Bakers Investment Group (Australia) Pty Ltd v Caason Investments Pty Ltd

(3) Leaving a balance of approximately 21.66 percent of the equity in Newco.

(4) Plus an expected fee to be paid to Bakers Investments in the sum of $2 million.[324]

503 The claim made by Bakers Investments is framed and pleaded as a claim for loss of opportunity. In cases where damages are sought for lost opportunity, a clear distinction must be kept between the requirement of the plaintiff to establish the existence and loss of an opportunity and the further exercise of establishing the value of any such loss. It is only once the existence and loss of the relevant opportunity have been established, on the balance of probabilities, that the court may proceed to determine the value of that opportunity by reference to the likelihood of the realisation of the opportunity, and to award damages accordingly.[325]

504 Significantly for present purposes, the basis upon which Bakers Investments pleaded its case, which basis was expressly acknowledged at trial,[326] was confined to Bakers Investments proving on the balance of probabilities that it would have raised the necessary funding. In essence, Bakers Investments claims that, by reason of Caason's breaches of the Fingal Valley Agreement, Bakers Investments lost the opportunity to obtain 21.66 percent of the shares in Newco. In order to establish this lost opportunity, Bakers Investments must necessarily prove on the balance of probabilities that it would have obtained the $25m Further Capital. In other words, Bakers Investments does not claim that, by reason of Caason's breaches of the Fingal Valley Agreement, the lost opportunity included the real prospect of being able to source the relevant funding to perform the Fingal Valley Agreement. Rather, it confined its case to seeking to prove this issue on the balance of probabilities. In this sense, the case may be distinguished from the basis upon which a claim was made for loss in cases such as Sellars v Adelaide Petroleum NL.[327]

505 On this approach that Bakers Investments has adopted, Bakers Investments' claim for loss of opportunity fails at a threshold level. There is insufficient evidence before the court to establish, on the balance of probabilities, that Bakers Investments would have been able to raise the funds required.[328] To summarise, there is no evidence of any concrete offer, or even a serious proposal, to provide either the $3m Seed Capital or the $25m Further Capital. Indeed, even if the alternate approach had been taken,[329] on the evidence before the court,[330] I seriously doubt whether I would have formed the view that Bakers Investments ever really had any realistic prospect, that could be regarded as other than speculative,[331] of raising any funds on a basis consistent with the Term Sheet.

G.9.2.3 The uncertainty that Bakers Investments ultimately would have ever held any beneficial interest in shares in Newco

506 Even assuming, for argument's sake, that Bakers Investments had the ability to cause the $25m Further Capital to be raised, the Term Sheet does not make any specific provision for the beneficial ownership by Bakers Investments of any equity in Newco. The Term Sheet simply provided for shares to be issued in Bakers Investments' name, but to be held in escrow until funding arrangements were in place. It must follow that there was a real prospect that any potential investors would have only agreed to invest on the basis that any unallocated shares in Newco would have been allocated to them rather than remain with Bakers Investments. Even if the position could be properly characterised as Bakers Investments holding a beneficial interest in unallocated shares in Newco, if investors required those shares to be transferred the underlying issue remains.

507 Given there is no evidence before the court of any specific offer or offers from investors (or even substantive expressions of an intention to make an offer or offers in the required terms consistent with the Term Sheet), there is a dearth of evidence of funding ever being available on terms which would have left Bakers Investments with a 21.66 percent shareholding in Newco.[332] In those circumstances, if the court had been required to determine Bakers Investments' loss, I expect it would have been difficult for Bakers Investments to establish a loss beyond the fees it may have been entitled to receive pursuant to the Term Sheet.[333] Naturally, any such claim for fees would still be subject to Bakers Investments establishing that the funds required pursuant to the Term Sheet were able to be raised.

508 If, contrary to all of the above, Bakers Investments had been able to establish it had lost the opportunity to obtain 21.66 percent of the shares in Newco, a number of further complications arise in respect of the quantification of the value of that opportunity by reference to the expert evidence led.

509 Both parties filed their own expert reports concerning the quantification of the claim for damages by Bakers Investments. Subsequent to this, a joint expert report was prepared by the respective experts retained by the parties. No expert report was the subject of any formal objection. Further, it was accepted between the parties that, if any compensation was to be awarded in favour of Bakers Investments, relevant values should be detrmined as at April 2011.

510 The expert called by Bakers Investments was Philip Rundle ("Rundle"), a chartered accountant and partner in the corporate finance division of Grant Thornton Australia Ltd. The expert called by Caason was George Kompos ("Kompos"), a director at KPMG Forensic and a member of the Institute of Chartered Accountants.

511 Rundle undertook a valuation of "[Newco's] equity", by applying a market based valuation approach using a multiple of the resources pertaining to the Mine. That multiple was calculated by reference to the enterprise value and resources data of comparable companies and, to a lesser extent, comparable transactions sourced from publicly available material. Rundle's evidence was that, on the assumption the transaction had proceeded, as at April 2011 the approximate market value of:

(1) The total equity in Newco was $207.2 million.[334]

(2) A 66.66 percent shareholding in Newco was approximately $138.1 million.[335]

(3) A 46.66 percent shareholding in Newco was approximately $96.6 million.[336]

512 Accordingly, Bakers Investments quantified its claim for damages by reference to Rundle's valuation on the basis of the following:

21.66% x $207.2 million + $2 million[337] = $46,879,520.

513 The quantification of damages proposed by Bakers Investments, in reliance upon Rundle's evidence, is problematic for a number of reasons.

514 First, as already discussed,[338] Bakers Investments' claim for damages is a claim for loss of opportunity. Accordingly, even assuming, contrary to the court's findings, Bakers Investments had established on the balance of probabilities that it could have raised the required funds, the amount of any damages awarded must be quantified (or reduced) by reference to the degree of likelihood of the relevant opportunity materialising. In undertaking this exercise, a court typically discounts the damages or compensation awarded by reference to a percentage of probabilities. While such an approach is not compulsory in the sense that the court is entitled to take a much more global approach in awarding a lump sum payment,[339] the value of a lost opportunity must be determined on a sound and reasoned basis. It is not a matter of a lump sum being "plucked from the air".[340]

515 Bakers Investments led no evidence as to the likelihood (in percentage terms or otherwise) of the relevant opportunity occurring; that is, of the likelihood that, if the Term Sheet had been performed, Bakers Investments would have received 21.66 percent of the equity in Newco, or even approximately that amount.[341] Accordingly, in the event that the court had found Bakers Investments was likely to have been able to obtain a beneficial interest in some shares in Newco, it would have been required to make an award of damages by reference to the principles described above. This would have been a difficult exercise in respect of quantification of the alleged loss of opportunity given the absence of any relevant evidence.

516 Secondly, Rundle's instructions were confined to providing a valuation of 66.66 percent and 46.66 percent of the shares in Newco. Thus, he did not provide a valuation of the percentage of shares in respect of which Bakers Investments sought damages, namely 21.66 percent. Rundle expressly acknowledged, in both his expert report and during the course of giving his oral evidence, that his calculations included a premium for control.

517 There is little evidence before the court to establish whether the relevant control premium would have been applicable to the 21.66 percent shareholding the subject of Bakers Investments' claim. Properly, Rundle expressly acknowledged under cross-examination that a shareholding of 21.66 percent would attract a "reduced premium or a nil premium". Rundle also acknowledged that the extent and nature of the other shareholdings in the company would affect the application of any control premium.

518 The Fingal Valley Agreement contemplated that Caason would retain 33.34 percent of the shares in Newco. Although there was evidence of what might have been the position with BW Equities and various other (very remote) possibilities of investors at various stages, there was no evidence led by Bakers Investments as to what the remaining shareholdings would be likely to have been if the $25m Further Capital had been raised. In short, it is highly unlikely Bakers Investments would have been able to establish that a premium for control ought to have been a component of a 21.66 percent shareholding in Newco.

519 Thirdly, in applying a market based valuation methodology, Rundle had regard, to a limited extent,[342] to recent comparable transactions in the market. However, Rundle excluded from his consideration the transaction between the Vendors and Hardrock Coal Mining settled on 24 June 2011, pursuant to which Hardrock Coal Mining paid $10 million to the Vendors for the purchase of the Shares. This was a price that had been agreed in December 2010, albeit that some of the terms had changed by reason of the delay in settlement.

520 I accept the evidence of Kompos that the transaction by which the Shares were sold on 24 June 2011 was significant to assessing the value of any shares held in Newco. The reasons for this include:

(1) The transaction was conducted on an arm's length basis between commercial parties.

(2) The completion of the transaction was within 2 months of the relevant time, namely April 2011. Further, the negotiations which culminated in the terms of the settlement were conducted throughout a period which included April 2011.

(3) The actual subject matter of the valuation was the Exploration Licences, which Exploration Licences were the assets held by Hardrock Investments giving rise to the sale of the Shares.

(4) The sale of the Shares closely coincides with the relevant circumstances as it was completed having regard to the obligation to make payment of royalties to the Vendors (albeit at the increased level of $2 per tonne rather than $1.50 per tonne as contemplated in the Term Sheet and the Letter of Intent).

521 In these circumstances, the transaction must be a relevant consideration for the purposes of any market based valuation of the equity in Newco as at April 2011. The failure to consider this transaction, at the very least as a comparable transaction for the purposes of the market based valuation conducted by Rundle must, to some significant extent, undermine the reliability of Bakers Investments' evidence as to valuation.

522 Fourthly, in reaching his ultimate valuations, Rundle had regard to resource data in respect of the Exploration Licences contained in a report of Philip Jones of Al Maynard & Associates dated 3 May 2012 (ie which post-dated the valuation date by more than a year). That data showed a total resource of 1,036 million tonnes (including measured, indicated and inferred resource), when compared with the data available at the valuation date which showed a total resource of 246.5 million tonnes (including measured and indicated resource only).[343] Further, Rundle made an express assumption that the resource was a "compliant resource" under the Australian Joint Ore Reserves Committee ("JORC") Code. In fact, the resource was not defined as JORC compliant until 3 May 2012.

523 Under challenge, Rundle suggested that the use of the post-valuation data was justified by the fact that a knowledgeable buyer would have made an assessment, in the due diligence, as to the amount of inferred resource as at April 2011, beyond the 246.5 million tonnes which was measured and indicated at that date. However, there is no evidence to suggest that Rundle applied any discount to account for the inherent uncertainty of any such assessment.

524 By comparison, in respect of the JORC compliance issue, Rundle stated that he did take into account, when making his assessment, the fact that, as at April 2011, the resource was not JORC compliant. That said, Rundle stated he did not discount heavily for that fact. In giving this evidence, he described it as "one of a range of factors I considered in taking into the assessment", but it was entirely unclear on the face of his report how, or the extent to which, this had been done. Moreover, there is no further evidence before the court that permits any assessment of the extent or appropriateness of any discount applied by Rundle in that regard. With respect, it appears there may be some inconsistency in Rundle's evidence on this issue. In any event, given the absence of any meaningful detail as to how the non-compliant status as at April 2011 was taken into account, the evidence was less than satisfactory.

525 Whilst it must be accepted that the use of later facts may, in some circumstances, be legitimate to confirm an estimate based on an earlier point in time,[344] the later facts should not be taken as a certainty, or used in hindsight, as at the earlier date.[345] It must follow that, if later information is to be relied upon, a discount should generally be applied to reflect the relevant level of uncertainty of the subsequent event. Given the bald statement by Rundle under cross-examination that some discount was applied, the court has no way of assessing the level of uncertainty that was adopted.

