Allstate Explorations NL & 2 Ors v Beaconsfield Gold NL & 2 Ors - [1999] NSWSC 832 - NSWSC 1999 case summary — Zoe

NSWNSWSC

Allstate Explorations NL & 2 Ors v Beaconsfield Gold NL & 2 Ors

[1999] NSWSC 832

Supreme Court of NSW|1999-08-25|Before: Santow J, Needham J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

1999-08-25

Before

Santow J, Needham J

Catchwords

CONTRACTS - Principles of construction - Scope of resort to extrinsic evidence by way of factual matrix - "Ambiguity" an ambiguous term.
s118(3) Supreme Court Rules Pt 6 r10

Source

Original judgment source is linked above.

Catchwords

CONTRACTS - Principles of construction - Scope of resort to extrinsic evidence by way of factual matrix - "Ambiguity" an ambiguous term.s118(3) Supreme Court Rules Pt 6 r10

Judgment (37 paragraphs)

[1]

INTRODUCTION 1 This is an appeal by the Plaintiffs, Allstate Explorations NL & Others, ("Allstate") from a judgment of Master McLaughlin of 18 May 1999 brought under Pt 6 r10 of Supreme Court Rules and s118(3) of the Supreme Court Act 1970 (NSW) against the Master's refusal to determine separate questions to be tried. It poses questions concerning the proper approach to appeals from a Master in matters of discretion and procedure and, more particularly, the proper approach to the introduction of extrinsic evidence in construing contracts involving a fiduciary agent. The Master declined to make an order, substantively pursuant to Pt 31 r2 of the Supreme Court Rules, that certain questions set forth in the schedule to the Plaintiffs' Notice of Motion of 3 May 1999 be determined separately from any other question or issue in the proceedings and before any final hearing of the proceedings. I take the Master's reference to "substantively" as implicit recognition of the Court's inherent jurisdiction to embark on a separate determination of particular issues, independent of the Rules. In declining so to do, the Master exercised the Court's discretion by concluding (para 12): "Where, as here, the decision on the questions will not, of necessity, result in the determination of the proceedings, but will result in such determination only if the answers go in one direction, it seems to me that the defendants should not be deprived of their right to have the matter heard at a final hearing of the entirety of the proceedings. That is especially so where, as here, the defendants have raised on the pleadings the assertion that the plaintiffs are in breach of a fiduciary duty, and especially to where, as here, a decision on some, at least, of the questions must depend upon disputed questions of fact."

[2]

