HIGHTIME INVESTMENTS PTY LTD -v- ADAMUS RESOURCES LTD [2012] WASC 295 | Case summary

Supreme Court of WA|2012-08-21|Before: Edelman J

1 This trial required consideration of numerous transactions concerning Ghanaian mining property. There were hundreds of exhibits and substantial expert evidence about the value of prospecting licences over land in Ghana. But one of the most fundamental issues concerned an oral conversation which took place nearly a decade ago on 16 May 2003.

2 The plaintiff's case eventually became an allegation that there were two parties to the conversation: Mr Gardner and Mr Bojanjac. Mr Gardner said that in the conversation Mr Bojanjac made a binding commitment on behalf of Adamus Resources. The binding commitment was alleged to be that Adamus Resources would pay Mr Gardner's company, Hightime Investments Pty Ltd, the fair value of a prospecting licence over land in Ghana for which Hightime Investments had otherwise intended to apply. That land has been described in this trial as 'the Ground'. The alleged oral promise in relation to the Ground was not mentioned in a written heads of agreement reached between Mr Gardner and Adamus Resources on related matters fewer than three weeks later. That written heads of agreement was expressly subject to approval by the board of directors. After numerous further legal steps the written heads of agreement was replaced by a Share Sale and Purchase Agreement.

3 Although Mr Gardner said that he made hundreds of demands for payment based on the alleged oral promise, for six years there was no written demand nor any allegation of any existing liability in relation to this alleged oral promise. The first, and only, written letter of demand in evidence was by Hightime Investments' lawyers on 9 December 2009. That letter did not mention any oral promise to pay fair market value for a prospecting licence over the Ground. The demand was based on the assertion that Hightime Investments provided Adamus Resources with the opportunity to explore and to acquire the Ground without obtaining the 'benefit it anticipated by a Share Sale and Purchase Agreement'. A writ of summons was filed by Hightime Investments on 26 March 2010. Still there was no mention of the alleged independently binding promise to pay the fair market value for a prospecting licence over the Ground.

4 On 11 April 2011, nearly eight years after the alleged oral agreement, the plaintiff changed tack. The writ was amended and a statement of claim was filed which alleged for the first time a binding oral agreement to pay fair market value for a prospecting licence over the Ground.

5 Adamus Resources disputed this allegation of a binding oral agreement. Mr Bojanjac, giving evidence for the defendant, said that the conversation related only to negotiations between the companies; he denied making the alleged promise that Adamus Resources would pay the fair market value of a prospecting licence over the Ground. Mr Bojanjac's evidence was convincing, and consistent with the written documentation.

6 I am satisfied that a conversation occurred between Mr Bojanjac and Mr Gardner. Mr Bojanjac undertook to procure Adamus Resources to negotiate for an agreement concerning rights in relation to the Ground for which Hightime Investments intended to apply, as well as for rights which Hightime Investments already had in relation to land in the area. And I accept that the parties expected that a subsequent agreement was very likely. But I do not accept that Mr Bojanjac made any promise in that conversation that Adamus Resources would pay the fair market value of a prospecting licence over the Ground, nor that he made any separate independent agreement about this with Mr Gardner.

7 There was a strong likelihood of subsequent agreement being reached between the parties after the 16 May 2003 conversation. Mr Gardner said that there had never been a transaction which did not go through the board and, unless there was something completely wrong, they would go through. An agreement was reached soon after 16 May 2003 with the heads of agreement subject to conditions including confirmation by the Adamus Resources board of directors. That agreement was signed by Mr Gardner and Adamus Resources on 5 June 2003.

8 It may be that the high probability of subsequent agreement was the reason why, the day after the conversation, an employee of Adamus Resources was instructed to substitute the name of Adamus Resources for the name of Hightime Investments in an application which he had prepared for an exploration licence over the Ground. But, whatever the reason why this was done by Adamus Resources, this substitution does not require the conclusion that the oral conversation had contained an unequivocal promise to pay the fair market value of a prospecting licence over the Ground.

9 Even if the alleged oral promise had been made, the claim by Hightime Investments would still have failed for two other reasons. First, the subject matter of the alleged oral promise in relation to the Ground was interdependent with the subject matter of the 5 June 2003 heads of agreement, as to which no earlier agreement had been reached. Secondly, Mr Bojanjac had no authority to bind Adamus Resources to the contract which was alleged. Mr Gardner also knew this.

10 During the trial, and in submissions, witnesses and counsel referred interchangeably to the value of 'the Ground', the value of 'a prospecting licence over the Ground', and the value of 'an exploration licence over the Ground'. These notions all described the same concern, which was the subject of expert evidence, namely the value of a hypothetical prospecting licence over the Ground.

Mr Gardner, Hightime Investments, Mr Lungan, Mr Hopkins and Wildbush

11 Mr Gardner has been involved in the mining industry for more than 30 years.[1] He is the sole director, and sole shareholder, of the plaintiff, Hightime Investments Pty Ltd.[2]

12 Until 2003, Hightime Investments was a vehicle through which Mr Gardner conducted mining exploration activities.[3]

13 In 2000, Mr Gardner incorporated Wildbush Pty Ltd as the service company for Hightime Investments.[4] From the inception of Wildbush in 2000, Mr Bojanjac (below) and Mr Hopkins were its directors.[5]

14 Mr Lungan is a geologist who, in midSeptember 2002, was engaged by Mr Gardner to do work for Hightime Investments in Ghana. Mr Lungan was generally remunerated through Wildbush.[6] Hightime Investments did not call Mr Lungan to give evidence.

15 In late 2002 and 2003, Adamus Resources also used Mr Lungan's services.[7] On at least one occasion Mr Lungan was remunerated by Adamus Resources for work done for it in Ghana.[8]

Adamus Resources, Messrs Halliday, Bojanjac, Owen and MeadowsSmith

16 In June 2001, Adamus Resources was listed on the Australian Stock Exchange.[9]

17 From 2001 until 2007, Mr Halliday was the managing director of Adamus Resources. From August 2001, Mr Bojanjac was also a director of Adamus Resources. Mr Bojanjac became an executive director in 2002.[10] Mr Daniels was then the chairman and Mr Hunter was then the company secretary.[11]

18 Mr Halliday and Mr Bojanjac managed Adamus Resources.[12] As a chartered accountant, Mr Bojanjac focused on the financial aspects of Adamus Resources[13] although Mr Bojanjac's role went beyond this and included a role in assisting to negotiate significant agreements. Any significant expenditures or liabilities which were incurred by Adamus Resources were agreed by Mr Halliday and Mr Bojanjac and, where necessary, by the board of Adamus Resources.[14] All cheques and fund transfers had cosignatures of Mr Halliday and Mr Bojanjac.[15]

19 From mid2002 until 2005, Adamus Resources employed Mr Owen on a full-time basis as its exploration manager with duties including management of Adamus Resources' prospecting activities in Ghana and preparing applications for prospecting licences.[16]

20 In late April 2003 (formalised on 12 May 2003), Adamus Resources engaged Mr MeadowsSmith to work for Adamus Resources as its incountry Consultant Geologist in relation to the Salman Gold Project in Ghana, including preparing and extending applications for prospecting licences.[17]

The transactions in the Salman Project tenure area

21 This section sets out my findings of the background facts, many of which were uncontroversial. Again, where possible I have referenced the source which I accept for each finding.

