PANGEA RESOURCES LTD v GENERAL CREDITS LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P, MAHONEY and CLARKE JJ 10 April 1992, 24 December 1992 [1992] NSWCA 178 CONTRACT — commercial agreement — condition or warranty — proper construction of contract — alleged breach of term of — promise of "due performance of its obligations" by one party to contract — compromise of legal obligations upon default under lease and debt of almost $870,000 — promise to discharge liability by taking certain steps — steps to be taken include payment of $10,000 for certain equipment and plant — equipment and plant sold for nett sum of $9,800 and such sum duly paid — default in payment of $200 — such sum later tendered after proceedings commenced — whether default of $200 constitutes breach of agreement avoiding compromise and rendering initial debt due and owing — no equitable defences raised — held (1) The consequence of the default was to be determined upon a proper construction of the agreement, being a commercial agreement between the parties; (2) The promise of "due performance" was not breached by a deficit in the performance of an appropriately minor nature. Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632 (FC); 61 CLR 286 applied;(3) The failure to pay $200 in time was, in the circumstances, such a minor deficit as not to constitute a failure of "due performance" of the promises of the contract. Bowes (Carrying on Business as the British Company) v Chaleyer (Carrying on Business as J Chaleyer and Company) (1923) 32 CLR 159 considered; (4) However, (Kirby P dissenting) the failure to pay the full $10,000 by the date fixed and for some months thereafter did not constitute "due performance" of the agreement as required; (5) Decision of Brownie J (upon different grounds) affirmed; appeal dismissed. CONTRACT — compromise of large debt upon conditions — conditions complied with except for condition calling for discharge of liability by payment as moneys raised on disposal of plant and equipment — proper construction of the condition — whether condition imposed obligations primarily upon the party sued or upon a third party — held: (1) The obligation was imposed upon a third party; (2) The failure by that party to pay the relevant moneys by the date provided in the contract did not represent a failure to provide "due performance" of its obligations under the agreement for the compromise of its debt. PRACTICE and PROCEDURE — Commercial Division — decision upon written materials — interpretation of written contract — observations by Mahoney JA as to the necessity to ensure that all facts relevant to the consideration of the interpretation and construction of the written documents are placed before the court asked to give such interpretation and construction. WORDS and PHRASES — "due performance". Electronic Industries Ltd v David Jones Ltd (1954) 91 CLR 288 applied. Bowes (Carrying on Business as the British Company) v Chaleyer (Carrying on business as J Chaleyer and Company) (1923) 32 CLR 159, 172 referred to. Kirby P The facts and the relevant legal authorities are stated in the reasons for judgment of Mahoney JA which I have had the privilege of reading in draft. 2 UNREPORTED JUDGMENTS Challenge to "due performance" of a settlement agreement The issue before the Court is whether the appellant gave "due performance" of the settlement agreement which, by its previous name, it entered with the respondent. Conformably with authority, such an agreement, being designed to terminate litigation between the parties, would be given a rigorous construction according to its terms designed, as they were, to upholding the surrender by the parties of their strict rights at law. See Scott v English [1947] VLR 445 (VSC - Fullagar J) at 454. Cf Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549, 561; Tricontinental Corporation Ltd v HDFI Ltd (1990) 21 NSWLR 689 (CA), 702, 704. On the other hand, the agreement between the parties was a commercial document, between business enterprises. The Court should not adopt a punctist's approach in giving meaning to the words which the parties agreed upon, by which to express their mutual promises. The respondent denied "due performance" by the appellant of the settlement agreement, the terms of which are set out in the reasons of Mahoney JA. That agreement laid down four requirements to be performed by the appellant. The respondent did not contest the payment of the sum of $250,000 contemplated by CL2(a) of the agreement. Although that sum was apparently paid about four weeks late, no point of objection was raised by reason of this default. At least in that respect, the respondent adopted an apparently sensible and commercial approach to the meaning of the agreement. But that is where this attitude ceased. It was then replaced by an approach of strictissimi juris which would have made the lawmakers of the Medes and Persians proud. So far as the second requirement was concerned (the issue of shares in accordance with CL2(b)(i) of the agreement) there was no room for dispute. The appellant had conformed strictly to this requirement. That stipulation was duly performed. The respondent contested that the appellant had complied with the fourth requirement, viz the payment of moneys, by the date provided, as laid down by CL2(b)(iii) of the agreement. For the reasons given by Mahoney JA, I agree that there is no substance in this complaint. I adopt Mahoney JA's reasons in that regard. That leaves only the respondent's third complaint that the appellant failed to give "due performance" of its obligation under CL2(b)(ii) of the agreement. That clause provided: "(2) Tantalex [the former name of the appellant] hereby agrees with GCL [the respondent] to discharge that liability in the following manner: (b)@) (ii) by the payment of $10,000.00 for the purchase of absorption plant Item No 40 reagent shared No 41 client buildings ('item 40 and 41') and plant office item No 43. By CL3(b) of the agreement the payment of the $10,000 provided for in CL2(b)(ii) was to be made "progressively upon realisation of the equipment". Mahoney JA has described what occurred. There was a delay in the sale of the equipment. At its eventual sale a sum of $10,500 was recovered. Clearly this sum vindicated the approximate valuation which the parties had put upon the equipment and the amount which they had anticipated would be recovered from its sale. However, an amount for agent's commission was deducted from the sum recovered. The nett amount remaining after that deduction was $9,800. That sum was duly forwarded to the respondent by the agent engaged to sell the equipment, URJ PANGEA RESOURCES LTD v GENERAL CREDITS LTD (Kirby P) 3 a specialist in mining and machinery supplies. The sum actually paid was thus $9,800. There was, therefore, a default of $200 in the strict terms of the promise by CL2(b)(ii) to pay $10,000. It was not revealed in the meagre evidence whether the appellant knew of this default at the time of payment. It seems fairly likely that it did not and assumed that this obligation of the agreement had been properly complied with. However that may be, when, after the commencement of the litigation, the default came to notice the balance of the sum of $200 was tendered, promptly, on 21 March 1989. It was accepted, but without prejudice to the legal rights of the respondent. Before Brownie J, the respondent's successful argument was that the under-payment by $200 put the appellant in breach of its obligation, by CL5 of the settlement agreement, to give "due performance" of its obligations under the agreement. Only by such "due performance" would the appellant be released from its obligations at law. In default of such "due performance" the outstanding amount of $869,655.31 (together with interest) would be payable. The respondent, contending principally that the $200 under-payment amounted to a failure of "due performance", commenced these proceedings. Brownie J, adopting a strict approach to the meaning of the settlement