GMA Garnet Pty Ltd v Barton International Inc

INDEX Introduction.......................................................................................................... [1] THE ISSUES................................................................................................................... [40] principal agreement......................................................................................... [41] Garnet Supply agreement.............................................................................. [59] outline of the parties' cases........................................................................ [73] the court's approach to its construction task.............................. [89] surrounding circumstances, purposes and objects of transaction............................................................................................................ [102] the negotiation of the principal agreement and gsa................. [138] summary - key points of negotiations................................................... [225] the parties' common understanding or concurrence concerning intentional blending and marketing....................... [226] barton's practices and plans regarding Intentional Blending.................................................................................................................... [290] The Branding issue.............................................................................................. [366] First strand of the construction argument: does cl 2.5 only apply to packaging?.. [367] Second strand of the construction argument: does cl 2.5 apply to an internal Barton transaction?................................................................................................... [415] Third strand of the construction argument: does the phrase "which is 100% Product" qualify the branding obligation?.............................................................. [467] Conclusion on the construction issue...................................................................... [492] The question of breach of cl 2.5 by inadequate branding........................................ [493] the marketing issue........................................................................................... [502] The constructional issue............................................................................................ [502] Misleading or deceptive representation..................................................................... [561] Estoppel....................................................................................................................... [581] conclusion and orders................................................................................... [582]

WESTERN AUSTRALIA DISTRICT REGISTRY WAD 79 of 2007

Introduction 1 Garnet is a mineral. Most garnet mined in the world is alluvial. Some other garnet is known as "hard rock" garnet. Alluvial garnet is most commonly used as both an industrial abrasive in the preparation of surfaces and as an abrasive in water jet cutting. It is also used in other applications including anti‑slip coatings, denim blasting, water purification, glass preparation and electronic component surfacing. Hard rock garnet is generally more angular and sharper than alluvial garnet and is sold for different applications at significantly higher prices. 2 Garnet International Resources Pty Ltd (GIRL), the second applicant in these proceedings, owns an alluvial garnet mine at Port Gregory, near Geraldton, Western Australia (the mine), which is operated by GMA Garnet Pty Ltd (GMA Garnet), the first applicant, of which GIRL is the parent corporation. 3 GMA Garnet and Indian producers of alluvial garnet are the largest producers of garnet in the world. 4 In early 2005, and at material times, Barton Mines Corporation was a corporation incorporated in the State of Pennsylvania, United States of America (USA), which traded, as it still trades today, under the name, The Barton Group. 5 Barton Mines Company LLC (BMC) is and was at material times a corporation incorporated in the USA and a wholly owned subsidiary of Barton Mines Corporation. 6 Barton International Inc (Barton International), the respondent in these proceedings, is and was at material times a corporation incorporated in the USA and registered in Australia as a foreign registered company and a wholly owned subsidiary of Barton Mines Corporation. 7 Barton International (Australia) Pty Ltd (BIA) is and was at material times a company incorporated in Australia and a wholly owned subsidiary of Barton International. 8 Barton Mines Corporation is a family owned company. In 1878 it commenced the business of mining, processing, selling and distributing garnet for industrial abrasive uses. From 1988, several wholly owned subsidiaries of Barton Mines Corporation (including Barton International and BMC) were established to conduct the various divisions of its business. In particular: · Since 1988, BMC has owned and operated a hard rock mining and milling operation in the State of New York, USA. · From 24 February 1999 to 26 March 2002, Barton Joint Venture Corporation, another company incorporated in the USA, and Barton International (then known as B‑L (Australia) Inc) were shareholders in GMA Garnet. · From 26 March 2002 to 31 March 2005, Barton International held 50% of the issued shares in GMA Garnet, following a restructure of those corporations. · From its incorporation in April 2002 until 31 March 2005, BIA purchased garnet from GMA Garnet. This garnet was sold to customers in the eastern states of Australia, New Zealand, North East Asia, South Africa, South America and to BMC in North America. The sale of garnet by BIA to BMC was on a consignment basis. Much of the garnet purchased by BIA from GMA Garnet was in loose bulk form though other garnet was supplied in a packaged form. · Since its incorporation in 1998, BMC has also operated in the USA a warehouse and wholesale distribution and sale network for garnet. 9 For some time, BMC has purchased garnet from various sources, including from GMA Garnet and from a supplier in India, V.V. Mineral of India (VVM). At material times, BMC maintained stocks of garnet at 19 warehouses in the USA. Four of those warehouses were known as mega-centres and operated as import centres. They are located at Reserve (Louisiana), Chesapeake (Virginia), San Diego (California) and Olympia (Washington State). 10 In early 2002, GIRL acquired the other 50% shareholding in GMA Garnet. From that time, together with Barton International, it effectively owned and controlled GMA Garnet. 11 During 2003 and into 2004, significant differences arose between Barton International and GIRL and their respective representatives in relation to the operation of the mine at Port Gregory. Attempts were made, unsuccessfully, to resolve those differences. 12 In the course of doing so, GIRL approached the Australian Competition and Consumer Commission (ACCC) and explained what it regarded as a contravention of the Trade Practices Act 1974 (Cth). The alleged contraventions related to an agreement known as the Perth Agreement, under which garnet was to be sold to the partners in the garnet mine at cost and the partners would sell that garnet for profit into defined territories. 13 On 23 August 2004, GIRL commenced proceedings in the Federal Court of Australia (the dissolution proceedings) against Barton International and GMA Garnet in which it claimed, amongst other things, an order dissolving the partnership in respect of the garnet mine and the winding up of GMA Garnet. GIRL contended, amongst other things, that there were irreconcilable differences between it and Barton International in relation to the partnership and GMA Garnet, and the management of both were deadlocked. 14 Those proceedings were eventually set down for trial in February 2005. 15 In the result, the dissolution proceedings were compromised and settled without trial. 16 Negotiations that led to the compromise and settlement had a false start in October 2004, and were then recommenced in December 2004. They were ultimately successfully concluded by the execution of a deed called the Principal Agreement, on 21 February 2005. 17 The Principal Agreement, which was the subject of a number of conditions that were subsequently satisfied, provided for the resolution of differences between the parties by GIRL purchasing all of the interests of Barton International in the mine and its shareholding in GMA Garnet. The consideration for these transactions included a substantial cash payment and the execution of a long term supply agreement in respect of garnet from Port Gregory, as well as other aspects provided for in the deed. The Principal Agreement provided that the parties to these proceedings should execute a Garnet Supply Agreement in the form annexed to the Principal Agreement. 18 On 31 March 2005, GMA Garnet, Barton International and GIRL executed the Garnet Supply Agreement (GSA). The GSA provided for the supply by GMA Garnet (as Seller) to Barton International (as Buyer) of garnet from the mine and included responsibilities, which are now disputed, with respect to the branding (or labelling) and the distribution and sale of GMA garnet by Barton International. 19 Thereafter, Barton International had no interest in the mine or the garnet it produced, save that, under the GSA, Barton International had contractual rights to a supply of GMA garnet for a period of just over 12 years. The GSA provided for Barton International to order a certain quantity per year of GMA garnet in either packaged or loose bulk form, on the terms set out in the GSA. The GSA continues to govern the garnet supply arrangements between the parties. 20 Clause 4.2 of the GSA and cl 2.3 of the Principal Agreement record the acknowledgment of the parties to each Agreement that GMA Garnet "wishes to promote distribution" of GMA garnet within the USA and Canada (North America). Clause 4.2 then goes on to note that, "Accordingly" (in the circumstances provided for by cl 4.2), Barton International is entitled to a "concessional rate" in respect of certain quantities of Product which it "ships and discharges" into North America. 21 By cl 2.5 of the GSA, the Buyer undertakes certain branding obligations with respect to the distribution and sale of the GMA garnet, "which is 100% Product", purchased under the GSA. On the face of it, generally speaking the Buyer must ensure such garnet is labelled with the GMA Garnet name and logo (with no less prominence than that which applied during the 2004 calendar year); although it can also be co‑branded with "the Buyer's own branding". The Buyer must also ensure the GMA Garnet name and logo is not used in relation to product which is not 100% Product. 22 Following execution of the GSA, GMA Garnet filled orders lodged by Barton International under the GSA and shipped GMA garnet to Barton International in the United States, both in packaged form and (mostly) in loose bulk shipments, where it was discharged and taken delivery of by BMC. The first bulk shipments of loose bulk garnet were made in about August 2005. 23 In the second half of 2005, Mr Aaron Williams who had been involved in the negotiation of the GSA on behalf of GIRL, and by then had become the Group General Manager within the GMA group of companies including GMA Garnet, made some reconnaissance trips to the USA. 24 In August 2005, Mr Williams visited a garnet distributor's warehouse in Houston, Texas where he inspected several pallets of paper bags which were labelled as "GMA Garnet 80 mesh". On inspecting the contents of several of these bags he discovered the garnet in them was of a different appearance to GMA garnet, which is of a distinctively pink colour. He then noticed that the words "80 mesh" had been struck out by ballpoint pen and the words "16A" substituted. However, the GMA logo had not been altered or obscured in any way. 25 In the warehouse Mr Williams also discovered another bag not labelled as GMA Garnet, but located amongst a collection of GMA Garnet bags. This led him to conclude that, while unlabelled, the bag in fact contained GMA garnet. 26 As a result of his warehouse inspection, Mr Williams was concerned that garnet supplied by GMA Garnet to Barton International pursuant to the GSA was being distributed or sold contrary to the branding obligations set out in cl 2.5 of the GSA. 27 As a result, on Friday 9 September 2005, Mr Williams, who was also GMA Garnet's authorised officer for the purposes of the GSA, emailed Mr Clifford (Cliff) Summers, who was Barton International's authorised officer for the purposes of the GSA, setting out what he had seen in the Houston warehouse, expressing his concerns and requesting an investigation and explanation from Barton International. 28 Mr Summers replied by email dated 15 September 2005 - an email which had been settled by Barton International's lawyers - assuring Mr Williams of Barton International's adherence to its obligations and taking offence at the tone of the allegations made. 29 Mr Williams was quite unsatisfied with this response. By further email dated Friday, 16 September 2005 he required that Barton International conduct an urgent investigation into both incidents, withdraw the offending bags and advise GMA Garnet of the measures that Barton International would put in place to avoid a repeat of such an occurrence. 30 Eventually, following a reminder, Mr Williams received a letter informing him that, due to Hurricane Katrina (in late August 2005), Barton had lost all records at their New Orleans warehouse and were unable to determine what had happened. Mr Williams then let the matter drop. 31 A little later, in about February 2006, Mr Williams relocated to the United States when GMA Garnet (USA) Corp (GMA USA), a United States corporation of which GIRL is the parent, commenced operations in the United States. By then he had also become President and a director of GMA USA. Later in the year he began visiting customers, or potential customers, on behalf of GMA USA. On two occasions in October/November 2006, he noticed bulk bags containing what appeared to be GMA garnet, on which the GMA Garnet logo was, he considered, smaller than the logo used prior to the GSA and less prominently displayed, contrary he believed to the requirements of cl 2.5 of the GSA. These bags were also prominently marked "Barton". 32 During September 2006, at a water jet job shop in Florida, Mr Williams inspected bags of garnet that were not branded with GMA Garnet's name, but which appeared predominantly to contain the distinctive pink colour of GMA garnet. Mr Williams took a sample of the garnet and arranged for it to be analysed. (He was later advised that it contained a mixture of GMA garnet and Indian garnet.) 33 By written notice dated 3 November 2006, and sent by fax to Barton International, Torsten M H Ketelsen, director of GMA Garnet, purported to give notice of breach of cl 2.5 "for the purposes of clause 8.1(c) of the Supply Agreement", which was limited to the branding issue relating to bags, in the following terms: Under clause 2.5 of the Supply Agreement, Barton must brand 100% GMA Garnet product with the GMA Garnet name and logo which is entitled to co-exist with Barton's own branding provided that the prominence of the GMA Garnet name and logo is not less than that which has applied during the 2004 calendar year. In breach of its obligations under clause 2.5, Barton is selling 100% GMA Garnet product in packaging where the prominence of the GMA Garnet name and logo co-existing with Barton's own branding is less than that which applied during the 2004 calendar year. Take notice that GMA Garnet requires Barton to remedy the above breach within a period of 30 days from the date of the giving of this notice. This notice constitutes a notice in writing given for the purposes of clause 8.1 (c) of the Supply Agreement. 34 By fax dated 10 November 2006, Mr Cliff Summers from Barton International responded to the notice expressing concern and seeking more information. Mr Ketelsen provided further information to Mr Summers by letter dated 15 December 2006. 35 By letter dated 19 December 2006, sent by fax, Richard G Jenks, Jr, from Barton International responded substantively to the GMA Garnet notice advising that while Barton International did not agree that it had breached the GSA, Barton International had taken action and "implemented systems, designed to address any future concerns, and to give assurance to all parties of continuing contractual compliance". 36 Despite Barton International's assurance, it seems GMA Garnet remained concerned about the extent to which Barton International was meeting its obligations under the GSA. In early March 2007, Mr Aaron Williams received information from a Barton customer to the effect that "Barton were now mixing GMA 30/60 mesh with Indian 30/40 mesh to extend the availability of blast grade material". 37 Soon after, on 23 April 2007, the applicants commenced these proceedings seeking clarification of their rights under the GSA, confirmation of their right to terminate the GSA for breach of material terms, and damages. 38 On 20 December 2007, during the pre-trial stage of these proceedings, GMA Garnet having regard to the re-amended defence filed by Barton International, considered that Barton International effectively admitted it had sold to BMC all bulk shipments of GMA garnet supplied under the GSA without branding it as GMA garnet. It therefore issued the first breach notice. GMA Garnet issued a second breach notice on 13 May 2008 and a third breach notice on 30 July 2008 in respect of subsequent bulk shipments it considered had been on-sold by Barton International to BMC without meeting the branding obligations in cl 2.5 of the GSA. 39 The issues of branding, or labelling, particularly in respect of loose bulk supplies and promotion of distribution, or marketing, of GMA garnet under the GSA and the Principal Agreement remain unresolved and in issue between the parties.

THE ISSUES 40 Having regard to the matters outlined above, the two principal issues arise for determination in these proceedings: 1. Whether Barton International was obliged to brand discounted garnet supplied to it by GMA Garnet under the GSA, all of which it has onsold to BMC (primarily in loose bulk form), identifying it as GMA garnet. 2. Whether Barton International was obliged to do anything, or refrain from doing anything to assist in the promotion of the discounted garnet supplied to it under the GSA.

principal agreement 41 By the Principal Agreement executed on 21 February 2005 (in which Barton International is referred to most often as "Barton"), in particular the Introduction part of it, the parties note that at material times before the execution of the deed: · Through the chain of documents and events summarised in the Schedule to the Principal Agreement, Barton International and GIRL were equal partners in a partnership that owned a garnet mine near Geraldton, Western Australia (the Mine or GMA Garnet mine), processing plant, associated plant and equipment and infrastructure and the minerals produced therefrom, and each held 50% of the issued shares in GMA Garnet which then had receivers and managers appointed. · GMA Garnet provided mining and processing services to the partnership and was the partnership's exclusive distributor of garnet produced from the GMA Garnet mine. · Disputes had arisen between the parties to the deed which, among other things, resulted in proceedings being instituted in the Federal Court of Australia in action number W202/2004 (the dissolution proceedings). · The receivers and managers appointed to GMA Garnet were also appointed to the partnership in the dissolution proceedings. 42 The Principal Agreement then recites that, without admission of liability, the parties have agreed to settle all disputes and claims between them, including those arising from the proceedings on the terms set out. 43 The disputes the parties agreed to settle by the Principal Agreement are defined by the term "Disputes" in cl 1.1 as follows: Disputes means all and any matters of dispute between the Parties and/or GMA Garnet (and including their respective Personnel and Related Entities) arising in any way in connection with:

• the Partnership or the operations and activities of the Partnership; and/or
• GMA Garnet or the operations and activities of GMA Garnet; and/or
• the documents and events summarised in the Schedule; and/or
• otherwise howsoever; up to and as at Completion (other than arising out of a breach of the Settlement Documents), whether or not known to or suspected by either Party or GMA Garnet, and including all matters the subject of the Proceedings and any claim by either Party or GMA Garnet against the Partnership or by the Partnership against either Party or GMA Garnet. (emphasis in original) 44 The term "Completion" is defined by the cl 1.1 of the Principal Agreement to mean: the settlement of the sale and purchase of the Partnership Interest and the Sale Shares in accordance with accordance with this Deed, the Partnership, Interest Sale Deed and the GMA Garnet Share Sale Agreement. 45 The expression Partnership Interest is defined by cl 1.1 as follows: Partnership Interest means all of Barton's rights, title and interest in the Partnership. (emphasis in original) 46 The Partnership is defined by cl 1.1 as follows: Partnership means the partnership between Barton and GIRL referred to in the Introduction and includes all assets, rights, liabilities and obligations of the Partnership. (emphasis in original) 47 The expression Partnership Interest Sale Deed is defined by cl 1.1 to mean: the Deed to be entered into between Barton and GIRL in the form set out in Annexure C. 48 The expression Sale Shares is defined by cl 1.1 to mean: all the shares held by Barton in GMA Garnet being 1,593,784 fully paid ordinary shares. 49 The expression GMA Garnet Share Sale Agreement is defined by cl 1.1 to mean: the Agreement to be entered into between Barton International and GIRL in the form set out in Annexure B. 50 The Principal Agreement was subject to a number of conditions as set out in cl 3.1 as follows, all of which were satisfied at material times: This Deed (other than clauses 1, 6.1, 6.2, 7, 8, 9, 10, 11, 12 and 13), the Partnership Interest Sale Deed, the GMA Garnet Share Sale Agreement and the Product Supply Agreement are subject to and conditional upon: (a)the Parties: (i) receiving official communication or advice from the ACCC that it raises no objection, or that the ACCC proposes to take no action in respect of, any proposed transaction or dealing the subject of the Settlement Documents; or (ii) receiving ACCC approval of the proposed acquisitions and dealings between the Parties in the terms of the Settlement Documents (or such of them over which the ACCC claims relevant jurisdiction authority), such approval being either unconditional or subject to conditions acceptable to the Parties; (b) the granting of all necessary approvals and consents required at law to the execution of the Settlement Documents, and Completion of the GMA Garnet Share Sale Agreement and Partnership Share Sale Agreement, including written approval by the Minister or an officer of the Department of Industry and Resources responsible for the administration of the Mining Act 1978 (WA) to the transfer of the mining tenements specified in the Partnership Interest Sale Deed; (c) the retirement or removal of the Receivers as receivers and managers of GMA Garnet at Completion; and (d) the execution by GMA Garnet of a Deed of Covenant and the Supply Agreement at Completion. 51 The "Supply Agreement" is defined by cl 1.1 to mean: the Agreement to be entered into between Barton, GMA Garnet and GIRL at Completion in the form set out in Annexure D. 52 In the interpretation cl 1.2(c), the parties agree that in the interpretation of the GSA, unless there is something in the subject or context inconsistent therewith: Headings used in this Agreement are for convenience only and shall not be used in the interpretation or construction of this Agreement. 53 The Schedule to the Principal Agreement, earlier referred to, provides as follows: 1. The Partnership is governed by an agreement dated 4 June 1998 between Barton Joint Venture Corporation (BJVC), B-L (Australia), Inc (BLAI), Garnet Millers Australia Pty Ltd (GMAPL) and Garnet Producers NL ( GPNL). (Partnership Agreement). 2. The relationship of the shareholders of GMA Garnet is governed by its constitution and by an Agreement dated 24 February 1999 between BJVC, BLAI, GPNL and GMA Garnet (Shareholders Agreement). 3. By an Agreement dated 25 June 1998 between GMAPL, GPNL, BJVC and BLAI, GMAPL transferred its interest in the Partnership to GPNL. 4. By a Sale Deed dated 6 December 2001 between GMAPL, GPNL, GIRL and Messrs Ketelsen, Jebsen, Putzier and Jessen, GIRL acquired a 50% interest in the Partnership and 50% of the issued shares in GMA Garnet (2001 Sale Deed). 5. GIRL became bound by the terms of the Partnership Agreement by a Partnership Assumption Deed dated 26 March 2002 between GIRL, GMAPL, GPNL, BJVC and BLAI. By a Shareholders Assumption Deed also dated 26 March 2002 and made between the same parties, GIRL became bound by the Shareholders Agreement. 6. Pursuant to an Exclusive Distributorship Agreement dated 24 February 1999 between BJVC, BLAI, GPNL and GMA Garnet, GMA Garnet was appointed the exclusive distributor of garnet for the Partnership. 7. Pursuant to a Mining and Processing Services Agreement dated 24 February 1999 between BJVC, BLAI, GPNL and GMA Garnet, GMA Garnet was appointed to provide various mining and processing services to the Partnership. 8. On 30 June 2002, as evidenced by Certificate of Ownership and Merger of that date, pursuant to Section 253 of the General Corporation Law of the State of Delaware, USA, BJVC merged with BLAI and BLAI assumed its present name of Barton (International) Inc. (emphasis in original) 54 By cl 2.1, headed "Settlement Documents", the parties to the Principal Agreement undertook to one another, subject to the Conditions, the following: (a) to execute and deliver to each other and to GMA Garnet on Completion each of the Settlement Documents to which they are a party; (b) to duly and punctually observe and perform all obligations on their part respectively contained or implied in each of the Settlement Documents to which they are a party; (c) to do all matters and things reasonably within its power or control to cause GMA Garnet at Completion to execute and deliver to the other the Deed of Covenant and Supply Agreement. 55 Clause 2.2, headed "Interdependence", provides: This Deed is interdependent with the Partnership Interest Sale Deed, the GMA Garnet Share Sale Agreement and the Supply Agreement. 56 Clause 2.3, headed "Generally", provides: The Parties acknowledge: (a) that it is the composite transaction evidenced by the Settlement Documents that reflects the consideration under the Settlement Documents; and (b) that as part thereof, GMA Garnet wishes to promote distribution of Product (as defined in the Supply Agreement) within the United States of America and Canada and, for that purpose, GMA Garnet is allowing Barton a concessional rate for product as provided for in cl 4.2 of the Supply Agreement. 57 The action required at "Completion" by the parties to the Principal Agreement - and which was performed at material times so that the Principal Agreement became unconditional - was set out in cl 4 and provides, in substance, as follows: a) the parties shall execute and effect the various deliveries and undertakings to each other required at Completion pursuant to the Partnership Interest Sale Deed and the GMA Garnet Share Sale Agreement; b) Barton shall endorse each of the Promissory Notes in favour of GIRL and deliver them to GIRL; c) GIRL shall deliver to Barton a bank cheque for the sum of $18 million; d) each party shall execute and do all matters and things reasonably within its power or control to procure GMA Garnet to execute the Supply Agreement and the Deed of Covenant; e) Barton must pay GMA Garnet in accordance with GMA Garnet's normal trading terms, for all GMA Garnet product taken by Barton and not paid for by Completion; and f) the Parties shall execute and file with the Court and shall do all matters and things within their power or control to procure GMA Garnet to execute and file with the Court, the Consent Orders B. 58 The Consent Orders B are defined by cl 1.1 to mean: the orders in the form attached as Annexure A2.

Garnet Supply agreement 59 The GSA as executed by the parties to these proceedings on 31 March 2005, was in the same terms as the form attached to the Principal Agreement, as the Principal Agreement required it to be. (Barton International is most often simply referred to in the GSA as the "Buyer" or "Barton") 60 By cl 2.1, (in short) the Seller, GMA Garnet, agrees to sell and deliver to the Buyer (which, on the face of the GSA, is Barton), against orders for Product that may be placed by the Buyer with the Seller in accordance with the GSA, the following quantities: (i) up to 50,000 x tonnes of Product during the initial Contract Year (where "A" = the number of months, (to one decimal place) from the Commencement Date to the expiry of the first Contract Year); (ii) up to 50,000 tonnes of Product during each other Contract Year during the Term on the terms and conditions of this Agreement. 61 "Product" is defined by cl 1.1 to mean 30/60 Mesh or 80 Mesh as the context requires. The expression 30/60 Mesh is further defined to mean 30/60 Mesh garnet or 60 Mesh garnet produced from the Mine. 80 Mesh is defined to mean 80 Mesh garnet or 100/120 Mesh garnet produced from the Mine. (Mesh is a reference to the grade the garnet ore is crushed to following mining, 30 Mesh being the finest grade). 62 Clause 2.1(b) of the GSA expressly provides that the quantity of the Product to be sold and delivered in each "Contract Year" shall not comprise more than 50% of 30/60 Mesh unless the Seller agrees otherwise. 63 Clause 2.2 sets out a non accumulation limitation so that if the Buyer does not purchase and take delivery of its full entitlement of Product in any Contract Year the quantity not taken shall not be carried forward. 64 The "Term" of the GSA Agreement is defined by cl 1.1 to mean the period commencing on the "Commencement Date", namely 31 March 2005 when the GSA was executed, and ending on 30 June 2017, or such earlier date if the Agreement is terminated pursuant to cl 8. In other words the GSA has an expected period of operation of just over 12 years. 65 By cl 2.4, headed "No Restriction", the parties provide that: This Agreement does not restrict the Buyer from acquiring any Product from sources other than the Seller nor does it restrict the Seller from selling any Product to parties other than the Buyer. 66 Clause 2.5 of the GSA -which, together with cl 4.2 of the GSA, and cl 2.3 of the Principal Agreement, is at the heart of the dispute between the parties the subject of these proceedings - is headed "GMA Branding" and provides as follows: All garnet purchased under this Agreement and distributed or sold by the Buyer which is 100% Product must be branded by the Buyer with the GMA Garnet name and logo (which may co-exist with the Buyer's own branding provided that the prominence of the GMA Garnet name and logo is not less than that which has applied during the 2004 calendar year) and the Seller grants to the Buyer a non exclusive licence to use the GMA Garnet name and logo on Product for this purpose. The Buyer must not use the GMA Garnet name or logo on, or in connection with, the distribution or sale of any garnet which is not 100% Product or hold out in any way that garnet which is not 100% Product, is Product. 67 Clause 2.6 provides, in effect, that nothing in the GSA is intended to limit the quantity of Product, or prescribe the terms of supply of Product to which the Seller and the Buyer may agree from time to time in addition to the 50,000 tonnes of Product in effect guaranteed by cl 2.1. 68 Clause 4 deals with "Price". Clause 4.1 sets out a price which applies generally and in effect has regard to the type, quantity and price that GMA Garnet usually offers to its "prime customers (other than related entities)". However, this price does not apply where clauses 4.2 and 4.3 operate. 69 Clause 4.2 of the GSA in some respects reflects the terms of 2.3(b) of the Principal Agreement referred to above. Clause 4.2 is headed "North American Market" and provides as follows: The Parties acknowledge that the Seller wishes to promote distribution of Product within the United States of America and Canada and, for that purpose, the Seller shall allow to the Buyer a concessional rate for Product as provided in this Agreement. Accordingly, if the territory into which the Buyer ships and discharges Product under clause 2.1 after taking delivery of the same is the United States of America or Canada, the price for Product to be sold pursuant to orders to be placed by the Buyer pursuant to clause 2.1 shall be: (a) during the first Contract Year: (i) for the first 35,000 x tonnes of Product: the prices specified in Annexure A; and (ii) for the next 15,000 x tonnes of Product taken: the prices specified in Annexure A plus 15%: (Base Prices); where: A= the number of months (to one decimal place) from the Commencement Date to the expiry of the first Contract Year. (b) during each subsequent Contract Year: (i) for the first 35,000 tonnes of Product: the Base Price in clause 4.2(a)(i) adjusted pursuant to clause 4.3; (ii) for the next 15,000 tonnes of Product: the Base Price in clause 4.2(a)(ii) adjusted pursuant to clause 4.3. 70 What is evident from a careful reading of cl 4 of the GSA, as the parties to these proceedings agree, is that in respect of the product sold and delivered to the Buyer under cl 2.1 - up to 50,000 tonnes each Contract Year - the Buyer is entitled to "a concessional rate" under cl 4.2, but only "if the territory into which the Buyer ships and discharges Product under cl 2.1 after taking delivery of the same is the USA or Canada". 71 In this context, the expressions "sell and deliver" in cl 2.1(a) and "ships and discharges" in cl 4.2 are terms of art. The point is that the concessional rate referred to in cl 4.2 of the GSA is not available to Barton International unless the Product it has purchased and takes delivery of under cl 2.1, is shipped and discharged into the territory of the USA or Canada. 72 How the GSA came to be in these terms and what the parties commonly understood at material times at and before the Principal Agreement and GSA were executed, is part of the contractual narrative that the parties contend, variously, helps to define the rights and obligations of the parties under the GSA as properly interpreted or construed and, so far as the applicants are concerned, helps to inform the representations they say were made to them.

