would simply be to substitute one form of contractual remedy for another. That is, in place of the express indemnity given in cl 11.4(b) there would be an entitlement to common law damages in the same amount.[5] As Dixon J made clear in Thomson's case,[6] if what is sought to be enforced is in substance a liability to repay tax paid, the precise legal character of that liability is immaterial:

The imposition of a tax necessarily involves an intention that when levied it shall not become repayable. Any liability ex contractu to repay it in substance, whether as damages, indemnity or recoupment, must be dissolved by force of the statute.[7]

9 It follows, in my view, that cl 11.4(a) could no more give the appellant a right to damages than cl 11.4(b) could give the appellant a right of indemnity or recoupment. Either way, what would be imposed on the State is, in substance, a liability ex contractu to repay the amount of additional tax paid. (I am conscious that this conclusion runs contrary to the view expressed by Gavan Duffy CJ, Starke and Evatt JJ in Perpetual Trustee Co (Ltd) v The Federal Commissioner of Taxation,[8] on which the appellant relied. That view must, I think, be seen as having been overtaken by the subsequent decisions, to which Buchanan JA refers and, in particular by the analysis of Dixon J in Thomson's case.)

10 For completeness, I should mention the appellant's submission that what informed, and confined, the decision in Thomson's case was that the relevant taxing

legislation was enacted subsequently to the giving of the promise of immunity from tax. It was said to be a distinguishing feature of the present case that the taxing legislation was already in force when the purported promises in cl 11 were made.

11 In my opinion, nothing turns on the temporal relationship between the taxing statute and the purported contractual promise. The dicta of Rich J in Magrath v The Commonwealth,[9] Dixon J in Thomson's case and Windeyer J in Placer Development Ltd v The Commonwealth[10] are all expressed quite generally. For example, Rich J says that 'no promise of the Executive, past, present or future, can absolve the bondholder ...'[11]

12 The fundamental proposition is that the Executive cannot by contract promise to compensate a taxpayer in respect of a liability to tax imposed by statute. This contractual incapacity must operate with equal force whether the purported promise relates to a tax liability already in existence or, as in Thomson's case, to taxes 'now or at any time hereafter imposed'. The same incapacity must likewise exist in a case such as the present, where there is a failed attempt to have Parliament alter the law so as to confer the promised tax relief. Just as in Thomson's case a subsequent change in the law could not render the Commonwealth liable in damages for breach of contract, so here a subsequent failure to change the law could not expose the State to such liability.

13 The principal question in this proceeding is whether an agreement by the executive government to refund to a landowner the amount of land tax payable by the landowner is unenforceable as an unlawful dispensation from the obligations

14 By an agreement in writing dated 15 February 1996 ('the agreement') the Port of Portland Authority ('the Authority'), which administered the Port of Portland ('the port'), agreed to sell to two corporations the assets and business of the Authority for the sum of $30 million. The appellant was nominated by the corporations to be the purchaser and now stands in their shoes for all purposes under the agreement. The respondent was a party to the agreement and liable to carry out the Authority's obligations.

15 Among the assets acquired by the appellant under the agreement were a number of parcels of land in and in the vicinity of the port, amounting in all to some 115 hectares. Nearly half the land was leased to others.

16 A section of the agreement entitled 'Adjustments' provided the means by which the price was to be adjusted to reflect the respective responsibilities of the vendor and the purchaser for periodic and other outgoings. A clause in this section provided:

11.4 Land Tax

(a) The State has agreed with the Purchaser that it will effect an amendment to statutes governing the assessment and imposition of land tax to ensure that the unimproved site value used as the basis for assessment of land tax liability for the Real Property excludes the value of buildings, breakwaters, berths, wharfs, aprons, canals or associated works relating to a port.

(b) In the event that, before or after Completion the relevant statutory amendments do not become law and, as a result of that the Purchaser is assessed to land tax on the Real Property at a rate higher than would have been the case if the relevant statutory amendments were law, the State will refund or allow to the Purchaser the difference between the two amounts.

The 'Real Property' was the land sold to the appellant. I shall call the buildings, breakwaters, berths, wharfs, aprons, canals and associated works referred to in the clause 'the port improvements'.

17 At the date of the agreement, the Land Tax Act 1958 (Vic) provided that tax was to be levied on the unimproved value of land. Section 3(2) of that Act provided that the unimproved value of land was an amount equal to the site value of the land as defined in the Valuation of Land Act 1960 (Vic) ('the Act').

18 Section 2(1) of the Act defined the term 'site value' to mean the market value of land 'assuming that the improvements (if any) had not been made.' The same section defined 'improvements' as work or materials which increased the value of the land but did not include certain types of work, such as the removal of vegetation.

19 On 25 June 1996 the Royal Assent was given to the State Taxation (Omnibus Amendment) Act 1996 (Vic). Section 27 of that Act was intended to carry out the respondent's obligations in cl 11.4 of the agreement. The section provided:

(1) In section 2(1) of the Valuation of Land Act 1960, the definition of "improvements", for "that does not include" substitute "but, except as provided in sub-section (2AA) does not include".

(2) After section 2(2) of the Valuation of Land Act 1960 insert -

"(2AA) Works relating to a port, being buildings, breakwaters, berths, wharves, aprons, canals or associated works are improvements within the meaning of this Act."

20 As it stood immediately before the amendments were made, s 2(1) did not appear to include works such as the port improvements in the improvements which were not to be taken into account in valuing land. The amendments were designed to ensure that the port improvements were excluded in valuing land.

21 The appellant was assessed for and paid land tax for the years from 1997 to 2001. In 2002 the appellant instituted proceedings against the respondent alleging that it had paid land tax which had been assessed on the basis of the site value which included the value of the port improvements and that this constituted a breach of the respondent's obligations under cl 11.4 of the agreement. At trial the appellant did not seek to specifically enforce the promise contained in cl 11.4(a), but claimed that it constituted a guarantee by the State. If the guaranteed result did not ensue, cl 11.4(b) provided a remedy.