agreement, upheld this contention. In this Court, the appellant challenges his Honour's view, and the judgment which followed it. A trivial default is not a failure of "due performance" For the reasons given by Mahoney JA, I agree that Brownie J's conclusions on the primary argument should be rejected. The deficit by the appellant in its performance of a requirement of an appropriately minor or trivial nature would not deprive that performance of the character of "due performance", as that phrase was used in CLS of the agreement. Looking at this settlement agreement, in its context and between such parties, and viewing the appellant's compliance with the four requirements which it accepted, it could not be said that default in the payment of $200 by the due time would provide such a breach of the agreement as to warrant its termination by the respondent. See Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632, 641 (FC); 61 CLR 286. As the appellant pointed out, the amount of its default represented 0.004 percent of the alleged compromised obligations. It was only 2 percent of the sum of $10,000 provided for by CL2(b)(ii) of the agreement which was paid to, and accepted by, the respondent. It would be surprising indeed if such a minor default, trivial in all the circumstances, had the consequence of depriving the appellant's conduct of the character of "due performance" of its obligations under the agreement, every other part of which was either accepted as, or held to be, duly performed. The logic of the respondent's submissions drove its counsel to accepting that even a one cent underpayment or a second's delay in payment would, upon his view, represent a failure of "due performance" in the terms of the agreement. The basic fallacy of this approach lies not only in its misunderstanding of the law of essentiality of the conditions of contracts but also in its unrealistically rigid construction of the phrase "due performance" in an agreement of this character between these parties. Brownie J made it plain that, in his view, it was only the default in the payment of $200 which entitled the respondent to succeed. He said: 4 UNREPORTED JUDGMENTS "Tt follows that the defendant would be entitled to succeed but for the fact that the sum paid pursuant to CL2(b)(ii), within the time fixed by CL3(c) was $9,800 rather than $10,000.... On the proper construction of CL2 and CL3, I conclude that the plaintiff should succeed on this issue..." A belated application to raise a new contention should be refused When the appeal was initially argued, the notice of contention filed on behalf of the respondent did not refer to the basis upon which the majority of this Court has now concluded that the respondent was entitled to hold its judgment. With supplementary written submissions, made in response to an inquiry by this Court, the respondent has now filed an amended notice of contention. By this, it seeks to rely upon an "additional ground" with which to support Brownie J's judgment. The additional ground proposed by the respondent is: "That there was not due performance by the appellant of its obligation under CL2(b)(ii) and CL3(c) of the agreement in that the appellant did not pay $9,800.00 being part of the sum of $10,000.00 referred to in CL2(b)(ii), within 180 days from the date of the Agreement, that is to say, by 31 March 1987, and in fact paid that amount of $9,800.00 on or about 20 January 1988." This contention assumes (correctly as it turns out) that a default of $200 would not, of itself and standing alone, amount to such a breach of a condition of the agreement (and of the terms of CLS, properly construed) as to amount to a failure of "due performance". But it says that the default is constituted not by the minor sum involved but by the late time of the payment of the sum actually paid. I would be disinclined to permit such a belated amendment of the notice of contention to permit this issue to be raised in this Court. It is proper to say that the transcript of argument reveals that the matter was orally argued but outside the formal record of the Court which the respondent now seeks to put in order. There is no demonstrated merit in the respondent's insistence upon its strict rights, so rigidly insisted upon. On the contrary, at least on the basis of the evidence adduced at the trial, the merits favour the appellant. With minor defaults (one of them accepted, and one not) it conformed to its obligations under the settlement agreement. It paid large sums. It sold and realised its equipment. It issued shares. Just as it had promised. In these circumstances, I am not convinced that this Court should grant the respondent the indulgence it belatedly seeks to raise a different basis in its notice of contention with which to insist upon its unrealistic and uncommercial construction of the agreement which it reached with the appellant. No sense of justifiable grievance or injustice to the respondent urges me to a different conclusion. Those who take wholly technical points must not be surprised when courts respond in a like way. Nevertheless, I shall assume against my inclination that leave to raise the new contention would be permitted by the Court, the notice of contention amended and the issue accepted, to be dealt with upon the present facts as a matter of construction of the agreement. The question before the Court is then whether the appellant's default of time robs its actions, in purported compliance with CL2(b)(ii), of the character of "due performance" of the agreement as required by CLS. I pause to reflect that it would be curious if the failure to pay the sum of $200 by the due date would not be of such a character but the payment of $9,800, accepted some time after the suggested due date, would deprive the appellant's action of the character of "due performance". URJ PANGEA RESOURCES LTD v GENERAL CREDITS LTD (Kirby P) 5 Non-essentiality of contractual stipulations as to time In my view, the late payment of the sum of $9,800 did not amount to a breach of the requirements as to time for payment in the agreement such as to rob the appellant's purported payment of the character of "due performance" of its obligations. CL3(b) of the agreement governed CL2(b)(ii). That subclause provided, relevantly, that payment of the money should be made "progressively upon realisation of equipment". According to the evidence at the trial, the sum of $9,800 was certainly paid promptly by the agent upon the realisation of the sale of the specified equipment. The respondent has not argued to the contrary. The appellant's only real default was the failure, initially, to pay the sum of $200 underpaid. The appellant accepts that that sum was not paid in accordance with the requirements of CL3(b). However, as has now been held, that default is so minor in character and trivial in amount that it does not mean that the appellant has not given "due performance" for that reason. A clue to the non-essentiality of time in compliance with the obligation imposed by CL2(b)(ii) of the instant agreement may be seen in the structure of CL2 itself. So far as the obligation imposed by CL2(a) a specific date, viz 31 December 1986, is nominated by the subclause. Similarly, in respect or CL2(b)(i) a specific date, viz "the date of this agreement", is nominated. But in respect of CL2(b)(ii) and (iii) no identified date is stated at all. Doubtless this was because each of those subclauses contemplated action on the part of the appellant which would necessarily take a little time, the completion of which could not be determined in advance and with exact precision. The agreement between the parties did not explicitly state that the time for compliance with the obligations imposed by CL2 was of the essence. To the contrary, the fact that time was not regarded as of the essence is demonstrated by the acceptance of the sum of $250,000 paid pursuant to CL2(a) nearly a month after the due date without any complaint on the part of the respondent. Even at