Ground is required to be 'shed' from the Salman Project tenure

22 The Salman Project area is in the Southern Ashanti Gold Belt in the Western Region of Ghana.[18] Its location is shown in Appendix B to these reasons. In early 2001, the Salman Project tenure rights were held by African Gold Properties Limited.[19]

23 During 2002, African Gold Properties was required by Ghanaian law to relinquish or 'shed' some of its tenements in the Salman Project area.[20] African Gold Properties wanted the tenements which had been shed to be held in friendly hands so that they might be reconsolidated later.[21] Mr Bojanjac, who was an executive director of the parent company of African Gold Properties, devised the solution.

24 Mr Bojanjac had known Mr Gardner since 1993.[22] Initially there was a high degree of trust between them.[23] Mr Bojanjac was also director of Wildbush, the service company for Hightime Investments.

25 After Mr Bojanjac discovered that African Gold Properties had to 'shed ground' (ie relinquish its prospecting licences), Mr Bojanjac suggested to Mr Gardner and to African Gold Properties that Hightime Investments should apply to acquire the shed ground when it was relinquished.[24]

26 This idea appealed to Mr Gardner. In 1998, Mr Gardner had travelled to Ghana to explore the potential for mining interests there. He was interested in investing in Ghana and he considered that the Salman Project area had good prospects for an operational gold mine.[25]

27 On 20 June 2001, Hightime Investments applied for the shed ground mining tenements in the Salman Project area.[26]

Adamus Resources reconsolidates the Salman Project tenure

28 At the same time as Hightime Investments had applied to acquire the shed ground, Adamus Resources began investigating the possibility of acquiring:

(1) the Salman Project tenure held by African Gold Resources (less the shed ground), and

(2) the shed ground from Hightime Investments.[27]

These two acquisitions would reconsolidate the Salman Project tenure as previously held by African Gold Resources.

29 The first set of negotiations was between Adamus Resources and the parent company of African Gold Resources, Afrowest Gold Limited. On 28 May 2002, the board of Adamus Resources resolved to negotiate for the acquisition of the shares in African Gold Resources.[28] This acquisition would give Adamus Resources control, through African Gold Resources, of the Salman Project tenure then held by African Gold Resources, although without the shed ground.

30 The second set of negotiations was to acquire the shed ground. Adamus Resources negotiated with Mr Gardner, the controlling mind of Hightime Investments. At Mr Bojanjac's suggestion, Mr Gardner incorporated a new company called Hightime Investment Enterprises Pty Ltd (Hightime Enterprises) into which the licences over the shed ground would be transferred. Hightime Enterprises was to become the vehicle, or seller, from which the sale of the shed ground licences would be made to Adamus Resources.[29]

The negotiation and acquisition of the shares in African Gold Resources

31 On 18 June 2002, the Adamus Resources board of directors approved a draft agreement with the parent company of African Gold Resources for the acquisition of the shares in African Gold Resources.[30] Following discussions and proposed amendments to the draft agreement, a final agreement was approved by the board of Adamus Resources.[31] On 13 August 2002, after an independent audit and valuation,[32] the shareholders of Adamus Resources approved the agreement.[33]

The negotiation and acquisition of the shares in Hightime Enterprises

32 In order to reconsolidate the Salman Project tenure previously held by African Gold Resources, Mr Bojanjac and Mr Halliday also discussed the acquisition or assignment of the shed ground which Hightime Investments was intending to acquire. They decided to recommend to Mr Gardner that the acquisition price be five million shares in Adamus Resources. With Mr Halliday's consent, Mr Bojanjac told Mr Gardner of the suggested price and Mr Bojanjac explained that the proposal was subject to board and shareholder approval.[34] If Mr Gardner agreed, and if the Adamus Resources board approved the proposal then Mr Gardner would hold a considerable shareholding in Adamus Resources. Mr Gardner was already a large shareholder of Adamus Resources. In late 2001 he had acquired a sizeable shareholding in the company.[35]

33 On 18 June 2002, the Adamus Resources board of directors approved a draft agreement with Hightime Enterprises.[36]

34 On 26 June 2002, the licences were transferred from Hightime Investments to Hightime Enterprises. At the same time Mr Gardner sold his shares in Hightime Enterprises to Adamus Resources in exchange for five million shares in Adamus Resources.[37] That agreement was executed by Mr Gardner on the one hand, and Mr Halliday and Mr Bojanjac on behalf of Adamus Resources.

The transactions in the area surrounding the Salman Project tenure

35 The next stage of the background to this case concerns facts, which I find below, which led up to the critical conversation in which a binding oral agreement was alleged to have been made.

36 Although Adamus Resources had control over the reconsolidated Salman Project area tenure in mid2002, it needed to raise funds for the gold mining operation.[38] Mr Gardner, who was a major shareholder in Adamus Resources, together with board members of Adamus Resources began meeting with potential investors and began examining financing options for Adamus Resources to consider.

37 One potential investor was Mr Nelson. On 11 September 2002, Mr Nelson met with Mr Gardner, Mr Halliday, Mr Bojanjac, Mr Daniels and Mr Lungan. At the meeting, Mr Nelson raised the possibility of Adamus Resources also acquiring further tenements in the area surrounding the Salman Project area. Mr Nelson also suggested that Adamus Resources could put these tenements into a company which could be floated on the Alternative Investment Market.[39] Mr Halliday said that he would not acquire further ground until it was able to show that the tenure it currently had was of sufficient viability.[40] Mr Gardner said that if Adamus Resources was not going to acquire any further ground in Ghana then Hightime Investments would do so.[41]

Hightime Investments acquires further rights in relation to land around the Salman Project area

38 Shortly after the 11 September 2002 meeting, Mr Lungan met with Mr Gardner and Mr Bojanjac. Mr Gardner had invited Mr Bojanjac to the meeting with Mr Lungan.

39 At the meeting, Mr Gardner agreed to pay a monthly fee of $10,000 to Mr Lungan for work which Mr Lungan would do for Hightime Investments.[42] The payments were made through Wildbush and Mr Bojanjac, who was a director of Wildbush, authorised the payments.[43]

40 Mr Gardner instructed Mr Lungan to communicate with either Mr Gardner or Mr Bojanjac.[44] Subsequently, on 29 October 2002, Mr Gardner gave Mr Lungan a power of attorney to enter agreements on behalf of Hightime Investments.[45]

41 In October 2002, Mr Gardner travelled to Ghana. He met with local chiefs of villages. He also met with a representative of a mining company which was working a tenement near the Salman Project area, and he examined soil samples.[46]

42 Mr Gardner decided to acquire rights in relation to tenements in areas including those close to the Salman Project area.[47] Mr Gardner instructed Mr Lungan to make enquiries about holdings in the area.[48] These enquiries, and agreements arising from them, occurred between October 2002 and May 2003.[49] Much correspondence ensued during this period between Mr Gardner and Mr Lungan. It was often communicated through Mr Bojanjac.[50]

43 By December 2002, Hightime Investments, through Mr Lungan, had entered into four agreements with entities in Ghana.[51] One of these was with Satemkon Mining Ltd on 10 December 2002.[52] Another was with Tropical Exploration and Mining Company Ltd (Temco) on 12 December 2002.[53] The Satemkon and Temco tenements are shown below.