22 Accordingly, the appellant claimed that the respondent was indebted to the appellant in an amount representing the difference between the tax it paid and the tax that would have been payable if the tax had been based upon the unimproved value of the appellant's land excluding the value of the port improvements. Alternatively, the same sum was claimed as damages for breach of the agreement.

23 The stance adopted by the respondent was to contend that cl 11.4 was ultra vires, void and unenforceable. In the alternative, the respondent contended that its only obligation under cl 11.4 was to procure legislative amendments that altered the definition of site value to exclude the value of port improvements and the amendments made in 1996 satisfied that obligation.

24 The trial judge held that the clause was unenforceable because '[t]he State cannot validly promise to release a person from taxes imposed by Parliament without Parliamentary approval' and '[a] promise by the State to return to the taxpayer tax duly payable and collected or an equivalent sum is equally unenforceable.'[12]

25 This conclusion was based upon statements made by Rich J in Magrath v The Commonwealth,[13] Dixon J in Perpetual Executors and Trustees Association of Australia Ltd v Federal Commissioner of Taxation[14] (Thomson's case) and Windeyer J in Placer Development Ltd v The Commonwealth.[15]

26 The first two cases concerned bonds issued in the United States by the Commonwealth. It was a term of the bonds that interest payments would be made without deduction for any present or future Australian taxes.

27 In Magrath v The Commonwealth, the taxpayer, a resident of New South Wales, was assessed to income tax on the interest. When the bonds were issued, there was no Commonwealth act in force which imposed any income tax on the income derived by a taxpayer, who was a resident of Australia, from sources outside the country. Subsequently, the Income Tax Assessment Act 1922 (Cth) was amended to levy income tax upon the income derived by a taxpayer resident in Australia from all sources, whether in the country or elsewhere. Two questions were submitted in a case stated. The first was whether by the bonds the Commonwealth promised the bond holder that the interest would not form part of his assessable income for the purposes of federal income tax. The second question, which arose if the first question was answered affirmatively, was whether the taxpayer could recover damages from the Commonwealth for breach of the contract constituted by the bonds.

28 A majority of the Court, Rich, McTiernan and Williams JJ, held that on the proper construction of the bonds the Commonwealth had agreed that the interest from the bonds would not be subject to Australian taxation.

29 It was not necessary for the Court to answer the second question, for the Commonwealth agreed not to recover the tax if the court held that by the bonds it had promised it would not levy tax. Of the majority, Rich J alone stated his opinion as to whether the Commonwealth was liable to bondholders who were assessed to taxation. He said:

The Executive Government has no more dispensing power in relation to Commonwealth legislation than had James II in relation to English legislation. It cannot, without legislative authority, exempt, a bondholder, or anybody else, from obligations imposed by existing legislation, much less can it tie the hands of future Parliaments. Any attempt to do so is necessarily void, and can create no legal rights. If, therefore, an Act is passed imposing a tax on bond interest notwithstanding the warranty, a legal obligation to pay is created, and from this obligation no promise of the Executive, past, present or future, can absolve the bond holder, although it may not be possible to enforce it if the bond holder is not within the reach of the Commonwealth. The Commonwealth, by its legislature, can, without any breach of the law, repudiate promises given by its Executive Government. It follows that an action brought in Australia against the Commonwealth to recover tax lawfully imposed but operating in derogation of an executive warranty must fail, because the warranty could not lawfully be given. To allow such an action would be enabling the Executive to fetter the legislative power of Parliament.[16]

30 As a result of the outcome in Magrath v The Commonwealth, the Commonwealth reimbursed income tax to the deceased estate of another bond holder. The deceased had included in her returns made under the Income Tax Assessment Act 1936 (Cth) the amounts of bond interest received between 1939 and 1943. The issue in Thomson's case[17] was whether the repayments of tax formed part of the estate for estate duty purposes. The Commission of Taxation assessed the amount paid as a 'right of action' belonging to the deceased person for 'recovery of unliquidated damages'. A majority of the Court, Latham CJ, Dixon and McTiernan JJ, held that the payments did not form part of the estate because they were made ex gratia and not pursuant to any legal obligation.

31 Latham CJ, with whom McTiernan J agreed, held that, by subjecting the bond interest to tax, the Income Tax Assessment Act 1936 (Cth) discharged the contract by rendering its performance impossible. Similarly, Dixon J said:

[A] subsequent Act of Parliament inconsistent with the immunity promised would operate as a paramount law destroying the obligation of the promise. Neither the passing of such an Act nor the doing of anything under it which it authorised, as for instance the levying of a tax, could amount to an actionable breach of contract ... [T]he change in the law could not amount to a breach of contract for which the Commonwealth would be liable in damages or otherwise. A statute destroys all contracts which stand in the way of its operation.

The imposition of a tax necessarily involves an intention that when levied it should not become repayable. Any liability ex contractu to repay it in substance, whether as damages, indemnity or recoupment, must be dissolved by force of the statute.[18]

32 Placer Development Ltd v The Commonwealth[19] concerned an agreement between the Commonwealth and the plaintiff company which provided:

If customs duty is paid upon the importation into Australia for plywood, veneers, logs and other products of [the company which was to be formed by the contracting company], and is not remitted, the Commonwealth will pay to the [company] a subsidy upon the exportation of these products from the Territory for entry into Australia at an amount or at a rate determined by the Commonwealth from time to time, but the amount of subsidy paid shall not exceed the amount of customs duty paid and not remitted.

In an action in the High Court brought by the company, a special case was stated to the Full Court to determine whether the Commonwealth was obliged to grant a subsidy which recouped the company all the duty it had paid.

33 The majority of the Court held that the agreement carried no implication that at least a reasonable subsidy would be paid. The Commonwealth promised to pay such subsidy, if any, as it might decide upon. It therefore created no contractual obligation.

