Case: Masters v Cameron [1954] HCA 72 ; (1954) 91 CLR 353
Outcome: referred to
submits that the agreement falls under the first category of agreement identified in Masters v Cameron [1954] HCA 72 ; 91 CLR 353 such that the parties have agreed all terms and intend to be bound immediately but propose 'to have the terms restated in a form which will be fuller or more precise but not different in effect'. Like FMG, Forrest submits that the agreement was a binding first agreement for the build, finance and transfer of the railway, with a further agreement to be executed at a later date. ASIC submits, however, that the most noteworthy aspect of the agreement is the absence of agreement on critical matters, and the complete absence of detail about other matters. ASIC makes the following submissions regarding the terms of the CREC Framework Agreement in support of its contentions that the agreement was a bare agreement to negotiate the scope and terms of a further contract to build, transfer and finance the infrastructure, and that it did not impose any legally enforceable obligations: (a) CREC was not obliged to actually build or transfer the railway; (b) there was no agreed price in the agreement nor any mechanism to achieve or confirm a price; (c) there was no definition of the scope of the works to be performed; (d) there was no provision for choice of contractors or the selection of materials; (e) there was no definition of "practical completion"; (f) there were no specifications for any design elements of the infrastructure. I will deal with each of these in turn. Was CREC arguably obliged to actually build or transfer the railway? In Australian Broadcasting Corporation v XIVth Commonwealth Games 18 NSWLR 540 Gleeson CJ, with whom Hope and Mahoney JJA agreed, confirmed at 584E-F the importance in a Masters v Cameron type of dispute of assessing the parties' intention to make a concluded bargain, and stated that the question of intention is distinct from, although it may be closely related to, the question whether the parties have reached agreement upon such terms as are, in the circumstances, legally necessary to constitute a contract. His Honour stated: Nevertheless, in the ordinary case, as a matter of fact and commonsense, other things being equal, the more numerous and significant the areas in respect of which the parties have failed to reach agreement, the slower a court will be to conclude that they had the requisite contractual intention. Jobern [2007] FCA 1066 involved a contractual dispute where the parties had executed a document entitled 'Heads of Agreement' (HofA), clause 3.3 of which stated: "Each party will conduct all such negotiations in good faith to ensure that the terms set out in these Heads of Agreement are given full effect". It was not in dispute in Jobern that the parties were bound by the HoFA, which Gordon J stated to be a final agreement within the first category described in Masters v Cameron [1954] HCA 72 ; 91 CLR 353 at [106] . However Gordon J considered that cl 3.3 was uncertain because it suffered from the same problems referred to by Kirby J in Coal Cliff Collieries 24 NSWLR 1 at [130]. In Masters v Cameron [1954] HCA 72 ; 91 CLR 353 , Dixon CJ, McTiernan and Kitto JJ explained in a joint judgment that where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes, the first two involving binding contracts (360): (1) The parties have agreed all terms and intend to be bound immediately but at the same time propose 'to have the terms restated in a form which will be fuller or more precise but not different in effect'; (2) The parties have agreed all terms but intend to make performance of one or more terms conditional on the execution of a formal document; (3) The intention may be not to make a concluded bargain at all unless and until the parties execute a formal contract. The judgment went on to explain that the question depends upon the intention disclosed by the language the parties have employed (362.5) and that there is no formula, such as "subject to contract" which is so intractable as always and necessarily to produce a result that there is no binding contract (363.6). The courts have also recognised a fourth class of case additional to the three mentioned in Masters v Cameron [1954] HCA 72 ; 91 CLR 353 , a class identified by Knox CJ, Rich J and Dixon J in Sinclair, Scott &amp; Co Ltd v Naughton [1929] HCA 34 ; (1929) 43 CLR 310 at 317 as: ... one in which the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms. This fourth category was recognised by McLelland J in Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 and on appeal in G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 where McHugh JA delivered the Court of Appeal's judgment and observed that the magnitude, subject matter or complexities of a transaction may indicate that an