Supreme Court of WA|2010-07-01|Before: Corboy J

AUSTRALIAN ZIRCON NL -v- AUSTPAC RESOURCES NL [2010] WASC 166 (1 July 2010)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : AUSTRALIAN ZIRCON NL -v- AUSTPAC RESOURCES NL [2010] WASC 166

Practice and procedure - Crossvesting - Application to transfer proceedings to the Supreme Court of New South Wales - Whether the proper law of the contract being the law of New South Wales was a sufficient connecting factor

Jurisdiction of Courts (Crossvesting) Act 1987 (WA), s 5(2)

Alpha Wealth Financial Services v Frankland River Olive Co [2008] WASCA 119

Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; (1993) 177 CLR 485

Bankinvest AG v Seabrook (1988) 14 NSWLR 711

Bourke v State Bank of New South Wales (1988) 22 FCR 378

BPH Billiton Ltd v Schultz [2004] HCA 61; (2004) 221 CLR 400

Chemeq v Shepherd Investments International [2007] WASCA 117

Equinox Engineering and Installation Pty Ltd v Puffin Installation Services Pte Ltd [2008] WASC 183

Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89

Franklins v Metcash Trading [2009] NSWCA 407; (2009) 264 ALR 15

Franklins v Metcash Trading in Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [2006] FCAFC; [2006] FCAFC 144; (2006) 156 FCR 1

Home Building Society v Pourzand [2005] WASCA 242

Investments WA v Hatton [2007] WASCA 110

James Hardie & Co Pty Ltd v Barry [2000] NSWCA 353; (2000) 50 NSWLR 357

Kable v Director of Public Prosecutions for the State of New South Wales [1996] HCA 24; (1996) 189 CLR 51

Kok v Sheppard [2009] NSWSC 1262

Korner v Witkowitzer (1950) 2 KB 128

Lipohar v The Queen [1999] HCA 65; (1999) 200 CLR 485

Resource Equities Ltd (subject to Deed of Company arrangement) v Carr [2007] WASC 246

The Movie Network Channels v Optus Vision [2010] NSWCA 111

1 CORBOY J: (This judgment was delivered orally on 24 June 2010 and has been edited from the transcript.)

2 This is an application by the first defendant (Austpac), supported by the second defendant (Astron), for the transfer of the proceedings to the Supreme Court of New South Wales. The application is made pursuant to s 5(2)(b)(iii) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (WA) (the Cross-vesting Act).

3 I have decided that the application should be refused for the following reasons.

4 The proceedings were commenced by writ filed on 3 May 2010 and indorsed with a statement of claim. Austpac commenced its application for a transfer of the proceedings without delay so that neither defendant has filed a defence.

5 By its statement of claim, the plaintiff (Australian Zircon) alleges that:

(a) Austpac is the holder of an exploration licence, EL 4521, over an area of land located in Victoria;

(b) by a farm-in agreement dated 29 January 2004 and made between Austpac and Australian Zircon (the Farm-in Agreement), Austpac agreed to farm out to Australian Zircon that part of EL 4521 known as the WIM 150 Heavy Mineral Sands Project and Australian Zircon agreed to carry Austpac through to completion of a bankable feasibility study;

(c) the Farm-in Agreement imposed obligations and conferred rights on Austpac and Australian Zircon that, on a proper construction of the agreement, were personal to each party and were not transferable to any third party;

(d) further or alternatively, it was an express or implied term of the Farm-in Agreement that Austpac and Australian Zircon could not transfer any of their respective rights and obligations under the agreement to a third party without the other party's consent;

(e) in point of law, none of the respective obligations of Austpac and Australian Zircon under the Farm-in Agreement were able to be transferred to a third party without a novation of the agreement to which the consent of Australian Zircon would be required;

(f) on or about 27 March 2010, Austpac purported to agree with Astron to transfer Austpac's rights and obligations under the Farm-in Agreement to Astron pursuant to a business sale and purchase and transfer of exploration licence agreement (the Sale Agreement);

(g) Australian Zircon did not consent to the transfer of Austpac's rights and obligations under the Farm-in Agreement to Astron.

6 Declarations to the effect that the Sale Agreement is ineffective to the extent that it provided for a transfer of Austpac's rights and obligations under the Farm-in Agreement are sought. An injunction restraining Austpac and Astron from giving effect to the Sale Agreement insofar as it provided for the transfer of Austpac's rights and obligations under the Farm-in Agreement is also claimed.