2 With no objection from the Defendants, the Plaintiffs have, by Notice of Appeal dated 1 June 1999 re-stated the questions for separate determination with some refinements. They have for the first time, re-stated the last two questions by reference to six factual statements in Schedule B. These the Plaintiffs contend could not be the subject of any bona fide dispute, and rely inter alia on an affidavit of John Wood dated 1 June 1999. In relation to those factual statements, the Appellants rely upon s82 of the Supreme Court Act 1970 (NSW) and seek the Court's exercise of discretion under s190(3) of the Evidence Act 1995 (NSW). That discretion under s190(3) of the Evidence Act 1995 arises in a civil proceeding where "the matter to which the evidence relates is not genuinely in dispute", or where otherwise application of the relevant provisions "would cause or involve unnecessary expense or delay". Section 82 of the Supreme Court Act is to similar effect. The Defendants, while not objecting to these refinements of the Plaintiffs' case, take issue with the Plaintiffs' contentions in their appeal. 3 For convenience, I set out below the relevant schedules containing the questions sought for separate determination and the statements of fact said not to be genuinely in dispute: SCHEDULE "A" - QUESTIONS FOR SEPARATE DETERMINATION The following questions are for separate determination: 1. Whether, as a matter of construction, a 2% Management Fee under clause 2.05 of the Beaconsfield Management Agreement is within the meaning of 'costs' in clause 11.3 of the Beaconsfield Mine Joint Venture Agreement (the "BMJVA"). 2. Whether, as a matter of construction, the marking up of an employee's fee determined on a time basis for each employee of any company related to the Manager as are employed on the Project in an amount not exceeding the formula in Item 17 of the Schedule to the Beaconsfield Management Agreement is within the meaning of 'costs' in clause 11.3 of the BMJVA. 3. Whether, as a matter of construction, a program and budget approval in accordance with Part 10 which was calculated to include a 2% Management Fee under clause 2.05 and the marking up of an employee's fee determined on a time basis for each employee of any company related to the Manager as are employed on the Project in an amount not exceeding the formula in Item 17 of the Schedule to the Beaconsfield Management Agreement is binding upon the joint venturers and on the Manager under clause 10.5 of the BMJVA and is a decision binding upon the Joint Venturers pursuant to clause 7.2 of the BMJVA. 4. Whether, in the circumstances as described in schedule B, as a question of law, the Manager could be subject to any fiduciary duty as alleged in the pleadings in carrying out joint venture activities in accordance with programs and budgets approved by the Management Committee under Part 10 of the BMJVA. 5. Whether, in the circumstances as described in schedule B, as a question of law, the marking up of an employee's fee determined on a time basis for each employee of any company related to the Manager as are employed on the Project, or engaging retaining or paying such an employee, in an amount not exceeding the formula in Item 17 of the Schedule to the BMJVA could be a breach of the obligation under clause 2.01(c) of the Beaconsfield Management Agreement." SCHEDULE "B" 1. The second and third plaintiffs and the defendants are parties to the Beaconsfield Mine Joint Venture Agreement ("BMJVA"). 2. The terms of the BMJVA are set out in Exhibit JCW 1 to the affidavit of John Charles Wood sworn 9 July 1998 and in annexure A to the affidavit of John Charles Wood sworn 1 June 1999. 3. Allstate Explorations NL is the Manager of the Beaconsfield Mine Joint Venture (the "BMJV") and is bound by the terms of the BMJVA. 4. All cash calls made during the period 1 May 1994 to date by the first plaintiff as Manager of the BMJV were made in accordance with a programme or budget approved by the Management Committee. 5. The making of the said cash calls by the Manager was done in the course of carrying out Joint Venture activities. 6. A second amended cross-claim has been filed alleging certain fiduciary duties are owed by the Manager as pleaded, and which are denied by the plaintiffs."

[5]

7 There is thus a substantial onus upon the Appellant in seeking to overturn such a decision simply because of the nature of the decision appealed against. But in any event, appeal or not, there must be a high level of confidence that ordering separate questions satisfies the stringent requirements for doing so. These requirements are conveniently set out by Giles CJ Comm D in Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 141-2: "Part 31 r2 of the rules empowers the court to make orders for the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings, and for the statement of a case and the question for decision. In the ordinary course all issues in proceedings should be decided at the one time , but separate decision of a question may be appropriate where, for example, the decision of the question is critical to the outcome of the proceedings and (at least if decided in one way) will bring the proceedings to an end . In particular circumstances the separate decision of a question may be appropriate even if it will not bring the proceedings to an end, such as where there is a strong prospect that the parties will agree upon the result when the core of their dispute is decided or where the decision will obviate unnecessary and expensive hearing of other questions, but such occasions must be carefully controlled, lest fragmentation of the proceedings (particularly when the exercise of rights of appeal is borne in mind) brings delay, expense and hardship greater than that which the making of an order was intended to avoid. It is often the case that the need to make findings of fact for a decision of the separate question, especially findings which may involve issues of credit, tell strongly against the making of an order because related facts, and renewed issues of credit, will or may arise at a later stage in the proceedings. Experience teaches that it should be able to be seen with clarity that decision of a separate question will be beneficial in the conduct of the proceedings and the resolution of the parties' dispute ."

[8]

