for Applicant: H.K. Insall instructed by

Messrs Minter Ellison

Counsel and Solicitors D.F. Libling

for Respondent: instructed by Messrs

Abbott, Tout, Creer and Wilkinson

The orders appealed from be set aside, and in lieu thereof the application be dismissed.

The respondent pay the appellant's costs of the appeal and the proceedings below.

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

I have had the advantage of reading in draft form the reasons for judgment of Hill J. I agree with the conclusion expressed by his Honour upon each of the issues argued in the appeal. In some respects those conclusions coincide with the views taken by the learned primary Judge. But there are differences in respect of two matters, upon each of which I wish to add a short comment.

2. The first matter relates to the affidavit evidence of Mrs Andrew, quoted by Hill J. Hill J also sets out the comment of the primary Judge concerning that evidence. Before us, counsel for the appellant complained of that comment. They contended that his Honour was not entitled to reject Mrs Andrew's evidence, because it was not challenged at the trial. Mrs Andrew was not cross-examined at all. Counsel referred to the rule in Browne v Dunn (1894) 6 R 67. That rule was stated in these words by Lord Herschell L.C. at 70:

"Now, my Lords, I cannot help saying that it seems to

me to be absolutely essential to the proper conduct of

a cause, where it is intended to suggest that a witness

is not speaking the truth on a particular point, to

direct his attention to the fact by some questions put

in cross-examination showing that that imputation is

intended to be made, and not to take his evidence and

pass it by as a matter altogether unchallenged, and

then, when it is impossible for him to explain, as

perhaps he might have been able to do if such questions

had been put to him, the circumstances which it is

suggested indicate that the story he tells ought not to

be believed, to argue that he is a witness unworthy of

credit."

3. There are exceptions to the principle propounded by Lord Herschell. One of them was recognised by the Lord Chancellor himself, at p.71: "cases in which that notice has been so distinctly and unmistakably given, and the point upon which he is impeached, and is to be impeached, is so manifest, that it is not necessary to waste time in putting questions to him upon it." Lord Morris referred to "a case in which a story told by a witness may have been of so incredible and romancing a character that the most effective cross-examination would be to ask him to leave the box"; although I think that this course would be reserved for only the most exceptional cases. More commonly, a sensible exception is often negotiated between counsel where, their clients being clearly at issue, they consider that there is little point in each of them taking up time putting their version of the facts to the opposing witnesses, especially in relation to matters of detail or of opinion. But, generally speaking, the rule ought to be observed. This is important not only as a matter of fairness to the witness but also because its observance assists the court in the understanding and evaluation of the witness' evidence: see the comprehensive discussion of the rule by Hunt J in Allied Pastoral Holdings Pty Limited v Commissioner of Taxation (1983) 1 NSWLR 1 at pp.15-26.

4. An associated question is the consequence of a failure by counsel to challenge the account of a witness. In Paric v John Holland Constructions Pty Limited (1984) 2 NSWLR 505 Samuels J.A., with whom Hutley and Priestley JJ.A. agreed, thought that it would not "be right to conclude that the absence of cross-examination entails the acceptance of the evidence given"; but "it certainly enables that evidence to be regarded by any tribunal of fact with a greater degree of assurance than might otherwise have been the case". If the evidence is not only unchallenged but is also uncontradicted, a court may be bound to accept it. In Holman v Holman (1964) 81 WN (PT 1) NSW 374 Sugerman J, with whom Richardson and Macfarlan JJ. agreed, said at p.378: "Leaving aside questions of the witnesses' demeanour or manner, it may be said that in general uncontradicted evidence in an uncontested proceeding which is not improbable or unreasonable should be acted upon". Although that comment referred to an uncontested proceeding - their Honours were concerned with a case where the trial judge had rejected the petitioner's evidence in an uncontested matrimonial cause - the same principle applies to uncontradicted evidence in a contested proceeding, as the authorities relied upon by Sugerman J make plain. In the present case, there was no question of demeanour or manner; Mrs Andrew did not give oral evidence. Accordingly, the question would be whether her evidence is improbable or unreasonable. As it happens, the appeal will succeed on another ground, part performance. So it is unnecessary to consider whether Mrs Andrew's evidence should be considered improbable or unreasonable.

5. I share the view of Hill J that the real issue relating to Mrs Andrews' evidence is not whether that evidence ought to have been accepted but, accepting it, what it proves. As Hill J has observed, the evidence was, to say the least, equivocal. But considering it in conjunction with the relevant documents, there is no doubt in my mind that the words "executed in blank" were intended to convey more than that the mortgage was left undated. The title particulars must have been left incomplete; because it is clear that they were then unknown both to Mr Wardle and to the bank. Mrs Andrew's evidence does not stand in the way of a finding that there was no sufficient note or memorandum in writing prior to 24 February 1983.

6. My second comment relates to the question whether there was a sufficient part performance of the contract between Mr Wardle and the bank to take the case outside the operation of ss.23C and 54A of the Conveyancing Act 1919 (NSW). The trial Judge rejected the claim of part performance because he characterised the action of the bank, pursuant to the agreement, as being a payment of money. This reflected the traditional view, traced by Hill J, that the payment of money is such an equivocal act as to be an inappropriate foundation for a finding of part performance. In so characterising the bank's action, the Judge apparently adopted the submission of counsel for the bank. Counsel apparently invited his Honour to apply in his client's favour the House of Lords' decision in Steadman v Steadman (1976) AC 536. Not surprisingly, having regard to the reception of that decision in Australia, the primary Judge declined that invitation; leading him, therefore, to reject the claim of part performance.

