African Minerals Limited v Pan Palladium Limited

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

50161/02 AFRICAN MINERALS LIMITED v PAN PALLADIUM LIMITED JUDGMENT

1 HIS HONOUR: This is a motion brought by the defendant for an order by way of a stay under Pt 11 r 8 of the Supreme Court Rules. The plaintiff has commenced proceedings in this Court in relation to an alleged agreement made with the defendant. 2 The original summons sought a number of declarations. However, during the course of the proceedings, the plaintiff has sought, and I have granted it leave, to file an amended summons. That amended summons merely seeks a declaration that on or about 17 May 2002, the plaintiff and the defendant entered into a legally binding agreement in the terms contained in a document annexed to the summons. That document is a letter dated 15 May 2002. 3 As I understand the position before the May letter was written, the parties had been in discussion for sometime about the prospect of the plaintiff acquiring part of the defendant's interest in a mining project referred to as the Northern Bushveld Projects in which the defendant is in joint venture with companies known as Impala Platinum Limited and Randgold & Exploration Company Limited. The letter of 15 May 2002 is alleged to be the culmination of those negotiations and is claimed by the plaintiff to reflect a legally binding agreement. The letter contemplates conditions precedent before there can be a binding arrangement but the plaintiff says all of those preconditions have been fulfilled. 4 The defendant, as I understand the position, asserts the letter was not intended to create or to evidence a legally binding relationship and, in any event, there were preconditions which have not been fulfilled. It is also asserted that as the agreement contemplates that the plaintiff will acquire part of the defendant's interest in joint ventures which it has with Impala and Randgold, and as that could only occur with the consent of those companies, in the circumstances where those consents have been denied, the agreement, if there be one, fails ab initio. 5 It is submitted that in order to determine the plaintiff's amended summons, it will be necessary to determine whether, if the plaintiff and the defendant have otherwise entered into a binding relationship, the consents of the third parties under the respective agreements with the defendant have been reasonably withheld. 6 The assets of the joint ventures are located in South Africa and there is no dispute that the defendant's joint venture partners are South African companies. The defendant says as the dispute must necessarily involve the evidence of the reasonableness of the actions of the South African company in denying consent, the current proceedings should be stayed upon the company undertaking to bring proceedings at an early date in December. 7 The plaintiff resists this course. It is submitted that the proceedings which it brings relate only to the issue as to whether there is a legally binding agreement between the parties. Whether or not the agreement, if it exists, is capable of enforcement or could give rise to a claim in damages for its breach are matters which it submits do not presently arise. 8 Although the joint venture partners have not consented to any assignment of rights, it is submitted that the consequences which flow from those matters, will have to be determined in other proceedings, should they ever prove necessary. Accordingly, the plaintiff submits that all the court is presently concerned with is the limited question of whether the letter of 15 May evidences a contract. 9 In order that the issues which the defendant says arise may be clearly defined, the defendant has provided a draft defence and cross-claim which it says it will file if the proceedings are not stayed. It says it will seek to join the joint venture partners in the proceedings and obtain binding declarations in relation to their refusal of consent. Whether or not this occurs and whether, if it does, the court would entertain the cross-claim as part of the present hearing, are matters which I need not determine at this stage. However, questions of enforceability or breach, if an agreement exists are, to my mind, different questions to the question raised by the plaintiff's summons, which is confined to whether or not there is an effective agreement. 10 The agreement which is said to be evidenced in the letter of 15 May 2002 was negotiated, drafted, accepted and, in part, implemented in Sydney. That part which has been implemented, as I understand it, is the obligation under clause 2.1A, which requires a placement of shares. This occurred in Sydney. The defendant is an Australian company registered in Western Australia. The plaintiff is a company registered in Canada. It is clear that the contract will, if proceedings are maintained in this Court be considered under Australian law. See: Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197. 11 It is also relevant that the letter provides for the acquisition of securities in Australian currency, the money amounts are expressed in Australian dollars and the times for performance are expressed in Sydney times. 12 The proceedings were commenced by summons filed on 24 September 2002 which was, as I understand it, served on 26 September 2002. It was first returnable on 25 October 2002. The principles to be applied with respect to motions under Pt 11 r 8 of the Supreme Court Rules are well understood: See: Oceanic Sun Line and Voth v Manildra Flour Mills Pty Limited (1990) 171 CLR 538. Rather than inquiring whether there may be a more convenient forum, the test to be applied is to see whether the New South Wales Supreme Court is a clearly inappropriate forum. 13 I do not to overlook the fact that the arrangement between the parties contemplates an ongoing relationship under which various matters, including the payment of annual sums, are required of the plaintiff. It is imperative that the legal obligations of the parties, if any, to each other are clarified at the earliest opportunity. The Commercial List of this Court can give this matter a hearing at any time from the beginning of the law term 2003. I am informed that if proceedings were commenced in South Africa and an application for expedition is made and granted, it might be listed in the appropriate South African court in February or March next year. As yet, such an application has not been made as proceedings, have understandably, not been commenced in South Africa. 14 It is unnecessary to explore the complete arguments of the parties in relation to the legal character of the letter dated 15 May 2002. They have not been fully ventilated on this motion. However, I am satisfied that the question of whether or not a legally binding agreement exists is capable of being determined without the joinder of the defendant's joint venture partners and furthermore, without determination of the question whether, if there is an agreement, it is capable of enforcement. I have no doubt that the determination of the legal character of the arrangement between the parties will be of considerable practical benefit to them and will assist in the efficient resolution of their present commercial difficulties. 15 In the circumstances, having regard to the proceedings as constituted by the amended summons, I am not satisfied that the New South Wales Supreme Court is clearly an inappropriate forum. In coming to this view, I have had regard to the following matters:

(a) The applicable law is almost certainly the law of Australia. (b) The defendant is Australian. (c) The agreement, if any, was negotiated in Australia. (d) The agreement, if any, requires various matters to be undertaken in Australia. (e) The necessary evidence is unlikely to involve evidence from persons who cannot conveniently give evidence in Sydney. 16 I have also had regard when reaching this conclusion to the letter forwarded by the plaintiff's solicitor to the defendant's solicitor which accompanied the form of the amended summons. 17 There has been an exchange between the parties' counsel in court which has further amplified the nature of the obligation accepted by the plaintiff in relation to the application of the decision in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. It is unnecessary for me to refer to the undertaking given beyond noting that it has been recorded in the transcript. The giving of that undertaking reinforces my view that the appropriate course is to provide for the current proceedings to be heard in this Court. In those circumstances, the appropriate order is that the defendant's motion should be dismissed.

FURTHER SUBMISSIONS BY COUNSEL, SEE SEPARATE TRANSCRIPT. 18 HIS HONOUR: The plaintiff seeks an order for costs. When the defendant's motion was first advanced, the summons as then filed, raised the possibility of larger questions being argued than those which could arise under the amended form of summons. It has only been necessary to deal with the amended summons in my reasons because that is the form now sought to be pursued by the plaintiff. 19 However, in my opinion, the opposition which the defendant has brought and maintained to the bringing of these proceedings in this Court in whatever form was not justified. Accordingly, the appropriate order is that costs follow the event. I order the defendant to pay the plaintiff's costs of the motion. 20 The orders are: 1. Motion dismissed. 2. The defendant is to pay the plaintiff's costs of the motion. **********

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