trial no complaint was made in that regard and none was voiced on the appeal. The very nature of the obligations accepted by CL2(b)(ii) and (iii) of the agreement made it inappropriate that time should be of essence for compliance with the requirements of those sub-clauses. In the history of our legal system, a difference arose between the approach of the common law and of equity as to the manner in which each regarded breaches of stipulation as to the time for the performance of contractual obligations. There being no relevant equitable defences in this case, it is appropriate to consider the rule at common law. That rule in its original form was stated by Barwick CJ and Jacobs J in Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286 at 298: "At law a failure to carry out the contract on the day stipulated, if the failure was not due to any default on the part of the other party in performance of his obligations, was a breach of the contract in one of its essential terms. In other words, time was of the essence of the contract." Equity adopted a quite different position. A stipulation as to time was not regarded as essential unless the contract expressly, or by necessary implication, made it so. Only if the contract so provided would equity follow the law. Sometimes essentiality would be implied from the nature of the contract, viewed in its surrounding circumstances. See eg Neeta, 298. The Conveyancing Act 1919, s13 changed the common law in this State. It provided that: 6 UNREPORTED JUDGMENTS "13 Stipulations in contracts as to time or otherwise, which would not before the commencement of this Act have been deemed to be or to have become of the essence of such contracts in a court of equity, shall receive in all courts the same construction and effect as they would have heretofore received in such court." The stipulation as to time in the subject agreement was not essential It is therefore the duty of this Court to approach the suggested time default on the part of the appellant, in conforming to the requirement of CL2(b)(ii) as elaborated by CL3(c) of the agreement, in accordance with the beneficial approach of equity as now mandated by statute. Neither by CL3(c) itself nor otherwise in this agreement did the respondent expressly purport to make a stipulation as to time essential. Before the sum of $9,800 was paid to it, the respondent did not purport to terminate the agreement with the appellant for breach of any such stipulation as to time. Accordingly, when the appellant tendered to the respondent the sum of $9,800 it tendered substantial, sufficient and relevantly timely performance of its obligations under the agreement. In the terms of CLS of the agreement it gave "due performance" of its obligation thereunder. It was thereupon, by that clause, "released and forever discharged" from its obligations to pay the respondent the balance of the sum outstanding. It was entitled to have the benefit of the settlement and of the "due performance" of its part in the agreement by which that release was achieved. See Halsbury's Laws of England, 4th ed, Vol 9, para479ff; Citicorp Australia Ltd v Hendry and Ors (1985) 4 NSWLR | (CA) 30ff. Conclusions and orders Like Brownie J, then, I am of the view that, but for the default in the payment of $200, under-payment of the sum of $10,000 promised, the appellant was entitled to succeed at trial. Unlike Brownie J, I agree with the conclusion which Mahoney JA has expressed: that the default in the under-payment of $200 was of such a minor or trivial nature in the circumstances as not to constitute a failure of "due performance" by the appellant of its obligations under the settlement agreement. But, unlike Mahoney JA, I would not give leave to the respondent to amend its notice of contention to raise its meritless point as to the suggested time default in the payment of the sum of $9,800. If, however, the majority of the Court would give that leave, I would determine the point against the respondent. Neither by the terms of the settlement agreement nor by necessary inference arising from the circumstances, was the stipulation as to time for compliance with CL2(b)(ii) of the agreement strict so as to make the suggested time default of the appellant such as to rob its conduct of the character of "due performance" of its obligations. The appellant therefore gave "due performance". This conclusion, by the application of the relevant legal principles, produces a result which is neither unjust nor surprising. Indeed, it is the contrary result which is surprising. With respect, it involves an apparent departure from commonsense in the resolution of a commercial dispute between business enterprises. The common law normally reflects commonsense. It does so here. The orders which I would favour are: 1. Appeal allowed; 2. Set aside the judgment entered by Brownie J; 3. In lieu thereof, order that the plaintiff's proceedings in the Commercial Division of the Supreme Court be dismissed with costs; and 4. Order that the respondent pay the appellant's costs of the appeal and have, in respect of such costs, if otherwise so qualified, a certificate under the Suitors' Fund Act 1951. URJ PANGEA RESOURCES LTD v GENERAL CREDITS LTD (Mahoney JA) 7 Mahoney JA The main issue in this appeal is the meaning of "the due performanceby Tantalex of its obligations hereunder". The plaintiff's contention is that all but two of those obligations may be accepted as performed: two of them were not. The learned judge held that one of such obligations had not been performed and gave judgment for the plaintiff. The defendant has appealed to this Court against his Honour's judgment. Before the judge and before this Court, counsel for the parties have reduced the facts to their essentials. They may therefore be stated briefly. [In stating the facts I shall drawn no distinction between Australian Guarantee Corporation Ltd and General Credits Ltd ("GCL"). I shall refer to the defendant Pangea Resources Ltd by its former name Tantalex Ltd ("Tantalex")]. Tantalex had leased certain mining plant and equipment from GCL. It defaulted under the lease and, as at 2 October 1986, it owed GCL $869,655.31. On 2 October 1986, an agreement was made between GCL and Tantalex providing for the discharge of that indebtedness. The relevant clauses of that agreement were as follows: "2. TANTALEX hereby agrees with GCL to discharge that liability in the following manner: (a) by payment of the sum of $250,000.00 on or before 31 December 1986. (b) (i) by the issue upon the date of this agreement of one million 20 cent fully paid shares in its capital (ii) by the payment of $10,000.00 for the purchase of absorption plant Item No 40 reagent shared No 41 client buildings ('Item 40 and 41') and plant office Item No 43 (iii) by payment of the whole of the moneys raised by the disposal of the major remaining plant and equipment the subject of the lease less the costs of disposal properly paid to third parties (such costs of disposal however in no case to exceed 15% of the gross sale price) (such sale estimated to realise $260,000) payable progressively upon the same of such remaining major plant and equipment such sale to be effected by Mr N Seckold, a director of Tantalex acting as agent for GCL. 3.(a) All offers for the purchase of remaining items of major equipment received in pursuance of the arrangements referred to in the last sub-clause of the preceding clause shall be submitted to Australian Guarantee Corporation Ltd for approval before acceptance. (b) Payment of the sums of money to be paid pursuant to CL2(b)(ii) and CL2(b)(iii) be made progressively upon realisation of the equipment. (c) Unless otherwise agreed by GCL all payments and actions required to be made by Tantalex shall be made or done (as the case may be) on or before the expiration of 180 days from the date hereof. 