Case: Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24 ; (1982) 149 CLR 337
Outcome: followed
Finally, the Commissioner's reference to and reliance upon the parties' prior and subsequent conduct is misplaced. Where, as here, the language in context is not ambiguous, the Court may not look at the prior and subsequent conduct of the parties to interpret the Occupational Licence Agreement: Administration of Papua and New Guinea v Daera [1973] HCA 59 ; (1973) 130 CLR 353 at 446 (per Gibbs J); Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24 ; (1982) 149 CLR 337 at 348 (per Mason J) and L Schuler AG v Wickman Machine Tool Sales Ltd [1973] UKHL 2 ; [1974] AC 235 at 261; cf Sinclair, Scott &amp; Co Ltd v Naughton [1929] HCA 34 ; (1929) 43 CLR 310 at 327; Farmer v Honan [1919] HCA 13 ; (1919) 26 CLR 183 at 197. Such conduct cannot be used to generate disputes about the meaning of unambiguous terms. Such an approach would be inconsistent with the " general test of objectivity [that] is of pervasive influence in the law of contract" : Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (No 2) [2004] HCA 55 ; (2005) 218 CLR 471 at [31] - [36] and, in particular at [34] quoting Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 549 (per Gleeson CJ). 61 As to the evidence of prior conduct (the 13 December 1994 letter), although the Commissioner submitted that the letter explicitly states that SHCP was the party liable for the Prepayment, the inferences that the Commissioner sought to draw from the letter are not open on the face of it. First, the letter was sent by Star City to the Treasurer of New South Wales, as the CCA's nominated recipient of the Prepayment. The letter was not a communication between the parties to the Occupational Licence Agreement. As such, it is not relevant to the proper construction of cl 5.2 of the Occupational Licence Agreement. It does not and cannot provide evidence of the objective factual background known to the parties at or before the date of the Agreement. The letter does not form part of the relevant factual matrix in which the Agreement was set which might highlight the context in which the words were used and the purpose for which they were chosen: Codelfa Construction at 401. 62 Secondly, the letter was concerned with and addressed an issue separate from the use to which the Commissioner sought to put it. The letter dealt with the method by which the Prepayment was to be paid. The fact that the letter described that issue in a particular way does not point to the conclusion that the Commissioner sought to draw from it that the party obliged to make the payment had been absolved of liability or was not in fact liable. 63 Thirdly, even if the letter were to be considered as part of some relevant factual matrix, it would not assist in resolving the question of the proper construction of the Occupational Licence Agreement. The letter was an attempt by Star City to gain leverage in its bargaining with the CCA in circumstances where it was the preferred candidate for the grant of the casino licence and, if successful, would be required to pay the Prepayment. The letter was an attempt by Star City to secure repayment of the Prepayment if a possible legal challenge to the grant of such a licence, by an opposition bidding consortium associated with the late Mr Kerry Packer, had been successful. Such a challenge was made although it was unsuccessful: Darling Casino Ltd v New South Wales Casino Control Authority [1997] HCA 11 ; (1997) 191 CLR 602. Negotiations of this nature are evidence of no more than the expectations of the parties and cannot be used to construe the meaning of the written agreement: Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51 ; (1979) 144 CLR 596 at 606 and Codelfa at 352.