7 It is relevant to note that the particulars of the allegation that a term was to be implied into the Farm-in Agreement to the effect that either party's rights and obligations were not to be transferred without the other party's consent referred to two matters: first, the terms of the Farm-in Agreement and second, the relationship between the parties in undertaking the project contemplated by the agreement. The particulars characterise that relationship as being a joint venture. I note from correspondence annexed to Mr Hughes' first affidavit that Austpac contests that characterisation. I anticipate that this is an aspect of the dispute on which the parties may seek to adduce evidence. If so, it is likely that the evidence will be similar to that which would be relevant to ascertaining the object or purpose of the Farm-in Agreement, especially in circumstances where that agreement contemplated a further 'more definitive agreement and joint venture arrangement' which has not been concluded.

8 Austpac relied on the evidence of Branwell Taliesin Inigo Black (affidavits sworn on 24 May and 8 June 2010) in support of its application. Mr Black is a senior associate in the firm of solicitors that acts for Austpac in these proceedings.

9 Australian Zircon relied on the evidence of Bryan Kevin Hughes (affidavits sworn on 7 and 31 May 2010) in opposition to the application. Mr Hughes is a chartered accountant practising in Perth. He is the deed administrator of Australian Zircon, having been appointed at a meeting of creditors convened on 18 February 2010. A deed of company arrangement was executed on 10 March 2010.

10 Australian Zircon also relied on an affidavit sworn on 15 June 2010 by Kathleen Marie McNally. Ms McNally is a solicitor employed by the solicitors acting for Australian Zircon. Annexed to her affidavit is correspondence passing between the parties and also with the Victorian Department of Primary Industry.

11 No evidence was adduced by Astron. It merely adopted the submissions of Austpac in its support of the application.

12 It is apparent from Mr Black's first affidavit that Austpac, and by inference Astron, does not dispute that Austpac is the holder of EL 4521, that Australian Zircon and Austpac made the Farm-in Agreement and that Austpac has agreed to transfer EL 4521 to Astron subject to the Farm-in Agreement and the consent of the Victorian Minister for Energy and Resources. A copy of the Farm-in Agreement is annexed to the first affidavits of both Mr Black and Mr Hughes.

13 It is not necessary to further refer to the terms of the Farm-in Agreement except to note that:

(a) Mr Hughes asserts in his first affidavit that pursuant to the terms of the Farm-in Agreement, Austpac farmed out the requirement to undertake such work and expend such money as was necessary to satisfy the expenditure requirements prescribed for EL 4521. That assertion is not disputed by Austpac or Astron and I note in that regard, cl 1, cl 4 and cl 5 of the agreement.

(b) Clause 11 of the Farm-in Agreement provided that the proper law of the agreement was the law of New South Wales.

(c) Clause 9 of the Farm-in Agreement provided that the parties would negotiate a 'more definite agreement and joint venture arrangement' if Australian Zircon elected to proceed to a bankable feasibility study.

14 There is some evidence concerning the prescribed expenditure requirements for EL 4521 to which I will refer later in these reasons.

15 The first of the affidavits sworn by Mr Black and Mr Hughes respectively provided some details concerning the parties.

16 As previously noted, Australian Zircon is under external administration. According to an ASIC company extract annexed to Mr Black's first affidavit, its registered office and principal place of business are located in Adelaide. Mr Hughes stated that Australian Zircon is primarily involved in mineral sands exploration and mining.

17 The company extract for Australian Zircon shows that its directors are Jeremy David Shervington (appointed on 16 February 1998) and George Bedineishvili (appointed 18 May 2009). An address in Perth is given for Mr Shervington and an address in London for Mr Bedineishvili.

18 The Farm-in Agreement was executed on behalf of Australian Zircon by Brian Rear. I do not know what position Mr Rear held with Australian Zircon. However, I have been informed by Mr Hughes that Mr Rear might be called as a witness at the trial of this matter if evidence of the negotiations preceding the making of the Farm-in Agreement are considered to be relevant. Mr Rear is said to reside in Perth.

19 Mr Hughes also stated that Australian Zircon might call Mark Teakle, a former exploration manager of Australian Zircon, as a witness at the trial. Mr Teakle is said to reside in Perth.