34 Windeyer J prefaced his dissenting opinion by referring to an Act of the Commonwealth Parliament which approved the agreement. He said:

If it were not for the statutory backing of the Agreement, I would greatly doubt whether the Commonwealth would have been justified in reimbursing the company in this way. I do not think that the government could, without statutory authority, validly promise a person that he would be released from any taxes or duties levied by Parliament. Whether the dispensation was to be by not collecting the tax or by returning to the taxpayer the amount collected the promise would, I think, be equally improper in a constitutional sense. ... However, Parliament by its approval of the Agreement, has prevented any doubts arising on that score.[20]

35 In the present case, counsel for the appellant submitted that the dicta relied upon by the trial judge did not compel the result that cl 11.4 of the agreement was unconstitutional. The general statements of Rich J and Windeyer J were obiter. Dixon J's decision was based upon the enactment of a statute overriding a prior contract.

36 To meet the dicta of Rich, Dixon and Windeyer JJ, counsel for the appellant relied upon the decision in The Eastern Extension, Australasia and China Telegraph Company Ltd v Federal Commissioner of Taxation. [21] He submitted that the decision was binding on this Court.

37 The case concerned an agreement made in 1900 between three colonial Australian governments and a company to install and operate telegraphic equipment. The agreement contained a promise by the governments to repay to the company amounts sufficient to recoup certain taxes which the company should be required to pay. At Federation, the Commonwealth succeeded to the rights and obligations of the former colonial governments under the agreement. The Commonwealth levied land tax on the company and the company sought an exemption by relying upon the agreement.

38 A majority of the Court, Knox CJ, Gavan, Duffy and Starke JJ, held that the agreement did not exempt the company from land tax, that is, free the company from any statutory obligation to pay the tax. Rather, the agreement was held to require repayment of the amounts paid by the company as taxes. Their Honours said:

But, when the agreement is critically examined, we do not find any exemption from land taxation, but an agreement to repay such sums as will be sufficient to recoup the Company any taxes which it shall be required to pay. The agreement is based upon the existence of a power to tax, and in no wise exempts or attempts to exempt the Company from taxation imposed in pursuance of such a power. It is argued for the appellant that this view only leads to a multiplicity of actions. The Company will pay land tax to the Commonwealth, and then claim it over against the State, or against the Commonwealth if the obligation passes both force of sec. 85 sub-sec. IV, of the Constitution. The Court cannot, however, affirm that the Company is not liable to be assessed to land tax as an owner of land, because of some rights in personam which it may have against the Governments of South Australia or the Commonwealth.[22]

Isaacs and Rich JJ held that the doctrine of circuity of action applied, which precluded a declaration that the company was liable to pay to the government money which the government would be under an immediate obligation to repay if the company's contention was correct.

39 As counsel for the respondent pointed out, the validity of the agreement was not in issue in The Eastern Extension case. The Court assumed that the agreement was valid. The majority in The Eastern Extension case disposed of the claim for exemption by construing the agreement as a promise to reimburse any tax paid by the company. It did not follow that the promise was enforceable.

40 In Thomson's case,[23] Latham CJ also drew a distinction between a promise to exempt from taxation and a promise to repay to a taxpayer an amount equivalent to tax paid by the taxpayer. The Commissioner contended that the Commonwealth was contractually bound to pay to the deceased the amount of any tax levied in respect of the bond interest. Latham CJ said:

The answer to this contention is to be found in the answer given to the first question in Magrath's Case. The contract was not a contract to recoup tax paid.[24]

His Honour referred to the distinction made in The Eastern Extension case. Like the propositions advanced by the majority in The Eastern Extension case, this statement was made in order to dispose of a particular argument and was not intended to draw a distinction between an invalid exemption from tax and a valid promise to repay an amount of tax levied on a taxpayer.

41 Rich J's reference in Magrath v The Commonwealth to James II's attempt to dispense with legislation points to the Bill of Rights[25] being the source of the principle his Honour stated. The Bill of Rights declared:

That the pretended power of dispensing with laws or the execution of laws by regall authoritie as it hath beene assumed and exercised of late is illegall.

The 'pretended power of dispensing with laws ... exercised of late' consisted of issuing dispensations from statutes barring Catholics from public office.[26] A separate provision in the Bill of Rights declared:

That levying money for or to the use of the Crowne by pretence of prerogative without grant of Parlyament for longer time or in other manner then the same is or shall be granted is illegall.

42 Counsel for the appellant submitted that the judicial statements condemning as invalid the repayment of tax by the executive improperly conflated the prohibition on dispensations and the conferring of an exclusive power upon Parliament to levy taxes. Counsel also contended that 'no special vigilance' was required in applying the prohibition on dispensations to taxation legislation, as distinct from (for example) its application to the criminal law.[27] In my opinion statutes imposing taxation stand in no special category for this purpose. If an act of the executive is properly characterised as a dispensation from a law levying taxation, it suffers the same fate as dispensations from other laws.

43 I am also of the opinion that cl 11.4(b) of the agreement did operate as a dispensation from the obligation to pay land tax. I think that drawing a distinction between unlawfully exempting a person from an obligation to pay tax on the one hand and validly promising to repay to a tax payer the amount paid in tax on the other hand elevates form over substance.[28] The result is the same in both cases. In one case the liability to pay tax does not arise; in the other case it attaches to the taxpayer but is assumed by the State. I acknowledge that the executive might have calculated the purchase price in the agreement by notionally deducting the present value of future obligations to pay land tax. Setting the price in this way, however, would leave the land tax regime to operate in the manner contemplated by the legislation.