7. However, once the actions taken by the bank are properly analysed and it is realised that they are different from a mere payment of money, and explicable only upon the basis of a contract such as that alleged by the bank, the claim of part performance falls within traditional principles, as authoritatively expounded in Maddison v Alderson (1883) 8 App Cas 467. The bank does not need to resort to Steadman v Steadman to make good its claim of part performance.

I have had the advantage of reading the draft judgments of my brethren. I agree that the appeal should be upheld. Sufficient acts of part performance were proved before the learned primary judge to enable the enforcement of the appellant's equitable rights which came into existence outside the relevant period of relation back. I agree in the orders proposed.

The appellant, the Australia and New Zealand Banking Group Limited ("the bank"), appeals against the judgment of a judge of the Court in which declarations were made that a mortgage of land in certificate of title volume 6114 folio 35 given by Anthony James Wardle ("the bankrupt") to the bank was void as against the respondent, the trustee of the bankrupt's estate ("the trustee") and that a payment to the bank on 7 November 1983 of $698.08 was a preference which was void as against the trustee.

2. The single issue in the appeal is the date upon which the mortgage became effective. It was common ground that the creditors' petition on which the bankrupt became bankrupt was presented on 24 August 1983. Accordingly, if the mortgage became effective on or after 24 February 1983, being a date six months before the presentation of the petition, it would be void as against the trustee by virtue of the provisions of s.122(1) of the Bankruptcy Act 1966 (Cth). If, on the other hand, the mortgage became effective before 24 February 1983, then it would not be void as against the trustee as a preference pursuant to s.122(1) of that Act.

3. The evidence below consisted solely of affidavits read in the proceedings. No witness was cross-examined. Thus the Court, sitting as an appeal court is in as good a position as the learned trial judge to determine matters of fact.

4. The bankrupt, prior to his bankruptcy, practiced as a chartered accountant. On 22 December 1982 he approached the bank for accommodation to enable him to finance the buy-out of a former partner. The bank diary note of a meeting held on that day recorded:

"As security fully advanced Mr Wardle has offered

us a mortgage over property situated in Bellvue

Hill (sic) and valued by the National Bank of

Australasia limited (sic) on 22.4.81 $450,000".

5. The Bank approved of the grant to the bankrupt of a commercial bill facility on 24 December 1982.

6. On or about 5 January 1983 the bankrupt attended at the Chatswood branch of the bank and signed a number of documents. These included:

* A letter re Prior encumbrances

* An authority to complete and

* A form of mortgage (in duplicate)

7. The first of the documents purported to be a letter advising the bank, with respect to the title, said to be referred to in the schedule, that there were no unregistered interests or other encumbrances which would affect that title. The schedule was not completed.

8. The "authority to complete" was addressed to the bank and provided as follows:

"We hereby irrevocably request that you or any

officer of the bank will at any time enter in the

bank's mortgage forms executed by us, the

following:

* Description of Land (A)

* Mortgagor

* Prior Encumbrances

* Note"

9. The mortgage, which was in the bank's usual form appropriate to land under the Real Property Act, 1900 (N.S.W.) was held by his Honour to have been signed in blank, in the sense that it was not only undated (that was common ground) but also the title particulars and description of the mortgagor were uncompleted. This finding was attacked as being contrary to the evidence of Mrs J.M. Andrew, a bank officer employed as an advance/security clerk, whose evidence, it would seem from his Honour's judgment, was not accepted. Of Mrs Andrew's evidence his Honour said:

"Evidence has been given by Mrs J.M. Andrew that,

on 5 January 1983, the forms of mortgage were

completed and executed by both Wardle and the Bank

in all respects save for the insertion of a date.

Nevertheless, for the reasons I shall mention

hereafter, I am satisfied, as a matter of

probability, that, apart from Wardle's signature

on the form of mortgage, the document and its

counterpart were then blank."

10. Before considering Mrs Andrew's evidence, it is convenient to set out the balance of the evidence to which his Honour made reference in concluding that as at 5 January 1983 the mortgage was executed in blank with the title references, in particular, blank.

11. The manager's diary note of 5 January 1983 contained the following relevant entries:

"As security for the advance he has offered us

security over a property situated at Bellvue Hill

(sic) and valued by the National Bank of

Australiasia (sic) Ltd on 22.4.81 of $450,000.

...

Mr Wardle advises that property offered to us as

security is in the joint names of his wife and

himself and he has given us a mortgage although

this is not worth much at the present time over

his half share of the property but in due course

the property has to be sold because of divorce

settlement and this is anticipated to take place

within a period of six months.

...

All security documentation has been completed and

we are having difficultly (sic) in obtaining a

search on the property and have been advised by

Branch Securities that book is absent at the

present time and to resubmit our request within a

period of 7 days.

However, all security documentation has been

completed in blank with permission from Mr Wardle

to complete on obtaining of search and under these

circumstances propose to make the facility

available due to urgency of matter.

Undue delay has occurred in obtaining of search."

12. The facility was drawn down on or about 5 January 1983 and the proceeds credited to the bankrupt's account on or about 14 January 1983. On that date a diary note was made which under the heading "Security" contained a tick on the box "To be taken" and the following words were handwritten:

"Security signed in blank. C-/T mislaid by State

Super borad (sic)".

The words "To be taken" were, as well, handwritten.

13. No further diary entry was made until 9 May 1983. The entry for that day reads relevantly:

"1. We have received from Freehill, Hollingdale U

(sic) Page, discharge of mortgage from state

superannuation board in relation to our security

property. However, state superannuation board has

mislaid title deed and a duplicate will now have

to be produced, but this will take time due to the

legal ramifications involved. For the time being,

our security documentation will have to be

retained as is until title deed is produced with

all other documentation being held including

discharge of mortgage for registration in due

course". (emphasis added)

14. The note continued by referring to an application for bridging finance originally made on 18 January 1983. In respect of this application the author notes:

"Due to non-completion at that time of security

documentation we declined to proceed in this matter...