(b) a charge representing a marking up of certain persons' salaries in accordance with a formula in item 17 to the schedule to the management agreement. 9 These issues have arisen, following cash calls upon the joint venturers and in particular the three Defendants. These calls are said to be in accordance with programmes and the budgets approved by a management committee under the BMJVA. There is however an issue of whether the Defendants were properly aware of what made up their constituent elements, as I describe later. 10 Under the Plaintiffs' Statement of Claim, the First Plaintiff claims that it is entitled to charge a management fee "under" clause 2.05 of the relevant Management Agreement (para 15). To this the Defendants respond that the definition of "costs" in clause 1.1 of the BMJVA and the costs the subject of clause 2.1 of the annexed "Accounting Procedure" do not extend to nor include management fees (para 17(a)). They contend, in the alternative, that management fees are "inconsistent" with the BMJVA (para 17(b)). To this the Plaintiffs respond that insofar as such management fees were paid by the Defendants, the Defendants, having had knowledge and awareness of the management fees and having approved them in circumstances where the Plaintiffs have at all times acted pursuant to decisions of and at the direction of the management committee, that it follows the Defendants are estopped from denying that the First Plaintiff was manager of the joint venture and thus entitled to the fees. To this the Plaintiffs respond that any monies paid were mistakenly paid by the First Defendant for management fees, with recovery now sought either by way of restitution or as money had and received. I deal later in more detail with the particularisation of these contentions. 11 There is a connection between the issue of the management fee and what are termed charges for "the services". Thus the pleadings disclose a dispute as to whether so much of such charges as represented a sum based on the marking up formulae in item 17 of the schedule to the Management Agreement in respect of the services of personnel retained by the manager on behalf of the joint venture are, or are not, the defined term "Costs" within clause 1.1 of the joint venture. "Costs" are there defined as meaning "all costs incurred in connection with Joint Venture Activities, accounted for in accordance with the Accounting Procedure or, where not provided for in the Accounting Procedure, in accordance with generally accepted accounting practices in Australia". There is a live dispute as to whether what I shall call these item 17 service costs "were Costs of the Joint Venture within the meaning of Part 2.1(f) of the Accounting Procedure" (para 12(a) of the Defence). 12 "Joint Venture Activities" are defined in clause 1 of the BMJVA as meaning "all activities conducted for the purposes of the Joint Venture and under the terms of this Agreement, up to the point at which Production is delivered, whether actually or notionally, to the Joint Venturers as provided in this Agreement." 13 The connection between the two items, that is the management fee and the charges based on the marking up formulae is that both were included in cash calls issued by the First Plaintiff. There is thus a live dispute as to whether the Defendants are, as the Plaintiffs contend, "precluded" from disputing that the cash calls issued by the First Plaintiff prior to 1996, are true and correct and thus "precluded" from making any adjustment claims in relation to those cash calls (see para 10 of the Plaintiffs' Reply). That preclusion is said to arise by way of estoppel and on the basis that the Defendants "had knowledge of, approved and were aware of the service cost charges and management fees and that the First Plaintiff has at all times acted pursuant to decisions of and at the direction of the Management Committee" (see Defence of 17 March 1999); see earlier. 14 A further complex of issues arises by virtue of the Second Amended Cross-Claim of the Defendants under which, speaking generally, it is said that the First Plaintiff stood in a fiduciary relationship with the joint venturers and owed fiduciary duties to the joint venturers as there elaborated. It is then said that the First Plaintiff breached those fiduciary duties by having:

[13]

18 Earlier in para 4(d) the Defendants contend that they did not appreciate nor were informed that the proposed programmes and budgets prepared and presented at the Management Committee meetings with the joint venturers included "the charge", this being the charge in para 6(b) of the Plaintiffs' Defence to Second Amended Cross-Claim in relation to "the Personnel" referred to in para 6(a) thereof. 19 Speaking generally, para 6(a) of the Plaintiffs' Defence to Second Amended Cross-Claim refers to the First Plaintiff as manager retaining, through a company called Otter Services Pty Limited on behalf of the joint venturer and allegedly in connection with Joint Venturer Activities, the services of some twenty persons. Paragraph 6(b) contends that "the cost of obtaining the services of those persons on behalf of the joint venture was in accordance with the amount charged by Otter Services and was charged in accordance with item 17 of the schedule to the Management Agreement ….". In that same Defence, the Plaintiffs, in para 7(a) define these as "Service Costs" being "amounts in respect of personnel retained through Otter Services Pty Limited by the First Cross-Defendant, as Manager of the Joint Venture, on behalf of the Joint Venture in the programmes and budgets presented to and approved by the Management Committee". 20 I deal with some of the ramifications of the pleadings through cross-claims and defences, in order to show that the issues involved are of considerable complexity. Speaking very broadly, they stem from the notice pleaded in paras 19 and 20 of the Plaintiffs' Statement of the Claim, said to be pursuant to clauses 12.5 and 9.6(c) of the BMJVA, requiring the First Plaintiff, as manager, to rectify specified alleged breaches of the BMJVA, such breaches being as I have earlier described and as elaborated in para 20 set out below: "Specific details of the alleged defaults of the first plaintiff as Manager in allegedly not conforming to the BMJVA when issuing cash calls under clause 11.3 of the BMJVA, all of which are denied, are: (a) charging incorrectly (charging 2.4 times salary rather than fair cost recovery) for the services of the Manager-Metallurgy (Barrie Hancock) who is a site employee; (b) charging incorrectly (charging 2.4 times salary rather than fair cost recovery) for the services of offsite personnel (such as Patrick Scott and Ian Kirkham) employed by Otter Gold Mines Limited or other companies within the Otter Gold Group; and (c) charging a management fee (calculated as 2% of total Joint Venture expenditure except for HEC power costs) when such a fee is not a defined Cost under the BMJVA."