44 The appellant contended that only literal dispensations from the law were historically contemplated as within the scope of the dispensing power and its subsequent prohibition. The appellant referred to examples given in Thomas v Sorrell.[29] The Court in that case, however, was prepared to construe both laws and dispensations by reference to their literal and practical effect. For example, in discussing a law imposing a tax or a fine and considering whether both would be a law for the King's inheritance, the Court recognised that 'The laws were the same in effect, either way penn'd, and consequently the forfeiture of five pounds given, as the Acts stand penn'd, is equally the King's inheritance, as if it had been given by way of duty'. I do not think the case supports the appellant's contention that only literal dispensations were within the contemplation of the prohibition. It has long been a basic rule of constitutional law that limitations on government power are not to be circumvented by draftmanship. Thus the High Court has said, in relation to federal legislative power:

When a constitutional limitation or restriction on power is relied on to validate a law, the effect of the law in and upon the facts and circumstances to which it relates - its practical operation - must be examined as well as its terms in order to ensure that the limitation or restriction is not circumvented by mere drafting devices.[30]

45 This Court should follow the considered dicta of Rich, Dixon and Windeyer JJ.[31] For the reasons I have stated I do not consider that there is any authority to the contrary. Clause 11.4(b) of the agreement does constitute an effective dispensation from the land tax legislation and accordingly is invalid.

46 The appellant submitted that the agreement should not be construed as conferring an impermissible dispensation from a statute unless the language of the agreement was 'intractable'. Counsel for the appellant relied upon L'Huillier v Victoria.[32] In that case it was contended that an agreement was void because it was an impermissible fetter on the exercise of a public law discretion. The Court of Appeal held that a contractual provision to the effect that the repository of a public law discretion would, at a future time, exercise the discretion in a particular way was void if, and only if, on its true construction it meant the repository would exercise the discretion in that way in any event, even if in breach of the duty to exercise the discretion according to law. It was held that that was so unlikely that the provision was not to be construed that way unless its language was intractable. In the present case the agreement clearly contains a promise of reimbursement of tax. The construction of the agreement is not in doubt. The question is whether the promise of reimbursement constitutes an unlawful dispensation from a statute.

Whether the agreement was authorised by Parliament

47 The appellant sought to meet the defence of constitutional invalidity by contending that the agreement was authorised by s 4A of the Port of Portland Authority Act 1958 (Vic), a provision enacted in anticipation of the privatisation of the port, and thereby it secured 'for the executive government Parliamentary approval of the transaction'.[33]

48 The section provided, so far as is presently relevant:

(1) In addition to its other powers under this Act, the Authority must (if directed in writing to do so by the Treasurer after consultation with the Minister) sell, assign, transfer or otherwise dispose of any part of its assets, liabilities, undertaking or business to any person or body specified in the written direction, at the price specified in the written direction and subject to and in accordance with the other conditions (if any) specified in the written direction.

...

(3) No stamp duty or other tax is chargeable under any Act in respect of anything done under sub-section (1) at the direction of the Treasurer or in respect of any act or transaction connected with or necessary to be done by reason of sub-section (1) or by way of compliance with the direction, including a transaction entered into or an instrument made, executed, lodged or given for the purpose of, or connected with, the transfer of property to, or the creation of an interest in or in favour of, a purchaser or transferee.

On 14 February 1996 the Treasurer made a direction annexing a final draft of the agreement.

49 Counsel for the appellant submitted that explicit Parliamentary approval[34] was unnecessary if a mechanism of the kind created by s 4A(1) was employed. He relied upon the decision of the Full Court in City of Camberwell v Camberwell Shopping Centre Pty Ltd.[35] A municipal council entered into an agreement with a developer for the redevelopment of land. It involved the sale of certain land by the developer to the council, the leasing of land by the council to the developer and the redevelopment of that land into a shopping centre by the developer. The agreement was challenged as being beyond the powers of the council. The Full Court held that the agreement was authorised by ss 811G and 811J of the Local Government Act 1958 (Vic). The first section authorised a council with the approval of the Minister and the Treasurer to 'undertake or assist in any activity, business or enterprise to promote the economic development of or tourism or employment within the Municipality'. The agreement was approved by the Minister for Local Government and the Treasurer. The second section authorised a council to 'enter into an agreement with any other ... person'.

50 Counsel for the appellant submitted that City of Camberwell v Camberwell Shopping Centre Pty Ltd was on all fours with the present case. I do not agree. The Local Government Act 1958 (Vic) contained authorisations of general activities in broad terms. The Court held that the agreement in general was authorised by those provisions and that particular clauses, which were usual in contracts of this kind, were also authorised. Section 4A(1), on the other hand, authorised the sale of assets in accordance with a direction by the Treasurer. In my opinion s 4A(1) could only authorise the Treasurer to specify terms of an agreement of sale between the Authority and a purchaser. It did not authorise the Treasurer to undertake to the purchaser to reimburse taxes levied by Parliament.

51 In Thomson's case[36] the bonds were issued pursuant to a provision in the Loan Securities Act 1919 (Cth), which provided that the Governor-General could authorise the Treasurer to borrow money 'on such terms and conditions' and issue 'securities in such form as the Governor-General approves'. The Governor-General approved the issue of bearer bonds containing a promise to pay principal and interest in New York without any deduction for any taxes imposed by Australian taxation authorities. It was argued that because the Governor-General approved the form in which the bonds were issued, the contract was authorised by the Act. Dixon J rejected that construction, holding that the section did not warrant 'a term or condition promising immunity from a present or future act of Parliament'. The fact that the Governor-General authorised the bonds and their terms did not mean that the terms of the bonds were authorised by statute. He said:

The exemption claimed is not contained in a statute. So far as the principle rests upon the conception that the legislature ought not to be taken to intend to repeal or vary a prior particular statute by the use of general words this case lies outside it. The exemption depends entirely on the contract. The Loans Securities Act is not one which contemplates the grant of exemptions from existing taxation laws, still less from future taxation laws.[37]

52 In the same way, there is nothing in s 4A of the Port of Portland Authority Act 1958 (Vic) which contemplates the grant of exemptions from tax laws. It could hardly be said that cl 11.4 was a clause usually found in sale of business agreements, even sales by government authorities. Section 4A(3) took the matter no further. The sub-section was directed to taxes upon the transaction of sale, not taxes payable by the purchaser after completion of the sale.