15. On 3 June 1983 a further diary note makes the following comments relevant to the mortgage:

"We are still awaiting production of title deed to

enable us proceed with registration of discharge

of mortgage as mentioned in previous diary notes

and also withdrawal of these caveats will receive

attention at that time."

16. No further relevant diary entries were tendered in evidence. Apart from Mrs Andrew's evidence, all that is known is that the mortgage in completed form bore the date 20 September 1983 inserted, it would seem, in the hand writing of Mrs Andrew, who also witnessed Mr Wardle's signature. Stamp duty appears to have been denoted as paid upon the mortgage on 10 November 1983.

17. Mrs Andrew's evidence was, to say the least, somewhat equivocal. She apparently prepared the documents for signing by Mr Wardle on 5 January 1983. She deposed:

"5. While the mortgage was executed in blank form

on or about 5 January 1989 (sic), it was not dated

immediately....If, in these circumstances, the

mortgage was dated upon signature the mortgage

could attract stamp duty penalties and therefore

the date was often left as a blank.

6. To the best of my recollection, the mortgage

in this instance remained undated for a considerable

time but I cannot recall why this was the case...

7. The mortgage was ultimately dated on 20

September 1983 on James McLachlan's instructions,

I believe because at that time Wardle had applied

for a further advance for the purchase of a

property at Bowral and the Manager had taken the

decision to have the mortgage stamped and dated in

respect to this and previous advances. The insertion

of the date was completed by myself on or about

20 September 1983 which was recorded in the same pen...

18. It would seem that his Honour took the view that Mrs Andrew's affidavit established that the only matter left uncompleted as at 5 January 1983 was the date, the title reference being then printed in the document. But with respect I would not read her affidavit in that way. Mrs Andrew refers to the mortgage being executed in "blank form". That description is, at least, equally consistent with a state of affairs where, not only was the date left blank but also the title reference was uncompleted on that day.

19. Subject to the question whether the appellant, in the way the case was run below, was led into a false sense of security by a mistaken belief that there was no issue as to the time the title particulars were entered in the mortgage, the findings of fact, which should be made can be shortly stated.

20. In my opinion it is more probable than not that on 5 January 1983, when the bankrupt executed the mortgage, it was not only left undated but the title particulars were left blank, to be completed after the title search had been made. If this had not been so, it is unlikely that the bank would have obtained an authority to complete the mortgage, inter alia, by completing the title particulars. Further, the documents signed at the same time, such as the "Letter re Prior Encumbrances", contained no reference in the schedule to title particulars, an omission which suggests that as at that date these particulars were unknown or at least incompletely known.

21. There is no evidence thereafter which allows one safely to conclude that the title particulars were completed until the mortgage was ultimately dated and ready to be submitted for stamping. Rather, such evidence as there is suggests that the mortgage remained uncompleted on 9 May 1983 when the bank manager referred to the security documentation being "retained as is". It is possible that the reference to "as is" was merely a reference to the mortgage being retained in unregistered form but if this be so, the evidence does not support a conclusion that the details were completed at a date prior to 9 May 1983. Further, even if the mortgage had been completed around 9 May 1983 that would have been outside the six month period referred to in s.122(1) which period commenced on 24 February 1983.

22. The appellant submitted, however, that it was never put to any witness that the mortgage was left uncompleted as to title particulars until a date after 4 February 1983. Counsel referred to Browne v Dunn (1894) 6R 67; Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation (1983) 1 NSWLR 1 at 22; and see R v Birks (unreported) New South Wales Court of Criminal Appeal, 7 June 1990 at pp.12-19; R v Martin (unreported) New South Wales Court of Criminal Appeal, 18 July 1990 at pp.13-16.

23. However, the present is not a case where the rule in Browne v Dunn has direct application because Mrs Andrew did not give evidence that the title particulars were completed on 5 January 1983 so the respondent had no need to challenge her evidence. When this was pointed out during argument, the appellant submitted, in the alternative, that the issue of when the title particulars were inserted was not one that arose until after the evidence was completed and one that took the appellant by surprise. To evaluate this submission it is necessary to consider the course which the proceedings took below.

24. There were no formal pleadings, although affidavits were filed and served before the hearing. No affidavit was sworn by the bankrupt. Had the matter proceeded by way of pleadings it is possible that the factual issue would have come to light before the hearing.

25. At the trial, counsel for the trustee referred in opening to the fact that the mortgage on its face bore the date 20 September 1983. He indicated that it was the bank's case that irrespective of the date of the mortgage it was actually granted on an earlier date. He did not elaborate. He said:

"On the applicant's case the mortgage was granted

on 20 September 1983 after the presentation of the

petition and before the bankruptcy and the

crediting of the various accounts took place on 7

November, again after the presentation of the

petition and before the act of bankruptcy".

26. He immediately corrected the reference to the act of bankruptcy so as to read "before the bankrupt became bankrupt".

27. Affidavits were then read and objections dealt with. By agreement between the parties, counsel for the bank addressed first. He submitted that the mortgage took effect from the date of execution, 5 January 1983. It was at this stage that his Honour pointed out that the mortgage could not then have been registered. Counsel for the trustee submitted that there was nevertheless an equitable mortgage. His Honour then pointed out that the mortgage at that time was "not over any property, the land was not described". Counsel for the trustee then referred to Mrs Andrew's evidence and submitted that this evidence was consistent with the mortgage having been completed. He conceded:

"MR INSTALL (sic): Perhaps the evidence is

incomplete in the sense that we do not know if

they had title particulars or not.

HIS HONOUR: There is no evidence they had them".