[15]

22 The Plaintiffs in their outline submissions of 1 June 1999 gave a summation of the background to the issues now raised in para 2-5 in these terms: "2. The respondents served a purported notice dated 29 June 1998 upon the first appellant allegedly under clause 9.6(c) of the BMJVA. The issues raised by this purported notice are in essence whether the appellant is entitled to include a 2% management fee in the cash calls and whether the Manager is entitled to include a charge representing a marking up of certain persons' salaries in accordance with a formula in Item 17 to the schedule to the Beaconsfield Management Agreement. 3. The appellants commenced proceedings seeking declaratory relief specifically focussing upon the construction issues raised by the purported notice. A Defence and Second Amended Cross-Claim have been filed by the respondents which raises construction issues as well as an allegation of alleged fiduciary duty relating to the marking up of the employees' salaries as well as seeking recovery based on restitution for moneys had and received for the amounts paid in relation to the management fee and for so much of the salary as is above the fair cost of recovery for the services. A defence has been filed to the Second Cross-Claim raising both the matters of construction as well as joining issue with the causes of action alleged in the cross-claim as well as pleading certain estoppels. A reply has also been filed by the appellants raising both matters of construction and estoppel as well as a reply by the respondents. 4. The parties had an interlocutory dispute on the pleadings in relation to the adequacy of the alleged fiduciary duty. 4. By Notice of Motion dated 3 May 1999, which came before Master McLaughlin for hearing on 18 May 1999, the appellants sought to have separately determined three questions of construction and two questions of law. The application was supported by an affidavit of G. L. Kent sworn 12 May 1999 together with certain paragraphs of an affidavit of J. C. Wood sworn 9 July 1998 which was not the subject of cross-examination or competing evidence."

[19]

27 Thus what a contract means is primarily a question of law to be found as a matter of objective intention of the parties derived in the first instance from the words used. But courts have long recognised that disputes about what meaning was objectively intended almost invariably requires recourse to the factual matrix of the contract. What is comprised in the factual matrix, its potential for expansion in the interpretive process, is still a matter of divergent view. A narrow formulation was recently essayed by the Court of Appeal in these terms: "the immediate context of the contract, facts which both parties would have had in mind and known that the other had in mind when the contract was made"; per Staughton LJ in Scottish Power plc v Britoil (Exploration) Ltd & others (CA (Staughton, Ottow and Robert Walker LJJ), 18 November 1997) Times Law Reports 2 December 1997. Whether any wider ambit of fact may also be considered under factual matrix, or context, is discussed later (paras 39 and following). But this does not affect the basic proposition that a dispute about the construction of a contract, though primarily a legal question, almost invariably involves factual questions of context as well. 28 It is important that if limited issues are proposed for separate determination, the utmost care must be taken to ensure that they are really suitable for separate decision and that the questions are specified with clarity, in particular with respect to mixed questions of fact and law; see American Home Assurance Co v Ampol Refineries Ltd (1987) 10 NSWLR 13 at 18. 29 Thus courts often refuse to make such orders where what may first appear to be a pure question of law involves in truth findings of fact and the drawings of inferences from primary facts that are more properly dealt with as part of the proceedings as a whole; Rogers v Bailieu Bullock Wilkinson Pty Ltd (1981) 28 SASR 594. 30 That is not to say that, especially in complex litigation, there may not be circumstances where separate questions will be beneficial in the conduct of the proceedings and represent a likely shortening of the proceedings; the paradigm case is where a decision of a particular question critical to the outcome of the proceedings will, at least if decided in one way, bring the proceedings to an earlier end. The question is whether the Plaintiffs satisfy the onus upon them to disturb the finding of the Master that those exceptional circumstances were not there made out. It is to that I now turn.