526 Fifthly, Rundle's report does not provide any calculations or breakdown of the process by which he reached what he considered to be the "appropriate enterprise value per tonne of resource for [Newco]". When this was put to him, Rundle's response was that it was not an arithmetic exercise. Rundle said he took a collective view on all the various inputs and also used his judgment. He stated it was not practical to try and do an arithmetic exercise and to add up all the various components.

527 Whilst there may be some substance to this evidence, a complete lack of explanation as to the basis upon which the final figure was arrived at is inherently problematic. It leaves the court in a position where it is not possible to verify the appropriateness or otherwise of the weight given by Rundle to the various considerations contributing to the final enterprise value.

528 The only real evidence on this issue was information set out in appendices to Rundle's report, coupled with a statement from Rundle during oral evidence that he "looked at [the comparable] companies ... at their types and then the factors, the type of coal, the method of mining, the percentage measured, indicated, inferred, the location, the access to necessary infrastructure ... all of those types of factors". Although it is not necessary to decide, I seriously doubt whether the court would have been satisfied that the requirements of leading expert evidence satisfactorily had been met.[346]

529 In summary, it appears highly unlikely that, if Bakers Investments had established a case that breaches by Caason caused some loss to Bakers Investments, that Bakers Investments would have also established that:

(1) The relevant opportunity the subject of the claim for damages would ever have resulted in Bakers Investments obtaining a 21.66 percent shareholding in Newco.

(2) Rundle's valuation of the equity in Newco should be adopted by the court either in relation to the valuation as a whole, or in relation to a 21.66 percent shareholding.

(3) Bakers Investments was entitled to make a claim of $46.8 million or any amount remotely within that vicinity.[347]

530 For completeness, and without in any way being exhaustive, if it had been found that fiduciary duties existed and that, as a result of a breach of those fiduciary duties by Caason, Bakers Investments had been entitled to equitable compensation, there are matters that would have substantially curtailed the ability of Bakers Investments to claim compensation, or other equitable relief based upon any remedial constructive trust.

531 Before the court will find a constructive trust, it must consider whether there is an appropriate equitable remedy falling short of the imposition of a trust.[348] Further, in considering an appropriate equitable remedy, a court should only order the minimum equity necessary to do justice between the parties or relieve the conscience of the defendant(s).[349]

532 There are numerous matters already referred to above that indicate awarding equitable compensation or other relief as sought by Bakers Investments would be to make an order far beyond what might have been necessary to do justice between the parties.[350] Further, there may have been a real issue about granting equitable relief concerning ownership of the Shares in the form sought given that a party not before the court, San Miguel, was granted a registered charge over all of the Shares (presumably without any knowledge of any claim Bakers Investments may have had in relation to those Shares).

G.10 Has Caason suffered the loss and damage pleaded in the Defence and Counterclaim by reason of Bakers Investments' alleged breaches of the Fingal Valley Agreement pleaded in paragraphs 12(c) and 33(c)(iv) of the Defence and Counterclaim?

533 By reason of the breaches of the Fingal Valley Agreement by Bakers Investments, Caason has claimed forbearance costs in the sum of $150,000 paid to the Vendors. Forbearance costs paid by Hardrock Coal Mining to the Vendors in the sum of $487,449 were also claimed.[351] This latter claim for forbearance costs is made on the basis that Caason owns nearly all the shares in Hardrock Coal Mining.[352]

534 In addition, Caason has made a claim for the additional $0.50 per tonne paid as an additional royalty to the Vendors when the Share Purchase Agreement was completed on 24 June 2011.[353] Caason contends that if Bakers Investments had performed, this additional royalty payment would not have been extracted from Caason by the Vendors.

535 Although Caason has proved that each of the payments the subject of its claim were either paid or, in relation to the royalties, agreed to, Caason has not proved any loss or damage has been suffered as a result of any breach by Bakers Investments.

536 The failure of Bakers Investments to provide any funds pursuant to the Fingal Valley Agreement created an opportunity for Caason that Caason would not otherwise have had; namely, the ability to complete the Share Purchase Agreement using Hardrock Coal Mining as the purchasing entity and owning nearly all the shares in Hardrock Coal Mining. This level of ownership is in stark contrast to the level of ownership Caason would have had if Newco had become the owner of the Shares in accordance with the Fingal Valley Agreement.

537 In other words, as a result of the Fingal Valley Agreement not being performed by Bakers Investments on or before 4 or 5 May 2011, Caason now owns 98.7 percent of Hardrock Coal Mining, the owner of the Shares, instead of having 33.34 percent of the owner, which would have been the position if Newco had become the owner of the Shares under the Fingal Valley Agreement.

538 It is unnecessary for the court to engage in an exercise in precisely ascertaining the value of the interest now held by Caason in the Shares through Hardrock Coal Mining and what the interest of Caason would have been worth if it had held 33.34 percent of Newco as owner of the Shares. It was common ground between the parties that the Exploration Licences now represent very valuable assets, worth far beyond the $10m paid for the Shares. Given that the ownership held by Caason is effectively 3 times greater than it would have been, this is sufficient to establish that the additional costs and expenses incurred in achieving a different outcome cannot be considered as loss suffered given it resulted in Caason procuring such a significantly greater interest in the Shares.

539 Even if Caason had proved that it had actually suffered loss by reason of the breaches committed by Bakers Investments, there would have been a real difficulty in Caason seeking to recover those losses in light of the position it took between 19 April 2011 and 4 May 2011. As already discussed,[354] by its email of 19 April 2011, Caason complained of a failure of Bakers Investments to perform, but left the Fingal Valley Agreement on foot and did not seek to terminate the contractual relationship between the parties. Further, on 28 April 2011, Flory suggested that the agreement had been frustrated.[355] Furthermore, on 4 May 2011, Astill communicated to Bakers Investments that Caason had abandoned the Fingal Valley Agreement (which position was accepted by Bakers Investments).[356]

540 Given the abandonment of the Fingal Valley Agreement by the parties by 4 or 5 May 2011, which precluded Bakers Investments from having any further possibility of providing the $25m Further Capital pursuant to that agreement, Caason by its own conduct ensured that the Fingal Valley Agreement would not be performed by Bakers Investments from that time on. In these circumstances, Caason could have no claim for losses for breach of the Fingal Valley Agreement by Bakers Investments after 4 May 2011, and is likely to have had serious difficulties in relation to any losses incurred before that time.

G.11 Was Caason required to hold the Exclusive Right on trust for the benefit of itself and Bakers Investments in accordance with the Trust (as defined in paragraph 11 of the Statement of Claim)?

541 No. For reasons stated below,[357] Bakers Investments has failed to establish any form of joint venture existed which established a fiduciary relationship between the parties. There is no basis to allege the creation of a trust, or even the possibility of a remedial constructive trust.

542 Although the findings made below are sufficient to deal with this issue, I make the further observation that the basis upon which Bakers Investments sought to establish a trust was not soundly based in any event. The trust was said to arise by reason that "[i]mmediately upon the creation of Newco, Caason was [to] cause its interest in the escrowed shares in Hardrock Investments [ie the Shares] to be transferred to Newco". For reasons stated above,[358] this simply does not reflect clause 3 of the Term Sheet. Similar submissions made on this issue must fail as clause 3 made it clear that there was no requirement upon Caason to transfer any interest in the Shares unless and until the $3m Seed Capital was paid.

G.12 Was there a joint venture relationship between Bakers Investments and Caason by reason of:

543 Although the pleadings did not raise this issue directly,[359] the Defence and Counterclaim denied the existence of a joint venture. Contrary submissions were made by the parties as to whether or not Bakers Investments and Caason entered into a joint venture. As to the meaning of that term, the following passage is instructive:[360]

The term "joint venture" is not a technical one with a settled common law meaning. As a matter of ordinary language, it connotes an association of persons for the purposes of a particular trading, commercial, mining or other financial undertaking or endeavour with a view to mutual profit, with each participant usually (but not necessarily) contributing money, property or skill ... The term is, however, apposite to refer to a joint undertaking or activity carried out through a medium other than a partnership: such as a company, a trust, an agency or a joint ownership. The borderline between what can properly be described as a "joint venture" and what should more properly been seen as no more than a simple contractual relationship may on occasion be blurred. Thus, where one party contributes only money or other property, it may sometimes be difficult to determine whether a relationship is a joint venture in which both parties are entitled to a share of profits or a simple contract of loan or a lease under which the interest or rent payable to the party providing the money or property is determined by reference to the profits made by the other. One would need a more confined and precise notion of what constitutes a "joint venture" than that which the term bears as a matter of ordinary language before it could be said by way of general proposition that the relationship between joint venturers is necessarily a fiduciary one.[361]

(Emphasis added.)

Accordingly, because of the use of the term "joint venture" in the pleadings, the issue necessarily attracts a degree of imprecision.

544 Bakers Investments submitted that a joint venture was created by the parties entering into the Fingal Valley Agreement. By reason of the alleged joint venture and the terms of the Term Sheet, it was submitted that there was a fiduciary relationship between the parties. This submission is rejected for a number of reasons.

545 First, it is of some significance that the parties never referred to the term "joint venture" in any of their communications prior to the Term Sheet being executed or in the Term Sheet itself. There were commercial lawyers acting for the parties. It would be expected that if they intended some form of joint venture to be created upon execution and without any provision of funds, that would have been expressly stated at some time.[362]

546 Secondly, the Term Sheet spoke in terms of recording "the parties' expression of interest" and outlining "the basic terms and conditions of a financing transaction". This language is not suggestive of a transaction to create a joint venture incorporating fiduciary duties.[363]

547 Thirdly, the Fingal Valley Agreement was the means by which Bakers Investments and Caason were to become shareholders in Newco. That shareholders' relationship was subject to all of Bakers Investments' shares being held in escrow until funds were raised and provided to Newco. Further, it was envisaged that Caason and Bakers Investments were to be co-shareholders as set out in the Term Sheet only momentarily. As soon as the $3m Seed Capital was made available, Bakers Investments was required to divest some of the shares in Newco held in its name. There was a real possibility that Bakers Investments would end up with none or very few shares in Newco once both the $3m Seed Capital and the $25m Further Capital had been raised. Furthermore, it was entirely up to Bakers Investments to negotiate as to whom any new shareholders would be and the number of shares in Newco they received in return for investing. In engaging in these activities, and attempting to put such arrangements in place, there was nothing in the Fingal Valley Agreement to suggest that Bakers Investments would be acting in anything other than its own interests to maximise its own gain.

548 Moreover, and in any event, the mere relationship of being co-shareholders does not, of itself, create a fiduciary relationship.[364] As was stated by Dixon J in Peters' American Delicacy Co Ltd v Heath[365] when considering whether any duties exist between shareholders in the context of an alteration of the articles of the company at a general meeting:[366]

The power of alteration is not fiduciary. The shareholders are not trustees for one another, and, unlike directors, they occupy no fiduciary position and are under no fiduciary duties. They vote in respect of their shares, which are property, and the right to vote is attached to the share itself as an incident of property to be enjoyed and exercised for the owner's personal advantage.[367]

549 In this case, there was no pooling of assets or other arrangements which might impose duties beyond those held by mere shareholders.[368] The fact that fiduciary duties may exist as between the directors of Newco does not translate to there being, necessarily, a fiduciary relationship as between shareholders.

