New South Wales Land and Housing Corporation v Australia and New Zealand Banking Group Limited

Builders are regularly required to provide bank guarantees to secure their obligations under building contracts. This case is about the legal consequences of an innocent error where the builder gave the bank the wrong name for the beneficiary of the guarantees so that, if taken literally, the beneficiary does not exist.

The plaintiff is the New South Wales Land and Housing Corporation (the “Corporation”). The Corporation is constituted as a body corporate by s 6 of the Housing Act 2001 (NSW). The Corporation claims that it is the intended beneficiary of two guarantees (the “guarantees”) issued by the defendant, ANZ Banking Group Limited (“ANZ”) at the request of ANZ’s customer, the first defendant, Nebax Constructions Australia Pty Ltd (In liquidation) (“Nebax”). ANZ cross-claims against Nebax and five other cross-defendants (including Nebax’s former director Mr Daniel Simic (“Mr Simic”)) for indemnity in respect of any liability ANZ may have to the Corporation under the guarantees. The guarantees were issued in favour of the nonexistent “New South Wales Land & Housing Department”.

Mr D Talintyre of Counsel appeared for the Corporation. Mr S.B. Docker of Counsel appeared for ANZ. Mr A. Fernon of Counsel appeared with Mr G. Farland of Counsel for Mr Simic and the other cross-defendants, with the exception of Nebax. On an earlier occasion, the Court granted leave to ANZ to proceed against Nebax, whose liquidator decided not to defend the proceedings.

The cross-defendants, for whom Messrs Fernon and Farland appeared, accepted that if ANZ was liable to the Corporation under the guarantees, then their clients were liable to indemnify ANZ. Therefore, the only question for determination by the Court is whether ANZ is liable to the Corporation under the guarantees. The answer to that question is “yes”.

Most of the facts were not in dispute and I find them to be as follows. As to facts in dispute or about which there was doubt, I have set out in this narrative my reasons for any finding I have made.

The Corporation was established by s 6 of the Housing Act 2001 (NSW):

In September 2009 on a form headed “New South Wales Land and Housing Corporation” and addressed to “The Director, NSW Land and Housing Corporation” Nebax submitted a tender for a project described as “BG2J8 3-7 Karowa Street, Bomaderry”.

On 21 October 2009 a letter was sent to Nebax on the letterhead of “Housing New South Wales” which included:

A letter dated 21 December 2009 on the letterhead of “Housing New South Wales” was sent to Nebax which included:

A letter dated 4 March 2010 on the letterhead of “Housing New South Wales” was sent to Nebax and included:

The enclosed draft “Form of Instrument of Agreement” referred to the agreement being made with “The New South Wales Land and Housing Corporation (ABN 24 960 729 253) a statutory authority constituted pursuant to s 6(1) of the Housing Act 2001 and having its principal office at 223-239 Liverpool Road, Ashfield in the State of New South Wales (the “Principal”)”. The specified ABN was and remains registered to the Corporation.

The Corporation’s draft form of Banker’s Certificate enclosed with the letter of 4 March 2010 (the “draft Banker’s Certificate”) set out a form of guarantee which included:

The ABN given in the draft Banker’s Certificate for the Corporation was and remains registered to the Corporation. The ABN given in the draft Banker’s Certificate for Housing NSW was also correct. However registration of this latter ABN was cancelled from 1 July 2010. A quite different ABN - 84 608 917 940 – was, as at March 2010, registered in respect of the trading name “Department of Human Services Housing NSW” and from 1 July 2011 was and remains registered to “Department of Family and Community Services – Housing NSW”.

On 4 March 2010 the “Formal Instrument of Agreement” was executed by the parties (the “Building Contract”) and included:

Between at least October 2009 and April 2010 the Corporation was trading as “Housing NSW”. So much is apparent from the documents referred to in paragraphs [8], [9], [10] and [12] above.