[25]

38 The pleading, as I have earlier quoted it, then asserts that "Costs" as so defined and as referred to in Clause 2.1 of the Accounting Procedure is a term not apt to comprehend management fees and in particular the two percent Management Fee. Further that to the extent that such a Management Fee is anticipated by the Management Agreement, as clearly it is, it is not "a relevant 'principle'" for the purposes of the overriding clause 9.3 of the BMJVA or is actually inconsistent with it. Presumably this latter argument depends on the word "principles" being inapt to pick up something of the nature of a management fee. 39 It can be seen that the argument is not without its difficulties. Nonetheless, insofar as the argument is not so implausible as to lead to a successful strike-out application in relation to that part of the Defendants' pleadings, as I am satisfied is the case, it does give rise to a legitimate question of interpretation anterior to question 1. The Defendants' argument is then that one cannot resolve that prior question without the Court looking at the relevant background before the parties in ascertaining objectively their contractual intentions. At the narrower level this means looking at least at what may be said to be the immediate context of the contract; that is, confining the factual matrix to the facts which both parties would have had in mind and known the other had in mind when the contract was made; per Staughton LJ in Scottish Power plc v Britoil (Exploration) and Others (supra). Lord Hoffman in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] 2 WLR 945 at 972 would go further (speaking obiter in describing how contracts are to be construed, for what was before him was a contractual notice, not the contract itself): "In the case of commercial contracts, the restriction on the use of background has been quietly dropped. There are certain special kinds of evidence, such as previous negotiations and express declarations of intent, which for practical reasons …. are inadmissible in aid of construction. … but apart from these exceptions, commercial contracts are construed in the light of all the background which could reasonably have been expected to have been available to the parties in order to ascertain what would objectively have been understood to be their intentions: Prenn v Simmonds [1971] 1 WLR 1381, 1383. The fact that the words are capable of a literal application is no obstacle to evidence which demonstrates what a reasonable person with knowledge of the background would have understood the parties to mean, even if this compels one to say that they used the wrong words. In this area, we no longer confuse the meaning of words with the question of what meaning the use of the words was intended to convey."

[28]

44 But whether one takes the wider or narrow view of context and factual matrix, the questions of construction are not self-evidently ones which can be safely determined solely by reference to the words used and the factual matters in Schedule B, with no resort beyond that to "the objective contextual scene". 45 Thus when one analyses Question 1 in terms of the pleadings, it does evoke anterior questions indicating the possibility - yet to be determined - of a different outcome than a surface reading of the literal words may suggest; in particular as to whether, though the two per cent Management Fee (upper or lower case) may be literally within the meaning of "Costs" in clause 11.3 of the BMJVA, this result may nonetheless be precluded by other provisions of the BMJVA and the associated documents. This is judged by reference to the objective contextual scene, viewed by "reasonable persons circumstanced as the actual parties were", so as to determine in an objective sense what such persons would have had in mind in relation to the Management Fee. In so doing, one seeks to find the meaning to be attributed objectively to the words from the evident commercial purpose of the parties' overall arrangements; compare Lord Steyn "Contract Law: Expectations of Honest Men" (1997) 113 LQR 431 at 441. 46 On that basis, there are questions of fact to be determined which go beyond those factual statements contained in Schedule B, even if all of these were treated as not genuinely in dispute and thus treated as matters which the Defendants should be required to admit without further proof. 47 That reasoning must be fatal to determining question 1 as a proper question for separate determination, as it cannot be said that it could not depend on facts additional to those required to be admitted, when regard is had to anterior issues. 48 Question 2: Whether, as a matter of construction, the marking up of an employee's fee determined on a time basis for each employee of any company related to the Manager as are employed on the Project in an amount not exceeding the formula in Item 17 of the Schedule to the Beaconsfield Management Agreement is within the meaning of 'costs' in clause 11.3 of the BMJVA.?