550 Fourthly, although there were some aspects of mutuality between the parties, and despite Bakers Investments using language in precontractual negotiations concerning mutuality, there were interests of Caason that were separate and distinct from those of Bakers Investments, which were not dealt with in the Term Sheet on the basis of mutuality or the parties each assuming like obligations. Bakers Investments was acting very much in its own interests, and, to the potential detriment of Caason, in insisting that Caason alone remain liable, and assume further liability, with respect to the Vendors.[369]

551 Fifthly, in addition to the matters identified above as surrounding circumstances,[370] as at 9 March 2011, Bakers Investments had brought nothing to the relationship other than a commitment to seek to obtain the necessary funds. If the matter did not proceed because of the absence of funds, on the case put by Bakers Investments the imposition of fiduciary duties on Caason would have required it to give up a potentially very valuable interest for nothing in return. There was no obligation for Caason to do this based on the wording of the Term Sheet (see especially clause 3[371]). Further, if no funds were raised, Bakers Investments stood to lose nothing other than the time and money involved in seeking those funds.[372] In contrast, Caason stood to lose a great deal more.

552 Sixthly, the express incorporation of the Confidentiality Deed[373] is relevant. Although the Confidentiality Deed must be read subject to the terms of the Term Sheet, clause 10 of the Term Sheet provided the obligations under the Confidentiality Deed specifically apply "to any activities under this Deed". The obligation on Caason being imposed by clause 4.2 of the Confidentiality Deed must result in it having been implicitly contemplated that Caason might, independently of Bakers Investments, "approach, deal with, contact or contract with" a third party not introduced or disclosed to Caason by Bakers Investments. This may not be consistent with obligations created by the imposition of fiduciary duties.

553 In summary, the Term Sheet does not speak in terms of the parties acting as joint venturers or fiduciaries, or being required to act in their mutual best interests. Even though non-exhaustive language is used in the Term Sheet, the totality of the relationship must be considered in the context of the agreed contractual terms.[374] In my opinion, viewed objectively, neither the language of the Term Sheet nor the transactions in which the parties were engaging, indicates an intention to create a joint venture or a fiduciary relationship.

554 A series of arguments was put by Bakers Investments in support of the contention that the Fingal Valley Agreement was in the nature of a joint venture agreement, and created fiduciary duties. Those arguments included the following:

The Term Sheet itself provides for [Bakers Investments] to receive shares from escrow regardless of how finance is obtained. [Bakers Investments'] obligation is to use its allotment to pay for it. The corollary is that if [Bakers Investments] is unsuccessful the joint venture probably fails.

(Original emphasis.)

555 This submission says a lot about the case of Bakers Investments. The first 2 sentences of the above passage are plainly correct. Caason had no control over the manner in which finance was to be obtained, nor the number of shares in Newco Bakers Investments allotted in order to pay for the finance. Bakers Investments could pursue its own interests in this regard. Further, more significantly, it is a logical consequence of the case put by Bakers Investments that, if it were unsuccessful in raising any funds, the arrangement the subject of the Fingal Valley Agreement would necessarily fail. In my view, on the facts of this case, this provides a sound legal and commercial basis for determining that it was not a joint venture arrangement, and that fiduciary duties were not created.

556 It made no commercial sense for Caason to enter a binding agreement that created the real potential for Caason to lose all of its rights in the Shares and the Mine, and be entirely dependent upon Bakers Investments in this regard, without there being some ability of Caason to pursue the investment opportunity if no funds were produced pursuant to the Fingal Valley Agreement. It is significant that Bakers Investments was a party with which Caason had had no relationship prior to the events the subject of this proceeding. It is also significant that Bakers Investments refused to give any commitment by which it was tied to specific timeframes in providing the required funds. Those facts indicate that, at the time Caason executed the Term Sheet, it could have had no certainty that Bakers Investments could ever produce the funds even if it complied with its best endeavours obligations.[375]

557 Bakers Investments also submitted that, because the Term Sheet was executed as a deed, it meant that consideration was unnecessary "because, although there were mutual promises, the essence of their venture was that neither [Bakers Investments] nor Caason was doing more than pooling resources and collaborating to obtain finance to acquire assets". It was suggested that the collaboration relied entirely on sharing the benefit. This submission does not reflect the facts. The parties were not "pooling resources". Unlike Caason, Bakers Investments was not putting up any of its own funds. Although Bakers Investments was committing some of its time, its investment by reason of this was marginal when compared to the position of Caason. Further, Bakers Investments was not exposing itself to any substantive risk if the venture failed. This was in stark contrast to the position of Caason.

558 Bakers Investments further submitted there was considerable scope for each "joint venturer" to exercise its discretion on how it performed its allocated tasks under the Term Sheet.[376] It was suggested that fiduciary duties ought to be imposed because allocated tasks were being performed which affected the interests of the other. It was submitted that the enterprise otherwise would not work and "the Term Sheet would essentially be pointless".

559 In my view, the performance of the Term Sheet could have been achieved perfectly well without the imposition of fiduciary duties. Bakers Investments had an obligation of best endeavours in respect of raising the $25m Further Capital.[377] Caason had its specific obligations set out in relation to what was to occur both prior to and upon provision of the $3m Seed Capital and beyond. The imposition of fiduciary duties was not necessary to make it clear what the respective essential obligations of the parties were, or how they were to be performed or to give business efficacy to the Fingal Valley Agreement.[378]

560 Bakers Investments also directed attention to the fact that the appointment of Alford by Bakers Investments to arrange the $3m Seed Capital was for the mutual benefit of the parties. This is plainly correct. However, the obligation was clearly stated in the Term Sheet.[379] The possibility that, as was contended, Bakers Investments might have used its contacts and judgment in deciding upon Alford as a suitable person to arrange the $3m Seed Capital and that "[e]verything depended on this" is not to the point. On the contrary, for reasons already stated,[380] the fact that the venture would come to nothing if the $3m Seed Capital and the $25m Further Capital were not raised,[381] is a factor against the imposition of fiduciary duties upon Caason.

561 Bakers Investments also submitted that the "underlying commercial logic was that the special purpose vehicle [ie Newco] owned a valuable asset against which funds could be raised". This submission is not supported by the facts.

562 At the time the Fingal Valley Agreement was entered into, Newco did not exist and, upon its incorporation, it did not own any assets of its own. Further, Newco would continue to own essentially nothing unless and until the Vendors were paid in full. True it is that Newco had the potential to obtain ownership of the Shares upon Caason transferring any interest it had in the Shares to Newco,[382] which of itself may have had a value, but even this potential interest was not created unless and until the $3m Seed Capital was provided. Accordingly, the fact that Bakers Investments "would have an asset in its name which it could point to when negotiating with investors" is of little moment when the shares in Newco were practically worthless unless the necessary $3m Seed Capital could be raised. Indeed, the shares in Newco may have remained practically worthless even if the $3m Seed Capital had been raised; upon that event there would have been still no certainty that Newco would become the owner of the Shares.

563 The artificiality of the case put by Bakers Investments is laid bare in the following submission put on its behalf:[383]

Caason was to immediately transfer its interest (whatever that is or was) in the escrowed [S]hares in Hardrock Investments to be assigned to [Newco]. This appears to reflect the periodic assertion by Caason that there was an existing share purchase agreement in respect of which there might be an equitable interest in the [S]hares. On the facts that does not appear to be the case.

(Emphasis added.)

564 For the reasons already stated above, it is incorrect to state there was an obligation on Caason to immediately transfer its interests in the Shares. Clause 3 of the Term Sheet makes this clear.[384] Further, whatever incorrect assertions about ownership were made by Caason prior to the Fingal Valley Agreement being entered into, Bakers Investments fully understood before 9 March 2011 that, in fact, Caason did not have a legal or a beneficial interest in the Shares.[385] In short, there is no basis for a submission that Bakers Investments was to obtain some interest in the Shares before the provision of any funding. In other words, whatever the proper characterisation of the venture, Bakers Investments obtained no meaningful interest in it (beyond the exclusive right to raise the required funds within a reasonable time) unless and until the $3m Seed Capital was provided.

565 Bakers Investments finally submitted on this issue that the Term Sheet imposed an obligation on Caason "to negotiate an extension of time with [the Vendors] for payment of $8.5 million to allow time for this structure to work". Although the Term Sheet clearly required Caason to negotiate with the Vendors before the provision of the $3m Seed Capital,[386] there was actually no obligation on Caason to obtain an extension of time. The words "but subject to the agreement of the Vendors" clearly indicated the parties contemplated the possibility that an extension might not be obtained.

566 Accordingly, I do not accept the submission that both parties recognised that it was not "realistically feasible" for Bakers Investments to raise $8.5m by the end of April 2011. Although Bakers Investments firmly rejected being contractually committed to strict timeframes in relation to the provision of funding, the language of the Term Sheet plainly contemplated a possibility of the Shares being acquired by the end of April 2011.

567 Although I do not think the term aptly describes the relationship, because of the inherent imprecision in the term "joint venture", it might be possible, despite all of the matters set out above, to describe the relationship between Bakers Investments and Caason as a joint venture in the very broadest sense of that term. But, in any event, the real question is whether or not a fiduciary relationship was created along with the concomitant duties that are part of such a relationship. For the reasons stated above, no such duties arose. For completeness, I note that, as there was no fiduciary relationship between the parties, no remedial constructive trust can be imposed on the basis of such a relationship.

G.13 Did Caason owe each or any of the Duties as defined in paragraph 12 of the Statement of Claim to Bakers Investments?

568 No. See paragraphs 543-567 above.

G.14 Did Bakers Investments owe the duties alleged in paragraphs 12(c) and 33(c)(iv) of the Defence and Counterclaim to Caason (namely the duty not to obtain any unauthorised benefit from the relationship and the duty not to be in a position of conflict)?

569 The allegations in paragraph 12(c) of the Defence and Counterclaim were pleaded on the alternate basis that if, contrary to Caason's primary position, fiduciary duties were owed, the parties were in a joint venture relationship.[387] As no fiduciary relationship was created, this issue need not be considered further.

570 The allegations in paragraph 33(c)(iv) of the Defence and Counterclaim raise 2 issues. The first issue concerns Bakers Investments dealing separately with the Vendors "and/or a third party investor" to the exclusion of Caason. These events occurred in early June 2011, at a time when the Fingal Valley Agreement was no longer on foot.[388] As the Fingal Valley Agreement had already been abandoned at the relevant time, there could be no breach of that agreement and, accordingly, no breach of any duty which arose by reason of the existence of the Fingal Valley Agreement.

571 The second issue concerns the allegations regarding good faith. Reference is made to paragraph 12(c) of the Defence and Counterclaim. In fact, that paragraph does not specifically plead a duty of good faith. In any event, for the reasons stated in paragraphs 411 to 412 above no duty of good faith existed. Equally, the further duties referred to in the question above also were not created by the parties entering into the Fingal Valley Agreement.

G.15 If yes to the previous question, did Bakers Investments breach its alleged duties to Caason by reason of the acts or omissions alleged at paragraphs 12(c) and 33(c)(iv) of the Defence and Counterclaim?

G.16 Is Hardrock Coal Mining accessorily liable for the alleged breaches by Caason of its alleged fiduciary duties?

573 No. As there were no fiduciary duties capable of being the subject of any breach, there can be no possibility of accessorial liability. I note the defendants conceded that if Caason had been in breach of the alleged fiduciary duties, it was open for the court to find the relevant knowledge of such matters would be imputed to the mind of Hardrock Coal Mining by reason of the common director, Astill.

G.17 Is Hardrock Investments accessorily liable for the alleged breaches by Caason of its alleged fiduciary or other duties?

574 No. This point was not pressed by Bakers Investments in closing submissions.

G.18 Is Bakers Investments entitled to the relief sought in the Statement of Claim, and if so what relief?