5. GCL hereby agrees that upon the due performance by Tantalex of its obligations hereunder, Tantalex shall be released and forever discharged from all obligations to pay GCL the balance of the then(sic) outstanding of the said sum of $869,655.31 and from actions proceeding claims or demands whatsoever which GCL then has or can or may have against Tantalex for or in respect of the default recited above or any other matter or thing whatsoever concerning such default of the said lease." CL2 contemplated four things: the payment of $250,000, the issue of shares by Tantalex, the payment of $10,000, and the payment of the moneys raised by the disposal of the plant and equipment referred to in CL2(b)(iii). 8 UNREPORTED JUDGMENTS $250,000 was paid by Tantalex to GCL. It was paid not by 31 December 1986 but on 28 January 1987. It is accepted that, in this regard, Tantalex was not in breach of its obligations under the agreement because the time for payment was extended. Tantalex issued shares in accordance with CL2(b)(i): no issue arises in that regard. As to the sales of Items 40, 41 and 43 of the Tantalex property, the position was more complicated. The plant and equipment referred to in CL2(b)(ii) and (iii) was, it is agreed, not owned by Tantalex. It was leased by it from GCL. It was, in my opinion, contemplated by the agreement that the plant and equipment referred to in CL2(b)(ii) would be purchased from GCL by Tantalex: that sub-clause, in providing "for the purchase of..." the relevant items, contemplated the purchase of them by Tantalex from GCL. It contemplated in addition that the purchase by Tantalex from GCL would be in the context of or with a view to the "realisation of the equipment": CL3(b); by the sale of it to other parties. The payment of the $10,000 provided for in CL2(b)(ii) was, by CL3(b) to be "made progressively upon realisation of the equipment". In fact, arrangements were made for the sale of that equipment by a Mr Wilson. Mr Wilson appears to have been a "principal" of a company or firm Minemach, suppliers of mining and machinery supplies. The 180 day period referred to in CL3(c) expired on 31 March 1987. The plant and equipment referred to in CL2(b)(ii) and (iii) was not sold by that time. Subsequently, following consultation with GCL, Mr Wilson achieved a sale of the plant and equipment referred to in CL(2)(b)(ii) in 1988. The sale was for $10,500. After deduction of commission, the net proceeds of the sale were $9,800. The Minemach company accounted to GCL for $9,800 accordingly. Subsequently, in or about February 1990, GCL commenced proceedings against Tantalex to recover $379,441.42, being the balance of $869,655-31 which, it claimed, had not been received by it. It acknowledged that on 20 January 1988 it had received $9,800 in accordance with the agreement but suggested that the balance of the $10,000 referred to in CL2(b)(ii) had not been received. By a letter dated 21 March 1989 Minter Ellison, the solicitors for Tantalex, tendered $200 plus interest of $74 "being the difference between $10,000 referred to in the Settlement Agreement and the amount received by your client". That amount was received by GCL: it is agreed that the receipt of it does not affect the rights of GCL otherwise in respect of the agreement. In relation to the plant and equipment referred to in CL2(b)(iii), it is accepted that the sale or sales took place in the early part of 1987. Sums were received by Tantalex in respect of those sales and subsequently payments were made by Tantalex to GCL in respect of them. As I understand the final position and contentions of the parties, the dispute which GCL now raises relates to a net amount of $13,500, being the proceeds of sale of plant and equipment in March and May 1987. The contention of GCL is that though it received some of the proceeds of the various sales of plant and equipment, the amount of $13,500 remained outstanding. Minter Ellison, in the letter of 21 March 1989, conceded that amounts "received from Minemach in March and May 1987... have apparently not been accounted to your client". A tender of payment was then made and presumably accepted. It is from these facts that the present dispute arises. GCL claims that, at the time of the agreement of 2 October 1986, Tantalex owed it $869,655.31; that it agreed to discharge that liability "upon the due performance by Tantalex of its URJ PANGEA RESOURCES LTD v GENERAL CREDITS LTD (Mahoney JA) 9 obligations" under the agreement; that Tantalex did not do so; and that therefore GCL is entitled to the balance in fact unpaid of the $869,655.31. Tantalex contends that what occurred constituted "the due performance by Tantalex of its obligations" under the agreement and that accordingly it was released from that balance. It is conceded by Tantalex that the discharge of its indebtedness was to take place, not by virtue merely of its promise to do what the agreement obliged it to do, but by virtue of the performance of the obligations which, by the agreement, it undertook to perform. The appeal has proceeded on that basis. In the circumstances, the matter should be decided accordingly. I shall consider in turn what happened in respect of CL2(b)(ii) and CL2(b)(iii). 1. CL2(b)(ii): It is necessary to consider two things: (a) what were the obligations of Tantalex under the agreement in this regard; and (b) whether there was "the due performance" by Tantalex of those obligations. (a) The obligations of Tantalex involved (I shall put the matter in a neutral sense at this stage) the payment of $10,000 on or before 31 March 1987. The obligation in this regard was for the payment of $10,000, not merely the sum or the net sum received upon the "realisation" of the relevant equipment by subsequent sale by it. However, the payment of $10,000 was, by CL3(b) to be made "upon realisation of" the relevant items. But, as GCL has contended, the "payments and actions required to be made or done by Tantalex" on or before 31 March 1987: CL3(c); included the purchase of the relevant items by it and the realisation of them within CL3(b). GCL contends that Tantalex was in default in respect of these obligations in two respects: what was done was not done on or before 31 March 1987; and the payment made to it by Tantalex was not for $10,000 but only for $9,800. There has been doubt as to the reliance placed upon these and in particular upon the first of them, the non- payment within the specified time. The basis on which the matter was dealt with before the trial judge is, from the terms of the judgment, not completely clear. His Honour said: "Tt follows that the defendant would be entitled to succeed but for the fact that the sum paid pursuant to CL2(b)(ii), within the time fixed by CL3(c), was $9,800 rather than $10,000, remembering that the defendant paid and the plaintiff accepted the further sum of $200, plus a further $74 in respect of interest upon that sum in March 1989. On the proper construction of CL2 and CL3, I conclude that the plaintiff should succeed on this issue, subject perhaps to consideration of the circumstances in which $274 was paid, and accepted." His Honour appears to have found that the $9,800 was paid "within the time fixed by CL3(c)" and to have decided the claim against the defendant upon the basis of the non-payment of $200. However this is, as I have said, not completely clear: it may be that his Honour acted upon the basis that no portion of the $10,000 was paid "within the time fixed by CL3(c)". Before this Court, it was not clear from the argument whether the plaintiff relied upon the contention that the $9,800 was not paid within the time fixed by CL3(c). After the court had reserved its decision, the court directed the attention of the parties to what was said in argument and invited further submissions upon this matter. The plaintiff then filed further written submissions in which it was contended that it relied, and was entitled to rely, before this Court on that matter. 