In April 2010 Ms Adele Hanna was employed by ANZ at its Caringbah Business Centre (the “Branch”). At that time she was ANZ’s senior relationship manager for Nebax and had previously had many dealings with Mr Simic. She knew Nebax operated a construction business and regularly obtained contracts from various entities and government departments. It was not unusual for Mr Simic to contact Ms Hanna and request the urgent provision on the same day of a bank guarantee in relation to a construction contract which Nebax had obtained. Ms Hanna was cross-examined and I accept her evidence.

On 12 April 2010 Nebax entered into a facility with ANZ. The facility letter described the purpose of the facility to be “Bank Guarantee requirement various contracts”.

On 16 April 2010 Mr Simic visited the Branch and had a conversation with Ms Hanna in words to the following effect:

After making some adjustments to Nebax’s facilities, Ms Hanna set about preparing the guarantees. She did this by entering the details given to her by Mr Simic into a template on her computer, which then created the documents to be printed. Two materially identical guarantees were prepared, each for $73,482.53. I shall reproduce the relevant parts of one of them in the following paragraphs of these reasons.

In April 2010 ANZ’s guarantees comprised three documents. The first and second were originals of the guarantee. One was to be retained by ANZ. The other was to be provided to the beneficiary of the guarantee (described in the documents as the Favouree or Principal). The guarantees were executed by Ms Hanna on behalf of ANZ and included:

The third document was an “Indemnity and Application for Guarantee” to be retained by ANZ (the “Indemnity”). One of these was prepared by Ms Hanna for each guarantee, executed by Mr Simic on behalf of Nebax and included:

The Indemnity and the guarantees used the words “New South Wales Land & Housing Department Trading As Housing NSW ABN 45754121940”. The difficulty that has given rise to these proceedings is that while the ABN was the ABN for Housing NSW (see paragraph [13] above) there never was or has been a “New South Wales Land & Housing Department” (emphasis added). At all material times there was and is the ‘New South Wales Land & Housing Corporation” (emphasis added).

Mr Simic gave Ms Hanna both the name of the intended beneficiary of the guarantees and the details of the contract in respect of which they were required. She incorporated this latter information in the Description. On the basis of Ms Hanna’s own evidence, the fact that the information includes sequences of numbers and the inherent probability of the situation, the Court is satisfied that Mr Simic provided Ms Hanna with that information in written form. However, the Court finds that Mr Simic did not give Ms Hanna either a copy of the Building Contract or the draft Banker’s Certificate because both of these had the Corporation’s correct name. It is highly unlikely Ms Hanna, as a careful bank employee, would have made an error in the Corporation’s name if either of those documents had been given to her.

Nevertheless, Ms Hanna understood that the guarantees were being entered into in relation to a construction contract to which Nebax was a party. She also understood that the words “Job Number P0409021, Bombaderry – Design & Construct 3-7 Karowa Street Contract Number BG2J8” were intended to be a reference to that contract. Furthermore, she would still have issued the guarantees if she had been given the name “New South Wales Land & Housing Corporation” for the Favouree and Principal.

After the Indemnity and guarantees were completed and executed that same day (16 April 2010), Mr Simic left the Branch with the two original guarantees. Nebax then provided these to the Corporation.

On 2 October 2013 the Corporation wrote to ANZ:

On 9 October 2013 ANZ’s solicitors responded:

By letter dated 1 November 2013 the Corporation responded to ANZ’s solicitors, including:

On 5 December 2013 ANZ’s solicitors responded by saying that ANZ did “not accept that a call has been made on the Bank Guarantees”.

The Corporation commenced these proceedings by summons filed on 23 June 2014.

On 5 February 2015 (the day before the hearing) the Corporation’s solicitor attended the Ashfield branch of the ANZ where he presented the assistant manager of that branch with the two original bank guarantees and a letter from the Corporation addressed to the ANZ dated 5 February 2015 which included:

The Corporation put two alternative submissions. The first submission was in support of the first prayer for relief in the summons:

The submission in support of the declaration was that the Corporation had been misdescribed in the guarantee. That misdescription was a misnomer which the Court has jurisdiction to correct. The words “New South Wales Land & Housing Department Trading As Housing NSW ABN 45754121940” were no more or less than an inaccurate description of the Corporation. It was clear the party named in the guarantees was intended to be the Corporation and the misnomer was immaterial because ANZ would have given the guarantees even if the Corporation had been properly described.