576 By their counterclaim, the defendants sought a declaration that the Fingal Valley Agreement was terminated either on 17 April 2011 or some other date. Relief was also sought pursuant to various statutory provisions declaring the Fingal Valley Agreement to be void ab initio, or ordering that the Fingal Valley Agreement be set aside. Additionally, damages were sought.

577 Essentially, the counterclaim was in 2 parts. The 1st part concerned representations alleged to have been made in early February 2011, before the Fingal Valley Agreement was entered into. The 2nd part concerned representations alleged to have been made on or about 17 April 2011 which were said to be misleading or deceptive or likely to mislead or deceive.

578 Again, it is convenient to address the issues raised by reference to the specific questions agreed by the parties.

H.1 Did Bakers Investments make any or each of the Capacity Representation and/or the Timing Representation (as defined in paragraph 51(a) and (b) of the Defence and Counterclaim respectively) to Caason?

579 The Defence and Counterclaim included the following allegation:

1. In early February 2011, [Bakers Investments] represented to Caason that:

(a) it had the skills and contacts to raise $25m for the completion of the acquisition of the Shares in [Hardrock Investments] from the Vendors and for the further development of the coal resources the subject of the [Exploration Licences] ("the Capacity Representation"); and

(b) it would be able to raise those funds within a reasonable period of time and would be able to raise the $8.5m required to complete the acquisition of the Shares in [Hardrock Investments] from the Vendors by the date due for payment of that amount to the Vendors ("the Timing Representation").

580 The particulars of the Capacity Representation contained in the Defence and Counterclaim alleged that in addition to Baker referring to raising the $25m Further Capital from Indian contacts in the coal industry, Baker specifically said the words "we can provide the funding you need". No evidence as to such a specific promise was given at trial. Although Alford represented that he was in a position to provide immediate funding of up to $5 million,[390] on the evidence no express representation was made by Baker concerning Bakers Investments' capacity to raise or procure the $25m Further Capital.

581 However, the defendants also pleaded that the Capacity Representation was implied from what was said at the meeting on 3 February 2011, together with Bakers Investments' signing of the Memorandum of Understanding and the Term Sheet, coupled with Baker's knowledge of the contents of the Letter of Intent.

582 Notwithstanding the fact that the defendants have failed to prove that an express representation of the kind alleged was made by Baker on 3 February 2011, it was plainly implicit that Baker was representing in early February 2011 that Bakers Investments had the skills and contacts to raise the $25m Further Capital. In Baker stating that he anticipated raising the $25m Further Capital from existing contacts, and that he had existing relationships with parties in India in this regard, he implicitly represented that there was a capacity for the funds to be raised. Further, by entering into the Memorandum of Understanding on 9 February 2011, with the specific provision for the raising of $25m during the period from 15 February 2011 until 30 May 2011, Bakers Investments was implicitly representing it had a capacity to raise these funds, particularly in light of the representations made on 3 February 2011. However, the Term Sheet was not executed until 9 March 2011. Any implied representation made by such conduct in March 2011 does not establish that the Capacity Representation was made in "early February 2011".

583 The Timing Representation consists of 2 components which are conjunctive, namely that the $25m Further Capital could be raised within a reasonable period of time and that $8.5m would be able to be raised to complete the acquisition of the Shares.

584 By reason that the Letter of Intent was shown to Baker on 3 February 2011,[391] and that Baker read its contents, Baker knew that the Second Payment was due in February 2011 and the Third Payment was due at or about the end of April 2011. The matters stated by Baker on 3 February 2011 in this context, coupled with the execution of the Memorandum of Understanding, implicitly represented to Caason in early February 2011 that the required funds for the Vendors could be raised within the required timeframes, and that the remainder of the $25m Further Capital could be raised within a reasonable period of time.

H.2 Did Bakers Investments make the Direct Dealing Representations (as defined in paragraph 59 of the Defence and Counterclaim) to the Vendors?

585 The Defence and Counterclaim included the following:

1. Further, after about 17 April 2011, [Bakers Investments] represented to the Vendors that it:

(a) was not bound by the Term Sheet;

(b) was not in a joint venture relationship with Caason;

(c) did not owe Caason any fiduciary duties; and

(d) it was free to deal directly with the Vendors to the exclusion of, or without the involvement of, Caason.

("the Direct Dealing Representations").

586 There is no evidence that any representations were made to the Vendors by Bakers Investments after about 17 April 2011. The particulars to this allegation referred to the particulars to paragraph 12(c) of the Defence and Counterclaim, which were confined to events in April 2011. The only relevant evidence with respect to this allegation is the contact that was made by Bakers Investments with Mallesons on or about 20 April 2011.[392] However, the evidence, such as it is, of the events of that day, and the subsequent correspondence[393] bear no resemblance to each of the allegations the subject of the Direct Dealing Representations. In short, there is no evidence that such representations were made in April 2011.

587 The closing submissions also referred to the events of June 2011. Although I have found that Bakers Investments was acting as if it were not bound by the Term Sheet, were not in a joint venture agreement with Caason, did not owe fiduciary duties to Caason and chose to deal directly with the Vendors without the involvement of Caason, there is no evidence that any representations were made by Bakers Investments to the effect of the Direct Dealing Representations.[394]

H.3 By the Capacity Representation, the Timing Representation or the Direct Dealing Representations did Bakers Investments breach:

(1) Section 18 of the Australian Consumer Law?****[395]

(2) Section 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act")?

(3) Section 1041H of the Corporations Act 2001 (Cth)?

588 Broadly speaking, each of the above provisions are concerned with misleading or deceptive conduct, or conduct likely to mislead or deceive, in trade or commerce. In light of the fact that the Direct Dealing Representations were not made, it is only necessary to consider the Capacity Representation and the Timing Representation.

589 The Capacity Representation is not pleaded as being with respect to any future matter. The allegation is confined to a representation that, in early February 2011, Bakers Investments had the skills and contacts to raise $25 million for the completion of the acquisition of the Shares and for further development of the Mine. The fact that Bakers Investments subsequently did not raise the $25m Further Capital, or any part of it, does not prove that at the time the representation was made in early February 2011 that representation was misleading or deceptive.[396]

590 There is no evidence before the court as to precisely what contacts Bakers Investments had in early February 2011. In particular, there is no evidence of what specific contacts Baker may have had in mind at the time the Capacity Representation was made. In circumstances where there was no direct evidence of the financial position of Bakers Investments in early February 2011, or of the precise contacts it had in early February 2011, the defendants have failed to discharge the onus of establishing that the Capacity Representation was misleading or deceptive or likely to mislead or deceive.[397]

591 Accordingly, no contravention of any of the provisions set out above has been established by reason of the making of the Capacity Representation.

592 In contrast to the Capacity Representation, the Timing Representation was pleaded as a representation as to a future matter. Reliance was placed upon s 4 of the Australian Consumer Law, alternatively s 12BB of the ASIC Act.

593 Relevantly, s 4 of the Australian Consumer Law provides as follows:

(1) If:

(a) a person makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act); and

(b) the person does not have reasonable grounds for making the representation;

the representation is taken, for the purposes of this Schedule, to be misleading.

(2) For the purposes of applying subsection (1) in relation to a proceeding concerning a representation made with respect to a future matter by:

(a) a party to the proceeding; or

(b) any other person;

the party or other person is taken not to have had reasonable grounds for making the representation, unless evidence is adduced to the contrary.

Section 12BB of the ASIC Act is in substantially the same terms.[398]

594 Bakers Investments did lead some evidence as to its capacity to raise the $25m Further Capital although, as already noted, the direct evidence that Paul was capable of giving in this regard was very limited.[399] Essentially, Paul gave evidence of attending management meetings at which there were discussions about Baker contacting Indian parties. He also gave some evidence of limited direct involvement himself.[400] Bakers Investments also tendered a volume of correspondence to seek to establish it had the ability to raise the required funds.[401] I do not propose to go through all the correspondence individually. Without being exhaustive, the salient matters are as follows:

(1) Correspondence in February and March 2011, and an agreement struck by Bakers Investments on 17 March 2011,[402] demonstrate that there was no specific Indian investor that had been identified by Bakers Investments for the purpose of providing the $25m Further Capital.

(2) On 17 March 2011, Bakers Investments entered into an exclusive arrangement with a company incorporated under the Indian Companies Act 1956 for the purpose of seeking to identify any suitable investor. Pursuant to this agreement, Bakers Investments was entitled to a fee of $2 million "of the amount raised".[403]

(3) There was never any formal proposal from any "Indian party" to provide any particular amount by any point in time.

(4) By mid March 2011, no data room appears to have ever been created by Bakers Investments, notwithstanding such a data room was requested, by persons who appear to be prospective investors and their representatives, in order for them to consider the investment.

(5) As at 22 March 2011, the correspondence indicates Bakers Investments was only starting to compile the relevant information to make up a transactional electronic data room, and was still negotiating as to the exclusivity arrangement with the Indian broker.

(6) As at 27 March 2011, Baker was suggesting that a comprehensive information pack was still about 3 weeks away. Further, it was said that after that 3 weeks it was anticipated a "roadshow" in India would be necessary. No such roadshow ever occurred.

(7) As at late March 2011, a large list of queries of a preliminary and fundamental nature were being made by an Indian mining company.

(8) It was not until around 1 April 2011 that Bakers Investments started dealing with Chye, of Zheng He Global, which negotiations never resulted in an "offer" or formal proposal consistent with the Term Sheet.[404]

(9) On 7 April 2011, extensive queries were still being made by the Indian mining company which demonstrated that the company did not have a substantial amount of relevant information. Also the list of queries was not exhaustive.

(10) On 20 April 2011, an email was sent by a representative of an Indian company suggesting it was interested in the project. The company was asked to put the expression of interest on the letterhead of the company so it could be presented to the board of Newco. It did not do so. Rather, the subsequent letter simply stated that the company had met with an intermediary (ie not Bakers Investments) in India and awaited further details regarding the project.[405]

(11) An email dated 27 April 2011 suggested that the detailed information memorandum and data room the subject of correspondence the previous month was still not available for a due diligence to be conducted.

(12) On 12 May 2011, reference was made to "Chinese" interest in the project, following a discussion held between Paul and what appears to be another intermediary. Paul was not asked any questions about this document and the relevant interest was not identified. Although Lombardi was taken to this document, there was no suggestion she was part of the discussion. Further, there was nothing on the face of the document to indicate that this approach was made pursuant to the Fingal Valley Agreement. The document is equally consistent with Bakers Investments pursuing its own interests at this point in time to the exclusion of Caason.

(13) On 20 May 2011, an email was sent by an Indian company to an intermediary, which was then forwarded to Baker. That email stated that there had been an offer for 2 "coal concessions in Tasmania". The email continued:

Out of the two, the Tier East (EL 16/2010) is interesting although the average coal seam thickness (1.2m) is not so encouraging. We still show our interest on this eastern concession and would request you to please send us the detail database and commercial offer for our consideration.

In response the intermediary sent an email stating that Baker would "revert to you with more information the (sic) commercial opportunity". Baker was copied in on this email. There is no evidence that Baker ever pursued this expression of interest, such as it was.

595 None of the evidence before the court, including the matters referred to above, shows, even remotely, that Bakers Investments had an ability to raise the $25m Further Capital within a reasonable period of time, or for that matter $8.5 million in time to allow settlement of the purchase of the Shares. Further, the evidence does not establish that a person could have reasonably formed an opinion that the funds would be raised.