44 Another potential acquisition for Hightime Investments was rights in relation to the Dadwen tenure. The Dadwen tenure was two parcels of land in the Salman Project area.[54] On 4 April 2003, Hightime Investments entered an agreement with Fidelity Resources Limited in relation to the Dadwen tenure.[55] But on 14 April 2003, the Minerals Commission in Ghana wrote to Hightime Investments saying that Fidelity's prospecting licence had expired and was not valid.[56]

45 Mr Lungan tried to devise a strategy to deal with the invalid Fidelity licence over the Dadwen ground. Mr Lungan said to Mr Gardner that he thought that Hightime Investments should peg ground including the Dadwen ground.[57] On 17 April 2003, Mr Lungan sent an internal memorandum to Mr Bojanjac raising a number of options and recommending that Hightime 'tie up all the ground to the south of Salman to establish an orthogonal tenement position'.[58] Mr Gardner discussed this with Mr Bojanjac and they both considered that it was a priority that Hightime Investments peg the Dadwen ground to protect it.[59]

46 On 22 April 2003, Mr Bojanjac suggested to Mr Lungan that 'we' should 'peg everything surrounding the ground including Fidelity extenure and renegotiate with the owners [of Dadwen]'.[60]

47 On 14 May 2003, Mr MeadowsSmith (of Adamus Resources) emailed Mr Lungan, copying the email to Mr Bojanjac, with attachments including a search request and map in the name of Hightime Investments.[61] Mr MeadowsSmith said that unless he heard otherwise 'a formal application will be lodged in the name of Hightime to cover any vacant ground'.

48 On the next day, 15 May 2003, Mr MeadowsSmith again emailed Mr Lungan (copying the email to Mr Bojanjac) attaching the search results for the Hightime request.[62] He also attached a recommended application over the Ground in the name of Hightime Investments.

The central factual dispute: the conversation between Messrs Gardner and Bojanjac

49 At the heart of this trial was a conversation between Mr Gardner and Mr Bojanjac, the content of which was disputed. In his witness statement Mr Gardner said that the conversation occurred some time around late April or May 2003. In his oral evidence Mr Gardner said that the conversation occurred on 16 May 2003.[63] There was no evidence that either Mr Gardner or Mr Bojanjac made any contemporary notes of the conversation.

50 Hightime Investments says that during this conversation Mr Bojanjac, on behalf of Adamus Resources, entered a binding agreement with Hightime Investments. Hightime Investments alleges that it was a term of the agreement reached in that conversation that Hightime Investments would 'allow Adamus Resources to apply for, and obtain, a licence' in 'stead' of Hightime Investments over land in the Salman Project area which was described as 'the Ground'.[64] That area is shown in the diagram below which also shows the location of the Satemkon, Temco (Tropical Exploration Pty Ltd) and Dadwen (Sanu Resources Pty Ltd) tenures.

51 Hightime Investments pleads,[65] and Adamus Resources denies,[66] that material terms of the oral agreement were that:

(1) Adamus Resources would pay Hightime Investments the fair market value of the licence if Adamus Resources was successful in obtaining a licence over the Ground;

(2) Adamus Resources would pay Hightime Investments after Adamus Resources completed its bankable feasibility study for its mining project in the Salman Project Area; and

(3) Hightime Investments would allow Adamus Resources to use Hightime Investments' intellectual property (ie allow Adamus Resources to use the application for a licence over the Ground prepared on behalf of Hightime Investments) in order for Adamus Resources to lodge its application for a licence with the Minerals Commission in Ghana.

52 In broad summary, the effect of Mr Gardner's evidence in his witness statement concerning the 16 May 2003 conversation was as follows:[67]

(a) Mr Bojanjac said that Adamus Resources did not want Hightime Investments acquiring ground around the Salman Project area. It was embarrassing for Adamus Resources to have its major shareholder, Hightime Investments, pegging ground around Adamus Resources' interests in the Salman Project area.

(b) Mr Gardner pointed out that Adamus Resources had taken no action and was leaving ground which could be taken by competitors.

(c) Mr Gardner also said that Mr Halliday had told him that Adamus Resources had looked at the other ground but could not handle the ground it already had.

(d) Mr Bojanjac said that Adamus Resources wanted to acquire Hightime Investments' interests in relation to the Dadwen Tenure and the Satemkon and Temco Agreements. Mr Bojanjac also said that Adamus Resources would pay Hightime Investments for the ground for which Hightime Investments was going to apply.

(e) Mr Bojanjac said that Adamus Resources could do a deal on the Satemkon, Temko, and Dadwen ground and that Adamus Resources would pay for the other ground when the licences had been granted.

(f) Mr Bojanjac said that the application for the other ground could be made in the name of Adamus Resources instead of Hightime Investments. Mr Gardner said that if he was not paid then Hightime Investments would go ahead and peg the ground.

(g) Mr Bojanjac said that he did not know what the ground was worth but Mr Gardner said that 'Adamus [Resources] could wait until it was granted ground until we go it valued. That way [Mr] Bojanjac did not have to worry about the value now'. Mr Bojanjac also said that because Adamus Resources did not have a lot of capital, Hightime Investments could be paid after a bankable feasibility study had been done by Adamus Resources.

(h) Mr Bojanjac said that he controlled the Adamus Resources chequebook.

(i) At the time of the discussion he had reached an agreement on two matters:

(i) payment for Hightime's interests in relation to Satemkon, Temko and Dadwen;

(ii) payment for allowing Adamus Resources to apply for a licence over the Ground in stead of Hightime Investments.

Mr Gardner said that at the time the conversation had led to 'an agreement - two agreements that were subject to some completion in time'.[68]

(j) The following day after the conversation Mr Gardner said he telephoned Mr Lungan and told him that a deal had been done so that the ground that was going to be applied for in Hightime Investments' name was instead to be applied for in the name of Adamus Resources and that Hightime Investments would not be pegging any more vacant ground.

(k) Mr Gardner said that if he had not reached an agreement with Adamus Resources then he would have continued to acquire vacant land in the Salman Project area.

(l) Mr Bojanjac subsequently told Mr Gardner that Mr Bojanjac would ask a geologist working for Adamus Resources, Mr Owen, to provide a price for the sale of Hightime Investments' interests.[69]

53 A offer made to Mr Gardner subsequent to the 16 May 2003 conversation was rejected by Mr Gardner, but on 5 June 2003 Mr Gardner entered a heads of agreement with Adamus Resources.

54 In crossexamination, Mr Gardner referred to his conduct subsequent to 16 May 2003 in abstaining from pegging any further ground:[70]

[O]n 16 May 2002 [sic: 2003] when I was active in pursuing every piece of ground that I could, the conversation was about - Adamus didn't want Hightime to peg any more ground. It was agreed at that point with Mr Bojanjac that I stop acquiring ground and don't peg any more ground and they would take it from there on and I was to withdraw from applying for any other ground which I did. I kept my word and I allowed Adamus to take over my person, being Mr Lungan, at that point completely. I never pegged another piece of ground in Ghana.