The Corporation’s second submission was in support of its alternative prayer for relief in the summons:

This alternative submission was that the guarantees could be rectified. The Corporation contended that it was the clear intention of the Corporation and Nebax that the Corporation was to be the beneficiary of the guarantees. Similarly, it was clearly the intention of Nebax and ANZ that the beneficiary of the guarantees was to be the party with whom Nebax had the building contract under which the guarantees were required. There was no doubt that party was the Corporation.

ANZ’s submissions were more in the nature of an interpleader. Its commercial difficulty was obvious. It was by no means clear that it was legally obliged to honour the guarantees. If it honoured the guarantees when it was not legally required to do so, then it would not be entitled to indemnity from the cross-defendants.

The matters raised by ANZ were:

The cross-defendants (other than Nebax) submitted:

At the outset it is useful to make some general observations before descending into the particulars of the argument.

The present dispute requires the Court to construe the guarantees. The guarantees are a contract and ordinary contractual principles apply. Nevertheless, the guarantees are only one of the contracts which form part of the facts of this case and are themselves the product of other contracts. This last point is important for the resolution of the issues.

The contractual framework is:

The Court of Appeal (albeit after the hearing of these proceedings) has recently considered the construction of standby letters of credit in Griffin Energy Group Pty Limited (Subject to Deed of Company Arrangement) v ICICI Bank Limited [2015] NSWCA 29 (“Griffin”). The standby letters of credit in that case were, in commercial terms, indistinguishable as to their purpose from the guarantees in the case at bar. The parties in that case were in common cause as to certain matters relevant to the construction of the standby letters of credit, a joint approach from which the Court of Appeal did not demur:

I will adopt a similar approach in this case. In determining the entitlement (if any) of the Corporation to call on the guarantees and the obligation of ANZ to pay under them, regard is not to be had to any provision of the Building Contract. So much is apparent from the terms of the guarantees themselves, which include that ANZ pay under the guarantees “without regard to the performance or non-performance of the Customer or Principal under the terms of the contract or agreement” (which in this case can only be the Building Contract).

Next, again applying the approach in Griffin, the guarantees must be construed by reference to what a reasonable business person would have understood the terms to mean. Subject to the principle stated in the previous paragraph, this requires consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purposes or objects to be secured by the contract. It is to be noted that the language, surrounding circumstances and commercial purposes or objects of the Building Contract are different from those of the guarantees.

Because it is seminal and formed the basis of the Court of Appeal’s approach in Griffin, I conclude these general observations with the relevant passage from the decision of the High Court in Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 (per French CJ, Hayne, Crennan and Kiefel JJ):

A “misnomer” is an error in naming something or someone. The Corporation based its misnomer case on the analysis of the Full Court of the Supreme Court of Western Australia in Kingstream Steel Ltd v Stemcor UK Ltd [2001] WASCA 138 (“Kingstream”). In that case a commercial transaction was secured by a letter of credit which was payable on the sighting of various documents. One of those was a guarantee to be issued by “An Feng Kingstream Steel Limited”. One guarantee was issued on a letter headed “An Feng Kingstream Steel Co Ltd” and another guarantee was issued by a letter headed “An Feng Kingstream Ltd”. It was accepted that there was no company with either of those names.

In its judgment in Kingstream the Full Court resolved the problem in this way (emphasis added):

It is important to note that the judgment in Kingstream was not dealing with a final determination of the issues. It was an interlocutory appeal against the decision of a Master on a summary judgment application. The Master had concluded that there was a very strong case that the misdescription in the guarantees could be corrected either as a misnomer or by rectification. Similarly, because of the nature of the appeal the Full Court confined its decision to the conclusion that correction by misnomer was plainly arguable.