596 The evidence relied upon by Bakers Investments is directed to the period from late February 2011 through to May 2011, and the Timing Representation was made in early February 2011. In short, Bakers Investments has failed to adduce evidence "to the contrary" for the purposes of s 4 of the Australian Consumer Law or s 12BB of the ASIC Act. Further, the evidence led as to the slightly later period of time does not give rise to any proper inference that the Timing Representation was made on reasonable grounds. Indeed, the opposite inference is the only inference which could properly be drawn.

597 Therefore, by operation of the statutory provisions concerning "future matters", this aspect of the counterclaim has been established.

H.4 Has Caason, Hardrock Investments and/or Hardrock Coal Mining suffered or will/may Caason, Hardrock Investments and/or Hardrock Coal Mining suffer the loss and damage alleged in the Defence and Counterclaim by reason of the Capacity Representation or the Timing Representation?

598 In light of the findings above, it is only necessary to consider the Timing Representation with respect to this issue. In order to assess loss under the statutory regimes relied upon, the court is required to make a comparison between the position the defendants found themselves in as a result of the relevant conduct of Bakers Investments and the position they would have been in had the conduct not occurred. Put succinctly, they must establish the requisite causal link between the conduct and the loss claimed.[406]

599 For the reasons set out above,[407] the defendants have failed to demonstrate that any loss was suffered "by"[408] or "because of"[409] the conduct of Bakers Investments comprising the Timing Representation.

600 Further, and in any event, the defendants did not lead any evidence to suggest that the agreement Caason reached with San Miguel would have been available to it any earlier. In other words, I cannot be satisfied that, absent the making of the Timing Representation by Bakers Investments and the subsequent events pursuant to which Caason relied upon Bakers Investments to raise the required funds, Caason would have been capable of completing the Share Purchase Agreement before 24 June 2011.[410]

601 To summarise, there is no evidence that the costs incurred by any of the defendants would not have been incurred in any event, or that the defendants were capable of raising funds independent of Bakers Investments before the time at which the funds were raised by Caason in June 2011.

H.5 Has Caason, Hardrock Investments and/or Hardrock Coal Mining suffered or will/may Caason, Hardrock Investments and/or Hardrock Coal Mining suffer the loss and damage alleged in the Defence and Counterclaim by reason of the Direct Dealing Representations?

H.6 Is Caason entitled to the relief sought in the Defence and Counterclaim, and if so what relief?

603 For the reasons stated above,[412] Caason is not entitled to any damages. The position is the same in relation to the other defendants.

604 Further, there is no need for the court to grant any declaratory or other relief sought.

H.7 Is Caason entitled to set off any damages owing to it by Bakers Investments against any damages owing to Bakers Investments by it?

605 Not applicable. There is no entitlement of Bakers Investments which might be the subject of a set off in favour of Caason.

606 The correspondence and other documents exchanged between the parties and others in 2011 demonstrated that both Bakers Investments and Caason were willing to make representations in relation to substantive matters which they knew were untrue.[413] I expect both parties were, to a greater or lesser extent, willing to "give comfort" in the sense referred to by Flory in his evidence at trial.[414]

607 Although the conduct referred to is clearly far from desirable, I did not form the view that such matters affected the credibility of the evidence given by any witness called at trial.

608 Further, in giving evidence, on more than 1 occasion Astill struggled to answer questions either directly or at all. It appeared, on occasions, this course may have been adopted in order to seek to avoid giving evidence that was not what Astill perceived to be in the interests of his case. That said, generally speaking, I found Astill to be a credible witness. In any event, on the key aspects in the case, the evidence he gave was largely corroborated by contemporaneous documentation.

609 The claim by Bakers Investments was an ambitious claim. Bakers Investments did not surrender or give up any existing rights or interests in agreeing to enter into the arrangements with Caason; it never raised any funds; it never contributed any moneys to Caason which Caason was required to pay to the Vendors before settlement to keep the relationship with the Vendors on foot (for which Bakers Investments made no allowance in its claim for loss); and it only purported to act pursuant to the Fingal Valley Agreement for, at best, a little over 3 months. And yet Bakers Investments claimed tens of millions of dollars. Such a claim calls for close scrutiny.[415]

610 Bakers Investments outlined its case by blaming Caason for the failure of the proposed transactions the subject of the Fingal Valley Agreement to proceed to conclusion. This included suggesting that, on 22 March 2011, "Caason then committed to a share purchase agreement with an obviously unrealistic settlement date and then derailed the first tranche of funding". In my view Caason had little choice but to adopt the course of entering into the Share Purchase Agreement if it wanted the Vendors to continue to deal with it.[416]

611 Bakers Investments also suggested that "Caason deliberately misrepresented the immediacy of finance to [the V]endors". But this submission ignores the uncontradicted evidence of Astill that he was given an assurance by Alford that the necessary funds were being remitted on the day the Share Purchase Agreement was executed.[417] Although Caason did "give comfort" to the Vendors from time to time, such conduct was not causative of any failure of Bakers Investments to perform its obligations under the Fingal Valley Agreement.

612 Next, by its outline, Bakers Investments asserted that Casson "fatally misrepresented the investment structure to first tranche investors who had committed in principle to terms with the special purpose vehicle". The facts set out above[418] demonstrate that there was no first tranche investor who was remotely committed to invest consistent with the Term Sheet.

613 Bakers Investments said the result of the matters referred to in the immediately preceding paragraphs was "a commercial difference between investors and [the Vendors] with the joint venture in the middle. This was a commercial difference created by Caason which it now uses as an excuse for its renunciation of its agreement with [Bakers Investments]". No commercial difference was created by Caason. The various proposals put by Bakers Investments to prospective investors did not reflect the Term Sheet or what the Vendors had ever agreed to. That was a fundamental problem throughout. Even more fundamental was that Bakers Investments was unable to procure, or cause, or even come close to procuring, or causing, either directly or indirectly, an investor to provide the $3m Seed Capital or the $25m Further Capital in accordance with the terms of the Fingal Valley Agreement.

614 Finally, as to the opportunity created by the parties entering into the Fingal Valley Agreement, Bakers Investments submitted that "the whole point" of the proceeding was that Caason had "denied [Bakers Investments the] opportunity to participate in that opportunity". In fact, as set out in the previous paragraph, Bakers Investments was not capable of availing itself of the opportunity regardless of any conduct of Caason.

615 For the reasons stated above, both the claim of Bakers Investments, and the counterclaim of Caason, Hardrock Investments and Hardrock Coal Mining, will be dismissed.

616 Given the complexity of the proceeding, and the various parties and persons involved, I propose to say nothing about costs at this stage.

[1] See Corporations Act 2001 (Cth), chp 7, esp ss 761A, 913B.

[2] The full names of these companies were not referred to in the evidence given by Paul.

[3] Darling was the chairman of a company that was listed on the Australian Stock Exchange. Bakers Investments had had dealings with this company and, as a result, Darling became known to Baker. Astill had met Darling on 2 or 3 occasions before he was approached in relation to his role in the subject matter of this proceeding.

[4] By way of example, Lombardi was not privy to all discussions with prospective funders and was unable to identify all persons approached by Baker in this regard: see court book 2/486; T235.04.

[6] The Exploration Licences were granted by a minister of the Tasmanian government on 8 November 2010, numbered 16/2010 and 17/2010, for a term of 5 years. It is not necessary to elaborate on the terms and conditions of the Exploration Licences.

[7] The precise timing of this approach is unclear.

[10] The requirement to make the First Payment and the exclusive period of 45 days were included under this heading.

[11] See pars 366-370 below.

[12] See, for example, Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337, 352.3 (Mason J).

[13] Hope v RCA Photophone of Australia Pty Ltd [1937] HCA 90; (1937) 59 CLR 348, 357.8 (Latham CJ). See also par 373(3)-(5) below.

[14] There were 2 versions of this document in the court book: 1/260 and 1/278. The other version commenced with the words "Opportunity to acquire" rather than "Opportunity to invest in". Nothing was made of this distinction at trial.

[15] That is, capital expenditure and operating expenditure.

[16] It may have been that it was a different version of the document: see fn 14 above.

[17] In this judgment, I will not refer to all addressees to an email, or to all persons to whom an email was copied, unless such a reference assists with the narrative. Further, there was a time difference between Queensland and other eastern States of Australia at the time that some of the emails referred to in this judgment were sent. Where times are referred to, they will be the times appearing on the email without distinguishing between the different time zones.

[18] See par 32 above.

[19] This refers to an initial public offering.

[20] This refers to an initial public offering.

[21] The letter was erroneously dated 25 January 2010. It was common ground the letter was sent on 25 January 2011.

[22] In the agreement that was concluded subsequently, no proposal was put by Bakers Investments for an off-take arrangement. Off-take is a reference to taking some of the coal once the Mine was in operation.

[23] See par 32 above.

[24] I do not accept the contention on behalf of Bakers Investments that an email from Baker sent on 9 February 2011 asking for specific details of "[a]ny payment and arrangements that may exist with previous vendors, or any other encumbrances" suggests Baker had failed to read and understand the Letter of Intent. Nearly a week had elapsed since the meeting at which the Letter of Intent was shown, and, further, subsequent events had occurred at the time this later email was sent. In any event, such a communication is entirely consistent with Baker wanting to have a written record of the relevant arrangements. See also pars 61 and 80 below.

[25] On 22 February 2011, Caason forwarded a draft term sheet to Bakers Investments which referred to funds being required to complete the purchase of the Shares: see par 63 below.

[26] See pars 47-49 above.

[31] Of course, insofar as these emails were sent from Lombardi, they were likely to be genuine inquiries. Lombardi never suggested, nor on the evidence could she properly suggest, that Baker kept her fully briefed on his activities and knowledge.

[32] See para 56 above.

[33] See par 91 below.

[34] See par 98 below.

[35] See also pars 127 and 264 below.

[36] In circumstances where Baker was not called, I am not willing to find that these assertions from Lombardi as to Baker's recollection ought to support a finding that Baker was not shown the Letter of Intent. This evidence is entirely consistent with Baker having overlooked or forgotten this particular aspect of the Letter of Intent at the time he made these assertions to Lombardi.

[37] See par 98 below.

[38] See Androvitsaneas v Members First Broker Network Pty Ltd [2013] VSCA 212, [30] (Redlich and Priest JJA and Macaulay AJA); Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298, 308.5, 312.6, 320.8-321.2. There was a suggestion made in Bakers Investments' closing submissions that both Baker and Alford were not cooperative with Bakers Investments. Whilst it was common ground between the parties that there had been a falling out between Bakers Investments and Baker, there was nothing by way of evidence to suggest there was any good reason for Alford not being called as part of the case of Bakers Investments. See also par 22 above.

[39] See pars 110, 111 and 113 below.

[40] See pars 366-370 below.

[41] See par 373(1)-(2) below.

[42] In fact, the Exploration Licences were defined twice, as "ELs" and "the Assets".

[43] Cf par 81 above.

[44] Subsequently, Bakers Investments insisted that this provision meant that the further formal contract contemplated by the Letter of Intent for the purchase of the Shares was to continue to be between Caason and the Vendors. Caason ultimately accepted this position. The position taken by Bakers Investments was entirely consistent with the Term Sheet.

[45] See par 104 below.

[48] See par 33 above.

[49] There was no explanation given as to why such language was used despite the Term Sheet being executed as a deed: see par 108 below.

[50] See, for example, Biosciences Research Centre Pty Ltd v Plenary Research Pty Ltd [2012] VSC 249, [17] (Croft J), NGL Properties Pty Ltd v Harlington Pty Ltd [1979] VicRp 11; [1979] VR 92, 95.6 (Kaye J), both citing Re Strand Music Hall Company (Limited) [1865] EngR 570; (1865) 35 Beav 153, 160.1 [1865] EngR 570; [55 ER 853, 856.1] (Romilly MR). As I understood it, this construction was accepted by Bakers Investments: see pars 363(2) and 396 below.