55 Mr Gardner may not have pegged any more ground but see below at [67] in relation to the application for a licence over the Dadwen ground by Hightime Investments on 10 June 2003.

56 Mr Bojanjac accepted that a conversation had occurred between him and Mr Gardner. He described the conversation as concerned with the 'entire context' of all Mr Gardner's interests in the area. Although he was not sure of the date of the conversation, or the precise words used, Mr Bojanjac also accepted that he said something to Mr Gardner to the effect that it was embarrassing that Hightime Investments was in the process of acquiring ground around Adamus Resources' interests,[71] although he did not think he said that in the same conversation.[72]

57 Mr Bojanjac accepted that he frequently said that 'he who controls the chequebook controls the company' but he did not think he said that on the occasion of the 16 May 2003 conversation either.[73]

58 Mr Bojanjac specifically denied a number of matters:

(a) Mr Bojanjac denied that there was any agreement that payment would be made for vacant ground when licences were granted.[74] He said that at no stage did he ever say to Mr Gardner that Adamus Resources would pay him anything for any extra ground that Mr Gardner might peg.[75]

(b) Mr Bojanjac denied that he said that payment would occur after a bankable feasibility study had been completed.[76]

(c) Mr Bojanjac denied that Mr Gardner had said during the 16 May 2003 conversation that Mr Halliday had said that Adamus Resources did not want any more ground and it couldn't handle the ground it had.[77]

(d) Mr Bojanjac said that Mr Gardner did not tell him which ground Mr Gardner was proposing to peg.[78] However, Mr Bojanjac accepted that some time prior to 22 April 2003 he had a telephone conversation with Mr Gardner in which Mr Gardner had agreed that Hightime Investments should peg the Dadwen ground as well as the ground around it to protect it from being taken.[79] And Mr Bojanjac knew that Hightime Investments was going to make a formal application over any vacant ground in the area,[80] and he had received from Mr MeadowsSmith on 15 May 2003 a (draft) recommended application by Hightime Investments for a licence over the Ground.[81]

59 Mr Bojanjac was asked many times about the conversation. His description of the effect of the conversation was firm, resolute and consistent. He described the effect of his conversation as 'the formative stages of trying to reach an agreement which would resolve all of that and by which Adamus could seek to negotiate'.[82] He said that he recalled having a discussion that 'since we are in the process of negotiating to buy the tenure we should negotiate a price which included sufficient consideration for everything'.[83] He said that he had suggested 'that we negotiate a sufficient consideration to cover all interests including those three pieces of tenure'.[84]

60 When asked about his statement in the conversation concerning the embarrassment of having Hightime Investments pegging ground around that which was held by Adamus Resources, Mr Bojanjac replied that this 'was a matter which needed to be negotiated, brought to a head and acquired'.[85]

61 Mr Bojanjac also accepted that in the conversation Mr Gardner said that if Adamus Resources was not going to 'buy' the Ground from Hightime Investments then Hightime Investments would proceed to peg it.[86] However, Mr Bojanjac explained that a payment would be on 'the basis that we negotiated consideration that would include everything which is what I thought we had done and were doing'.[87] Again, when Mr Bojanjac was asked whether he told Mr Gardner that Adamus Resources would pay for the vacant ground that was the subject of the upcoming application, he replied that he had told Mr Gardner that 'we should negotiate a position ... where the consideration was sufficient to buy all of his interests'.[88] The consideration which would be negotiated would 'include any pegged ground subject to application'.[89]

62 In other words, Mr Bojanjac described the conversation as an undertaking to procure Adamus Resources to negotiate with Mr Gardner to acquire all of Hightime Investments' interests and prospective interests. It was not a binding agreement by Adamus Resources to acquire the licences held by Mr Gardner. Nor was it an agreement by Adamus Resources to pay for the vacant land which Hightime Investments was intending to peg or to apply for (see [52(d)] [52(g)] above).

63 Counsel for the plaintiff pointed to other answers given by Mr Bojanjac in crossexamination. Some of those answers, if read in isolation, might have supported a submission that the conversation involved Mr Bojanjac agreeing that Adamus Resources would pay Hightime Investments for the Ground. But, read in the context of all of Mr Bojanjac's evidence, he was referring only to an undertaking to procure Adamus Resources to negotiate with Hightime Investments. For instance, counsel asserted to Mr Bojanjac that the 'only way that you would get a change in Hightime's position would be by agreeing to pay him for this ground'. Mr Bojanjac replied that '[t]hat would be correct. I have given you the context by which I thought the solution to it had been reached'.[90] That context was the undertaking that he would procure Adamus Resources to negotiate with Hightime Investments for a price to be paid for the licences held by Hightime Investments and its intention to apply for licences for further ground.

64 As Mr Bojanjac had undertaken, negotiation subsequently did occur between Hightime Investments and Adamus Resources.

65 I find the following facts in relation to the events subsequent to the 16 May 2003 conversation.

66 Consistently with Mr Bojanjac's evidence about the oral conversation, subsequent negotiations took place between Hightime Investments and Adamus Resources. Mr Gardner said that subsequent to the conversation an offer was made to him by Adamus Resources[91] to purchase Hightime Investments' interests in relation to the Satemkon, Temco and Dadwen ground. Mr Gardner rejected it.[92] There were, nevertheless, strong grounds to expect that an agreement would be negotiated and concluded. Mr Gardner said that there had never been a transaction that did not go through the board. He added that the 'transactions' (by which he must have meant his discussions with Mr Bojanjac since, as Mr Gardner knew, no contracts were concluded prior to board approval) were 'presented correctly by Mr Bojanjac and they wanted the ground and the deals to go through, so in those circumstances, unless there is something completely wrong, they would go through'.[93]

67 On 17 May 2003, the day after the conversation between Mr Gardner and Mr Bojanjac, Mr MeadowsSmith emailed Mr Lungan saying 'I spoke with [Mr Halliday] yesterday and will proceed to make two Prospecting Licence applications. A Hightime application over the [Dadwen] ground and a larger one for Adamus filling in all the gaps'.[94] On 10 June 2003, Mr MeadowsSmith applied for the licence on behalf of Hightime Investments in relation to the Dadwen tenement.[95]

68 On 17 May 2003, Mr MeadowsSmith also emailed Mr Halliday. He attached a draft application for a licence over the Ground. With one difference, it was the same draft application as that sent by Mr MeadowsSmith to Mr Lungan on 15 May 2003. The difference was that the draft application was in the name of Adamus Resources rather than Hightime Investments. Mr MeadowsSmith also emailed Mr Owen about the prospective application by Adamus Resources for a prospecting licence over the Ground.[96]

69 On 30 May 2003, Mr Gardner, Mr Bojanjac and Mr Halliday flew to Toronto to meet with bankers concerning a capital raising.[97] During that trip, on 5 June 2003, a conditional heads of agreement was agreed between Mr Gardner and Adamus Resources. It was subject to a number of conditions precedent.