10 UNREPORTED JUDGMENTS That has not been substantially contested by the defendant. I shall therefore deal with the matter upon the basis that the default alleged is in respect of each of these two matters. I shall deal first with the significance of the failure to pay the outstanding $200. There are three aspects of the obligations of Tantalex under the agreement which are relevant for present purposes. First, Tantalex's obligations extend to the whole of the matters referred to in CL2, viz, the payment of $250,000, the issue of one million 20 cent fully paid shares, the payment of $10,000, and the dealing with "the disposal of the major remaining plant and equipment...". Second, its obligations in relation to the matter directly in question, the payment of $10,000, were conditioned by CL3(b) and (c). And, for present purposes, the discharge of Tantalex's liability for $869,655.31 was conditional upon "the due performance by Tantalex of its obligations hereunder": CLS. It is relevant to have in mind the totality of the obligations of Tantalex under the agreement: this will be relevant in considering whether there was "due performance" of its obligations under the agreement. Tantalex was obliged to pay $250,000 in cash, to issue one million 20 cent fully paid shares having at least some value, to pay $10,000, and to allow or be concerned in the disposal of the residue of the plant and equipment. It is not clear how the failure to pay the $200 now in question or to pay it by 31 March 1987 is to be measured against the totality of these obligations. Counsel suggested in argument that the $200 represented.04 per cent of the company's total obligations. It is 2 per cent of the sum of $10,000 provided for in CL2(b)(ii). How its significance in the context of its obligation to dispose of one of its assets, its share capital, and the unquantified price of the residue of the plant and equipment is to be calculated is, as I have said, not clear. On any assessment, it constitutes a very small part of the totality of Tantalex's obligations. It has however been accepted that CL2(b)(ii) required the payment in cash of $10,000. The agreement provided for the payment of that money "for the purchase of" the items of plant there specified and it provided further that the payment of that sum was to "be made progressively upon realisation of the equipment". It was contemplated that, the plant and equipment having been leased from GCL, Tantalex would "purchase" the relevant items of it as specified in CL2(b)(ii). It was further contemplated that Tantalex would then itself sell those items of plant to third parties. If and insofar as it be relevant, or admissible, the evidence disclosed that negotiations for such a sale had in fact been undertaken. But, in my opinion, the effect of these provisions was not to impose an obligation merely to pay to GCL the proceeds of realisation of the particular items: the obligation remained one to pay $10, 000. Therefore, the fact that Tantalex received, as the net proceeds of the sale, only $9,800 did not relieve it of the obligation to pay $10,000. Reference was made in argument to the relationship between CL3(b) and CL3(c). It was submitted that the effect of CL3(c) was to qualify CL3(b) and that all that had to be done by Tantalex had to be done within 180 days of the date of the agreement, viz, by 31 March 1987. The result of this would be that the items had to be realised by them and that if there had been no realisation of the relevant items of equipment within CL2(b)(ii) by that time, it remained the obligation of Tantalex to pay $10,000 by 31 March 1987. That, I think, is the correct construction. CL3(c) operates to require that, as and when the equipment is realised and the proceeds of realisation received, the proceeds are to be paid to URJ PANGEA RESOURCES LTD v GENERAL CREDITS LTD (Mahoney JA) 11 GCL, even though that be before 31 March 1987. But CL3(c) put an overall time limit upon the discharge of these obligations, including the obligation to realise and to pay, inter alia, the $10,000. I do not mean by what I have said that CL3(b) has no effect upon the nature of the obligation imposed by CL2(b)(ii). It may be that the provision that the amount payable under CL2(b)(ii) be paid "progressively upon realisation of the equipment" operates to create an equitable assignment or security over the proceeds of sale of the relevant equipment: see Palmer v Carey (1926) AC 703; Robertson v Grigg (1932) 47 CLR 257 at 265. However, it is, in my opinion, not necessary to pursue that matter: no issue has arisen by reference to it. (b) I come therefore to the significance of the reference in CL5 to "due performance". Tantalex owed $869,655.31. The agreement, by CL2, provided that Tantalex would "discharge that liability in the following manner:...". And, by CLS, GCL agreed that "upon the due performance by Tantalex of its obligations hereunder" Tantalex should be "released and forever discharged from" the balance of that amount. The question to be determined is therefore whether there was a failure of due performance of such obligation because, though the other obligations were performed, the obligation to pay $10,000 was performed only to the extent of $9,800. Mr McDougall QC has, in his careful submissions, suggested in effect that it would be strange if a failure to perform limited to the minor deficit here in question should lead the court to the conclusion that the balance of the amount of $869,655.31 remained to be satisfied. There is, I think, force in this submission. It would be sad if the law required, at least in such a case as this, that the object which Tantalex sought to achieve and GCL was prepared to concede was defeated by a minor or even, as Mr Lindgren QC accepted, the smallest deficit in performance. However, the agreement is to be given effect according to the intention of the parties as appearing from its terms and it is necessary to determine whether that result flows from the terms of it. Before doing so, it is proper to record how that issue has been presented for determination and what has not been raised. The court does not know why the $200 was not paid: at least, the matter has not been dealt with in any detail. Nothing has been established as to the circumstances in which the deficit of performance occurred. It is open to a court, exercising equitable jurisdiction, to mitigate the effect of an agreement if a deficit in performance has resulted from, eg, mistake or accident. The jurisdiction of the court in this regard is well established: see, eg, Storey on Equity Jurisdiction, 11th ed (1873), para78, at 84 (accident) and ch 5 (mistake); Halsbury's Laws of England, 4th ed, vol 16, paral235. The extent of the court's jurisdiction in relation to accident and mistake has not been argued: no application has been made for the exercise of it. Therefore this Court should, in my opinion, deal with the present dispute upon the basis that no case has been made out for the application of those principles. It has not been established whether the deficit in performance resulted from, eg, deliberate default by Tantalex or a misunderstanding of the requirements of the agreement. It is therefore necessary to deal with this appeal upon the basis that issues of this kind do not arise. It was on that basis that the matter was argued before the trial judge. 