Despite the nature of the appeal in Kingstream, the Full Court’s approach is instructive. Applying the language in paragraph [17] of the judgment in Kingstream, I respectfully express the test for misnomer which will be corrected by construction as whether the misnomer was the product of a mistake made in circumstances in which it would have been plain to all who are concerned with the relevant document as to who the party was that was referred to in the document. Stating the principle in that way is supported by the authorities referred to by the Full Court and in the leading contract texts.

Whittam v W.J. Daniel & Co. Ltd [1961] 1 QB 271 is a decision of the English Court of Appeal comprising Donovan and Danckwerts LJJ. The plaintiff had issued a writ against “W.J. Daniels & Company (a firm)” claiming damages for personal injuries in the course of her employment. An amendment of the writ was allowed by substituting “W.J. Daniel & Co. Ltd” as defendant. That company applied to have the writ struck out on the ground that the amendment substituted a new defendant against whom the plaintiff’s claim had become statute barred. The Court of Appeal agreed with the decision at first instance that, on the facts, there was no reasonable doubt as to the identity of the proposed defendant and that it was a case of mere misnomer and not the substitution of a new defendant. Donovan LJ expressed his conclusion (at 277) as:

F. Goldsmith (Sicklesmere) Ltd v Baxter [1970] 1 Ch 85 (“Goldsmith”) was a case where F. Goldsmith (Sicklesmere) Ltd had bought some land. One of the shareholders in the company gave his solicitors the name of the company as Goldsmith Coaches (Sicklesmere) Ltd and the property was conveyed to the company in that name. Subsequently an agreement for sale of part of that land was made between Goldsmith Coaches (Sicklesmere) Ltd as vendor and the defendant as purchaser. The defendant’s solicitors discovered that there was no company registered in the name of Goldsmith Coaches (Sicklesmere) Ltd and, notwithstanding a reconveyance of the land in the correct company name, the defendant refused to complete the contract on the basis that there was no vendor and therefore no contract.

Stamp J concluded that since a contract was to be construed by reference to the surrounding circumstances or in light of the known facts, it was clear that Goldsmith Coaches (Sicklesmere) Ltd was an inaccurate description of F. Goldsmith (Sicklesmere) Ltd.

His Lordship expressed his conclusion (at 91):

His Lordship also observed (at 93):

Nittan (UK) Ltd v Solent Steel Fabrication Ltd trading as Sargrove Automation (1981) 1 Lloyd’s Rep 633 is a decision of the English Court of Appeal. Solent Steel manufactured metal products and was insured for product liability by Cornhill Insurance Co Ltd (“Cornhill”). Solent Steel subsequently took over the assets, but not the liabilities, of Sargrove Electronic Controls Ltd and began to do business under the business name of Sargrove Automation. When Cornhill adjusted Solent Steel’s existing insurance policy to meet the requirements of the newly acquired business, Cornhill issued an endorsement that the insured was “deemed to include Sargrove Electronic Controls Ltd”. The plaintiff sued Solent Steel for damages arising from a malfunction in equipment supplied by Solent Steel. That action was settled and damages paid. Solent Steel claimed indemnity under its policy from Cornhill. Cornhill sought to rely on an exclusion clause in the policy. Solent Steel contended that Cornhill could not rely on the exclusion clause because it only applied in respect of goods supplied by Sargrove Electronic Controls Ltd.

At first instance it was held that in the absence of any rectification Cornhill could not rely on the exclusion clause. As there was no case for rectification Cornhill had to suffer the consequences of their mistake in describing the insured incorrectly. That decision was unanimously reversed on appeal. Lord Denning MR held (at 637):

Similarly, Brightman LJ said (at 639):

Griffiths LJ agreed (at 641):

Professor Gerald McNeel in The Construction of Contracts Interpretation, Implication, and Rectification 2nd Edn, Oxford University Press, 2011 treats the topic with eloquent brevity:

Sir K. Lewison and D. Hughes, The Interpretation of Contracts in Australia, Law Book Co, 2012 discuss the topic at pages 407 - 414 by reference to these statements of principle:

The learned authors make clear a fundamental point with which I respectfully agree, namely that the process of correction of an error, including a misnomer, is still an exercise in interpretation. In doing so they draw attention to the decision of the Full Federal Court in Maddestra v Penfolds Wines Pty Ltd (1993) 44 FCR 303, in which a guarantee for the debts of the principal debtor named as “Retail Equity Limited” was construed as a guarantee of the debts of “Retail Equity Pty Ltd”. The Court said (at 306):

Finally, the learned authors (at 94) state the fundamental proposition that one of the basic exceptions to the parol evidence rule is that evidence is admissible to identify the parties to the contract (citing Gilberto v Kenny (1983) 48 ALR 620; (1983) 57 ALJR 283 and Roman Catholic Trusts Corp v Van Driel Ltd [2001] VSC 310) or the subject matter of the contract (citing County Securities Pty Ltd v Challenger Group Holdings Pty Ltd (2008) NSWCA 193 at [15]).

Quite apart from the principles relating to misnomer, a related body of law in relation to contractual interpretation that may be called in aid in the present case are the authorities dealing with the avoidance of absurdity. When the misnomer refers to a non-existent entity then the principles in relation to correcting misnomer and avoiding absurdity represent two different solutions to the same problem, although, it must again be emphasised that both approaches are examples of the application of the fundamental principles of contractual interpretation.

I respectfully adopt as an accurate statement of the principles in relation to avoiding absurdity what fell from Leeming JA in National Australia Bank Ltd v Clowes [2013] NSWCA 179 (McColl and Macfarlan JJA agreeing):

The construction of the guarantees may be resolved by application of the principles of interpretation which I have discussed above in a number of ways. However, they all come to the same end. Whatever approach is used the same answer is dictated by one feature of the guarantees, being the Description, which I set out again for convenience:

There is no doubt about the identity of ANZ. Nor is there any doubt that “The Customer” in the guarantees is Nebax. Who then is the Principal when there is no entity described by the words “New South Wales Land & Housing Department Trading As Housing NSW ABN 43754121940”? A reasonable business person, without going outside the four corners of the guarantees, would understand that question to be resolved by ascertaining who was the other party with Nebax to the contract identified in the Description. Sensibly and correctly, no party before me suggested that contract could be anything other than the Building Contract. Engaging the principle that evidence can be admitted to identify a party to or the subject matter of an agreement, the Building Contract establishes beyond doubt according to its terms that the other party to that contract with Nebax was the Corporation.

The short conclusion in the preceding paragraph can be expanded by reference to the general principles set out in Electricity Corporation or the more specific principles concerning misnomer or avoiding absurdity. I shall undertake that in what follows.

Since the fundamental task of interpretation is to determine objectively the intention of the parties to the contract, the first question is to identify the parties and the contract. All of the parties understandably focussed on the guarantees. This led to discussion of how it was impossible to determine the intention of the Corporation, which had played no part in the creation of the guarantees, or the more metaphysical problem of identifying the parties when the very issue was the identity of one of them.

The guarantees are, in fact and law, unilateral contracts. So much is apparent from the fact that ANZ’s obligation is expressed to be “in consideration of the Principal accepting this Undertaking and its terms”. That complies precisely with Lord Diplock’s famous definition of a unilateral contract in United Dominions Trust (Commercial) Ltd v Eagle Aircraft Services Ltd [1968] 1 All ER 104 at 109 as being contracts where “one party, whom I will call “the promisor”, undertakes to do or to refrain from doing something on his part if another party, “the promisee”, does or refrains from doing something, but the promisee does not himself undertake to do or to refrain from doing that thing”. Under the guarantees the Principal does not promise to accept “this Undertaking and its terms”. But if the Principal does accept (presumably by accepting the guarantees as complying with the requirement in the Building Contract for the guarantees or, at the very latest, by purporting to act in accordance with the guarantees by presenting the originals with an appropriate demand), then ANZ’s obligation to pay under the guarantees is enlivened. As Barwick CJ once observed, to call documents such as the guarantees by that name is itself a misnomer: Wood Hall Limited v The Pipeline Authority (1979) 141 CLR 443 at 445. They are unconditional bonds to pay money on demand.