70 The 5 June 2003 heads of agreement was signed by Mr Gardner, Mr Halliday and Mr Bojanjac. It provided for Adamus Resources to acquire all of the interests of Mr Gardner and/or Hightime Investments, including Hightime Investment's rights, in relation to the Satemkon agreement, the Temko agreement and Hightime Investments' application over the Dadwen/Fidelity tenement.

71 It was subject to a number of conditions precedent including:

(i) approval of the other board members of Adamus Resources;

(ii) obtaining the required approvals under the Corporations Act and ASX listing rules;

(iii) completion of independent due diligence on the relevant interests and joint ventures involved in the Satemkon, Temko and Dadwen tenures; and

(iv) the successful completion of Adamus Resources' negotiations with Semafo Ltd to acquire the Anwia Project and obtaining all the necessary associated approvals.

72 It is likely that the price in the 5 June 2003 heads of agreement was negotiated even earlier than 30 May 2003 which was the date when Messrs Halliday, Bojanjac and Gardner left for Toronto. Mr Bojanjac said that he remembered arriving at Adamus Resources' offices one morning and being told by Mr Halliday that Mr Halliday had met with Mr Gardner earlier that morning and had reached agreement to issue five million shares in Adamus Resources and pay US$350,000 to Hightime Investments. Mr Bojanjac asked Mr Halliday '[i]s this for all of it?'. Mr Halliday replied that it was, and Mr Bojanjac said that he was relieved and believed that the conflicts between Hightime Investments and Adamus Resources were over.[98]

73 The day after the heads of agreement were signed, on 6 June 2003, Mr MeadowsSmith lodged applications for prospecting licences over two areas known as 'Apa Tam' and 'Asanta'. The Ground is a subset of those areas. It can be seen in Appendix A to these reasons.

74 On 17 December 2003, a formal agreement between Hightime Investments and Adamus Resources gave force to the 5 June 2003 heads of agreement.[99] The formal agreement was between Adamus Resources and Hightime Investments. Unlike the brief and heavily conditional 5 June 2003 heads of agreement, the 17 December formal agreement was 22 pages including schedules, and detailed. The formal agreement involved a purchase by Adamus Resources from Hightime Investments of the shares in Hightime Ghana Pty Ltd, an entity to which Hightime had sold its interests in relation to Satemkon, Temco and Dadwen. The formal agreement was approved by shareholders of Adamus Resources on 23 January 2004.[100]

75 The prospecting licence in relation to Apa Tam was granted on 24 November 2004[101] and in relation to Asanta on 10 January 2005.[102]

76 In June 2007, Adamus Resources published its bankable feasibility study.[103]

77 Apart from the evidence and my conclusions described in the section immediately above, there is little other evidence which casts any real light upon the nature of the 16 May 2003 conversation. Mr Halliday had little day to day contact with Mr Gardner.[104] Only Mr Bojanjac and Mr Gardner were parties to that conversation.

78 As I have explained, Mr Halliday was closely involved in events surrounding the 16 May 2003 conversation even though he was not a party to that conversation. I accept Mr Bojanjac's evidence that it was not Mr Bojanjac who gave instructions to Mr MeadowsSmith on 16 May 2003 about changing the name of the draft application. The emails from Mr MeadowsSmith at the time suggest that the instructions came from Mr Halliday.

79 But Mr Halliday's evidence was not reliable. Mr Halliday generally, and implausibly, denied knowledge of Hightime Investments' intention to acquire the Ground. In part, the unreliability of his evidence might be explained by the years which have passed since the events about which he was crossexamined. But his answers to a considerable number of other questions were implausible. For instance, in response to a long line of questions he consistently maintained that Hightime Investments were only going to acquire ground in the area they wanted by purchasing ground (at potentially considerable expense) rather than by pegging vacant ground (for minimal cost).[105] I accept the submission of counsel for the plaintiff that no weight can be put on the evidence of Mr Halliday.[106]

The alleged promise was not made in the 16 May conversation

80 Apart from the matter at [82] below, I accept the evidence of Mr Bojanjac as set out above at [56] [61]. Mr Bojanjac impressed me as an honest and reliable witness doing his best to answer questions and to recall the events of around May 2003. The impression I formed from Mr Bojanjac's and Mr Gardner's oral evidence was that Mr Bojanjac's was considerably more reliable than Mr Gardner's.

81 On some matters, there was a consensus, or something close to it, between Mr Gardner and Mr Bojanjac. I accept that the conversation occurred between Mr Gardner and Mr Bojanjac on 16 May 2003. Although there was some dispute about the date, the date of the conversation was not seriously doubted by Mr Bojanjac. Adamus Resources denied that Mr Bojanjac had promised that Adamus Resources would pay the fair market value of a prospecting licence over the Ground but Mr Gardner was not crossexamined in detail about his changing recollection of the date when the alleged conversation had occurred.

82 I also find that Mr Bojanjac said something to Mr Gardner to the effect that it was embarrassing that Hightime Investments was in the process of acquiring ground around Adamus Resources' interests. Although Mr Bojanjac did not think this was said in the 16 May 2003 conversation, he was uncertain about this and I consider that it is likely that it was said then.

83 However, I find that the substance of the conversation was that Mr Bojanjac would procure Adamus Resources to negotiate towards paying Hightime Investments for all of the interests which Hightime Investments had in the area including the substitution of Adamus Resources for Hightime Investments as the named applicant for the licence in relation to the Ground. The latter substitution occurred in a draft of the application the day after the 16 May 2003 conversation. And the application was made on 6 June 2003. The negotiations took place and ultimately were brought to fruition in the form of a heavily conditional agreement on 5 June 2003.

84 Counsel for Mr Gardner relied heavily upon evidence which he described as a 'change of position'. The initial position was that immediately before 16 May 2003, Mr MeadowsSmith (of Adamus Resources) had prepared a draft application for the Ground in the name of Hightime Investments. That application was never lodged. The change of position occurred when, on 17 May 2003, an identical application was prepared by Mr MeadowsSmith in the name of Adamus Resources. The applications over an area which included the Ground were lodged on 6 June 2003.

85 As I have explained, there was some discussion on 16 May 2003 between Mr Bojanjac and Mr Gardner concerning (1) the potential acquisition by Adamus Resources of Hightime Investments' rights in relation to the Satemkon, Temco and Dadwen tenements; and (2) the substitution of Adamus Resources for Hightime Investments as the named applicant for the licence in relation to an area of land in Ghana.

86 I accept Mr Bojanjac's evidence that the general content of the conversation, and its general tenor, was that Mr Bojanjac would procure Adamus Resources to negotiate towards an agreement between Hightime Investments and Adamus Resources.

87 It may be that the undertaking by Mr Bojanjac to procure these negotiations gave Mr Gardner and Adamus Resources a strong expectation that Adamus Resources would subsequently enter an agreement. As I have explained, Mr Gardner said that there had never been a transaction that did not go through the board: 'they wanted the ground and the deals to go through, so in those circumstances, unless there is something completely wrong, they would go through'.[107] And it may be that it was this strong expectation which motivated the change of position where Mr MeadowsSmith prepared a new draft application in the name of Adamus Resources in place of the one which he had prepared in the name of Hightime Investments.