12 UNREPORTED JUDGMENTS What is in issue in relation to the non-payment of $200 is therefore the effect of a minor deficit in the performance of obligations under an agreement. This has been the subject of consideration in relation to, inter alia, the termination of an agreement for default and the construction of the terms of the agreement. It and associated matters have arisen in cases where the court has considered whether an agreement may be terminated for breach: see generally Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632; (1938) 61 CLR 286; Associated Newspapers Ltd v Bancks (1951) 83 CLR 322; DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423; and Citicorp Australia Ltd v Hendry (1985) 4 NSWLR 1. Where there has been a deficit in the performance of a party's obligation, the other party may be entitled to claim a termination of the agreement. Without limiting the grounds on which a right to terminate for default may arise, it ordinarily arises because what has happened is a fundamental breach, a repudiation of the agreement or a breach of a condition of it. A minor deficit in performance will ordinarily, by definition, not constitute a fundamental breach and so provide the cause of termination: see Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549 at 561-2.A minor deficit in performance may constitute evidence of an intention to repudiate an agreement but, in most cases, the question will not arise: see generally Carr v JA Berriman Pty Ltd (1953) 89 CLR 327. But such a question may arise where the non-performance, although minor, involves a breach of a condition. A term which is a condition, either of the contract coming into force or of its continuance may constitute a ground on breach for termination of the contract. A term which is a condition merely of the performance of some obligations of the contract may give rise to more difficult questions: see generally Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537. In the present case, the due performance by Tantalex of its obligations under the agreement was a condition of the agreement by GCL that Tantalex should be released and discharged from its obligation to pay the balance of its indebtedness then outstanding: CLS. The effect of a minor deficit in the performance of a condition has, in my opinion, been considered in at least two respects: reference has been made to the possibility that a breach of a condition which ordinarily would justify termination of an agreement will not do so if the breach is minor; and the fact that the term is a condition ordinarily grounding termination has, I think, been seen as relevant to the construction of the term and to whether it should be read in such a way that a minor deficit in performance is not seen as a breach of it. In the first of these cases, the construction of the condition is not affected: the obligation remains, to adapt the present case, to pay $10,000. But, the suggestion has been, effect is given to the fact that the instant breach is minor by holding that such a minor breach does not give rise to a right to termination. Such a formulation of the principle does not, I think, appear in terms in the cases. But, I am inclined to think, the reasoning of Jordan CJ in the Tramways Advertising case was founded upon such a basis. The court was there required to consider the breach of a term requiring that advertising be displayed on trams for "at least eight hours". Two questions arose: whether the term was a condition of the contract or merely a warranty; and if it was a condition, what rights flowed from the breach of it. In considering the first question, Jordan CJ: at 38 SR (NSW) 632 at 641-2; said: "The question whether a term in a contract is a condition or a warranty, ie, an essential or a non-essential promise, depends upon the intention of the parties as appearing in or from the contract. The test of essentiality is URJ PANGEA RESOURCES LTD v GENERAL CREDITS LTD (Mahoney JA) 13 whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or substantial performance of the promise, as the case may be, and that this ought to have been apparent to the promisor.... If the innocent party would not have entered into the contract unless assured of a strict and literal performance of the promise, he may in general treat himself as discharged upon any breach of the promise, however slight. If he contracted in reliance upon a substantial performance of the promise, any substantial breach will ordinarily justify a discharge." It may be inferred from what the Chief Justice there said that a term may be a condition if only "a substantial performance" of the obligation that it imposed was expected. It would appear to follow from this that, if there was a performance of it not in terms but only substantially, that deficit would not give rise to a right to terminate for breach of the condition. Therefore, it would appear to follow, a right to terminate for breach of a condition providing for the payment of $10,000 would not arise from the payment only of $9,800 if the intention discerned by the court was that the payee "would not have entered into the contract unless he had been assured of... a substantial performance of the promise". When the matter was considered in the High Court, it was determined upon a different basis. Latham CJ dealt with the matter upon a basis of construction to which I shall refer. He held that, upon the basis of an extended construction of the requirement for "at least eight hours" display, the condition had been broken: at 304-5. Rich J gave the obligation a literal construction: at 306. McTiernan J did the same: at 311-2. Dixon J dissented: his Honour leaned to a more extended and less literal construction: at 309-310. There is, in my respectful opinion, attraction in a view which accepts that, if that which led the parties to see the term as essential was the necessity for not a literal but only a substantial performance of it, then a performance which is substantial only should not give rise to the consequence in law that the agreement may be terminated for such a breach. In the present case, the due performance of Tantalex's obligations was not, in literal terms, made a condition of the operation of the agreement: it was, by inference, a condition of the agreement of GCL that Tantalex should be released and discharged from the balance outstanding of the debt. It is, I think, at least arguable that, had GCL adverted to the matter, it would have accepted, in the sense to which Jordan CJ referred, that the essential nature of the term depended not upon the literal but upon a substantial performance of it. However, it is not necessary to form a final conclusion upon this aspect of the matter. I am of opinion that the agreement, properly construed, required only the substantial performance of Tantalex's obligations and that what occurred constituted such a performance. As I have said, it is to be accepted that the release and discharge of Tantalex was conditioned upon "the due performance" of its obligations. Those obligations involved, inter alia, the payment of $10,000. But, where the intention of the parties is clear, it has been accepted that words otherwise clear or precise may be construed as if "approximately" or "substantially" were added to them. In my opinion, such a construction is to be adopted in the present case. In Bowes v Chaleyer (1923) 32 CLR 159 the commercial contract provided for the sale of goods, to be shipped to Melbourne from Europe, "Half as soon as possible. Half two months later". Knox CJ: at 168; construed the agreement as 14 UNREPORTED JUDGMENTS requiring the shipment of one half of the goods ordered on each occasion but said that "even assuming that the contract did not require the first half to be comprised in one shipment, the admitted facts show that neither the first shipment taken alone, nor the first and second shipments taken together, consisted even approximately of one half of the goods ordered...". Higgins J held that the contract required the plaintiff "to have the goods shipped in halves, with an interval of two months" and that this had not been done: at 190-1. Starke J took a somewhat different approach. His Honour: at 192-3; said: "The written order contained these words: "Goods to be shipped per sailer/steamer. Half as soon as possible. Half two months later.' As a matter of construction, these words mean, in my opinion, that the goods are to be shipped in equal parts, the first part as soon as possible, and the second part two months after the first part has been shipped. A stipulation for shipment in half parts does not warrant a piecemeal shipment of those parts; the shipment of the half part must be in one parcel. 