[51] This exception existed by reason of the prefatory words "prior to the provision of the [$3m Seed Capital]".

[52] See pars 59-60 above.

[53] The Australian Securities and Investments Commission.

[54] See par 104 (3rd bullet point) above.

[55] See par 36 above.

[56] See pars 39, 41, 51, 55 and 62 above.

[57] See par 63 above.

[58] The email also attached various documents.

[59] The email is a stand alone document. It is not entirely clear to what "this" was referring.

[60] The document tendered recording this email also contained a passage which had been cut and pasted from Lombardi's email sent at 9.21 am on 21 March 2011. It is possible this first part of the email may have preceded Lombardi's email. However, nothing turns on the precise timing of these communications. It is clear they occurred before the execution by Caason of the Share Purchase Agreement: see par 136 below.

[61] See par 130 above.

[65] See par 167 below.

[66] See par 32 above.

[67] See par 136 above.

[68] The email refers to "$8m", but clearly this is a typographical error.

[69] See par 180 below.

[70] See par 159 above.

[71] See par 163 above.

[72] In fact, the shares had already been issued, albeit to Caason.

[73] See par 153 above.

[74] See pars 62 and 126 above.

[75] See par 159 above.

[76] See pars 184-191 (concerning BW Equities) and 192-196 (concerning Zheng He Global).

[77] For example, instead of asking the investor to provide seed funding of $3 million, the amended term sheet sought an underwriting of apparently $3 million ordinary shares in Newco (the document refers to $34 million, which is clearly a typographical error, but later in the document there is a reference to $3 million: cl 4), together with a further underwriting of another $2 million ordinary shares in Newco.

[78] Contrast this evidence with correspondence from Kay at the time: see, for example, par 176 above. However, as this was not explored in the cross-examination of Kay, I propose to make nothing of the apparent contradiction. I note Kay gave evidence that BW Equities could sub-underwrite.

[79] See pars 153 and 167 above.

[80] See par 440 below.

[81] There is no suggestion by Bakers Investments that the negotiations with Zheng He Global meaningfully progressed beyond the contents of this "offer".

[82] See par 151 above.

[83] See par 200 above.

[84] See par 233 below.

[85] This documentation appears to overlap with the documents Flory said he provided to Kay at the 11 am meeting: see par 207 above. By 1 means or another, the documents were provided to BW Equities: see also par 226 below.

[86] An email sent at 10.43 am on 10 April 2011 by Baker to Astill and others reflects the fact that such discussions took place.

[87] See pars 212-216 above.

[88] See par 172 above.

[89] As opposed to securing no definite proprietary interest by paying $1.4 million.

[90] See pars 228 and 269 below.

[91] Macri gave evidence that this position was adopted before the Share Purchase Agreement was entered into, which was 22 March 2011. See also pars 336, 339 and 349 below. In closing submissions, senior counsel for Bakers Investments said he could not put it any higher than "as a matter of common sense" the Vendors would have been open to accepting scrip. I do not accept this submission carries any real weight in light of the credible evidence given by Macri as to the position of the Vendors from at least 22 March 2011 onwards.

[92] See par 232 above.

[93] Leaving aside the fact that the deposit (ie the Second Payment) was well overdue, having been due and payable since 22 March 2011.

[94] This appears to be a reference to the Bakers Investments Information Memorandum.

[95] There was no evidence that the document in question had been provided to Caason at any time before 12 April 2011.

[96] See par 232 above.

[97] See par 234 above.

[98] See par 98 above.

[99] T 522.20. See also pars 71, 85, 87, 110, 115, 119, 178 and 181 above.

[100] But see par 258 below.

[101] See par 104 (2nd bullet point) above.

[102] Lombardi seems to have not appreciated that such burdens could not be transferred without a novation. As a general proposition, an assignment can only transfer a benefit under a contract rather than a contract as a whole, as distinct from a novation, which is in substance the creation of a new contract.

[103] See par 274 below.

[104] The reference to the Vendors defaulting appears to be a reference to the Vendors terminating the relationship.

[105] This was a matter Baker said Lombardi had requested be raised in this email: see pars 250-251 above.

[106] Although this document was not executed by all the parties to it, it is defined above as "the Assignment" as that was the definition given to it in the Statement of Claim: see par 416 below; Statement of Claim, par 27.

[107] Lombardi accepted this was the position: T250.02.

[108] See par 256 above.

[109] See par 257 above.

[110] See par 232 above.

[111] See par 104 (2nd bullet point) above.

[112] In 2011, Good Friday was on 22 April 2011.

[113] See pars 472-475 below.

[114] See pars 292-293 and 302 below.

[115] See pars 284-287 above.

[116] See par 287 above.

[117] See pars 284-287 above.

[118] See par 292 above.

[119] The note is dated 29 April 2011, but Lombardi said that was a mistake and that the conversation occurred on 28 April 2011.

[120] The note refers to "several offers", but it is clear on the evidence that only 2 "offers" were made.

[121] The written submissions referred to another document apparently dated 30 April 2011. It was not in evidence at trial.

[122] See par 317 below.

[123] See par 308 above.

[124] See par 342 below.

[125] See pars 312-313 above.

[126] See pars 329-333 below.

[127] Initially the further moneys were tendered by personal cheque, but this was rejected by the Vendors.

[128] See par 319 above.

[129] See par 345 above.

[130] The letter was only introduced in re-examination. Its use was limited under s 136 of the Evidence Act 2008 (Vic). The only purpose for which the evidence was led was to establish that, by 5 July 2011, Bakers Investments had become aware of the fact that Caason had completed the Share Purchase Agreement, and that that information was provided to Lombardi by Baker.

[131] That is, 45 days from 20 December 2010.

[132] See par 95 above. The Statement of Claim alleged the Fingal Valley Agreement was partly in writing and partly to be implied, but the only terms pleaded were written terms contained in the Term Sheet. Also the closing submissions made the position clear.

[133] See pars 97-107 above.

[134] See pars 96 and 107 above.

[135] See par 43 above.

[136] See par 54 above.

[137] See par 52 above.

[138] No such email was tendered by any party.

[139] See par 70 above.

[140] See par 78 above.

[141] See par 82 above.

[142] See par 87 above.

[143] See par 89 above.

[144] See fn 17 above.

[145] See pars 45-49 above.

[146] See pars 70 and 71 above.

[147] Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253, 275 [59] (Gummow and Hayne JJ), 284-286 [98]-[101] (Heydon and Crennan JJ); Ooh! Media Roadside Pty Ltd v Diamond Wheels Pty Ltd [2011] VSCA 116; (2011) 32 VR 255, 263 [28], 264 [35] (Nettle JA, with whom Redlich and Weinberg JJA agreed); Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, 179 [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ); Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451, 461-462 [22] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).

[148] Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234; (2009) 261 ALR 382, 401-403, [90] (Campbell JA, with whom Allsop P and Basten JA agreed).

[149] There is no suggestion of a collateral contract in this proceeding.

[150] Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2005) 218 CLR 471, 484 [36] (Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ).

[151] BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266, 283.2 (Lord Simon, Viscount Dilhorne and Lord Keith). See also Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337, 347.2 (Mason J). There is no occasion to consider whether any term was imputed by reason of the nature of the contract. No submission was put in this regard.

[152] Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596, 607.3 (Mason J).

[153] Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304, 358 [168] (Gummow, Hayne, Heydon and Kiefel JJ).

[154] Cf Campbell v Backoffice Investments Pty Ltd [2008] NSWCA 95; (2008) 66 ACSR 359, 450 [557] (Young CJ in Eq), where it is suggested it is "almost impossible".

[155] Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337, 352.9-353.2 (Mason J).

[156] International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; (2008) 234 CLR 151, 160 [8] (Gleeson CJ), 174 [53] (Gummow, Hayne, Heydon, Crennan and Kiefel JJ); Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, 179 [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).

[157] International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; (2008) 234 CLR 151, 160 [8] (Gleeson CJ).

[159] Charter Reinsurance Co Ltd (in liq) v Fagan [1997] AC 313, 387H-388C (Lord Mustill, with whom Lords Goff, Griffiths and Browne-Wilkinson agreed); Wickman Machine Tool Sales Ltd v Schuler AG [1973] UKHL 2; [1974] AC 235, 251E (Lord Reid).

[160] Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99, 109.7 (Gibbs J, dissenting, but not on this point).

[161] Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191, 201D (Lord Diplock, with whom Lords Roskill and Brandon agreed).

[162] See par 416 below; Statement of Claim, par 12.

[163] Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41, 97.6 (Mason J, dissenting).

[166] As may be seen from the facts set out above, both Bakers Investments and Caason had a lawyer actively involved in drafting the Term Sheet, which was the subject of numerous drafts.

[167] See par 373 above.

[168] See pars 38-94 above.

[169] In light of the issues concerning the terms of the Fingal Valley Agreement (see pars 37, 361-370 and 372-373 above), it is unnecessary to consider the issue of whether an ambiguity must exist in the written contract before surrounding circumstances may be considered: see Mainteck Services Pty Ltd v Stein Heurtey SA [2014] NSWCA 184; (2014) 310 ALR 113, 130 [71] (Leeming JA, with whom Ward and Emmett JJA agreed); Newey v Westpac Banking Corporation [2014] NSWCA 319, [89] (Gleeson JA, with whom Basten and Meagher JJ agreed, [17] and [23] respectively); Pepe v Platypus Asset Management Pty Ltd [2013] VSCA 38, [25] (Neave JA and Hollingworth AJA, with whom Buchanan JA agreed); Retirement Services Australia (RSA) Pty Ltd v 3143 Victoria St Doncaster Pty Ltd (2012) 37 VR 486, 501-502 [47]-[51] (Warren CJ, Harper JA and Robson AJA); Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; (2011) 282 ALR 604, 605 [2]-[5] (Gummow, Heydon and Bell JJ).

[170] See pars 93-94 above.

[171] See pars 97 and 104 above.

[172] See pars 97, 104 and 105 above.

[173] See par 63 above.

[174] See pars 31 and 358-360 above.

[175] Macri indicated that the first time he saw the Term Sheet was in the witness box.

[176] See par 105 above

[177] See par 79 above.

[178] This had been emphasised by Bakers Investments during the negotiations: see par 80 above.

[179] Email from Lombardi to Flory dated 18 March 2011: see par 127 above.

[180] See par 415 below.

[181] See par 368 above.

[182] See par 369 and fn 138 above.

[183] See pars 43, 52-54, 70, 82 and 88 above.

[184] See pars 97, 104 and 105 above.

[185] See pars 65, 68, 73 and 85-90 above.

[186] Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337, 352.5 (Mason J).

[187] See par 57 above.

[188] See par 386 above.

[189] See pars 55 and 59 above.

[190] See pars 45-48 above.

[191] This is recorded in cll 1, 3 and 5 of the Term Sheet: see pars 97, 104 and 105 above.

[192] I note the particulars to the alleged term referred to in paragraph 367(1) above do not refer to the term being implied. However the terms referred to in paragraph 367(4) and (5) rely solely on this as the basis for implying the term.

[193] See fn 191 above.

[194] The Term Sheet expressly contemplated that the $25m Further Capital might be provided in instalments: cl 2, see par 99 above. It is quite possible, indeed likely, that the reasonable time for the provision of the first $8.5 million of the $25m Further Capital could be different to the remainder of the $25m Further Capital; that remainder not being the subject of the time pressures imposed by the Letter of Intent (and subsequently, consistent with the Letter of Intent, the Share Purchase Agreement). There is no need to consider this issue fully in light of the fact that none of the $25m Further Capital was provided by Bakers Investments.

