COPYRIGHT AND USE OF THIS THESIS This thesis must be used in accordance with the provisions of the Copyright Act 1968. Reproduction of material protected by copyright may be an infringement of copyright and copyright owners may be entitled to take legal action against persons who infringe their copyright. Section 51 (2) of the Copyright Act permits an authorized officer of a university library or archives to provide a copy (by communication or otherwise) of an unpublished thesis kept in the library or archives, to a person who satisfies the authorized officer that he or she requires the reproduction for the purposes of research or study. The Copyright Act grants the creator of a work a number of moral rights, specifically the right of attribution, the right against false attribution and the right of integrity. You may infringe the author’s moral rights if you: - fail to acknowledge the author of this thesis if you quote sections from the work - attribute this thesis to another author - subject this thesis to derogatory treatment which may prejudice the author’s reputation For further information contact the University’s Director of Copyright Services sydney.edu.au/copyright AN EMPIRICAL ANALYSIS OF THE STATUS OF GOOD FAITH IN CONTRACTUAL PERFORMANCE: THE AUSTRALIAN EXPERIENCE Nurhidayah binti Abdullah October 2015 A thesis submitted in partial fulfilment for the degree of Doctor of Philosophy Discipline of Business Law The University of Sydney Business School Abstract This thesis examines the concept of good faith in contractual performance as an important element in Australian contract law. The research begins with an empirical investigation of the extent of judicial support for an obligation of good faith in contract law since it was first put onto the judicial agenda in Australia by the case of Renard Construction (ME) v Minister for Works (1992) 26 NSWLR 234 through the obiter comments of Priestley J in 1992. The research continues with an empirical investigation of the meaning of good faith. There are many possible interpretations of the meaning of good faith, most of which are complex, contradictory, and unclear, which has led to undesirable uncertainty in the concept of good faith. The research then critically evaluates the possibility of legislating an obligation of good faith in contractual performance. 104 Australian cases from 1992 to 2009 that raised the issue of good faith were identified. The study period was divided into three phases; ‘Introduction Phase 1992- 1998’, ‘Development Phase 1999-2003’, and ‘Consolidation Phase 2004-2009’. These phases are examined for trends and development of the concept. A four Likert- type scale was used to access the attitude of the judges regarding the concept of good faith. In order to measure the validity and reliability of the data, the ‘average’ and ‘standard deviation’ is used in this study. The empirical observation concluded that there is still inconsistency of support from judges towards the issue of good faith. A rigorous thematic analysis of the meaning of good faith was conducted to propose a workable meaning of good faith. Despite the traditional reservations arising from uncertainty associated with the many meanings of good faith, an empirical analysis concluded that a workable meaning of good faith could be achieved by way of ‘multi-categories’. The previous Australian government accepted the recommendation to legislate good faith in the context of franchising to regulate the unethical behaviour of franchisors toward franchisees. In the context of franchising, good faith is legislated by way of ‘non-discretionary reference criteria’ as prescribed in S 22 of Australian Consumer Law. The development of good faith in the context of franchising offers a valuable opportunity for legislating good faith in contractual performance. Overall, this thesis argues that in the absence of a High Court decision regarding the application and meaning of good faith in contract law, there is scope for legislating a good faith obligation by defining good faith. This thesis suggests that good faith can be defined by way of ‘multi -categories’. - i - Statement of Originality This is to certify that to the best of my knowledge, the content of this thesis is my own work. This thesis has not been submitted for any degree or other purposes. I certify that the intellectual content of this thesis is the product of my own work and that all the assistance received in preparing this thesis and sources have been acknowledged. Nurhidayah binti Abdullah . - ii - Acknowledgements Firstly, all thanks to God for endowing me with the health, patience, and knowledge to endure the difficult and often trying experience of completing a PhD thesis. He has surrounded me with the support of countless people over the past four and a half years without of whom I would not have been able to complete this arduous journey. My gratitude to them cannot be completely comprehended through this few short humble lines. My deepest appreciation extends to my supervisor, Professor Andrew Terry for his ideas, constant advice, direction, understanding, and encouragement without which this thesis would not have seen completion. A similar appreciation is extended to Professor Tyrone Carlin, my co-supervisor for offering insightful comments and advice. My gratitude to my sponsors, the Ministry of Higher Education Malaysia and the University of Malaya for their belief in my ability to pursue higher studies and for their generous financial support. A special acknowledgement to Professor Tan Sri Dr. Ghauth Jasmon, the 10th Vice-Chancellor of the University of Malaya, who unreservedly supported his staff studying overseas. I also owe my gratitude to Hajah Dr. Jumiati Ismail, Head Consul in Sydney, who offered continuous emotional support and encouragement while I was in Sydney. There have also been countless other university staff and friends (particularly, Nazreen, Wai, Ina, Sue, Mimi, Azni, Peggy, Lachlan and Abg Daud’s family) who provided encouragement and light relief during a long and sometimes difficult research journey. Thank you for your friendship during this period. My sincere thanks to all my family (especially my sisters, brothers, and in-laws) back home in Malaysia for their du’a, love, and support. During my period of study, I was pregnant after seven years of marriage. When all the doctors that I met in Malaysia and Australia told me it was near impossible for me to conceive without reproductive assistance, fate had something different in store - iii - for me and I was blessed with a son, Mohd Al Haddad and then later, a daughter, Nur Hurin Amani. Irrespective of this unexplainable joy, it proved to be a difficult journey to balance between study and motherhood. To ease this responsibility, my mum, Rusizah binti Md Taib was always by my side to assist me in managing between studies and motherhood. My gratitude for her timely assistance cannot be encompassed by words. Thank you to my father, Abdullah bin Kassim who never wavered in his support and who took care of the family when mama was with me. My husband, who is also my best friend, is among the greatest gifts from God. I owe my deepest gratitude to my devoted husband, Mohd Hakimi bin Mohd Badrol Afandi, for his understanding and support. Your complete and unconditional love carries me through always. You have been a wonderful partner and supporter. You were willing to sacrifice your job for my dream. You have made our son your top priority, as is the case for me, you are his hero. Finally, to my dear children, this PhD is a journey for me and for both of you. Mummy loves the both of you very much. May this be a source of encouragement and inspiration for the two of you to persevere in the face of difficulty and rise to any occasion. Both of you are my strength and I pray that you become successful Muslims in this life and the Hereafter. To my late father in law who passed away on 27th February 2013, during my final year of study, may God accept him among the guided ones. Amen. - iv - I dedicate this thesis to my parents, my husband, my children and my beloved families for their unending support and unconditional love. - v - Table of Contents Abstract ................................................................................................................................. i Statement of Originality ....................................................................................................... ii Acknowledgements ............................................................................................................. iii Table of Contents ................................................................................................................. vi List of Figures....................................................................................................................... x List of Tables ...................................................................................................................... xii 1 INTRODUCTION ........................................................................................................... 1 1.1 RESEARCH BACKGROUND ............................................................................... 1 1.1.1 Good Faith in the Common Law ........................................................................ 1 1.1.2 Good Faith in Australian Contract Law .............................................................. 4 1.2 RESEARCH OBJECTIVES, SCOPE AND QUESTIONS ....................................