28. The argument thereafter moved to a consideration of the Conveyancing Act 1919 (NSW) and whether the mortgage was enforceable.

29. Counsel for the trustee made no attempt to seek leave to reopen his case to clarify the evidence in this respect although he did seek leave to adduce further evidence about an unrelated matter, which leave was granted. While it is true that the trustee's case appears to have been put on a ground different to that now argued, a perusal of the transcript makes it quite clear that the question whether the mortgage was completed with the title particulars was an issue in the trial and that it was open to the bank to seek leave to address further evidence on this point, a course which it did not adopt.

30. In these circumstances the bank is bound by the course it took at the trial and can not now complain that it was not given the opportunity to adduce further evidence when it did not seek at the trial so to do.

31. His Honour held that, save as to compliance with the provisions of ss 23C and 54A of the Conveyancing Act 1919 (NSW), what was done on 5 January 1983 had all the elements of an equitable mortgage. In particular, the parties had agreed for value that the bankrupt would grant a mortgage to the bank over his interest in the Bellevue Hill property and had conferred power upon the bank to complete the mortgage which had been signed by him. However his Honour held that the mortgage document at the relevant time, not having been completed as to title details, was not a sufficient memorandum in writing to satisfy the provisions of ss.54A or 23C. His Honour further held that there had not been part performance of the contract, with the consequence that the provisions of s.23C and s.54A not having been complied with, the mortgage was unenforceable until 20 September 1983 when the title particulars were completed.

32. The appellant challenged both of these conclusions.

33. Ss. 23C and 54A of the Conveyancing Act are in the following terms so far as is relevant:

"23C.(1) Subject to the provisions of this Act with

respect to the creation of interests in land by parol -

(a) no interest in land can be created or

disposed of except by writing signed by the person

creating or conveying the same, or by his agent

thereunto lawfully authorised in writing, or by

will, or by operation of law;"

"54A(1) No action or proceedings may be brought

upon any contract for the sale or other

disposition of land or any interest in land,

unless the agreement upon which such action or

proceedings is brought, or some memorandum or note

thereof, is in writing, and signed by the party to

be charged or by some other person thereunto by

him lawfully authorised."

Was there a sufficient note or memorandum in writing?

34. It was submitted for the bank that even if the title details were not included in the mortgage document on 5 January 1983 that document, taken together with the form of authority, constituted a sufficient writing for the purposes of s.23C of the Conveyancing Act.

35. It was not in dispute that, for there to be a sufficient writing either for s.23C or s.54A, that writing must describe the subject matter of the mortgage. A mortgage of land which did not refer at all to the mortgaged property would be unenforceable. Nor could parol evidence be given to fill the gap in the mortgage and supply the missing title reference. That course would be contrary to the policy of the Statute of Frauds from which ss.23C and 54A are derived which Statute is directed at excluding the reception of parol evidence of oral agreements of the kind referred to therein.

36. There can also be no doubt that, in an appropriate case, two or more documents may be read together so as to constitute a sufficient memorandum in writing: Burgess v Cox (1951) 1 Ch 383, Stokes v Whicher (1920) 1 Ch 411, De Leuil v Jeremy (1964) 65 SR (NSW) 137, Timmins v Moreland Street Property Co Ltd (1958) 1 Ch 110, Elias v George Sahely and Co (Barbados) Ltd (1983) AC 646, Grime v Bartholomew (1972) 2 NSWLR 827 and Thomson v McInnes [1911] HCA 30; (1911) 12 CLR 562 at 569. There is, however, a difference of principle in the cases as to the circumstances where it is appropriate to do so and as to the extent to which parol evidence may be adduced to link the one writing to the other.

37. There can be no doubt that, if the note signed by the party to be charged refers expressly to some other document in such a manner as to incorporate it by reference in the note signed, the two documents may be read together: Thomson v McInnes [1911] HCA 30; (1911) 12 CLR 562. However, as Griffith C.J. with whom Barton and O'Connor JJ. agreed, said in that case at 569:

"But the whole contract must be shown by the

writing. The reference, therefore, in the

document signed must be to some other document as

such, and not merely to some transaction or event

in the course of which another document may or may

not have been written".

38. It is not now essential that the reference to the second document be express. Rather it is sufficient if the reference arises by necessary implication (cf Timmins v Moreland Street Property Co Ltd (supra) per Romer L.J. supra at 134, Stokes v Whicher (1920) 1 Ch 411 at 418). As Griffith C.J. pointed out in Thomson v McInnes (supra) at 569:

"The reference may, of course be made in various

ways. Whether there is a reference or not

depends, first of all, upon the construction of

the document which is signed."

39. The role which parol evidence may play in identifying the other document or documents which may constitute the sufficient writing is a subject of greater difficulty. It was settled in Thomson v McInnes that parol evidence was admissible for the purpose of showing that a word capable of having reference to a particular thing really does have such a reference. This use of parol evidence is, as Griffith C.J. points out at 569, but an application of the well known doctrine of "latent ambiguity". Thus in the case of Ridgway v Wharton [1857] EngR 713; 6 HLC 238, cited by his Honour, the word "instructions" could be read as referring to another document the identity of which was proved by parol evidence.

40. However, in Thomson v McInnes their Honours declined to accept that there was a more liberal view to be gleaned from the case law up to that time. Thus Griffith C.J. was moved to say at 570:

"The rule has always been the same. Some Judges

may have been more liberal in their application of

the rule than others, or may have taken a more

liberal view of the words to be construed. The

rule is thus stated by Baggallay L.J. in Long v

Millar (4 CPD 450, at p.455):-

'The true principle is that there must exist a

writing to which the document signed by the party

to be charged can refer, but that this document

may be identified by verbal evidence.' I think it

is unfortunate that any doubt should be

entertained as to that doctrine. It is as well

settled as any doctrine relating to contracts."