For the purposes of interpretation the point is that the guarantees are the result of the performance of the Indemnity, whereby ANZ agreed to issue the guarantees at the request of Nebax on certain terms. As such, the question of the identity of the Principal must be answered by reference to ANZ’s and Nebax’s intention as evidenced by the Indemnity and the guarantees. Who did ANZ and Nebax intend to be the Principal in the guarantees which were the product of the Indemnity?

Putting it another way, the fact that the guarantees are the product of the Indemnity is the critical surrounding circumstance in construing the guarantees.

Analysing the matter in this way, the language in the Indemnity makes it clear that the commercial purpose of the guarantees is to facilitate a “business transaction” with the named Favouree, who becomes the Principal in the guarantees. The “business transaction” is better described in the guarantees in the Description.

The surrounding circumstances known to both Nebax and ANZ were:

The Court concludes that a reasonable business person taking into account the matters referred to in paragraphs [72] and [73] above would have understood the reference in the guarantees to “New South Wales Land & Housing Department trading as Housing NSW ABN 45754121940” as being intended to be a reference to the party with whom Nebax had the contract which answered the description “Job Number: P0409021, Bombaderry – Design and Construct 3/7 Karowa Street. Contract No: BG2J8”. That reasonable business person would be left in no doubt that contract was the Building Contract, being the contract which Nebax had with the Corporation and that, therefore, the party which Nebax and ANZ had intended to describe as the Principal was the Corporation.

The same result follows if the more specific principles in relation to misnomer are applied. I summarised the test in paragraph [49] above. One further comment is necessary. Insofar as the test requires that the identity of the correct party must be obvious or plain to all those who are concerned with the document, that can be conveniently assessed by asking what would have happened if the allegedly correct state of affairs had been asserted to the parties at the time.

Given that no piece of paper generated by any party in the process up to and including the Building Contract ever referred to the New South Wales Land and Housing Department and there never has been such an entity, there can be no doubt that when Mr Simic gave that name to Ms Hanna, Mr Simic made a mistake. Ms Hanna, unwittingly, perpetuated that mistake in both the Indemnity and the guarantees produced pursuant to the Indemnity. If someone had pointed out at the time to Mr Simic and Ms Hanna that the name given by Mr Simic to Ms Hanna for the Favouree and Principal was wrong, it would have been plain or obvious to both of them that it was meant to be Nebax’s counterparty to the Building Contract. It is no objection to this analysis that Ms Hanna did not know the correct name of the Corporation because that is something which, if the mistake had been drawn to her attention, she could easily have found out by asking Mr Simic either to tell her from his own knowledge or by producing the Building Contract.

A further and alternative way in which the Court reaches the same conclusion is by the application of the principles to avoid absurdity. To adopt the language of Leeming JA in Clowes cited in paragraph [64] above, this is a clear case where the literal meaning of the contractual words is an absurdity, and, it is self-evident what the objective intention is to be taken to have been. It is an absurdity because the literal description of the Favouree and Principal in the Indemnity and guarantees refers to a non-existent entity with the result that the Indemnity and guarantees have no legal effect. That is an absurd outcome because it is clear that the entire process of Mr Simic attending at the Branch, providing the information to Ms Hanna, Ms Hanna producing the Indemnity and guarantees and Mr Simic and Ms Hanna duly executing those documents all points to their intention that the Indemnity and guarantees were intended to have legal effect. The description of the Favouree and Principal in the Indemnity and guarantees respectively, taken literally, renders that whole process, which was otherwise an unremarkable, everyday commercial transaction, a solemn farce.