20 Mr Hughes stated in his second affidavit that the books and records of Australian Zircon are located in Perth and Adelaide and that the documents held in Adelaide can be readily transported to Perth if required.

21 An ASIC company extract annexed to Mr Black's first affidavit disclosed that Austpac's registered office and principal place of business are located in Sydney. Mr Hughes informed me of a belief that Austpac's primary activities are the development of mineral processing technology and the exploration and development of mineral sands deposits. That statement of belief was not contested by Austpac or Astron.

22 The company extract for Austpac also disclosed that its directors are Terry Cuthbertson (appointed 22 March 2001), Robert James Harrison (appointed 1 September 2004) and Michael John Turbot (appointed 7 February 1985), each of whom is said to reside in New South Wales. Mr Black referred to Mr Turbot as being the managing director of Austpac.

23 In his first affidavit, Mr Black stated that Austpac may call Mr Turbot and John Allen as witnesses at the trial of this action. It was said that Mr Turbot and Mr Allen negotiated the Farm-in Agreement on behalf of Austpac. Mr Allen and Mr Turbot reside in Sydney.

24 An ASIC company extract annexed to Mr Black's first affidavit disclosed that Astron's registered office and principal place of business are located in Sydney. Mr Hughes informed me of a belief that Astron's principal activities are the mining, development and manufacture of advanced metals and chemical products and that it (or a related party) is the largest zirconium chemical producer in the world. Those statements of belief were not disputed by Austpac or Astron.

25 The company extract also disclosed that the directors of Astron are Gerald Arthur King (appointed 3 April 1989), Robert John Flew (appointed 19 March 2004), Rong Kang (appointed 21 August 2006), Ronald Hugh McCulloch (appointed 21 August 2006) and Alexander Gavin Brown (appointed 4 February 1988). It was also stated that Mr King resides in Perth; Mr Flew and Mr McCulloch reside in Victoria and Mr Rong and Mr Brown reside in China.

26 In his first affidavit, Mr Black stated that he had been informed by the solicitor retained by Astron in relation to these proceedings, Mr McKenna, that first, Astron did not presently intend to call any witnesses at the trial of this matter and second, that Astron's documents are held in Sydney.

The alleged termination of the Farm-in Agreement

27 As I have already indicated, no defence has been filed in the proceedings by Astron or Austpac. There is, however, correspondence annexed to the first affidavit of Mr Hughes in which Astron contended that the Farm-in Agreement had been or alternatively, was to be terminated - see the letters dated 30 March and 8 April 2010 from Hunt and Humphry, being annexures 'BKH4' and 'BKH11' respectively to Mr Hughes' first affidavit.

28 Mr Hughes' solicitors, Clayton Utz, responded to that correspondence by, among other things, contending that Astron was estopped from asserting any right of termination on at least some of the grounds identified in the correspondence from Astron's solicitors - see the letter dated 1 April 2010 from Clayton Utz to Hunt and Humphry, being annexure 'BKH7' to Mr Hughes' first affidavit.

29 Foreshadowed defences and replies can be readily ascertained from this correspondence. However, I was informed by counsel for Astron that as matters presently stand it did not intend to make any allegation concerning the possible termination of the Farm-in Agreement. Counsel added that Astron might (indeed I infer from what was said, would most likely) raise that issue in these proceedings if the Minister for Energy and Resources in Victoria registered a transfer of EL 4521 from Austpac to a subsidiary of Astron while the action remained on foot. However, in the circumstances that presently prevail the application to transfer is to be determined on the basis that the primary issue in the proceedings is the proper construction of the Farm-in Agreement.

30 Section 5(2) of the Cross-vesting Act provides, so far as is relevant, that:

Where-

(a) a proceeding (in this subsection referred to as the relevant proceeding) is pending in the Supreme Court (in this subsection referred to as the first court):

(b) it appears to the first court that -

...

(iii) it is otherwise in the interests of justice that the relevant proceeding be determined by the Supreme Court of another State or of a Territory,

the first court shall transfer the relevant proceeding to that other Supreme Court.

31 Section 5(2)(b)(iii) of the Cross-vesting Act does not confer a procedural discretion on the court in which the relevant proceedings were commenced; rather, there is a statutory requirement to exercise the power of transfer whenever it appears to the court that it is in the interests of justice that the power should be exercised. No question of discretion arises: see BPH Billiton Ltd v Schultz [2004] HCA 61; (2004) 221 CLR 400 [14], [62].