41. In the United Kingdom the modern law has been said to have been correctly stated in the words of the judgment of Jenkins L.J. in Timmins v Moreland Street Property Co Ltd (supra) at 130 (see Elias v George Sahely and Co (Barbados) Ltd (supra) at 655):

"it is still indispensably necessary, in order to

justify the reading of documents together for this

purpose, that there should be a document signed by

the party to be charged, which, while not

containing in itself all the necessary ingredients

of the required memorandum, does contain some

reference, express or implied, to some other

document or transaction. Where any such reference

can be spelt out of a document so signed, then

parol evidence may be given to identify the other

document referred to, or, as the case may be, to

explain the other transaction, and to identify any

document relating to it. If by this process a

document is brought to light which contains in

writing all the terms of the bargain so far as not

contained in the document signed by the party to

be charged, then the two documents can be read

together..." (emphasis added)

42. In Elias, a case upon which the appellant strongly relied, the note signed by the party to be charged was a receipt in the following terms:

"$39,000 Barbados 10-2-1975. Received from Fauzi

Elias the sum of thirty nine thousand dollars and

... cents being deposit on property at Swan Street

B'town agreed to be sold by George Sahely and Co

B'dos Ltd to Fauzi Elias and/or his nominees, R.G.

Mandeville and Co per E. Clarke."

43. The giving of this receipt followed a letter in which the purchaser had endorsed a cheque and in which all the terms of sale were set out including the fact that the purchase price was to be $390,000, a matter not referred to in the receipt.

44. The Privy Council referred to Long v Millar (supra) as a "watershed decision". After quoting from Timmins with approval the Board said at 655:

"The first inquiry must, therefore, be whether the

document signed by or on behalf of the person to

be charged on the contract contains some reference

to some other document or transaction. The

receipt in this case clearly did refer to some

other transaction, namely an agreement to sell the

property in Swan Street. Parol evidence can,

therefore, be given to explain the transaction,

and to identify any document relating to it. Such

evidence was led in the present case: it brought

to light a document, namely Mr Forde's letter ...

which does contain in writing all the terms of the

bargain.... If, therefore, a document signed by

the party to be charged refers to a transaction of

sale, parol evidence is admissible both to explain

the reference and to identify any document

relating to it. Once identified, the document may

be placed alongside the signed document. If the

two contain all the terms of a concluded contract,

the statute is satisfied." (emphasis added)

45. Their Lordships accordingly were of the view that on the facts of that case the requirements of a sufficient note or memorandum were satisfied.

46. The decision in Thomson v McInnes has been criticised by the learned authors of Greig and Davis The Law of Contract (The Law Book Company Limited, 1987) at pp 699-70, as being too narrow and in conflict with the English authority. In Woden Squash Courts Pty Ltd v Zero Builders Pty Limited (1976) 2 NSWLR 212, Holland J pointed out at 218, that the statement of principle in Thomson v McInnes appeared to be in conflict with a later statement of the law in Harvey v Edwards Dunlop and Co Ltd [1927] HCA 13; (1927) 39 CLR 302 where a majority of the Court, by reference to Stokes v Whicher (1920) 1 Ch 411 at 418, said at 307:

"It is also well settled that the memorandum 'need

not be contained in one document; it may be made

out from several documents if they can be

connected together'. They may be connected by

reference one to the other; but further, 'if you

can spell out of the document a reference in it to

some other transaction,you are at liberty to give

evidence as to what that other transaction is,

and, if that other transaction contains all the

terms in writing, then you get a sufficient

memorandum within the statute by reading the two

together'". (emphasis added)

47. Blackburn J in the Supreme Court of the Northern Territory in The Commonwealth v John White and Sons (NT) Pty Ltd (1967) 13 FLR 172, 177-8 followed Harvey v Edwards, Dunlop and Co Ltd (supra) to permit oral evidence to be given of a transaction to which the note signed by an architect referred so as to connect that note with a Government Gazette notice which identified the vendor, the property to be sold and the laws of sale thereby constituting it a sufficient note in writing, rejecting the approach taken in Thomson v McInnes.

48. It is not necessary in this case to determine whether the more restrictive approach taken in Thomson v McInnes is still good law having regard to Harvey v Edwards, Dunlop and Co Ltd. Even if parol evidence may be given of a transaction, it is a prerequisite of the rule which permits that course, that the document signed by the party to be charged refers to the transaction. In this case the mortgage document does not refer to any transaction. Nor does it refer to another document. Even if it be read with the "authority to complete" (both being signed at the one time, this course would be permissible: Timmins v Moreland Street Property Co Ltd (supra) at 123) the matter is taken no further, because the schedule in the authority is likewise devoid of reference to any property.

49. What the appellant seeks to do here is to read the terms of the conversation, which is presumably summarised in the bank manager's diary note of 5 January 1983 and which does identify the relevant land into the authority and the mortgage. But that would be to adduce oral evidence, not to clarify an ambiguity but to supply the deficiency in writing; precisely what the Statute of Frauds seeks to prevent. It might be said at this stage that the weight of authority is against the bank diary note itself being treated as a "writing" because it is not a document, the existence and contents of which were known to the signatory at the time he signed the written document: De Leuil v Jeremy (1964) 65 SR (N.S.W.) 137 at 151; Di Biase v Rezek (1971) 1 NSWLR 735 at 747. While Greig and Davis criticise this rule (supra at p.701), they do so in relation to the requirement of contemporaneity rather than the requirement of knowledge.

