Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd

REASONS FOR JUDGMENT 1 There is before the Court a motion on notice dated 1 October 2010 by the first respondent, Quasar Resources Pty Ltd ("Quasar") for an order that the remainder of this proceeding be conducted in the South Australian District Registry of the Court pursuant to s 48 of the Federal Court of Australia Act 1976 (Cth) ("the Federal Court Act"). 2 The proceeding was commenced on 12 July 2010 by the applicant, Alliance Craton Explorer Pty Ltd ("Alliance") filing in the Victorian Registry of the Court an application and statement of claim. 3 The litigation arises out of a joint venture between Alliance and Quasar to exploit the Four Mile Uranium Project which is in the Arkaroola Region adjacent to the Northern Flinders Ranges in South Australia. After the formation of that joint venture, Alliance became the registered holder of successively, Exploration Licences 2874 and 3666 in respect of a prospect also located near Arkaroola. On 30 August 2002, Alliance entered into another joint venture agreement with the second respondent, Heathgate Resources Pty Ltd ("Heathgate") under which Heathgate agreed to pay the costs of exploration for at least two years of Exploration Licence 2874, amounting to not less than $300,000 and would have the opportunity of acquiring a 75% interest in that licence. At all relevant times, Heathgate has been the owner and operator of the Beverley Uranium Mine which is located on Mining Lease No 6321 adjacent to the prospect which was the subject of Exploration Licence 2874. By cl 13.5 of the Joint Venture Agreement between Alliance and Heathgate it was provided that the agreement should be governed by and construed in accordance with the laws of South Australia. 4 On 17 December 2002, Heathgate assigned to Quasar its rights and obligations under the joint venture agreement with Alliance. Thereafter, on 29 September 2004, that joint venture agreement was varied in various respects including an extension for one year of the "earn-in" period in return for Quasar increasing its expenditure commitment to $450,000. Alliance alleges that, at the time of obtaining that extension, Quasar and Heathgate did not disclose to it that Quasar was planning an exploratory drilling program pursuant to Exploration Licence 3666 ("the Tenement") searching for sedimentary-hosted uranium mineralisation. Nor, it alleged, did Quasar or Heathgate disclose to Alliance that, as a result of exploratory activity undertaken, the Tenement was regarded as prospective for sedimentary-hosted uranium mineralisation. However, on 29 April 2005, Quasar wrote to the Department of Primary Industry and Resources of South Australia ("PIRSA") reporting that uranium mineralisation had been intersected in areas of the Tenement now known as "Four Mile". 5 Despite the assignment noted at [4] above, Heathgate performed some of Quasar's functions and exercised some of its powers as manager of the Tenement on behalf of the Joint Venture. Heathgate charged Quasar the cost of that work and Quasar submitted to Alliance accounts for the amounts so charged in support of its claim to have expended the amount necessary to qualify for its "earn-in" right. 6 After the extension of the "earn-in" period, Quasar, in April 2005, drilled three exploratory holes in the Four Mile East area and one in the Four Mile West area of the Tenement. Then, on 25 June 2005, Quasar informed Alliance that it had expended $650,811.11 in relation to the Tenement and sought a transfer to it of a 75% interest in Exploration Licence No 3666. That transfer occurred on 13 September 2005 and Quasar was registered as transferee in the Mining Register on 18 October 2005. 7 Alliance alleges that on 5 August 2004 it agreed to the proposed extension of Quasar's "earn-in" period and says that when it did so it was unaware that Quasar had caused to be carried out ground-based surveys in the area of the Paralana Plains, and that the results of those surveys and other information possessed by Quasar had been available to Quasar but not disclosed to Alliance when it agreed on 5 August 2004 to extend the "earn-in" period. 8 Alliance also contends that, before 5 August 2004, Quasar had formulated a proposal for an extensive drilling program to be undertaken on Paralana Plains for which it had identified the location of some 18 drillholes. However, it is alleged, neither the formulation of this proposal nor the preparatory work which had been undertaken was disclosed to Alliance by 5 August 2004. 9 Further preparatory work, including the lodging with PIRSA of an application for approval to undertake an exploratory drilling program on the Paralana Plains and the obtaining of Aboriginal heritage clearance for the location of the drillholes, including the 18 noted at [8] above, is said to have been carried out between 20 August and 12 September 2004. However, according to Alliance, none of these matters had been disclosed to it by 13 October 2004 when it executed the agreement extending Quasar's "earn-in" period to 30 October 2005. That agreement recites that it is to be governed by, and construed in accordance with, the laws of South Australia. 10 The acts and omissions alleged against Quasar as detailed above are claimed by Alliance to have occurred in breach of fiduciary obligations owed to it, and in breach of an equitable obligation not to use information acquired in the course of effecting the Joint Venture in Quasar's own interests or not contrary to the interests of Alliance. Alliance also seeks to erect on the same factual allegations causes of action against Quasar for breach of contract and contravention of s 52 of the Trade Practices Act 1974 (Cth) ("the TPA") and s 9 of the Fair Trading Act 1999 (Vic) ("the FTA") and against Heathgate for involvement in or assisting, Quasar's breaches of duty, breach of contract or contraventions of the TPA and the FTA.