In addition to the literal meaning of the contractual words being an absurdity, it is self-evident from the language of the Indemnity and guarantees what the objective intention is to be taken to have been. The Description clearly demonstrates that the Favouree and Principal was intended by ANZ and Nebax to be the entity with which Nebax had entered into the contract which matched the Description.

Having reached the conclusions which are set out in the preceding section of this judgment, I now turn to the key submissions raised by the parties which are contrary to the conclusions I have reached. There are five such objections.

First, ANZ submitted that Kingstream was distinguishable for three reasons:

Second, much emphasis was laid on those cases which said there had to be strict compliance with the terms of the guarantee or letter of credit. An archetypal example of the many cases to that effect drawn to the Court’s attention was United Bank Ltd v Banque Nationale de Paris [1991] 2 SLR(R) 60 (“UBL”) in which Chow Hick Tin J held that a bank was entitled to reject documents where the relevant letter of credit was issued in favour of Pan Associated Ltd whereas the letter of credit was negotiated on behalf of Pan Associated Pte Ltd. Despite evidence that it was not possible in Singapore for two companies with the names of Pan Associated Ltd and Pan Associated Pte Ltd to co-exist, in the absence of obvious typographical errors (of which this was not an example) the negotiating or issuing bank was entitled to reject the documents unless the name of the beneficiary was the same on the tendered documents as on the letter of credit.

The Court has already noted that the requirement for strict compliance in the present case arises from the term of the guarantees themselves. The Court does not dispute the correctness of decisions such as UBL or other cases to similar effect. But this case does not engage those principles.

The guarantees required the originals of the guarantees to be produced “accompanied by a written demand”. There can be no doubt that on its proper construction “written demand” means a written demand by the Principal. In this case the originals of the guarantees have been produced accompanied by a written demand by the Corporation. The question is whether the Corporation is the Principal. This requires the Court to answer the question whether “New South Wales Land & Housing Department Trading As Housing NSW ABN 45754121940” on its proper construction means the Corporation.

Cases such as UBL are of no assistance. This is because the question of construction in this case raises an issue which must be determined before the application of the contractual requirement of strict compliance between what the guarantees said had to be done and what was in fact done. The Court’s conclusion is that, on the proper construction of the guarantees, the demand by the Corporation was the demand by the Principal required by the guarantees. Having determined the question of construction, the contractual requirement of strict compliance is engaged and shown to be satisfied.

The third objection was that there was no evidence that the Corporation was trading as Housing NSW at the date of the guarantees. There are two answers to this:

The fourth objection was that there was no evidence that Ms Hanna knew of the Building Contract. That is strictly correct given that what she knew was the incorrect name of Nebax’s counterparty to the contract in relation to which the Indemnity was agreed and the guarantees were sought. That, however, is irrelevant for the purpose of construing the Indemnity and guarantees because it reflects no more than her (and, therefore ANZ’s) subjective state of mind. The objective theory of contract does not take that into account. ANZ’s objective intention is demonstrated from the terms of the Indemnity and guarantees to the effect that the Principal was Nebax’s counterparty to the contract referred to in the Description.

Fifth, it was submitted that to the extent that the named beneficiary was “Housing NSW ABN 45754121940”, the guarantees could never be called upon after the cancellation of that registration in July 2010. That objection is irrelevant when, as the Court has found, the proper construction of the description of the Principal in the guarantees is the Corporation simpliciter. The Court does not have to consider, and expresses no view, on the question of whether the trading name and ABN number were essential terms in the description of the Principal and whether any demand under the guarantees would have to have been made by the Corporation expressly describing itself as such. Whether the Corporation could reactivate the ABN registration for the purposes of making the demand is not a matter that was canvassed before the Court.

Given the conclusion I have reached on the question of construction, it is strictly unnecessary to deal with the case brought for rectification. However, out of deference to the parties’ arguments, I will express my brief conclusions on this aspect of the case.