[195] See pars 104 and 363(2) above.

[196] If I am incorrect in my understanding, see par 104 above.

[197] Cf Perri v Coolangatta Investments Pty Ltd [1982] HCA 29; (1982) 149 CLR 537, 543.4 (Gibbs CJ), 554.2 (Mason J), 556.4 (Wilson J), 567.8 (Brennan J).

[198] See Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206, 227.8 (MacKinnon LJ).

[199] See, for example, Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623, 638.2 (Mason CJ), 642.9-645.5 (Brennan J), 651.7-652.6 (Deane and Dawson JJ), 664.4 (Gaudron J). It is unnecessary to discuss this further in light of the findings made on the absence of any notice of termination by Caason.

[200] See fn 192 above.

[201] The language used is ambiguous. It might also mean a later date if the Vendors had subsequently agreed to extend, but if that were the intended meaning, it is very similar to the term which has been found to be implied.

[202] In the circumstances, it is unnecessary to consider whether the term was also oral as particularised by Caason.

[203] In light of this finding, it is not necessary to discuss further the Memorandum of Understanding, which is also the subject of the particulars of this allegation. For reasons already stated, in my view, the Memorandum of Understanding did not form part of the Fingal Valley Agreement: see par 388 above.

[204] See par 368 above.

[205] See pars 104 and 396 above.

[206] See par 98 above.

[207] See pars 70, 71 and 370 above.

[208] See par 374 above.

[209] See par 416 below; Statement of Claim, par 12.

[210] Esso Australia Resources Pty Ltd v Southern Pacific Petroleum NL (Receivers and Managers appointed) (Administrators appointed) [2005] VSCA 228, [25] (Buchanan JA, with whom Warren CJ and Osborn AJA agreed); see also [2]-[4] (Warren CJ). See also Androvitsaneas v Members First Broker Network Pty Ltd [2013] VSCA 212, [101]-[110] (Redlich and Priest JJA and Macaulay AJA); Specialist Diagnostic Services Pty Ltd v Healthscope Ltd [2012] VSCA 175; (2012) 305 ALR 569, 587 [86]-[87] (Buchanan, Mandie and Osborn JJA); Bytan Pty Ltd v BB Australia Pty Ltd [2012] VSCA 233, [45] and fn 30 (Warren CJ, with whom Osborn JA agreed); Tote Tasmania Pty Ltd v Garrott [2008] TASSC 86; (2008) 17 Tas R 320, 326 [16] (Tennent J and Buchanan and Mandie AJJ).

[211] See par 388 above.

[213] Cf fn 155 above.

[214] See pars 543-567 below.

[215] See, for example, Secured Income Real Estate (Australia) Ltd v St Martins Investment Pty Ltd [1979] HCA 51; (1979) 144 CLR 596, 607.4 (Mason J).

[216] Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41, 64.5 (Gibbs CJ).

[217] Subject to the qualification referred to in par 405 above.

[218] Subject to the qualification referred to in par 407 above.

[219] The words "in breach of the [Fingal Valley Agreement]", which appeared in par 17 of the original statement of claim, were deleted in the Statement of Claim.

[220] The words "and not that of [Newco]" were also deleted.

[221] See paragraph 12 of the Statement of Claim referred to above.

[222] See par 112 above.

[223] Indeed, this had been suggested by Caason in precontractual negotiations and rejected: see pars 70, 71 and 407 above.

[224] See par 112 above.

[225] See pars 104 and 405 above.

[226] T 366.27-367.17. See also par 36 above.

[227] See fn 219 above.

[229] See par 218 above.

[231] See par 218 above.

[232] See par 269 above.

[233] For completeness, I note that the Statement of Claim, par 24, alleged that Caason subsequently disclosed to BW Equities on 11 April 2011 (ie the same day the representation is alleged to be made) that it had not in fact executed the Draft (as defined in the Statement of Claim, par 21: see par 416 above) as represented. Not only was there no evidence to support this allegation, Bakers Investments did not invite the court to give any adjudication on this allegation.

[234] At pars 172-175 and 223-224 above.

[235] No specific term was pleaded by Bakers Investments as being the subject of the breach. It is possible the obligation of Caason recorded in the 4th bullet point of clause 3 of the Term Sheet was breached: see par 104 above. Whether that is correct or not, in my view, the conduct of Caason in producing this document was contrary to an implied term that Caason was required to do all that was reasonably necessary for Bakers Investments to secure performance: see Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596, 607.4 (Mason J). Given the conclusions I have reached about Bakers Investments' non-performance, regardless of the provision to BW Equities of the Incorrect Draft Assignment, it is unnecessary to consider the significance or otherwise of the absence of a pleaded term relevant to this breach.

[236] See pars 104, 396 and 405 above.

[237] Lombardi expressly acknowledged this during cross-examination.

[238] See par 260 above.

[239] See par 416 above, Statement of Claim, par 26.

[240] See par 228 above.

[241] Reference was made to the email sent by Baker to Kay on 9 April 2011: see par 188 above.

[242] Court Book 3/1109-1110 was referred to: see par 270 above.

[243] See par 188 above.

[245] The reference to BW Equities investing is a reference to the clients of BW Equities.

[246] See pars 229, 230 and 271 above.

[247] See pars 269-270 above.

[248] See par 434 above.

[250] Court Book 3/899, see par 149 above.

[251] See par 192 above.

[252] See pars 193-195 above.

[253] See par 192 above.

[254] See pars 417-418, 427-428 and 429-441 above.

[255] See par 317 above.

[256] See pars 309 and 310 above respectively.

[257] See pars 471-486 below.

[258] See par 446 below, Defence and Counterclaim par 33(a) and (b).

[259] See pars 471-486 below.

[260] See par 367(6) above.

[261] See pars 334-341 above.

[262] See par 335 above.

[263] In opening the case, senior counsel for Bakers Investments suggested there was "nothing improper or inappropriate at all in [Bakers Investments] then trying to do the same deal for itself" once it was apparent Caason could not complete the purchase of the Shares and there was no longer an exclusive arrangement with the Vendors. The significance of this submission is the acknowledgement, correctly, that Bakers Investments was acting in its own interests in June 2011.

[264] See pars 367(4) and (5), and 392-398 above.

[265] See pars 383(3) and 390 above.

[266] This is not to ignore the fact that the Vendors were in a position to terminate the arrangement with Caason on or before 9 March 2011 (ie the date of the Term Sheet) because of the failure of Caason to make the Second Payment and enter into the Share Purchase Agreement. However, considering the matter commercially rather than strictly legally, as the facts indicate, the Vendors were willing to take a commercial approach in the event they could receive sufficient comfort that a deal could be done with Caason.

[267] See pars 433-438 above.

[268] See pars 151-153 and 192-196 above.

[269] See pars 350-351 above.

[270] See pars 308, 313 and 323 above.

[271] See par 350 above.

[272] [1961] HCA 72; (1961) 107 CLR 466.

[274] [1989] HCA 51; (1989) 168 CLR 385, 425.7; see also 393.8, 394.7 (Mason CJ), 430.6 (Brennan J), 437.7 (Deane J), 451.5 (Dawson J).

[277] See pars 334-341 and 447-449 above.

[278] Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623, 643.6 (Brennan J), 666.7 (Gaudron J); Shevill v Builders Licensing Board [1982] HCA 47; (1982) 149 CLR 620, 625.10-626.2 (Gibbs CJ, with whom Murphy and Brennan JJ agreed).

[279] See par 334 above.

[280] See pars 479-484 below.

[281] In making this finding, I am not ignoring the email sent by Lombardi on 3 June 2011: pars 329-334 above.

[282] See pars 481-489 below. See Sunbird Plaza Pty Ltd v Maloney [1988] HCA 11; (1988) 166 CLR 245, 280.2 (Gaudron J).

[283] See pars 437 (for BW Equities) and 440 (Zheng He Global) above.

[284] See par 4 above.

[285] Bakers Investments' closing submissions, par 111, refer to "CCB" 15-30, 37-44, 65, 66-72. None of these documents were tendered.

[286] The single page document relied upon was a confirmation of appointment by Bourke Resources Ltd, whereby Bakers Investments was appointed to provide assistance in negotiating access to a gold processing plant, presenting an initial public offering to brokers and assisting with the planning of a prospectus and other materials for the initial public offering. In short, it did not concern raising millions of dollars in seed capital and initial development capital.

[287] Paul could not recall the name of the person he met, nor the precise time at which the meeting occurred though he thought it was in February 2011.

[288] The Defence and Counterclaim also refers to an alleged conversation on 7 April 2011. At trial, no reliance was placed on any such conversation in contending that the Fingal Valley Agreement was terminated.

[289] See pars 284-287 above.

[290] See pars 110, 111, 113, 119, 138, 146, 150, 170 and 181 above as to the complaints. See also par 286 above and the reference to reinstating the Term Sheet.

[291] See par 317 above.

[292] See pars 284-287 above.

[293] The position adopted by Caason cannot be equated with circumstances where a terminating party by its conduct elects to treat the contract as discharged: see, for example, Holland v Wiltshire [1954] HCA 42; (1954) 90 CLR 409, 416.1 (Dixon CJ).

[294] Pan Foods Company Importers & Distributors Pty Ltd v Australia and New Zealand Banking Group Ltd [2000] HCA 20; (2000) 170 ALR 579, 584-585 [24]-[25] (Kirby J).

[295] Cf Coefficiency Pty Ltd v Workforce International Pty Ltd [2005] NSWCA 300, [26]-[27] (Bryson JA, with whom Beazley and Ipp JJA agreed).

[296] See, for example, the email from Flory sent to Bakers Investments on 8 April 2011. Although that email records serious concerns about the non-performance of Bakers Investments to that time, there is a clear intention expressed by Flory to avoid legal issues and to try and proceed with the project as planned. See also fn 288 above.

[297] See pars 305-307 above.

[298] This is to be contrasted with the position adopted by Astill: see par 477 below.

[299] See par 317 above.

[300] See par 287 above.

[301] This conclusion is corroborated by the fact that the Defence and Counterclaim seeks a declaration that the Fingal Valley Agreement was terminated on or about 17 April 2011. This date cannot be supported on any evidence before the court.

[302] See, for example, Liristis Holdings Pty Ltd v Wallville Pty Ltd [2001] NSWSC 428, [29]-[30] (Barrett J); DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423, 434.4 (Stephen, Mason and Jacobs JJ); Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420, 431.4, 432.4 (Dixon CJ and Fullagar J); Creamoata Ltd v The Rice Equalization Association Ltd [1953] HCA 40; (1953) 89 CLR 286, 326.7 (Kitto J).

[303] Summers v The Commonwealth [1918] HCA 33; (1918) 25 CLR 144, 151.9-152.3 (Isaacs J); affirmed on appeal [1919] HCA 20; (1919) 26 CLR 180 (Barton, Powers and Rich JJ). See also Cedar Meats (Aust) Pty Ltd v Five Star Lamb Pty Ltd [2014] VSCA 32, [19] (Nettle and Beach JJA and McMillan AJA).

[304] Creamoata Ltd v The Rice Equalization Association Ltd [1953] HCA 40; (1953) 89 CLR 286, 326.6 (Kitto J).

[305] Cedar Meats (Aust) Pty Ltd v Five Star Lamb Pty Ltd [2014] VSCA 32, [19], citing Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420, 432.7 (Dixon CJ and Fullagar J).

[306] See par 317 above.

[307] See par 319 above.