32 Section 5(2)(b)(iii) is not to be construed and applied by reference to the Australian common law on forum non conveniens. So, for example, the principle that a claimant has a right of access to a court possessing jurisdiction, and the court has a corresponding duty to exercise the jurisdiction that it possesses unless it is the 'clearly inappropriate forum', has no application. Rather, the focus of the section is on identifying the appropriate court by reference to the interests of justice. As the plurality stated in BHP v Schultz, '[i]t is not necessary that it should appear that the first court is a "clearly inappropriate" forum. It is both necessary and sufficient that, in the interests of justice, the second court is more appropriate' [14].

33 In an application under s 5(2)(b)(iii) of the Cross-vesting Act, the plaintiff's choice of forum merely provides the occasion for the application. Nothing further flows from that choice except for one matter to which I will return: see the comments of Martin CJ in Equinox Engineering and Installation Pty Ltd v Puffin Installation Services Pte Ltd [2008] WASC 183, where his Honour extracted the following propositions from BHP Billiton v Schultz:

Firstly, there is no relevant onus in an application under section 5(2) (at [71] per Gummow J). Secondly, the court is to pay no regard to the plaintiff's choice of forum. Lastly, there is no longer any presumption as to where the balance of convenience or, more correctly, the balance of appropriateness might lie [6].

34 Paragraphs (i) and (ii) of s 5(2)(b) of the Cross-vesting Act refer to it being more appropriate for a matter to be determined by another court, whereas par (iii) does not expressly refer to a more appropriate court. Nevertheless, it has been accepted that par (iii) involves a determination of which, in the interests of justice, is the more appropriate forum. The process of judicial reasoning by which that approach came to be adopted is outlined in the judgment of Mason P in James Hardie & Co Pty Ltd v Barry [2000] NSWCA 353; (2000) 50 NSWLR 357; and see also Bankinvest AG v Seabrook (1988) 14 NSWLR 711 and note recital (c) at the commencement of the Cross-vesting Act.

35 In BHP Billiton v Schultz, Gleeson CJ and McHugh and Heydon JJ referred with evident approval to a passage from the judgment of Street CJ in Bankinvest (714), where his Honour stated that s 5(2) required a 'nuts and bolts management decision as to which court, in the pursuit of the interests of justice, is the more appropriate to hear and determine the substantive dispute'. That statement was adopted by Martin CJ in Resource Equities Ltd (subject to Deed of Company arrangement) v Carr [2007] WASC 246 [8] as encapsulating the approach to be taken to the application of s 5(2)(b)(iii). His Honour went on to observe in the following paragraph that the decision was to be made as a matter of impression rather than, in the words of Street CJ in Bankinvest, to be 'overly encumbered by an encrustation of judge-made pronouncements of principles'.

36 The statutory language ('the more appropriate court' and 'the interests of justice') and the notion of a 'nuts and bolts management decision' combine to suggest that in making a determination under s 5(2)(b)(iii) of the Cross-Vesting Act, the court will have regard to those connecting factors that may serve to identify the natural or more accurately, appropriate forum, and to pragmatic considerations of case management that may impact upon the speedy, efficient and economical disposition of the proceedings: and see the observations of Brereton J in Valceski v Valceski [2007] NSWSC 440; (2007) 70 NSWLR 36 [69].

37 In James Hardie v Barry, Mason P referred to the judgment of Higgins J in Dawson v Baker (1994) 120 ACTR 11 as containing a useful checklist of factors relevant to the determination of an application under s 5(2)(b)(iii). The factors identified by his Honour were:

(b) the forensic advantage or detriment conferred by procedural law;

(e) the balance of convenience to parties and witnesses and convenience to the court system.

It must, however, be emphasised when referring to such 'checklists' that the section requires a broad approach to the interests of justice that reflects the particular circumstances under consideration: and see in that regard, the comments of Kirby P in Bankinvest (716 B-C).

38 In its submission, Austpac pointed to the following matters as supporting its application for transfer:

(a) the lack of any substantial connection between the dispute and this jurisdiction, reference being made to the registered offices and principal places of business of the parties and the location of EL 4521;

(d) the capacity of this court and the New South Wales Supreme Court to expeditiously deal with the proceedings.

