Hill End Gold Ltd v First Tiffany Resource Corporation

CITATION : Hill End Gold Ltd v First Tiffany Resource Corporation [2010] NSWSC 375

JURISDICTION : Equity Division Expedition List

DECISION : Proceedings dismissed with costs with leave to apply for any alternative or additional order

CATCHWORDS : ENERGY AND RESOURCES - Mining for minerals - Mining leases and licences apart from statute - nature of "free-carried interest" where transfer of no force unless approved by Minister - effect of repeal of statute requiring ministerial approval - where transfer required to be in writing - whether writing must post-date statute imposing requirement - ESTOPPEL - Former adjudication and matters of record or quasi of record - Former Adjudication - Judgment inter partes - Res judicata - General matters - whether order of Mining Warden's Court final judgment on merits - whether plaintiff is privy of party to earlier proceedings - CONTRACT - where agreement intended to supersede and replace earlier agreement - where later agreement terminated or abandoned - whether earlier agreement revised - CONTRACT - Conditions - Condition subsequent - failure to obtain stipulated approval renders contract voidable, not void - CONTRACT - Implied - whether to be implied from supposition and reconstruction in context of dispute years after event

(CTH) Foreign Acquisitions and Takeovers Act 1975 s 19, s 25 LEGISLATION CITED : (NSW) Interpretation Act 1987 s 30 (NSW) Mining Act 1973 s 107 (NSW) Mining Act 1992 s 160(1), s 297, Sch 6 cl 47

Barber v Staffordshire County Council [1996] 2 All ER 748 Blair & Perpetual Trustee Co Ltd v Curran (1939) 62 CLR 464 Brown v Heffer (1967) 116 CLR 344 Butts v O'Dwyer (1952) 87 CLR 267 Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 853 Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 3) [1970] Ch 506 Chamberlain v Deputy Commissioner of Taxation (ACT) (1988) 164 CLR 502 DSV Silo - und Verwaltungsgesellschaft mbH v Sennar (Owners) (The Sennar (No 2)) [1985] 1 WLR 490 Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (Receivers and Managers Appointed) (in liq) (1993) 43 FCR 510, Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630 Gange v Sullivan (1966) 116 CLR 418 Gleeson v J Wippell & Co Ltd [1977] 1 WLR 510 Graham v Moree Local Aboriginal Land Council [2004] NSWSC 1178 CASES CITED : Kok Hoong v Leong Cheong Kwen Mines Ltd [1964] AC 993 Linprint Pty Ltd v Hexham Textiles Pty Ltd (1991) 23 NSWLR 508 Maganja v Arthur (1984) 3 NSWLR 561 Marshall v Smith (1907) 3 CLR 1617 McWilliam v McWilliam Wines Pty Ltd (1964) 114 CLR 656 MK and JA Roche Pty Ltd v Metro Edgley Pty Ltd [2005] NSWCA 39 Port of Melbourne Authority v Anshun Pty Ltd (1982) 147 CLR 589 Powell v Wiltshire [2005] QB 117 R v Patents Appeal Tribunal; Ex parte Baldwin & Francis Ltd [1959] 1 QB 105 Ramsay v Pigram (1968) 118 CLR 271 SCF Finance Co Ltd v Masri (No 3) [1987] QB 1028 Spautz v Butterworth (1996) 41 NSWLR 1 Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 Swan Resources Ltd v Southern Pacific Hotel Corp [1983] WAR 39

TEXTS CITED : Spencer-Bower and Turner, The Doctrine of Res Judicata, 2nd edn (1969)

PARTIES : Hill End Gold Limited (plaintiff) First Tiffany Resource Corporation (defendant)

COUNSEL : Mr B J Weber SC w Mr C N Bova (plaintiff) Dr K A Stern (defendant)

SOLICITORS : Ian Congdon (plaintiff) Watson Mangioni Lawyers Pty Ltd (defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EXPEDITION LIST