[308] See the reference to "NDA" in the email: par 319 above.

[309] See par 480 above.

[310] See pars 329-331 above.

[311] Cf, for example, Newbon v City Mutual Life Assurance Society Ltd [1935] HCA 33; (1935) 52 CLR 723, 733.5 (Rich, Dixon and Evatt JJ); Summers v The Commonwealth [1918] HCA 33; (1918) 25 CLR 144, 153.2 (Isaacs J).

[312] See par 333 above.

[313] As already noted, the position adopted by Caason was somewhat inconsistent from 19 April 2011 to 28 April 2011.

[314] Given that Baker was not called by any party, it is difficult to properly characterise his conduct on 20 April 2011, the day on which he contacted Mallesons (see par 288 above) or thereafter. It is quite possible Bakers Investments abandoned the Fingal Valley Agreement before 5 May 2011. However, in light of the unequivocal conduct of Bakers Investments on 5 May 2011, it is unnecessary to consider this issue further.

[315] See par 319 above. See also fn 314 above.

[316] See pars 417-418 above.

[317] See par 426 above.

[318] See par 287 above.

[319] See pars 297 and 464-469 above.

[320] See pars 464-469 above.

[321] As opposed to having the relevant shares in Newco issued in the name of Bakers Investments.

[322] Foran v Wight [1989] HCA 51; (1989) 168 CLR 385, 394.8, 397.2, 408.4-409.2 (Mason CJ), 417.4-422.4 (Brennan J), 433.4, 437.3 (Deane J), 450.9-452.10 (Dawson J), 456.2 (Gaudron J).

[323] See pars 272-276 and 427-428 above.

[324] The fee of $2 million is based on the agreement reached on 17 March 2011, by which Bakers Investments retained the services of an Indian company: see par 594(2) below.

[325] Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332, 355.6 (Mason CJ, Dawson, Toohey and Gaudron JJ), 367.5 (Brennan J).

[327] [1994] HCA 4; (1994) 179 CLR 332. See esp at 349.2-350.3 (Mason CJ, Dawson, Toohey and Gaudron JJ), 362.7-364.2 (Brennan J).

[328] See pars 460-469 above and 594 below.

[329] See par 504 above.

[330] Of course, if a different approach had been adopted, further evidence may have been led to support it.

[331] Cf Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332, 350.4 (Mason CJ, Dawson, Toohey and Gaudron JJ), 368.7 (Brennan J).

[332] What evidence is available, namely the "offers" from BW Equities and Zheng He Global (see pars 184-196 above) show the full 20 percent shareholding in Newco on offer would have gone to the investors.

[333] See clause 5 of the Term Sheet: par 105 above. See also par 594(2) below.

[334] Rundle identified the mid point of the total equity value of Newco as $207.2 million, with the lowest estimated value being $155.4 million and the highest estimated value being $259 million.

[335] Rundle identified the mid point of the value of a 66.66 percent shareholding in Newco as $138.1 million, with the lowest estimated value being $103.6 million and the highest estimated value being $172.6 million.

[336] Rundle identified the mid point of the value of a 46.66 percent shareholding in Newco as $96.6 million, with the lowest estimated value being $72.5 million and the highest estimated value being $120.8 million.

[337] Representing an anticipated fee to be earned by Bakers Investments if the transaction went ahead: see pars 502(4) above and 594(2) below.

[338] See pars 501-502 above.

[339] See, for example, Burger King Corporation v Hungry Jack's Pty Ltd [2001] NSWCA 187, [590]-[595] (Sheller, Beazley and Stein JJA) and the cases there cited.

[340] Sensis Pty Ltd v McMaster-Fay [2005] NSWCA 163, [57] (Tobias and McColl JJA and McClellan AJA).

[341] See pars 506-507 above.

[343] See par 38 above.

[344] Housing Commission of NSW v Falconer [1981] 1 NSWLR 547, 558B (Hope JA), and the cases there cited.

[346] Cf Dasreef Pty Ltd v Hawchar [2011] HCA 21; (2011) 243 CLR 588, 604 [37] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ) (referring with approval to Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705, 743-744 [85] (Heydon JA)), 632 [110] (Heydon J).

[347] Based on Kompos' evidence, 21.66 percent of Newco in April 2011 would have had a value of $5.58 million. Although I have refrained from closely analysing Kompos' report in this judgment in light of the conclusions I have reached, such a value (and the approach in arriving at that value) is far more likely to have reflected the position as at April 2011.

[348] Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101, 113 [10] (Gleeson CJ, McHugh, Gummow and Callinan JJ).

[349] See, for example, Crabb v Arun District Council [1976] Ch 197, 198G (Scarman LJ).

[350] See pars 448, 457, 464-469, 495-500, 505-507 and 529 above.

[351] This amount was not in controversy. Accordingly, it is unnecessary to itemise its components.

[352] See par 8 above.

[353] See par 350 above.

[354] At pars 284-287 and 472-475 above.

[355] See par 306 above.

[356] See pars 317-319 above.

[357] See pars 543-567 below.

[358] See pars 104, 396, 405 and 427-428 above.

[359] Bakers Investments defined the Fingal Valley Agreement in the Statement of Claim as "the joint venture agreement", but there was not a specific allegation of a joint venture relationship.

[360] United Dominions Corporation Ltd v Brian Pty Ltd [1985] HCA 49; (1985) 157 CLR 1, 10.5 (Mason, Brennan and Deane JJ).

[361] See also John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1, 21 [44] (French CJ, Gummow, Hayne, Heydon and Kiefel JJ); GM & AM Pearce & Co Pty Ltd v Australian Tallow Producers [2005] VSCA 113, [34] (Warren CJ, with whom Chernov JA and Dodds-Streeton AJA agreed).

[362] Cf Daoud v Boutros [2013] NSWSC 687, [88] (Sackar J); Bova v Avati [2009] NSWSC 921, [181] (Ward J).

[363] See also par 77 above, and, to the extent it might be relevant, Lombardi's reference to an "offer to provide finance"; and adopting the position that Bakers Investments was not to be an investor: see par 51 above.

[364] See, for example, King Network Group Pty Ltd v Club of the Clubs Pty Ltd [2008] NSWCA 344; (2008) 69 ACSR 172, 179 [33] (Hodgson JA), (cf Campbell JA at 186 [69]-[73], Young CJ in Eq 221-222 [251]-[260]); Re Bagot Well Pastoral Company Pty Ltd; Shannon v Reid (1992) 9 ASCR 129, 143.7 (Cox J); affirmed on appeal (1993) 61 SASR 165, 183.2 (Debelle J, with whom King CJ and Millhouse J agreed).

[365] [1939] HCA 2; (1939) 61 CLR 457.

[367] Reference was then made to other limitations which may exist in relation to the exercise of a power of a shareholder.

[368] Cf Norwich Winterthur Insurance (Australia) Ltd v Australian Associated Motor Insurers Ltd (unreported, Supreme Court of Victoria, Brooking J, 18 July 1988) (BC8800640), 1, 113.

[369] See pars 78-80, 83, 100 and 104 (cl 3, 3rd bullet point) above. See also pars 116, 123, 127 and 130 above, where strict adherence to this term was insisted upon.

[370] See pars 57 and 383 above.

[371] See par 104 above.

[372] The time Bakers Investments had spent on the project up to 9 March 2011 was only a matter of weeks and there was no suggestion Bakers Investments had incurred any significant costs to that time. Also see par 264 above, where Baker expressly acknowledged Caason's materially different position.

[373] See pars 59 and 60 above.

[374] Cf John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1, 34-36 [85]-[92], 39 [101] (French CJ, Gummow, Hayne, Heydon and Kiefel JJ).

[375] Clause 4, see par 104 above.

[376] Cf Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41, 96.10-97.3 Mason J, dissenting).

[378] Cf John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1, 34-36 [85]-[92], 39 [101] (French CJ, Gummow, Hayne, Heydon and Kiefel JJ).

[379] Clauses 1 and 5, see pars 97 and 105 above.

[380] See par 555 above.

[381] As Bakers Investments contended: Bakers Investments' closing submissions, pars 156-157.

[382] See par 104 above.

[383] Bakers Investments' closing submissions, par 163.

[384] See par 104 above.

[385] See par 63 above.

[386] See par 104 above.

[387] See par 446 above.

[388] See pars 334-341, 447-449 and 481-490 above.

[389] See pars 495-532 above.

[390] See par 45 above.

[391] See pars 47-49 above.

[392] See pars 288-289 above.

[393] See pars 292-293 and 302 above.

[394] Of course, in light of the findings made concerning abandonment, it is highly likely that none of the alleged conduct pleaded would have consisted of conduct in contravention of the relevant statutory provisions.

[395] Competition and Consumer Act 2010 (Cth), Schedule 2.

[396] See, for example, Phoenix Court Pty Ltd v Melbourne Central Pty Ltd (1997) ATPR (Digest) 46-179, 54,431.8 (col 2)-54,432.6 (col 1) (Goldberg J).

[397] This finding is entirely consistent with the findings above in relation to the absence of a readiness, willingness and ability of Bakers Investments to perform the Fingal Valley Agreement on or after 9 March 2011: see par 363 above. Not only is the onus reversed in this regard, but also there is a period of at least a month in time separating the 2 allegations.

[398] No reliance was placed on s 769C of the Corporations Act. Accordingly, s 1041H is not considered in this part of the judgment.

[399] See pars 4 and 15-16 above.

[400] See pars 16 and 468-470 above, and 594(12) below.

[401] This correspondence included the following: court book 2/473, 2/708-712, 2/745-750, 2/798-799, 2/803, 2/852-853, 2/854, 2/880, 3/885-887, 3/980, 3/1216-1218, 3/1227, 4/1361-1362 and 4/1364.

[402] See par 594(2) below.

[403] This is not evidence upon which the court would have been satisfied that $2 million represented the likely fee that Bakers Investments would have been likely to have earned if the $25m Further Capital had been raised. This agreement produced no funds. The other party to the agreement was not called. It was not a probative basis to establish on the balance of probabilities that a fee of $2 million would have been earned.

[404] See pars 151-152, 192-196, 440 and 455 above.

[405] This was described by senior counsel for Bakers Investments as "a preliminary exchange". No evidence was given of any details being provided to this company.

[406] See, for example, Marks v GIO Australia Holdings Pty Ltd [1998] HCA 69; (1998) 196 CLR 494, 512-513 [42] (McHugh, Hayne and Callinan JJ).

[407] See pars 533-540 above.

[409] Australian Consumer Law, s 236(1)(a).

[410] Cf Wealthsure Pty Ltd v Selig [2014] FCAFC 64; (2014) 221 FCR 1, 42-44 [223]-[232] and the cases there cited (White J, with whom Mansfield and Besanko JJ relevantly agreed: at 1[1] and 6[20] respectively); Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304, 353 [146]-[147] (Gummow, Hayne, Heydon and Kiefel JJ); Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494, 504-505 [19]-[22], 514 [48] (McHugh, Hayne and Callinan JJ); BHP Billiton (Olympic Dam) Corporation Pty Ltd v Steuler Industriewerke GmbH (No 2) [2011] VSC 659, [28]-[29], [37].

[411] See pars 586-587 above.

[412] See pars 598-601 above.

[413] See, for example, pars 39, 41, 51, 176, 212, 216, 237, 259, 275 and 301 above.

[414] See pars 212 and 216 above.

[415] Cf John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1, 20 [41] (French CJ, Gummow, Hayne, Heydon and Kiefel JJ).

[416] See also par 420 above.

[418] See pars 184-195, 297, 437, 440 and 464 above.