outline of the parties' cases 73 GMA Garnet and GIRL say that, under the GSA, Barton International is not only obliged to ensure that all GMA garnet supplied under the GSA is branded according to the formula set out in cl 2.5 of the GSA, but also - by virtue of a term they say should be included in the GSA upon its rectification to honour the common understanding of the parties - that Barton International is obliged to ensure that BMC complies with the same branding obligation. 74 Further, the applicants say that Barton International is obliged by the GSA and Principal Agreement to encourage the marketing of GMA garnet in North America both by itself and through BMC, and must ensure that neither does anything that would diminish its distribution and reputation in North America. The applicants claim that representations conveyed by the GSA when read with representations made by Barton International during the negotiations in early 2005, are to similar effect. 75 The applicants say that Barton International has failed to satisfy these obligations or representations. So far as branding is concerned, the applicants say the acts of sale or distribution by Barton International to its related entity, BMC, of loose bulk 100% GMA garnet acquired from GMA Garnet under the GSA, without first branding the garnet, constitute breaches of cl 2.5 of the GSA. They also point to acts of sale to BMC of packaged GMA garnet in the USA, which they say breached the name and logo branding requirement of cl 2.5. 76 Additionally, the applicants say the subsequent blending by BMC of the loose bulk 100% GMA garnet with garnet acquired from elsewhere, which occurred with the knowledge of Barton International, is in breach of both the branding and marketing obligations imposed on Barton International by the GSA. This is because 100% GMA garnet was not branded when it went to consumers as GMA garnet, and because its distribution as GMA garnet was diminished. 77 Indeed, the applicants say that the evidence shows that Barton International always intended to blend GMA garnet from the time the agreements were negotiated and so ignore the branding obligations, and for similar reasons never had any intention to meet the distribution or marketing obligations imposed on it, or to satisfy the representations it made in that regard. 78 In consequence of the pleaded breaches of the contract and representations, the applicants claim they are entitled to a declaration that they may terminate the GSA for the identified contractual breaches, as well as to damages for breach of contract and by reason of loss and damage flowing from the dishonoured representations. 79 As to damages, the applicants contend the proper measure is equal to the whole of the amount of any loose bulk garnet sold by Barton International to BMC which BMC could potentially blend, an amount of $9,353,123. Alternatively, the applicants say the measure is the amount of the discount received by Barton International for the quantity of loose bulk garnet which BMC has in fact blended, an amount of $4,869,433. 80 Barton International denies the applicants' claims; although it agrees some rectification of the GSA is required, but only in acknowledgement of the agreed role of BMC in sales and distribution of 100% GMA garnet to ultimate consumers. Otherwise, Barton International says no obligations arise under the Principal Agreement or the GSA in respect of the marketing of GMA garnet, and so far as cl 2.5 of the GSA is concerned, Barton International and BMC are only obliged to brand GMA garnet which they sell or distribute to end consumers (customers) in a packaged form. 81 In effect, Barton International contends that nothing in the Principal Agreement or GSA constricts their right to market GMA garnet supplied under the GSA to customers in any form that they choose, for example, following blending - whether in packaging or in loose bulk. 82 Barton International says that nothing in the agreements prevents them from mixing or blending GMA garnet supplied under the GSA with garnet they source from other suppliers. 83 Barton International accepts, however, that if GMA garnet supplied under the GSA is distributed or sold to customers in a packaged, unblended form (ie "100% Product"), then it must be branded as provided for by cl 2.5 of the GSA. 84 As to the applicants' claim that Barton International always intended to blend GMA garnet supplied under the GSA to avoid its branding and marketing obligation, Barton International says this raises a false issue in the proceedings and, in any event, is false as a matter of fact. 85 Barton International contends that its position is vindicated on the proper interpretation or construction of the Principal Agreement and GSA, taking into account certain facts commonly known to the parties at the time of execution of the Principal Agreement and GSA. In the alternative, Barton International claims that the position it contends for is made apparent if cl 2.5 of the GSA is rectified in the manner it proposes. 86 Barton International deny any representations were made that go beyond the terms of the Agreements. 87 As to the applicants' claim for damages, the respondent contends that because the concessional price has nothing to do with a breach of cl 2.5 dealing with branding, assuming the applicants make out their case, damages should not be assessed by reference to a difference between the concessional price and the prime customer price, or the benefit of the discount obtained. The respondent says no facts are pleaded which are capable of supplying a causal connection between the absence of branding bulk product sold to BMC and the giving of concessional pricing to Barton International. Accordingly, no damage has been proved as regards the first breach allegation. As regards the other breach allegations, although these seek to relate the entitlement to concessional prices to an absence of blending and distribution in North America, both ignore the fact that concessional prices were readily made available by GIRL as part of the overall consideration for the settlement effected by the Principal Agreement. As a result the benefits obtained by GIRL cannot be ignored in any calculation of damages. The respondent says no attempt has been made to prove such losses or to quantify the value of these benefits for the purpose of assessing damages. 88 Finally, it should be noted that each of the applicants and Barton International rejects the rectification of the GSA proposed by the other.

the court's approach to its construction task 89 In this case, each of the parties puts forward sophisticated and commercially justifiable sets of reasons for interpreting or construing the relevant clauses of the GSA in a way that favours their interpretation or construction. This only serves to emphasise there are no obviously correct literal meanings of the contentious clauses under consideration. The Court is now called upon to adjudicate and state, in effect, which meanings it prefers. 90 In Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1981)149 CLR 337at 352, Mason J said, in oft repeated words, that: Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties' presumed intention in this setting. 91 A little later in Codelfa 149 CLR 337 at 352-253, Mason J added that there was perhaps one situation in which evidence of the actual intention should be allowed to prevail over their presumed intention, namely: If it transpires that the parties have refused to include in the contract a provision which would give effect to the presumed intention of persons in their position it may be proper to receive evidence of that refusal. 92 The exceptional position mentioned in the last quoted portion of Mason J's dicta in Codelfa at 149 CLR 337, which is relied on by the respondent here, has been applied in a number of cases, some examples of which are: Esso Australia Limited v Australian Petroleum Agents' & Distributor's Association [1999] 3 VR 642, 647 - 8 [19] - [20]; Wachmer v Jaksic [2007] WASC 313 [168] - [187]; Sunset Vineyard Management Pty Ltd v Southcorp Wines Pty Ltd [2008] VSCA 96 [48] - [49]; Horton Geoscience Consultants Pty Ltd v Energy Minerals Pty Ltd [2005] QCA 169. 93 In relation to the "objective framework of facts within which the contract came into existence", as Mason J put it in Codelfa 149 CLR 337, it is commonly understood that the proper construction of a contract should reflect what reasonable people in the position of the contracting parties would have understood by the relevant clauses, considering not only their text, but also the surrounding the circumstances and the purpose and object of the entire transaction and its elements: Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451, 461 - 462 [22]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, 179 [40]; International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151, [8], [53]. 94 In International Air Transport Association 234 CLR 151 at [53], in the joint judgment of Gleeson CJ, Gummow, Kirby, Hayne, Heydon, Crennan and Kiefel JJ, their Honours confirmed that the task of construction is to be approached in the manner described as follows by Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ in Toll 219 CLR 165 at [40]: This Court, in Pacific Carriers Ltd v BNP Paribas (footnote omitted), has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction (footnote omitted). 95 It may be said that it is now generally accepted in Australia, particularly having regard to this recent dicta of the High Court of Australia which makes no mention of an ambiguity factor as a precondition to considering other factors, that there is no need for ambiguity to be demonstrated in a contractual provision before regard can be had to the surrounding circumstances known to the parties and the purpose and object of the transaction. See also Seddon NC and Ellinghaus MP, Cheshire and Fifoot's Law of Contract (9th Australian ed, Lexis Nexis Butterworths, 2008) at [10.12], and authorities there referred to. 96 In other words, as stated in Toll, the construction task to be undertaken by the Court requires consideration of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction. In a commercial setting, the business objectives should be accounted for and, as other authorities have suggested, the relevant provisions given a "business commonsense" or a "business‑like" construction. See, for example, Investors Compensation Scheme v West Bromich Building Society [1988] 1 WLR 896, Lord Hoffman at 912 - 913. 97 Nonetheless, this process of construction is not intended to be a "free‑wheeling" exercise. In the Court of Appeal of New South Wales in Ryledar Pty Ltd t/as Volume Plus and Anor v Euphoric Pty Ltd (2007) 69 NSWLR 603 at 626 [108], the Court endorsed the observations of the trial judge (Palmer J) whose decision was under consideration, to the following effect: [31] However, that does not mean that when the Court begins the task of construction it puts the words of the document aside and endeavours first to ascertain the commonly known factual context and purpose of the transaction, often only by resolving a strenuous contest between the parties. The Court does not, once it has found the commonly known factual context and purpose, then look at the words of the contract and, if they do not readily accommodate the context and purpose so found, force them to do so by a process of interpretation. [32] When the Court is construing a commercial contract, it begins with the words of the document: there it often finds expressed the factual context known to both parties and the common purpose and object of the transaction. But the Court is alive to the possibility that what seems clear by reference only to the words on the printed page may not be so clear when one takes into account as well what was known to both parties but does not appear in the document. When that is taken into account, the words in the contract may legitimately have one or more of a number of possible meanings. It is then the Court's task to identify which of the possible meanings represents the parties' contractual intention. [33] However, when a party to a contract argues that the known context and common purpose of the transaction gives the words of the contract a meaning which, by no stretch of language or syntax they will bear then, in truth, one has a rectification suit, not a construction suit. 98 While the objective determination of what a particular contract means may require the adoption of a "business commonsense" or "business‑like" approach, this does not necessarily mean those expressions are themselves unproblematic. As Gleeson CJ, Gummow and Hayne JJ observed in Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 at [43] what "business commonsense" is may itself be a topic upon which minds may differ and in respect of which an imputed consensus is impossible. 99 Writing extra‑judicially, Chief Justice Spigelman has noted that, while the "business commonsense" constraint on contractual interpretation is acceptable, "The only difficulty is that, at least when the matter comes to the level of litigation, each party remains convinced that a 'businesslike' interpretation or 'business commonsense' happens to coincide with its own commercial interests. This is not always easy to resolve": Spigelman JJ, "From text to context: Contemporary contractual interpretation" (2007) 81 ALJ 322 at 330. 100 To similar effect, one commentator, writing with commendable academic freedom has recently commented (footnotes omitted): Issues of interpretation occupy a good deal of the time of busy commercial practitioners and judges. Such issues 'are the very lifeblood of commercial law'. Nevertheless, on the basis of the countless decided cases that I read, they also tend to be the most intractable. The outcome of interpretation litigation is notoriously difficult to predict. This is partly because questions of interpretation are often seen as 'matters of impression' or intuition, and inevitably the way in which judges mentally process language and apply it to the facts will vary according to their background and experience. Even so, the division of opinion that one finds in the cases is remarkable. Time and again judges will disagree on such elementary questions as whether particular words have a plain meaning and what is the 'commonsense' or 'commercially realistic' interpretation. : McLauchlan D, "Contract Interpretation: What Is It About?" (2009) 31 Syd LR 5. 101 With that guidance and those admonitions in mind I turn to the tasks at hand.

surrounding circumstances, purposes and objects of transaction 102 As suggested above, the Principal Agreement and the GSA were products of the settlement of what plainly was an acrimonious dispute between Barton International and GIRL in relation to the operation of the garnet mine at Port Gregory. Of that there is no doubt on the evidence and the Court so finds. 103 At the time the dispute broke out, GIRL and Barton International as partners owned the mine and were equal shareholders in GMA Garnet, which company conducted, and still conducts, garnet mining at the mine and garnet distribution operations. 104 In the dissolution proceedings in the Federal Court of Australia - which were due to go to trial in February 2005 - GIRL wanted the partnership dissolved and GMA Garnet wound up because of the breakdown of the relationship between the parties. 105 The breakdown of the relationship between the Barton International and related companies and GIRL was no doubt contributed to or exacerbated by GIRL's conduct in complaining to the ACCC about the Perth Agreement, by which Barton International and GMA Garnet had an arrangement concerning the marketing of GMA garnet in Australia (and elsewhere), as a result of which the ACCC commenced an investigation into the circumstances of the Perth Agreement. 106 In general terms, in settling the litigation, the parties agreed that Barton International would sell all its various interests to GIRL for a consideration which comprised cash and a long term supply contract enabling Barton International to buy from GMA Garnet 35,000 tonnes of garnet per annum at prices which effectively represented cost of production and a further 15,000 tonnes per annum at those prices plus 15%. 107 The matter of the Perth Agreement investigation was later resolved by consent order of The Federal Court of Australia on the application of the ACCC in September 2006, by which Barton Mines Corporation and Barton International were declared to have engaged in conduct contrary to the Trade Practices Act 1974 and pecuniary penalties were imposed: see Australian Competition and Consumer Commission v Barton Mines Corporation & Ors [2006] FCA 1264. 108 In this overall context, the GSA was a supply agreement made in circumstances to be contrasted with those where the seller is more or less free, having regard to the market conditions, to impose such terms as it desires on the sale of its product. Rather, it represents part of a total consideration provided to the former joint owner of the mine and mining distribution operations for selling its interests to the other joint owner and otherwise resolving their differences. This much is made clear by cl 2.3(a) of the Principal Agreement. 109 Having regard to the ACCC investigation, competition law issues also loomed large for the parties when the Agreements were struck. One essential term of the Principal Agreement insisted on by GIRL from the outset of negotiations was that the Agreement had to pass ACCC scrutiny. The parties were very aware, and took advice during the negotiations of the Principal Agreement and the GSA to ensure there would be no settlement under which: (a) The market for distribution and sale of garnet was "carved up" by the parties (for example, by way of a provision which could preclude Barton International from selling in Australia), which would contravene s 45(2) and s 4D of the Trade Practices Act 1974; (b) GMA Garnet's monopoly position in Australia was used to curtail competition in Australia, which might infringe s 46 of the Trade Practices Act 1974; nor (c) Barton International was offered a discount for garnet on terms that prevented it from distributing the garnet in a particular place, if the purpose or effect of the arrangement was to lessen the competition substantially in Australia, which might contravene s 47(2)(c) and s 42(f)(ii), s 47(10) of the Trade Practices Act 1974. For example, an agreement which positively required discounted product only to be sold in North America, which would have the effect of preventing Barton International from selling product in Australia in competition with GIRL/GMA Garnet, might well have offended s 47 of the Trade Practices Act 1974, given the selling position in the Australian garnet market. 110 In the negotiations leading up to the execution of the GSA, as explained below in more detail, GIRL proposed that Barton International's related entity BMC should act as GMA Garnet's exclusive distributor, and failing that, for Barton International to become GMA Garnet's non‑exclusive distributor in the North American market. GIRL was obviously concerned to ensure that, with the changed arrangements, GMA garnet would still be appropriately marketed in the USA and Canadian markets. However, Barton International - or BMC - was unwilling to accept these proposals, or to undertake the achievement of key performance indicators (KPIs) and negotiated for an open supply agreement between it and GMA Garnet. 111 Ultimately, the agreement that was reached was that a concessional, or discounted rate for GMA garnet would apply to garnet which Barton International "ships and discharges" into North America, as provided for by cl 4.2 of the GSA. This produces a commercial disincentive for Barton International - because of the double freight charges that would be involved - to consider reshipping GMA garnet out of North America once it had been discharged there. But the GSA does not go so far as to impose an express obligation on Barton International to distribute or sell such GMA garnet only in North America. It is not so limited by the GSA. 112 However, cl 4.2 of the GSA, in the first sentence, states that the "purpose" for the concessional rate in respect of garnet shipped and discharged into North America is the wish of GMA Garnet, acknowledged by the parties, "to promote distribution of Product" in North America. 113 It is also important to note, at this point, that in the negotiations leading up to the GSA, GIRL specifically proposed that all GMA garnet purchased by Barton International should be labelled with the GMA Garnet name and logo. Clause 2.5 is the final outcome of the negotiations in relation to this proposal. How cl 2.5 came to be in this form is discussed in detail below. 114 Accordingly, on the one hand, at material times following the execution of the GSA, the applicants appear to have held the belief that, under the GSA, Barton International had assumed the obligation to brand, as GMA garnet, all GMA garnet supplied under the GSA and to promote, and not to diminish, distribution of discounted Product in North America. As a consequence they later formed the view, when they discovered loose bulk GMA garnet was being blended by BMC with other non‑GMA garnet, to the knowledge of Barton International, that such conduct contravened the branding and marketing obligations imposed on Barton International. 115 What, if anything, the applicants knew of the practices of Barton International or Barton International interests in relation to the blending of GMA garnet with other garnet at times leading up to the conclusion of the GSA, or of Barton International's future plans for blending in that regard, is the subject of dispute between the parties and is the subject of findings below. 116 On the other hand, it appears that Barton International and related entities believed, that under the GSA, there was no impediment to them mixing or blending GMA garnet with garnet sourced from elsewhere, if they so chose - something they say was brought to the applicants' attention during the negotiations leading up to the conclusion of the agreements - and that the obligation to brand garnet in accordance with cl 2.5 of the GSA only arose when garnet, that was in fact 100% GMA garnet, was sold in packaging to an end consumer. 117 Against this background, for the purposes of their claims of breach of the pleaded terms of the Principal Agreement and GSA, the applicants plead (in para 12A of the substituted further re‑amended statement of claim - hereafter simply referred to as the "statement of claim") a number of surrounding facts and circumstances they say were mutually known to the parties over the period that the GSA and the Principal Agreement were being negotiated and then concluded in late 2004 and early 2005, as set out in the following summary. Barton International accepts a number of these in its substituted defence (hereafter simply referred to as the "defence"), but adds others of its own or qualifies those pleaded by the applicants. In summary: (1) The applicants say (para 12A.1 statement of claim) that up to the time of conclusion of the GSA, 100% GMA garnet had been sold or distributed by BMC in North America to ultimate consumers of garnet either directly or through an established distribution network. Barton International agrees (para 15 (b) defence); (1A) The applicants say (para 12A.1A statement of claim) that up to that time of the conclusion of the GSA, BMC or related companies were the sole supplier of GMA garnet to ultimate consumers in North America. Barton International agree, but say that in fact only BMC was the supplier of GMA garnet (para 15 (c) defence); (1B) The applicants say (para 12A.1B statement of claim) that 100% GMA garnet sold or distributed by BMC to ultimate consumers of garnet within North America had always, or alternatively usually, been packed and labelled in a fashion that identified the garnet product as GMA garnet (and on occasions with a BMC label of equal prominence). Barton International agrees that BMC usually sold GMA garnet in bags labelled with the Barton International logo and the GMA Garnet name and logo in late 2004 and early 2005, when the GSA was being negotiated, save when BMC blended GMA garnet with garnet from BMC's North Creek Mine and when BMC sold GMA garnet in bulk (para 15(d) defence); (1C) The applicants say (para 12A.1C statement of claim) that up to the time of conclusion of the GSA, BMC did not sell and distribute GMA garnet within North America that was mixed with garnet from other sources, whether in bags or in bulk. Barton International agrees, save when BMC blended GMA garnet with garnet mined from the North Creek Mine (para 15(e) defence); (1D) The applicants say (para 12A.1D statement of claim) that there was a potential problem in that 100% GMA garnet supplied under the GSA, which had been warehoused and stockpiled in North America, might be inadvertently mingled with other stored garnet which was not 100% GMA garnet. Barton International says, (i) that at an early point in the negotiations the possibility of GMA garnet being co‑mingled with other garnet that was in BMC's warehouses in the USA, in circumstances where GIRL and GMA Garnet wanted all GMA garnet that was to be purchased under the proposed GSA to be marketed and sold in the USA, was identified as a possible issue; but (ii) that possible issue later ceased to be an issue because the parties agreed that Barton International only had to ship and discharge GMA garnet into North America to obtain the concessional price for GMA garnet (para 15(f) defence); (1E) The applicants say (para 12A.1E statement of claim) that Barton Mines Corporation, GMA Garnet and GIRL were then under investigation by the Australian Competition and Consumer Commission (ACCC) for alleged breaches of s 45(2) of the Trade Practices Act 1974 concerning arrangements by which GMA Garnet agreed to exclusively supply GMA garnet to certain territorial regions within Australia and BMC agreed to exclusively supply GMA garnet to other territorial regions in Australia (the Perth Agreement). Barton International agree and say that Barton International, Barton Mines Corporation and BIA were under investigation as a consequence of a complaint made by either, or both of, GIRL and GMA Garnet (para 15(g) defence); (1F) The applicants say (para 12A.1F statement of claim) that in the circumstances referred to in the preceding point, Barton International, Barton Mines Corporation, GMA Garnet and GIRL all wished to avoid the proposed GSA being regarded adversely by competition regulators in Australia or in North America, and for that reason Barton International and GMA Garnet commonly considered that the proposed GSA should be an open product supply agreement rather than an exclusive territorial distribution contract. Barton International say, (i) that for reasons that include those circumstances, Barton International, GMA Garnet and GIRL commonly intended that the proposed GSA should be an open supply contract rather than a contract that imposed any territorial restrictions whatsoever and should provide that Barton International would be entitled to a discount on the purchase of the GMA garnet if it shipped and discharged the garnet into North America; (ii) when the GSA was negotiated and executed it was mutually known by Barton International, GMA Garnet and GIRL that Barton International and its related entities, on the one hand, and GIRL, on the other, were adversaries, were hostile to each other and did not have any trust or confidence in each other; (iii) accordingly when the GSA was negotiated and executed, it was mutually known by the parties that Barton International wished to have an open supply agreement and did not wish to have any obligation to market or promote GMA garnet purchased under the GSA (para 15(h) defence); (2) The applicants say (para 12A.2 statement of claim) that by reason of its superior qualities over garnet sourced from other places in the world, 100% GMA garnet sold or distributed by BMC had acquired, in North America, an established product reputation as a superior garnet; and that (para 12A.3 statement of claim) the established product reputation of GMA Garnet in North America could be lost, jeopardised or diminished if: (a) GMA garnet was not in future labelled so as to be identifiable as such when sold or distributed in North America; (b) GMA garnet so labelled was to be mixed with other garnets of lesser quality and sold or distributed in North America; and (c) GMA garnet so labelled was not available for purchase in significant quantities as an identifiable product in North America. Barton International admits GMA garnet sold by BMC prior to February 2005 had been of good quality, but otherwise denies these allegations (para 15(i) and (j) defence). 118 For the purpose of pleading the proper interpretation or construction of the agreements, Barton International pleads (para 5 defence) that, when negotiating, concluding and executing the Principal Agreement and GSA, each of the parties knew a number of things at all material times before the GSA and Principal Agreement were made, as set out in the following summary. The applicants in their substituted reply (hereafter simply referred to as the "reply") accept some of these facts but deny or do not admit others. In summary: (a) Barton International says (para 5(a) defence) that garnet produced in Australia, which Barton International had acquired during Barton International's participation in a partnership with GIRL and which were shipped to North America had been on‑sold to BMC, a related company of Barton International and BIA. The applicants do not admit that they knew that garnet produced in Australia, which BIA had acquired during Barton International's participation in a partnership with GIRL and which was shipped to Canada and the USA, had been on‑sold to BMC, but otherwise admit the facts alleged (para 1(a) reply); (b) Barton International says (para 5(b) defence) that Barton International, BIA and BMC were members of a group of companies. The applicants admit this fact (para 1(b) reply); (c) Barton International says (para 5(c) defence) that within that group of companies BMC: (i) used warehouses in the United States of America; (ii) sold garnet to third-party customers in Canada, the United States of America and elsewhere under its own name or co-branded, including that it sold 100% GMA garnet in bags with branding that prominently contained the logo "Barton" (and usually the words "Barton Mines Company LLC" along with BMC's address) as well as the GMA Garnet name and logo. The applicants admit these facts, save to say that: (1) the applicants knew, as was the case, that before the GSA was made BMC sold or distributed under its own name into Canada, the USA or elsewhere, 100% GMA garnet in bags - which were co‑branded with the GMA Garnet name and logo; (2) the applicants knew, as was the case, that before the GSA was made, 100% GMA garnet sold and distributed by BMC into Canada, the USA and elsewhere, was sold and distributed in bags with co‑branding that included the GMA garnet name and logo, and in bags that had been bagged and co‑branded (with branding that included the GMA garnet name and logo) in the USA and Canada by BMC or the Barton group, from the 100% GMA garnet acquired by BIA in bulk during and under the partnership relationship between GIRL and Barton International; (3) the applicants say that before the GSA was completed the applicants thought that BMC did not sell and distribute GMA garnet that was mixed with garnet from other sources, in bags or in bulk (para 1(c) reply). (d) Barton International says (para 5(d) defence) that Barton International did not itself carry on business as a seller or distributor of garnet other than to BMC. The applicants do not admit this fact and deny that GMA Garnet knew the matters pleaded (para 1(d)) reply; (e) Barton International says (para 5(e) defence) that Barton International did not intend to sell GMA garnet within USA and Canada, other than by selling GMA garnet to BMC. The applicants accept that Barton International now admits that it did not intend to distribute or sell GMA garnet within the USA or Canada, other than by selling GMA garnet to BMC, but deny that GMA Garnet and GIRL knew that (para 1(e) reply); (f) Barton International says (para 5(f) defence) that GMA garnet was purchased by BIA in bags or in bulk and sold to BMC. The applicants say that whilst they assumed that some GMA garnet purchased by BIA in bags or in bulk may have been on‑sold to BMC, they deny that the applicants knew that to be so, or that it was invariably the case (para 1(f) reply); (g) Barton International says (para 5(g) defence) that when GMA garnet was purchased by BIA in bags, the bags were usually already branded by GMA Garnet prominently with the logo "Barton" (and usually the words "Barton Mines Company, LLC" along with the address of BMC) as well as the GMA Garnet name and logo. The applicants repeat what they said in subpara (2) and subpara (3) of para 1(c) of the reply above, and otherwise admit they knew, as was the fact, the matters pleaded by Barton International in subpara 5(g) and subpara 5(h) of the defence (para 1(g) reply); (h) Barton International says (para 5(h) defence) that when BMC on‑sold the GMA garnet to a third-party customer in bags without being mixed with other garnet, the bags were branded prominently with the logo "Barton" (and usually the words "Barton Mines Company, LLC" along with the address of BMC), as well as the GMA Garnet name and logo. The applicants agree (para (g) reply); (i) Barton International says (para 5(i)) that when BMC on‑sold the GMA garnet to a third-party customer in bulk, there was no branding of the GMA garnet. The applicants deny it to be the case that Barton International on‑sold 100% GMA garnet to third-party customers in bulk without co‑branding of the GMA garnet, but say that, if it be the case, the applicants never knew of such matters (para 1(h) reply); (j) Barton International says (para 5(j) defence) that Barton International intended that GMA garnet purchased from GMA Garnet under the GSA would be shipped and discharged into North America and on sold to BMC, but Barton International did not otherwise intend to promote the distribution of GMA garnet within North America. Barton International pleads that the knowledge of GMA Garnet and GIRL in this respect is to be inferred from the following: · at all material times before the GSA was made GMA Garnet sold bagged garnet to BIA including with branding that prominently contained the logo "Barton" (and usually the words "Barton Mines Company LLC" along with the address of BMC) on the basis that BMC was the company which sold garnet in Canada, the USA and elsewhere; · the document entitled "Without Prejudice Discussion Paper" which was tabled by Steven Cole at a meeting with David Williams on 10 December 2004 and in letters and other documents passing between David Williams and Steven Cole between 10 January 2005 and 19 February 2005 (as set out in the particulars to para 5 of the defence); · the Principal Agreement and the GSA executed by the parties; · BMC had long been, at all material times, the member of the Barton group of companies which sold garnet under its own name or co‑branded in Canada or the USA as was published by BMC on its website and in the garnet market. The applicants: · accept that Barton International now admits it intended to ship and discharge into the USA or Canada, and to on‑sell to BMC, the GMA garnet purchased from GMA Garnet under the GSA, and that Barton International did not otherwise intend to promote the distribution of GMA Garnet within those countries, but deny that GMA Garnet and GIRL knew that (para 1(i) reply); · add (in para 1(j) reply) that pursuant to the Perth Agreement of 13 March 2002 made between Barton Mines Corporation trading as The Barton Group and Barton Joint Venture Corporation and B‑L (Australia) Inc (which two entities later merged to become Barton International) and GIRL, Barton International was obliged to purchase garnet from GMA Garnet, but that another Barton group entity, BIA, in fact purchased all GMA garnet from GMA Garnet prior to the date of the GSA; · admit (in para 2A reply) they knew at all material times that BMC owned and operated a hard rock garnet mine (North Creek Mine) at North River, New York, USA. However, the applicants (para 2B reply) do not admit that BMC blended garnet with garnet from the North Creek Mine and deny in any event that they had any knowledge of such blending occurring either before or at the time when the Principal Agreement or the GSA were executed; · say (para 2(d) reply) that the dominant reasons why Barton International rejected a proposal that BMC be appointed as an exclusive distributor of GMA garnet and why the applicants did not thereafter persist with a proposal to appoint BMC as an exclusive distributor of GMA garnet purchased from GMA Garnet, were: (1) the concern of each of these parties that any agreement or arrangement which appointed BMC as such an exclusive distributor would at the time be viewed as anticompetitive, contrary to Australian law; and (2) the concern of Barton International and BMC, which the applicants acknowledged, that an agreement or arrangement which appointed BMC as an exclusive distributor would impose objective performance goals; · the applicants say (in para 2(e) reply) the dominant reasons why Barton International and the applicants did not attempt to further negotiate the appointment of BMC as an exclusive distributor was not because these parties commonly intended that members of the Barton group should not be subjected to any obligation to develop the market for GMA garnet in North America. The applicants say (in para 2(f) reply) that notwithstanding that the parties did not attempt to further negotiate the appointment of BMC as an exclusive distributor, they commonly intended that Barton International would develop the market for GMA garnet in North America and that the significant price discount to be provided by GMA Garnet was granted so as to provide an incentive to Barton International as a member of the Barton group to do so. 119 It goes without saying that the representatives of Barton International at material times had a complete understanding of the structure of the various entities owned or controlled by Barton Mines Corporation - The Barton Group - as outlined above. Mr Steven Cole, the lawyer who acted as the agent for Barton International in the negotiations leading up to the conclusion of the Principal Agreement and GSA, had acted for some years as solicitor for Barton International and related companies and appears to have become well acquainted with the corporate structure and familiar, at least to an extent, with the nature and organisation of the business. In evidence at the trial, Mr Charles (Chuck) Bracken Jnr, Chairman of the Board of Directors of Barton Mines Corporation, Barton International, BIA and BMC, and other executives from Barton entities outlined in some detail the corporate structure. 120 However, the applicants deny that they were fully conversant with, and had a strict legal and operational understanding of, that corporate structure. Mr David Williams, who was the solicitor appointed by the applicants to negotiate the compromise and settlement with Mr Cole, had not had a long involvement, it appears, with the operations of the applicants and certainly not with the operations of Barton International or related companies. In his evidence he said he did not recall having any real understanding of the entities within The Barton Group. As far as he was concerned he was acting for GIRL and Mr Cole was acting for "the other side". He accepted that from the correspondence that passed between him and Mr Cole, and from information he received from his instructors, particularly Mr Ketelsen, he knew there was more than "one Barton" corporate entity. But he was not told by Mr Cole and was not instructed about what role each Barton entity played within the Barton group of companies. Nonetheless, he acknowledged that in the letter to Mr Cole he wrote dated 10 January 2005, he expressly referred to Barton Mines Company LLC (BMC). Nonetheless, he does not recall being informed by Mr Cole or ever being instructed about the role BMC performed, or how it differed from the role performed by Barton International. 121 Mr Ketelsen, a director of GIRL, had had a much longer involvement in the Port Gregory mine as a representative of the interests of GIRL. He plainly was aware of the existence of BMC. He was also aware of BIA, as it purchased Barton International's share of the GMA garnet produced from the mine. As he explained in his testimony at trial, he knew this because from time to time he saw invoices issued by GMA Garnet to BIA for Barton International's proportion of the GMA garnet produced at the mine. As far as Mr Ketelsen was concerned, no Barton entity appeared to distinguish its own separate business from the core Barton business. Instead every Barton entity appeared to be pursuing the one core Barton business seamlessly. Mr Ketelsen says that, accordingly, he knew that Barton International, BIA and BMC were part of the Barton group. 122 Mr Ketelsen assumed during the negotiations that in order for BMC to distribute GMA garnet in the USA, warehouses were used; although he did not profess any knowledge as to which entity in the Barton group was responsible for those warehouses. 123 Mr Ketelsen also knew that BMC sold garnet to third party customers in the USA. He assumed that all GMA garnet sold by BMC was sold in bags and was branded with the "Barton" logo as well as the "GMA Garnet" name and logo. 124 Mr Ketelsen also said in evidence that he assumed at the time of the negotiations that GMA garnet sold by the Barton group other than in the USA was sold by either Barton International or BIA. He assumed this simply on the basis that the names of the companies suggested this to be the case. He also thought that Barton International and/or BIA sold GMA garnet in Australia and in Asia. 125 Mr Ketelsen also says he knew at material times that GMA garnet was purchased by BIA from GMA Garnet and sent in bags or in bulk shipments to the USA, but says he did not know what internal transactions were then undertaken within The Barton Group to enable BMC to distribute that garnet in the USA. 126 Mr Aaron Williams also gave evidence on the extent of his knowledge of the Barton company arrangements. He is qualified as an accountant and was engaged as General Manager of GMA Garnet in June 2002. In early 2004 he resigned from that position. Since September 2004, he has been the Company Secretary of GIRL. Since October 2005, he has been a director of GMA Garnet (amongst other GMA Garnet positions he now holds). 127 Mr Aaron Williams says that in late 2004 and early 2005, he knew that Barton International was a member of a group of companies known as The Barton Group, sometimes referred to by Jim Nash, a Barton representative, and Mr Bracken, as "TBG" - that is "The Barton Group", but he had very little knowledge of the actual corporate structure of The Barton Group or the roles played by each entity within it. 128 He had assumed, although he did not know, that TBG somehow referenced the entire Barton group of companies including BIA, Barton International and BMC. He made this assumption because in his experience one would normally refer to a group of companies that share common ownership as a group and it was his understanding that the entities were all 100% owned by the Barton Mines Corporation parent. 129 Mr Williams was plainly aware of Barton International, BIA and of the existence of BMC, because that was the name which he knew GMA Garnet affixed on some of the bags of GMA garnet sold to BIA. He assumed BMC was a Barton group entity which sold GMA garnet in the USA. 130 He also understood The Barton Group to be the largest distributor of garnet in the USA and Canada, as he was told this by Mr Robert Brand of BIA, Mr Bracken and/or Mr Jim Nash on various occasions after he joined GMA Garnet as General Manager. 131 Nonetheless, Mr Aaron Williams says he did not know that: · Barton International was not an entity which distributed and sold GMA garnet in the USA or elsewhere in the world; · BIA had onsold before the GSA and, after the GSA, Barton International was to onsell or had onsold the GMA garnet purchased under the GSA, to BMC; or · BMC sold some of the GMA garnet purchased from BIA to BMC's customers in bulk form. 132 On the pleadings, as supplemented by the evidence, there is much that the parties agree they commonly knew or understood. Accordingly, having regard to the whole of the evidence before the Court and the agreement of the parties on the pleadings - but presently leaving to one side what the applicants did not know of certain matters relating to the structure and operation of the entities related to Barton International - the Court finds the following facts were commonly known by the parties in the period of the negotiations leading up to the conclusion of the Principal Agreement and GSA: · that 100% GMA garnet in packaged form had been sold or distributed by BMC in North America to ultimate consumers of garnet either directly or through established distribution networks; · that BMC was the sole supplier of GMA garnet to ultimate consumers in North America; · that 100% GMA garnet sold or distributed by BMC to ultimate consumers of garnet within North America had usually been packed and labelled in a fashion that identified garnet product as GMA garnet (and on occasions with a BMC label of equal prominence); · that Barton Mines Corporation, Barton International's predecessors (Barton Joint Venture Corporation & B-L (Australia) Inc), GMA Garnet and GIRL were then under investigation by the ACCC for alleged breaches of s 45 (2) of the Trade Practices Act 1974 concerning arrangements by which GMA Garnet agreed to exclusively supply GMA garnet to certain territorial regions within Australia and Barton International's predecessors agreed to exclusively supply GMA garnet to other territorial regions in Australia (the Perth Agreement), such investigation having been commenced following the complaint of GIRL; · that Barton International and GMA Garnet commonly understood that there were advantages in the proposed GSA being an open product supply agreement for the reason that it would limit the risk of the GSA being regarded adversely by competition regulators in Australia (and possibly in North America); · that GMA garnet supplied up to the execution of the GSA was regarded as being of high quality and had an established reputation in the garnet market; · that GMA garnet which Barton International had acquired during its participation in the partnership with GIRL had been shipped to Canada and the USA; · that Barton International, BIA and BMC were members of a group of companies (the Barton group of companies); · that within the Barton group of companies, BMC or, in the case of the applicants, most probably BMC but possibly other related entities, used warehouses in the USA and sold garnet to third-party customers in Canada and USA and elsewhere under its own name or co‑branded, including that it sold 100% GMA garnet in bags with branding that probably contained the logo "Barton" (and usually the words "Barton Mines Company LLC" along with BMC's address) as well as the GMA Garnet name and logo; · that BMC or, in the case of the applicants, most probably BMC, sold or distributed GMA garnet in bags with co‑branding that included the GMA name and logo, such bags having been bagged and co‑branded in the USA and Canada by BMC from the GMA garnet acquired by BIA in bulk during the partnership relationship between GIRL and Barton International; · that when GMA garnet was purchased by BIA in bags, the bags were usually already branded by GMA Garnet prominently with the logo "Barton" (and usually the words "Barton Mines Company LLC" along with the address of BMC) as well as the GMA Garnet name and logo; · that when BMC on sold GMA garnet to a third-party customer in bags without being mixed with other garnet, the bags were branded prominently with the "Barton" logo (and usually the words "Barton Mines Company LLC" along the address of BMC) as well as the GMA Garnet name and logo. (However, this is not to be taken as an implicit finding that the applicants knew BMC intentionally mixed GMA garnet with other garnet at material times before the Principal Agreement and GSA were concluded. This issue is dealt with further below). 133 Having regard to the evidence of Mr David Williams, Mr Ketelsen and Mr Aaron Williams, I find that the applicants did not have a detailed legal or accounting understanding of all the entities that may have been within the Barton group, or the roles they played. However, Mr Ketelsen and Aaron Williams were in a position to make certain assumptions about that, and did so. Mr Ketelsen, for example, instructed Mr David Williams to propose that BMC undertake distribution responsibilities for the applicants in early negotiations in January 2005. 134 Accordingly, I find, on the knowledge they possessed, the applicants understood that, before the GSA, Barton International's share of garnet from the mine at Port Gregory found its way, through BIA, to BMC in the United States, where it was usually sold or distributed in packages containing both the GMA name and logo and BMC's branding, by BMC in the North American region. 135 However, I am not prepared to find that the applicants knew that Barton International did not itself carry on business as a seller or distributor of garnet other than to BMC. The facts as outlined in evidence rather leave it open to suggestion, from the applicants' point of view, that outside North America, entities such as Barton International and BIA possibly engaged in trading, for example, in the Australian and Asian regions. 136 I find that the applicants did not know, before the GSA, that BMC or any related entity sold or distributed loose bulk GMA garnet to any of its customers. Rather, it believed all GMA garnet was sold or distributed to BMC customers in packaging. (I also find in passing, that BMC did in fact distribute or sell loose bulk garnet to some of its customers in the period before the GSA.) 137 As to what the parties commonly knew about the extent of Barton group entities' activities in North America, including as to blending of GMA garnet with other garnet, is dealt with further below. But, on the face of it, the applicants knew nothing of this practice prior to the negotiations in early 2005, to which I now turn.