(b) the factors relevant to ascertaining the appropriate court tended to cancel each other out except that an inference could be drawn that the interests of the creditors of Australian Zircon would be best served by the proceedings remaining in this court;

(c) the proceedings should remain in this court if the factors relevant to determining where the interests of justice lay did not point in one direction or the other.

41 I accept that the only matter connecting these proceedings with this court is the place of residence and business of the administrator of Australian Zircon. The points of connection, on the other hand, between the proceedings and the Supreme Court of New South Wales are the places of residence and business of Austpac and Astron and the stipulation in the Farm-in Agreement that the proper law of the agreement is the law of New South Wales.

42 The first of those factors is obviously balanced by Mr Hughes' location.

43 Mr Hughes' affidavit provided little evidentiary foundation for the submission made by Australian Zircon that the public interest would be served by the proceedings remaining in this court as that would minimise expense to the company's creditors. Reference was made in Mr Hughes' first affidavit to one creditor providing funding for the administration but I do not know how that funding is to be applied and although the sum is substantial, I do not know how it relates to the likely expenses of the administration and the amounts owing to creditors. In the circumstances, the only inferences that I am prepared to draw are that at the time that the administrator was appointed Australian Zircon was insolvent or was thought to be likely to become insolvent in the future and that the administration is of some magnitude having regard to the amount paid by the funding creditor.

44 I can also readily infer that there will be some saving of costs by the proceedings being conducted where the administrator resides but there is insufficient evidence to enable me to draw any inference about whether that engages the public interest. I note in that regard that there is apparently only one funding creditor and Mr Hughes has indicated that the value of the deposit the subject of the exploration licence may be as much as $4.5 billion.

45 The converse side of the same coin is, of course, that Austpac and Astron may incur some additional costs in instructing its legal advisers if the matter remains in this court. On the evidence before me it does not appear that the lack of any connecting factor, as Austpac has characterised this aspect of its submissions, points to either of the two possible forums as being more appropriate.

46 I previously noted the evidence regarding the location of the business records of each party. It also does not appear to me that this evidence suggests that either forum is the more appropriate.

47 Finally, the location of the land the subject of the exploration licence might be thought to be a connecting factor but no party contends that the Supreme Court of Victoria is the more appropriate forum.

48 As I previously noted, Australian Zircon and Austpac have each identified two witnesses that might be called if evidence of the circumstances surrounding the formation of the farming agreement was to be admitted. The witnesses that might be called by Australian Zircon are said to reside in Perth. The witnesses that might be called by Austpac reside in Sydney. At present Astron does not propose to call any witnesses.

49 Austpac submitted that Mr Hughes had not identified the roles that were said to have been played by Mr Rear and Mr Teakle in the negotiations preceding the making of the Farm-in Agreement. While that is so, I do not consider that I should discount his evidence that Australian Zircon might call Mr Rear and Mr Teakle to give evidence at the trial for that reason. Consequently, the location of witnesses does not provide a basis for distinguishing between the conduct of these proceedings in this court and in the Supreme Court of New South Wales. It might, in any event, be thought that the location of possible witnesses is not a matter that commands much weight in the context of a dispute over the proper construction of a commercial instrument litigated in a court that routinely receives oral evidence by video.

50 I turn to what was, in my view, the most significant of the matters raised by Austpac in support of is application for a transfer of these proceedings - the proper law of the Farm-in Agreement.

51 Self-evidently, the proper law clause of the Farm-in Agreement provides a relevant connection between the proceedings and the Supreme Court of New South Wales. However, in my view, the significance of that connection is qualified in at least one important respect. The construction of a contract is governed by principles that form part of a unified body of common law in Australia; there is no distinct contract law of Western Australia or New South Wales: see Kable v Director of Public Prosecutions for the State of New South Wales [1996] HCA 24; (1996) 189 CLR 51; and Lipohar v The Queen [1999] HCA 65; (1999) 200 CLR 485.

52 This is not a case where, as in BHP Billiton v Schultz, there is a statutory provision unique to one jurisdiction that bears on the substantive issue to be determined or the procedures by which the proceedings are to be prosecuted, nor is it a case where knowledge of local practises may be relevant as in, for example, a claim in negligence made against a legal practitioner: see Bankinvest (729 D) and Kok v Sheppard [2009] NSWSC 1262.