2005/262103 Hill End Gold v First Tiffany Resource Corporation JUDGMENT 1 HIS HONOUR: Prior to March 1982, Silver Orchid Pty Limited held certain mining tenements in the Hill End locality. In 1982, Silver Orchid agreed to sell to the defendant First Tiffany Resource Corporation (Tiffany) an undivided 20% "free-carried interest" in those tenements ("the 1982 Agreement"). Although the 1982 Agreement contemplated that Silver Orchid and Tiffany would execute a joint venture agreement "upon closing to permit Tiffany to participate in the development of such properties" in a form said to be annexed, the annexure has never been produced. However, on 18 January 1983, Mr Cleaver on behalf of Silver Orchid and Mr McAlpine on behalf of Tiffany executed a memorandum ("the 1983 Memorandum Agreement") providing that Tiffany would be entitled to maintain its 20% interest in the Hill End mining tenements when an economic feasibility study was received by paying its 20% share of the funds required to bring the property or properties into production. 2 On 24 August 1983, Northern Gold NL, Silver Orchid, Tiffany and McAdam Mining Corporation entered into a joint venture agreement ("the 1983 Joint Venture Agreement"), which was expressed to supersede and replace all other agreements arrangements or understandings between the parties or any of them pertaining to the Hill End area. It established a joint venture for the further exploration, prospecting and development of the area, in which the interests were Northern Gold 60%, Tiffany 20% and Silver Orchid 20%; and provided that all costs of exploration and development up to and including completion of a feasibility study (which was defined in the agreement) would be borne by Northern Gold, and that if as a result of any feasibility study a decision was made to develop a commercial mining operation on the area covered by such study, that area would be excised from the joint venture and the parties interested in the joint venture would then enter into a new agreement in respect of it, and in respect of the remaining area all further costs of exploration and development would be borne jointly by Northern Gold, Silver Orchid and Tiffany in their proportionate percentage interests. 3 By 1990, the 1983 Joint Venture Agreement had been terminated. On 25 June 1993, Mr McAlpine on behalf of Big Nugget Partnership (BNP) and Mr Cleaver on behalf of agreed that BNP would have an option to acquire 50% of Silver Orchid's Hill End holdings. Although that agreement contained no reference to Tiffany's 20% holding, a letter agreement dated 4 August 1993 between BNP and Tiffany recited that Silver Orchid had sold an undivided 20% free-carried interest in its holdings in the Hill End area to Tiffany, and provided that Tiffany would sell to BNP 25% of its free-carried interest for $10. On or around 22 July 1994, BNP transferred its interest in the holdings to BNP Holdings Limited, which by late October 1994 on-transferred that interest to Nugget Resources Inc. On 13 April 1995, Silver Orchid acknowledged to Nugget Resources that it had satisfied the conditions of its option, and had thus earned the right to 50% of Silver Orchid's interest in the holdings. 4 On 16 March 1999, Nugget Resources transferred its interest to its wholly-owned subsidiary, the plaintiff (then known as Nugget Resources Australia Pty Limited (NRA)). Simultaneously, by a deed of transfer, which recited that Silver Orchid had held 80% of the legal and equitable interest in the tenements, Silver Orchid transferred all its legal and equitable interest in the tenements to NRA. On about 18 July 2001, NRA became a public company, and on or about 24 September 2002, changed its name to Hill End Gold Ltd (HEGL). On 9 September 2003, HEGL submitted to Tiffany a group of reports, which it asserted constituted a feasibility study, and called for Tiffany's first contribution. Tiffany disputed that the documents in fact constituted a feasibility study, and declined to contribute as requested. 5 HEGL now claims that it has a 100% interest in the mining tenements, free of any interest of Tiffany. HEGL contends that Tiffany never acquired an interest in the tenements, and alternatively that Tiffany has forfeited any such interest by failing to contribute as requested. Tiffany contends that it originally acquired a 20% free-carried interest, which was subsequently reduced to 15%, and that it retains that interest. There are three main issues:

· Did Tiffany have a 15% free-carried interest? I conclude that Tiffany did have such an interest. · If so, has that interest become contributory? I conclude that the interest has not become contributory. · If so, what is the effect of Tiffany's failure to contribute upon retention of that interest? 6 For the reasons set out below I conclude that Tiffany holds a 15% free-carried interest, and that it has not become contributory. In those circumstances, the third issue does not arise, but the effect of a failure to contribute once the interest had become contributory would be that the interest would lapse. Because of my conclusions on the first and second issues, HEGL's claim fails. Did Tiffany have a 15% free-carried interest? 7 The first issue is whether - apart from any forfeiture arising from a failure to contribute - Tiffany had a 15% free-carried interest. Tiffany contends that it has such an interest, arising from the 1982 Agreement. HEGL's contrary argument is that Tiffany's original interest arose if at all from the 1983 Joint Venture Agreement, which has been terminated and removed from the Register, and that this did not revive the previous 1982 Agreement, which in any event was never approved by the Minister and was therefore not effective to create any interest in the tenements. 8 By the original 1982 Agreement made on 18 March 1982, Silver Orchid agreed to sell, transfer and assign to Tiffany "an undivided one-half interest" in the mining tenements (clause 1), and Tiffany agreed to issue to Silver Orchid 5,250,000 fully paid shares at a price of 10c each (clause 3). The "transfer assignment herein" was expressed to be subject to the prior approval of the Australian Foreign Investment Review Board (clause 6). Tiffany agreed to expend not less than CAN$400,000 on exploration and development within 12 months and a further $1.2 million within 24 months (clause 13), and such further amounts as may be necessary to produce "a feasibility study on the said property" (clause 14). The parties agreed that a joint venture agreement substantially in the form annexed as Schedule D would be executed upon closing to permit Tiffany to jointly manage the properties in conjunction with Silver Orchid (clause 15); however, that Schedule has not been found, and probably never existed. The agreement also provided that, in the event that the Alberta Securities Commission or the Alberta Stock Exchange failed to approve it within 30 days, it would be null and void (clause 16). 9 The original March 1982 Agreement was amended on 10 June 1982. The amendments substituted "an undivided 20% free-carried interest" in the mining tenements as the subject matter of the sale, in place of "an undivided one-half interest" (clause 1); deleted Tiffany's obligation to expend funds on exploration and development and a feasibility study (former clauses 13 and 14), and substituted for former clause 15 the following: 13. The parties hereto agree that a Joint Venture Agreement substantially in the form annexed hereto as Schedule D will be executed upon closing to permit Tiffany to participate in the development of such properties. 10 Again, that Schedule has not been found, and probably never existed. At least to some extent, however, the gap was filled by the 1983 Memorandum, which recorded that - in consideration for an advance by Tiffany to an Australian company for use in covering some immediate payments due on the Hill End properties, which advance would now be considered non-repayable - Tiffany would be entitled to maintain its 20% interest in the Hill End mining tenements when an economic feasibility study was received by paying its 20% share of the funds required to bring the property or properties into production. 11 The 1982 Agreement was completed (or, to use its own terminology, "closed") on or about 28 October 1982, when Silver Orchid as transferor executed transfers of "an undivided 20% of its right title and interest in" the tenements to Tiffany, which Tiffany had previously executed as transferee; in each transfer, Silver Orchid agreed to do all acts and execute all documents necessary to obtain the approval of the NSW Minister of Mineral Resources and to have the transfer registered. On 8 December 1982, Mr McAlpine on behalf of Tiffany's board wrote to shareholders that: "To date an agreement has been closed involving the acquisition of a 20% free-carried interest in a 400 square mile gold property in New South Wales". On 22 February 1983, Tiffany issued the consideration of 5,250,000 shares (then worth about CAN$1.5 million) to Silver Orchid, and notified the Alberta Stock Exchange. 12 It is manifest that Silver Orchid and Tiffany intended, by the amended 1982 Agreement, to confer on Tiffany a 20% free-carried interest in Silver Orchid's mining tenements at Hill End. Both parties thereafter proceeded on that basis: inter alia, the 1983 Memorandum assumed that Tiffany had acquired such interest, and Tiffany joined in a press release with McAdam on 27 January 1983 which stated that Tiffany owned 20% of the property. However, HEGL advances several arguments why Tiffany acquired no interest under the 1982 Agreement, namely:

· The 1982 Agreement was avoided because there was no FIRB approval as required by clause 6; · The 1982 Agreement was void pursuant to clause 16 because there was no approval by the Alberta Stock Exchange or the Alberta Securities Commission; · The absence of ministerial approval as required by (NSW) Mining Act 1973, s 107, deprived the 1982 Agreement of force and effect; · In any event, the 1982 Agreement was superseded and replaced by the 1983 Joint Venture Agreement; · Termination of the 1982 Agreement did not revive the 1982 Agreement, and even if it otherwise would have done so, there was no such writing as required by (NSW) Mining Act 1992, s 160(1). 13 For the following reasons, each of those arguments fails. 14 FIRB Approval. Clause 6 of the 1982 Agreement provided that the "transfer assignment" referred to in the agreement was subject to FIRB approval. As at 1982, the effect of (CTH) Foreign Acquisitions and Takeovers Act 1975, s 19, was that in certain circumstances the Treasurer could make an order prohibiting a proposed acquisition by a foreign person of the assets of an Australian business carried on solely by a prescribed corporation, and (pursuant to s 25) had 30 days from receipt of notice of a proposed acquisition in which to make such an order. The purpose of the condition was to guard against the possibility that the Treasurer might make such an order in respect of the proposed acquisition by Tiffany. In that context, the word "approval" is in a sense inapt, and is to be construed as contemplating a failure to make such an order within the time allowed following notification of the proposed acquisition. 15 The evidence is silent as to whether or not the Treasurer was notified of the proposed acquisition in 1982. However, assuming that such notification was not then made, the parties nonetheless proceeded to complete the transaction. Non-satisfaction of such a condition - which could have been satisfied by either party seeking the relevant "approval" by giving notification, renders the agreement voidable, not void [Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; Gange v Sullivan (1966) 116 CLR 418, 441; MK and JA Roche Pty Ltd v Metro Edgley Pty Ltd [2005] NSWCA 39, [44]]. Neither party sought to rescind: to the contrary, they proceeded to completion without doing so. In those circumstances, any right to rescind for want of such "approval" was lost. 16 Moreover, it is known that FIRB "approved" the 1983 Joint Venture Agreement - which involved Tiffany acquiring a 20% free-carried interest in the tenements - in the sense that, having been notified of the proposed acquisition, the Treasurer did not make an order prohibiting it. Assuming that the Treasurer had not been notified of the 1982 Agreement, nonetheless the Treasurer did not make an order prohibiting the acquisition of a 20% free-carried interest by Tiffany when the proposed acquisition came to attention in 1983. That was an acquisition of the same interest as was referred to in the 1982 Agreement. The failure to make such an order following notification of the 1983 Joint Venture Agreement therefore involves, for relevant purposes, the approval of the acquisition by Tiffany of a 20% free-carried interest in the tenements; and the Treasurer could not thereafter make an order prohibiting that acquisition, whether it was under the 1983 Joint Venture Agreement or the 1982 Agreement. Accordingly, the failure to make a prohibitory order following notification of the 1983 Joint Venture Agreement satisfied the condition in clause 6 of the 1982 Agreement. 17 Alberta Regulatory Authorities. Clause 16 of the 1982 Agreement provided that in the event that the Alberta Securities Commission or the Alberta Stock Exchange failed to approve the Agreement within 30 days, the Agreement would be null and void. The onus of proving the facts attracting the operation of this clause would fall upon HEGL. While the evidence of approval is slight, there is some: it is clear that the Alberta Stock Exchange was notified of the agreement by a filing statement on 16 June 1982; the imposition of a one-year hold requirement points to a restriction imposed by the Alberta Stock Exchange; and Mr McAlpine's note that "after approval of the Exchange and the Alberta Securities Commission for the acquisition I will request the suspension of share trading be lifted", coupled with the subsequent lifting of that suspension, suggests that such approvals were obtained. Against that, there is no evidence that the Exchange or Commission did not approve the agreement. If it were necessary to do so, I would conclude on balance that approvals were given; but it suffices to conclude that it has not been established that either the Exchange or the Commission failed to give the requisite approvals.