53 Section 4A required the Authority to sell its business in accordance with the Treasurer's directions. For the most part, the obligations in the agreement on the vendor's side were undertaken by the Authority. In cl 11.4, on the other hand, the obligation was assumed by the State. I do not consider that s 4A authorised the State, independently of the Authority as vendor, to make a promise to the purchaser, albeit a promise connected with the sale of the Authority's business.

54 The appellant relied upon s 17E(1) of the Port of Portland Authority Act (1958) (Vic), which empowered the Treasurer to exercise any power of the Authority with respect to the sale of the Authority's assets. In my view, the guarantee contained in cl 11.4 was not, and did not purport to be, an exercise of the power of the Authority.

Claim for damages for breach of clause 11.4(a)

55 It was submitted on behalf of the appellant that if cl 11.4(b) was not enforceable, the appellant was entitled to damages for breach of the separate promise contained in cl 11.4(a).

56 Counsel for the appellant relied upon cases in the United States[38] and Canada[39] in which like provisions had been enforced in this fashion. Counsel also cited a statement by Mason J in Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth.[40] Referring to cases involving a contract to which the government was a party but which related to the grant of a licence or privilege which depended upon the exercise of a statutory discretion by an officer who was not a party to the contract, his Honour said:

In these cases at least it has been suggested that the free and unfettered exercise of the discretion is sufficiently preserved if the validity of the contract is upheld, provided that it is enforceable only by way of action for damages and not by order or injunction. Such an outcome, it is said, would work a reasonable compromise between the desirability of recognising the binding nature of contracts and the need to preserve the free and unfettered exercise of the discretion.[41]

57 The statement by Mason J was made in the context of cases of executive necessity, dealing with contractual provisions purporting to limit the exercise of an executive or statutory discretion. Such a fetter is not necessarily void.[42] In the United States a statute relieving a party from an obligation to perform a contract may give rise to a claim for damages. In Australia the position is otherwise. In Thomson's case[43] Dixon J said:

[T]he change in the law could not amount to a breach of contract for which the Commonwealth would be liable in damages or otherwise. A statute destroys all contracts which stand in the way of its operation.[44]

58 The appellant's position depends upon cl 11.4(a) being unenforceable only in the sense that it was a valid obligation binding upon the executive but one in respect of which equity would not grant specific relief.[45] In my view cl 11.4(a) was altogether void as one infringing the principle of the primacy of Parliament. The land tax legislation is not to be undermined by granting compensation to tax payers. Accordingly, in my view, the appellant is not to be placed in the same position as if the invalid contractual obligation had been performed.

59 Holding that cl 11.4 of the agreement was unenforceable was sufficient to dispose of the proceeding. Nevertheless, his Honour went on to decide the question whether, if the clause was enforceable, the amendments made to the Act in 1996 satisfied the requirements of cl 11.4(a), that is, whether the amendments ensured that the unimproved site value of the appellant's land used to assess land tax excluded the port improvements.

60 The question depends upon the legislative regime governing the valuation of land and the assessment of land tax and events concerning valuation and assessment of land tax in respect of the land acquired by the appellant under the agreement occurring after the date of the agreement.

61 As I have said, land tax is levied on the site value of land in accordance with the provisions of the Act. The site value of the land may also be used by local councils in determining council rates and charges. The appellant's land was situated in the municipal district of the Shire of Glenelg ('the Shire'). The Shire was required by the Commissioner of Land Tax to compute the rateable value of the land in its municipality according to the site value of the land.

62 Section 13DC of the Act required councils to make a general valuation for rating purposes. Before 1998, councils outside Melbourne were required to carry out general valuations every six years. The Shire had carried out a general valuation as at 30 June 1993. The general valuation included site values for the tenanted properties sold by the Authority to the appellant but the Shire had not valued the land occupied by the Authority itself because that land was not rateable before its purchase by the appellant.

63 Section 13DF of the Act provided for the making of supplementary valuations. The section provided, so far as is presently relevant:

(1) Despite anything in this or any other Act [a valuer] may carry out a supplementary valuation for the purposes of the Local Government Act 1989.

(2) A supplementary valuation may be made in any of the following circumstances:

(a) If any land which should be included in the valuation then enforced is not included;

...

(e) If any land has become rateable since the return of the existing valuation;

...

(n) if for any reason other than a reason referred to in any of paragraphs (a) to (m), the capital improved value, net annual value or site value -

(i) of any land specified by Order of the Governor in Council published in the Government Gazette; or

(ii) of the land in any area specified by Order of Governor in Council published in the Government Gazette -

is or is likely to have been materially altered as a consequence of any Act, proclamation, Order in Council, regulation, by-law or local law ...

(3) Any supplementary valuation when returned must be treated as part of the valuation in force and has the effect of cancelling anything it contained in the existing valuation which is not consistent with the supplementary valuation.

...

(6) The valuer in making a supplementary valuation must -

(a) have regard to the general levels of value upon which the valuation in force within the municipal district or ward was based; and

(b) assess the value of the land to which the supplementary valuation applies would have had if at the time at which the last valuation of municipal district or ward is made it had been in the condition in which it is at the time of the making of the supplementary valuation, having regard to every circumstance which affects the value of the land at the time of the making of the supplementary valuation, if it is a circumstance requiring the making of a supplementary valuation of land under sub-s (2).

64 On 7 March 1997 a valuer appointed by the Shire made a supplementary valuation of the land acquired by the appellant other than the tenanted land. The capital improved value of the land was set at $18,284,800 and the site value at $2,050,500. The appellant did not object to the amount of the site value.

65 On 22 August 1997 the appellant received a 1997 land tax assessment notice in an amount of $2,406.38. By letter, the appellant objected that some of the land appeared to be incorrectly described and some of the 'items taxed may be exempt from land tax liability'. On 17 February 1998 the appellant received an amended 1997 land tax assessment notice increasing the land tax to $24,569.58 as a result of the inclusion of some properties omitted from the previous assessment. The appellant again formally objected to the assessment and reiterated that several areas of land may be 'exempt' from land tax liability.