the negotiation of the principal agreement and gsa 138 On 10 December 2004, Mr Steven Cole, partner at Allens Arthur Robinson and solicitor for Barton International and related companies met with Mr David Williams, partner at Williams and Hughes, and solicitor for GIRL to discuss a paper entitled "Without Prejudice Discussion Paper Prospectively Leading To Terms Of Settlement And Compromise W202 of 2004 Barton - GIRL - GMA" (Discussion Paper). (The Discussion Paper and other negotiating documents referred to below were all issued on a "without prejudice" or "without prejudice subject to contract" basis.) 139 Mr Cole and Mr David Williams respectively were appointed by the Barton International interests and GIRL to represent them not only as lawyers but also as agents with a view to settling the disputes between the parties and compromising the dissolution proceedings in the Federal Court of Australia. The reason for this, which apparently emanated from a suggestion made by Mr Cole to his client, was that the respective parties otherwise would have difficulty in communicating civilly. Mr Cole and Mr Williams did not suffer from that difficulty. 140 In the course of the trial of these proceedings, objection was taken on the part of the respondent to the applicants adducing evidence of what had passed between the applicants' representative, Mr Torsten Ketelsen and Mr Aaron Williams outside the formal negotiations between Mr Cole and Mr David Williams - which the applicants sought to adduce on the basis that it was reliable evidence that would assist the Court in determining what in fact passed between and was concluded by Mr Cole and Mr David Williams. 141 In circumstances in which Mr Cole and Mr David Williams were not merely engaged by the respective clients as lawyers to draft the terms of an agreed settlement and compromise, but were charged with the primary responsibility of acting as agents for their clients for the purpose of negotiating a settlement as well as drafting the terms of the compromise, the Court upheld the respondent's objections to this evidence and ruled in the following terms. 142 In Codelfa 149 CLR 337 at 352 - 353, (as noted earlier) Mason J said, of the relevance of the intentions of a party to the meaning to be given to a term of a written contract, the following: Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties' presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract. There may perhaps be one situation in which evidence of the actual intention of the parties should be allowed to prevail over their presumed intention. If it transpires that the parties have refused to include in the contract a provision which would give effect to the presumed intention of persons in their position it may be proper to receive evidence of that refusal. After all, the court is interpreting the contract which the parties have made and in that exercise the court takes into account what reasonable men in that situation would have intended to convey by the words chosen. But is it right to carry that exercise to the point of placing on the words of the contract a meaning which the parties have united in rejecting? It is possible that evidence of mutual intention, if amounting to concurrence, is receivable so as to negative an inference sought to be drawn from surrounding circumstances. The importance of this evolution of the law as it affects the construction of contracts is that it centres upon the presumed, rather than the actual, intention of the parties. 143 Senior counsel for the applicants drew attention to the decision of the majority in Horton Geoscience Consultants Pty Ltd v Energy Minerals Pty Ltd QCA 169, cited above, where Williams JA (with whom Holmes JA agreed) at [20] took into account the evidence of the two persons who negotiated a contract for the contending parties, to determine the mutual intention of the parties which negatived an inference to be drawn from the agreement. At [20], Williams JA stated: The evidence I have referred to essentially amounts to an agreement between the parties limiting the operation of the second paragraph of the agreement to year 1 and in consequence it is evidence of mutual intention negativing an inference sought to be drawn from the words of the agreement to the effect that the obligation imposed by the words used in the second paragraph extended throughout the whole term of the EPM. 144 Senior counsel for the applicants contended that in assessing the objective intention of the parties as to what, if any, mutual intention the parties had in relation to certain branding requirements in cl 2.5 of the GSA, it is permissible for the Court in the present circumstances to receive the internal communications of officers of the applicants that are said to have informed communications between the applicants' lawyer/negotiator, Mr David Williams, and the lawyer/negotiator for Barton International, Mr Cole. 145 In my view, mutual intention of the parties, if any, must be found in the intentions, however expressed, of the lawyer/negotiators in their communications (whether verbal or non‑verbal; as to which see discussion of what is required to prove common continuing intention for the purposes of granting rectification, which may be considered generally relevant to proving intention in this context, in Ryledar Pty Ltd v Euphoric Pty Ltd 69 NSWLR 603, Campbell JA (with whom Mason P agreed especially at [281]), not from what may or may not have lain behind the communications in the minds of the parties themselves, or more correctly their officers who did not directly participate in the negotiations. To engage in an analysis of the latter would, in my view, be to take into account the intentions, aspirations and expectations of those who instructed their lawyer/negotiator - and would simply constitute the internal communications of the applicants. 146 In other words, as Mason J said in relation to the primary rule excluding parol evidence, to do this would be time consuming and unrewarding and give too much weight to those factors at the expense of determining the consequences of the actual communications of the parties' agents appointed for the purpose of concluding the agreement. 147 That ruling had the consequential effect, as acknowledged by the counsel for the parties, of excluding a number of other paragraphs of witness statements of Mr Ketelsen and Mr Aaron Williams and other evidence that the applicants had proposed to lead. 148 Focussing then on what evidence was received of what passed between Mr Cole and Mr David Williams in the course of their negotiations on behalf of the parties, the following events are of particular relevance to what, if any, understanding or agreement the parties commonly formed concerning the issues of blending by "Barton" of GMA garnet and marketing of GMA garnet by "Barton" in North America, and/or any representations in respect thereof. 149 Mr Cole's Discussion Paper of 10 December 2004, outlined prospective litigation outcomes, and prospective settlement outcomes. In the light of these, the paper noted (para 3.1) there was only one "remaining prospectively viable settlement outcome", namely, the prospect of Barton International selling 100% of its partnership interest and GMA Garnet shareholding to GIRL. The paper further noted (para 3.2) that Barton International was "a continuing player in the global garnet abrasives business, albeit with a different business strategic approach to that of GIRL". The paper then noted (para 3.3) that nevertheless this prospective outcome need not be an anathema to Barton International per se provided that: (a) a sale price can be agreed upon; and (b) absolute security and long term availability of GMA Garnet products supplied to Barton International on acceptable terms can be assured. The paper then addressed (para 3.4) questions of price, sales terms and a long term supply contract. 150 In relation to the proposed long term supply contract, the paper specified that the contract must address Barton International's requirement for a very long term commitment, "at least commensurate with the projected life of mine", an obligatory minimum annual tonnage - in the region of 50,000 tonnes divided equally between 30/60 mesh and 80 mesh - the price per tonne of product, security of an ongoing supply with "a first ranking charge over the mine and related assets", and other miscellaneous terms. 151 Under the heading "Other Miscellaneous Terms" the paper noted as follows: · Barton is an independent agent and not a GIRL/GMA "distributor". Therefore there are no performance KPI's applicable to Barton's sale of product. · There are no market or territory allocations or restraints applicable. · Barton will be granted a non‑exclusive licence to use GMA product branding. (emphasis in original) 152 Mr David Williams in his evidence recalled little detail of what was said in meetings and telephone discussions between him and Mr Cole, and was largely dependent on the written record for any recollection of events that he had. 153 Mr Williams recalled however, that at the time of the first meeting on or about 10 December 2004 he had no involvement in the then current dissolution proceedings. His partner, Mr David Stone, was preparing those proceedings for trial on the assumption that the matter would not settle. Mr Williams' only real knowledge of the litigation was that he knew there was a trial commencing in early February 2005 and that if the settlement was to occur it needed to do so before then. 154 As explained above, Mr Williams did not recall having any real understanding of the entities within the Barton group during the negotiations. However, he acknowledged that he knew from certain correspondence there was more than one "Barton" corporate entity. However, he was not told by Mr Cole and was not instructed about what role each Barton entity played within the Barton group of companies. 155 He was also aware that Barton International was a 50% owner of GMA Garnet. He does not recall being informed by Mr Cole or ever being instructed about the role that BMC performed or how it differed from the role performed by Barton International, although he plainly was aware of the existence of BMC. 156 He was not informed by Mr Cole and was not instructed as to which Barton entity was a distributor of garnet within the Barton group of companies. 157 In particular he does not recall ever being told by Mr Cole about or instructed that Barton International did not itself carry on businesses as seller or distributor of garnet or that Barton International onsold to BMC all of the GMA garnet which it acquired. 158 Nor was he ever told by Mr Cole or instructed as to how the GMA garnet purchased under the GSA would be dealt with. 159 Mr Williams knew however, that "Barton" took its share of GMA garnet in both bags and loose bulk shipments and also knew in general terms that GMA garnet as taken was labelled with both the GMA Garnet and Barton logos, although he did not know the details of that arrangement. 160 In the course of negotiations, Mr David Williams learnt from Mr Cole's letter dated 15 February 2005 that an entity in the Barton group used warehouses in the United States. But he did not know which entity did so, nor did he know which Barton entity distributed garnet to Canada, within the USA or elsewhere, nor any of the logistics by which the garnet was labelled. 161 Mr David Williams' recollection is that in all his discussions with Mr Cole he referred to Mr Cole's clients as "Barton". 162 By letter dated 10 January 2005, Mr David Williams sent a letter by email to Mr Cole responding to the Discussion Paper, noting that the paper "has now been considered by GIRL". He noted the preferred outcome from the GIRL viewpoint of acquiring 100% of Barton International's partnership interest in the GMA Garnet shareholding. 163 He also noted that a sale of Barton International's interests not coupled with a long term supply contract was evidently not commercially attractive to Barton International. He noted Barton International's desire to have a long term supply obligation of GMA product to Barton International. 164 He further noted that: GIRL recognises that it is an important commercial objective for Barton to be able to continue to source GMA product to feed its distribution network in the USA. At present Barton is the sole supplier of GMA product in the USA. 165 Mr David Williams then set out in his letter what GIRL considered to be "the essential terms" of acquisition irrespective of whether the acquisition was coupled with a long term supply contract. The essential terms of acquisition were stated to be: 1. GIRL purchases Barton's partnership interest and Barton's GMA shares, including the Barton held promissory notes from GMA and including all unappropriated stockpiles of product, on a going concern and walk in/walk out basis. 2. No adjustments and no profits/cash distributions are to be made at completion. 3. To the extent that any third party guarantees had been given by Barton to support the partnership or GMA which are unable to be released at completion, GIRL will provide an indemnity to Barton. 4. The terms of acquisition are subject to all necessary regulatory approvals and both parties being reasonably satisfied that the transaction does not give rise to a breach of any of the provisions of Australian Trade Practices legislation or US Antitrust legislation. The parties must be satisfied that any terms do not result in an inadvertent contravention of Sections 45 and 47 TPA; obviously there must be no breach of Section 46 TPA (ie. there must be a level playing field (in terms of price and other conditions of acquisitions) for all purchasers who supply the Australian market) and the ACCC will need to be satisfied that there are no Section 50 issues. GIRL proposes to give a copy of any final settlement proposal to ACCC, and settlement will be subject to ACCC not voicing any objection or concern about the terms. 166 The letter then stated that, subject to essential term 4 above, GIRL considered the following to be the essential terms of a long term supply agreement to supply GMA product to Barton International: (a) Barton Mines Company LLC (New York) (hereafter "Barton Mines") be appointed the exclusive distributor of GMA product in the USA by GMA Garnet Pty Ltd; the terms of delivery shall be FOB Geraldton or FOB Fremantle; (b) Barton Mines be entitled annually to take a quantity of up to 35,000 tonnes of GMA product, divided equally between 30/60 mesh and 80 mesh, at a price equal to cost of production (escalating annually in line with increases in the Australia Consumer Price Index) plus government royalties, plus FOB costs Geraldton or Fremantle; (c) The entitlement to product under (b) above does not accumulate; (d) Barton Mines also be entitled annually to take additional quantities of product at the rate of up to 5,000 tonnes escalating at 10% per annum but capped at 10,000 tonnes per annum, divided equally between 30/60 mesh and 80 mesh, at a price equal to the price referred to in paragraph (b) above plus 15%, with delivery FOB Geraldton or FOB Fremantle; (e) The entitlement to product under paragraph (d) above does not accumulate; (f) The above terms are for supply of GMA product to Barton Mines' USA market; (g) In addition to (the product taken under (b) and (d)) Barton Mines may take GMA garnet, if available, at a price commensurate with the price offered by the Mine to its other distributors; (h) Barton Mines to pay for product by irrevocable & confirmed letter of credit payable at sight; (i) The term of the distribution/supply contract is to equate with the period of the projected life of mine; (j) No security will be granted by GIRL/GMA to secure the distribution/supply contract; (k) Barton Mines will not be entitled to maintain stockpile/warehousing rights at the processing plant; and (l) Barton Mines will be granted a non exclusive licence to use GMA product branding. For any market other than the USA, GMA product may be taken by any other Barton company, if available, at a price commensurate with the price offered by the mine to its other distributors and customers. Barton International was invited to propose a price at which it would be prepared to sell its GMA Garnet interests to GIRL on the above terms. 167 It is apparent from the terms of this letter from Mr David Williams to Mr Cole dated 10 January 2005, that a number of the essential terms of the GSA as ultimately executed on 31 March 2005, were expressed from the outset, although a number of others went through an evolutionary process before finding final expression in the GSA. For example, the proposal by Mr David Williams on behalf of GIRL in (a) that BMC be appointed the "exclusive distributor" of GMA product in the USA by GMA Garnet, and in (f) that the terms specified "are for supply of GMA product to Barton Mines USA market", did not survive. It should also be noted that, the proposal in (k), that Barton Mines will not be entitled to maintain stockpiles/warehousing rights at the processing plant was, however, developed. The questions of stockpiling at Geraldton and possible blending issues in the stockpile were raised later in negotiations. The proposal that Barton Mines will be "granted a non‑exclusive licence to use GMA product branding" developed along the way, into cl 2.5. 168 By "Without Prejudice Memorandum of Proposal (Subject To Contract)" (Memorandum of Proposal) emailed by Mr Cole to Mr David Williams on 25 January 2005, Mr Cole provided Barton International's response to the invitation of GIRL to propose terms of settlement and compromise. The Memorandum of Proposal noted there was "common appetite" for an outcome whereby GIRL acquired Barton International's interests in the partnership, and GMA Garnet and Barton International and GIRL entered into a long term supply contract for GMA garnet. In relation to the sale and purchase of the partnership, and GMA Garnet interest of Barton International, the Memorandum of Proposal specified a price. In relation to a long term supply contract, the Memorandum of Proposal (para 4.1) stated as follows: To minimise the risk of opportunity for future dispute interface between Barton and GIRL, to optimise the prospect of arrangements being non‑offensive to competition law regulatory intervention, and to simplify matters generally, it is Barton's strongly preferred outcome that the contract merely be an open 'product supply' contract and not an "exclusive territorial distribution" contract. If an exclusive distribution arrangement is a critical requirement of GIRL then please let us have details of the proposed terms, so that Barton can give further consideration to this aspect. 169 The Memorandum of Proposal then went on to deal with the term and product quantity, and accepted a number of the other terms already proposed in Mr Williams' last letter. 170 In respect of the topic "Territorial benefits and constraints" the Memorandum of Proposal (para 4.2(c)) noted as follows: There be none (refer to paragraph 4.1 above). This should also facilitate ACCC (and related) clearances. Some comfort may be gained for GIRL from the first bullet point at the end of paragraph 4.2(b)(i) above [to the effect that the tonnages required of up to 50,000 tonnes primary product and up to 15,000 tonnes secondary product 'are Barton's estimates of its needs for the Americas']. 171 In other words, it was plain enough that, by its Memorandum of Proposal, Barton International then considered that while it was not prepared to enter into any territorial benefits and constraints for exclusive distribution arrangements, the fact that it required primary product of up to 50,000 tonnes and secondary product of up to 15,000 tonnes particularly for the "Americas", should be of some "comfort" to GIRL who were wanting Barton International through BMC to be its exclusive distributor in the USA. 172 Mr David Williams then emailed to Mr Cole a letter on 2 February 2005 putting a firm proposal for GIRL's acquisition of Barton International's GMA Garnet interests. First, it specified a price and then set out terms of acquisition including those referred to initially, that the terms of acquisition were subject to all necessary regulatory approvals particularly under competition law. 173 Nothwithstanding the earlier resistance of Mr Cole to the idea, in cl 2 of the letter, Mr Williams again proposed as follows: 2. DISTRIBUTION Barton Mines LLC (New York) (Barton Mines) to be appointed the exclusive distributor of GMA product in the USA by GMA Garnet Pty Ltd. (emphasis in original) 174 Mr Williams' letter then went on to deal with production entitlement, whereby "Barton Mines" would be entitled annually to take a quantity of up to 35,000 tonnes of GMA garnet, with an additional entitlement annually to take up to 15,000 tonnes. 175 Other terms included that: 4.2 Barton Mines will not be entitled to maintain stockpiles/warehousing rights at the processing plant. 4.3 Barton Mines will be granted a non‑exclusive licence to use GMA product branding. 4.4 The exclusive distribution rights and production entitlement granted to Barton Mines will be personal to Barton Mines and not capable of assignment. 176 On 3 February 2005, Mr David Williams and Mr Cole discussed GIRL's settlement offer on a without prejudice basis. Mr Williams made a note of that conversation without reference to which he would not have had a clear recollection of the fact, or the content of the conversation. However, the note enabled him to refresh his memory in recalling some, but not all of the matters in the note. He was satisfied however, that the matters contained in the note were an accurate and reliable record of events at the time. The Court has no difficulty accepting that the note should be accepted as an accurate and reliable record of events at the time. It is a carefully written note of the telephone conversation with Mr Cole. 177 Amongst matters dealt with in the conversation on 3 February 2005 were the following: · Aspects of the cash payment, the quantity of product and the term of the supply contract. · Other issues noted included "territory to be Americas - not just USA" and "exclusive distrib not critical to GIRL". · "B prefers exclusivity but does not want onerous terms (e.g. KPIs) but does want Americas. Perhaps some exclusive, some not exclusive. Also right to appoint sub‑distributors. No oblig to expand market, supply GMA products in preference to other product". 178 By letter sent by email to Mr Cole on 9 February 2005, Mr David Williams referred to his discussions with Mr Cole "over Thursday and Friday of last week" in respect of which he then had instructions to respond to. In respect of cl 1 dealing with the sale and purchase of Barton International's interests, much was agreed. 179 In respect of distribution, Mr David Williams proposed as follows: 2. DISTRIBUTION 2.1 In our discussions I advised that GIRL has structured its offer on the basis of an exclusive distribution contract in the belief that this was Barton's wish. It seems, however, that Barton's position appears to be: (a) that it is not essential for Barton to be an exclusive distributor for the USA market - in fact its preferred outcome is that the contract be an open 'product supply' contract and not an 'exclusive territorial distribution' contract (Barton Memorandum of Proposal 25/1/05); (b) that Barton wishes to have the (presumably non‑exclusive) right to distribute through the Americas, ie North America, Central America and South America; and (c) if, however, Barton was to be an exclusive distributor of GMA Garnet in a specific territory it would not accept its distribution rights being tied to performance obligations. 2.2 To address these concerns GIRL proposes the following: (a) Barton be appointed as a distributor of GMA Product on a non‑exclusive basis which it would be at liberty to distribute in any territory; (b) Barton, along with all other GMA distributors, would be entitled to purchase GMA product on prevailing market terms; (c) to incentivise (sic) ie the maintenance and development of the North American (USA/Canada) market, GMA product distributed into that market each year would attract a rebate/discount for the first 50,000 tonnes of product sold. This would be equivalent to the difference between the prevailing market price and; (i) the price referred to in paragraph 3.1 in our letter of 2 February 2005 for the first 35,000 tonnes; and (ii) the price referred to in paragraph 3.3 of our letter of 2 February 2005 for the next 15,000 tonnes; (d) Barton would have the first right to take the first 35,000 tonnes of product on the terms of (c)(i) above; (e) to the extent that Barton does not exercise this right the quantity not taken may be offered, on the same terms, to any other distributor in that market; (f) the first distributor in that market to commit to at least 35,000 tonnes would also have the sole right to take up to an additional 15,000 tonnes on the terms (c)(ii) above. 2.3 GIRL would be uneasy with any distribution agreement which gives one distributor a significant price advantage over others in Australia by, in effect, being able to take product at cost or near cost. GIRL wishes to maintain a level playing field for all of the distributors/customers and is concerned that the ACCC may not authorise a settlement which gives Barton the potential to create/maintain a monopoly in the Australian market. ACCC authorisation is fundamental to any agreement. If Barton is concerned that the structure of its distribution arrangements may be in breach of the Trade Practices Act then we are prepared to write to the ACCC on the issue now and seek its views. 180 Mr Williams' letter went on to deal with production entitlements and some other matters including the proposal that GIRL would allow Barton International to remove its existing stockpile of product over a period of six months, provided the product is removed first from the GMA Garnet shed. This proposal was a reference to the existing stockpile of product at Geraldton, Western Australia. 181 By letter dated 10 February 2005 and sent by email that day, Mr Cole responded to Mr David Williams' letter of 9 February 2005. In para 1 of his letter, Mr Cole indicated that Barton International was prepared to proceed to the negotiation of formal documents within the parameters of the principles therein set out. 182 In para 2, Mr Cole noted that Barton International had noted the distribution arrangements now proposed by GIRL "are designed in the context of the mutual desire of both Barton and GIRL to structure arrangements to minimise the prospect of adverse response from competition law regulators". Barton International however perceived that aspects of the proposed structure in para 2.2 may unnecessarily over complicate matters. Mr Cole then set out in para 3 the simplified approach to which Barton International was prepared to commit. 183 Subject to those comments, Barton International responded on the numbered paragraphs of para 2.2 of Mr Williams' letter, as follows: (a) noted on the assumption that distribution rights will not be tied to performance obligations and that also that Barton will not be restricted in any way from distributing other than GMA product. (b) noted. (c) the pricing of the product within the threshold tonnage levels must be by way of a net discount at the time of payment of the primary price rather than as an after the event rebate back to Barton. Further, Barton is prepared to accept an undertaking that the discount is offered as an incentivisation with respect to the market in the relevant territory (but without performance and market growth obligations) and that the product acquired at a discount must only be distributed into that market. Further, the relevant market must not be confined to North America, but also must extend to Central America and South America. (d) the provision is superfluous - Barton's right is an absolute right at its discretion. (e) GIRL's intention is noted. Barton does not wish to contractually constrain or oblige GIRL in any respect whatsoever as to the price and the terms upon which it can offer product to any of its other distributors. (f) the provision is superfluous - refer paragraph (e) above. 184 In para 3, Barton International's simplified approach to the ongoing product supply agreement was set out as follows: (a) Barton has the right to acquire up to 50,000 tonnes of GMA Product per annum for a term until 30 June 2017. (b) The first 35,000 tonnes is priced as per paragraph 3.1 of your letter of 2 February 2005 (i.e. not by payment and rebate back). (c) The next 15,000 tonnes is priced as per paragraph 3.3 of your letter of 2 February 2005 (i.e. not be paid and rebate back). (d) GMA product other than for that 50,000 tonnes, is subject to contract on commercially negotiated terms. (e) The concessionally priced product under (b) and (c) above may only be sold/distributed by Barton into North/Central or South America ('Americas') - as incentivisation and development of that market. Barton will so undertake. GIRL can also gain comfort of this through the shipping bills of lading etc at the time of delivery. (f) Subject to force majeure/non performance of deliveries by GIRL, annual tonnage discount entitlement is non cumulative. (g) Barton has no restraint undertaking in its favour to restrict GMA or other GMA Distributors from entering into any market, including the Americas. (h) Barton is also not subject to any market restraint undertaking other than in (e) above to the extent of the price discounted product (b) and (c). (i) Barton accepts that its orders for GMA Product under (b) and (c) above must be for no more than 50% 30/60 Mesh (compared with 80 Mesh), although a greater than 50% order for 80 Mesh is acceptable to GIRL. (emphasis in original) 185 At this point, it is important to note that Barton International was acknowledging that the concessionally priced product may only be sold or distributed by Barton International into the Americas - "as incentivisation and development of that market". Barton International was prepared to "so undertake". 186 To that letter, Mr David Williams responded by letter dated 11 February 2005 sent by email and enclosing a document entitled "Principles of Proposed Settlement GIRL/Barton" (Principles of Proposed Settlement). Clause 1 of the Principles of Settlement dealt with sale and purchase on terms that had more or less been negotiated to that point. 187 Clause 2 dealt with supply in the following terms: 2. SUPPLY 2.1 Barton shall have the right to acquire up to 50,000 tonnes of GMA product per annum for a term ending on 30 June 2017. 2.2 The proportion of 30/60 Mesh and 80 Mesh of GMA product taken by Barton shall be as Barton elects in each year provided that 30/60 Mesh constitutes no more than 50% of total GMA product taken in any year. 2.3 Barton will not be subject to any market restraint undertaking. 2.4 A commercially negotiated price shall apply to GMA product purchased by Barton save that where Barton distributes that product to the North American market (ie USA/Canada) the price shall be discounted to: (a) for the first 35,000 tonnes of GMA product: a price equal to the 2004 Partner Transfer Price (escalating annually in line with a mutually agreed index) plus government royalties plus FOB charges at cost ex Geraldton or Fremantle; and (b) for the next 15,000 tonnes of GMA product: a price being 15% above the price specified in paragraph (a). 2.5 To derive the benefit of the discount Barton must demonstrate the delivery of the GMA product to North America to the reasonable satisfaction of GMA, including producing the relevant bills of lading. 2.6 Barton's annual entitlement to the 50,000 tonnes of GMA product does not accumulate except where Barton has been unable to take its required tonnage through the default of GMA or an event of force majeure. 2.7 GMA, GIRL and other GMA distributors will not be restricted from distributing GMA product in any market, including North America. 2.8 Barton shall pay for all GMA product by irrevocable and confirmed letter of credit payable at sight. 2.9 Barton may deal with GMA product as it wishes and will not be restricted from assigning its above rights to acquire GMA product. 188 Clause 4 dealt with existing stockpiles, in the following terms: Barton shall be allowed a period of 6 months from Completion to remove its product stockpiled in the GMA shed free of storage costs provided that Barton removes that product before it removes any other Barton stockpiled product. (On one copy of the Principles of Proposed Settlement, Mr David Williams at a later date, wrote in the margin adjacent to this clause "possible blending issue". To this note I will return). 189 Clause 5 dealt with the topic of product branding in these terms: 5. PRODUCT BRANDING Barton must label all product purchased from GMA as GMA product and will be granted a non‑exclusive licence to use GMA product branding for that purpose. This clause is the predecessor to that which ultimately became cl 2.5 of the GSA. 190 Clause 6 confirmed that the formal contracts would be subject to all regulatory approvals including any authorisations that may be necessary for the purposes of Australian Trade Practices Legislation or US Anti‑Trust Legislation. 191 On 11 February 2005, Mr David Williams had a number of separate telephone conversations with Mr Aaron Williams and Mr Ketelsen, and also with Mr Cole. He made a note of some of those conversations. But for the note he would not have a clear recollection of the fact or content of the conversations. He refreshed his memory from the note and was thereby able to recall some, but not all of the matters recorded in the note. He had no reason to doubt that the matters contained in the note are not an accurate and reliable record of events at the time. 192 On the right hand side in the top two thirds of the note, Mr David Williams recorded the "what ifs" which Mr Ketelsen or Mr Aaron Williams instructed him to raise with Mr Cole. They are headed "For SC". On the left hand side of the file note Mr Williams made provision for Mr Cole's responses to those "what ifs". 193 Following the noting of the points for discussion with Mr Cole, Mr David Williams spoke to Mr Cole about the issues noted in the top two‑thirds of the page and made notes. Then Mr Cole raised other issues which Mr Williams noted in the bottom third of the page as follows: S/Pile - Removal - may be issue of blending - Product quality: to be consistent with other suppliers - Ops continue as is pending Compl - Issue: do not wish to be compelled to label as GMA - may be blending. By "S/Pile"-or stockpile-Mr David Williams said he understood Mr Cole to have been referring to the stockpile located in Geraldton. This was a continuing issue that had been referred to in the earlier negotiations. Apparently, the concern was that GMA garnet not subject to the GSA might be mixed up with GMA Garnet product provided under the GSA, and cause GSA compliance difficulties later. 194 The second and third points concerning product quality and operations speak for themselves. The last issue is, however, critical. 195 Mr David Williams says to the best of his recollection Mr Cole did not specify the nature of the blending to which he referred. 196 Mr Williams says that following his discussion with Mr Cole on this point, he raised the issue with Mr Ketelsen who said words to him to the effect: If the product is labelled GMA, it must be 100% GMA product. The product cannot be labelled as GMA product otherwise. 197 Mr David Williams says that, to the best of his recollection, at no time did Mr Cole say anything to him regarding: (a) the blending of GMA garnet with other garnet, save for the comment in the conversation on 11 February 2005 referred to above; (b) the branding of bulk or loose bulk shipments of garnet; (c) how the product received under the long term supply contract would be dealt with once it had reached North America; or (d) future plans with respect to branding, mixing or distribution of garnet once it reached North America. 198 By the weekend of 12 and 13 February it seems the question had arisen for GIRL as to whether Barton seriously wished to conclude a compromise and settlement in relation to the existing dissolution proceedings due to what it considered a prolonged negotiating process. By email from Mr Cole to Mr Williams on Sunday 13 February, Mr Cole advised that he had been able to "speak to my people overnight" and "confirm I have instructions to proceed with formal documentation as soon as is practicable". The email concluded with the note that: I note you are amending the draft documentation prepared by your office last October as well as incorporating into that settlement and release terms, and also documenting the proposed supply agreement. I look forward to receiving drafts for prompt consideration. 199 On 15 February 2005, Mr Cole emailed a letter to Mr David Williams enclosing copies of documents Mr Williams had prepared with Mr Cole's preliminary comments shown "by way of compare function". These related to the Principal Agreement, of which the GSA was expected to be an attachment. At this point Mr Cole indicated he had not provided his clients with these initial draft documents as he intended to refine them to the next draft stage before doing so. 200 In the penultimate paragraph of his letter, Mr Cole stated: With respect to the proposed Supply Agreement, I look forward to receiving your draft. In this context, and as part of further discussions I have been having with my client in connection with the mechanical logistics and difficulties of stock piling the USA/Canada discounted priced GMA garnet without risk of co‑mingling with other GMA product (either existing stock piles of Barton or new fully priced product), a number of practical difficulties have been identified. As a proposed solution to these practical difficulties that have been identified, and without resiling from the principle that up to 50,000 tonnes per annum of the special contractually priced GMA Garnet must be delivered into and distributed/sold within USA/Canada, I attach a proposal for your consideration. I believe it would be beneficial if I could meet with you to talk through and work with you in explaining the various formulae proposed in order to satisfy constraint 2. 201 As can been seen from the terms of these comments, Mr Cole appreciated that in essence the 50,000 tonnes per annum of the concessionally priced GMA garnet "must be delivered into and distributed/sold within USA/Canada". The expressed concern here was that the discounted garnet to be so sold or distributed may become "co‑mingled" with stockpiled GMA garnet which was not subject to the GSA obligations. 202 Attached to that email was Mr Cole's document entitled "Barton/GIRL Settlement Proposal" (Settlement Proposal). Paragraph 2 of the Settlement Proposal stated: The long term supply arrangements include the principle of the special contractually priced GMA garnet (up to 50,000 tonnes per annum) being delivered into and distributed/sold within USA/Canada. Then in para 3, the Settlement Proposal provided: Without resiling from that principle, and to manage assurance of compliance by Barton with this requirement, notwithstanding the mechanical logistics of stockpiling and co‑mingling of GMA Product within Barton's warehouse and wholesale distribution network, Barton proposes it be bound by the 2 constraints set out below in satisfaction of its obligations in the terms of that principle: Constraint # 1 All shipments of contractually priced GMA garnet must be for delivery, and be delivered, to USA/Canada. Constraint # 2 Z must never exceed X + Y (for each grade of GMA garnet) and then the formula was further set out therein. 203 It appears that Mr David Williams did not respond to the stockpiling and risk of co‑mingling issue raised by Mr Cole in his emailed letter. A question arises, of course, whether this logistical "co‑mingling" and "compliance" issue is the issue to which Mr Cole drew attention and Mr Williams noted on 11 February. For reasons given later, it appears not to have been. 204 On 16 February 2005, Mr David Williams sent to Mr Cole by email a draft GSA for his review, noting that it remained subject to his client's instructions as various aspects were still being considered. 205 On 17 February 2005, Mr Cole by email returned a marked up revised GSA, noting that his client was yet to comment on the document and that he reserved the right to suggest amendments. On his copy of Mr Cole's marked up "DRAFT " of 17 February 2005 (produced as Attachment DJW 17 to witness statement of Mr Williams, exhibit I), Mr David Williams made handwritten notations. 206 There are a number of things to be noted about this draft and document: ● Mr Cole had amended the "Buyer" from BIA and Barton International to Barton International alone. ● The concept of the Buyer taking "delivery" in relation to certain rights and entitlements was introduced, for example in cl 2.2 dealing with non‑accumulation rights. ● In relation to cl 2.5, which Mr David Williams had initially drafted, Mr Cole proposed the following marked up amendments: All garnet distributed or sold by the Buyer which is 100% Product must may be branded by the Buyer with the GMA Garnet name and logo and the Seller grants to the Buyer a non exclusive licence to use the GMA Garnet name and logo on Product for this purpose. The Buyer must not use the GMA Garnet name and logo on, or in connection with, the distribution or sale of any garnet which is not 100% Product or hold out in any way that garnet which is not 100% Product, is Product. ● In relation to cl 4.2, headed "North American market", which Mr David Williams had initially drafted, Mr Cole proposed the following marked up amendments: If the territory to which the Buyer distributes ships and delivers product under cl 2.1 after taking delivery of the same is the United States of America or Canada, the price for Product as sold from the Seller's Geraldton storage facility to be sold pursuant to orders to be placed by the Buyer pursuant to cl 2.1 shall be: ● On his copy of this draft, Mr David Williams, in relation to cl 2.5, in handwriting struck out Mr Cole's word "may" and circled his word "must" in relation to the branding obligation. ● Mr Williams also wrote above the draft cl 2.5 the words: (which may coexist with own branding prov that prominence of GMA no less than existing). ● In relation to the draft cl 4.2, Mr David Williams struck out the word "delivers" and wrote above it the word "discharges". ● Mr Williams also made an amendment to the beginning of cl 4.2 that inserted the prefatory words: B[Barton] acknowledges that the Seller wishes to maintain and promote distribution of Product within USA and Canada and for that purpose the Buyer shall be allowed a concessional rate for a quantity of Prod [Product] accordingly. 207 In relation to the change of "delivers" to "discharges", Mr Williams recalled that he was instructed by Mr Ketelsen that if cl 4.2 only stated "delivers", Barton International might sail a ship into the port (which might constitute "delivery") and then sail it back out again. That is why he was instructed to replace the word "delivers" with the word "discharges" so as to avoid this possibility. Good faith dealing under the GSA plainly could not be relied upon. 208 Mr David Williams also says that in relation to the contracting Barton entity being only Barton International, and not also BIA, he did not know at the time what particular role it performed. He treated the Barton entities as a uniformly controlled corporate group. He says there was never any discussion between him and Mr Cole as to the parties or as to what Barton International or any other Barton entity would do with the GMA garnet once it was discharged into North America. 209 On 17 February 2005, Mr Williams sent by email his further revised and marked up draft of the GSA. Draft cl 2.5 and cl 4.2 then appeared in the revised marked up draft as follows: 2.5 All garnet distributed or sold by the Buyer which is 100% Product may must be branded by the Buyer with the GMA Garnet name and logo (which may co‑exist with the Buyer's own branding provided that the prominence of the GMA Garnet name and logo is not less than that which has applied during the 2004 calendar year) and the Seller grants to the Buyer a nonexclusive licence to use the GMA Garnet name and logo on Product for this purpose. The Buyer must not use the GMA Garnet name and logo on, or in connection with, the distribution or sale of any garnet which is not 100% Product or hold out in any way that garnet which is not 100% Product, is Product. 4.2 The Parties acknowledge that the Seller which is to maintain and promote distribution of Product within the United States of America and Canada and, for that purpose, the Seller shall allow to the Buyer a concessional rate for Product as provided in this agreement. Accordingly, Iif the territory into which the Buyer ships and delivers discharges Product under cl 2.1 after taking delivery of the same is the United States of America or Canada, the price for Product to be sold pursuant to orders to be placed by the Buyer pursuant to cl 2.1 shall be: 210 Mr David Williams indicated in the covering letter sent by email to Mr Cole, that the enclosed draft took in all his amendments, and to the extent that they were not acceptable and had resulted in further changes, those parts were highlighted. 211 On 18 February 2005 Mr Cole sent an email to Mr Williams, together with attachments described as "final draft documents acceptable to Barton", including the Principal Agreement and the GSA. 212 In relation to the Principal Agreement Mr Cole relevantly noted that cl 2.3(b) "picks up the opening sentence that you previously had included in cl 4.2 of the Supply Agreement (but which I am now proposing be deleted from the Supply Agreement and included in the Principal Agreement)". 213 In relation to the GSA, Mr Cole made a number of comments including the following: (b) I confirm that the deletion of the opening sentence in cl 4.2 is proposed to be transcribed over into the new clause 2.3 of the Principal Agreement as I appreciate your client's desire for that concept to be expressly stated. 214 In the margin next to this written comment, Mr David Williams noted on his copy of the email, "no-stays in". 215 Mr Cole also amended the previous draft so that cl 2.5 now relevantly read in the first sentence: All garnet purchased under this Agreement and distributed or sold by the Buyer which is 100% Product must be branded by the Buyer with the GMA Garnet name and logo 216 In relation to cl 4.2 as noted above, Mr Cole removed the prefatory words introduced by Mr Williams in the previous draft commencing "The parties acknowledge" and concluding with the words "accordingly", and largely replicated them in a new cl 2.3 of the Principal Agreement as follows: 2.3 Generally The Parties acknowledge: (a) that it is the composite transaction evidenced by the Settlement Documents that reflects the consideration under the Settlement Documents; and (b) that as part thereof, GMA Garnet wishes to maintain and provide distribution of Product (as defined in the Supply Agreement) within the United States of America and Canada and, for that purpose GMA Garnet is allowing Barton a concessional rate for Product as provided for in cl 4.2 of the Supply Agreement 217 While the words in cl 2.3(b) were similar to those inserted by Mr David Williams in the earlier draft of cl 4.2 of the GSA, Mr Cole employed the word "provide" instead of the word "promote" in relation to "distribution of Product". 218 Mr Williams says there was no discussion between him and Mr Cole concerning the proposed changes resulting in cl 2.3 of the Principal Agreement, or to cl 4.2 of the GSA as he had previously drafted it. 219 On 19 February 2005, without further discussion between Mr Williams and Mr Cole, Mr Williams sent a number of draft agreements by email to Mr Cole including marked up drafts of the Principal Agreement and the GSA. 220 In relation to cl 2.5 of the draft GSA, Mr Williams accepted the last proposed amendments of Mr Cole, so that the first sentence then relevantly read: All garnet purchased under this Agreement and distributed or sold by the Buyer which is 100% Product must be branded by the Buyer 221 In relation to cl 4.2 of the draft GSA, Mr Williams proposed that the prefatory words he had earlier suggested should remain in place, including the expression of the Seller's wish "to maintain and promote" distribution of Product. 222 On 19 February 2005, Mr Cole forwarded to Mr David Williams an email he had sent to Mr Brand of Barton International setting out changes Mr Cole proposed to the last version of the draft agreements. In relation to cl 2.3(b) of the Principal Agreement, Mr Cole proposed that the words "maintain and provide" be replaced with the word "promote". Mr Cole did not propose any further amendment to cl 4.2 of the draft GSA. There were a number of other, not presently relevant amendments also proposed to the Principal Agreement, the GSA and some other related agreements. 223 Mr Williams accepted the proposed change to cl 2.3 of the Principal Agreement and the consequential change to cl 4.2 of the GSA and removed the words "maintain and", with the consequence that the acknowledged wish of the Seller that then appeared in each of cl 2.3(b) of the Principal Agreement and cl 4.2 of the GSA was to "promote distribution of Product". 224 At that point, each of cl 2.3 of the Principal Agreement, and cl 4.2 of the GSA, and cl 2.5 of the GSA, found the form in which they appeared in the GSA annexed to the Principal Agreement at the time of its execution on 21 February 2005.