agreement was a limited one not intended to have legal effect (634D) but that what was critical was the parties' intention objectively ascertained, and that this intention should prevail (634E-F). In Uranium Equities Ltd [2008] WASCA 33 ; 36 WAR 97 , the Supreme Court of Western Australia (Court of Appeal) stated at [129] that the fourth Masters v Cameron category was a variation of the first category. In Tasman Capital Pty Ltd v Sinclair [2008] NSWCA 248 , the NSW Court of Appeal emphasised that determining whether parties have come to a concluded agreement is a matter of their objectively ascertained intention in the particular case. Giles JA stated that the Masters v Cameron categories and a possible fourth category are intellectual aids, and that categorisation does not greatly contribute to the decision in the particular case, which is concerned with finding what agreement, if any, the parties came to, [26]. Similarly, in Moffat Property Development Group Pty Ltd [2009] QCA 60 , Keane JA, with whom McMurdo P and Atkinson J agreed, said at [37] in relation to classifying the putative agreement in that case under one of the four Masters v Cameron categories: In my respectful opinion, however, there is little purpose to be served in seeking to resolve the issue of classification. A concern as to classification should not be allowed to obscure or distract from the real task of the court which is to ascertain and give effect to the intentions of the parties. Keane JA referred to Sir Anthony Mason's opening address to the Journal of Contract Law 20 th Anniversary Conference ((2009) 25 Journal of Contract Law 1, 6): ... [T]he categories (or classifications of Masters v Cameron ((1954) [1954] HCA 72 ; 91 CLR 353) , be they three or four, are no more than exemplifications of the general principle that, in the case of written documents, the intention of the parties is to be resolved objectively and as a matter of construction of the relevant documents. The categories are necessarily subject to the general principle. The question therefore, which is of paramount importance here is whether or not the parties to the framework agreements intended them, objectively, to be legally binding. In Anaconda [2000] WASCA 27 ; 22 WAR 101 , the issue was whether a binding contract for Anaconda, a company interested in lateritic nickel, to explore and mine for base metals on the tenements of Tarmoola, a company interested mainly in gold, had been made when a heads of agreement containing five clauses was signed, the last paragraph of which said that the heads of agreement ' constitutes an agreement in itself intended to be replaced by a fuller agreement not different in substance or form' . Tarmoola argued that there was no intention to contract, no agreement on essential terms, and that the agreement was incomplete and uncertain. By majority, the WA Full Court rejected these arguments and held that the heads of agreement was a binding contract. Ipp J (with whom Pidgeon J agreed) found that contractual intention was present. His Honour endorsed the existence of the fourth Masters v Cameron category in stating: It is well recognised that parties may enter into a valid contract containing a limited number of terms comprising those terms essential to the bargain that they wish to conclude, in the expectation that at a later date a further contract will be arrived at containing additional terms that would facilitate and clarify the initial contract. That is to say, a binding contract may be arrived at even though it leaves unresolved many matters which might arise in future. [25] His Honour found that the agreement was neither incomplete nor uncertain such as to render it void or such as to indicate that the parties did not intend to enter into legal relations, and that the agreement contained all the essential terms required for a legally binding agreement. The omission to deal with particular future problems such as water did not make the agreement uncertain or incomplete: these issues could be resolved by processes of construction and implication: [79]. His Honour stated that the parties' failure to enter into a more detailed agreement may have made the exploring and mining operations contemplated by the heads of agreement more expensive, difficult and complex, but he did not accept that it was unworkable in the sense of it being objectively impossible for performance of its terms to be effected: [95]. In dissent, Anderson J noted that the trial judge had found this case to be in the third Masters v Cameron category, that is, a case in which the terms of the heads of agreement were not indtended to have and therefore did not have any binding effect of their own, and he agreed with the trial judge that the parties did not intend the heads of agreement to have binding effect as their concluded bargain ([121]-[124]).