53 In BHP Billiton v Schultz [100], Gummow J cited with approval passages from the judgments of Gibbs CJ, Wilson and Brennan JJ and Mason J in Pozniak v Smith [1982] HCA 39; (1982) 151 CLR 38 to the effect that the safe course in a case where the relevant law in competing jurisdictions is materially different is to remit the matter to the state whose law has given rise to the cause of action. However, I accept the submission made on behalf of Australian Zircon that the words 'materially different' that appear in each of the passages cited by Gummow J are significant for the application of the principle identified by their Honours.

54 Austpac's submission, however, does not rest solely upon the existence of the proper law clause in the Farm-in Agreement. While it was acknowledged that there is a unified common law of Australia, it was said that there were nevertheless differences between the New South Wales Court of Appeal and the Court of Appeal in this State regarding the admissibility of evidence for the purpose of construing a contract and that those differences would present difficulties for the trial judge if the proceedings remained in this court.

55 Two differences were identified. First, it was submitted that the Court of Appeal in this State has left open the question of whether it is necessary to identify an ambiguity in the wording of the contract in issue before evidence of surrounding circumstances may be admitted, whereas the New South Wales Court of Appeal has made it plain that such evidence is always admissible. Second, it was said that it is arguable at first instance that a court in Western Australia may admit evidence as to both the circumstances known, and those which ought reasonably to have been known, to the parties whereas the New South Wales Court of Appeal has recently rejected such a possibility.

56 As to the first of those matters, the position in Western Australia was said to be reflected in Home Building Society v Pourzand [2005] WASCA 242 [26] - [32]; Chemeq v Shepherd Investments International [2007] WASCA 117 [154] - [155]; Alpha Wealth Financial Services v Frankland River Olive Co [2008] WASCA 119 [112] - [116] and Investments WA v Hatton [2007] WASCA 110 [46] - [49].

57 The position in New South Wales was said to be established by Boreland v Docker (2007) ACR 90-256; (2007) NSW Conv R 56-182; (2007) NSWCA 94 [67]; Franklins v Metcash Trading [2009] NSWCA 407; (2009) 264 ALR 15 [14] - [18], [239] - [304] and The Movie Network Channels v Optus Vision [2010] NSWCA 111 [68].

58 In relation to the second possible difference in approach identified by Austpac, reference was made to a passage in the judgment of McLure J in Home Building Society v Pourzand [33] and to the decision of the New South Wales Court of Appeal in The Movie Network Channels.

59 Two related propositions underpinned Austpac's submission. First, that a trial judge in this court was, or could be, bound by the decisions of the Court of Appeal in this State to which I have referred and second, that questions concerning the admissibility of evidence for the purpose of construing the Farm-in Agreement were arguably questions of procedure rather than substantive law. The second of those propositions was, of course, necessary as whatever approach has been adopted by the New South Wales Court of Appeal (assuming that there is arguably a difference between that approach and the position at first instance in this court) would apply in whichever court the trial is held by reason of the proper law clause in the Farm-in Agreement if the admissibility of evidence of surrounding circumstances is a matter of substantive law.

60 It must be emphasised that Austpac's arguments do not depend on it positively establishing each of the propositions that I have identified. Rather, it contends that each proposition is arguable and that being so, there are complications and uncertainties entailed in a hearing of the matter in this court that would be avoided if the proceedings are transferred to the Supreme Court of New South Wales.

61 In my view, there is no real doubt as to the principles that would apply to determine the admissibility and use of evidence of surrounding circumstances if the trial of this matter was to be held in this court, and that those principles accord with the principles that would be applied if the trial was conducted in the Supreme Court of New South Wales.

63 First, I do not consider that the Court of Appeal in this State has decided the question of whether it is necessary to first identify ambiguity in the wording or effect of a contract before recourse can be had to evidence of surrounding circumstances. The Court of Appeal has found it unnecessary to decide that question in each of the cases to which Austpac referred.

64 Second, the New South Wales Court of Appeal unequivocally held in Franklins v Metcash Trading that, in the words of the Allsop P:

The construction and interpretation of written contracts is to be undertaken by an examination of the text of the document in the context of the surrounding circumstances known to the parties, including the purpose and object of the transaction and by assessing how a reasonable person would have understood the language in that context. There is no place in that structure, so expressed, for requirement to discern textual, or any other, ambiguity in the words of the document before any resort can be made to such evidence of surrounding circumstances [14].