summary - key points of negotiations 225 To summarise the sequence of proposals during negotiations relating to what ultimately became cl 2.5 and cl 4.2 of the GSA (and cl 2.3 of the Principal Agreement), the following dates and key proposals are relevant: · On 10 December 2004, the Discussion Paper prepared by Mr Cole, noted the need for a "long term supply contract", with the following key provisions;  An obligatory minimum annual tonnage in the region of 50,000 tonnes.  Barton International is an independent agent and not a GIRL/GMA "distributor". Therefore there are no performance KPIs applicable to Barton International's sale of product.  There are no market or territorial allocations or restraints applicable.  Barton International will be granted a non‑exclusive licence to use GMA product branding.  Barton International will be granted reasonable continuing stockpile/warehouse rights at the processing plant (this being a reference to the plant at Geraldton, Western Australia). · On 25 January 2005, in the Memorandum of Proposal circulated by Mr Cole, Barton International proposed in respect of a long term supply contract that:  "It is Barton's strongly preferred outcome that the contract merely be an open product supply contract and not an exclusive territorial distribution contract."  Product quantity to be up to 50,000 tonnes, at the "cost of production" previously suggested on behalf of GIRL.  There would be no territorial benefits and constraints. "This should also facilitate ACCC (and related) clearances". "Some comfort may be gained for GIRL from the first bullet point at the end of paragraph 4.2(b)(i) above", namely, that the tonnages referred to are "Barton's estimates of its needs for the Americas", and that Barton International will provide annual and quarterly forward estimates in budgeted timetables for shipment requirements. · On 2 February 2005, the settlement proposal put forward by Mr David Williams proposed that:  in para 2 headed Distribution, "Barton Mines LLC (New York) … to be appointed the exclusive distributor of GMA product in the USA by GMA Garnet Pty Ltd".  in para 4.3, Barton Mines be granted a non‑exclusive licence to use GMA product branding. · On 9 February 2005, the further separate proposal of Mr David Williams in para 2.2 that: (a) Barton be appointed as a distributor of GMA Product on a non‑exclusive basis which it would be at liberty to distribute in any territory. (b) Barton, along with all other GMA distributors, would be entitled to purchase GMA product on prevailing market terms; (c) to incentivise the maintenance and development of the North American (ie USA/Canada) market, GMA product distributed into that market each year would attract a rebate/discount for the first 50,000 tonnes of product sold. · In para 2.3 of the same letter of Mr Williams of 9 February 2005, GIRL indicated it would be "uneasy with any distribution agreement which gives one distributor a significant price advantage over others in Australia by, in effect, being able to take product at cost or near cost". GIRL indicated it wished to maintain a level field and was "concerned that the ACCC may not authorise a settlement which gives Barton the potential to create/maintain a monopoly in the Australia market". GIRL emphasised that "ACCC authorisation is fundamental to any agreement". · On 10 February 2005, Mr Cole's letter, referring to Mr Williams' letter of 9 February, by which:  In para 2, Barton International noted "the distribution arrangements now proposed by GIRL are designed in the context of the mutual desire of both Barton and GIRL to structure arrangements to minimise the prospect of adverse response from competition law regulators".  In relation to para 2.2(a) of Williams' letter of the previous day, Barton International notes this "on the assumption that distribution rights will not be tied to performance obligations and also that Barton will not be restricted in any way from distributing other than GMA product".  As to para 2.2(b) this was "noted".  In relation to the proposal in para 2.2(c) "to incentivise" the North American market, Barton International noted that "the pricing of the product within the threshold tonnage levels must be by way of a net discount at the time of payment of the primary price rather than as an after the event rebate back to Barton. Further, Barton is prepared to accept an undertaking that the discount is offered as an incentivisation with respect to the market in the relevant territory (but without performance and market growth obligations) and that the product acquired at a discount must only be distributed into that market". Barton International noted that the market must be the Americas, not just North America.  In para 3(e), Barton International stated that its "simplified approach" to the ongoing product supply agreement included that "the concessionally priced product … may only be sold/distributed by Barton in North/Central or South America … - as incentivisation and development of that market. Barton will so undertake. GIRL can also gain comfort of this through the shipping bills of lading etc at the time of delivery". · On 11 February 2005, the Principles of Proposed Settlement circulated by Mr Williams in respect of supply, the principles included:  In para 2.4, a discounted price in respect of 50,000 tonnes of GMA Product.  In para 2.5, the principle that "To derive the benefit of the discount Barton must demonstrate the delivery of the GMA product to North America to the reasonable satisfaction of GMA, including producing the relevant bills of lading".  In relation to product branding, para 5 proposed that "Barton must label all product purchased from GMA as GMA product and will be granted a non‑exclusive licence to use GMA product branding for that purpose". · On 11 February 2005, whether before or after the circulation of the Principles of Proposed Settlement by Mr Williams the discussion between Mr Williams and Mr Cole. This followed discussions Mr Williams had had with Mr Ketelsen and Mr Aaron Williams. The handwritten notes made by Mr Williams (which are attachment DJW12 to his witness statement, exhibit I) do not make any obvious references to the paragraph number of the Principles of Proposed Settlement. This might suggest that the discussion between Mr Williams and Mr Cole was before Mr Cole received the Principles of Proposed Settlement document. However, having regard to the particular issues raised by Mr Cole as noted in the handwritten notes, it is more probable the discussion related to the terms of the Principles document which each then had before them.  In relation to "S/Pile" - clearly a reference to the Existing Stockpiles para 4 of the Principles document, which had been the subject of earlier exchanges between Mr Cole and Mr Williams - the notes indicate "Removal - may be issue of blending". That reference is clearly a reference to a concern that Product to be supplied under the GSA may in some way be blended or mixed up with GMA garnet to which Barton International was currently entitled and which was in existing stockpiles at the Geraldton processing plant. This is rather confirmed by the fact that on Mr Williams' copy of the Principles document (as it appears at attachment DJW11, to exhibit I) adjacent to cl 4 dealing with the existing stockpile issue, Mr Williams has written the words "possible blending issue".  Under what appears to be a comment in respect to the topic of "S/Pile", but which may well be a separate notation altogether, Mr Williams wrote: "- Issue - do not wish to be compelled to label as GMA - may be blending". As explained above, this is accepted by Mr Williams to be a note of an issue raised by Mr Cole in their conversation. In the bottom left hand corner notes, Mr Williams also wrote: "TK: if labelled GMA must be 100% GMA Not to be labelled o/wise". Mr Williams explained that he made this note after putting to Mr Ketelsen the labelling issue raised with him by Mr Cole. · On 15 February 2005, the email in which Mr Cole set out a proposed solution to practical difficulties that Barton International had identified in respect of stockpiling, and "without resiling from the principle that up to 50,000 tonnes per annum of the special contractually priced GMA Garnet must be delivered into and distributed/sold within USA/Canada". In the "Settlement Proposal" attached to the email, Cole proposed two constraints, the first of which provided that "all shipments of contractually priced GMA Garnet must be for delivery, and be delivered, to USA/Canada". · On 16 February 2005, the first draft of the Garnet Supply Agreement prepared by Mr Williams on or about, which included the following terms:  BIA and Barton International as the 'Buyer'.  Clause 2.5 under the heading GMA Branding, proposed that: All garnet distributed or sold by the Buyer which is 100% Product must be branded with the GMA Garnet name and logo and the Seller grants to the Buyer a non exclusive licence to use the GMA Garnet name and logo on Product for this purpose. The Buyer must not use the GMA Garnet name or logo on, or in connection with, the distribution or sale of any garnet which is not 100% Product.  Clause 4.2, under the heading North American market, proposed that: If the territory to which the Buyer distributes Product is the United States of America or Canada, the price for Product as sold from the Seller's Geraldton storage facility shall be:

the parties' common understanding or concurrence concerning intentional blending and marketing 226 From the time Mr David Williams emailed the first formal draft of the GSA on 16 February 2005, the essential features of the GMA Garnet branding obligation in cl 2.5 remained in place. 227 So far as the expression of the branding obligation is concerned, the earlier negotiating position of GIRL in para 5 of the Principles document of 11 February 2005 was that: Barton must label all product purchased from GMA as GMA product and will be granted a non‑exclusive licence to use GMA product branding for that purpose. 228 However, when the first draft of the GSA was put forward by Mr Williams on 16 February 2005, cl 2.5 dealing with GMA branding relevantly provided that: All garnet distributed or sold by the Buyer which is 100% Product must be branded with the GMA Garnet name and logo and the Seller grants to the Buyer a non exclusive licence to use the GMA Garnet name and logo on Product for this purpose. The Buyer must not use the GMA Garnet name or logo, or in connection with, the distribution or sale of any garnet which is not 100% Product. 229 The only objective thing that happened between the putting forward of para 5 of the Principles document and the putting forward of cl 2.5 of the draft GSA early in the week following, was the discussion between Mr Cole and Mr Williams, and Mr Williams' subsequent conversation with Mr Ketelsen concerning Mr Cole's advice to Mr Williams, that his clients "do not wish to be compelled to label as GMA - may be blending". The advice of Mr Ketelsen to Mr Williams in relation to this was, "If labelled GMA must be 100% GMA Not to be labelled so otherwise". 230 The advice of Mr Ketelsen to Mr David Williams finds clear reflection in the changes made to para 5 of the Principles document and the way cl 2.5 was expressed in the first draft of the GSA. No longer was Barton International required to "label all product purchased from GMA as GMA product", but rather, "All garnet distributed or sold by the Buyer which is 100% Product must be branded". The obligation to label now only arose at the point of distribution or sale by the Buyer and only in respect of garnet "which is 100% Product". 231 The expression "100% Product" is a particularly significant change in wording and it seems, on the face of it, to have been suggested by Mr Ketelsen to Mr Williams. On the face of it, when told that Mr Cole had advised that Barton International did not wish to be "compelled" to label as GMA garnet because there "may be blending", the response by Mr Ketelsen to Mr Williams simply was to confirm that if the GMA Garnet label was to be used, then the product must be 100% GMA garnet and should not be labelled so otherwise. 232 The advice Mr Cole gave to Mr Williams makes it clear enough that the blending being spoken of was not in relation to stockpiling, but arose because of the labelling issue. Paragraph 5 of the Principles document plainly proposed mandatory labelling of all GMA product purchased under the GSA. Mr Ketelsen's recorded advice was also in respect of labelling. 233 Again, on the face of it, GIRL, without inquiring as to the nature or extent of any blending of GMA Garnet product that Barton International might have had in mind, was apparently more concerned to ensure that its product reputation be fully protected by ensuring that only garnet distributed or sold by Barton International which contained 100% GMA garnet be so labelled and that Barton International not be entitled to represent product that was not 100% GMA garnet as such. 234 This, again on the face of it, suggests that Mr David Williams and Mr Ketelsen too, fully understood what they had been advised by Mr Cole - that there may be blending of garnet obtained from GMA Garnet under the GSA, so that Barton International might produce something less than 100% GMA garnet - even if they did not further explore or fully appreciate the potential implications of that advice. 235 Mr Williams did not have any close recollections of what otherwise was said by Mr Cole in this discussion on 11 February concerning blending. He is simply left with his note. 236 Mr Torsten Ketelsen gave evidence in connection with the instructions he gave to Mr David Williams leading up to the conclusion of the Principal Agreement and the GSA. His statement of evidence (exhibit H) became his evidence in chief. In relation to Mr Williams' file note to the effect that "Barton have an issue, they do not wish to be compelled to label all product as GMA as there may be blending", he stated he had no recollection of a conversation with Mr Williams along those lines. 237 Mr Ketelsen held the firm position that GMA garnet was the premium garnet product in the world garnet market. At all material times in the negotiating period he did not know or even suspect that Barton International would order discounted GMA garnet if that garnet, as received, was not going to be labelled and then sold in North America as GMA garnet. He says he would have expected that Barton International would have told GMA Garnet if in fact that was to occur. 238 Senior Counsel for Barton International did not cross‑examine Mr Ketelsen concerning his communications with Mr David Williams about the file note. This is not surprising given that Mr Ketelsen in his evidence in chief had no recollection of the matter having been raised with him by Mr Williams. 239 Senior Counsel for Barton International also chose not to cross‑examine Mr David Williams further concerning this evidence on the topic. Given his lack of detailed recollection, that too is not surprising. 240 In the result, the evidence bearing upon the communications between the parties about the "issues" concerning "blending", in relation to the labelling requirement, emanates from the lawyer/negotiators Mr Cole and Mr David Williams. Each agrees that the issue was raised. Mr Williams confirms that he took the issue to Mr Ketelsen who made the comment he noted at the bottom left of his file note. 241 It is then relevant to turn to Mr Cole's evidence about his discussion on the blending issue with Mr Williams and in relation to the discounted supply provisions. 242 Mr Cole gave evidence in chief by adopting a witness statement that he had prepared for the purpose of the proceedings (exhibit AA) as well as by adopting a supplementary witness statement prepared for the proceedings (exhibit BB). He explained that from 2003 he had been the lead partner in the law firm, Arthur Robinson Hedderwick, acting for Barton International and related entities including BIA in connection with business transactions that ultimately led to these proceedings, and that he retained overall client contact and responsibility. 243 Mr Cole concluded that, as a result of what he considered to be the complete breakdown in the relationship between the parties in the course of their commercial disputes, it would be best if negotiations for any settlement were conducted between solicitors if there was to be a reasonable prospect of a commercial settlement. 244 Mr Cole says in his evidence in chief that when he received the Principles document on 11 February 2005, he perused it and made handwritten notes on it (see attachment SC22 to exhibit AA, which is a copy of the document with his handwriting on it). For example, next to para 4 dealing with existing stockpiles, he wrote the words "comparable". Then next to para 5, dealing with product branding, he circled the words "must label all", and wrote the word "issues" in the margin with much emphasis above and beneath that word. 245 Mr Cole in his evidence in chief further says that he had a telephone conversation with Mr David Williams on Friday 11 February 2005, at a time at which he believes he had the Principles document in front of him, and that he referred to various paragraphs of it during the conversation. 246 Mr Cole also says that he has refreshed his memory of the fact and content of this conversation from perusing a copy of the handwritten file note that Mr David Williams made of this conversation with him on 11 February 2005. 247 Mr Cole said that without reference to the handwritten notes he made on the Principles document and without consulting Mr Williams' handwritten note of the conversation on 11 February 2005, he would have some recollection of the conversation although not a recollection of all that was discussed. 248 Mr Cole then says that during the conversation he said to Mr Williams among other things statements about para 4 dealing with the existing stockpiles, the need for the garnet purchased under the GSA to be of a quality consistent with that supplied to other prime customers of GMA Garnet, that mining and processing operations should continue as present pending completion of any settlement and (importantly for present purposes) that there was an issue concerning para 5 relating to the branding of GMA Garnet product. He said that Barton International did not wish to be compelled to label all garnet purchased from GMA Garnet as GMA garnet because there may be blending of the GMA Garnet product with garnet sourced from elsewhere. 249 Mr Cole says Mr Williams said he would take instructions on those issues. 250 Mr Cole says that he believes that on Saturday 12 February and Sunday 13 February 2005, he had one or more telephone conversations with Mr David Williams who indicated that unless Barton International could give prompt affirmation of its intent to progress the negotiations towards an agreement, GIRL would withdraw from negotiations. 251 In light of that advice, on Monday 13 February 2005, Mr Cole sent an email to Mr Williams confirming that he had instructions to proceed with formal documentation as soon as practicable. 252 Mr Cole says that by Wednesday 15 February 2005, the position was reached such that, if it was ultimately agreed that discounted product could only be distributed in a defined territory, there would be significant logistical problems for Barton International due to the nature of its distribution and warehouse operations in America, the fact that it had existing supplies of GMA garnet in America, it had a stockpile of GMA Garnet product in Geraldton and the proposed GSA would enable it to buy both discounted GMA Garnet product and other GMA Garnet product. If there was an obligation to distribute discounted product only in a particular territory there was a material risk that Barton International in a practical logistical sense may not be able to assure compliance with that obligation, or demonstrate that it had only distributed particular product in that territory and that may lead to GMA Garnet/GIRL disputing Barton International's entitlement to the concessional pricing, asserting default and seeking to terminate the GSA. To overcome that risk, Mr Cole said he proposed in his email of 15 February 2005, that the principle of discounted product being distributed in North America could be given effect to in a practical manner by the observance of certain inventory accounting protocols, and he explained that in a meeting with Mr David Williams. 253 He understood that Mr David Williams would take instruction on his proposal following their meeting on 15 February 2005, but did not receive a full response to that letter, nor does he recall any later negotiations concerning progressing that proposal. 254 Rather, on 16 February 2005 he received from Mr Williams the first draft of the GSA. 255 Mr Cole says that when he read the first draft of the GSA, he noted, amongst other things, that it contained a provision to the effect that the discount only applied if product was distributed in North America and it contained no provisions dealing with the practical problems he had explained in the conversation with Mr David Williams of 15 February. 256 Accordingly, on 17 February 2005 he sent a revised draft of the GSA in which he had deleted the reference to discounted product being distributed in North America, and replaced it with a reference to the product being "shipped and delivered" in that territory. 257 Mr Cole says he recalls a telephone conversation with Mr David Williams either before or after he sent the revised draft in which he said words to the effect that without the practical issues of Barton International's inventory management and control being addressed, the risk of termination of the GSA and the consequent loss of benefit of discounted long term product supply was too great, and so Barton International would not accept an obligation to distribute discounted garnet only in North America or a contractual constraint or prohibition on selling discounted garnet outside North America, but that Barton International was prepared to accept that discounted garnet must be shipped to North America and it should be able to satisfy GMA Garnet and GIRL that it had delivered that garnet into North America by producing shipping documents including bills of lading. This would act as a commercial disincentive to ship the garnet to North America and to trans-ship that same garnet to other countries, and that should satisfy his client's concerns. Mr Cole says that Mr Williams indicated he would take further instructions. 258 Mr Cole says that when he received the further draft of the GSA in which a new first sentence had been included in cl 4.2 expressing the wish of the seller to promote distribution in North America, he asked Mr Williams to explain the rationale for this. Mr Cole says Mr Williams said words to the effect that it related to competition law concerns that GIRL had with justifying the discount to which Barton International would be entitled under the GSA. 259 In cross‑examination Mr Cole was pressed about his ability to recall independently the events just referred to. Mr Cole responded by saying that he recalled most of the fundamental terms of the negotiations because they consumed a very important part of his life at the particular time, and that he had a "reasonable recollection" of some fundamental aspects. 260 When further pressed that he might have difficulty recalling the contents of particular documents or conversations, Mr Cole said he recalled contents of discussions that he had over that period. Indeed he could recall them without reference to the notes. He accepted however that the documents to which he had referred, did jolt his memory of things. He rejected the suggestion that any of his statements constituted reconstruction of events. 261 Mr Cole was pressed as to his recollection of his discussion with Mr Williams about his concerns arising out of the Principles document. He was pressed about his "blending" concern in respect of the existing stockpile and explained that to be supplied under the GSA, which might lead to claims by GIRL that Barton International had distributed the discounted garnet contrary to the GSA he perceived there was a real risk of mixing the existing stockpile in the shed with the new discounted garnet. 262 Mr Cole was also pressed in cross‑examination as to why he did not make some file note about the points raised in this conversation on that day and the fact there did not seem to be any other documentation relating to the points raised at the meeting subsequently. As to his file keeping practices, Mr Cole said that it would not necessarily tend to suggest that nothing terribly significant was said in the conversation because he had not kept a note. He said it could have been poor practice on his part, particularly as it had been a very intense time. He also said that he often verbally communicated matters to his clients and did not always reduce them to writing. He agreed that "quality best practice" might suggest that important matters be reduced to writing. However, he suggested that while one might have "aspirations" in that regard, "practical issues come through", and one does not always have time to prepare notes on the number of conversations that one has over a period. He agreed that he would have conveyed at the least the significant matters to his clients in discussions with them. 263 In relation to his evidence concerning para 5 of the Principles document concerning product branding, and the fact that he had referred to it in the context of "blending", Mr Cole was challenged that para 5 was not about blending at all but was substantively concerned with the use of a trademark. Mr Cole said his concern was "the potential for a breach of contract on the part of Barton". He was concerned that there might be intentional blending which might run contrary to the obligation to ensure that all garnet purchased from GMA Garnet was labelled as GMA garnet when sold. 264 Mr Cole agreed that the prospect of intentional blending had not been raised in correspondence between the parties at any time prior to February. He was challenged to point out where it had ever been expressly mentioned after 11 February 2005 up until when the agreements were signed. Mr Cole implicitly accepted that it had not been so mentioned, but said this was "because the next pass of the documents resolved that issue". From Mr Cole's point of view, when the next pass of the draft documents came back it was no longer an issue because of the manner in which cl 2.5 of the first draft of the GSA dealt with the issue. He accepted, however, that the issue of intentional blending was not an item of discussion after 11 February 2005. 265 Mr Cole was further challenged on this view by reference to the fact that, when he received the next pass of documents, the requirement in cl 2.5 was that the GMA garnet "must be branded" and he had, in his subsequent revision, changed that to "may be branded". He was asked whether the change to "may" was intended to reflect the idea that it was at the option of Barton International or any member of the Barton group whether or not 100% Product was branded. Mr Cole indicated that it was, and he was seeking to minimise any obligations of Barton International on a continuing basis: "may" was permissive. 266 Counsel further challenged Mr Cole by suggesting that what the note made by Mr David Williams concerning blending really referred to was unintentional blending of product, not intentional blending. Mr Cole rejected this. The following exchange between Mr Cole and counsel is important (transcript: 509): [Mr Cole]: My concern was with intentional blending, and I recall having a conversation with David Williams as to Barton practice or industry - what I understood industry practice, dealing with garnet, some of the properties of garnet, some of its niche applications. I don't recall it specifically at that particular conversation. [Mr Thomson]: Well I suggest that you actually - if that was your concern - didn't say to him express words to the effect that BII or Barton wish to blend, intentionally, some of that product that you send across, and if that happens, they don't want to label it 100 per cent GMA garnet? --- I wasn't seeking permission on behalf of Barton for that purpose. I was outlining a practice which became an issue because of a trademarking provision sought to be included in the document. Certainly. But what I am suggesting to you is that the words you used, if you did have that concern yourself, didn't convey to them, to Mr Williams, in any way, shape or form, that what Barton was proposing was to blend 100 per cent product intentionally and thereby not be subject to a branding obligation? --- The communication wasn't concerning Barton's intent. It was concerning Barton's practice and industry practice, as I understood it, having regard to niche applications of the product, and therefore the risk that may arise in very long-term contract that product could become blended, and therefore potential for a breach which would trigger a potential termination of the supply contract. Well, tell me what practice you outlined to Mr Williams? --- The practice - I suppose I - lawyers take pride in understanding their client's business. I did understand, from prior instructions that I had with Robert Brand, and from my dealings with my client over a period of time, and from discussions I'd had with Jim Nash in the past, that some of the different qualities of garnet - alluvial garnet compared with hard rock garnet, some being smoother ridged, some being sharper ridged, different - the size of the particles, and special applications that they have from time to time to meet particular requirements. You're telling me about your understanding at the moment? --- Yes, and I communicated that issue to David Williams. What issue? --- The issue that in this industry, that there is blending of garnet, intentional blending, for niche applications from time to time, and therefore we did not wish to have a provision that obliged it to be branded GMA garnet on every piece of garnet that came through. Is it not the case that you told him about - on your version, you told him about the industry practice, but he - well, you did not indicate that the use of the GMA garnet was intended for those niche applications and that it would be blended in the course of those niche applications? --- I didn't have instructions or an understanding as to exactly what Barton was going to do with this particular garnet, no. 267 I am satisfied that Mr Cole's testimony concerning his discussion with Mr David Williams about the substance of para 5 of the Principles document, and the issue that his client had with it - because there "may be blending", should be accepted. 268 It is hard to walk away from the note Mr David Williams made of the discussion. As noted above it plainly is about the substance of para 5 of the Principles document to do with the branding of GMA garnet supplied under the GSA, not GMA garnet stockpiled at Geraldton or in the USA. 269 Counsel for the applicants submits that the evidence of Mr Cole should not be considered reliable. The reasons put forward for adopting this view include the fact that no other note of such an apparently significant conversation was made at the time or immediately afterwards by Mr Cole himself. I am satisfied with the explanations given by Mr Cole as to why that was so. 270 I accept, as Mr Cole has explained, that para 5 of the Principles document related to a trademark issue, but that incidentally the question of its breach was provoked by his awareness of Barton International practice and industry practice concerning the blending of garnet for niche operations. 271 I am also satisfied that once Mr Cole saw the terms of cl 2.5 of the first draft of the GSA prepared by Mr Williams on about 16 February 2005, he was satisfied, as he said he was, that that issue had been removed by the changed wording. 272 I do not consider that Mr Cole's subsequent attempt to further revise the terms of that draft of cl 2.5 by removing the "must" and replacing it with the discretionary "may" materially bears on the issue. His intent then was to obtain as much discretion on the part of his client as possible in respect of all obligations. He did not resist the subsequent reinsertion of the "must" by Mr Williams. 273 In the course of the trial, when the applicants pressed for access to certain documents of the respondent, for which legal client privilege had been claimed, senior counsel for the respondent recorded on the transcript that there were no privileged documents which recorded or shed light upon the fact, content or terms as to what was said on 11 February 2005. While the applicants submit this fact is surprising I do not consider the absence of a note about the issue to be determinative in the light of all the evidence I have recounted above. 274 In so finding, I also accept that the question of intentional blending of GMA garnet by Barton International was not the subject of the framework discussions either before or after 11 February 2005, and during the course of the negotiations leading up to the execution of the Principal Agreement and the GSA. But there is no particular reason why that should have been so. The issue as it occurred to Mr Cole was raised incidentally, by reason of his awareness of blending as a possible concern. 275 I am satisfied that how cl 2.5 ultimately came to be drafted in the form that it currently exists, is directly as a result of the discussions between Mr Cole and Mr David Williams over the issue of labelling and blending raised by Mr Cole. That issue plainly was raised in respect of the substance of para 5 of the Principles document. It matters not in these circumstances whether Mr Williams made his note on 11 February 2005 before or after the circulation of the Principles document. The conversation was about the substance of that paragraph. Nonetheless, I think on balance, having regard to the whole of the note and the other matters referred to in it, and the level of detail in the other comments made in the note, that both Mr Cole and Mr Williams must have had the Principles document in front of them at the time of their conversation. 276 Further, I consider it to be the case having regard to the evidence of Mr Williams himself, that following the raising of the labelling and blending issue by Mr Cole, Mr Williams took further instructions from Mr Ketelsen, which instructions in cryptic form appear at the bottom left of the page of handwritten notes he made. As explained above, those notes and the instructions strongly suggest how cl 2.5, in its first draft by Mr Williams, came to be. Mr Ketelsen instructed Mr Williams that: If labelled GMA must be 100% GMA Not to be labelled so o/wise. 277 The obvious concern of Mr Ketelsen, and on those instructions of Mr Williams in his first draft of cl 2.5, was that any product distributed or sold by Barton International if it were to be labelled as GMA Garnet product, must in fact be 100% GMA Product, and it was not to be so labelled otherwise. 278 It seems reasonably plain, in these circumstances, that the parties through this process of negotiations between Mr Cole and Mr David Williams shared a common understanding that there may indeed be some intentional blending of GMA Garnet product by Barton International or entities associated with it, including of GMA garnet acquired under the terms of the proposed GSA. Mr Cole raised the prospect and Mr Williams ultimately accepted it was so, or assumed it was so for the purposes of drafting cl 2.5. Clause 2.5 of the GSA was ultimately negotiated and agreed upon in light of that common understanding or acceptance. 279 It is not to the point, though I consider on the basis of the evidence of Mr Ketelsen and Mr Aaron Williams which I accept in this regard, that it is the case that, at the time Mr Cole pointed out to Mr David Williams that there may be blending such that Barton International did not wish to be subject to an all encompassing obligation to label all GMA garnet purchased as GMA garnet, the applicants themselves had no detailed or other appreciation of the nature or extent to which Barton International engaged in the practice of intentional blending. 280 What appears to have happened, having regard to the applicants then understanding of Barton International's practices, is that at material times when the Principal Agreement and GSA were negotiated, and in the years leading up to that time, the applicants believed (incorrectly) that not only was GMA garnet supplied to Barton International's entities already packaged with both the GMA Garnet name and logo and the relevant BMC name and logo, but that loose bulk garnet which was shipped to the USA and packaged in the USA by BMC with the GMA Garnet name and logo, accompanied by the BMC brandings, was only provided to customers in packaged form. 281 As a result, persons such as Mr Ketelsen and Mr Aaron Williams had no appreciation that blending of GMA garnet was something that was or might ordinarily be undertaken. It was not something that GIRL was aware of in relation to its own areas of garnet sales. GMA Garnet product was at that time very favourably mentioned in trade literature in North America. It had a good reputation in the market. Mr Ketelsen indeed considered it to be the superior garnet in the world market. It probably ran counter to marketing intuition, or at least that of GIRL, that Barton International would, in these circumstances, ever consider blending superior quality GMA garnet with inferior quality garnet from elsewhere and then put to market a fused product that would, by definition, be inferior to GMA garnet. 282 Be that as it may, the Court has little hesitation in concluding that cl 2.5 was drafted on the understanding or acceptance by GIRL that, however few and whatever the occasions might be, blending might possibly occur intentionally and that Barton International would not wish to be subject to an obligation that required it to brand all GMA garnet purchased by Barton International under the GSA. 283 Given the acrimonious relationship between the parties, and Mr Cole's realisation that the terms of the GSA would need to be carefully considered to avoid creating opportunities for the premature termination, the point he raised during negotiations is not to be considered surprising. It will be recalled Mr Ketelsen took a not dissimilar attitude when he instructed Mr Williams to use the word "discharges" rather than "delivers" in cl 4.2. Each side seems to have been fully aware that if an occasion should arise in the future for a breach or avoidance point to be taken, it surely would. 284 The next issue arising from those negotiations is whether the parties arrived at a common agreement or understanding that Barton International (or BMC or any other related entity) would not assume the role of a distributor of Product on behalf of the applicants in North America. 285 In my view, the closest that the parties got to any concept of marketing Product in North America was in their negotiations, was the recognition in Mr Cole's letter dated 10 February 2005, that the proposed concessionally priced product may only be sold or distributed into the Americas - "as incentivisation and development of that market". 286 As to exactly what "incentivisation and development of that market" meant in this context is problematic. One would have expected to see its meaning translated in clear words in to any subsequent contract, if it were the subject of agreement. It could for example have resulted in a contractual term that required Barton International only to sell the concessionally priced product in a stipulated territorial area. By achieving such an outcome, conceivably the GMA Garnet product would become better known in that territory. Even if there were such a provision in the contract, it would on its face fall short of an obligation positively to distribute or sell the GMA Garnet product in that market. Rather the contract would depend for its practical efficacy, on the desire of Barton International to make a profit and its ability to do so. If GIRL and GMA Garnet were to provide discounted garnet that could only be sold in the Americas, or North America, then there would be an incentive provided for Barton International to sell the product in that territory in order to maximise its profits. In so doing, GIRL and GMA Garnet would acquire exposure (whether guaranteed or not) in that particular territorial market. The point is that the "incentivisation" spoken of is a practical economic incentive, rather than a legal obligation to effect distribution or sale. This makes sense, particularly when one also takes into account the express desire of the parties to avoid any competition law problems that exclusive distributorship or nonexclusive distributorship, or binding sales or distributor obligations, might bring with them. 287 However, following the evolution of the terms of the GSA then being negotiated, the position finally arrived at was that the discount for Product supplied under cl 4.2 of the GSA would only be provided where relevant product was shipped and discharged into North America - not when sold or distributed into the Americas. 288 No express distribution or marketing obligations - sale or distribution - were undertaken under the provision of cl 4.2. As to whether or not on the proper construction of the GSA an obligation on Barton International to develop the North American market for the applicants or some relevant representation to similar effect can be identified, in this light, is dealt with below. 289 What can be said now is that in the course of negotiations Mr Cole was adamant that neither BMC nor Barton International would not undertake the obligations of distributor of GMA garnet supplied under the GSA, and GIRL understood that. The question remains whether, nonetheless, the terms of the GSA, as properly construed and taking into account the surrounding circumstances and commonly understood positions of the parties, including that Barton International and BMC would not undertake the obligations of a distributor of GMA garnet supplied under the GSA, Barton International assumed market development responsibilities in respect of GMA Garnet Product in North America in any event.