'In carrying out a commercial contract such as this, some slight elasticity is unavoidable; no one supposes that' that shipment must be mathematically one half of the goods purchased; it must, however, be substantially of the quantity specified (cf Harland and Wolff v Burstall and Co (1901) 6 Com Cas 113 at 116). The words 'as soon as possible' in this contract mean 'within a reasonable time', regard being had to the ability of the vendor to obtain the goods from the manufacturers and to despatch them to the purchaser...". His Honour concluded that on that construction, there had been a breach. Isaacs and Rich JJ dissented. Their Honours: at 170-1; said: "In all cases of contract the supreme function of the court is to see that the real intention of the parties is enforced, so far as that can be ascertained or deduced from the language they have used with reference to the circumstances in which they have used it. Particularly is this so in mercantile contracts; since merchants are habitually less formal than lawyers, and trust to terse and often elliptical modes of expression that need close attention to surrounding circumstances in order to appreciate their true meaning. The court must be careful to maintain the spirit of the bargain so far as that is consistent with the language employed, neither neglecting the materiality of stipulations expressly assented to, nor blindly adhering to form at the expense of substance whereby either party may slip out of an honest bargain...". Subsequently, at 174-7, their Honours examined the meaning of, inter alia, the two phrases referred to. They held that "business efficacy" indicated that the terms did not strictly impose a condition but allowed appropriate flexibility in the performance of the obligations. In the Tramways Advertising case Latham CJ considered the requirement imposed by the words: "we guarantee that these boards will be on the tracks at least eight hours per day throughout your season". The Chief Justice: (1938) 61 CLR at 304; said: "But it is still necessary to consider what default will amount to a breach of the clause. The clause used the words "at least eight hours' but, in my opinion, such a phrase should not be interpreted with absolute mathematical exactitude in a commercial contract of this class. In some contracts it may be proper to construe references to time with absolute and precise accuracy down to minutes and seconds, but in a contract dealing with the display of roof boards on trams for at least eight hours per day the words 'eight hours per day' should be understood as URJ PANGEA RESOURCES LTD v GENERAL CREDITS LTD (Mahoney JA) 15 meaning substantially eight hours per day. The clause would not, in my opinion, be broken by small occasional deficiencies. I give to this clause the same kind of construction which was given in Bowes v Chaleyer (1923) 32 CLR 159 to such phrases as 'half' the goods and 'two months later'. The court read these provisions as conditions but interpreted them as if the word 'substantially' had been introduced into them. I take the admission that each board was not exhibited for at least eight hours a day as an admission that it was not the case that each board was exhibited for substantially eight hours each day. I am accordingly of opinion that the defendant was entitled to determine the contract by reason of the past breaches of the plaintiff." Such an approach to the construction of "due performance" may, in my opinion, properly be taken in the present case. It was not, I think, the intention of the parties that if Tantalex performed all but the most minor part of its obligations the object of the agreement should yet be defeated. Thus, for example, the agreement provided that Tantalex should "use its best endeavours to have the shares" provided in CL2 "listed with the Australian Associated Stock Exchanges". That was part of the obligations to be performed by Tantalex under the agreement. It could not have been the intention of the parties that, if Tantalex failed to use its best endeavours to have the shares listed on one stock exchange, the release and discharge should not take place and that even though, in the event, the shares were listed on all stock exchanges. They intended, I think, more elasticity than that. In my opinion, therefore, the operation of CL5 was not prevented if there was a deficit in its performance of an appropriately minor nature. Was Tantalex's non-performance of that nature? I have referred to the significance of the failure to pay $200. It was, as I have indicated, a minor matter in the context of the total obligations of Tantalex under the agreement. Mr Lindgren QC accepted that his argument that any deficiency in performance would defeat the operation of CLS would apply even if the deficit involved a payment short by only $1. I do not think that submission should be accepted. The agreement is a commercial agreement. It does not spell out in terms all of the obligations of the parties or lay down the letter of what is to be done. It covers some matters and leaves others to be implied. There are apparent omissions: cf, for example, CL3(b). The obligations of Tantalex under the agreement range from the large (the payment of $250,000) to the small (the payment of $10,000). And the obligation to issue the one million shares "upon the date of this agreement': CL2(b)(i); was, I think, intended to be interpreted in substance and with some flexibility. It was not, I think, contemplated that a deficit in performance of some of the minor obligations undertaken would constitute a failure of "due performance" of all of them. I do not think that there was such a failure in the present case. T have to this point dealt with the effect of the failure to pay $200 in due time. I have dealt with this separately because of the way in which the failure to pay the full $10,000 by 31 March 1987, the time required by CL3(c), has been dealt with and against the possibility that a different view may be able to be taken in respect of this obligation. I come now to deal with the failure to pay the full $10,000 in time. As I have said, the sale of the relevant equipment was not completed, and so the sum from which the $10,000 was paid was not received, until some time in 1988. It was therefore after that date and from the net proceeds of that sale that the $9,800 was paid to GCL. 16 UNREPORTED JUDGMENTS If the obligation of Tantalex was to pay $10,000 by 31 March 1987, there was a breach of that obligation. I am not able to conclude that, in the sense to which I have referred, that was "a minor matter" or that there was a substantial performance of the obligations of Tantalex. It may be that the default was minor and that the performance was substantial. But those matters must be decided on the evidence before the court and that evidence, as far as it extends, does not satisfy me that it was so. I have considered whether, in view of the terms of the judgment of the trial judge, I am constrained to decide otherwise. I do not think that I am. On that basis, I am not satisfied that there was "due performance by Tantalex of its obligations hereunder". I shall, in favour of the defendant, assume that "due performance" does not require the performance of all of its obligations literally in accordance with the terms of the agreement. As I have indicated, the terms of the agreement indicate that the parties contemplated - I put the matter generally - some flexibility in the performance of it. Accordingly, there could be "due performance" notwithstanding that there were minor or incidental non-compliance with the literal terms of the agreement. But I am not able to say that that flexibility extended to a default in the payment of $10,000 over the period of months here in question. I am satisfied that it did not. I am conscious that in fact other obligations were not performed strictly in accordance with the terms of the agreement and that no point has been taken in relation to that non-performance. But nothing has been urged, or at least established, to show that that can lead to a construction of the present obligation different from that which the terms of it require. And it has not been argued, or established, that the delay in payment was excused, by the conduct of the parties or otherwise or that it resulted from a misunderstanding of the terms of the agreement which might be relied upon for the defendant. The rights of the parties have been argued by reference essentially to the terms of the agreement. Therefore, with some reluctance, I conclude that there was not due performance of Tantalex's obligations in this regard. 