50. To overcome this problem, the appellant submitted that the reference to "Description of Land" in the authority should be read as a reference to "the bankrupt's land". If the authority had referred to "my land", or "my land at Bellevue Hill", parol evidence could probably have been adduced to identify the land referred to and the combination of the authority and the mortgage would have constituted a sufficient note and memorandum in writing: Shardlow v Cotterell (1881) 20 Ch D 90; Ogilvie v Foljambe [1817] EngR 662; (1817) 3 Mer 53; Plant v Bourne (1897) 2 Ch 281, and Auerbach v Nelson (1919) 2 Ch 383, where a note referring to "on account of house being sold for 500" was held to contain a sufficient description of the property. However, there is no basis for such a reading. When a person executes a mortgage it cannot be assumed that it is intended to operate over land presently owned by him. It is a everyday occurrence that mortgages are executed over land about to be acquired, ordinarily by way of security for the purchase price.

51. The present, is merely a case where the only documents to which reference can be made are completely silent as to the property proposed as the subject of the mortgage. It follows therefore, that there was no sufficient note or memorandum in writing to satisfy either s.23C or s.54A of the Conveyancing Act with the result that unless the appellant can show that there has been part performance of the oral agreement to mortgage the property the appeal must fail.

52. The doctrine of part performance, as an exception to the operation of the Statute of Frauds rendering oral agreements unenforceable, is a result of the intervention of the Court of Chancery to prevent, in keeping with equitable principles, the Statute of Frauds being used as an instrument of fraud: Steadman v Steadman (1976) AC 536 at 540, 551.

53. The basis of this equitable relief was explained by the Earl of Selborne L.C. in Maddison v Alderson (1883) 8 App Cas 467 at 475-6 in the following terms:

"...the defendant is really 'charged' upon the

equities resulting from the acts done in execution

of the contract, and not (within the meaning of

the statute) upon the contract itself. If such

equities were excluded, injustice of a kind which

the statute cannot be thought to have had in

contemplation would follow. Let the case be

supposed of a parol contract to sell land,

completely performed on both sides, as to everything

except conveyance; the whole purchase-money

paid; the purchaser put into possession;

expenditure by him (say in costly buildings) upon

the property; leases granted by him to tenants.

The contract is not a nullity; there is nothing in

the statute to estop any court which may have to

exercise jurisdiction in the matter from inquiring

into and taking notice of the truth of the facts.

All the acts done must be referred to the actual

contract, which is the measure and test of their

legal and equitable character and consequences.

If, therefore, in such a case a conveyance were

refused, and an action of ejectment brought by the

vendor or his heir against the purchaser, nothing

could be done towards ascertaining and adjusting

the equitable rights and liabilities of the

parties, without taking the contract into account.

The matter has advanced beyond the stage of

contract; and the equities which arise out of the

stage which it has reached cannot be administered

unless the contract is regarded. The choice is

between undoing what has been done (which is not

always possible, or, if possible, just) and

completing what has been left undone. The line

may not always be capable of being so clearly

drawn as in the case which I have supposed; but it

is not arbitrary or unreasonable to hold that when

the statute says that no action is to be brought

to charge any person upon a contract concerning

land, it has in view the simple case in which he

is charged upon the contract only, and not that in

which there are equities resulting from res gestae

subsequent to and arising out of the contract. So

long as the connection of those res gestae with

the alleged contract does not depend upon mere

parol testimony, but is reasonably to be inferred

from the res gestae themselves, justice seems to

require some such limitation of the scope of the

statute, which might otherwise interpose an

obstacle even to the rectification of material

errors, however clearly proved, in an executed

conveyance, founded upon an unsigned agreement".

54. In Regent v Millett [1976] HCA 40; (1976) 133 CLR 679 the High Court in discussing the principle upon which the doctrine of part performance rests, made reference to the judgment of Lord Cranworth L.C. in Caton v Caton (1866) LR 1 Ch App 137 at p.148 in the following terms (682):-

"'...when one of two contracting parties has been

induced, or allowed by the other, to alter his

position on the faith of the contract, as for

instance by taking possession of land, and

expending money in building or other like acts,

there it would be a fraud in the other party to

set up the legal invalidity of the contract on the

faith of which he induced, or allowed, the person

contracting with him to act, and expend his money.'

The books are full of cases in which it has been

held that the entry into possession alone, or the

taking of possession coupled with the expenditure

of money by one party on the improvement of

property, with the cognizance of the other party

to the contract, may amount to part performance

(see the cases cited in Halsbury's Laws of

England, 3rd ed., vol. 36, par. 416)."

55. The performance which has to be shown must be performance of the person seeking to enforce the contract or, as in the present case, the person seeking to show that the contract was enforceable, notwithstanding the lack of writing.

56. In the present case, the oral contract between the bankrupt and the bank was one whereby, in consideration of the bank agreeing to provide a commercial bill facility and to endorse bills drawn by the bankrupt thereby rendering the bank liable on them, the bankrupt agreed to indemnify the bank against all claims on the bills and to provide a mortgage on the Bellevue Hill property to the bank to secure that indemnity.

57. The bank, the party seeking to enforce the mortgage, performed the whole of its side of the bargain. It may be inferred from the evidence before the trial judge that the bank endorsed (or accepted) bills which were discounted on the market, the bills being for a period of 180 days having a face value of $30,000 and providing to the bankrupt $28,121.10. The bills were thereafter rolled over. The question is therefore whether acceptance and discounting of the bills constituted a sufficient part performance of the oral agreement.

58. In Maddison v Alderson (supra) at 479 the Earl of Selborne L.C. said:

"All the authorities shew that the acts relied

upon as part performance must be unequivocally,

and in their own nature, referable to some such

agreement as that alleged:"

59. The converse of this proposition, as Sir James Wigram V.C. said in Dale v Hamilton [1846] EngR 1212; (1846) 5 Hare, 369 at 381; [1846] EngR 1212; 67 ER 955 at 960 is:

"But an act which, though in truth done in

pursuance of a contract, admits of explanation

without supposing a contract, is not, in general,

admitted to constitute an act of part performance

taking the case out of the Statute of Frauds; as,

for example, the payment of a sum of money,

alleged to be purchase-money".