88 In any event, it suffices to say that I do not accept Mr Gardner's evidence that the 16 May 2003 conversation involved Mr Bojanjac speaking any words which could reasonably have been construed as committing Adamus Resources to any acquisition or payment to Hightime Investments. Apart from the evidence at [52](a) and (b) and the first sentence of (d) above, I do not accept the remaining factual allegations in that paragraph. As I have explained, I also prefer Mr Bojanjac's evidence that he had effectively undertaken to ensure that Adamus Resources would negotiate with Hightime Investments.

89 To be fair to Mr Gardner, there were other parts of his oral evidence which were more consistent with Mr Bojanjac's account. For instance, immediately after being asked about the 16 May 2003 conversation, Mr Gardner gave the following answers in crossexamination:[108]

COUNSEL: You might recall me asking you that no matter whether Mr Bojanjac thumped his fists or stamped his feet at a board meeting, he was only one member of the board and if the other members of the board or at least a majority of the board did not agree to proceed with the transaction, then the transaction would not proceed?

MR GARDNER: Technically, yes.

COUNSEL: I put to you that this was the understanding that you had in April or May 2003?

MR GARDNER: No, because there had never been a transaction that didn't go through the board because it was presented correctly by Mr Bojanjac and they wanted the ground and the deals to go through, so in those circumstances, unless there is something completely wrong, they would go through.

90 This is more consistent than other evidence from Mr Gardner with Mr Bojanjac's account that Mr Bojanjac had not committed Adamus Resources to any payment but that he (and Adamus Resources) would negotiate for a deal. The parties might well have expected that unless 'there was something completely wrong' a contract should eventuate after further negotiations and approval by the board.

91 I do not accept Mr Gardner's evidence that words which could be construed as words of binding commitment were spoken by Mr Bojanjac. This is for the following eight reasons. Individually many of these reasons would be sufficient to reject Hightime Investments' claim. Together, the result is irresistible.

92 First, as I have explained above, Mr Bojanjac was a more compelling and reliable witness. He accepted that he may have said, or did say, a number of the matters which Mr Gardner attributed to him. He was not emphatic on many matters, which given the length of time which had elapsed since the 16 May 2003 conversation, was understandable. And on the matters on which he was emphatic, such as that the only promise was to negotiate consideration for everything including the rights held by Hightime Investments, his evidence was clear and cogent. In contrast, Mr Gardner's evidence was unclear in parts, often evasive, and sometimes inconsistent.

(2) Inconsistencies in Mr Gardner's oral evidence

93 Counsel for Hightime Investments submitted that Mr Gardner was not challenged about his evidence of the 16 May 2003 transaction.[109] It is true that it was not expressly put to Mr Gardner that Mr Bojanjac did not promise that Adamus Resources would pay the fair market value for the Ground. But Mr Gardner could have been in no doubt that his evidence on this point was disputed by Adamus Resources. Adamus Resources had denied that there was any term of the alleged agreement that it would pay Hightime Investments the fair value of any licence which was granted over the Ground.[110] The written outline of opening submissions filed by Adamus Resources before trial explained that a central issue was that:[111]

[Mr] Bojanjac denies the discussions pleaded, and in particular denies ever saying to Gardner (whether in late April/May 2003 or earlier) that Adamus would pay money for the Opportunity [for Hightime Investments to allow Adamus Resources to apply for and obtain a licence over the Ground].

94 Mr Gardner was exhaustively crossexamined about inconsistencies between his allegation of an oral agreement and the letter of demand. He was cross-examined about inconsistencies between the writ filed on behalf of Hightime Investments and his allegations of oral agreement. He was crossexamined about the use of written agreements by Adamus Resources in other transactions. He was crossexamined in relation to the absence of any announcement of the alleged oral agreement to the market.

95 One inconsistency in Mr Gardner's case concerned the 5 June 2003 heads of agreement.[112] The pleaded case for Hightime Investments, and Mr Gardner's initial evidence, was that an agreement was reached during the 16 May 2003 conversation. The pleaded case was that this agreement included Adamus Resources acquiring the interests of Hightime Investments in relation to the Satemkon, Temco and Dadwen tenements.[113] But in crossexamination Mr Gardner conceded that this alleged oral agreement on 16 May 2003 was only to do the things which were set out in the written heads of agreement on 5 June 2003.[114] Crucially, the 5 June 2003 heads of agreement:

(a) was described in the introduction as involving Adamus agreeing (not having previously agreed) '[f]ollowing today's discussion'[115] with bankers;

(b) was specifically subject to approval of the other board members of Adamus Resources;

(d) was subject to the condition precedent of complying with 'the ASX Listing Rules as are necessary for it to enter into a full agreement'.

96 The inconsistency is that this 5 June 2003 heads of agreement was not an immediately binding agreement to pay as Mr Gardner alleged. On Mr Gardner's case the 5 June 2003 agreement (which did not include such an immediate obligation) embodied the earlier oral agreement which he said did include such an obligation. Finally, even if an oral agreement as to these matters had been reached earlier (which I reject) this alleged embodiment of such an oral 'agreement' was, in very broad summary, only a conditional agreement for the matter to be taken to the board of directors of Adamus Resources.

(3) Lack of any written document supporting Mr Gardner's account

97 Mr Gardner's evidence in his witness statement concerning the content of the 16 May 2003 conversation was produced nearly nine years after the relevant conversation. The conversation was not supported by any document or contemporary note. Mr Gardner claimed (but I do not accept) that he had made hundreds of demands for payment from the chairman, company secretary, managing director, and chief operating officer of Adamus Resources. But there was no evidence of any such demand in writing; no email, no letters, no memorandum. There was nothing in writing which mentioned any undischarged liability to Hightime Investments in relation to the Ground between 16 May 2003 and 9 December 2009. The only demand made in writing was by his lawyers on 9 December 2009. And, as I explain below, it is significant that this demand was fundamentally different from the binding oral promise which Mr Gardner alleged was made on 16 May 2003.

98 This subsequent conduct is a relevant matter to consider in finding whether, as a fact, the alleged oral promises were made. Mears v Safecar Security Ltd,[116] Stephenson LJ (with whom O'Connor LJ and Sir Stanley Rees agreed) said:

I have already expressed my view that this agreement was oral, but even if it was partly in writing, we are concerned with the search for a term that was not written down, and there is nothing in those authorities which prevents the court from looking at the way the parties acted for the purpose of ascertaining what that term was. Common sense suggests that their subsequent conduct is the best evidence of what they had agreed orally but not reduced to writing, though it is not evidence of what any written terms mean.

99 This passage was approved by Owen J in The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9][117] and the latter half was quoted with approval by Murphy JA (Pullin & Newnes JJA agreeing) in Fazio v Fazio[118]. The statement by Stephenson LJ is consistent with statements in a number of other cases.[119] Spigelman CJ has also described postcontractual conduct as a matter of 'significant weight' in identifying the subject matter of an alleged oral contract.[120] This approach also accords with principle. It would be peculiar if courts were to be constrained in the exercise of finding facts from considering any relevant matter subsequent to the alleged occurrence of the fact in issue.

