Case: Australian Estates Ltd v Palmer (unreported, New South Wales Court of Appeal, Kirby P, Samuels and Meagher JJA, 22 December 1989)
Outcome: cited
matter that received limited attention in the submissions of the parties was the relevance, if any, of post-contractual conduct in determining what the terms of the contract are when they are not in writing. If they are in writing the common law of Australia is comparatively clear: see the observations of Heydon JA in Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61 ; (2001) 53 NSWLR 153 at [26] and more recently the judgment of the High Court in Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57 ; (2008) 251 ALR 322 per Gummow, Hayne &amp; Kiefel JJ at [36] and [163]. The post-contractual conduct is irrelevant. However the position is less clear in relation to contracts which are not in writing. This question was comparatively recently addressed by Finkelstein J as a member of a Full Court in Seven Network (Operations) Ltd v TCN Channel 9 Pty Ltd [2005] FCAFC 144 ; (2005) 146 FCR 183 at [83] . His Honour said: As things presently stand Anglo-Australian law does not allow reference to what the parties to a contract said and did before or after the contract as an aid to construction: James Miller &amp; Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 583 ; L Schuler AG v Wickman Machine Tool Sales Ltd [1973] UKHL 2 ; [1974] AC 235 ; Secured Income Real Estate (Australia) Limited v St Martins Investments Proprietary Limited (1979) 144 CLR 597 ; FAI Traders Insurance Company Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343. The fear is that this approach could result in a contract having different meanings on different days. The rule does not, however, prevent the reception of pre-contract conduct (White v Australian and New Zealand Theatres Limited [1943] HCA 6 ; (1943) 67 CLR 266 ) or post-contract conduct (Australian Estates Ltd v Palmer (unreported, New South Wales Court of Appeal, Kirby P, Samuels and Meagher JJA, 22 December 1989 )) to identify the things with which the contract does deal. Why Australian Estates Ltd v Palmer is not reported, I do not know. However in a passage from the judgment of Samuels JA (with whom Kirby P. and Meagher JA agreed) the following is said: ..... it is true that a court cannot have regard to the subsequent conduct of the parties as an aid in the interpretation of a term in a written contract (see James Miller and Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 583 , Wickman Machine Tool Sales Ltd v L Schuler AG [1973] UKHL 2 ; [1974] AC 235) , this is merely an application of the parol evidence rule. Thus, as Stephenson LJ (with whom O'Connor LJ and Sir Stanley Rees agreed) said in Meares v Safecar Security Ltd [1983] QB 54 at 77, dealing with an oral contract: There is nothing in those authorities which prevents the court from looking at the way the parties acted for the purpose of ascertaining what that term was. Commonsense suggests that their subsequent conduct is the best evidence of what they had agreed orally but not reduced to writing, though it is not evidence of what any written terms mean; And see generally the Law of Contract , Greig and Davies at 436-438. Observations to similar effect were made by Spigelman CJ and McColl JD in County Securities v Challenger Group Holdings Pty Ltd [2008] NSWCA 193.