66 On 14 April 1998 the State Revenue Office wrote to the appellant disputing the appellant's contention that the amendments to the Act provided an exemption from land tax. The State Revenue Office position was that the amendments merely directed a valuer to disregard certain improvements when determining the site value of the land. As the issue related to valuation, the State Revenue Office did not propose to further consider the appellant's objection.[46]

67 On 24 April 1998 a land tax assessment notice was issued to the plaintiff in an amount of $15,638.83 based upon a site value of $1,371,230.

68 In September 1999 the appellant received advice from its solicitors that any objection to the site value assessment of the appellant's land should have been addressed to the municipality at the time rate notices were issued. By letter dated 24 February 2000 to the State Revenue Office, the appellant stated that as no objection to the Shire's valuation was lodged, the valuation must stand for 1998 and 1999 land tax assessments and accordingly the appellant would pay the amount of the assessments.

69 In April 2000 the appellant received from the State Revenue Office drafts of 1997, 1998 and 1999 land tax assessments in the sums of $155,516.73, $130,222.73 and $150,262.90 respectively based upon unimproved values of approximately $4,500,000. On 10 July 2000 the appellant received an amended 1998 land tax assessment notice and a 1999 land tax assessment notice in amounts which did not differ significantly from the drafts earlier forwarded. The plaintiff objected to the assessments; the objections were disallowed. The assessments of land tax in the years before 2000 had been relatively modest.

70 In 2000 the valuer appointed by the Shire valued the land of the appellant as at 1 January 2000. The appellant lodged objections to the site values and as a result the values were reduced from $5,557,600 to $1,150,000.

71 In 2001 the appellant initiated correspondence with the Treasurer in relation to land tax paid from the date of the agreement to the time when the amended site values came into force as a result of the 2000 general valuation. The Treasurer maintained that the obligations of the respondent under the agreement had been fulfilled. In response, the appellant instituted the proceeding.

72 The trial judge held that the amendments to the Act made in 1996 did not satisfy the obligation contained in cl 11.4(a) in that until the impact of the 2000 general valuation was felt in 2002 by the making of assessments based on the valuation, the tenanted properties were assessed for land tax on a basis that included the value of the port improvements. His Honour held that the supplementary valuation should have been made by taking the amendments into account. If that was not done, it was the result of error on the part of the valuer, which could have been challenged by objecting to the valuation. It was not a result of any shortcoming in the amendments.

74 The appellant contended that it was not until 2002 that it received a land tax assessment which took account of the provisions of s 2(2AA) of the Act. That was a consequence of the provisions of the Act. The unimproved value of land was the site value of the land according to the last general valuation of the land returned before 1 January of the year before the year of taxation or a supplementary valuation returned before 1 January of the year of taxation.[47] A supplementary valuation valued the land as at the return date of the last general valuation adjusted only for the effect of the event which has triggered the supplementary valuation.[48] There was no right of appeal against a land tax assessment on the basis that the unimproved value of the land was too high.[49] A tax payer who wished to object to a land tax assessment on the basis that the unimproved value was too high was required to object to the relevant valuation under the Act within two months of the notice of the valuation.[50] According to the appellant, it followed that there was no amendment to the legislation which ensured that land tax assessments between 1997 and 2002 were based on a site value which excluded the value of the port improvements.

75 The legislative regime I have described shows that his Honour erred in assuming that in making a supplementary valuation after the making of the amendments to the Act, the valuer was required to apply the amendments and exclude the value of the port improvements. The concluding words of s 13DF(6) provided that the valuer was to have regard to 'every circumstance which affects the value of the land at the time of the making of the supplementary valuation, if it is a circumstance requiring the making of a supplementary valuation'. A change in the Act was not such a circumstance.[51] The respondent submitted that s 13DF(2) did not contain an exhaustive list of the circumstances in which a supplementary valuation could be made. In my view the word 'may' in the sub-section denotes a discretion to conduct a supplementary valuation if a circumstance listed in the sub-section occurs. It does not leave at large the circumstances in which a supplementary valuation may be conducted.

76 The respondent, on the other hand, contended pursuant to a notice of contention that the 1996 amendments did ensure that the unimproved value of the appellant land used as the basis for the assessment of land tax did not take into account the port improvements. It was submitted that the appellant had the opportunity to review any valuation of site value which failed to take into account s 2(2AA) of the Act from 25 June 1996, when the section came into effect, and could have done so upon the receipt or any notice of assessment.

77 In practical terms, the modest amounts assessed for land tax in the notices received by the appellant between 1997 and 2000 appear to have induced the appellant to believe that port improvements had not been taken into account. In any event, an objection to the site valuations made before the amendments on the basis that they failed to take into account s 2(2AA) of the Act would have been bound to fail until the general valuation was made in 2000. If it had attacked the value of land stated in a rate notice or land tax assessment, the appellant would have been driven back to the last valuation. The Act does not contemplate an entitlement to have a new valuation made each time a rate notice or land tax assessment is issued. An attack can only be made upon the valuation on which the notice or assessment is based.

78 Although I am of the opinion that the obligation created by cl 11.4(a) was not satisfied by the making of the supplementary valuation, the appeal must fail because the obligation contained in the clause was not enforceable.

79 One issue remains. When the trial judge published his reasons for judgment, the parties made applications for orders for costs. The respondent contended that costs should follow the event. The appellant contended that as the respondent had only prevailed on the basis of a plea contained in an amendment to its defence made on 2 August 2007, after the commencement of the trial, the respondent should pay the appellant's costs until 2 August 2007 and the appellant should pay the respondent's costs thereafter.

80 The trial judge made no order as to the costs prior to 1 June 2006 and ordered that the appellant pay the respondent's costs as between party and party after that date.