(4) A contradictory account put on Mr Gardner's behalf on 9 December 2009

100 Although Mr Gardner's witness statement of 13 April 2012 was very specific about the detail of the 16 May 2003 conversation, there were significant contradictions between that account of the conversation and earlier contentions made on Mr Gardner's behalf.

101 A stark contrast is with the only written demand in evidence which Mr Gardner made of Adamus Resources. This was a demand by his lawyers on 9 December 2009.[121] Although Mr Gardner's answers to many questions about this letter were evasive, I accept his early answer in crossexamination that this demand, by his lawyers, had been made after extensive discussions between Mr Gardner and his solicitors about the nature of his grievances against Adamus Resources.[122]

102 First, in the letter of demand, the conversation is alleged to have occurred at a meeting in late 2002 (which Mr Gardner corrected to 16 May 2003 in his oral evidence)[123] between Mr Gardner, Mr Bojanjac and Mr Halliday. Mr Halliday did not recall being present at that meeting.[124] In Hightime Investments' statement of claim and Mr Gardner's witness statement, the conversation relied upon by Mr Gardner was said to have occurred in late April or early May 2003 and was only with Mr Bojanjac.[125] In Mr Gardner's oral evidence, the conversation occurred on 16 May 2003, again only with Mr Bojanjac.

103 Secondly, and more fundamentally, the 9 December 2009 letter of demand suggested that a single interdependent agreement had emerged from the conversation. That agreement alleged was as follows:

(a) Adamus Resources would acquire from Hightime Investments the Ground[126] already pegged by Hightime Investments as well as Hightime Investments' application for an exploration licence over a substantial part of the Ground [I interpolate that there was no evidence at trial that any part of the Ground had been pegged by Hightime Investments and it appeared to be common cause at trial that it did not do so].[127]

(b) Adamus Resources would peg the remaining unpegged portion of the Ground.

(c) Adamus Resources' acquisition of the pegged part of the Ground was conditional upon completion of the oral agreement for transfer of the Temko, Satemkon and Dadwen tenures to Adamus Resources, which occurred when it was put into a formal Share Sale and Purchase agreement on 17 December 2003 (see my discussion above concerning this agreement at [74]).

(d) Hightime Investments would allow Adamus Resources to control and direct Mr Lungan and to use Hightime Investments' infrastructure to lodge the application and peg the remainder of the Ground in Adamus Resources' name.

104 The letter of demand then alleged that because the Shan Corporation had acquired the Dadwen tenure, the Share Sale and Purchase Agreement was unable to be completed and 'Hightime has provided Adamus with the opportunity to explore and acquire the Ground, without having obtained the benefit it anticipated by the Share Sale and Purchase Agreement'.

105 A fundamental point is that the letter of demand described the alleged oral agreement in terms of a single, interdependent agreement, which became the Share Sale and Purchase Agreement.

106 Thirdly, there was no mention in the letter of demand of the alleged oral promise by Mr Bojanjac that Adamus Resources would pay the fair market value of the Ground, or that the Ground would be valued, or that Adamus Resources could pay once it had obtained a bankable feasibility study. Instead, a demand was made for $5,000,000 or transfer of the Ground.

107 In summary, it is entirely implausible that after providing his solicitors with detailed instructions leading to the 9 December 2009 letter, Mr Gardner would subsequently recall that seven years earlier an entirely oral agreement had been struck in different and inconsistent terms.

(5) A contradictory account put on Mr Gardner's behalf on 26 March 2010

108 There is a further implausibility of Mr Gardner's allegations of the commitment by Mr Bojanjac, on behalf of Adamus Resources, to pay the fair market value of a licence over the Ground. This further implausibility is that the alleged oral agreement was also not mentioned in the writ filed on Mr Gardner's behalf on 26 March 2010. Mr Gardner accepted that prior to the filing of the writ he had had long and careful discussions with his lawyers about the allegations contained in it.[128]

109 In his 26 March 2010 writ, the claim for breach of contract was for a single interdependent contract made in December 2002 in which it was alleged that Hightime Investments agreed to 'transfer to [Adamus Resources] 3 mining tenements it controlled in Ghana, West Africa and allow [Adamus Resources] to register and apply for an exploration licence over [the Ground] in consideration of [Adamus Resources] transferring to [Hightime Investments] 5,000,000 ordinary shares in [Adamus Resources] and US$350,000'.

110 Once again, the alleged promises in relation to the transfer of the mining tenements and the application for an exploration licence over the Ground are expressed as a single interdependent agreement. Further, there was no suggestion of the alleged oral promise by Mr Bojanjac that Adamus Resources would pay the fair market value of the Ground, or that the Ground would be valued, or that Adamus Resources could pay once it had obtained a bankable feasibility study.

(6) Adamus Resources agreements required board approval

111 A sixth reason for rejecting Mr Gardner's account of the oral conversation on 16 May 2003, and preferring that of Mr Bojanjac, is the consistency of Mr Bojanjac's account, and inconsistency of Mr Gardner's, with the manner in which other transactions were entered between Adamus Resources and Hightime Investments. Contrary to the pleaded case for Hightime Investments, although those transactions were the subject of oral negotiations, nothing was binding until the proposals were put to the board and accepted.

112 In relation to specific transactions, Mr Gardner also conceded in crossexamination that no binding agreement was reached until the board of directors approved proposals which were made to it. One example is in relation to the transaction by which Adamus Resources acquired the shed ground from Hightime Investments. That transaction was initially negotiated between Mr Gardner and Mr Bojanjac. But, as Mr Gardner and Mr Bojanjac were aware, it went through a long and detailed process to become a binding agreement:

(a) It was taken to the Adamus Resources board of directors for consideration on 28 May 2002.[129] Although Mr Gardner characterised his attendance as being at a discussion before that board meeting, I am satisfied that Mr Gardner was present at the meeting when Mr Bojanjac noted the numerous prerequisites before Adamus Resources could proceed with the acquisition of the shares in African Gold Resources in relation to the Shed Ground.[130] The typed minutes do not record Mr Gardner's attendance as an official member but the handwritten minutes record that Mr Gardner was present for a substantial part of the meeting by invitation and they record his departure during the meeting.[131]

(b) It was subject to due diligence by the independent directors, Messrs Halliday and Bojanjac.