barton's practices and plans regarding Intentional Blending 290 The evidence before the Court shows that: (a) In the period prior to the shipment pursuant to the vessel, the Maple Grove, in November 2008, 133,188 metric tonnes (mt) of GMA garnet was shipped in loose bulk form by GMA Garnet upon the orders of Barton International (see exhibit A at 315 (trial bundle vol 6/6A at 1440) and exhibit A at 576 (trial bundle vol 13/6A at 3384)); (b) Barton International onsold all of this to BMC; (c) In the period July 2006 until 30 November 2008, BMC blended 79,655 mt of this loose bulk: see exhibit A at 576 (trial bundle vol 13/6A at 3384). 291 The evidence also establishes that blending of 80 Mesh garnet commenced in June 2006 and blending of 30/60 Mesh garnet commenced in February 2007. 292 The issue of blending in a very practical sense has caused the disputation the subject of these proceedings and helps to define the principal issues for determination. Because of the blending undertaken by the BMC, Product has been put to market by BMC in North America without being branded with the GMA Garnet name or logo. This has meant in turn that the "wish" of GMA Garnet to "promote distribution of Product" - or more particularly to have Barton International assist it in such promotion - has largely been dashed. 293 The applicants say that the plan for blending was conceived by Barton International and associated interests much earlier than when it actually commenced, and also say that the blending was for the purpose of hindering promotion of GMA garnet in North America. The respondent denies these allegations on both counts. While Barton International says this further allegation raises a false issue, to which I will return, it also denies the allegation. I should deal with these factual matters and allegations and make findings in respect of them at this point and then consider whether the allegations raise a false issue in any event. 294 The applicants say the following pieces of evidence are critical and support an inference that blending was a plan conceived at the time when the GSA was being negotiated and before it was executed: (a) During negotiations Barton International was adamant that it would not subject itself to objective performance measures for promoting GMA garnet; (b) Mr Cole, the solicitor and agent for the Barton International interests was intent upon removing the word "distributes" from the promissory obligation of cl 4.2 and (mistakenly) considered that the introductory words of cl 4.2 were irrelevant other than as a "sop" to the ACCC. Presumably, he so advised his client; (c) By 2 March 2005, Mr Bracken believed that blending was permitted under the GSA. The applicants refer to testimony that at a sales meeting on 2 March 2005, where Mr Bracken addressed sales staff and informed them of matters concerning settlement of the litigation with GIRL, he also believed that Barton International had the ability to blend, if it wanted to (transcript 4.5). The applicant says it would be incredible if he came to this understanding after negotiations were complete. The only reasonable inference is that this was something expressly contemplated by Mr Bracken during negotiations. Further, such an intention was never stated or otherwise expressly and directly communicated by Mr Cole or Mr Bracken to representatives of the applicant during the negotiations; (d) If Mr Borgh's evidence is accepted, and there is no reason why it should not be, Mr Bracken announced a blending plan on 2 March 2005 to sales staff at the meeting. Senior Barton International management (Mr Bracken and Mr Rapple) denied this, but without particular recollection of what was in fact said at the sales staff meeting; (e) At the time of the email from Curtis Brand to Sandra O'Brien on 28 April 2005 (trial bundle at 1023) there was no serious enquiry as to whether GMA Garnet could supply additional garnet (transcript 318 - 319, 395). Such an enquiry would be expected, if Barton International or the Barton group had a serious supply problem; (f) The first order of VVM garnet from India was negotiated immediately after the GSA and the Principal Agreement were executed so that the VVM off‑take schedule for May 2005 included large quantities of 80 Mesh garnet in loose bulk form: see exhibit P. The explanation given by Mr Bracken and Mr Summers conveniently - that this was a "relationship" purchase - when it comprised such a significant sum of money, is incredible and should be rejected (see transcript at 297, 315 - 316); (g) The relationship between the GIRL/GMA Garnet camp and the Barton International camp was "poisonous" including as a result of the ACCC's investigation of the Perth Agreement. 295 The applicants accept that certain events in the United States in August 2005 (a warehouse fire, a flood and roof collapses) affected production, but they say simply contributed to a delay in implementing the blending strategy. The applicants say that "the contribution of these events is necessarily reflected in the timing and manner of implementing the blending strategy. Also it was obviously vital to test and achieve a minimum of quality blended product. But none of that gainsays that there was an initial blending plan and that the plan existed from the outset". 296 The applicants therefore reject the explanation of Barton International that the blending strategy grew out of events after August 2005 because this is negated if the evidence of Mr Borgh, about what Mr Bracken said at the sales staff meeting, is accepted. It is also implausible in the light of the early ordering of large quantities of loose bulk VVM garnet. 297 The applicants also say that if Barton International forthrightly considered it could blend GMA garnet there was no reason why it should not have disclosed that strategy immediately upon its implementation to the applicants. However, instead Barton International and the Barton group went to some lengths to not state that its strategy was to blend GMA garnet. The applicants say the only explicable reason for this is that Barton International was implementing a previously conceived secret strategy. 298 The applicants also point to internal emails discovered by Barton International, which they say demonstrate the purpose of the blending strategy, which was to prevent GMA Garnet Product being promoted in North America. 299 Accordingly, the applicants submit that upon on‑sale of the loose bulk garnet by Barton International to BMC: (a) Barton International breached cl 2.5 of the GSA as none of the garnet was labelled or branded appropriately; (b) Barton International breached the terms pleaded in para 15 of the statement of claim as Barton International knew of the blending project which BMC was proposing to adopt. 300 Barton International accepts that the question of blending was raised early, because it expressly relies on the evidence of Mr Cole that he indicated to Mr Williams, the solicitor and agent for the applicants during the negotiations, on 11 February 2005, that "there may be blending". 301 Barton International says that cl 2.5 as ultimately agreed, differed from the earlier term proposed by Mr Williams whereby unequivocally all garnet supplied under the GSA would have to be branded with the GMA Garnet name and logo. 302 So far as the applicants' emphasis on the purpose of the blending undertaken by or within the Barton group is concerned, the respondent notes that the applicants plead an alleged term of the GSA in para 15 of the statement of claim to the effect that Barton International is not entitled to concessionally priced product if it intended to undermine or diminish the reputation of GMA Garnet. The respondent says, however, it is not pleaded that Barton International ever acted with such an intention. All that is pleaded is that, in effect, by not selling 100% GMA garnet, Barton International caused GMA Garnet's established product reputation to be diminished (see statement of claim para 16A.3(b)). But there is no evidence to that effect in the event. 303 The respondent says that the only reference in the applicants' statement of claim to the purpose of blending is in the allegation of breach of terms of the GSA in para 16A.3(c). The gravamen of that alleged breach is Barton International's on-sale of concessionally priced GMA garnet to BMC, knowing that BMC intended to blend it. The breach allegation ends with the words, "even in circumstances where there was no commercial purpose served by such blending". The respondent says that is a superfluous embellishment of the breach allegation, which stands or falls on the scope of the alleged terms, which do not refer to the purpose of blending. The respondent says that, accordingly, the evidentiary issue which is being raised concerning the reasons for blending of product by BMC, is not a real issue. 304 Nonetheless, Barton International says there is no foundation for concluding that BMC instituted blending for no commercial purpose, but to the contrary, instituted blending for commercial reasons which have been explained, which arose principally from supply chain difficulties and the problems of conducting business across a very large market in North America, from a multitude of locations, with multiple products, individual stocks of which could not readily be maintained. 305 Barton International says that attempts to impugn that purpose ignore the commercial reality of BMC's extensive operations and the course of decision‑making that occurred in the multitude of contemporaneous records provided in the evidence. 306 As noted above, the applicants plead an alleged term of the GSA to the effect that Barton International is not entitled to concessionally priced product if it intended to undermine or diminish the reputation of GMA Garnet (para 15.2 statement of claim). 307 I accept the respondent's contention that it is not pleaded, however, that Barton International ever acted with such intention. All that is pleaded is that, in effect, by not selling 100% GMA garnet, Barton International caused GMA Garnet's established product reputation to be diminished (para 16A.3(b) statement of claim). I accept the submission of the respondent that there is no evidence of such intention in any event. 308 I therefore accept the submission made on behalf of Barton International that the evidentiary issue which has been raised as to the reason for blending of product by BMC is not a pleaded issue. 309 I also accept the submission of Barton International that there is in any event no foundation for concluding that BMC instituted blending for no commercial purpose. 310 I am satisfied on the evidence of Mr Bracken (exhibit O para 33 - 42, 46 - 60 and transcript 341, 342, 343, 344 and 345), the evidence of Mr Summers (exhibit S para 78 - 155, transcript 393, 408, 431 and 432) and Mr Rapple (exhibit Z para 38 - 65, transcript 464, 473, 484) that, in short, BMC instituted blending involving GMA garnet supplied under the GSA for commercial reasons which arose principally from supply chain difficulties, and the problems of conducting business from across a very large market in North America, from a multitude of locations, with multiple products, individual stocks of which could not readily be maintained. 311 I am simply not satisfied on the whole of the evidence that Barton International or BMC or other entities within the Barton group, from the time of negotiations for a Principal Agreement and GSA set out on a plan to avoid the obligations proposed to be created by those Agreements. 312 Rather, the evidence demonstrates that the genesis of the blending proposal lay in concerns about difficulties of maintaining consistent supplies of multiple products throughout BMC's extensive North American operations. The two principal factors which led to consideration of blending were the increasing demand that BMC experienced over the course of 2005/2006 and natural disasters which severely disrupted supplies in some areas in the USA. 313 BMC operated four mega‑centres and some 18 warehouses across North America. I accept that commercial prudence dictated that it had to plan in advance to ensure that it had product available across the entire North American market at all times. 314 Mr Rapple provided evidence of increases in demand which the business experienced in the period up to mid-2005 (see exhibit Z, annexure RR1). 315 In May 2005 there was a meeting between Mr Summers, Rapple, Jenks and Ahrberg regarding the possibility of blending Indian garnet with GMA Garnet 80 Mesh to overcome supply issues (see exhibit S para 81). 316 On 13 July 2005, Mr Summers wrote an email to Rappel, Jenks and Ahrberg proposing a meeting to discuss producing a blended 80 Mesh product. There followed an email exchange between Summers and Jenks discussing packaging of the blended product. Summers wrote (trial bundle 1028-9): Packaging will depend on our decision to blend or to sell discrete products. 317 On 18 July 2005, a meeting was held to discuss blending. Following the meeting there was a further email exchange: ● On 19 July Mr Rapple wrote an email to Mr Summers and others, summarising the meeting the previous day, noting in effect that if a blended 80 Mesh product was produced only that product would be supplied to customers. ● On 19 and 20 July, there was an email exchange between Rapple, Jenks and Summers, primarily concerning the importance of creating a truly homogenous blend of product and the possibility of marketing separate discrete products (ie Australian, Indian, Chinese) rather than blending. ● On 20 July, Mr Ahrberg sent an email in which he emphasised the importance of ensuring a quality and homogenous product from a marketing perspective. ● On 20 July, Mr Ahrberg sent an email in which he emphasised the importance of ensuring a quality and homogenous product from a marketing perspective. ● Mr Summers responded on 20 July noting in effect that continuity of supply from each source were the primary issues, and that over time as the percentage of Indian material increased and demand for garnet increased, the percentage of GMA 80 Mesh garnet in the blended 80 Mesh product would continue to decrease. ● On 21 July 2005, Mr Jenks responded to Mr Summers' email saying that this final point was very important and that it may argue for discrete products rather than blending. 318 Sometime in late July, Mr Ahrberg and Mr Rapple met to discuss the pros and cons of blending as opposed to selling multiple product lines. 319 By 25 August 2005, Mr Summers, Jenks, Ahrberg and Rapple had agreed to develop specifications, trials, blending ratios, labelling and in-product testing for blending purposes. Mr Rapple wrote in an email circulated on 25 August that "this is the most important thing we are working on at the moment". 320 On 26 August 2005, BMC entered into an asset purchase agreement with Flow International Corporation and its related companies regarding acquisition of a garnet distribution business. 321 In late August, Hurricane Katrina devastated the BMC garnet warehouses in New Orleans, Louisiana. 322 In September, Hurricane Rita further damaged the BMC garnet warehouse in New Orleans. 323 Also by September, testing protocol were prepared for the University of Missouri in respect of the blending investigation. 324 By the end of September there was an email exchange concerning the labelling of prospective blended product. 325 On 22 October 2005, Mr Summers circulated an email verging completion of the specifications before a foreshadowed meeting with VVM (the Indian garnet producer) within two weeks, with a view to discussing quality issues with VVM. He also wrote that BMC would have the necessary packaging materials on about 1 January 2006 and expressed the opinion that BMC should be blending "sooner rather than later". 326 Mr Rapple expressed a similar view in an email of 1 November 2005 relating to the testing of Indian garnet and adding that "we would like to see blending at Reserve and ERT begin as soon as possible" at a lower ratio which can be increased as the quality of Indian garnet improves. 327 Mr Summers responded the next day indicating that full scale blending could commence at Virginia on 1 January 2006 with Louisiana to follow some time thereafter. 328 The plan to blend garnet was by this stage well advanced. On 3 November 2005, Mr Bracken wrote to the Board of The Barton Group seeking approval for the purchase of an OMAX machine and indicated "within the next several months we will begin blending garnet at Reserve and ERT" and that "this will allow us to put Australian, Indian or even Chinese garnet in the blend which will allow us to better control our costs and supply chain". The Board subsequently approved that purchase. 329 In early November, Mr Summers, Bracken and Rapple travelled to India to meet with VVM. 330 On 19 or 20 November 2005, there was a fire at the marine terminal warehouse, Virginia, causing the collapse of the fibreglass roof. 331 On 23 November, Mr Summers sent an email that blending would not be in until at least 1 February 2006 in Virginia and 1 March 2006 at Louisiana. 332 In late December, early January, VVM advised of delays in garnet caused by heavy rains and flooding. 333 Between 25 and 27 January 2006, at Hidden Valley, Pennsylvania, there was a meeting at which the prospect of blending 30/60 and 60HPA products and the testing of the blended product were considered. 334 In February 2006, Mr Summers travelled to India to discuss quality issues and delays with VVM. 335 Later, sometime between February and June 2006, Mr Ahrberg informed Mr Summers of the results of performance testing of GMA product of 60 Mesh and 80 Mesh product. Mr Bracken was told of the test results and gave the go ahead for the commencement of blending in around February 2006. 336 On 13 March 2006, the roof collapsed at the Virginia mega‑centre. 337 In April 2006, a shipment of 4,000 tonnes of 80 Mesh was made by VVM and the improvement in the quality of that product was noted by Mr Summers. 338 Between 17 April and 20 April, there was an email exchange concerning the blending of HPA (Australian garnet) and HPX (hard rock BMC garnet) and the possible blend ratio. By 6 June 2006, blending of 80 Mesh garnet commenced at Louisiana. 339 On 11 July 2006, blending of 80 Mesh garnet commenced at Virginia. 340 On 29 November 2006, Mr Summers circulated an email expressing his concern about "the continuity of supply and the possibility of stock outs" and attaching an analysis of BMC's inventory position. He also sent an email that day concerning start dates for blending of 30/60 product at Louisiana. 60 HPA at Louisiana and both 60 HPA and 30/60 at Virginia. These all proposed start dates in early 2007. 341 On 31 January 2007, blending of 30/60 and 60 HPA commenced at Virginia. 342 On about 5 March 2007, blending of 30/60 garnet commenced at Reserve. 343 On about 13 April 2007, blending of 60 HPA garnet commenced at Louisiana. 344 When the applicants discovered that GMA garnet was being blended by BMC, apparently they were surprised. As noted above, at the time of the negotiations and execution of the GSA and Principal Agreement, Mr Ketelsen and Mr Aaron Williams had no knowledge of blending practices by BMC. Nor were they familiar with the practice in the operations of GIRL or GMA Garnet and subsidiaries. 345 The applicants subsequently took the view that BMC, with the knowledge of Barton International, had undertaken any earlier blending covertly and were at pains not to let them, or their customers know that they were blending. This is pointed to on behalf of the applicants as an additional reason why Barton International knew from the time of negotiations for the Principal Agreement and GSA that general blending of GMA garnet was a real possibility, if not then an active plan. 346 There is little doubt that BMC and companies within the Barton group maintained a degree of secrecy in respect of their blending proposals. One can understand that from their commercial point of view it might be important to do so. To that point they used their own HPX hard rock garnet. They also imported GMA garnet, which had an excellent reputation in the market, and additionally they were importing Indian and Chinese garnet. Any sudden change of supplies to established customers might well produce a negative reaction. Indeed, that much is established by the evidence of Mr Borgh, because when some blended garnet was put to market there was some adverse reaction to it. 347 But none of that is to suggest that at the time of the negotiations the evidence shows that Barton International or entities within the Barton group of companies had decided to blend. 348 Nonetheless there is no doubt that between May 2005 and December 2005, the idea that BMC might blend various supplies of garnet developed apace. The internal communications at BMC also show that, given the relationship between the Barton group of companies and the applicants, some officers of BMC were particularly enthusiastic about the idea. Undoubtedly it was appreciated generally within BMC and Barton International that if GMA garnet were blended, it would be a much less visible product in the North American market and that garnet carrying the BMC brand only would have an increased visibility. There is also little doubt, by that time that BMC and other entities within the Barton group of companies believed there was no contractual impediment to blending of GMA garnet in accordance with this proposal. Indeed, Mr Bracken said he held this view from when the GSA was executed. 349 The evidence suggests that, while there was enthusiasm within the Barton group of companies and BMC to pursue the blending plan, the blending plan was primarily driven by commercial reasons to do with demand and supply of garnet, not some plan conceived at the time when the GSA was being negotiated, as the applicants submit suggesting that Barton International engaged in the negotiations in this respect with less than good faith - something not pleaded against Barton International in any event. 350 The applicants also point to the fact that Mr Cole says that he proposed the possibility of intentional blending at his meeting with Mr David Williams on 11 February 2005. Whilst suggesting that Mr Coles' evidence in this regard should not be considered reliable by the Court, the applicants say it nonetheless indicates that the possibility of blending was on the mind of representatives of Barton International from the period of the negotiations. 351 However, in my view the evidence of Mr Cole fully and adequately explains how he, at that point, came to raise the question of intentional blending. He says, and I have accepted his evidence, that he understood from his familiarity with the business of The Barton Group that intentional blending did occur from time to time in niche markets. That evidence does not support a finding that, by the time of or during the negotiations, Barton International or other entities within the Barton group had hatched a plan to blend GMA garnet as soon as they received quantities of it under the GSA. 352 The applicants also point to the evidence of Mr Borgh, who at material times on 2 March 2005 was employed in sales with BMC. He says that at a sales meeting on 2 March 2005, Mr Bracken addressed the sales staff and informed them that the litigation with GIRL had settled and that Barton International would now be blending the GMA Garnet product that it sells. He considered that Mr Bracken presented the blending proposal in a manner that indicated that a final decision to blend had already been made. He says that within a few months of March 2005, the sales strategy was explained to the sales staff and no differentiation was made between the various grades and no timeframes for its introduction were stipulated. 353 The evidence of Mr Borgh as to what Mr Bracken said was not accepted by Mr Bracken. He could not recall exactly what he had said at the meeting, but emphasised that the question of blending was not developed until later that year. 354 In light of all the evidence I have recounted, it should be said that it is improbable, although not impossible, that the prospect of blending would have been mentioned as early as 2 March 2005 by Mr Bracken. In May 2005, Mr Summers, Rapple, Jenks and Ahrberg met concerning the possibility of blending Indian garnet with GMA 80 Mesh garnet to deal with supply issues. Obviously, the question of blending had been raised generally within BMC before that, at least for the purpose of discussing the topic. 355 However, the evidence of Mr Borgh is such as to suggest that a very definite decision had been taken by Mr Bracken in early March, and that at the sales meeting he was at pains to explain that blending would occur. It seems to me on the balance of probabilities that it is unlikely that Mr Bracken made any such statement as of March 2005. 356 The evidence of Mr Summers, that he and others met in May concerning the possibility of blending Indian garnet and GMA garnet to overcome supply issues, is not, to my mind, consistent with BMC or Mr Bracken having decided or announced that blending of GMA garnet, as a general practice, was something that BMC had already committed to. 357 Therefore, in the context of all the evidence concerning the process by which BMC developed and implemented its blending plan, I remain unconvinced that Mr Bracken made any firm statements concerning blending as Mr Borgh has recalled in his evidence, at least as of 2 March 2005. 358 However, given the state of the evidence, it would not be at all surprising if, in the period leading up to May 2005, the possibility of blending was mentioned in various quarters within BMC, given that Summers, Rapple, Jenks and Ahrberg then entered upon a discussion of that possibility. 359 Mr Rapple estimated that the BMC policy decision to proceed with blending was circulated to sales staff in June 2006. I accept that this was probably so. 360 The fact that BMC had in the past blended GMA garnet with HPX garnet in a covert fashion, that is to say, without informing its customers or anyone else that it had done so, and the fact that it developed its blending plans from about May 2005 without advising the applicants, does not to my mind suggest that Barton International or BMC had something approaching a "guilty mind", as implied by the applicants in their submissions, such that they were aware that they were acting contrary to the terms of the GSA. 361 I reject therefore the submissions of the applicants that the plan for such blending was conceived at the time the GSA was being negotiated and before it was executed, and that the blending was for the purpose of hindering promotion of GMA Garnet in North America. 362 I accept, however, that once the blending plan was developed and implemented, for commercial reasons, BMC and Barton International both also appreciated that blending of GMA garnet supplied under the GSA would have the effect of hindering promotion of GMA Garnet in North America. 363 As noted above, in any event I consider that the allegation of breach of the terms of the GSA made in para 16A.3(c) of the statement of claim, that ends with the words "even in circumstances where there was no commercial purpose served by such blending", is a superfluous embellishment of the breach allegation, which stands or falls on the scope of the alleged terms, which do not themselves refer to the purpose of blending. To that extent, the evidentiary issue raised concerning the reasons for blending of product by BMC is not a real issue. 364 Nonetheless, as stated above, I find there is no foundation for concluding that BMC instituted blending for no commercial purpose. 365 Nor does the evidence support a finding that Barton International or other entities within the Barton group had already decided, at the time of the negotiations for the GSA, that BMC or other entities within the Barton group would blend GMA garnet supplied under the proposed GSA.

The Branding issue 366 Clause 2.5 of the GSA provides: 2.5 GMA Branding All garnet purchased under this Agreement and distributed or sold by the Buyer which is 100% Product must be branded by the Buyer with the GMA Garnet name and logo (which may co-exist with the Buyer's own branding provided that the prominence of the GMA Garnet name and logo is not less than that which has applied during the 2004 calendar year) and the Seller grants to the Buyer a non exclusive licence to use the GMA Garnet name and logo on Product for this purpose. The Buyer must not use the GMA Garnet name or logo on, or in connection with, the distribution or sale of any garnet which is not 100% Product or hold out in any way that garnet which is not 100% Product, is Product.

First strand of the construction argument: does cl 2.5 only apply to packaging? 367 The applicants contend that, by reason of cl 2.5, Barton International was required to label all discounted garnet purchased by it and then onsold to BMC, whether it was in packaged form or loose bulk. 368 By the first strand of its construction argument, Barton International contends by contrast that, on its proper construction, the branding obligation in cl 2.5 relates to GMA garnet distributed or sold in packaging, but does not impose an obligation on it to package garnet, particularly loose bulk garnet, supplied under the GSA. 369 The applicants say that the respondent's construction involves substantially reading down crystal clear words of a blanket branding obligation carefully and deliberately imposed on Barton International. 370 The applicants say the parties can be seen to have attached pivotal importance to securing, over a 12 year period, a faithful adherence to the branding obligation. 371 The applicants also say that the branding obligation on Barton International is directly relevant to the purpose of the product discount afforded by cl 4.2, as the purpose of the discount is expressly stated to be to enable GMA Garnet to promote distribution of Product in North America. 372 As a result the applicants say that Barton International's unqualified branding obligation can be seen as a pragmatic mechanism, carefully crafted by the parties (who know the garnet industry) to securely identify what then becomes a discrete visible product and so thereby to enable the promoting of the distribution of GMA garnet as a "Product" in North America. In order for GMA Garnet as such to be promoted, consumers need to know of it and be able to find it, as that Product. 373 The applicants further argue that the obvious link between the proper labelling of GMA garnet and promoting distribution is legally and commercially founded upon the fact that the source of goodwill for the GMA garnet is, in the circumstances of the case, wholly generated by proper labelling of the GMA garnet. GMA Garnet had no presence in North America at the time the GSA was made and so through the distribution of the network of the Barton group. 374 Hence, if GMA garnet is properly labelled this would inevitably have the effect for building GMA Garnet's goodwill in North America. As goodwill builds, this will cause further custom to be attracted for GMA Garnet, thus promoting distribution of GMA garnet in North America. 375 The applicants say commonly known pre‑contractual circumstances can be used to assist in construing the meaning of contractual terms, but not in the end to overturn a term's plain meaning. Otherwise, the construction exercise alters to resemble a rectification argument. 376 The applicants say if Barton International's construction were to be accepted, limiting the branding requirement to packaged garnet, then all that Barton International is ever obliged to do, in return for the substantial price discount which it took on the 50,000 tonnes of GMA garnet that it may purchase annually under the GSA for 12 years, is to ship and discharge that discounted garnet into North America and (possibly) not to remove any pre-shipment GMA Garnet branding on a relatively small amount of GMA garnet shipped in pre-packed and branded bags. 377 The applicants say, in effect the construction advanced by Barton International approaches a defacto attempt at rectification of cl 2.5 designed to delimit the tangible obligation which Barton International accepted in exchange for a significant discount on price and which it could potentially obtain over 12 years of the GSA. 378 Barton International contends that the Principal Agreement and the GSA must be construed with due regard to the mutually known background facts, which include; ● BMC's commonly known role as the distributor of garnet in North America; ● the ACCC's investigation into the Perth Agreement; and ● the parties' concern to avoid further regulatory intervention and to conclude an open product supply contract. 379 Barton International says it is important to recognise that the setting here is a commercial one. It has particular features which are explained in the recitals and terms of the Principal Agreement. It relates to the supply of an industrial product to a buyer in a corporate group, whose related company markets such products in North America. 380 The respondent places particular emphasis on the fact that the GSA was entered into by virtue of the terms of the Principal Agreement and says that the principal purpose of the GSA was to provide to Barton International part of the total consideration it was to receive for the sale to GIRL of its various property interests and rights as provided for by cl 2.2 and cl 2.3 of the Principal Agreement. 381 The respondent says GMA Garnet and GIRL did not enter the GSA as the result of an independent commercial decision. On the contrary, both Barton International and GIRL agreed to cause GMA Garnet to enter the GSA: see cl 4.1(d) of the Principal Agreement. Garnet supplied under the GSA is owned by GIRL, not GMA Garnet. GMA Garnet is paid a sum representing its costs of production, but the benefit accorded to Barton International by 12 years of supply of garnet at concessional pricing, moves from GIRL. 382 The respondent says that by virtue of the genesis and principal objects of the Principal Agreement and the GSA, and the nature of the GSA as a supply agreement - not a distribution agreement - there is no foundation for imposing restrictions on the Buyer's freedom to deal with purchased product beyond those restrictions which are provided for expressly. 383 Barton International also says that neither cl 2.3 of the Principal Agreement nor cl 4.2 of the GSA imposes any promotion or marketing obligations on it. 384 The respondent says it is also important to note that garnet is used for specialist industrial uses it is not intended for general public use. 385 Barton International submits that the interpretation or construction of the obligation to brand garnet imposed on Barton International by cl 2.5 contended for by the applicants effectively amounts to an obligation on Barton International to package all 100% GMA garnet acquired under the GSA and to sell it and distribute it in packaging, even when Barton International sells it to a related entity such as BMC, which was known to operate the Barton International garnet distribution business in North America. The respondent says that cl 2.5 contains no words which convey such an intention. 386 Rather, Barton International says, the purpose of cl 2.5 is to control the use of the GMA Garnet name and logo, not to constrain the way in which a customer's requirements as to delivery of product may be satisfied. 387 Barton International also says it is not in dispute that garnet itself - in the sense of "particles" of garnet - cannot be branded. 388 Accordingly, Barton International contends that it is not possible to accord cl 2.5 a literal meaning and that it would be a nonsense to suggest that the thing which must be branded is garnet or garnet "particles". With a product such as garnet the concept of branding necessarily relates to packaging (if any) in which the garnet may be distributed or sold. Only packaging can be branded. 389 The respondent says so much is confirmed by the words in parenthesis in cl 2.5, which provide that the prominence accorded to the GMA Garnet name and logo must not be less than that which applied during the 2004 calendar year. That is a reference to the prominence of the GMA name and logo as then used on packaging, not on garnet itself. 390 Barton International also points out that the GSA expressly contemplates that product may be supplied to the Buyer "packaged" (ie in "packaging") or in bulk: see cll 5.1, 6.1 and 6.6, Annexure A, definition Consignment Type in cl 1.1. 391 The respondent says that this recognises that the Buyer has the right to buy garnet in bulk and thereby take advantage of cheaper prices, which reflects the avoidance of packaging costs otherwise charged by the Seller. 392 The respondent says that there is no express provision which requires the product which has been bought in bulk to be branded before any distribution or sale of it. 393 The respondent says that specifically providing for supply of product in loose bulk, the parties contemplated that loose bulk garnet can be distributed and sold anywhere in the world. This is an added reason for not attributing to cl 2.5 an intention to impose an onerous packaging requirement where no such intention is expressed. 394 Accordingly, Barton International contends, on its proper construction the branding obligation in cl 2.5 relates to garnet distributed or sold in packaging. It does not impose an obligation, in effect, to package garnet. 395 On that construction, the respondent says it is unnecessary to consider the issue whether cl 2.5 applies to a sale by Barton International to BMC, as it is not alleged that any sale of packaged product by Barton International to BMC was made in breach of cl 2.5. 396 The applicants, in response to the consideration argument mentioned above, say that to the extent Barton International contends that, because the GSA was a mechanism for delivering to Barton International part of the value which it exchanged for the sale of Barton International's partnership interest to GIRL there is a special principle of construction, namely that the obligations contained in the GSA should generally be construed in its favour so as to avoid imposing upon it onerous requirements that would entitle GMA Garnet to terminated the GSA and thereby deprive Barton International of a significant part of the consideration which it bargained for; that argument should be rejected for at least three reasons. 397 First, the agreed terms of the GSA were reached after lengthy negotiations. There is no special principle or presumption of contractual interpretation which means that the GSA should not be interpreted objectively as in the case of any other contract. 398 Secondly, neither the GSA nor the Principal Agreement expressly state that, commercially speaking, the purpose of the GSA is to deliver Barton International part of the consideration for the sale of its partnership interest to GIRL. On the other hand, they do expressly state a contractual purpose for the GSA, namely, that GMA Garnet wishes to promote distribution of Product in North America for which it allows a concessional rate. 399 Thirdly, it is doubtful whether the GSA was in fact ever intended to deliver to Barton International significant part of the value exchanged for Barton International's partnership interest. That is because of the significant business risks that could lead to the GSA failing to deliver any value. 400 I should say immediately that I do not consider that there is any special principle of construction that applies in a case such as the present. The GSA should be interpreted and construed according to ordinary principles. The fact that it was borne of the Principal Agreement does not, in present circumstances, alter the position. 401 The first construction issue is then whether the cl 2.5 branding obligation is properly restricted to packaged garnet, as the respondent contends, so that the on‑sale of loose bulk GMA garnet supplied under the GSA by Barton International to its related entity, BMC, is unaffected by cl 2.5. I consider, broadly for the reasons advanced on behalf of Barton International, that the construction of cl 2.5 contended for by the respondent supplies a meaning to cl 2.5 that accords with business commonsense. This is particularly so when one has regard to the surrounding circumstances and the commonly understood facts, as I have found them, including the circumstance I have found from the course of negotiations between the parties, that cl 2.5 was drafted by Mr David Williams (for GIRL) having regard to the issue of concern raised by Mr Cole (on behalf of Barton International), that an earlier proposal which provided that all GMA garnet purchased under the GSA must be branded, was objectionable to the Barton International interests because blending of garnet may occur. Whether one views the latter finding as something commonly understood by the parties, or a concurrence that negatives a particular construction of cl 2.5, it is in my view a fact that must necessarily be taken into account together with all others when interpreting or construing the GSA. 402 The construction advanced on behalf of the applicants that all garnet, whether packaged or loose bulk, must be labelled by Barton International, even at the point of on‑sale to a related entity such as BMC, produces an outcome that is not practical and, in my view, contradicts business commonsense. 403 Apart from any other factor, as the respondent argues, a sale may occur on paper at any point following the point at which Barton International takes possession of that property. There may, for example, be a "paper sale" at some point in transit of a shipment between Western Australia and the USA. 404 In this regard, it is important to note, as plainly is the case, that the branding obligation in cl 2.5 does not apply only to garnet shipped and discharged into the USA and Canada that attracts the discount provided for in cl 4.2. Rather, cl 2.5 imposes a branding obligation in respect of all garnet that is sold or distributed by the Buyer that is 100% Product. There is, in my view, no proper reason to link the wishes of the Seller expressed in cl 4.2 to promote distribution of Product in North America, with the branding obligation expressed in cl 2.5, as the applicants contend. 405 It makes perfect business sense that the Seller wants to see all of its relevant product branded under cl 2.5, wherever it may be sold or distributed and at whatever price the Buyer has paid for it. 406 There is, in my view, little doubt, as the respondent contends, if one is to adopt the construction of cl 2.5 the applicants contend for, then in substance Barton International would be required to package all GMA garnet it receives under the GSA, including that which it receives in loose bulk form. In submissions, the applicants do not in substance reject that outcome. Rather, they simply suggest that, if that is the contractual effect, then so be it. 407 If it was intended that loose bulk garnet could only be sold in a packaged form, in order to be branded, this is something that could easily and would have been specified in the contract. 408 The words in parenthesis in the first sentence of cl 2.5 concerning the use of the GMA Garnet name and logo with a prominence that was used during the 2004 year, also strongly suggest that the trading obligation only applies to packaged product. This prominence rule owes itself directly to the pre-existing 2004 practice, well known to the parties prior to the GSA, of branding packaging with the GMA Garnet name and logo at the point of sale to BIA. 409 The second sentence of cl 2.5, authorising the use of the GMA Garnet name and logo, also tends to emphasise that it is the sale of GMA garnet in packaging to third party customers that is intended to be affected by the branding obligation in cl 2.5. 410 The fact that the applicants also believed at the time of negotiations leading to the GSA, that BMC only distributed or sold GMA garnet to third party customers in packaging, and never loose bulk, also tends to confirm the intention of the parties was to brand packaged GMA garnet only. 411 On the face of it, the parties did not turn their minds to the particular question of branding loose bulk GMA garnet, even though the GSA provided for GMA garnet to be supplied in loose bulk. 412 It is correct to find, in my view, that it is not possible, in any strict sense, to label loose bulk garnet, or garnet particles. That product is not amenable to labelling or branding. While loose bulk might be supplied or transported in containers, to speak of branding the GMA garnet so supplied in this way makes little practical sense. 413 Given also my findings above, that the parties understood Barton International was adamant that the GSA should not constitute a distribution agreement, and my findings below rectifying the applicants' construction of cl 4.2, I do not consider the cl 2.5 branding obligation is to be construed with any marketing obligations in mind, as the applicants contend. The Buyer purchases GMA garnet. It may receive it in a packaged form or as loose bulk. There is a branding obligation in respect of the distribution or sale of 100% Product. There is no obligation to package. A branding obligation is only apposite, in my view and on the evidence received, where the election is made by the Buyer to package the product. Clause 2.5 does not speak to the circumstance in which the Buyer distributes or sells GMA garnet in a loose bulk form. 414 I therefore conclude that on its proper construction, cl 2.5 only imposes the specified branding obligation in respect of packaged, not loose bulk, GMA garnet supplied under the GSA.