2. CL2(b) (iii): GCL relied also upon the failure of Tantalex to perform its obligations under CL2(b)(iii). Some at least of the failure alleged is referred to in the letter dated 21 March 1989 from Minter Ellison, the solicitors for Tantalex. That letter refers to substantial amounts which, even at that time, had not been paid to GCL. Upon any view, the amounts there referred to were, it was submitted, not paid to GCL either "upon realisation of the equipment" or "on or before the expiration of 180 days from the date" of the agreement. In order to consider this submission, it is necessary first to determine the extent of the obligations of Tantalex under CL2(b)(iii). The plant and equipment was owned by GCL. There had been a lease of it to Tantalex. In this case, the items were not to be purchased by Tantalex and resold. The clause provided that the sale should be "effected" by an agent for GCL, albeit one who was a director of Tantalex. Prima facie it might be thought that the "effecting" of the sale included the receipt of the proceeds of it and that therefore those proceeds would be held, not by Tantalex, but by Mr Seckold as the agent of GCL. Subject to what I shall say, CL2(b)(iii) on a strict reading imposed no direct obligation on Tantalex in respect of the sale: at most, it imposed indirect obligations involving that it not interfere with the sale or the like: Electronic Industries Ltd v David Jones Ltd (1954) 91 CLR 288. Such indirect obligations are not here in question. URJ PANGEA RESOURCES LTD v GENERAL CREDITS LTD (Mahoney JA) 17 However, the clause involves an agreement by Tantalex "to discharge that liability" "by payment of" the moneys raised by the disposal of the remaining plant and equipment. It might be thought that such payment could not be made by Tantalex unless Tantalex itself received the proceeds of the sale. But prima facie it was the obligation of Mr Seckold, as agent for GCL, to pay those proceeds not to Tantalex but direct to GCL. He would prima facie be in breach of his fiduciary duty to GCL if he did otherwise. How, then, was CL2(b)(iii) to operate and what obligation did it impose on Tantalex? The words of clause 2(b)(iii) could perhaps be given effect by reading "by payment of" as "by ensuring payment of'. But I do not think that that construction should be adopted. It is, in my opinion, better to treat the clause as badly drafted and as involving the attempt to impose upon a person not a party to the agreement, Mr Seckold, an obligation which, in law, he would not have, unless, at least, he accepted it. CL3(a) gives rise to an analogous problem. It requires "all offers for the purchase of remaining items of major equipment" to be submitted to Australian Guarantee Corporation Ltd for approval before acceptance. As the sale of that equipment was to be effected by Mr Seckold as agent for GCL, that obligation prima facie would lie not on Tantalex but on Mr Seckold: unless, at least, CL3(a) be limited to only such offers as were received by Tantalex and not by Mr Seckold. That, I think, is a limitation which was not what the parties had in mind. In the end, I am not satisfied that the obligation to pay the moneys raised by the disposal of the relevant plant and equipment was an obligation primarily upon Tantalex "hereunder", ie, under the agreement. Tantalex may have acquired obligations as the result of the receipt of such moneys from Mr Seckold if, in breach of his fiduciary duty to account or otherwise, he paid them to Tantalex. But those obligations were not obligations "hereunder" within CLS. In my opinion, therefore, the failure of the persons responsible to pay the relevant moneys to GCL at an earlier date than they were paid does not represent a failure duly to perform the obligations of Tantalex under the agreement. Before parting with this appeal it is proper to record that, in my opinion, the basis upon which the appeal falls to be decided is unsatisfactory. The matter was, the court has been informed, dealt with in the Commercial Division upon limited evidence. The judge was, it has been said, provided with certain affidavits and an agreed bundle of documents. His Honour himself referred to the limitations of what was before him and the manner in which the issues fell to be decided: the trial, his Honour said, "took an unusual course'. It is, of course, proper that the parties, particularly in the Commercial Division, reduce the issues to be determined to those genuinely in dispute and that the evidence be presented in a form which reduces to the minimum disputes as to the facts. This is not merely proper but also necessary. But, in the end, it is necessary also that the parties ensure that there is before the judge all material necessary to make clear not merely the issues in dispute but the matters which will be of assistance in the decision of those issues. And, in the end, where the interpretation of a written contract is in issue, the court must ensure as best it can that the relevant material is before it. In Bowes v Chaleyer, Isaacs and Rich JJ at 172; said: "The learned trial judge, Macfarlan J, says that 'no evidence was given as to the precise nature of a contract to indent, both parties preferring to treat it as in effect a contract by plaintiffs to purchase themselves and resell to defendant'. His Honour adds: 'I had some doubts whether this was the proper view of it'. The 18 UNREPORTED JUDGMENTS construction of the written contract being for the court, it is a question of law... It is therefore impossible, when appealed to for its judicial opinion, that the court in authoritatively declaring the rights of the parties should accept an erroneous construction of the very nature and effect of the contract, even though suggested by both parties. A court is bound to dispense the King's justice according to law... Parties may so conduct their case as to conclude themselves as to the existence or non-existence of facts, where the truth does not appear; but they cannot relieve the court from its duty of legal interpretation of documents before it, or of giving the true legal effect to facts as ascertained. The common law is as binding on the court as any statute." I confess to coming from the facts of this case with the feeling that, in the construction of the agreement, the court has been required to consider questions of interpretation and construction of the agreement and of what the parties did, without having all of the facts which would be of assistance to it for those purposes. However, the parties have joined in asking the court to give effect to the agreement strictly according to its terms. The result is, in my opinion, that the appeal should be dismissed with costs. Clarke JA I agree with Mahoney JA that the appeal should be dismissed with costs and, subject to one matter on which I would wish to reserve my opinion, I agree with the reasons which led his Honour to that conclusion. The one aspect of the case on which I would wish to reserve my position concerns the failure of the appellant to pay the sum of $200 within the contractually agreed time. While the observations of Mahoney JA on this point are persuasive it is unnecessary to deal with the point for the purposes of disposing of the appeal and I would prefer not to do so. The appeal should be dismissed with costs. Appeal dismissed with costs. Counsel for the Appellant: RC McDougall QC with S Donaldson Instructed by: Minter Ellison Counsel for the Respondent: KE Lindgren QC with J Parsons Instructed by: Corrs Chambers Westgarth