60. The learned trial judge appears to have regarded the (alleged) act of part performance as being the payment of money rather than the accepting and discounting of the bills. His Honour said:

"The making available of a bill facility by the

ANZ Bank and the drawing by Wardle on that bill

facility was an ordinary commercial transaction

which was not referrable to the granting of a

security over land. The mere payment of money is

not a sufficient act of part performance. See

Maddison v Alderson, at pp 478-9; Chaproniere v

Lambert (1917) 2 Ch 356; Jones v Pepert (1948) VLR

331 at pp 336-7; Voumard p 93; Meagher Gummow and

Lehane para 2041. The payment of money may

together with other circumstances give rise to

part performance. See Sugden on "The Law of

Vendors and Purchasers of Estates" 13th Ed.

pp 124-5; Steadman v Steadman per Lord Reid at

p 541, Lord Simon at p 565, Lord Salmon at p 570.

However, the payment of moneys to Wardle pursuant

to the bill facility was equivocal and did not

constitute a sufficient act of part performance to

bring into operation the equitable principle."

61. There is a difficulty in determining what meaning is to be given to the word "unequivocal" in the test propounded by the Earl of Selborne L.C. As Hutley J.A. pointed out in Millett v Regent (1975) 1 NSWLR 63 at 65, if the word was given its ordinary meaning:

"...it is hard to see how any acts would suffice,

as any set of acts can have multiple references to

ingenious minds. 'Unequivocal' is used in a

special sense."

62. What this "special sense" may be is a question of some difficulty. cf Chaproniere v Lambert (1917) 2 Ch 356 which applied a strict test, with that expressed in Fry on Specific Performance 6th ed at p 278, Section 582; cited with approval in Kingswood Estate Co Ltd v Anderson (1963) 2 QB 169 where the learned authors say:

"The true principle, however, of the operation of

acts of part performance seems only to require

that the acts in question be such as must be

referred to some contract, and may be referred to

the alleged one; that they prove the existence of

some contract, and are consistent with the

contract alleged."

63. In the present case, the acts alleged to constitute part performance on the part of the bank, were acts required to be performed by it pursuant to the arrangements entered into by it with the bankrupt.

64. The High Court had cause to consider the doctrine of part performance in a number of early cases: McBride v Sandland [1918] HCA 32; (1918) 25 CLR 69, Cooney v Burns [1922] HCA 8; (1922) 30 CLR 216 and J.C. Williamson Ltd v Lukey and Mulholland [1931] HCA 15; (1931) 45 CLR 282. In the last mentioned case Dixon J, with whose judgment Gavan Duffy C.J. agreed, stated the test at p 300 as follows:

"The acts of part performance must be such as to

be consistent only with the existence of a

contract between the parties, and to have been

done in actual performance of that which in fact

existed. But in such a case the equity which so

arises is to have the entire contract carried into

execution by both sides. Because the acts done

upon the faith of the contract could not have

taken place if it had not been made, and the

contract is of a kind which it is considered

equitable to enforce in specie, a party who has so

acted in partial execution of the contract obtains

an equity to its complete performance."

65. In McBride v Sandland (supra) Isaacs and Rich JJ. at p 78 made it clear that the contract to which the acts of part performance must unequivocally be referable meant "some contract of the general nature of that alleged". Knox C.J. in Cooney v Burns (supra) thought that by the agreement was meant "some agreement for the disposition of some estate or interest in the land in question" at p 222.

66. However, in the United Kingdom a more liberal view was taken in Kingswood Estate Co Ltd v Anderson (supra) and Wakeham v Mackenzie (1968) 1 WLR 1175 and ultimately by the House of Lords in Steadman v Steadman (1976) AC 536. In the last case the House held that a payment of money coupled with the sending of a transfer and the announcement to a magistrate that the parties had agreed to arrears of maintenance being remitted (save for 100) was a sufficient act of part performance of an agreement for the sale of a matrimonial home.

67. The majority of their Lordships accepted that the acts of part performance must, on the balance of probabilities, point to the existence of some such contract as alleged. They approved the decision in Kingswood Estate Co Ltd v Anderson (supra), including the passage from Fry on Specific Performance already set out (see per Viscount Dilhorne at 553, Lord Simon at 561, and per Lord Reid at 542 but see the judgment of Lord Morris, dissenting and Lord Salmon at 569).

68. In Millett v Regent, at first instance (22 July 1974, unreported) Holland J of the Supreme Court of New South Wales applied the rule stated in Kingswood Estate Co Ltd v Anderson. By the time the appeal was heard, the House of Lords had decided Steadman. The New South Wales Court of Appeal (1975) 1 NSWLR 62 expressed differing views as to the applicability of Steadman. Glass J.A. was of the view that, the High Court having expressed the test in terms of the traditional view in Maddison v Alderson, the Court of Appeal was bound by that formulation and could not apply the more liberal test in Steadman. Neither Hutley nor Mahoney JJ.A. found it necessary to consider whether Steadman was consistent with Australian authority. However, Mahoney J.A. said at p 74:

"The term 'unequivocally', and the similar terms

which have been used in this regard in other

cases, do no more than indicate that, in being

satisfied that such a contract was made, the Court

will require evidence of the appropriate degree of

cogency to establish that, e.g., the appropriate

basis for the intervention of equity against the

statute requiring the contract to be in writing is

made out. cf Briginshaw v Briginshaw" (1938) 60

CLR 336 at p 365."