In short, I accept the Corporation’s submission that the present case is on all fours with the circumstances considered by the Full Court of the Supreme Court of Queensland in Elders Lensworth Finance Limited v Australian Central Pacific Limited (1986) 2 QdR 364. I respectfully adopt as correct the statement of legal principles set out in the judgment of Derrington J (at 368-369), with whom Kelly ACJ and Moynihan J agreed:

I also particularly rely on the Full Court’s emphasis, first, on the search for the parties’ common intention to be determined by what Derrington J described as the “effective intention” and, second, on the relevance of the degree to which the specific identity of the party concerned was important to the other party (see per Derrington J at 369 and 370-371).

For the reasons I have already stated (see paragraphs [68] to [71] above), the relevant intention is that of Nebax (in the person of Mr Simic) and ANZ (in the person of Ms Hanna). For this reason I do not accept ANZ’s contention that rectification was not possible because there was no common intention demonstrable between the Corporation and ANZ. Similarly, I do not accept ANZ’s submission that rectification was impossible because Ms Hanna’s undoubted subjective intention was to issue a guarantee in the name she was given by Mr Simic. Owing to Mr Simic’s mistake, there is no doubt that both Mr Simic and Ms Hanna subjectively intended to write the words “New South Wales Land & Housing Department Trading As Housing NSW ABN 45754121940”. However, while that is some evidence towards a finding as to what their common contractual intention was, it does not dispose of the question. That is particularly so in these proceedings, where Ms Hanna readily and understandably accepted that the identity of the Principal was a matter of indifference to her (and, therefore, to ANZ).

Having regard to the matters set out in paragraphs [72] and [73] above, the Court finds that ANZ and Nebax’s common intention, or the effective intention to use the language of Derrington J, was for the guarantees to support Nebax’s building contract referred to in the Description. ANZ and Nebax intended the Principal to be Nebax’s counterparty to that contract. The Court is fortified in this conclusion by Ms Hanna’s indifference to the precise identity of the beneficiary of the guarantee. Her (the Bank’s) effective intention was to provide a guarantee in support for and compliance with its customer’s contract identified in the Description.

Finally, I should note that, with respect, I do not accept Stamp J’s initially attractive suggestion in Goldsmith (see paragraph [51] above) that rectification will not be available if, contrary to the circumstances of the case at bar, the identity of a party cannot be determined as a matter of construction. There are two reasons for my respectful disagreement.

First, as a matter of theory for rectification the Court is entitled to have regard to a wider range of material (including evidence of subjective intention) than what is available to it in the objective construction of a contract. There may be insufficient evidence for construction but sufficient for rectification. Second, if the requisite common intention can be found, rectification will relate back to the time of execution of the instrument. It follows the fact that there may be no contract but for the rectification is no bar to rectification: Issa v Berisha [1981] 1 NSWLR 261.

Finally, I note that ANZ and the active cross-defendants have accepted that their respective liabilities will arise if the Court finds, as it has, that the Corporation is the Principal referred to in the guarantees. In those circumstances there is no need for the Court to take the next step of ordering rectification of the guarantees. Nevertheless, the Court finds that the prerequisites for the making of an order for rectification are satisfied. If it were to be suggested that leaving the guarantees in an unrectified state would be a potential source of confusion or difficulty, then in the exercise of the Court’s discretion I would order the guarantees to be rectified (see the discussion as to this approach to rectification in cases of construction in J.D. Heydon, M.J. Leeming and P.G. Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies, 5th Edn, LexisNexis Butterworths, 2015 at [27-105]).

The Court finds that on its proper construction “New South Wales Land & Housing Department Trading As Housing NSW ABN 45754121940” in the guarantees and Indemnity means the Corporation. The Corporation has complied with the terms of the guarantees by presenting the originals accompanied by a written demand from the Corporation at an ANZ Branch located within Australia. ANZ is therefore liable to pay the Corporation in accordance with the guarantees. The active cross-defendants have accepted that in that event they are liable to ANZ.

The proceedings will be stood over to enable the parties to formulate orders to give effect to these reasons. I will also give the parties an opportunity to prepare submissions as to costs to the extent they are unable to be agreed.