65 Third, the same position pertains in relation to the question of whether circumstances that ought reasonably to have been known to both parties to a contract are admissible for the purpose of construing a contract. In Home Building Society v Pourzand McLure J said:

[I]t is also clear from Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 at 22 and in Toll (FGCT) Pty Ltd v Alphapharm [2004] HCA 52; (2004) 219 CLR 165 at 40 that the surrounding circumstances must be known (or perhaps ought reasonably to have been known) to the relevant contracting parties [33]. (emphasis added)

66 The requirement that the circumstances must be actually known by the parties was clearly affirmed by the New South Wales Court of Appeal in The Movie Network Channels [97] - [105].

67 Fourth, it is well established that intermediate appellate courts and trial judges should not depart from an interpretation placed upon uniform national legislation unless convinced that the interpretation is plainly wrong: Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; (1993) 177 CLR 485. In Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89, the High Court referred to that principle and added that '[s]ince there is a common law of Australia rather than of each Australian jurisdiction, the same principle applies in relation to non-statutory law': [135]. I do not read the comments of Gaudron, Gummow and Hayne JJ in Lipohar v The Queen regarding the role of precedent in the common law system as being inconsistent with what was said by the High Court in Farah Constructions.

68 Consequently, a trial judge in this State would be bound to apply Franklins v Metcash Trading and The Movie Network Channels unless he or she was convinced that those decisions were wrong. In my view, there is little possibility of that occurring given that the appeals heard by the Court of Appeal in this State, to which Austpac referred, were decided before Franklins v Metcash Trading and The Movie Network Channels and the Full Court of the Federal Court of Australia reached the same conclusion as in Franklins v Metcash Trading in Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [2006] FCAFC; [2006] FCAFC 144; (2006) 156 FCR 1. That conclusion is reinforced by the various matters referred to in the New South Wales Court of Appeal's analysis of the issues in Franklins v Metcash Trading and the consistency in the language employed by the High Court across several cases to describe the proper approach to the construction of contracts.

69 Fifth, in any event whether evidence of the circumstances surrounding the formation of a contract is admissible, and if so, whether it extends to what the parties ought to have known are, in my view, matters of substantive not procedural law. They raise questions about what matters the law regards as being relevant to the construction of a contract; they do not go to the means by which those matters are to be proved. Further, they are not concerned with the admission of evidence to add to or vary a contract: refer Korner v Witkowitzer (1950) 2 KB 128 and see generally, the discussion in Davies, Bell and Brereton, Nygh's Conflict of Laws in Australia (8th ed, 2010) [16.21] and [16.22].

70 Accordingly, a trial judge hearing this action in this court would be obliged by the proper law clause in the Farm-in Agreement to apply the same principles as a judge sitting in the Supreme Court of New South Wales to determine the admissibility of evidence of surrounding circumstances for the purpose of construing the agreement. That is so irrespective of the approach taken to that issue by the Court of Appeal in this State.

71 There was a suggestion made by Austpac that the admission of evidence on the allegation that the Farm-in Agreement included an implied term was a matter of procedure and not substantive law as Australian Zircon was seeking to add to the written terms of the agreement (refer Korner v Witkowitzer). I doubt whether that is so, but it is in my view unnecessary to decide the issue. That is because the trial judge hearing this matter would be bound to apply the same principles to determine whether the term alleged was to be implied regardless of the court in which the trial was conducted. That is not just because there is a unified Australian common law but also because, so far as I am aware, there is no difference between any relevant appellate authority in New South Wales and Western Australia. Boreland v Docker, Franklins v Metcash Trading and The Movie Network Channels did not consider the principles relevant to the implication of a term in a written and apparently complete contract, and senior counsel for Austpac did not point to any other authority that suggested a divergence of approach between the Supreme Courts of Western Australia and New South Wales.

72 Accordingly, I consider that there is no material difference between the law to be applied in construing the Farm-in Agreement in either of the jurisdictions relevant to Austpac's application and that the inclusion of the proper law clause in the agreement does not provide a basis for concluding that the Supreme Court of New South Wales is the more appropriate forum.