69. When Regent v Millett went on appeal to the High Court (reported at [1976] HCA 40; (1976) 133 CLR 679) the Court was unanimously of the view that part performance was made out. None of the judges found it necessary to consider the questions raised by Steadman. Gibbs J with whose judgment Stephen, Mason, Jacobs and Murphy JJ. agreed, said at p 683 that the Earl of Selborne's test in Maddison v Alderson (supra) at p 479:

"...has been consistently accepted as a correct

statement of the law. It is enough that the acts

are unequivocally and in their own nature

referable to some contract of the general nature

of that alleged (see McBride v Sandland (1918) 25

CLR 69, at p 78).

...

It may be said immediately that if the reasoning

of their Lordships in the recent case of Steadman

v Steadman is accepted, the appellants' arguments

must fail. However it is unnecessary for the

present decision to consider the questions that

are raised by that case."

70. Subsequently Holland J in Ogilvie v Ryan (1976) 2 NSWLR 504, a case where the proper test to be applied affected the outcome, took the view that he should follow the approach of Glass J.A. in Millett v Regent and not apply the more liberal approach in Steadman. As to the implications possible to be drawn from Steadman, see Gareth Jones and William Goodhart, Specific Performance, Butterworths 1986, pp 103-6.

71. The liberal approach in Steadman has not been adopted in other States of Australia. Fullagar J in Thwaites v Ryan [1984] VicRp 7; (1984) VR 65 expressed doubt as to at least part of the formulation but was of the view that the conduct in question did not enable him to say:

"... for Ryan to have done all this, I really

think there must have been a contract". (87)

72. In Riley v Osborne [1986] VicRp 23; (1986) VR 193 Kaye J accepted the test of Fullagar J in Thwaites v Ryan (supra) at p 76 expressed in the following terms:

"In respect of each act of alleged part

performance that was actually done, was it on the

balance of probabilities unequivocally referable

to some act between the actor and the deceased,

that is to say, was it such that, on the

probabilities, it must have been done with a view

to performing such a contract?"

73. Subsequently the Full Court of the Supreme Court of Victoria, in McMahon v Ambrose [1987] VicRp 66; (1987) VR 817 expressed the view that the Court was bound by the orthodox interpretation of Maddison v Alderson adopted by the High Court in McBride v Sandland and Cooney v Burns. See too in Victoria, Butler v Caine [1986] VicRp 28; (1986) VR 274 at p 282, (per Marks J), and in Western Australia in Trifid Pty Ltd v Ratto (1985) WAR 19 at p 37. More recently Brennan J in Walton Stores (Interstate) Ltd v Maher [1988] HCA 7; (1987-88) 164 CLR 387 at p 432 restated the test of part performance consistently with the orthodox view. His Honour made no reference to Steadman.

74. It may be possible to reconcile what is said in Steadman with the orthodox approach taken by the High Court to date and while there is much to be said for the adoption in Australia of Steadman, these are matters for the High Court rather than an intermediate Court of Appeal.

75. In the present case, there is little doubt that, if the Steadman test be applied, the appellant would succeed. The acts of the bank clearly referred to some contract; they could be referred to the alleged one and they indicate on the balance of probabilities the existence of some contract and they are consistent with the contract alleged.

76. However, even on the orthodox view it seems to me that the bank should succeed. Although the acts of part performance relied upon by the bank resulted in the bankrupt recovering a sum of money, the bank does not rely merely on the payment of money.

77. Here, the bank obtained an indemnity agreement, took a mortgage in blank and took an authority to complete it (albeit the last two were deficient in that the title particulars were not completed). It then endorsed or accepted a bill or bills by virtue of which it became liable to holders thereof for the face value of those bills. It went onto the market and sold those bills at a discount, crediting the proceeds to the bankrupt's account. The acts of the bank, seen in this context, lead to the conclusion that they are unequivocally and in their own nature referable to a contract of the general nature of that alleged by the bank; namely, that there was an oral agreement between the bank and the bankrupt that the bankrupt would grant a mortgage to the bank over the Bellevue Hill property to secure to the bank its right of indemnity. In rendering itself liable on the bills, the bank altered its position on the faith of the oral agreement. It would be a fraud in the bankrupt to set up the legal invalidity of the oral contract on the faith of which he induced the bank to act and expend its money.

78. While the bank does not seek to rest its case on estoppel, the discussion of the principles upon which the present law of estoppel is based by some of the members of the High Court in The Commonwealth of Australia v Verwayen (1990) 64 ALJR 540 lends further support to the view that the doctrine of part performance should be applied in the present case in favour of the appellant. It would be unconscionable to permit the bankrupt or the trustee claiming through him to rely upon the legal invalidity of the contract on the faith of which the bankrupt induced the bank to become liable on the bills.

79. In my view the bank has established sufficient acts of part performance prior to 24 February 1983 to render the agreement to grant the mortgage enforceable in equity and thereby to constitute an enforceable equitable mortgage over the Bellevue Hill property.

80. Accordingly I am of the view that the appeal should succeed. The orders made by Davies J should be set aside, and, in lieu thereof it should be ordered that the application be dismissed. The respondent should pay the appellants' costs of the appeal and the proceedings below.

Re Australia and New Zealand Banking Group Limited v William John Widin As Trustee of the Bankrupt Estate of Anthony James Wardle [1990] FCA 474; 26 FCR 21 102 ALR 289

At a glance

Court

Decision date

Source

Judgment (176 paragraphs)

Re Australia and New Zealand Banking Group Limited v William John Widin As Trustee of the Bankrupt Estate of Anthony James Wardle [1990] FCA 474; 26 FCR 21 102 ALR 289 (29 November 1990)

Parties

Cases Cited (17)