Second strand of the construction argument: does cl 2.5 apply to an internal Barton transaction? 415 By the second strand of its construction argument, Barton International contends that cl 2.5 does not apply, in any event, to sales by Barton International to BMC, that is to say, to distribution or sales to a related entity. 416 It will be appreciated immediately that unless cl 2.5 applies in respect of an act of distribution or sale by Barton International to BMC, there can have been no breach of cl 2.5, as alleged by the applicants, when Barton International onsold loose bulk garnet purchased under the GSA to BMC. 417 Accordingly, even if the first strand of the construction argument raised by the respondent, that only packaged garnet need be branded, Barton International would have an immediate defence to the claim of breach of cl 2.5 if there is no contractual impediment to Barton International on‑selling Product to BMC without branding. 418 In this regard, Barton International says the very concepts of branding, together with that of the grant of the non‑exclusive licence, and the corollary which restricts use of the GMA Garnet name or logo and holding out of GMA garnet which is not sold as 100% Product, are all concepts concerned with the presentation of product in the market in which it is marketed and sold to third party customers. The respondent says these concepts have no significance as regards industrial product when it is transported, handled and stored prior to such marketing and sale. 419 Barton International says the concept of branding and its significance in the presentation of product are quite inapposite if sought to be applied to product which, while in storage, is subject to a private dealing between Barton International and a related entity. 420 Put another way, the practical concepts are devoid of utility in relation to a legal transaction which does not involve presentation of product to a customer. 421 The respondent points out that when the GSA was entered into, the applicants knew that BMC operated a warehouse, distribution and sales network for garnet within North America and was the company within the Barton group which distributed garnet in that region. The Court has found, it should be noted in passing that GIRL knew that BMC probably did do all these things. As a result, the respondent argues that the obvious inference to be drawn was that this would continue. 422 Indeed, Barton International seeks, by way of cross claim, to insert in the GSA a term as follows: The Buyer agrees to ensure that BMC abides by cl 2.5 as if it was bound thereby. For that purpose, rights conferred under clause 2.5 may be exercised by BMC. 423 The respondent says that rectification of the GSA in this way would reflect the common intention of the parties that Barton International would be obliged to cause BMC to abide by any provision of the GSA which imposed obligations as regards the sale or distribution of garnet acquired under the GSA, which common intention necessarily included the intention that rights conferred on Barton International which were connected with fulfilment of obligations, would be exercisable by BMC. 424 Barton International say that evidence of this intention is that no distinction was drawn between individual companies in the Barton group during the course of the negotiations and that it was obvious that, by one means or another, BMC would acquire that garnet (or the right to sell it) and distribute it to customers. 425 Accordingly, Barton International say cl 2.5 must be construed in harmony with the term inserted by way of rectification. That proposed term reflects an obvious focus on 100% Product when distributed or sold in packaging to customers. The intention which lies at the heart of this term is an intention that the branding requirement should apply when there is a distribution or sale to ultimate consumers by BMC, a related entity of Barton International. 426 The respondent says the existence of that (undisputed) intention is inconsistent with the notion that a prior sale between Barton International and a related entity should also attract a branding obligation. 427 The respondent says the concept of distribution or sale by Barton International or a related entity does not encompass successive sales. Distribution or sale is a reference to a single event, as regards particular product. 428 Further, the GSA does not require bulk garnet shipped by Barton International to be labelled before it is distributed or sold. Barton International can transport, process and store such garnet in bulk without breaching cl 2.5. 429 Barton International says this demonstrates that cl 2.5 is not directed at garnet being held in inventory, but garnet when marketed and sold to customers. 430 Thus, both sentences of cl 2.5 refer to distribution or sale. Plainly both references bear the same meaning. 431 Barton International says the restriction imposed by the second sentence of cl 2.5 reflects intention to limit the use of the GMA Garnet name and logo in marketing activities (for example, brochures, advertisements) as well as on packaging. This confirms that the references to distribution are intended to refer to marketing. 432 The respondent further argues that it is common ground between the parties that the reference to garnet "distributed or sold by the Buyer" in cl 2.5 encompasses sales to ultimate consumers; this having regard to para 13.2, para 15.1A and para 15.2 of the statement of claim. 433 Accordingly, the respondent says that on its proper construction, cl 2.5 refers to distribution or sale to customers. 434 Senior counsel for Barton International put this construction of cl 2.5, concerning an application of the branding requirement at the point of distribution or sale to a third party customer, on the basis that that is the proper construction of cl 2.5 both, before and after rectification. 435 In my view, if the rectification pleaded in the cross claim by Barton International is allowed, then there is considerable additional textual reason to accede to the respondent's argument. 436 However, it is appropriate first to consider the construction argument put by the respondent without regard to the claimed rectification of the GSA. 437 In my view, the arguments for such a construction of cl 2.5, so that the branding obligation only applies at the point of which 100% Product is distributed or sold to a third party customer, are compelling. 438 When one has regard to the fact that it is not "all garnet purchased" under the GSA that must be branded, but "all garnet purchased … and distributed or sold by the Buyer which is 100% Product", where the Seller grants to the Buyer a non‑exclusive right to use the GMA Garnet name and logo on product for the purpose, the textual argument for concluding that the act of distribution or sale which attracts the branding obligation is the act of distribution or sale to a third party customers becomes, in my view, compelling. 439 The textual argument is supported by the fact that the second sentence of cl 2.5 prohibits the Buyer from using the GMA Garnet name on, or in connection with, the distribution or sale of any garnet which is not 100% Product, or hold out in any way that garnet which is not 100% Product, is Product. That sentence, in my view, plainly has to do with the presentation of Product to the market - that is to say, to third party customers. 440 It is also important, in my view, to note the words in parenthesis in the first sentence of cl 2.5: (which may co-exist with the Buyer's own branding provided that the prominence of the GMA Garnet name and logo is not less than that which has applied during the 2004 calendar year). 441 Those words, as contended for by the respondent, must be understood in the context that BMC was known to be the distributor of GMA garnet in North America and it was BMC's name and logo that had previously been applied to packaging containing 100% Product, along with GMA Garnet's name and logo. The reference to prominence is a reference to the relative significance accorded to the two brands which had previously been used together. The words in parenthesis were plainly designed to allow the continued use of BMC's branding. 442 The inclusion of this portion of cl 2.5 serves to emphasise that the obligation to brand is intended to arise at the point of marketing to customers. 443 In my view, there can be little doubt that, textually an act of distribution or sale by Barton International to a related entity such as BMC is not intended to be, and is not caught by the branding obligation created by cl 2.5. 444 When one has regard to the broader context in which this commercial agreement was struck, particularly the understanding by the parties that BMC was engaged in the distribution and sale of GMA garnet in North America, and that distribution and sale depended upon its activities, it can be readily understood that while the expression "Buyer" was used in the singular in cl 2.5 - and so on the face of it, applies only to Barton International - it was not the intention of the parties that an internal transaction between Barton International and BMC should attract the branding obligation. The co‑branding provision in cl 2.5 just mentioned serves also to emphasise this. 445 The next related issue is whether, in the circumstances, the contract should be rectified by inserting the term pleaded by the respondent in the cross‑claim and set out in para 28(e) of the defence, as set out above. 446 In this regard, it is well understood there must be clear and convincing proof that parties had a common understanding about the terms, which were recorded erroneously, before rectification will be permitted: Ryledar Pty Ltd t/as Volume Plus v Euphoric Pty Ltd, 629 -33 at [22] - [143]; 655 - 67 at [258] - [315]. 447 Once it is appreciated that the proper construction of cl 2.5 is that the branding obligation only applies in respect of distribution and sale at the point of which product is marketed to a third party customer, and having regard to the surrounding circumstances as outlined above, I am satisfied the parties commonly understood and indeed had the continuing intention that BMC would be and should be engaged in the process of distribution and sale of GMA garnet in the marketplace, particularly the North American market in which GIRL had expressed its wish to encourage the marketing of GMA garnet. 448 I also accept that, having regard to the process of negotiation leading up to the Principal Agreement and GSA outlined in some detail above, that while the parties took some care to stipulate exactly who the contracting parties should be, in practical terms, when it came to the expected distribution and sale of GMA garnet (particularly in North America), the parties did not discriminate between one entity within the Barton group and another. While Mr David Williams initially proposed that BMC should be a party to the GSA, this was not accepted and ultimately Barton International became the contracting party. The reason BMC fell out of the proposed GSA as a contracting party had nothing to do with its commonly understood role in North America, but rather because the Barton group did not wish the GSA to become a distributorship agreement. For that reason, BMC plainly was left out of contention and the document primarily became a product supply agreement. 449 In seeking rectification of the GSA, the respondent also relies on the basis of the applicants' plea for rectification to the effect that Barton International "must ensure BMC abides by" the marketing obligations imposed on it by the GSA, while otherwise opposing the substance of the rectification sought. 450 The applicants oppose the rectification proposed by Barton International and say it is without merit for a number of reasons. First, that there is a fundamental obstacle in the way of the proposed rectification in that there is no evidence about a common continuing intention of the parties concerning the operation of cl 2.5 in respect of blended product. The applicants say that the respondent opposed evidence being adduced from the applicants' witnesses about this and never cross examined those witnesses about it. Yet, Barton International now seeks to rectify a small part of cl 2.5 in order to provide the basis for a (speculative) inference about the common intention of the parties concerning the operation of cl 2.5 in respect of blending product. The applicants say this is an attempt to make the "tail wag the dog". 451 Secondly, the pleaded basis for the rectification is unsupported by the evidence. Paragraph 28(b) of the defence alleges that the common continuing intention of the parties to the GSA was that rights conferred on Barton International which were connected with the fulfilment of obligations regarding the sale or distribution of garnet acquired under the GSA would be exercisable by BMC. However, there was no evidence from any witness, particularly Mr Bracken, of any particular intention that the terms of the GSA meant that BMC could apply the GMA Garnet name or logo for the purposes of cl 2.5 of the GSA. 452 Thirdly, not only is the proposed rectification unsupported by the evidence, it is practically inconsistent with Barton International's pleading in para 9(a) of the defence that when the GSA and the Principal Agreement were executed, the parties were united in rejecting any term to the effect that BMC would be bound by the GSA. If BMC is not bound by the GSA, but can exercise rights under the GSA, this would constitute a substantial rewriting of the bargain struck by the GSA and would fail to give effect to any common understanding at the time the GSA was entered. 453 Fourthly, BMC is not a party to the GSA or the Principal Agreement, and the proposed rectification does not seek that BMC be made a party to the GSA. Hence, there is no contractual privity between GMA Garnet and BMC. As a result, GMA Garnet would be unable directly to enforce the negative stipulation in the last sentence in cl 2.5 against BMC, even though BMC would be entitled to exercise the right to use GMA Garnet's licence. 454 The applicants say that apart from being highly unlikely that GMA Garnet ever intended to lose the ability to contractually enforce the terms of its licence, there might be another significant consequence. The contractual stipulation in cl 2.5 is governed by Western Australian law and the parties submit to the non‑exclusive jurisdiction of the courts of Western Australia (cl 15 GSA). If GMA Garnet has no contractual right to enforce the terms of its licence against BMC, it might be forced to take proceedings against BMC in North America, rather than in Western Australia, to enforce its licence. That would be a practically undesirable outcome and potentially costly result for GMA Garnet. 455 Fifthly, the proposed rectification takes no account of cl 8.1(c) which confers an important right upon GMA Garnet to terminate the GSA for persistent breach of cl 2.5 by Barton International. If the proposed rectification occurred, it would be unclear whether persistent branding of other than 100% Product by BMC would necessarily always be a persistent breach of Barton International's obligation to ensure that BMC abided by cl 2.5. For example, if Barton International had taken reasonable steps to ensure that BMC abided by cl 2.5, but nonetheless BMC still failed to do so. 456 Sixthly, the proposed rectification is inconsistent with the evidence of how the parties actually dealt with alleged breaches. Barton International did not respond to allegations of alleged branding breaches of the GSA by saying that BMC had fulfilled the relevant obligations. Instead, the parties acted as if Barton International was bound to brand the GMA garnet. This action conventionally stops Barton International from claiming the proposed rectification (Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd (1986) 160 CLR 226) and is also a good indication of Barton International's intention at the time of signing the GSA. 457 The applicants also say that the rectification proposed by the applicants is different to that proposed by Barton International. The applicants proposed that Barton International should ensure that BMC abide by the GSA in addition to Barton International remaining bound. That means that Barton International is obliged to brand 100% Product upon internal sales to BMC and that BMC is obliged to ensure that such product remains branded when externally sold or distributed. 458 The applicants say their proposed rectification makes commercial sense because it holds Barton International accountable for branding. While it is commercially unlikely that BMC would remove any branding applied by Barton International, the proposed rectification legally prevents this. 459 The applicants further say that there should be no argument about the applicants' proposed rectification, as it is now accepted by Barton International that there was a common continuing intention that Barton International would be obliged to cause BMC to abide by any provision of the GSA which imposed obligations as regards the sale or distribution of garnet acquired under the GSA: see para 28(a) of the defence. 460 As to the first objection of the applicants, which they say is a critical issue bearing upon the proposed rectification of Barton International, whether there is any evidence of a common continuing contention of the parties concerning the operation of cl 2.5 in respect of blended product, it should be noted the respondent does not expressly rely on this issue to properly construe cl 2.5 in relation to the point at which the branding obligation arises. The respondent does, however, expressly rely on this blending issue in relation to the final construction point - the effect of the words "which is 100% Product". In any event, the Court has found above that cl 2.5 found its form in the GSA directly as a result of the communications between Mr Cole, on the part of Barton International, and Mr David Williams, on the part of the applicants on 11 February 2005. 461 While the Court recognises the force of a number of the other objections to the rectification taken by the applicants, particularly the fact that the parties through negotiations and settlement of the agreements were represented by experienced lawyers who understood the importance and privity of contract and the need to specify exactly which parties were to be granted rights and which were to assume obligations, and that BMC was dropped from the proposed agreement, the textual considerations supporting the construction contended for by the respondent and the surrounding circumstances and conduct of the parties supporting the continuing intention of the parties that BMC should have a role in the distribution or sale of GMA garnet, in my view overwhelmingly point to the necessary continuing intention of the negotiating parties in that regard. 462 In such circumstances, I consider the rectification to cl 2.5 proposed by Barton International does not involve a rewriting of the bargain between the parties, but rather constitutes a clear reflection of what the parties understood and, in substance, agreed should be the continuing position. It is appropriate, if the parties commonly understood that BMC should meet the branding requirements that it should also be able to affix the GMA Garnet name and logo - as indeed envisaged by the co‑branding provision in cl 2.5 as referred to above. 463 I am unconvinced that issues raised by the applicants in their fourth, fifth and sixth objections militate against the respondent's proposed rectification. Barton International remains the primary party subject to the obligations imposed by cl 2.5 of the GSA on the Buyer. Whether there is a breach by the Buyer for the purposes of cl 8.1(c) of the GSA will remain a matter of fact. 464 As to whether or not there is some conventional estoppel preventing Barton International claiming the proposed rectification, I do not see that the proposed rectification is inconsistent with the evidence of how the parties actually dealt with earlier alleged breaches. Barton International in fact responded to allegations on its own part and plainly indicated in respect of allegations that BMC in the USA had failed to meet the branding obligations of cl 2.5, by saying that the contractual obligations would be met. If anything, Barton International provided assurances designed to meet exactly the obligations that the rectified cl 2.5 would impose on it in respect of a related entity. 465 As to whether the rectification proposed by the applicants is different from that proposed by Barton International, I accept that it is. The question of the applicants' proposed rectification is dealt with further below in relation to the marketing obligation the applicants say were assumed by Barton International and, in effect, by BMC. But, largely for the reasons advanced on behalf of the respondent, I consider there is no clear and convincing proof of agreement to support the rectification proposed by the applicants. While the parties had in mind a continuing involvement of BMC in relation to distribution and sale of branded Product, there is no demonstrated continuing intention that BMC should undertake the market development role contended for by the applicants. 466 Accordingly, for these reasons, I would allow the rectification of cl 2.5 of the GSA pleaded by Barton International.

Third strand of the construction argument: does the phrase "which is 100% Product" qualify the branding obligation? 467 The third major strand of the cl 2.5 constructional issue, is what garnet "must be branded" by the Buyer. The answer to this is to be found in the interpretation or proper construction of the words of cl 2.5 (whether rectified or not) but now set out in their emphasised rectified form: "The Buyer agrees to ensure that all garnet purchased under this Agreement and distributed or sold by the Buyer or its Related Entity (as defined in the Principal Agreement) which is 100% Product." 468 If these words did not include the final few, "which is 100% Product", there would be little room for disputation between the parties: the obligation to brand would apply to all garnet which, as a matter of fact, had been purchased under the GSA and distributed or sold by the Buyer. It is the addition of the words, "which is 100% Product", which textually complicates the issue. 469 The phrase "100% Product" is not defined or interpreted in cl 1.1 of the GSA, or elsewhere in the GSA. Nor is it defined in the Principal Agreement or attachments. 470 However, the GSA by cl 1.1, as noted above, defines Product, which means: 30/60 Mesh or 80 Mesh as the context requires. As also noted above: 30/60 Mesh means 30/60 Mesh garnet or 60 Mesh garnet produced from the Mine 80 Mesh means 80 Mesh garnet or 100/120 Mesh garnet produced from the Mine. 471 So, Product means 30/60 Mesh garnet, or 60 Mesh garnet, or 80 Mesh garnet, or 100/120 Mesh garnet, in each case produced from the Mine operated by GIRL near Geraldton, Western Australia. 472 The use of the expression "100%" in relation to "Product" first appears in the GSA at cl 2.5. Not only does it appear in the first sentence, but as will have been observed, it also appears in the second, final sentence of cl 2.5, which provides that: The buyer must not use the GMA Garnet name or logo on, or in connection with, the distribution or sale of any garnet which is not 100% Product or hold out in any way that garnet which is not 100% Product, is Product. 473 Barton International contends that the phrase "which is 100% Product" is a limiting condition which qualifies the range of garnet to which the branding obligation would have otherwise applied. The respondent contends that the branding obligation applies when the following two preconditions are satisfied: (1) garnet is purchased under the GSA; and (2) that garnet when distributed or sold, is 100% GMA Garnet (i.e. unmixed or unblended). 474 The respondent says that nothing in the GSA provides that garnet purchased under the GSA cannot be mixed or blended with other garnet before it is distributed or sold. 475 The respondent contends that the words "which is 100% Product" must be given meaning and effect. 476 The respondent says this qualifying expression makes it apparent that the parties recognise that there might be blending of GMA garnet with garnet from other sources before distribution and sale. 477 The respondent says that if the parties had agreed that all GMA garnet purchased under the GSA had to be distributed and sold as such, and had to be labelled with the GMA Garnet name and logo, that could have been expressly provided for precisely and easily, but that the parties deliberately refrained from imposing such an obligation. 478 Consequently, the respondent contends that the branding obligation in the first sentence of cl 2.5 on its proper construction applies to 100% GMA garnet, that is distributed and sold in packaging, but that it has no obligation to label garnet sold in loose form or to package all garnet that it distributes or sells. 479 Barton International also contends that, to the extent there is any textual ambiguity about the meaning of cl 2.5 in this regard it should be noted that the parties were united in their understanding that cl 2.5 as finally adopted should not impose an obligation of the kind that had earlier been foreshadowed in para 5 of the Principles document of 11 February 2005, which, if accepted, would have precluded blending. Accordingly, cl 2.5 must be construed with that understanding in mind. 480 The applicants, by contrast, contend that Barton International's argument is both untenable and irrelevant. 481 The reason why the applicants say the argument is untenable is that upon the respondent's own pleaded argument in para 5(e) of the defence, it is alleged that it was commonly known by the parties that Barton International did not intend to sell GMA garnet within North America other than by onselling it to BMC. In those circumstances: (1) all garnet purchased under the GSA by Barton International would necessarily be 100% Product; and (2) all garnet sold or distributed by Barton International to BMC would also necessarily be 100% Product. As a result, the phrase "which is 100% Product" simply describes a particular quality or characteristic of garnet "purchased under this Agreement and distributed or sold by" Barton International; it does not have any limiting function as contended for by Barton International. 482 The applicants say that the purpose of selecting this quality or characteristic is because cl 2.5, in the second, final sentence, provides for Barton International to have a non‑exclusive licence to brand GMA Garnet Product. In order to protect its reputation and to prevent the GMA Garnet brand from being associated with blended product, the GSA expressly prescribes that the licence can only be used for 100% Product. Hence the reason for emphasising this quality in respect of discounted garnet sold by Barton International in the first part of cl 2.5. 483 The applicants say that the reason why Barton International's argument about the phrase is irrelevant is that, as a matter of fact, Barton International only sold and distributed 100% Product to BMC. Hence, whether Barton International could have chosen to blend GMA garnet is neither here nor there in the present case - they in fact sold 100% Product to BMC and were obliged to brand it. 484 However, as I have found above, the obligation to brand is created in the context: (a) of packaging, not loose bulk; and (b) of a provision concerned with the distribution and sale of GMA garnet to third party customers that is emphasised by the rectification of cl 2.5 which I have allowed. 485 Thus, it follows that the branding obligation takes effect at the point at which Barton International or BMC distributes or sells to a third party customer. The final critical question is "Distributes or sells what?". 486 On the construction contended for by the applicants, the thing which must be so branded is "All garnet purchased under this agreement". The words which appear to qualify those words, namely, "which is 100% Product" are effectively ignored by the applicants. In opening the case for the applicants, senior counsel for the applicants accepted that, from the applicants' point of view, one should more or less put a line through the words "which is 100% Product" (transcript 12). 487 In my view, on their ordinary, textual construction, the words "All garnet purchased under this agreement and distributed by the Buyer" are in fact qualified by the subsequent words "which is 100% Product". These qualifying words are capable of having meaning. It is not appropriate in the circumstances to say they are meaningless, or that they have been placed in the first sentence because the same expression is used in the second sentence. 488 I accept the submissions made on behalf of Barton International that the obligation to label or brand Product, created by cl 2.5, only arises at the point of distribution or sale by Barton International (or BMC) and only in respect of Product which is then identifiable, as a matter of fact, as "100% Product". In other words, if the Product is less than 100% GMA garnet (such that the GMA Garnet name and logo cannot be affixed to the Product on its distribution or sale having regard to the terms of the second sentence of cl 2.5), then there is no obligation to label it. 489 Further, to the extent there is any textual ambiguity introduced by the words, "which is 100% Product" it is also relevant to the construction of cl 2.5, whether rectified or not, to note the Court's finding that the form of cl 2.5 as ultimately negotiated and agreed was a direct consequence of the discussion between Mr Cole and Mr David Williams on 11 February 2005. Mr Cole then advised Mr Williams that Barton International did not wish to be compelled to label all GMA garnet - as then proposed by para 5 of the Principles document - because "there may be blending". 490 This finding tends to confirm that the expression "which is 100% Product" was intended to qualify the preceding words in the first sentence of cl 2.5, and that the branding obligation was and is not intended to preclude the blending and unbranded distribution and sale of GMA Garnet Product, which blended product is less than "100% Product". 491 In other words, Barton International agreed to ensure that all garnet purchased under the GSA and distributed or sold by it or a related entity which, at the point of sale, was in fact 100% Product must be branded. That allowed for the possibility that some of the garnet purchased under the GSA might not be 100% GMA garnet at the time of distribution or sale to an ultimate consumer because it may have been blended with other non‑GMA garnet.

Conclusion on the construction issue 492 Having regard to these various constructional findings preferred by the Court, the on‑sales by Barton International to BMC of loose bulk garnet, which was not labelled with the GMA Garnet name or logo, did not breach the branding obligation in cl 2.5 of the GSA.

The question of breach of cl 2.5 by inadequate branding 493 The applicants, in the alternative to their pleading concerning the on‑sale of unbranded loose bulk garnet by Barton International to BMC, plead that in breach of the branding obligation created by cl 2.5 of the GSA, BMC distributed and/or sold GMA garnet which is 100% GMA garnet branded by BMC with the GMA Garnet name and logo with less than the prominence which was applied during the 2004 year (para 19B.1 statement of claim). Distribution or sales in the States of Missouri, Kansas and Texas, USA are relied upon. 494 Further, the applicants plead that BMC has used the GMA Garnet name and logo or has used it in connection with the distribution or sale of garnet which is not 100% GMA garnet and has held out that garnet which is not 100% GMA garnet is GMA garnet (para 19B.2 statement of claim). The applicants say this happened at least in the State of Texas, USA. 495 No damages are sought in respect of these breaches only declaratory relief. 496 The applicants in making the claim in reliance on the conduct of BMC do so on the basis that the GSA should be rectified in the manner the applicants have pleaded. The Court however rejects the applicants plea for rectification, as mentioned above and explained further below. Nonetheless, the Court has allowed the rectification pleaded by Barton International has the effect that Barton International must ensure that BMC abides by cl 2.5 and BMC has the right to affix the GMA Garnet name and logo when branding product. 497 Be that as it may, I am not satisfied that the evidence concerning the lack of prominence pleaded in para 19B.1 constitutes persistent breach by the Buyer of its obligations under cl 2.5 for the purposes of cl 8.1 of the GSA. 498 Whilst the matters of prominence were canvassed in evidence, particularly during the cross examination of Mr Bracken and Mr Summers, the fact is the issues raised by the applicants at material times were attended to. 499 Even if it may be said, as probably it can that in 2005 there appears to have been instances where BMC failed to adequately affix the GMA Garnet name and logo on packaging in the manner required by cl 2.5, the breach was relatively minor and was remedied in a timely manner. It cannot be said, on a proper analysis of the sequence of events, that there was persistent breach such that the applicants were entitled to a declaration that Barton International's actions constituted a breach of the GSA. 500 So far as the claimed breach of cl 2.5 holding out provision pleaded in para 19B.2 of the statement of claim is concerned, only the one instance of this is particularised. It too does not prove a persistent breach. 501 In all the circumstances, there is also much to be said for the view that, even if these particular instances constitute sufficient breach for the purposes of a notice of termination under cl 8.1 of the GSA, a declaration in such circumstances would serve little purpose and should not be made: Aussie Airline Pty Ltd v Australian Airlines Ltd (1996) 139 ALR 663, 670.

