COMMONWEALTH OF AUSTRALIA v HOOPER [1992] NSWCA 44

COMMONWEALTH OF AUSTRALIA v HOOPER

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL SAMUELS AP, PRIESTLEY and HANDLEY JJA

18 February 1992, 28 February 1992

[1992] NSWCA 44

CONTRACT — Pipeline Authority makes written agreement with Australian Gas Light Company ("AGL") in which subCL7.8 says AGL shall have first refusal right to acquire pipeline — Commonwealth proposes to transfer pipeline disregarding first refusal right whether Commonwealth was a party to the agreement — if so, whether Commonwealth was bound by subCL7.8 — Held: interpreting agreement against background of commercial practicalities requires interpretation that in subCL7.8 Commonwealth joined Authority in binding promise to AGL.

Samuels JA I agree with Priestley JA.

Priestley JA This appeal deals with one issue in a dispute between the Commonwealth of Australia and the Australian Gas Light Company ("AGL"). The proceedings began in late 1990. They were commenced by Mr Hooper the Secretary and statutory agent of AGL as plaintiff against the Commonwealth and the Pipeline Authority ("the Authority") when it appeared to AGL that the Commonwealth was proposing to act in breach of what, in AGL's view, were contractual obligations it had to AGL. The matter was regarded as urgent and the issues were ordered to be tried separately. The separate trial was before Gleeson CJ, who made a declaration, in regard to one of the issues, that AGL had a contractual entitlement against the Commonwealth which the Commonwealth had denied.

Before the Chief Justice, the Commonwealth argued a number of grounds in support of its contention that it was not subject to contractual obligations asserted by AGL. In dealing with those grounds, the Chief Justice set out in some detail the circumstances surrounding two agreements made in 1974 between the Authority, AGL and other parties, and Heads of Agreement dated 21 August 1985. The issue fought before Gleeson CJ was whether under subCL7.8 of the 1985 Agreement AGL had a binding contractual right against the Commonwealth. That sub-clause reads: