Chacmol Holdings Pty Limited v Handberg (in his capacity as Administrator of Australian Risk Analysis Pty Limited) [2005] FCAFC 40 (16 March 2005)

Last Updated: 22 April 2005

FEDERAL COURT OF AUSTRALIA

Chacmol Holdings Pty Limited v Handberg (in his capacity as Administrator of Australian Risk Analysis Pty Limited) [2005] FCAFC 40

CORRIGENDUM

CHACMOL HOLDINGS PTY LIMITED (ACN 008 605 892) AND MATTHEW LEE JOHNSTON v GEOFFREY NIELS HANDBERG (IN HIS CAPACITY AS ADMINISTRATOR OF AUSTRALIAN RISK ANALYSIS PTY LIMITED) AND AUSTRALIAN RISK ANALYSIS PTY LIMITED (CONTROLLER AND ADMINISTRATOR APPOINTED) (ACN 052 231 937)

V 736 OF 2004



TAMBERLIN, NORTH AND DOWSETT JJ
MELBOURNE
16 MARCH 2005 (CORRIGENDUM DATED 22 APRIL 2005)

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 736 OF 2004

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	CHACMOL HOLDINGS PTY LIMITED (ACN 008 605 892) FIRST APPELLANT MATTHEW LEE JOHNSTON SECOND APPELLANT
AND:	GEOFFREY NIELS HANDBERG (in his capacity as ADMINISTRATOR OF AUSTRALIAN RISK ANALYSIS PTY LIMITED) FIRST RESPONDENT AUSTRALIAN RISK ANALYSIS PTY LIMITED (CONTROLLER AND ADMINISTRATOR APPOINTED) (ACN 052 231 937) SECOND RESPONDENT
JUDGE:	TAMBERLIN, NORTH AND DOWSETT JJ
DATE OF ORDER:	16 MARCH 2005 (CORRIGENDUM DATED 22 APRIL 2005)
WHERE MADE:	MELBOURNE

CORRIGENDUM

Amendment to the Reasons for Judgment of Tamberlin, North and Dowsett JJ delivered on 16 March 2005.

In paragraph 53, the answers to question 5 are amended to read as follows:

"5. (a) Did the first respondent appoint the second respondent receiver of the property of the second applicant?"

(No)

"(b) Did the second respondent accept appointment as receiver of the property of the second applicant?"

(No)

"(c) If yes to (a) or (b), did the second respondent take possession or assume control of the property of the second applicant as receiver and, if so, on what date?"

(Not necessary to answer)

"(d) Is the appointment of the second respondent as receiver of the property of the second applicant:

a. valid; or
b. of no effect?"

(Of no effect)

I certify that this is a true copy of the Corrigendum
to the Reasons for Judgment of the Honourable
Justices Tamberlin, North and Dowsett.


Associate:

Date: 22 April 2005

FEDERAL COURT OF AUSTRALIA

Chacmol Holdings Pty Limited v Handberg (in his capacity as Administrator of Australian Risk Analysis Pty Limited) [2005] FCAFC 40

PRACTICE AND PROCEDURE - Appeal - Leave to - From interlocutory judgment - Answers given to questions set down for a preliminary hearing - Relevant considerations - Well-settled principles - Caution to be exercised in hearing questions as preliminary matters - Leave granted.

CONTRACT - Meaning and operation of an all moneys clause in a Deed of Charge - Three instruments executed to effect sale of business - Contract of Sale - Deed of Acknowledgement of Debt - Deed of Charge - Not contemporaneously executed - Unusually long delay until execution of Deed of Charge - Fixed charge - Floating charge - Basic and significant distinction between fixed and floating charge - All moneys clause - Usual terms of all moneys clauses - Principles of construction of contract - Objective approach - Conflict between recital and operative clause - Operative clause unambiguous - Operative clause prevails - Appeal allowed.


Federal Court Rules O 29 r 2(a)

Décor Corp Pty Limited v Dart Industries Ltd (1991) 33 FCR applied
Neimann v Electronic Industries Ltd [1978] VR 431 applied
Grant v John Grant & Sons Pty Limited [1954] HCA 23; (1954) 91 CLR 112 discussed
Glynn v Margetson [1893] AC 351 referred to
Fountain v Bank of America National Trust & Savings Association (1992) 5 BPR 11 referred to
Buchler v Talbot [2004] UKHL 9; [2004] 2 AC 298 approved
Fire Nymph Products Pty Ltd v Heating Centre Pty Ltd (in liq) (1992) 7 ACSR 365 approved
Re Bankrupt Estate of Donnelly v Commonwealth Bank of Australia Ltd (1996) 140 ALR 46 referred to
Leggott v Barrett (1880) 15 Ch D 306 at 309 applied
MacKenzie v Duke of Devonshire (1896) AC 400 at 406 approved
Inland Revenue Commissioners v Raphael (1935) AC 96 approved
O’Loughlin v Mount [1998] SASC 6672; (1998) 71 SASR 206 discussed
Equuscorp Pty Limited v Glengallan Investments Pty Limited [2004] HCA 55 applied
State of Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146 applied
McVeigh, In the Matter of Piccolo v National Australia Bank Ltd [2000] FCA 187 distinguished
Manks v Whiteley (1912) 1 Ch 735 distinguished
Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1981-1982) 149 CLR 337 discussed
Bank of Credit and Commerce International SA v Ali [2001] UKHL 8; [2002] 1 AC 251 distinguished
Re Clark’s Refrigerated Transport Pty Ltd (In Liquidation) [1982] VR 989 referred to


Chitty on Contracts, 27th edn, Sweet & Maxwell, London, 1994
K. Lewison The interpretation of contracts, Sweet and Maxwell, London 1989
J. O’Donovan and J.C. Phillips, The modern contract of guarantee Law Book Co, Sydney, 1992
Sir Frederick Pollock Principles of contract, 3rd ed, Stevens & Sons, London, 1929
Norton on Deeds 2^nd edn (1928), Sweet and Maxwell, London
Halsbury’s Laws of Australia, vol 10
















CHACMOL HOLDINGS PTY LIMITED (ACN 008 605 892) AND MATTHEW LEE JOHNSTON v GEOFFREY NIELS HANDBERG (IN HIS CAPACITY AS ADMINISTRATOR OF AUSTRALIAN RISK ANALYSIS PTY LIMITED) AND AUSTRALIAN RISK ANALYSIS PTY LIMITED (CONTROLLER AND ADMINISTRATOR APPOINTED) (ACN 052 231 937)

V736 OF 2004





TAMBERLIN, NORTH AND DOWSETT JJ
MELBOURNE
16 MARCH 2005

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 736 OF 2004

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	CHACMOL HOLDINGS PTY LIMITED (ACN 008 605 892) FIRST APPELLANT MATTHEW LEE JOHNSTON SECOND APPELLANT
AND:	GEOFFREY NIELS HANDBERG (in his capacity as ADMINISTRATOR OF AUSTRALIAN RISK ANALYSIS PTY LIMITED) FIRST RESPONDENT AUSTRALIAN RISK ANALYSIS PTY LIMITED (CONTROLLER AND ADMINISTRATOR APPOINTED) (ACN 052 231 937) SECOND RESPONDENT
JUDGES:	TAMBERLIN, NORTH AND DOWSETT JJ
DATE OF ORDER:	16 MARCH 2005
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. Leave be granted to the Appellants to appeal from the interlocutory judgment of primary Judge.
2. Appeal allowed.
3. Orders of primary Judge set aside.
4. Matter remitted for hearing in accordance with these reasons.
5. The Respondents pay the Appellants’ costs of this appeal.

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

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 736 OF 2004

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	CHACMOL HOLDINGS PTY LIMITED (ACN 008 605 892) FIRST APPELLANT MATTHEW LEE JOHNSTON SECOND APPELLANT
AND:	GEOFFREY NIELS HANDBERG (in his capacity as ADMINISTRATOR OF AUSTRALIAN RISK ANALYSIS PTY LIMITED) FIRST RESPONDENT AUSTRALIAN RISK ANALYSIS PTY LIMITED (CONTROLLER AND ADMINISTRATOR APPOINTED) (ACN 052 231 937) SECOND RESPONDENT

JUDGES:	TAMBERLIN, NORTH AND DOWSETT JJ
DATE:	16 MARCH 2005
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

TAMBERLIN J:

1 This is an application for leave to appeal from a decision of a single Judge of the Federal Court. The appeal concerns answers given to questions that were set down for preliminary hearing pursuant to directions given by another Judge of the Federal Court under O 29 r 2(a) of the Federal Court Rules ("the Rules") on 10 May 2004.

2 The questions, as formulated and as answered, are as follows:

"1. Does the deed of floating charge dated 24 June, 1996 and made between the second applicant and the first respondent stand as security only for the repayment of the pre-existing debt of $378,000.00 (with any interest) and the sale price of $5,000,000.00 (with any interest), referred to in the acknowledgment of debt, a copy of which is exhibited "GNH-9" to the Affidavit of Geoffrey Niels Handberg sworn on 13 April 2004?"
(Yes)

"2. Have the debts secured by the floating charge been repaid to the first respondent?"
(Yes)

"3. Is the first respondent obliged to deliver to the second applicant a memorandum in the form prescribed by s 269 of the Corporations Act 2001 acknowledging that the liability or liabilities secured by the charge have been paid?"

(Yes)

"4. (a) Did the first respondent, purporting to act as mortgagee, take possession or assume control of the property of the second applicant?"

(Yes)

"(b) If yes to (a), on what date did the first respondent take possession
or assume control of property of the second applicant?"

(On or about 29 October 2003)

"(c) Was the first respondent entitled to take possession or assume control of the property of the second applicant?"

(No)

"5. (a) Did the first respondent appoint the second respondent receiver of the property of the second applicant?"

(Yes)

"(b) Did the second respondent accept appointment as receiver of the property of the second applicant?"

(No)

"(c) If yes to (a) or (b), did the second respondent take possession or assume control of the property of the second applicant as receiver and, if so, on what date?"

(Possibly on 29 October 2003)

"(d) Is the appointment of the second respondent as receiver of the property of the second applicant:

a. valid; or
b. of no effect?"

(Of no effect)

3 It is common ground that the appellants seeking leave must show:

(a) that the decision below is attended by sufficient doubt to warrant being reconsidered by the Full Court and
(b) that substantial injustice would result if leave were refused."

4 These principles are well settled: see Décor Corp Pty Limited v Dart Industries Ltd [1991] FCA 655; (1991) 33 FCR 397 at 398-399; Neimann v Electronic Industries Ltd [1978] VR 431.

5 The appellants contend that the proposed appeal involves an interlocutory decision on a point of substance with practical consequences and of a final nature, in that if the decision of the primary Judge is not set aside, the first appellant ("Chacmol") will be deprived of its alleged rights as a secured creditor under a Deed of Charge, and will only rank as an unsecured creditor in the payment of claims for debts owed by the second respondent ("ARA").

FACTUAL BACKGROUND

6 In 1995 ARA (then known as Australian Underwriting Agencies Pty Ltd) agreed to purchase from Chacmol an insurance consultancy business for the sum of $5 million. This amount was payable over five years with interest. The purchase price and a pre-existing debt of $378,000 then owed by ARA to Chacmol, were to be secured by a charge given by ARA. The Deed of Charge, which in fact was executed more than one year later, contains an "all monies" clause. It appears from the judgment of the primary Judge that after the date of the Contract of Sale of 11 May 1995, and the Deed of Acknowledgment of Debt of 22 May 1995, further advances were made by Chacmol to ARA. On 19 October 2003 Chacmol purported to appoint a receiver to the assets of ARA in accordance with the terms of the Deed of Charge. The present dispute turns on the question of whether monies advanced by Chacmol to ARA subsequent to the execution of the Contract of Sale and the Deed of Acknowledgment of Debt are secured by the Deed of Charge which was executed on 24 June 1996.

7 The Contract of Sale of 11 May 1995 recites that Chacmol has for some time carried on the business of insurance consultants under the name Project Marketing Australia at specified premises in Canberra, and that Chacmol has agreed to sell, and ARA has agreed to purchase, the business, goodwill and business name, together with the plant and equipment set out in the annexure.

8 Clause 1 is as follows:

"(a) The Vendor shall sell and the Purchaser shall purchase the Business for the sum specified in Schedule Item 7 which shall be payable as specified in Schedule Item 8 and apportioned as specified in Schedule Item 9.
(b) In addition to the Sale Price referred to Item 7 of the Schedule the Purchaser shall repay to the Vendor the sum of $378,000.00 being the balance of a loan from the Vendor to the Purchaser (the pre-existing debt) as at 31 March 1995.
(c) The sale price together with the pre-existing debt shall be repaid by sixty (60) monthly instalments as specified in Schedule Item 8."

Schedule Item 7 is the sale price of $5 million. Item 8 is as follows:

"Payment of Sale Price and of pre-existing debt: As set forth in a related Acknowledgement of Debt executed by the Vendor and Purchaser on the date of this agreement."

9 The Deed of Acknowledgement of Debt between Chacmol and ARA is dated 22 May 1995 and provides as follows:

"RECITAL:

A. The Purchaser has requested the Vendor to accept payment of the amount specified in Item 3 (‘the Sale Price’) by monthly instalments and the Purchaser acknowledges that it is indebted to the Vendor for the Sale Price.
B. The Purchaser acknowledges that it is additionally indebted to the Vendor for the amount specified in Item 4 (‘the pre-existing debt’).
C. The parties have this day executed a Contract for Sale of Business.
D. The ‘principal sum’ where used herein shall mean the total of the sale price and the pre-existing debt.

CLAUSES:
In consideration of the Vendor agreeing to accept payment of the Sale Price by instalments at the request of the Purchaser, the parties agree:

1. The Purchaser will repay to the Vendor the Principal Sum by sixty (60) monthly instalments in accordance with Schedule B, together with interest thereon, the first such monthly instalment of principal and interest to be made on or before the 30^th day of April 1995.
2. So long as the Principal Sum or any part thereof shall remain due by the Purchaser to the Vendor, the Purchaser shall pay to the Vendor interest calculated thereon at the rate charged from time to time during the currency of this Agreement by Westpac Banking Corporation or its successors known as the Indicator Lending Rate published from time to time in Australian national daily newspapers.
3. In the event that the Purchaser shall default in payment to the Vendor of any payment of principal or interest hereunder the Vendor may then demand repayment of the Principal Sum and interest thereon payable pursuant to this Deed whereupon the balance of principal and interest shall immediately become due and payable and the lender may then recover the amount thereof from the Purchaser.
4. At any time during the currency of this agreement the Purchaser may repay to the Vendor the amount of the Principal Sum and interest then outstanding or any part thereof and interest shall abate on any amount or amounts so paid.
5. Subject to the consent of Westpac Banking Corporation Limited the Purchaser will execute a Deed of Floating Charge in favour of the Vendor to secure to the Vendor the Purchaser’s obligations hereunder."

10 Item 3 of the Schedule to the Deed of Acknowledgment of Debt specifies the "Sale Price" as $5 million and Item 4 specifies the "Pre-existing debt" as $378,000.00.

11 Minutes of a meeting of the directors of ARA held on 19 April 1995 record the following resolutions:

"1. It was resolved to acquire the insurance consultancy business of Chacmol Pty Limited (formerly known as Project Marketing (Australia) Pty Limited) based in the Australian Capital Territory at an agreed purchase price of $5,000,000.00
2. It was resolved to pay the purchase price of the business to the vendor over a period of 5 years on agreed terms
3. It was resolved to grant a Floating Charge to the vendor subject to the consent of Westpac Banking Corporation Limited, to secure the debt to the vendor
4. It was resolved to execute a Contract of Sale of Business and Acknowledgement of Debt to give effect to the foregoing resolution."

12 Minutes of a meeting of the directors of Chacmol, which was purportedly held on the same date, (although the date is illegible on the copy in evidence) records the following resolutions:

"1. It was resolved to sell the insurance consultancy business of the company to Australian Underwriting Agencies Pty Limited for an agreed sale price of $5,000,000.00
2. It was resolved to allow the purchaser to pay the full purchase price over a period of 5 years on agreed terms
3. It was resolved to execute all necessary documents in the Australian Capital Territory, to put the sale into effect."

13 On 13 April 1995 Messrs Wood Fussell, the solicitors for Chacmol, wrote to Mr Barry Johnston, the Chairman of Chacmol (and also a director of ARA), enclosing "the following documents in final form for execution by Chacmol and [ARA]". The documents enclosed were the Contract of Sale, the Deed of Acknowledgement of Debt, the minutes of directors’ meetings of ARA and Chacmol, and a letter not relevant for present purposes. Wood Fussell’s letter continued:

"We shall forward the Floating Deed of Charge and related ASC documents upon receiving the written consent of Westpac as first charge holder, you may care to follow upon [sic] our written request to Dick Fuller for the consent."

Mr Dick Fuller was apparently an officer of Westpac.

14 The obtaining of consent from Westpac took longer than expected, and it was not until 24 June the following year that ARA and Chacmol executed the Deed of Charge. The Deed of Charge was in the following terms:

"WHEREAS –

1. By Contract of Sale of Business dated 11th May 1995 the Vendor agreed to sell and the Purchaser agreed to buy the business of the Vendor.
2. By Deed dated [ ] day of April 1995 (‘Acknowledgment of Debt’) the Vendor has agreed to accept the payment of the debt over a period of five years being the purchase price of the business referred to in recital 1 above.
3. The Purchaser has agreed to enter into these presents for the purpose of securing the repayment of the said debt.

NOW THIS DEED WITNESSETH that in pursuance of the said agreement and in consideration of the premises the Purchaser DOTH HEREBY charge ALL AND SINGULAR its undertaking and all its assets whatsoever and wheresoever both present and future including (without prejudice to the generality) its unsold shares, uncalled capital and unpaid calls for the time being and including all present and future book debts of the Purchaser (which undertaking assets and premises are hereinafter for brevity referred to as ‘the mortgaged premises’) with the payment to the Vendor in full free of exchange of ALL MONEYS now owing or payable or hereafter to become owing or payable to the Vendor by the Purchaser either alone or jointly with any person on any account whatsoever ALSO ALL MONEYS which the Vendor has paid or shall be on [sic] become liable to pay to for or on account of the Purchaser either alone or jointly as aforesaid either by direct advances or by reason of the Vendor paying any moneys for or on behalf of the Purchaser or entering into any bond, indemnity or guarantee for or on behalf of the Purchaser either alone or jointly as aforesaid ALSO ALL MONEYS which the Vendor shall pay or become liable to pay in connection with or incidental to preparing or completing these presents and any other documents given or to be given to the Vendor as collateral security herewith or investigating or perfecting the title to the mortgaged premises or exercising or attempting to exercise any power, right or remedy of the Vendor hereunder or on account of or arising out of any default by the Purchaser or by any guarantor for the Purchaser or any default by any other person or corporation who has or shall give collateral security to the Vendor for the Purchaser in duly performing or observing any of the covenants or agreements on the part of the Purchaser herein contained or on the part of the guarantor or other person and contained in any guarantee or other collateral security as aforesaid and also interest on all such moneys and obligations as aforesaid at the rate from time to time agreed upon between the Vendor and the Purchaser pursuant to the Acknowledgment of Debt such interest to be computed from the time or respective times of such moneys being paid or becoming due and to accrue from day to day and to be added to the principal or quarterly balances and to become thenceforth part of the facility and to bear interest accordingly (all of which moneys, obligations, liabilities and interest are hereinafter referred to as ‘moneys hereby secured’) AND the Purchaser HEREBY COVENANTS with the Vendor as follows –
A. THAT the Purchaser will pay the Vendor all moneys which are or may become owing to it by the Purchaser under or pursuant to the Acknowledgment of Debt and duly and punctually observe every other obligation on its part expressly contained or implied in the Acknowledgment of Debt." (Emphasis added)

There follow a number of covenants dealing with such matters as rates, taxes, and repairs, covering nearly seven closely-typed A4 pages.

REASONING BELOW

15 The primary Judge considered that the Contract of Sale, the Deed of Acknowledgment of Debt and the Deed of Charge were entered into to give effect to one object, and were to be construed as a single instrument and read together. In reaching this conclusion, his Honour referred to the fact that the circumstances included the purchase of a business with a price being payable by instalments, and the securing of that debt and a pre-existing debt over the assets of the purchaser, which indicated that there was only one transaction. His Honour observed that on their face each of the documents refers to at least one of the other documents. By way of illustration, the Contract of Sale refers to "a related Acknowledgment of Debt". The Deed of Acknowledgment of Debt refers to the Contract of Sale and to the execution of a Deed of Charge, subject to the consent of Westpac. The Deed of Charge refers to the Contract of Sale and the Deed of Acknowledgment of Debt.

16 His Honour noted that there was an usually long delay until the Deed of Charge was executed, but found that this delay was plainly not contemplated by the parties in April/May 1995. Nor was there any suggestion that the delay was the fault of the vendor or the purchaser. He pointed to the fact that if ARA had refused to execute the Deed of Charge, Chacmol could have obtained a court order compelling it to do so. He considered that each of the documents by itself would not have been sufficient to achieve the object of the parties, and that it was plain that each document was executed on the faith of all the others being executed. His Honour then observed that if the three documents are treated as part of one transaction, there was an obvious conflict between them. He referred to way that the Contract of Sale speaks of payment of the sale price and the pre-existing debt as set forth in the Deed of Acknowledgment of Debt, and that the Deed of Acknowledgment of Debt refers to the "Principal Sum" (the sale price and the pre-existing debt) and the securing of "the purchaser’s obligations" hereunder, which comprised the payment of the principal sum and interest. In contrast, he noted that the Deed of Charge read literally is expressed to secure "all monies now owing or payable or hereafter to become owing or payable "to Chacmol by ARA and also other liabilities". His Honour considered that as a matter of construction the general words of the "all moneys" clause should be read down and confined to the object of the transaction, which was to secure only the purchase price and the pre-existing debt. He referred to the principles set out in Grant v John Grant & Sons Pty Limited [1954] HCA 23; (1954) 91 CLR 112 at 131.

17 His Honour considered that the principles referred to in Grant were not to be confined to a special rule of construction which applied only to releases of claims, and said that there was no reason to treat releases differently from other legal instruments in this respect. His Honour also referred to observations made in Glynn v Margetson [1893] AC 351 at 355 and Fountain v Bank of America National Trust & Savings Association (1992) 5 BPR 11,817 at 11,819 per Gleeson CJ. His Honour noted that the respondents laid stress on the literal meaning of the all moneys clause, the logical consequence of that argument would be that an all moneys clause could never be read down, which was clearly not the law. His Honour then answered the questions posed in the directions hearing by another Judge of the Federal Court in the manner set out in par [2] above.

REASONING ON APPEAL

18 The primary question on this appeal concerns the meaning and operation of the Deed of Charge executed on 24 June 1996. The Deed of Charge as executed in its terms is expressed to operate as a fixed charge with regard to a wide range of assets, and as a floating charge in relation to the unspecified assets. In this respect it cannot be said to be identical with the document contemplated in the Deed of Acknowledgment of Debt of 22 May 1995, which imposes an obligation on the purchaser in clause 5 to execute a Deed of Floating Charge in favour of the vendor to secure to the vendor the purchaser’s obligations under the Deed of Acknowledgment of Debt. The obligations under the Deed of Acknowledgment of Debt are set out in clause 1, namely, that the purchaser will repay to the vendor the principal sum, being the total of the sale price and the pre-existing debt, by 60 monthly instalments. There is no reference in the Deed of Acknowledgment of Debt or the Contract of Sale to the execution of any instrument which operates as a fixed charge.

19 The ARA Board Minutes on 19 April 1995 also refer to the grant of a "Floating Charge" to secure the debt to the vendor. At this meeting it was resolved to execute the Contract of Sale and Deed of Acknowledgment of Debt to give effect to the resolution with respect to the floating charge. The Board Minutes of Chacmol, which bear an illegible date, record a resolution in clause 3 to execute all necessary documents in the Australian Capital Territory to put the $5 million sale of the insurance consultancy business into effect. Clause 2 of these Minutes records a resolution to allow the purchaser to pay the full purchase price over a period of five years on agreed terms.

20 None of the executed instruments or resolutions refer to a fixed charge as being in the contemplation of the parties.

21 The specific question of construction raised on this appeal is the meaning of the words in the Deed of Charge, namely "ALL MONEYS now owing or payable ... to the Vendor by the Purchaser ... on any account whatsoever."

22 On accepted principles of construction of contract, the intention of the parties must be ascertained from the language they have used, considered in the light of surrounding circumstances, and with regard to the object of the contract, in so far as that has been agreed or proved. The Court will generally adopt an objective approach, which is to say that it will consider what would have been the intention of reasonable persons in the position of the actual parties to the contract. Where the words of a contract are clear the Court must give effect to them: see K Lewison The interpretation of contracts 1989, Sweet and Maxwell, London, at [2.03]-[2.05]. In the absence of a contrary intention, a deed usually speaks from the date of delivery: see Lewison at [9.03].

23 The first task therefore is to consider the words which are to be construed in the Deed of Charge and to ask whether the words are clear and unambiguous.

24 The recitals in the Deed of Charge refer to the Contract of Sale of Business dated 11 May 1995, and to the Deed of Acknowledgment of Debt of 22 May 1995. Recital 2 states that the vendor has agreed to accept the payment of the debt (being the purchase price of the business in the Contract for Sale). The purchase price of the business is $5 million. In the Deed of Acknowledgement of Debt, recital D uses the expression "Principal Sum", which means the total of the sale price plus the pre-existing debt. There is no reference to the expression "the debt" in the Deed of Acknowledgment of Debt. The agreement in the Deed of Acknowledgment of Debt, in operative clause 1, is to repay to the vendor the Principal Sum by 60 monthly instalments, which is to say, to repay the sale price of $5 million plus the pre-existing debt of $378,000.

25 The recitals to the Deed of Charge are therefore not completely clear or unambiguous. Recital 2 to the Deed of Charge does not state the full effect of the Deed of Acknowledgment of Debt, since the reference to "debt" there is to the purchase price of the business at $5 million. However, both parties have proceeded on this appeal on the basis that the debt referred to the recitals to the Deed of Charge is in the sum of $5,378,000.

26 Recital 3 to the Deed of Charge expresses an intention of the purchaser as being to enter into the Deed of Charge to secure the repayment of "the debt of the purchase price of $5 million". However, on the construction advanced by the appellants, the Deed of Charge achieves that purpose and more. It is relevant and important that the effect of securing the purchase price plus the pre-existing debt ($5,378.000) in the clause is covered by the Deed of Charge although on the appellants’ construction it provides a more extensive charge than that contended for by the respondents.

27 The first operative part of the Deed of Charge is that the purchaser will pay the vendor all moneys now owing or payable on any account whatsoever. These words on their ordinary and natural English meaning encompass all moneys payable on any account.

28 It is important to note that the Deed of Charge provides that the charge is to operate as a fixed charge as regards certain specified property and as a floating security only as regards all other assets. His Honour the primary Judge did not advert to this consideration in his reasons. The only charge contemplated by the Board Minutes and the Deed of Acknowledgment of Debt is a floating charge. The difference between a floating charge and a fixed charge is significant in the present circumstances, because the Deed of Charge executed is different in nature to that described by the parties in the earlier instruments and records. The distinction between the two types of charge was considered in Buchler v Talbot [2004] UKHL 9; [2004] 2 AC 298 and described at pars [1] and [3] by Lord Nicholls as follows:

"[1]... floating charges are a judge-made, or judge-approved, type of security. They originated in the early days of the development of company law in the 1870s. They are a means whereby a financier, typically a bank, provides a company with money on the security of the company’s assets which continue to be used and turned over in the ordinary course of business until, when certain events happen, the charge ‘crystallises’ into a fixed charge on the assets then within its scope. Notable among crystallising events are the appointment of a receiver by the charge holder or the company being wound up.
...

[3] Typically, a floating charge extends to substantially all the assets of a company. On its face this gives the charge holder a high degree of control over the assets and fortunes of a company."

29 In the same case at par [29] Lord Hoffmann said:

"When a floating charge crystallises, it becomes a fixed charge attaching to all the assets of the company which fall within its terms. Thereafter the assets subject to the floating charge form a separate fund in which the debenture holder has a proprietary interest. For the purposes of paying off the secured debt, it is his fund. The company has only an equity of redemption; the right to retransfer of the assets when the debt secured by the floating charge has been paid off."

30 In Fire Nymph Products Pty Ltd v Heating Centre Pty Ltd (in liq) (1992) 7 ACSR 365, Gleeson CJ (with whom Handley and Sheller JJ agreed) said at 371-3:

"Floating charges are found in contract and their legal effect derives from the agreement between the parties. Originally the usual form of contract which was held to create a floating charge provided that, upon the happening of some stipulated event or events, the charge would become enforceable. The chargee was then entitled, but not bound, to intervene, ordinarily by appointing a receiver. The courts held that in such a case the charge crystallised (that is to say, became converted to a fixed charge on the subject assets) upon such intervention.
...

Upon crystallisation the chargee has an interest which may compete for priority against the interest of a third party, and the third party’s interest may derive from the dealing that caused crystallisation.
...

The essence of crystallisation is that a charge fixes upon certain specific property, and that the mortgagor company’s contractual right as against the chargee to dispose of the property comes to an end."

31 It is apparent from the above authorities that there is a basic and significant distinction between a floating charge and a fixed charge.

32 The respondents rely on cross references in the Contract of Sale, Deed of Acknowledgment of Debt and Deed of Charge as a basis for contending that they must be construed as a single instrument effecting a single transaction. Chitty on Contracts, 27th edn, Sweet & Maxwell, London, 1994 at par 12057, which was cited by his Honour the primary Judge at [12], refers to the possibility that a "palpable mistake in [a] lease may be corrected by reference to [a] counterpart." However, this extract refers to the documents forming part of a single transaction in circumstances where they are contemporaneously executed, thereby having the same affect as if they were one deed. Chitty observes that the words "contemporaneously executed" do not give rise to an essential requirement, so long as the Court is satisfied that there is but a single transaction between the same parties. In the present case, the Deed of Charge was not executed until thirteen months after the other documents, which is a substantial lapse of time, notwithstanding that it was said to arise from the delay in obtaining approval from Westpac. It appears from his Honour’s judgment that after the Deed of Charge was entered into, subsequent advances were made by Chacmol to ARA.

33 There is no suggestion that the parties entered into the Deed of Charge in 1996 without the benefit of legal advice, or that they were wrongly advised in doing so. In the absence of any evidence to the contrary, it can be assumed that prior to execution of the Deed of Charge the parties read the terms of and understood the language used in the Deed of Charge and its consequences.

34 No proceeding has been commenced way of rectification or otherwise, to assert that the Deed of Charge should be rectified on the basis that it does not embody the true mutual agreement of the parties. Rather, the questions posed are framed on the basis that it is purely a question of construction of the words in the Deed of Charge in the circumstances, and in the context of the transactions effected by the documents. In particular, there is no material before the Court to indicate that circumstances had not changed in any way as between the parties in the period from May 1995 until June 1996 in relation to further advances or other agreements or arrangements between them.

35 In the present case it is appropriate to consider first whether the language used in the Deed of Charge in relation to the all moneys clause is ambiguous. Unless there is some ambiguity, lack of clarity, or uncertainty, there is no reason to have recourse to extrinsic evidence.

36 The usual terms of all moneys clauses were considered by Hill J in Re Bankrupt Estate of Donnelly v Commonwealth Bank of Australia Ltd (1996) 140 ALR 46 at 54-55, where his Honour concluded that there was no ambiguity in the expression of the all moneys clause in that case.

37 When the Deed of Charge in the present case is read according to its ordinary and natural meaning, the all moneys clause is clear and unambiguous. There is a conflict between the clear terms of the recital and the terms of the operative part of the Deed of Charge. However, the recital cannot be used to inject uncertainty into words which on their face are clear and unambiguous. In the course of submissions reference was made to the statement in J. O’Donovan and J.C. Phillips, The modern contract of guarantee, Law Book Co, Sydney, 1992 at 178-179, referring to authority, that:

"[I]n these cases of direct inconsistency [between a recital and a guarantee] the recital must be interpreted as qualifying the words in the body of the guarantee, but it is doubtful if this is a firm rule of construction. Indeed, it is considered that the correct approach is to construe the guarantee as a whole giving effect, where appropriate, to the operative part of the guarantee."

38 Counsel for the appellants has cited a number of authorities to the effect that where there is a conflict between the recital and the operative terms of a deed, and the operative terms are clear and unambiguous, then the recital must give way to the operative words, even though the terms of the recital are clear.

39 In Leggott v Barrett (1880) 15 Ch D 306 at 309, James LJ said:

"... I cannot help saying that I think it is very important, according to my view of the law of contracts, both at Common Law and in Equity, that if parties have made an executory contract which is to be carried out by a deed afterwards executed, the real and completed contract between the parties is to be found in the deed, and that you have no right whatever to look at the contract, although it is recited in the deed, except for the purpose of construing the deed itself. You have no right to look at the contract either for the purpose of enlarging or diminishing or modifying the contract which is to be found in the deed itself."

40 In the same case, at 311, Brett LJ said:

"If there is any doubt about the construction of the governing words of that document, the recital may be looked at in order to determine what is the true construction, but if there is no doubt about the construction, the rights of the parties are governed entirely by the operative part of the writing or the deed." (Emphasis added)

41 In MacKenzie v Duke of Devonshire (1896) AC 400 at 406, Halsbury LC observed:

"... I never in my life heard of the language of a deed which contained a perfectly unambiguous provision being twisted from the natural ordinary meaning of the words by a preliminary statement of what the maker of the deed intended should be the effect and purpose of the whole deed when made.
... I am unable to comprehend how that purpose could alter the natural and ordinary effect of the words used in the instrument."

42 In Inland Revenue Commissioners v Raphael (1935) AC 96 ("Raphael’s case"), Lord Warrington said at 134:

"I now come to the question ... whether the words in the operative part of the deed are capable as a matter of construction of being controlled and modified so as to give effect to the intention of the settlor declared by the recitals ...

The principle of law in this respect is perfectly settled and it may be thought unnecessary to restate it or to refer to authority on such a point."

43 Lord Warrington then proceeded to apply the above observations from Mackenzie.

44 In O’Loughlin v Mount [1998] SASC 6672; (1998) 71 SASR 206, a decision of the Full Court of South Australia, Lander J, at 218-219, applied the principles in Raphael’s case as follows:

"The English cases are perfectly clear and of long standing. It would be appropriate, in the absence of Australian authority, that this Court regard the decisions of the House of Lords ... as highly persuasive.

In these circumstances it would be appropriate to disregard the recital for the purpose of construing the agreement and uphold the construction contended for by the appellants. ...

In my respectful opinion the learned trial judge erred in his approach to construction. Applying the rules of construction to which I have referred it would have been appropriate to determine first whether the operative clauses of the agreement were unambiguous and if they were, in my opinion, then to disregard the inconsistent words in Recital F. It follows that in my opinion His Honour erred in the construction at which he arrived."

45 In Equuscorp Pty Limited v Glengallan Investments Pty Limited [2004] HCA 55 the High Court emphasised the importance of adherence to the clear terms of a written agreement. Their Honours made the following observations at [33] and [35]:

"33. The respondents each having executed a loan agreement, each is bound by it. Having executed the document, and not having been induced to do so by fraud, mistake or misrepresentation, the respondents cannot now be heard to say that they are not bound by the agreement recorded in it. The parol evidence rule, the limited operation of a defence of non est factum and the development of the equitable remedy of rectification, all proceed from the premise that a party executing a written agreement is bound by it. ... Having executed the agreement, each respondent is bound by it unless able to rely on the defence of non est factum or able to have it rectified. The respondents attempted neither.

...

35. ... Where parties enter into a written agreement, the Court will generally hold them to the obligations which they have assumed by that agreement. At least, it will do so unless relief is afforded by the operation of statute or some other legal or equitable principle applicable to the case."

46 In the present case, where the operative all moneys clause appears unambiguous on the face of the Deed of Charge, then the operative clause will prevail over the conflicting recital: see also Lewison at [9.11].

47 The respondents referred to the observations of the High Court in Grant that were to the effect that the general words of a release will be read down and confined to matters forming the subject of the specific disputes to which a deed relates.

48 The appellants contest the applicability of this principle in the present case on the basis that the decision in Grant should be limited to agreements or deeds of release. However, there are references in the authorities to the effect that the principle is not necessarily limited to instruments of release. For example, there is reference to the statement by Sir Frederick Pollock in his Principles of contract, 3rd ed, Stevens & Sons, London, 1929 at 475, to the power exercised by courts of law and equity to put a restrictive construction on general words when it appears on the face of the instrument that it cannot have been the real intention of the parties. The quotation reads:

"Courts of equity went farther, and did the like if the same conviction could be arrived at by evidence external to the instrument. ...

This jurisdiction, in modern times a well established one, is exercised chiefly in dealing with releases. ‘The general words in a release are limited always to that thing or those things which were specially in the contemplation of the parties at the time when the release was given.’" (Emphasis added)

49 Each document must be construed in its own factual matrix as indicated by the decision in Grant where the majority referred at 131 to:

"The detailed character of the terms of the settlement, the careful readjustment of rights, the specific reference to the debt of H C Grant and his wife and its discharge and the particularity of the allocation of things and contracts between the companies do not favour the view that a general release was intended going outside of the actual area of dispute."

50 In the present case we consider that the weight of authority favours the submission of the appellants that where there is a clear conflict between a recital and the operative part of an instrument, the operative part should prevail. This is particularly so in the present case, having regard to the lapse of thirteen months and the fact that a deed of a materially different nature to that referred to in the 1995 documentation was in fact executed in June 1996.

51 A number of other matters were canvassed in the respondents’ submissions, but it is not necessary in view of the conclusion we have reached, to canvass or express an opinion on these submissions.

52 The authorities concerning the appropriateness of hearing questions as preliminary matters emphasise that it is a process which must be exercised with caution, especially because it is often difficult, as in the present case, to isolate the question of construction concerning the true intention of the parties from the full factual context in which the question is embedded. In the present case, the process has not resulted in any saving of time or expense. In our view, the full factual background may well in this case be of considerable assistance in determining the issues before the Court.

53 The answers we give to the questions in the present case are as follows:

"1. Does the deed of floating charge dated 24 June, 1996 and made between the second applicant and the first respondent stand as security only for the repayment of the pre-existing debt of $378,000.00 (with any interest) and the sale price of $5,000,000.00 (with any interest), referred to in the acknowledgment of debt, a copy of which is exhibited "GNH-9" to the Affidavit of Geoffrey Niels Handberg sworn on 13 April 2004?"
(No)

"2. Have the debts secured by the floating charge been repaid to the first respondent?"
(No)

"3. Is the first respondent obliged to deliver to the second applicant a memorandum in the form prescribed by s 269 of the Corporations Act 2001 acknowledging that the liability or liabilities secured by the charge have been paid?"

(No)

"4. (a) Did the first respondent, purporting to act as mortgagee, take possession or assume control of the property of the second applicant?"

(Yes)

"(b) If yes to (a), on what date did the first respondent take possession or assume control of property of the second applicant?"

(On 29 October 2003)

"(c) Was the first respondent entitled to take possession or assume
control of the property of the second applicant?"

(Yes)

"5. (a) Did the first respondent appoint the second respondent receiver of the property of the second applicant?"

(Yes)

"(b) Did the second respondent accept appointment as receiver of the property of the second applicant?"

(Yes)

"(c) If yes to (a) or (b), did the second respondent take possession or assume control of the property of the second applicant as receiver and, if so, on what date?"

(Not necessary to answer)

"(d) Is the appointment of the second respondent as receiver of the property of the second applicant:

a. valid; or
b. of no effect?"

(Valid)

54 Leave is granted to the appellants to appeal from the interlocutory decision of the primary Judge. This appeal is allowed and the orders made by the primary Judge are set aside. The matter is remitted for further hearing in accordance with these reasons. The respondents should pay the appellants’ costs of this appeal.

I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.

Associate:
Dated: 16 March 2005

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 736 OF 2004

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	CHACMOL HOLDINGS PTY LIMITED (ACN 008 605 892) FIRST APPELLANT MATTHEW LEE JOHNSTON SECOND APPELLANT
AND:	GEOFFREY NIELS HANDBERG (in his capacity as ADMINISTRATOR OF AUSTRALIAN RISK ANALYSIS PTY LIMITED) FIRST RESPONDENT AUSTRALIAN RISK ANALYSIS PTY LIMITED (CONTROLLER AND ADMINISTRATOR APPOINTED) (ACN 052 231 937) SECOND RESPONDENT

JUDGES:	TAMBERLIN, NORTH AND DOWSETT JJ
DATE:	16 MARCH 2005
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

NORTH AND DOWSETT JJ:

INTRODUCTION

55 As Tamberlin J has outlined the facts of the case, we need not do so. However it is appropriate that we state our understanding of the legal consequences of the dealings between the parties. In our view, on 11 May 1995, the first applicant ("Chacmol") and the second respondent ("ARA") reached a binding agreement, evidenced by a contract of sale (the "contract") and an acknowledgment of debt (the "acknowledgment"). We will hereafter refer to the applicants collectively as the "Chacmol parties" and to the respondents collectively as the "ARA parties". Pursuant to cl 5 of the acknowledgment, ARA undertook to execute a deed of floating charge in favour of Chacmol to secure ARA’s "obligations hereunder". The acknowledgment did not specify the time within which ARA was to satisfy cl 5. In fact the deed of charge (the "deed") was not executed until 24 June 1996. The acknowledgment also said nothing about the form of the deed, save that there was to be a floating charge securing ARA’s "obligations hereunder".

56 The "obligations hereunder" referred to in cl 5 appear to have been the purchase price of a business bought by ARA from Chacmol (referred to in recital 1 of the deed) and a pre-existing debt of $378,000 said to be the balance of a loan made by Chacmol to ARA. Interest was also payable pursuant to the acknowledgment.

57 Chacmol apparently accepted that ARA’s execution of the deed discharged its obligation to give a floating charge. However the deed contained an "all moneys" clause. Thus the deed, on its face, secured the performance of obligations other than those identified in cl 5 of the acknowledgment. It is of some importance that the clause contemplated further advances by Chacmol to ARA. We will return to this matter at a later stage.

58 The "all moneys" clause was as follows:

‘NOW THIS DEED WITNESSETH that in pursuance of the said agreement and in consideration of the premises the Purchaser DOTH HEREBY charge ALL AND SINGULAR its undertaking and all its assets whatsoever and wheresoever both present and future including (without prejudice to the generality) its unsold shares, uncalled capital and unpaid calls for the time being and including all present and future book debts of the Purchaser (which undertaking assets and premises are hereinafter for brevity referred to as "the mortgaged premises") with the payment to the Vendor in full free of exchange of ALL MONEYS now owing or payable or hereafter to become owing or payable to the Vendor by the Purchaser either alone or jointly with any person on any account whatsoever ALSO ALL MONEYS which the Vendor has paid or shall be or become liable to pay to for or on account of the Purchaser either alone on jointly as aforesaid either by direct advances or by reason of the Vendor paying any moneys for or on behalf of the Purchaser or entering into any bond, indemnity or guarantee for or on behalf of the Purchaser either alone or jointly as aforesaid ALSO ALL MONEYS which the Vendor shall pay or become liable to pay in connection with or incidental to preparing or completing these presents and any other documents given or to be given to the Vendor as collateral security herewith or investigating or perfecting the title to the mortgaged premises or exercising or attempting to exercise any power, right or remedy of the Vendor hereunder or on account of or arising out of any default by the Purchaser or by any guarantor for the Purchaser or any default by any other person or corporation who has or shall give collateral security to the Vendor for the Purchaser in duly performing or observing any of the convenants or agreements on the part of the Purchaser herein contained or on the part of the guarantor or other person and contained in any guarantee or other collateral security as aforesaid and also interest on all such moneys and obligations as aforesaid at the rate from time to time agreed upon between the Vendor and the Purchaser pursuant to the Acknowledgment of Debt such interest to be computed from the time or respective times of such moneys being paid or becoming due and to accrue from day to day and to be added to the principal or quarterly balances and to become thenceforth part of the facility and to bear interest accordingly (all of which moneys, obligations, liabilities and interest are hereinafter referred to as "moneys hereby secured") ... .’

AT FIRST INSTANCE

59 At first instance the ARA parties submitted that the contract, the acknowledgment and the deed constituted one transaction and that they should be construed as one. They further submitted that, adopting such an approach, the "all moneys" clause should be construed as securing only the obligations identified in cl 5 of the acknowledgment, namely the purchase price, the pre-existing debt and interest. The Chacmol parties challenged the assertion that there was but one transaction and in any event, disputed the ARA parties’ submissions as to the proper construction of the documents. It was not suggested that the doctrine of merger was of any relevance. There was no prayer for rectification of the deed.

EXCLUDED EVIDENCE

60 At the hearing, the Chacmol parties sought to lead evidence in order to demonstrate that at the time of execution of the deed, and perhaps at the time of execution of the contract and acknowledgment, the parties contemplated further advances by Chacmol to ARA. Heerey J excluded the evidence upon two bases: firstly, that it went only to the subjective intentions of the parties at the time of executing the contract, the acknowledgment and/or the deed; and secondly, that the Chacmol parties had not provided the evidence in advance of the hearing, contrary to directions which had been given as to the conduct of the matter.

61 In our view the evidence was relevant to rebut the ARA parties’ plea, in par 11 of the amended points of claim, that the contract, the acknowledgment and the deed constituted a single transaction. This plea was the basis of the assertion that all three documents should be construed as one, which assertion was, in turn, the basis for the ARA parties’ submission that the "all moneys" clause should be construed as including only ARA’s obligations under cl 5 of the acknowledgment. Whether or not the deed, the contract and the acknowledgment constituted one transaction was, substantially, a question of fact. It was for the ARA parties to establish that fact. Recitals 1, 2 and 3 of the deed undoubtedly suggested that it was executed to secure payment of a pre-existing debt. However the "all moneys" clause suggested that the deed was not so limited. The Chacmol parties proposed to argue that as ARA and Chacmol contemplated further advances to ARA when they executed the deed (containing the "all moneys" clause), it should be inferred that they intended that the deed would secure repayment of such further advances as well as the obligations referred to in cl 5 of the acknowledgment. If so, then the deed was relevant to transactions other than those constituted by the contract and the acknowledgment. In that case, it could hardly be appropriate to construe it as comprising one transaction with the contract and the acknowledgment. If one accepts that the ARA parties’ approach to the construction of the deed was arguable (to which question we will return), then it follows that the Chacmol parties were entitled to lead evidence tending to disprove the factual basis upon which that approach depended.

62 As we have said, Heerey J also rejected the evidence upon the ground that it had not been provided in advance of the hearing. However, when the true purpose of the evidence is identified, it can be seen that it was arguably of considerable importance to the Chacmol parties’ case. Only rarely would such evidence be excluded for procedural reasons. See State of Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146 at 154. The Chacmol parties seek to appeal against the exclusion of this evidence. We are inclined to think that there is substance in their criticism of his Honour’s decision. However, as we have come to the conclusion that they should succeed for other reasons, it is not necessary that we decide this aspect of the case.

THE JUDGMENT AT FIRST INSTANCE

63 At first instance Heerey J adopted the following approach:

-> the contract, the acknowledgment and the deed were entered into to effect one object and should therefore to be construed as one instrument and read together;
-> there is an obvious conflict between the obligation imposed upon ARA by cl 5 of the acknowledgment and the "all moneys" clause in the deed; and
-> the "all moneys" clause should be ‘read down and confined to what is the object of the transaction’.

64 His Honour considered that a number of lines of authority justified this approach. They included:

-> cases cited in Chitty on Contracts 27^th edition (1997) at par 12-057 to support the proposition that:
"Several instruments made to effect one object may be construed as one instrument, and be read together ... .";
-> cases concerning the construction of releases;
-> cases concerning general words in printed forms; and
-> cases concerning the construction of "all moneys" clauses.

65 On appeal, the ARA parties also argued that the operation of the "all moneys" clause was ambiguous and should be construed having regard to the recitals in the deed.

66 We will deal with each of these matters separately.

THE CONTRACT AND ACKNOWLEDGMENT

67 The deed referred to both the contract and the acknowledgment. It secured "repayment" of a debt. Recital 2 indicated that the debt in question represented the sale price of the business pursuant to the contract referred to in recital 1. According to recital 2, the arrangements for payment were to be found in the acknowledgment. To the extent that the deed secured performance of obligations imposed by those documents, it was necessary to refer to them in order to determine the extent of such obligations. However the ARA parties’ argument, accepted by Heerey J, went further. It was based upon the following passage which appears at par 12-057 in Chitty on Contracts, 27^th edition, at par 12-065 of the 28^th edition and at par 12-067 of the 29^th edition:

‘Several instruments made to effect one object may be construed as one instrument, and be read together, but so that each shall have its distinct effect in carrying out the main design. Thus, a lease and counterpart are two documents relating to one transaction and a palpable mistake in the lease may be corrected by reference to the counterpart, just as it might by reference to other parts of the lease itself. "Where several deeds form part of one transaction and are contemporaneously executed they have the same effect for all purposes such as are relevant to the case as if they were one deed." Yet although the words "contemporaneously executed" have been used, there is no doubt that this is not essential, so long as the court, having regard to the circumstances, comes to the conclusion that the series of documents represents a single transaction between the same parties.’

68 We will refer to this statement as the "proposition". Such an approach would usually lead to the documents in question being construed so as to achieve overall consistency. Where the documents were executed at or about the same time, that may be an appropriate outcome, simply because the circumstances surrounding such execution would suggest that intention. However it is not so easy to come to that conclusion where the documents were separated in time by more than a year.

69 In our view application of the proposition poses a number of difficulties. Firstly, the meaning of the word "transaction" is not precise. In particular, does it mean something other than "contract"? Secondly, it is difficult to know what is meant by the first sentence in the extract set out above, namely:

‘Several instruments made to effect one object may be construed as one instrument, and be read together, but so that each shall have its distinct effect in carrying out the main design.’

70 The sentence seems to contemplate both an integrated and a discrete approach to the documents in question, treating them "as one" for some purposes, but separately for others. The cases cited in support of the proposition offer little assistance in identifying the underlying principle upon which it relies but in general, they seem to have been cases in which execution of all documents occurred within a relatively narrow time frame.

71 In McVeigh, In the Matter of Piccolo v National Australia Bank Ltd [2000] FCA 187, Finkelstein and Kenny JJ considered the proposition and the cases cited in Chitty. At [30], Finkelstein J observed:

‘The rule applies whether the documents are executed contemporaneously or at different times: see Norton on Deeds 2nd edition (1928) at p 87-89 and the cases there cited.’

72 However Kenny J said at [68]:

‘In certain circumstances, it is appropriate to have regard to other documents forming part of the same transaction as the document which is to be construed. Lewison, in The Interpretation of Contracts, at par 2.03, says:

"A document executed contemporaneously with, or shortly after the primary document to be construed may be relied upon as an aid to construction, if it forms part of the same transaction as the primary document."

See also Morrison et al, Norton on Deeds, 2nd edition (1981) [sic] at 87-89; Chitty on Contracts 28^th edition, (1999) at par 12-065; Halsbury’s Laws of Australia, vol 10 ‘Deed and Other Instruments’ at par 140-535(1).’

73 At 87 of Norton on Deeds, the following passage from the decision of Fletcher-Moulton LJ in Manks v Whiteley [1912] 1 Ch 735 at 754 appears:

‘Where several deeds form part of one transaction and are contemporaneously executed they have the same effect for all purposes such as are relevant to this case as if they were one deed. Each is executed on the faith of all the others being executed also and is intended to speak only as part of the one transaction, and if one is seeking to make equities apply to the parties they must be equities arising out of the transaction as a whole. It is not open to third parties to treat each one of them as a deed representing a separate and independent transaction for the purpose of claiming rights which would only accrue to them if the transaction represented by the selected deed was operative separately.’

74 The author then continues:

‘This rule applies whether the deeds be executed simultaneously ... or at different times ... .’

75 The author seems to distinguish between contemporaneous and simultaneous execution, perhaps implying that the documents must be closely associated in time but not necessarily simultaneous. This is the view taken in the other authorities to which Kenny J referred. Her Honour’s reference seems to have been to the first edition of Lewison, where the rule is stated as follows:

‘A document executed contemporaneously with, or shortly after the primary document to be construed may be relied upon as an aid to construction, if it forms part of the same transaction as the primary document.’

76 In the third edition, the same statement of the rule appears at par 3.03. In Halsbury’s Laws of Australia at 140-535, the rule is stated as follows:

‘If a series of instruments represents a single transaction between the same parties and if the documents are executed at the same moment or executed within so short an interval that having regard to the nature of the transaction, the court will conclude that the series of instruments represents a single transaction - the instruments will be treated as one in order to determine the intention of the parties.’

77 The more popular view seems to be that the rule will apply where the relevant documents were executed at or about the same time. If so, it can hardly apply in the present case.

78 At par 12-068 of the current edition of Chitty, the authors note that under s 58 of the Law of Property Act 1925 (UK):

‘Any instrument expressed to be supplemental to a previous instrument shall, as far as may be, be read and have effect as if the supplemental instrument contained a full recital of previous instruments.’

79 Section 58 of the Property Law Act 1958 (Vic) is to similar effect. It was not suggested in argument that the section was of assistance in the present case.

80 One other difficulty arises in construing a document by reference to other contemporaneous documents, at least where the documents do not evidence one contract. Such a process seems to be an example of using the context in which a document was executed in aid of its construction. That question was addressed by the High Court in Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1981-1982) 149 CLR 337, where Mason J said at 352:

‘The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.

It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification.’

81 Brennan J expressed similar views at 401-3.

82 It would seem that the proposition must either be an exception to the approach described in Codelfa or be limited by that decision.

83 It should be kept in mind that if the proposition authorizes reference to the earlier documents in aid of construction of the deed, it also authorizes reference to the deed in aid of construction of the earlier documents. Yet execution of the deed by ARA was in performance of its contractual obligation. Chacmol had no obligation to execute it. Had it not done so, it seems unlikely that one could have considered the deed in construing the contract or the acknowledgment. This raises the difficult question as to whether subsequent conduct can be used as an aid to construction.

84 We doubt whether the correctness or applicability of the proposition really matters in the present case. It is not possible to identify the debt referred to in the recitals without reference to the acknowledgment and perhaps, the contract. To that extent, at least, reference to them is necessary. However such reference does not really help the ARA parties. It demonstrates that the recitals to the deed did not accurately reflect ARA’s obligations under the acknowledgment, referring only to the purchase price and not to the pre-existing debt. Further, the recitals did not indicate that the deed was to secure the payment of interest pursuant to the acknowledgment. If the recitals did not accurately reflect the earlier documents, then it is difficult to see how reference to those documents could be used in order to contradict the clear words of the "all moneys" clause. Another difficulty is that the deed created a fixed and floating charge, whereas the obligation under the acknowledgment was to grant a floating charge.

85 Notwithstanding the difficulties to which we have referred, the deed was obviously intended to constitute performance by ARA of its obligation to grant a floating charge. However that raises two further questions:

-> Was the deed intended to serve some additional purpose?
-> Was the "all moneys" clause chosen as the preferred method of discharging ARA’s obligation?

86 The "all moneys" clause clearly contemplated the possibility that Chacmol might ‘become liable to pay’ moneys ‘to for or on account of [ARA] ... either by direct advances or by reason of [Chacmol] paying any moneys for or on behalf of [ARA]’. Whilst the words "liable to pay" may exclude purely voluntary payments or advances, that deficiency could be rectified by Chacmol entering into an agreement with ARA before making any advance or paying any debt on its behalf. The point is that the deed contemplated further advances, the repayment of which was to be secured by the deed. The express reference to such further advances excludes the possibility that the deed was intended to secure only the existing debt referred to in the recitals or the obligations contained in the acknowledgment. The ARA parties’ submission requires that all references to further advances be excised from the "all moneys" clause. There is no justification for so doing.

87 A guide to the correct approach to this case appears from the decision of the High Court in Equuscorp Pty Ltd v Glengallon Investments Pty Ltd [2004] HCA 55 at [31] – [35]. In that case Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ said:

‘31 Debate in the courts below, about whether the loan agreements were wholly oral, as the respondents alleged, or wholly written, as Equuscorp and Rural Finance contended, proceeded upon the premise that the critical question was whether the primary judge should have acted on his acceptance of oral evidence given on the respondents' behalf of some conversations that were said to have occurred before the written loan agreements were signed. That, in turn, was seen as a question to be decided by reference to whether subsequent events (including those we have mentioned) made it more or less probable that during these conversations some consensus was reached that the loans were "limited recourse". But behind these arguments lies a more fundamental issue which the respondents' contentions did not address, whether in the courts below or on appeal to this Court.

32 It is, and always has been, common ground that each of the respondents executed a written loan agreement on 30 June 1989. The respondents alleged that the "operative agreement" was not contained in that writing. It was said that the relevant agreement was reached earlier and was wholly oral. Yet it was not said that the written agreement should be rectified. It was not said that a defence of non est factum was available. It was not said that the written agreement was executed by mistake, or that its execution was procured by misrepresentation as to its contents or effect. (The misrepresentation alleged was as to what had been said in the conversations, not what the document was or provided.)

33 The respondents each having executed a loan agreement, each is bound by it. Having executed the document, and not having been induced to do so by fraud, mistake, or misrepresentation, the respondents cannot now be heard to say that they are not bound by the agreement recorded in it . The parol evidence rule, the limited operation of the defence of non est factum and the development of the equitable remedy of rectification, all proceed from the premise that a party executing a written agreement is bound by it. Yet fundamental to the respondents' case that the operative agreements between the parties were wholly oral, and reached earlier than the execution of the written agreements, was the proposition that the written agreements subsequently executed not only may be ignored, they must be. That is not so. Having executed the agreement, each respondent is bound by it unless able to rely on a defence of non est factum, or able to have it rectified. The respondents attempted neither.

34 There are reasons why the law adopts this position. First, it accords with the "general test of objectivity [that] is of pervasive influence in the law of contract". The legal rights and obligations of the parties turn upon what their words and conduct would be reasonably understood to convey, not upon actual beliefs or intentions.

35 Secondly, in the nature of things, oral agreements will sometimes be disputable. Resolving such disputation is commonly difficult, time-consuming, expensive and problematic. Where parties enter into a written agreement, the Court will generally hold them to the obligations which they have assumed by that agreement. At least, it will do so unless relief is afforded by the operation of statute or some other legal or equitable principle applicable to the case. Different questions may arise where the execution of the written agreement is contested; but that is not the case here. In a time of growing international trade with parties in legal systems having the same or even stronger deference to the obligations of written agreements (and frequently communicating in different languages and from the standpoint of different cultures) this is not a time to ignore the rules of the common law upholding obligations undertaken in written agreements. It is a time to maintain those rules. They are not unbending. They allow for exceptions. But the exceptions must be proved according to established categories. The obligations of written agreements between parties cannot simply be ignored or brushed aside.’

88 Whilst this passage is not, in all respects, apposite to the present case, it demonstrates the importance of documents in evidencing transactions and the well-established circumstances in which a party may be relieved from the consequences of having entered into a contract in writing. At first instance in the present case, the ARA parties effectively obtained the benefit of an order for rectification, without seeking it, and in circumstances in which the Chacmol parties were excluded from leading evidence which would have been relevant to the grant of such an order.

CASES CONCERNING RELEASES

89 Heerey J relied upon the following passage from the joint judgment of Dixon CJ and Fullagar, Kitto and Taylor JJ in Grant v John Grant & Sons Pty Ltd [1954] HCA 23; (1954-1955) 91 CLR 112 at 131:

‘The question is whether upon a proper interpretation of the deed the general release clause should be restrained to matters in dispute within the meaning of these recitals. The question depends primarily upon the application of the prima facie canon of construction qualifying the general words of a release by reference to particular matters which recitals show to be the occasion of the instrument. But it is also affected by the general tenor of the deed. It is unnecessary to say more about the canon of construction or to discuss further the contents of the deed. As to the first, all that remains is to apply the principle that prima facie the release should be read as confined to the matters forming the subject of the disputes which the deed recites. As to the second, such indications as can be found in the provisions of the deed point rather in the same direction. The detailed character of the terms of the settlement, the careful readjustment of rights, the specific reference to the debt of H C Grant and his wife and its discharge and the particularity of the allocation of things and contracts between the companies do not favour the view that a general release was intended going outside the actual area of dispute.’

90 His Honour considered that the passage justified a narrow construction of the "all moneys" clause. The Chacmol parties submitted that the passage concerned a rule of construction peculiar to releases. His Honour rejected this submission, observing at [16] that:

‘No rational reason was advanced why releases should be different from all other legal instruments in this regard. Rather Grant is an example of courts construing an instrument as a whole, and in order to give effect to the intention of the parties (objectively determined), reading down general words to give effect to the intention so manifested rather than reading them literally.’

91 With all respect to Heerey J their Honours’ reference to a ‘canon of construction qualifying the general words of a release by reference to particular matters which recitals show to be the occasion of the instrument’ and their discussion of the pleadings at 123-130 strongly suggest that the Court was considering propositions which were peculiar to releases. On appeal the ARA parties relied upon the following passage from the speech of Lord Nicholls of Birkenhead in Bank of Credit and Commerce International SA v Ali [2001] UKHL 8; [2002] 1 AC 251 at [26]:

‘Further, there is no room today for the application of any special "rules" of interpretation in the case of general releases. There is no room for any special rules because there is now no occasion for them. A general release is a term in a contract. The meaning to be given to the words used in a contract is the meaning which ought reasonably to be ascribed to those words having due regard to the purpose of the contract and the circumstances in which the contract was made. This general principle is as much applicable to a general release as to any other contractual term. Why ever should it not be?’

92 That passage means that releases should be construed in the same way as all other documents, not that all other documents should be construed in accordance with approaches previously taken to the construction of releases. When so understood, it is of no assistance to the ARA parties.

GENERAL WORDS USED IN PRINTED FORMS

93 His Honour relied upon the following passage from the speech of Lord Herschell LC in Glynn v Margetson [1893] AC 351 at 355 as follows:

‘Where general words are used in a printed form which are obviously intended to apply, so far as they are applicable, to the circumstances of a particular contract, which particular contract is to be embodied in or introduced into that printed form, I think you are justified in looking at the main object and intent of the contract and in limiting the general words used, having in view that object and intent.’

94 Heerey J considered that this statement reflected a wider general principle, presumably that identified in the extract from [18] of his Honour’s reasons which is cited above. His Honour considered that the deed could be treated ‘as analogous to a printed form’, observing that:

‘Judicial notice can be taken of the fact that for many years legal documents have been produced by word processors in which a standard form is taken and amendments or insertions made to a very detailed proforma document to accommodate details of the particular transaction concerned. It seems inherently unlikely that the deed of charge in the present case was prepared by somebody from Messrs Wood Thussell sitting down to a blank piece of paper, like a poet composing a sonnet.’