(d) It was considered on at least four subsequent occasions by the board of directors of Adamus Resources.[133]

(e) It was recorded in a document which was executed by Adamus Resources and Mr Gardner and announced to the market.[134]

(f) It was subjected to the reports of independent experts.[135]

(h) It was announced to the market. [136]

113 Contrary to Hightime Investments' pleaded case in relation to this transaction, Mr Gardner acknowledged in crossexamination that it was up to the board of Adamus Resources to accept or reject the proposal.[137] Mr Gardner accepted that he knew this at the time.[138] He realised that the Adamus Resources board could 'kick out' the proposal.[139]

114 Once again, any oral negotiations were not binding until any proposal was approved by the board. Mr Gardner said that he knew that it was up to the directors to decide whether to accept or to reject any proposal. He understood at the time that the 'recommendation for the management to the board is what the board relies on to be able to do a deal' and that this 'would have been discussed and it was up to the board to make a decision'.[140] Even if he had extensive discussions with Mr Bojanjac about the matter before the board meeting, or received a degree of assurance from Mr Bojanjac that the board would go ahead with the proposed transactions, Mr Gardner knew that it was entirely up to the board to make the decision.[141]

115 A final, and highly pertinent example, concerns the 5 June 2003 heads of agreement which Mr Gardner conceded was an agreement to do the things which were the subject of the 16 May 2003 conversation in relation to acquisition of Hightime Investments' rights.[142] Crucially, the 5 June 2003 written agreement was specifically subject to approval of the other board members of Adamus Resources. The process of putting the 5 June 2003 into a binding formal agreement involved directors' meetings. It also involved drafting a 22 page agreement. It required independent expert reports. It needed shareholder approval. It needed market disclosure.

116 What was true of these specific transactions was also true generally. Even on Mr Gardner's account of the way that he considered that oral deals were generally struck with Adamus Resources, he conceded that 'all agreements that we [did were] only ever spoken and reached with Mr Bojanjac and then he [Mr Bojanjac] did what was necessary through the board and management to do what was required to give effect to the conclusion of those deals'.[143] In light of Mr Gardner's concessions that specific transactions were not binding before board approval, his reference to 'deals' done by Mr Bojanjac could be no more than undertakings by Mr Bojanjac to take these matters to the board of directors.

(7) An oral contract would mean that breaches of disclosure rules occurred

117 If Adamus Resources had entered into the significant binding oral agreement with Mr Gardner on 16 May 2003, as Mr Gardner claimed, then Adamus Resources, as a company listed on the Australian Stock Exchange, was required to announce this to the market. Mr Gardner was aware of this.[144] If Mr Gardner were correct that Mr Bojanjac had undertaken binding commitments on behalf of Adamus Resources on 16 May 2003, then both Mr Bojanjac and Mr Gardner would have failed for numerous months to make any disclosure to the market. The failure to comply with disclosure requirements is a relevant matter to consider in assessing whether the alleged oral promises were made.[145] It is yet another indication that they were not made.

(8) The unlikelihood of the disputed oral promises

118 An eighth reason, which would also, of itself, have been sufficient for me to reject Hightime Investments' claim of the oral promise is the unlikelihood of the terms of the alleged oral promise.

119 I reiterate the terms of Mr Gardner's evidence of the alleged oral promises in dispute. The alleged terms were that Mr Bojanjac made promises that 'Adamus would pay for the other ground when the licences had been granted';[146] that 'Adamus could wait until it was granted ground until we got it valued';[147] and that Mr Gardner said that the ground could be valued and they could come up with a fair and reasonable value[148] and Hightime Investments could be paid after Adamus Resources completed its bankable feasibility study[149] which occurred in July 2007.

120 There are two contextual facts which make this alleged conversation, and alleged oral promise, very unlikely.

121 First, Adamus Resources had access to considerable facilities in Ghana. Mr MeadowsSmith was an employee of Adamus Resources. It was Mr MeadowsSmith who had prepared the application over the Ground for Hightime Investments on 15 May 2003 (he could not recall why he prepared it in the name of Hightime Investments). It was Mr MeadowsSmith who prepared the same application on 17 May 2003 in the name of Adamus Resources.[150] Mr MeadowsSmith also prepared the Apa Tam and Asanta applications which were eventually lodged for the area which included the Ground. And on 13 May 2003, Mr MeadowsSmith had told Mr Bojanjac that he had difficulty contacting Mr Lungan, whose emails were bouncing back.[151]

122 The alleged oral promise by Mr Bojanjac was to pay Hightime Investments the full market value of the Ground so that Adamus Resources' own employee, Mr MeadowsSmith could change the name in which he had prepared the application to that of his own employer. So stated, it is unlikely that such a promise would have been made.

123 Secondly, the terms of the alleged promise were opaque in circumstances in which more clarity would be expected. The defendant pleaded a defence of uncertainty which was later abandoned. However, the opaque nature of the alleged promise to pay fair market value of the Ground is a further matter which militates against the promise having been made. As I explain below in discussion about valuation, and as is immediately apparent, the valuation of a large section of unexplored ground in Ghana is a highly speculative exercise. One fair and reasonable valuation might differ from another by orders of magnitude as both expert valuers acknowledged.

124 A further matter in the alleged oral contract which was far from pellucid was the date at which this potentially very large value would be determined and the currency in which it would be measured. The experts at trial were instructed on the basis of two dates. Was the value to be determined at the date of the alleged promise (16 May 2003) or was it to be determined on the date of the grant of the licences, at some time in the future (which turned out to be 24 November 2004 and 10 January 2005)? And was it to be measured in Australian dollars, or United States dollars which was the currency used by the expert valuers, and the common currency for mining transactions in Ghana?

125 Although the matter is far from certain and need not be determined, for the sake of completeness I consider that the best construction, based on the alleged words 'Adamus could wait until it was granted ground until we got it valued' is that the valuation would occur at the date the licence was granted and that the valuation would be conducted, and the debt would arise, in the currency as commonly used by valuers and in these transactions and well known to Mr Bojanjac and Mr Gardner through previous transactions.[152] As I explain below in discussion of the expert evidence that currency is United States dollars. With fluctuating values and fluctuating exchange rates, this increases even further the uncertain effect of the alleged promise.

126 These reasons might not have caused an agreement to fail for uncertainty. But they do point to the significant unlikelihood that Mr Bojanjac without agreement of the board of directors would unilaterally have agreed to bind Adamus Resources, with limited finances, to a future financial commitment:

(a) based upon a highly speculative valuation in a different currency;

(b) which valuation would be conducted potentially years in the future;

(c) for payment of an amount of money potentially years in the future when a bankable feasibility study was completed; and

(d) which represented the full market value of a licence over Ground for which the application had been drafted (in the name of Hightime Investments) by Adamus Resources' own employee but not yet lodged.

The contract claim fails because no binding commitment was made

127 I have explained above the eight reasons why my conclusion of fact is that the conversation on 16 May 2003 did not involve any words by Mr Bojanjac which could reasonably be construed as words of promise that Adamus Resources would pay to Hightime Investments the fair market value of the Ground. This, alone, is sufficient to dispose of the claim. However, there are two other independent reasons why the claim must fail. These are the interdependency of the alleged promises in the oral agreement and the lack of authority of Mr Bojanjac to enter into the alleged oral agreement.

The contract claim fails because of interdependency of the matters discussed on 16 May 2003

128 A second reason why the plaintiff's claim must fail is because the conversation between Mr Gardner and Mr Bojanjac did not concern separate and independent matters. My conclusion above is that Mr Bojanjac's evidence should be preferred that the conversation concerned only an undertaking that he would procure Adamus Resources to negotiate on the matters discussed.

HIGHTIME INVESTMENTS PTY LTD -v- ADAMUS RESOURCES LTD [2012] WASC 295 (21 August 2012)

At a glance

Court

Decision date

Before

Source

Judgment (422 paragraphs)