Election | Robert Sheldon SC

Macfarlan JA:

26… a reservation of rights would likely have been ineffective because the outright exercise of one such right usually constitutes an election not to exercise the other, whatever reservation might have been made (see Haynes v Hirst (1927) 27 SR (NSW) 480 where a party unsuccessfully sought to “protect himself against the legal consequences of his acts by stating that he [did] them without prejudice” (at 489)). If the time has not arrived at which a party is confronted with the need to choose between two inconsistent rights, it may keep its position open by refraining from engaging in conduct that unequivocally indicates that it has made a choice between them (see Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) [1993] HCA 27; (1993) 182 CLR 26). If there has not been any outright exercise of one of the rights, reservations by a party of its rights may assist in depriving its conduct of the necessary unequivocal character.

Sackar J:

33. For the doctrine of election to operate there must be both an element of knowledge on the part of the elector and words or conduct sufficient to amount to the making of an election as between two inconsistent rights that he possesses. (Sargent v ASL Developments Limited (1974) 131 CLR 634 @ 642) The elector must at least know of the material facts that give rise to those legal rights as between which an election can be made. Without that knowledge the doctrine of election will not be available to make irrevocable his choice of one particular right although in appropriate circumstances an estoppel may still arise which produces the very consequence without any such requirement of knowledge on the part of the party who is estopped….

34. Importantly however for there to be an election there must be two inconsistent rights between which choice can be made. This necessitates that rights coexist such that they conflict with one another at the relevant point in time. As Brennan J observes in Commonwealth v Verwayen: [27]

“As a right is waived only when the time comes for its existence and the party for whose sole benefit it has been introduced knowingly abstains from exercising it, a mere intention not to exercise a right is not immediately effective to divest or sterilise it.” [28]

35 Brennan J’s comments draw attention to the temporal component of inconsistent rights – that is, one cannot prematurely ‘waive’ [29] a right through electing an inconsistent right until the precise moment that that second inconsistent right materialises. Put another way by Stephen J in Sargent v ASL: [30]

“The doctrine [of election as between two inconsistent rights] only applies if the rights are inconsistent with one another and it is this concurrent existence of inconsistent rights which explains the doctrine; because they are inconsistent neither one may be enjoyed without the extinction of the other and that extinction confers upon the elector the benefit of enjoying the other, a benefit denied to him so long as the two remain in existence.” [31]

36 For an election there need be no actual subjective intention to elect. However if knowingly made an election cannot be withdrawn. [32]

37 Essential to the making of an election is communication to the party affected by words or conduct of the choice. So words or conduct that do not constitute the exercise of a right conferred by or under a contract and merely involve a recognition of the contract may not amount to an election to affirm the contract. An election takes place only when the conduct of the party is such that it would be justifiable only if an election had been made one way or the other. [33]

38 The central issue in many instances is whether there has in fact been an election made or one merely foreshadowed. It is not unsurprising given the irrevocable position the elector may be faced with that the Court will require conduct that expresses or reasonably implies a sufficiently unequivocal intention. [34] But the result must be one that accords with the demands of justice. As Jordan CJ observed in O’Connor v S P Bray :

“Where a person is liable to be deprived of one of two alternative rights by the mere fact of intimating his choice of the other or by some other act falling short of obtaining satisfaction he is commonly said to be put to his election and the act which brings about the deprivation is said to be an act of election. It is obviously disadvantageous to a person who has alternative rights that he should be put to his election in this sense. The authorities show that he is not placed in this dilemma unless there is something in the nature of the rights or in the circumstances of the case which makes it inevitable or necessary in the interests of justice that the choice when made should be irrevocable.” [35]

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