81 The fact that no order was made for the costs before 1 June 2006 was due to the fact that the respondent succeeded on a point raised for the first time at trial. The fact that the respondent's costs between 1 June 2006 and the date of the amendment to the defence were ordered to be paid by the appellant was due to an offer made by the respondent by letter dated 17 May 2006 to bear its own costs other than costs already incurred in its favour if the proceedings were discontinued. His Honour said:

I do not think that the Calderbank letter can give rise to any order in relation to indemnity costs but I think it ought to be taken into account in that the defendant has clearly achieved a result much more favourable than that which it was proposing in that letter.

82 The appellant seeks leave to appeal against the order for costs.[52] It is submitted that the exercise of his Honour's discretion miscarried in that he took into

account an irrelevant consideration, namely, the letter dated 17 May 2006, and gave insufficient weight to the fact that the only defence on which the respondent wholly succeeded at trial was not pleaded until the hearing.

83 The contention that the letter dated 17 May 2006 was irrelevant was based upon the fact that it failed to refer to the only defence which succeeded. I do not think that it follows that the appellant was justified in wholly ignoring the letter or that the trial judge was required to ignore it. In considering the strength of its case, the appellant was not limited to the matters set out in the letter. On the other hand, the failure of the respondent to rely upon the invalidity of cl 11.4 was relevant in weighing the effect of the letter. In my opinion, in adopting the middle course of refusing to award solicitor and client or indemnity costs while taking the letter into account in determining the liability for party and party costs his Honour did not exercise his discretion according to a wrong principle or on a manifestly erroneous view of the facts.[53] The trial judge did take into account that the respondent was dilatory in pleading the only successful defence.

84 In my opinion the appellant has not established a legal error attending the exercise of the trial judge's discretion as to costs. I would refuse leave to appeal against the order for costs.

85 I have had the considerable advantage of reading in draft the reasons for judgment of Buchanan JA and gratefully adopt his Honour's statement of the facts and relevant authorities. I have come to a different view, however, as to the constitutionality of clause 11.4 of the agreement of 15 February 1996 ('the Agreement').

86 To begin with, although clause 11.4(a) of the Agreement was expressed in absolute terms, I consider that it should be construed as an obligation to do no more

than the respondent could lawfully and effectively do to procure the sort of amendment to legislation to which the clause refers.[54]

87 Next, although, as Buchanan JA explains, the State cannot without legislative authority exempt a subject from obligations imposed by existing legislation or tie the hands of a future Parliament,[55] I see no reason in principle and we were not referred to any authority which holds that the State cannot, as part of a bona fide commercial arrangement like the sale of public infrastructure comprised in the Agreement, covenant to do whatever it can lawfully and effectively do to procure a specific tax concession pertinent to the sale. To the contrary, in my view, public confidence in government dealings and contracts would be greatly disturbed if such a covenant were held not to be binding to the extent that the State is lawfully and effectively able to perform it.[56]

88 Further, although a covenant which purports to prevent the due exercise of executive discretion may be illegal and therefore void under what is sometimes called the Amphitrite doctrine,[57] such a covenant is not invalid if, upon its proper construction, it can be read as subject to the executive's right not to perform the covenant when and if the executive assesses performance of the covenant to be inconsistent with the proper exercise of discretion.[58]

89 With respect, I agree with Buchanan JA that, upon its proper construction, clause 11.4(b) of the Agreement is a covenant to reimburse tax and that, on the present state of the authorities, the better view is that such a covenant is void.[59] In my view, however, clause 11.4(b) may be severed from the agreement, leaving clause 11.4(a) to operate according to its terms: because severance would affect the extent but not the kind of obligations comprised in clause 11.4(a);[60] and because the obligation to pay provided for in clause 11.4(b) is not an integral element of the obligation to procure legislative amendments provided for in clause 11.4(a).[61]

90 I also agree with Buchanan JA that the amendments which were made to s 2(1) of the Valuation of Land Act 1960 (Vic) by s 27 of the State Taxation (Omnibus Amendment) Act 1996 (Vic) failed to achieve the objective provided for in clause 11.4(a). But so far as appears from the evidence, that was not what the State intended. Rather, the State appears to have been mistaken as to the way in which the Land Tax Act 1958 (Vic) would continue to operate until the 2000 general valuation took effect in 2002.

91 As has been observed, clause 11.4(a) was subject to an implied reservation to the effect that the State was required to do no more than it could lawfully and effectively do to procure the amendments provided for in clause 11.4(a), and thus that the State was not required to procure such amendments if it considered them to be contrary to a proper exercise of executive discretion. It follows that, if the State's failure to procure effective amendments in accordance with clause 11.4(a) had been the result of a positive decision by the State not to procure those amendments, the State would have a defence under the Amphitrite doctrine to the appellant's claim for breach of clause 11.4(a).

92 But there is nothing in the evidence to suggest that the State ever made a positive decision not to implement the amendments provided for in clause 11.4(a). To the contrary, as I have observed, such evidence as there is implies that the State intended to carry out its obligations under clause 11.4(a) but made an error as to the way in which to go about it. And it has not been suggested that the State could not have procured appropriate amendments if it had not made that error.

93 In the circumstances, I consider that the situation here is in point of principle little different to that which was considered by this court in L'Huillier v State of Victoria.[62] From the appellant's point of view, the case is a strong one, because it appears that the State intended to procure the amendments contemplated by clause 11.4(a). Hence, to hold the State accountable for a promise which it seems the State would have performed had it not been mistaken as to what needed to be done, would not hinder the exercise of relevant discretion, significantly or at all.[63] Therefore, the public interest, would not be served by refusing the appellant the relief which it seeks for the State's failure to procure amendments in accordance with clause 11.4(a).

94 Finally, as to the quantum, it appears to me that, if the State had performed its obligations under clause 11.4(a), it is more likely than not that the appellant would have been taxed on its land in each of the years of assessment 1997 to 2001 on the basis that the port improvements were excluded from the value of its land.

95 In the result, I would allow the appeal, set aside the judgment below and in lieu therefore give judgment for the appellant for damages to be assessed on that basis.