The constructional issue 502 Clause 4 2 of the GSA, which is headed "North American Market" provides for a concessional rate for Product in the following relevant terms: The Parties acknowledge that the Seller wishes to promote distribution of Product within the United States of America and Canada and, for that purpose, the Seller shall allow to the Buyer a concessional rate for Product as provided in this Agreement. Accordingly, if the territory into which the Buyer ships and discharges Product under clause 2.1 after taking delivery of the same is the United States of America or Canada, the price for Product to be sold pursuant to orders to be placed by the Buyer pursuant to clause 2.1 shall be: (a) during the first Contract Year: (i) for the first 35,000 x tonnes of Product: the prices specified in Annexure A; and (ii) for the next 15,000 x tonnes of Product taken: the prices specified in Annexure A plus 15%: (Base Prices); where: A= the number of months (to one decimal place) from the Commencement Date to the expiry of the first Contract Year. (b) during each subsequent Contract Year: (i) for the first 35,000 tonnes of Product: the Base Price in clause 4.2(a)(i) adjusted pursuant to clause 4.3; (ii) for the next 15,000 tonnes of Product: the Base Price in clause 4.2(a)(ii) adjusted pursuant to clause 4.3. 503 As noted above, cl 1.2(c) of the GSA provides that in the interpretation of the GSA, unless there is something in the subject or context inconsistent therewith, headings used in the GSA are for convenience only and shall not be used in the interpretation or construction of this Agreement. No party relied on the heading to cl 4.2 referred to above in making their interpretation or construction arguments and I do not consider it to be relevant. 504 The pleading of the applicants in relation to the alleged marketing obligations may be distilled as follows: ● All GMA garnet acquired at concessional prices must be sold as 100% GMA garnet to ultimate consumers within North America and must be labelled as GMA garnet ie blending is prohibited (para 15.1, para 15.1A and para 16A.2 of the statement of claim). The term to this effect is also alleged by reference to the Principal Agreement (para 13.1, para 13.2 and para 16 of the statement of claim). ● Barton International is not entitled to order and purchase GMA garnet at concessional prices if neither it nor another member of the Barton group intends to sell the garnet as 100% GMA garnet to ultimate consumers within North America and to label it as GMA Garnet (para 15.2, para 16A.3). 505 The applicants say that Barton International is not only obliged to brand the discounted garnet at the point of on‑sale to BMC but, by reason of the terms of cl 2.5 of the GSA and cl 4.2 of the GSA as well as cl 2.3(b) of the Principal Agreement, has positive and negative obligations in relation to the promotion in North America of GMA garnet discharged into North America, in return for receiving a discount on the price of that garnet. 506 The applicants say that those obligations arise from the expressed mutual acknowledgement by Barton International and GMA Garnet found in cl 4.2 of the GSA, that GMA Garnet "wishes to promote distribution of Product" in North America "and for that purpose" shall allow to Barton International a concessional rate; and from an identical acknowledgment by Barton International and GIRL, of what they say is the same contractual purpose in cl 2.3(b) of the Principal Agreement. 507 The applicants contend that by reason of these dual acknowledgements of contractual purpose: ● Barton International was contractually committed to cooperating, or at a minimum, that Barton International by conduct made a representation to GIRL that it would cooperate in and support the proposed promotion of all discounted garnet reaching North America. The commencement point of this obligation was the taking of steps by Barton International to ensure that all GMA garnet reaching North American under the GSA was properly branded and therefore capable of being identified in the market place of North America as the GMA Garnet Product when sold to ultimate consumers; or ● Barton International was contractually obliged not to assist in, or at minimum, represented to GIRL that it would not assist in hindering the promotion of the discounted garnet (such as by selling it to a related Barton International corporation that Barton International knew would not, generally speaking, sell as 100% GMA garnet branded as such). 508 The applicants, as an additional matter, claim that the parties commonly intended, and that both assumed and acted on the basis, that Barton International would cause BMC to abide by the provisions of the Principal Agreement and GSA relating to the purpose of promotion for which the discount was being given. On this basis the applicants seek rectification of each Agreement to correctly record this obligation, or alternatively, claim that Barton International (and the applicants) are conventionally estopped from denying such an obligation, as regard BMC. 509 The applicants say that the contractual purpose and object of the discount expressly nominated by cl 4.2 of the GSA is very clearly stated and does not need to be inferred. The discount provided was for the purpose of GMA Garnet being able to "promote" distribution of GMA garnet in North America. The applicants contend that, axiomatically, bulk GMA garnet is incapable of being identified by a potential consumer in that market as Product. Equally, GMA garnet blended with garnet from other sources and therefore unbranded, cannot be identified in the market as Product. It would otherwise remain a bulk amorphous bare garnet substance and therefore be unrecognisable in the marketplace. 510 The applicants say that the same contractual purpose is not only expressly stated in the GSA but also found in cl 2.3(b) of the Principal Agreement. The applicants say a commercial court will be astute not to diminish or negate a pragmatic end consequence, such an express confirmation of contractual purpose. 511 The applicants say the concept of "distribution" has the dictionary meaning - namely, "the dispersal of commodities among consumers effected by commerce": Shorter Oxford Dictionary (2007), 6th ed at 717. Hence, the contractual purpose of the discount is for GMA Garnet to promote dispersal of GMA garnet (Product) among consumers in effective commerce in the North American marketplace. 512 The applicants say Barton International was and remains part of the Barton group of companies all of which interact in conducting the principal business of that group, namely the importation, mining (to a small extent), production and sale of garnet for industrial abrasive uses. In other words, Barton International and BMC are both a part of an integrated large scale business of garnet distribution, particularly in North America. Neither Barton International nor any other member of the Barton group has a principal business of themselves actually using the garnet in the day to day industry as an industrial abrasive. 513 In this context, the applicants say GMA Garnet's contractual purpose of "promoting distribution" of GMA garnet, can only mean the purpose of GMA Garnet promoting distribution of GMA garnet in North America, through that principal business of the Barton group of companies of which Barton International forms an integrated part. The applicants say, that outcome also reflects and builds upon the status quo at the time the GSA was executed on 31 March 2005. 514 The applicants say advancement of this purpose was the tangible benefit GMA Garnet would have obtained by means of Barton International's adherence to the branding obligation in cl 2.5 of the GSA, in return for Barton International being allowed a substantial discount on the price of acquiring GMA garnet over time. 515 The applicants say no such benefit is obtained by GMA Garnet where price discounted GMA garnet is merely shipped and discharged into North America. This is because the landing of GMA garnet upon North American soil will not carry any necessary connection to a subsequent dispersal of that garnet to ultimate consumers in the North American garnet marketplace. 516 The applicants say that in the statement of contractual purpose (and operational effect of the GSA) expressly define the benefit of the GSA rather than leaving it to be deduced or inferred. 517 The applicants say that in spite of this benefit, Barton International has agreed to do all the things reasonably necessary in the performance of its obligations and provide to the applicants, particularly in the performance of its labelling obligation in cl 2.5 of the GSA. The applicants contend that this is a case in which, to use Mason J's words from Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596at 607: [It] is easy to imply a duty to co-operate in the doing of acts which are necessary to the performance by the parties or by one of the parties of fundamental obligations under the contract. 518 The applicants say that even if the labelling obligation in cl 2.5 is not construed as widely as the applicants contend, the statement in cl 4.2 must still be given some effect. That is to say, the expressly stated benefit of the GSA for the applicants is still promotion of some, if not absolutely all, discounted garnet. 519 The applicants say that if their primary argument is not accepted then they rely upon the second category of case mentioned by Mason J in Secured Income 144 CLR 596 at 607 - 608, where His Honour said immediately after the passage quoted above: It is not quite so easy to make the implication when the acts in question are necessary to entitle the other contracting party to a benefit under the contract but are not essential to the performance of that party's obligations and are not fundamental to the contract. Then the question arises whether the contract imposes a duty to co-operate on the first party or whether it leaves him at liberty to decide for himself whether the acts shall be done, even if the consequence of his decision is to disentitle the other party to a benefit. In such a case, the correct interpretation of the contract depends, as it seems to me, not so much on the application of the general rule of construction as on the intention of the parties as manifested by the contract itself. 520 The applicants then argues that the intention of the parties is manifested by the contract as expressly stated in the introductory words of cl 4.2 of the GSA and cl 2.3(b) of the Principal Agreement. Therefore, Mason J's reference to the greater difficulty of making implication in the second category of case does not apply, as no process of implication is required. 521 In these circumstances the applicants argue that even if Barton International is not obliged to label all 100% Product, the implication should still be made that Barton International would label and sell or distribute sufficient product in North America to the extent necessary to facilitate promotion of distribution, or at least not hinder distribution of GMA garnet in that geographical area. In this case it has singularly failed to do so, as almost all garnet supplied has been blended. 522 In response, Barton International contend the meaning of cl 4.2 is clear and unambiguous and that care must be taken to note and respect the specific way in which terms are expressed in this provision. It begins with an acknowledgement of GMA Garnet's "wish" and then gives Barton International a right to concessionally priced GMA garnet which Barton International "ships and discharges" into North America. 523 Barton International says that the parties deliberately refrained from transforming GMA Garnet's wish into an obligation on the part of Barton International. Barton International says the specific and limited scope of the first sentence cannot be destroyed by a process of construction. The limited intention of the parties as deliberately and carefully expressed here must be respected. Clause 4.2 does not impose any obligation on Barton International to distribute GMA garnet in North America nor any obligation to market GMA garnet. If the parties had intended that Barton International should have any such obligations imposed on it, the respondent points out that could have been simply and directly specified, but the parties did not agree to impose such obligations and precisely for that reason no obligations are imposed. There is no enforceable promise in cl 4.2. 524 The respondent emphasises that GMA Garnet's wish "to promote distribution" of GMA garnet within North America is recorded and limited to a stated wish, for competition law reasons. The wish is stated to be the reason for concessional pricing. This connection is made apparent by the word "Accordingly" in cl 4.2. The respondent says that rather than imposing any distributional marketing obligation, cl 4.2 requires no more than shipping and discharge into North America for Barton International to get the benefit of its right to concessional prices. 525 Barton International contends that this is put beyond doubt by cl 7.3 of the GSA which specifically deals with the circumstance in which the concessional price may be lost. The only such circumstance is if product is not in fact shipped and then discharged into North America. 526 Barton International says it is important to appreciate the sense in which "promote" is used in the opening words of cl 4.2 where GMA Garnet's wish is recorded. Acknowledgment is of a wish "to promote distribution" of GMA garnet in North America. When "promote" is used in that context it means to "encourage" distribution of GMA garnet: see Shorter Oxford Dictionary (2007) 6th ed at 2366. That is, the acknowledgement itself makes it plain that there is no obligation to distribute but rather a wish to "encourage" the distribution of GMA garnet in North America. This is far from the language of obligation. Barton International also say that the use of the word "promote" is not to be equated with advertising or marketing. 527 Barton International says that to the extent that cl 2.5, which contains specific branding obligations, refers to distribution of GMA garnet, that is wholly unconnected with the opening words of cl 4.2, which contain nothing more than an acknowledgement of GMA Garnet's "wish" that GMA Product be "encouraged" to be "distributed" in North America. 528 As to the effect of cl 2.3 of the Principal Agreement, Barton International says that cl 2.3(a) shows that the parties accepted that the consideration for the sale by Barton International of its partnership interest and other interests, included the rights it obtained under the GSA for concessionally priced garnet. Clause 2.3(b) is, therefore, no more than a repetition of the opening words of cl 4.2 of the GSA and involves no more than an acknowledgement of GMA Garnet's "wish" that Product be encouraged to be distributed in North America. The fact that the acknowledgement is repeated in cl 2.3 does not change the acknowledgement into an obligation or give it any greater meaning than is readily apparent on its face. 529 Barton International emphasises that there is no link between the limited and specific labelling obligation in cl 2.5 of the GSA and Barton International's entitlement to concessional prices under cl 4.2. The acknowledgement in cl 4.2 records GMA Garnet's wish to encourage the "distribution" as opposed to the marketing of the GMA garnet in North America. 530 Moreover, the limited and specific labelling requirements in cl 2.5 applies to all GMA garnet, not just concessionally priced GMA garnet purchased under cl 4.2. 531 The respondent also points out that, unlike cl 2.5, a persistent breach of which may entitle termination of the GSA under cl 8.1(c), no such remedy is specified as regards acquisition of concessionally priced product. Barton International says this is because cl 4.2 imposes no obligation which can be breached. Rather, it describes a condition which when fulfilled gives rise to concessional prices. The circumstance of the concession not being fulfilled is dealt with in cl 7.3, not the termination provision in cl 8. If the condition is not fulfilled, Barton International is deprived of its right to the concessional price. It must then pay an uplift cost under cl 7.3. That event, however, cannot lead to termination of the GSA. 532 Barton International also contends that GMA Garnet and GIRL misread cl 2.5 by suggesting that it imposes a requirement of labelling for Barton International to obtain the discount or concessional price. On a plain reading of cl 2.5, it imposes a specific obligation to use the GMA Garnet name and logo in relevant circumstances, regardless of whether the GMA garnet was acquired under the GSA at a discount and regardless of whether the GMA garnet is distributed and sold in North America. 533 Barton International emphasise that cl 4.2 of the GSA does not confer on GMA Garnet a right to have GMA garnet distributed in North America, nor does it confer on GMA Garnet a right to have GMA garnet promoted in North America. 534 Of the two distilled pleaded terms mentioned above, Barton International says they are different ways of conveying the idea that product was acquired at concessional prices but the product is required to be sold as 100% GMA garnet, so labelled to ultimate consumers within North America. 535 Barton International contend that the pleaded terms depend upon attributing to the GSA a construction under which: (a) blending of GMA garnet is prohibited; and (b) the entitlement to buy product at concessional prices is qualified by the obligation not to blend and by other alleged obligations concerning distribution. 536 Barton International says that the attempt to introduce a mental element (ie intentions) required when Barton International orders concessionally priced product is unrelated to the terms of the GSA not permissible by way of implication. 537 Additionally, Barton International says two aspects of the terms alleged in paras 15.1, 15.1A and 15.2 of the statement of claim must be rejected because it was the very thing the parties were united in rejecting, in reaching agreement upon the GSA and the Principal Agreement. That is to say that the parties were united in rejecting any terms whereby: (a) all garnet purchased under the GSA would be required to be labelled with the GMA name and logo when sold, such that blending would be prohibited; and (b) BII would be required to distribute GMA garnet into North America to be entitled to the concessional price. 538 Accordingly, Barton International contend that once the proper construction of cl 4.2 and cl 2.5 is understood it is fanciful to suggest that Barton International had and has an obligation to cooperate and not to hinder the promotion of concessionally priced GMA garnet in North America which requires Barton International to refrain from blending GMA garnet purchased under the GSA and requires it to sell all garnet with the GMA Garnet name and logo. 539 The applicants respond to the Barton International claim that there is no express link between the labelling obligation in cl 2.5 and the provision in cl 4.2 of the discount. The applicants say this is a flawed argument and the practical reality is that Barton International has sufficient demand in the North American market to consume over 50,000 tonnes of GMA garnet. Hence, assuming Barton International acts in a commercially rational manner, Barton International will only purchase garnet under the GSA, where the GSA provides a discount to the price of which it may otherwise purchase garnet from GMA Garnet or elsewhere. As the labelling obligation applies to all garnet purchased under the GSA, it follows that the labelling obligation will, in practice, apply to all discount garnet. 540 As to the submission of the respondent that there are no words which impose any promissory obligation upon Barton International in the introduction of cl 4.2, the applicants state that their primary position is that the introductory words state the contractual purpose and operational effect of the GSA, and that the principle in the High Court's decision in Secured Income 144 CLR 596 operates on this statement to supply the necessary, promissory obligation. In other words, the introductory words expressly state what might otherwise be deduced about the contractual purpose of the GSA. 541 The Court in large part accepts the construction of cl 4.2 of the GSA and cl 2.3(b) of the Principal Agreement contended for by Barton International, mostly for the reasons Barton International advances. The language actually employed in cl 4.2 of the GSA and cl 2.3(b) of the Principal Agreement whereby the parties "acknowledge" that "the Seller wishes to promote distribution of Product within the United States of America and Canada", for which purpose a concessional rate for Product is provided, is not the ordinary language of legally enforceable rights and obligations. 542 If the parties had in fact intended that Barton International should undertake to develop the North American market into which discounted garnet was shipped and discharged - or "sold", as the applicants would have it - then the express language of cl 4.2 of the GSA would surely have been quite different from what it is, particularly in circumstances where two highly distrustful commercial groups were negotiating such a significant supply agreement that was part of the consideration of the overall settlement of their bitter dispute. What cl 4.2 actually provides is that: The Parties acknowledge that the Seller wishes to promote distribution of Product… and, for that purpose, the Seller shall allow to the Buyer a concessional rate 543 It is the Seller who wishes to promote distribution. For that purpose the Seller shall allow the Buyer a concessional rate for Product. Just how the wish of the seller will be realised by the grant of the concessional rate is not clear from cl 4.2. 544 It is perhaps to some extent explained, as a matter of commerciality, by the product branding obligations created by cl 2.5 in relation to the distribution or sale of relevant Product. If all 100% Product must be branded by the Buyer with the GMA Garnet name and logo, as required by cl 2.5, compliance with this obligation may, where it applies, commercially assist in achieving market recognition of that Product in the markets in which it is sold. If Product can only be landed in North American at the concessional rate, commercial considerations suggest that ordinarily the Buyer would seek to sell in the same geographical market to maximise profits by limiting further transportation costs. In this way, the concessional price may be seen as an "incentive" for promoting distribution or sale of Product by the Buyer in North America (as indeed it was described by Mr Cole in his letter to Mr David Williams in the course of negotiations, dated 10 February 2005 in relation to the delivery of GMA garnet to the Americas). 545 It is a very big - and different - step to take, however, as the applicants submit should be taken, to construe the acknowledged wish of the Seller to promote distribution of Product in North America, in the light of the concessional rate purpose stated in cl 4.2, as constituting a contractually enforceable undertaking by Barton International to develop the North American market for the distribution or sale of GMA garnet in North America. 546 As the respondent points out, so far as cl 2.5 is concerned the branding obligation is not limited to Product purchased at a concessional rate. Rather, it applies to all garnet supplied under the GSA. Nor does cl 2.5 impose a branding obligation only in respect of Product distributed or sold by the Buyer within North America. 547 The most that can be said of cl 4.2 is that it constitutes an acknowledgement by the parties that the concessional rate granted by the Seller to the Buyer for shipping and discharging Product into North America is for the purpose of facilitating the Seller's wish to promote the distribution of that product within North America. As to how the grant of a concessional rate in respect of such Product will actively achieve this purpose is not provided for in the GSA. To some extent, the introductory words may be explained by GIRL's real concern to avoid drafting the GSA in such a way that the adverse attention of the competition regulators might be attracted. However, the applicants say the explanation is supplied by construing terms of the GSA as providing for the development of the North American market by the respondents and (effectively) BMC (or by recognising that certain representations were thereby made to similar effect). 548 What is very clear on the evidence, as outlined above, is that the parties understood Barton International and BMC were adamant that they would not undertake any form of distributorship for GMA garnet in North America or elsewhere but simply wanted a steady supply of GMA garnet for their own purposes. At the same time the parties were focussed on ensuring the GSA did not create any competition law problems. In the end, the only specific obligation that touches on the question of distribution of product - or marketing - are those to be drawn from cl 2.5, which relates simply to branding of relevant Product. In my view, no legal obligations were imposed on Barton International to develop a market into which discounted garnet was sold in North America, as the applicants contend. It follows that, in my view, there is also no term of the GSA to the effect that Barton International (or BMC) must not do anything to diminish the reputation of GMA Garnet or its distribution. 549 This conclusion is also supported by the finding I have made earlier concerning what the parties understood concerning the possible blending of GMA garnet supplied under the GSA. I have found that cl 2.5 of the GSA found its form directly as a consequence of the discussions and Mr Cole and Mr David Williams on 11 February 2005, during which Mr Cole said that Barton International did not wish to be compelled to label all garnet acquired under the GSA (as was then proposed by para 5 of the Principles document, prepared by Mr Williams and dated 11 February 2005), because "there may be blending". The substance and effect of the marketing terms of the GSA pleaded and advanced by the applicants are inconsistent with this understanding. 550 As I previously emphasised, it is irrelevant, in my view, whether the applicants, at the point of discussion between Mr Cole and Mr Williams, had any full appreciation of the implications of their understanding that there may be blending or its extent. Clause 2.5, in my view, was drafted so as not to prohibit intentional blending of GMA garnet supplied under the GSA. 551 The negotiations concerning the provision of concessionally priced product also militates against the construction of the GSA contended for by the applicants. Barton International through Mr Cole steadfastly declined to undertake any distribution responsibilities in North America. Mr David Williams prepared a draft of the GSA which linked the entitlement to concessionally priced product to "distribution" of product in North America. Mr Cole altered the word "distributes" in cl 4.2 with the words "ships and delivers". Mr Williams, on the advice of Mr Ketelsen changed the word "delivers" to "discharges", for the reason he explained in his evidence. 552 The parties clearly were of a common understanding that in order to obtain the concessionally priced product, all that was required was for Barton International to ship and discharge the relevant GMA garnet into North America. There was no requirement that it be sold or distributed in North America in order to obtain the concessional price. (This plainly also militates against the representations propounded by the applicants to the effect that all concessionally priced GMA garnet acquired under the GSA must be marketed in North America and labelled as GMA garnet, as discussed below.) 553 I also do not consider that the so called duty to cooperate from Secured Income 144 CLR 596 relevantly assists the applicants in this case. As Mason J pointed at 607 - 608 implied obligations are necessarily governed by the specific content of express obligations. It goes a bridge too far to say an implied term can attribute to a party a substantive intention which has not been incorporated in the express terms of the bargain. 554 As the respondent points out, in Moorgate Tobacco Co Ltd v Philip Morris Ltd [No 2] (1984) 156 CLR 414 at 434 - 435, the High Court disposed of an argument that Philip Morris could not apply to register a trademark of its own to market Golden Lighter cigarettes on the basis that it was, as licensee of Moorgate Kent cigarettes, obliged to not to hinder or prevent the development of Kent Light cigarettes. Deane J explained (at 435) that there was nothing in the agreement to indicate that any such term was assumed to exist; that such a term would preclude competition; and that such a term could not be implied because it did not correspond with some evident underlying intention of the parties. 555 In Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104, the New South Wales Court of Appeal (at 124) said that there is no duty to cooperate in bringing about something which the contract itself does not require to happen. 556 If a wider duty to cooperate to give the other party a perceived benefit under a contract is sought to be imposed, such a term has to be implied as a matter of fact. There is no warrant in this case to imply a term that Barton International would cooperate and assist GMA Garnet to develop a market in North America. 557 In other words, in my view, there is no relevant term expressed, on its proper construction, or to be implied upon which the duty to cooperate can operate to bring about the outcomes contended for by the applicants. 558 I should add for completeness that I reject the applicants' rectification plea. 559 As to the substance of the applicants' rectification plea there is no clear and convincing proof that the parties intended BMC to be bound by the GSA. During the early stage of negotiations GIRL wanted BMC to be a party to the GSA and to act as an exclusive distributor of Product. BMC was dropped when the parties agreed that Barton International would get the benefit of an open supply agreement, with the right to a concessional price if it shipped and discharged GMA garnet into North America. 560 I also accept the respondent's contention that the applicants' suggestion that Barton International was treated as part of the Barton group and that "Barton" was used to refer to the group and not to a particular Barton entity does not show the requisite common intention in this particular context - which is quite different from the context in which I have allowed the respondent's proposed rectification. There was no general understanding that Barton International would ensure BMC's compliance with the GSA in respect of generally stated obligations under the GSA.

Misleading or deceptive representation 561 The next issue is whether cl 4.2, by itself or in the context of the whole of the GSA and the Principal Agreement (especially cl 2.3(b)), or having regard to the pre‑contractual negotiations, conveyed or conveys any representations, in the nature of a contractual promise or short of a contractual promise, to facilitate promotion of GMA garnet in North America, which were misleading or deceptive as contended for by the applicants: see para 4 statement of claim; or that such representations were repeated when supply orders were periodically lodged, as alleged in para 4B statement of claim. 562 The question whether the conduct of a party is misleading or deceptive is a question of fact and requires an examination of all of the relevant conduct in the circumstances considered as a whole: Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; 218 CLR 592, 625 [109]. The question is one to be determined objectively: Butcher at [109]. 563 The applicants' primary position in these proceedings is that the introductory words of cl 4.2 of the GSA state the contractual purpose and operational effect of the GSA and that the principle from Secured Income 144 CLR 596 operates upon this statement to supply the necessary promissory obligations. In other words, the introductory words to cl 4.2 expressly state what might be otherwise deduced about the contractual purpose of the GSA. 564 The Court has found in the preceding section that the construction of cl 4.2 in this regard advanced on behalf of the applicants should not be preferred. 565 In those circumstances the applicants say that it does not follow that the introductory words of cl 4.2 have no legal significance and can be ignored for the purposes of construing the GSA. 566 The applicants claim that the introductory words of cl 4.2, alone or understood in the context of pre‑contractual negotiations, are at least a statement of Barton International's present and future intention to perform the GSA in a manner which would facilitate promotion of GMA Garnet in North America. 567 The applicants say that it does not automatically follow that if their primary contractual position is rejected, that Barton International's construction, which gives no effect to the introductory words, should be accepted. The applicants say there is an intermediate position, namely that Barton International represented, but did not contractually promise, to facilitate promotion of GMA garnet in North America. 568 The applicants essentially rely upon the same argument deployed above in relation to the contractual interpretation. In effect, that the introductory words of cl 4.2 of the GSA and cl 2.3(b) of the Principal Agreement, were intended to have some legal effect beyond the statement of an expectation or a dream. The applicants say further that the pre‑contractual negotiations demonstrate that the parties themselves understood that there was significance to Barton International's position and that it would facilitate promotion of GMA garnet in North America. Barton International undertook to develop the market into which discounted garnet was sold - and it was irrelevant whether that market was the Americas or North America, as the essential nature of the negotiated obligation remained the same but applied to a smaller area. 569 The applicants say, however, that Barton International never intended to facilitate promotion in the North American market. Its proposed undertaking was effectively an undertaking to do nothing. Mr Bracken himself believed soon after signing the Principal Agreement and before execution of the GSA that members of the Barton group could blend GMA garnet. The applicants say that it is only a matter of short inference that he and Barton International always intended to blend GMA garnet in order to prevent it being promoted in North America. 570 The applicants say, that in context, whenever an order was placed, pursuant to the contractual framework of the GSA, it follows that the Barton International represented that it was making an order on the basis of the GSA, including the representation derived from the introductory words of cl 4.2. 571 The Court has already found that it is not prepared to draw the inference that Barton International always intended to blend GMA garnet in order to prevent it being promoted in North America. 572 For the reasons given above in relation to the proper construction of cl 4.2 and having regard to the relevant surrounding circumstances and the pre‑contractual negotiations, I do not consider that by the time the Principal Agreement was signed and the terms of the GSA were settled, any such representation was made about the development of the North American market for GMA Garnet by Barton International. 573 As explained in the section dealing with the key points of negotiations above, on 9 February 2005, Mr David Williams for the applicants put forward a separate proposal that included in para 2.2 that Barton International be appointed as a distributor of GMA product on a non‑exclusive basis; and "to incentivise the maintenance and development of the North American (ie USA/Canada) market, GMA product distributed into that market each year would attract a rebate/discount for the first 50,000 tonnes of product sold". 574 On 10 February 2005, Mr Cole responded to that proposal noting the mutual desire of the parties to structure arrangements to minimise the prospects of adverse response from competition law regulators and, in relation to the proposal to "incentivise" the North American market, expressed some willingness to consider that proposal in respect of the Americas and stated that "Barton is prepared to accept an undertaking that the discount is offered as an incentivisation with respect to the market in the relevant territory (but without performance and market growth obligations) and that product acquired at the discount must only be distributed into that market". 575 In the event, the negotiations developed in different ways. There was no agreement that product acquired at a discount could only be distributed or sold into a particular market, whether the Americas or just North America. Instead, the terms of the GSA were such that the discount would be attracted by landing - "ships and discharges" - the relevant GMA garnet into North America. Nothing more was said about distribution. 576 Having regard to the concern of the parties about: the competition regulators; the plain unwillingness, at all material times, of the Barton interests to undertake any distribution responsibilities; and the notion of "incentivisation" used at material times (as discussed above), I do not consider that cl 4.2 of the GSA on its own, or cl 4.2 or the GSA when read with cl 2.3(b) of the Principal Agreement, or either or both of those provisions when taken with the pre‑contractual negotiations constituted a representation, short of a contractual obligation, that Barton International would distribute GMA garnet supplied under the GSA in the North American market under the GMA Garnet name or that it would refrain from doing anything that would affect the reputation of GMA garnet in the North American market. 577 At the very most, I consider that what was represented by the Principal Agreement and the GSA and what passed during the course of negotiations, was that the Seller of GMA garnet under the GSA had a wish to promote distribution of Product in North America, and that, by the operation of terms of the GSA concerning concessional pricing, that wish might be advanced. Apart from that representation, nothing else obliged Barton International (or BMC) to develop the North American market for GMA garnet or, short of a contractual obligation, constituted a representation that they would do so. 578 The fact that the Court has found that Mr Cole and Mr David Williams achieved a level of concurrence concerning the possibility of blending of GMA garnet during the discussions on 10 February 2005, which was reflected in the drafting of cl 2.5 of the GSA, only serves to confirm that no such representation was made. 579 Given that the parties were represented during the negotiations leading up the execution of the Principal Agreement and the GSA by two highly experienced commercial lawyers, who acted as their agents, and who understood the degree of acrimony between the parties and exactly what was at stake in the conclusion of the matters in dispute by the terms of the Principal Agreement and the GSA, it is hard to believe that either of the parties could have thought, or that the parties together intended, that the terms of cl 4.2 read in isolation or with cl 2.5, or in the context of the whole of the Principal Agreement and the GSA, and having regard to the pre‑contractual negotiations, did, or was apt to, create any contractual obligations or convey any representations different from those made express in the contract. 580 Nor does the Court consider that the "acknowledgement" of the "wishes" of the Seller in cl 4.2 of the GSA gave or gives rise to any representation short of a contractual promise that Barton International would assist in the marketing of GMA garnet in North America.

Estoppel 581 For the sake of completeness, I should indicate that a formal plea made by the applicants that the respondent should be conventionally estopped from adopting a construction of the GSA contrary to the applicants' pleaded market development terms of the GSA and in opposition to the pleaded representations, was but dimly pressed and fails on the above account of the evidence in any event.

conclusion and orders 582 The Court would therefore order that cl 2.5 of the GSA be rectified in the manner proposed by Barton International in para 29 of the cross‑claim, namely, by inserting in the GSA the following term: The Buyer agrees to ensure BMC abides by cl 2.5 as if it was bound thereby. For that purpose, rights conferred under cl 2.5 may be exercised by BMC. 583 The Court concludes that Barton International has not breached cl 2.5 of the GSA in the process of on‑selling, to BMC, GMA garnet it has acquired under the GSA. 584 The Court also finds that the GSA does not contain terms requiring Barton International's cooperation in the promotion of the continued distribution and/or sale of 100% Product and the other terms pleaded in para 15 and para 16 of the statement of claim. 585 Accordingly, the applicants' application for declarations that Barton International's actions as pleaded in para 16A.1 of the statement of claim constitute a breach of cl 2.5 of the GSA and that the notices referred to at para 25 of the statement of claim were lawfully issued, should be refused. 586 The Court also finds that the basis for the rectification sought by the applicants in respect of Barton International's responsibilities for the conduct of BMC is not made out. 587 As to whether there should be a declaration in respect of the breach pleaded in para 19B of the statement of claim relating to the question whether BMC has distributed and/or sold GMA garnet which is 100% Product branded by BMC with the GMA Garnet name and logo of lesser prominence than that which was applied during the 2004 calendar year, the conduct complained of has not been shown to constitute a "persistent" breach of cl 2.5 for the purposes of cl 8.1 of the GSA. Such relief should be refused. 588 Having regard to the Court's finding refusing the applicants' claims based on terms of the GSA alleged in relation to Barton International's distribution and promotion obligations, the applicants' claim for damages for such breach should be dismissed. 589 The Court also finds that Barton International did not make the representations pleaded in para 4 and para 4B of the statement of claim. 590 Accordingly, the applicants' claim for damages by reason of loss arising from the alleged misleading or deceptive conduct of Barton International should also be dismissed. 591 The Court therefore orders that: 1. The application of the applicants is dismissed. 2. The cross‑claim of the respondent is allowed. 3. The Garnet Supply Agreement made on 31 March 2005 between GMA Garnet Pty Ltd as Seller and Barton International Inc as Buyer and Garnet International Resources Pty Ltd be rectified by inserting therein, immediately after clause 2.5 the following term: The Buyer agrees to ensure that Barton Mines Company LLC abides by clause 2.5 as if it was bound thereby. For that purpose, rights conferred under clause 2.5 may be exercised by Barton Mines Company LLC. 4. The applicants pay the respondent's costs of the proceedings to be taxed if not agreed. 5. Such other orders as the Court may consider appropriate after hearing from counsel for the parties. I certify that the preceding five hundred and ninety-one (591) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker.

Counsel for the Applicants: Mr K J Martin QC and Mr J A Thomson

Counsel for the Respondent: Mr C L Zelestis QC and Mr B Dharmananda