73 Finally, there is the issue of urgency and which, if either, court is best able to accommodate the commercial exigencies surrounding the resolution of this dispute. Mr Hughes gave evidence that:

(a) the expenditure requirements imposed in relation to the exploration licence required Austpac as licensee to spend $103,500 in the period 2 December 2009 to 1 December 2010 and $192,000 in the period 2 December 2010 to 1 December 2011 (remembering that Mr Hughes asserts that the expenditure obligation has been farmed out to Australian Zircon);

(b) Australian Zircon had expended approximately $50,000 since December 2009 in meeting the expenditure requirements;

(c) whether Austpac is entitled to transfer its rights and obligations under the Farm-in Agreement is a relevant factor for him in determining whether to keep expending money;

(d) ministerial approval of any transfer of EL 4521 may be imminent;

(e) Australian Zircon has been involved in negotiations in relation to further investment opportunities, principally relating to the commercial exploitation of the project the subject of the Farm-in Agreement. It is said that a speedy resolution of these proceedings will be in the best interests of Australian Zircon as it will be able to say with certainty whether it has rights and interests in relation to the project.

74 All parties accepted that there was some urgency attending the resolution of the proceedings. Austpac suggested that the degree of urgency might not be as compelling as Mr Hughes's evidence implied. However, I do not think it is necessary in determining this application to define the degree of urgency with precision. I am satisfied that the resolution of the dispute is sufficiently pressing to make the speed with which the interlocutory steps can be completed and the matter set down for trial a relevant consideration; and see the comments of Wilcox J in Bourke v State Bank of New South Wales (1988) 22 FCR 378, 394, cited with approval by Mason P in James Hardie v Barry [96], in which Wilcox J observed that under the rubric of the interests of justice the court can consider adjectival matters including the procedures to be adopted and the likely hearing date.

75 Evidence was given by Mr Black of inquiries that had been made of the registry of the Supreme Court of New South Wales and the registry of this court about the likely delay between entry of this action for trial and trial. The information provided by the registry of this court did not take into account the fact that this matter is in my list and that as a CMC List judge I can control my listings. Since I have just been appointed I can say with reasonable confidence that a trial of this action could be held within a matter of days following completion of the required interlocutory steps. Inquiries made of the New South Wales Supreme Court registry suggest that there could be a longer period than that between entry for trial and trial. However, as senior counsel for Austpac rightly pointed out, it may well be that a judge of the Supreme Court of New South Wales could quickly list the matter for trial in the same way that I can and in any event, the information provided by the registry of the Supreme Court of New South Wales does not suggest that the period between entry and trial would be inconsistent with the commercial imperatives surrounding this dispute if the proceedings were transferred to New South Wales.

76 As with the other matters to which I have been referred by the parties, I find that the need for this dispute to be determined expeditiously does not favour one court or the other as being the more appropriate forum. The most that can be said is that it is unlikely that a trial of this matter could be arranged more readily and at an earlier time if the proceedings were transferred to the Supreme Court of New South Wales.

77 In Resource Equities v Carr Martin CJ said:

The only incidence in which I can envisage onus would be relevant would be, if, after considering all the circumstances the Court concluded that there was no identifiable distinction between the alternative fora in terms of the interests of justice in such circumstance. It may be that in such an instance the Court would conclude that it was appropriate to leave the case where it was [11].

78 It may well be that his Honour had in mind the kind of persuasive onus referred to by Mason P in James Hardie v Barry [100]. Whether or not it is appropriate to speak of an onus, s 5(2)(b)(iii) requires that it appear to the first court that it is in the interests of justice that the proceedings be determined by the Supreme Court of another State or Territory. In Valceski v Valceski Brereton J said:

It is only if both courts are equally appropriate that the initial choice will have significance; if one is more appropriate than the other, however so slightly, a transfer to the more appropriate is mandatory [70].

79 The qualification incorporated into that statement, 'however so slightly', indicates that cases where the 'competing' jurisdictions are equally appropriate will be rare. However, in my view this is one such case. Accordingly, Austpac's application for a transfer of these proceedings is dismissed.

Courts (Crossvesting) Act 1987

Courts (Cross-vesting) Act 1987

Alpha Wealth Financial Services v Frankland River Olive Co

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (136 paragraphs)

AUSTRALIAN ZIRCON NL -v- AUSTPAC RESOURCES NL [2010] WASC 166 (1 July 2010)

Parties

Legislation Cited (2)

Cases Cited (14)