[1] [1991] 2 NZLR 323, 328.

[3] [2003] WASCA 288; (2003) 27 WAR 574, 586.

[5] In the statement of claim, these remedies were claimed in the alternative.

[6] Perpetual Executors and Trustees Association of Australia Ltd v Federal Commissioner of Taxation [1948] HCA 24; (1948) 77 CLR 1 ('Thomson's case').

[8] [1932] HCA 19; (1932) 47 CLR 402, 409: '... though if a tax were imposed contrary to the terms of the bonds, a breach of the contractual obligation would arise which would sound in damages equivalent to the amount of the tax.'

[9] [1944] HCA 14; (1944) 69 CLR 156.

[10] [1969] HCA 29; (1969) 121 CLR 353.

[11] Magrath v The Commonwealth [1944] HCA 14; (1944) 69 CLR 156, 170.

[12] Port of Portland Pty Ltd v State of Victoria [2007] VSC 488, [75].

[13] [1944] HCA 14; (1944) 69 CLR 156.

[14] [1948] HCA 24; (1948) 77 CLR 1.

[15] [1969] HCA 29; (1969) 121 CLR 353.

[16] Magrath v The Commonwealth [1944] HCA 14; (1944) 69 CLR 156, 169-70.

[17] [1948] HCA 24; (1948) 77 CLR 1.

[18] [1948] HCA 24; (1948) 77 CLR 1, 28.

[19] [1969] HCA 29; (1969) 121 CLR 353.

[21] [1923] HCA 62; (1923) 33 CLR 426 ('The Eastern Extension case').

[23] [1948] HCA 24; (1948) 77 CLR 1.

[24] Ibid 19. Magrath's Case is a reference to Magrath v The Commonwealth [1944] HCA 14; (1944) 69 CLR 156.

[25] 1 Wm & Mary 11c11. The Bill of Rights applies in Victoria by virtue of s 8 of the Imperial Acts Application Act 1980 (Vic).

[26] FW Maitland, The Constitutional History of England (1908) 302-11.

[27] See, for example, R v D'Arrigo [1994] 1 Qd R 603; R v Stead [1994] 1 Qd R 665.

[28] As does the distinction which the appellant would draw between a promise to pay by reference to an amount of tax paid and a promise to repay a tax.

[29] (1673) Vaugh 330.

[30] Ha & Anor v State of New South Wales & Ors; Walter Hammond & Associates Pty Ltd v State of New South Wales & Ors [1997] HCA 34; (1997) 189 CLR 465, 498 (Brennan CJ, McHugh, Gummow and Kirby JJ).

[31] See Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 81 ALJR 1107, 1139, 1145, 1148.

[32] [1996] VicRp 79; [1996] 2 VR 465.

[33] PJ Magennis Pty Ltd v The Commonwealth [1949] HCA 66; (1949) 80 CLR 382, 410 (Dixon J). An early amendment to the Bill of Rights made all dispensations illegal except 'where allowed by statute', not merely dispensations 'as it hathe beene assumed and exercised of late': 12 & 13 William 111c2.

[34] For example, by annexing the agreement to a statute.

[35] [1994] VicRp 10; [1994] 1 VR 163.

[36] [1948] HCA 24; (1948) 77 CLR 1.

[37] [1948] HCA 24; (1948) 77 CLR 1, 30.

[38] United States v Winstar Corporation [1996] USSC 77; 518 US 839 (1996).

[39] Newfoundland v Wells [1999] 3 SCR 199.

[40] [1977] HCA 71; (1977) 139 CLR 54, 76.

[42] L'Huillier v State of Victoria [1996] VicRp 79; [1996] 2 VR 465.

[43] [1948] HCA 24; (1948) 77 CLR 1.

[45] Cf J C Williamson Ltd v Lukey [1931] HCA 15; (1931) 45 CLR 282.

[46] See s 24A of the Land Tax Act 1958 (Vic_)_.

[49] See s 23A(1) of the Land Tax Act 1958 (Vic).

[50] See s 24A(1) of the Land Tax Act 1958 (Vic) and ss 37(3)(b) and 18(2) of the Act.

[51] See s 13DF(2)(n). No Order of the Governor in Council was made.

[52] Section 17A(1)(b) of the Supreme Court Act 1958 (Vic).

[53] Wightman v Johnston [1995] VicRp 81; [1995] 2 VR 637, 639-40 (Phillips JA).

[54] Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth [1977] HCA 71; (1977) 139 CLR 54, 112 (Aickin J); 61 (Barwick CJ).

[55] Magrath v The Commonwealth [1944] HCA 14; (1944) 69 CLR 156, 169 (Rich J).

[56] Cf Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth [1977] HCA 71; (1977) 139 CLR 54, 74 (Mason J in dissent).

[57] Rederiaktiebolaget Amphitrite v R [1921] 3 KB 500; cf Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth [1977] HCA 71; (1977) 139 CLR 54, 113 (Aickin J).

[58] L'Huillier v State of Victoria [1996] VicRp 79; [1996] 2 VR 465, 481 (Callaway JA) and 485 (Charles JA).

[59] Magrath v The Commonwealth [1944] HCA 14; (1944) 69 CLR 156, 169 (Rich J); Perpetual Executors v Trustees Association of Australia Ltd v Federal Commissioner of Taxation [1948] HCA 24; (1948) 77 CLR 1, 28-9 (Dixon J); Placer Development Ltd v The Commonwealth [1969] HCA 29; (1969) 121 CLR 353, 366 (Windeyer J).

[60] McFarlane v Daniell (1938) 38 SR (NSW) 337, 345 (Jordan CJ); Thomas Brown & Sons Ltd v Fazal Deen [1962] HCA 59; (1962) 108 CLR 391, 411.

[61] Cf North v Marra Developments Ltd [1981] HCA 68; (1981) 148 CLR 42, 60.

[62] [1996] VicRp 79; [1996] 2 VR 465.

[63] Ibid 481 (Callaway JA); 475 (Charles JA).