95 This broad approach implies that those who draft documents take little or no care to choose appropriate precedents and to adapt them as necessary to the circumstances of the particular case. It would seem to apply to all documents which are prepared by solicitors, at least if the documents are of a kind which is in general use. In any event, such an approach cannot result in the exclusion of the reference in the "all moneys" clause to future advances.

"ALL MONEYS" CLAUSES

96 The ARA parties referred to a number of cases which were said to justify a narrow approach to the construction of "all moneys" clauses. The first case is the decision of Brooking J in Re Clark’s Refrigerated Transport Pty Ltd (In Liquidation) [1982] VR 989. In that case, his Honour read down the terms of a specific "all moneys" clause in a mortgage so as to exclude a debt owed by the mortgagor to the parent company of the mortgagee and assigned to the mortgagee. His Honour read the relevant mortgage in conjunction with an accompanying memorandum which had been executed contemporaneously with, or within a very short time after, execution of the mortgage. The decision depended very much upon the wording of the relevant documents.

97 Reference was also made to the reasons of Gleeson CJ (Kirby P concurring) in Fountain v Bank of America National Trust and Savings Association (1992) 5 BPR 11,817. At 11,819-11,820, where his Honour said, concerning "all moneys" clauses:

‘They must be confined in their operation by reference to the context in which they appear and by reference to the commercial purpose which they were intended to serve.’

98 The court was there concerned with an agreement between the bank and a Mr Fountain, which relevantly provided:

‘In consideration of your from time to time giving credit to me (us), or performing banking service for me (us), I (we) hereby agree as follows:-

(1) ...

(3) That I (we) shall furnish upon demand such security in such form and value as may be required by you from time to time in amounts and values sufficient at all times in your opinion to secure any of my (our) obligations to you whether contingent, future or otherwise.
(4) That this is a continuing agreement and all the rights, powers, and remedies hereunder shall apply to all my (our) past, present, future and contingent obligations and liabilities to you, including those arising under successive transactions which shall either continue existing obligations and liabilities, increase or decrease them or from time to time create new obligations or liabilities after any or all prior obligations and liabilities have been satisfied ... .’

99 That agreement was entered into in 1976. In 1981 Mr Fountain guaranteed moneys borrowed from the bank by a company of which he was managing director and in 1986, the bank made demand on Mr Fountain for payment of the amount guaranteed and security pursuant to the 1976 agreement. The question was whether or not Mr Fountain’s obligations under the 1981 guarantee fell within clauses 3 and 4 of the 1976 agreement so that he was required to provide security as demanded. At 11,820, following the passage quoted above, Gleeson CJ continued:

‘The critical question, it seems to me, is whether, on the true construction of the document and in the events that have occurred, the transaction of 1981 and the obligation that existed in 1981 were within the purview of clauses 3 and 4 of the 1976 agreement. Some assistance in answering that question is obtained from the introductory words of the 1976 agreement and the reference therein to the giving of credit to Mr Fountain and the performance of banking services for Mr Fountain. A concept of performing banking services is somewhat elastic. However, whilst I would regard the introductory words of the agreement as being a useful aid to an understanding of the purpose and scope of the 1976 contract I would not regard those words as a hard and fast definition of the scope.

It is necessary to inquire in particular whether the transaction in 1981, that is to say a borrowing of money by Energy Systems Holdings Ltd from the bank and the associated guarantee given to the bank by Mr Fountain and other officers, was "a successive transaction" within the meaning of clause 4. It has been submitted on behalf of the appellant that the obligations referred to in clause 3 are confined to obligations undertaken in the 1976 agreement itself. In my view such a conclusion cannot be sustained. Clause 4 in terms refers to the creation of new obligations or liabilities at some future time.

The successive transactions referred in clause 4 by hypothesis include transactions that might create obligations or liabilities not created by the 1976 contract. If it were otherwise, they would not be referred to as new obligations or liabilities and the concept of that creation would not be apposite.

Accordingly, when one turns to the reference in the concluding words of cl 3 "the obligations whether contingent, future or otherwise", one does so in the light of the provisions of cl 4 and the references in cl 4 to successive transactions creating new obligations. The Court has been favoured with very scant information about the 1981 transaction. However, in my view we know enough about it safely to conclude that it was a transaction of a kind within the purview of the ongoing banking arrangements the subject of the 1976 agreement and the obligation arising out of that transaction was also an obligation within the purview of the 1976 contract.’

100 The ARA parties also relied upon observations made by Kenny J in McVeigh at [84] as follows:

‘... in many cases, an "all moneys" clause will not be construed to secure a debt of a fundamentally different character from the debt specifically contemplated by the parties at the time of entering the contract. In construing such a clause, a court confines its operation by reference to its context and commercial purpose.’

101 Her Honour continued at [85]:

‘Having regard to the context of the "all moneys" clause in the guarantee in this case (or, for that matter, in the mortgage) and to its commercial purpose as disclosed in the other transaction documents, I can readily accept that the clause would not secure tortuous liability, or, indeed, some other liability disparate in kind to that arising from the provision of financial accommodation. But I am unable to accept that the clause would not secure liabilities for banking facilities provided to PLA, whether or not they were an overdraft facility, a bill facility, or a fully drawn advance facility.’

102 In both cases, it was accepted that the documentary context in which an "all moneys" clause appears may indicate that it should be read narrowly. In each case, it was accepted that the operation of the relevant clause might have been limited to debts arising in the course of the banker-customer relationship. However, in neither case was the debtor successful in avoiding the operation of the "all moneys" clause. Neither case would justify the exclusion of future advances from the operation of the present clause, given the clear indication that future advances were to be secured.

AMBIGUITY

103 On appeal, the ARA parties submitted that the "all moneys" clause was inherently ambiguous, which ambiguity could be resolved by reference to the recitals. We are unable to accept that the clause was, in itself, ambiguous. However one aspect of the deed might suggest an intention that it should secure a narrower range of obligations. Covenant A was in the following form:

‘That the purchaser will pay the vendor all moneys which are or may become owing to it by the purchaser under or pursuant to the acknowledgment of debt and duly and punctually observe every other obligation on its part expressly contained or implied in the Acknowledgment of Debt.’

104 Clearly, that covenant applied only to amounts owing under the acknowledgment. If it stood by itself, it might suggest that no other amounts were secured. However cl 2 provided:

‘That the moneys hereby secured shall not only become payable on demand but shall also at the option of the Vendor and notwithstanding any delay or previous waiver of the right to exercise such option immediately become payable without any demand or notice in each or any of the following events ...’.

There followed a list of events of the sort usually found in such a clause. Clause 2 seems to have been referring to moneys other than those referred to in Covenant A. The principal and interest payable pursuant to the acknowledgment were not to be payable on demand. The principal was payable by monthly installments. Interest was also to be paid monthly. The consideration for the acknowledgment was the agreement by the vendor to accept payment by installments. Clause 2 might mean that all moneys secured by the deed were to be payable on demand in any event, and payable without demand in the event of one of the specified occurrences. Alternatively, it might mean that all secured amounts were, in the event of a specified occurrence, to become payable on demand and payable without demand. The latter interpretation seems unlikely. The former would, if applied to the moneys payable under the acknowledgment, render them payable both monthly and on demand. Perhaps cl 2 was intended to render moneys (other than those payable pursuant to the acknowledgment) payable on demand and without demand in the event of a specified occurrence. However it is construed, the clause poses difficulties. It should not be read as excluding the clear intention to secure further advances.

105 The ARA parties argued that one should look at the recitals in the deed in order to find some inconsistency between them and the "all moneys" clause. As Tamberlin J has demonstrated, that approach is inconsistent with authority. In any event, it could not operate to exclude the clear intention to secure further advances.

CONCLUSION

106 In the circumstances, we see no basis for giving the "all moneys" clause anything other than its natural meaning. There is no justification for ignoring the clear references to further advances. Whilst Fountain and McVeigh might justify a limitation on the type of further advance to be secured, the ARA parties have not identified any such limitation. To do so, it may have been necessary to consider the dealings pursuant to which ARA became liable for the purchase price, the pre-existing debt and any subsequent advances now prima facie secured by the "all moneys" clause. That consideration might well have led to the conclusion that, as in Fountain and McVeigh, the subsequent advances were of similar kind to those initially secured by the deed. Such issues were not raised in these proceedings.

107 We respectfully agree with the observations made by Tamberlin J concerning the problems associated with the preliminary determination of questions of construction. However as there has been no appeal from the order that the construction question be determined as a preliminary matter, we agree that we should answer the questions posed.

ORDERS

108 We agree with the orders proposed by Tamberlin J.

I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices North and Dowsett.

Associate:

Dated: 16 March 2005

Counsel for the Appellants:	F.G.A. Beaumont QC and S.J. Maiden
Solicitor for the Appellants:	Winter & Co
Counsel for the Respondents:	Marcus Clarke
Solicitor for the Respondents:	Mills Oakley
Date of Hearing:	17 November 2004
Date of Judgment:	16 March 2005