[29]

49 Here again, the Defendants' apparent concession that the question is susceptible on its face to determination without resort to extrinsic facts is importantly qualified. The Defendants contend that such an approach is inattentive to antecedent questions that must be resolved which themselves present issues, the answers to which will require evidence concerning the conduct of the Plaintiffs. 50 The Defendants' contentions are as I have earlier quoted them from the Defendants' pleadings. Essentially, what the Defendants put in issue is the Plaintiffs' contention that the Defendants "had knowledge" and were "aware" that the multiplier (140 per cent concededly within the formula in item 17 of the schedule to the Beaconsfield Management Agreement), had been applied in relation to the twenty persons set out para 6(a) of the Plaintiffs' Defence. That is put in issue by para 5(d) and 6(j) of the Defendants' Reply to Defence to the Second Amended Cross-Claim. The Defendants point to the 29 June 1998 notice (Annexure A to the 9 July 1999 Wood affidavit) and to the particulars of para 32 of the Defendant's Defence and Second Amended Cross-Claim as referring only to three persons, Messrs Hancock, Scott and Kirkham as having received that mark-up, whereas seventeen additional persons who received the mark-up were identified in para 6(a) of the Plaintiffs' Defence to Second Amended Cross-Claim. 51 Essentially, the Defendants' contention is that, being (as they say) unaware and lacking knowledge of this multiplier in relation to the twenty persons, this removes the basis for a "Cash Call" capable of being legitimately made by the Plaintiffs. Such a Cash Call must be the result of an approved and binding programme and budget for the purposes of clause 10.5 of the BMJVA. The Committee, under clause 10.3 of the BMJVA must meet to consider and approve programmes and budgets prepared by the Manager before there can be a Cash Call for it is only "a programme and budget approved in accordance with the above provisions of that Part" which will be binding upon the joint ventures and on the Manager; see clause 10.5 of the BMJVA. The Defendants claim ignorance of a constituent element of the Cash Call, as put in issue by paras 5(d) and 6(j) of the Defendants' earlier mentioned Reply. 52 Essentially then the argument will be a factual one as to whether there was knowledge and awareness of the relevant marking-up on the part of the Defendants via their representation on the relevant Committee. If there were lacking that knowledge and awareness, then question 2, even if answered in the affirmative, would not in that regard resolve the real dispute between the parties. That dispute is not the question of construction but rather the question of whether as the Plaintiffs allege, there are necessary anterior procedures of full disclosure to be complied with and whether they were, such as would allow a Cash Call to be made which included the relevant mark-ups. 53 That again is fatal to allowing question 2 as a question for separate determination as it cannot in any real sense shorten the proceedings even if resolved in favour of the Plaintiffs. I should add that while the relevant affidavit evidence indicates some disclosure (see Annexure A to the 9 July 1998 Wood affidavit plus paras 27 and 29) the Defendants' case as I understand it is that they were not aware with particularity of the numbers of personnel receiving this mark-up and that this was a material matter. One can anticipate the Plaintiffs will strongly contend that the disclosure was sufficient but that is the very kind of matter that is properly for the substantive trial. 54 Question 3: Whether, as a matter of construction, a program and budget approval in accordance with Part 10 which was calculated to include a 2% Management Fee under clause 2.05 and the marking up of an employee's fee determined on a time basis for each employee of any company related to the Manager as are employed on the Project in an amount not exceeding the formula in Item 17 of the Schedule to the Beaconsfield Management Agreement is binding upon the joint venturers and on the Manager under clause 10.5 of the BMJVA and is a decision binding upon the Joint Venturers pursuant to clause 7.2 of the BMJVA.?

[32]

58 To this the Defendants have several answers based on the contract itself and also that a fiduciary relationship on the manager's part would find its foundation in agency, not contract, in contrast to the situation in Hospital Products. First, they point to clause 2.01(c) of the Management Agreement which requires the performance of joint venture activities "in a good and workmanlike and cost effective manner". Certainly, one would expect that a fiduciary obligation which would apply to the Manager as agent of the venturers would go so far as to place the Manager under a fiduciary obligation in preparation of the relevant programmes and budgets which are themselves to be approved; see generally for a useful discussion on an operator or manager's fiduciary position, "Joint Ventures Law in Australia", edited by W D Duncan 1994 and in particular "Joint Ventures and Equity - Fiduciary Aspects" by Rogers and Nesbitt at 77-9. A manager or operator is the paradigm of a fiduciary agent, being the agent of the venturers, whether appointed by them jointly or severally. 59 It is significant that in the case of a manager or operator, the existence of the basic contractual relationship may not, in the earlier quoted words of Mason J, necessarily provide "the foundation for" the erection of the fiduciary relationship. Rather that foundation is to be derived not from contract, but from the fact that the Manager is the agent of the venturers. Fiduciary obligations presumptively attach as a matter of law to an agency relationship, more particularly where the operator is placed in the position of ascendancy or trust and confidence by the venturers in holding funds and property for them. The contract may flesh out the details of those fiduciary obligations, but is not their fundamental source. 60 That does not render the joint venture contractual documentation irrelevant to the content of the fiduciary obligation. But it does not equate the situation to that of, for example, a distributor to his principal, where the relationship per se, unlike an agency, does not have a fiduciary character but depends fundamentally on the contract itself though capable of being affected by other factors. Here, the contractual documentation would have to be looked at with some care in analysing the content of the fiduciary duty of the Manager in the relevant circumstances but is not determinative in that fundamental sense. Answering question 4 as a separate question would not therefore assist in that overall determination. I should add that such a determination again necessarily requires reference to the factual matrix of the parties' relationship and the factual matters set out in B are quite possibly incomplete for this purpose. Moreover the question is one of mixed fact and law where separating questions and identifying all relevant facts with the necessary precision presents especial difficulty. 61 Question 5: Whether, in the circumstances as described in schedule B, as a question of law, the marking up of an employee's fee determined on a time basis for each employee of any company related to the Manager as are employed on the Project, or engaging retaining or paying such an employee, in an amount not exceeding the formula in Item 17 of the Schedule to the BMJVA could be a breach of the obligation under clause 2.01(c) of the Beaconsfield Management Agreement?

Parties

Applicant/Plaintiff:

Allstate Explorations NL & 2 Ors

Respondent/Defendant:

Beaconsfield Gold NL & 2 Ors

Legislation Cited (2)

Evidence Act 1995(NSW)

Supreme Court Act 1970(NSW)

Cases Cited (8)

New South Wales Supreme Court CITATION : Allstate Explorations NL & 2 Ors v Beaconsfield Gold NL & 2 Ors [1999] NSWSC 832 CURRENT JURISDICTION : Equity FILE NUMBER(S) : 3089/98 HEARING DATE(S) : 17/06/99, 22/06/99 JUDGMENT DATE : 25 August 1999

COUNSEL : A W Street, SC/R Pepper (Plaintiffs) J Styring (Defendants) SOLICITORS : Blake Dawson Waldron (Plaintiffs) Phillips Fox (Defendants CATCHWORDS : PRACTICE AND PROCEDURE - Appeal from Master declining to order separate questions to be tried - Principles to be applied in such appeals and in ordering separate questions under Pt 31 r2 Supreme Court Rules - Particular application of those principles to the construction of contracts.; CONTRACTS - Principles of construction - Scope of resort to extrinsic evidence by way of factual matrix - "Ambiguity" an ambiguous term.; EQUITY - Fiduciary obligation of joint venture operator derived from being a fiduciary agent - Relevance of contract when not the fundamental source of the fiduciary obligation. Evidence Act 1995 (NSW) s190(3) ACTS CITED : Supreme Court Act 1970 (NSW) s82; s118(3) Supreme Court Rules Pt 6 r10; Pt 31 r2 American Home Assurance Co v Ampol Refineries Ltd (1987) 10 NSWLR 13 Bass and Another v Permanent Trustee Co Ltd & Ors (1999) 161 ALR 399 Do Carmo v Ford Excavations Pty Ltd (1981) 1 NSWLR 409 Golosky v Golosky (NSWCA, 5 October 1993, unreported) Hospital Products Limited v United States Surgical Corporation & Others (1984) 156 CLR 41 Jacobson v Ross [1995] 1 VR 337 Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] 2 WLR 945 CASES CITED : Maunsell v Olins [1975] AC 373 Morrison v Judd (NSWCA, 10 October 1995, unreported) Printing & Kindred Industries Union of Australia v Clarke (Needham J, SCNSW, 17 September 1976, unreported) Rogers v Bailieu Bullock Wilkinson Pty Ltd (1981) 28 SASR 594 Scottish Power plc v Britoil (Exploration) Ltd & others (CA (Staughton,Ottom and Robert Walker LJJ), 18 November 1997, unreported) Singer v Berghouse (1994) 181 CLR 201 Carl Zeiss Stiftung v Herbert Smith & Co [1968] CA 93 Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 DECISION : Master's decision affirmed that no separate questions to be tried.

(1987) 10 NSWLR 13

(1999) 161 ALR 399

(1981) 1 NSWLR 409

(1984) 156 CLR 41

(1981) 28 SASR 594

(1994) 181 CLR 201

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