18 Ministerial Approval. (NSW) Mining Act 1973, s 107, provided that a transfer of a mining authority, or an instrument by which a legal or equitable interest in or affecting an authority is created, assigned or dealt with, was of no force unless approved by the Minister. Tiffany accepts that the failure of either Tiffany or Silver Orchid to seek and obtain such approval meant that the 1982 Agreement, and the transfers pursuant to it remained ineffective, and Tiffany did not acquire any legal or equitable interest under the 1982 Agreement so long as s 107 remained operative. However, this does not invalidate or avoid the agreement: an application for approval can be made before or after delivery of the instrument of transfer; and, at least until there was an affirmative refusal of approval (which did not occur), the vendor (here, Silver Orchid, which expressly undertook so to do in the relevant transfers) remained under a continuing obligation, enforceable in equity, to take all reasonable steps to procure the approval, upon the grant of which the instrument takes effect according to its tenor [cf Butts v O'Dwyer (1952) 87 CLR 267, 279; McWilliam v McWilliam Wines Pty Ltd (1964) 114 CLR 656, 661; Brown v Heffer (1967) 116 CLR 344; Graham v Moree Local Aboriginal Land Council [2004] NSWSC 1178]. Contrary to HEGL's submission, Brown v Heffer, and Swan Resources Ltd v Southern Pacific Hotel Corp [1983] WAR 39 which cited it, are entirely consistent with Butts and McWilliam: the purchaser obtains no equitable interest before consent is given, but a right to have the vendor do all things reasonable to obtain the consent, which once given "has a kind of retroactive effect making the instrument effective from its date". Adapting the words of s 107, once approved, the transfer or instrument has the force of which, in the absence of such approval, it was deprived. In the absence of a positive refusal of consent, the passage of many years does not affect this, as is illustrated by McWilliam, in which more than thirty years elapsed between the date of the contract and the High Court's ultimate confirmation of the order that the vendor seek consent, none having been sought in the meantime. 19 Accordingly, it remained open indefinitely to obtain the relevant approval, so as to give the transfers the force of which they were otherwise deprived by s 107. However, in 1992, the 1973 Act was repealed by the (NSW) Mining Act 1992, which contained no equivalent provision. The repeal of s 107 meant that the absence of Ministerial approval no longer deprived the transfers of force and effect. Subject to any effect of the 1983 Joint Venture Agreement and its termination, the 1982 Agreement and the transfers pursuant to it thereupon became effective to confer upon Tiffany its 20% free-carried interest. 20 HEGL argued that this was contrary to the tenor of (NSW) Interpretation Act 1987, s 30, which provides that the amendment or repeal of an Act does not revive anything not in force or existing at the time at which it takes effect, or affect the previous operation of the Act. But in my view this is not applicable: the repeal of s 107 merely removed the legislative impediment to the 1982 Agreement having force and effect, from the date of the 1992 Act - just as the giving of ministerial approval at any time up to then could have done; it did not revive anything not in force, nor have any retrospective operation. 21 The effect of the 1983 Joint Venture Agreement. Clause 4.5 of the 1983 Joint Venture Agreement provided as follows: This Agreement supersedes and replaces all other agreements arrangements or understandings formal or informal heretofore made between any of the Parties or any of them in relation to the Area, or in relation to the Red Hill Area other than the agreement of even date made between Silver and Northern referred to in recital hereto, and upon the approval of the Minister under Section 107 of the Act being given to this Agreement the obligations hereunder of Silver shall, for the purposes of Clause 2 of that agreement, be deemed to have been satisfied. 22 The 1983 Joint Venture Agreement was approved by the Minister pursuant to s 107 of the 1973 Act. This occurred prior to the repeal of the 1973 Act, and therefore prior to the 1982 Agreement and transfers taking effect. But I do not accept that it was the intention of the parties that the 1983 Joint Venture Agreement supersede the 1982 Agreement in every respect. Tiffany had already given consideration, pursuant to the 1982 Agreement, for the acquisition of its 20% free-carried interest; no consideration for the acquisition of any interest passed from Tiffany under the 1983 Joint Venture Agreement. The 1982 Agreement contemplated a subsequent Joint Venture Agreement, in addition to rather than in substitution for the sale under the 1982 Agreement, to deal with development; the 1983 Joint Venture Agreement was concerned with exploration and development, not the acquisition of interests. The 1983 Joint Venture Agreement referred to a separate contemporaneous agreement whereby Northern Gold acquired the right to earn an interest in the tenements; there was no corresponding separate agreement with Tiffany, no doubt because Tiffany was already thought to have acquired its interest pursuant to the 1982 Agreement. The 1983 Joint Venture Agreement assumed, rather than created, Tiffany's interest, and clause 4.5 was intended to catch agreements with regard to future exploration and development, not past acquisition of the existing underlying interests. Otherwise, it would have had to make provision, in place of those in the 1982 Agreement, in respect of Tiffany's acquisition from Silver Orchid, and consideration for it, which it did not. 23 In any event, on 6 May 1987, Northern Gold gave notice of its "complete withdrawal" from the joint venture. Although it is not entirely clear, it appears that Silver Orchid may have bought out the interest of Northern Gold for $100,000. On 19 March 1990, the 1983 Joint Venture Agreement was removed from the mining titles registration records "as the arrangements under it had been terminated and the agreements were no longer in force", according to a letter from the Department of Minerals and Energy of that date, in response to Silver Orchid's request in similar terms. Meanwhile, in 1987, a further joint venture agreement between Silver Orchid, Tiffany and BHP Gold Mines Limited was drafted, but so far as appears was never executed. 24 Both parties accept that the 1983 Joint Venture Agreement was terminated in or about 1987, and in any event abandoned by 19 March 1990, when it was removed from the mining titles registration records on the basis that it had been terminated. This conclusion is further supported by the absence of any further steps referable to the 1983 Joint Venture Agreement, including the negotiation and making of subsequent (inconsistent) joint venture arrangements, and the absence of any reference to it in the 1997 proceedings before the Mining Warden's Court, referred to below. HEGL apparently embraces the proposition that the 1983 Joint Venture Agreement was terminated, for the purpose of arguing that any interest that Tiffany acquired under it was also thereby terminated. However, insofar as the 1983 Joint Venture Agreement superseded the 1982 Agreement, its termination revived the 1982 Agreement. This is analogous to the effect (at general law) of the repeal of a repealing statute: the original statute is revived [see Marshall v Smith (1907) 4 CLR 1617, 1634]. Accordingly, by the time of the repeal of the 1973 Act (which removed the impediment imposed by the absence of ministerial consent), the 1982 Agreement had - to the extent that it had been superseded by the 1983 Joint Venture Agreement - been revived, by termination of the agreement that had superseded it. No specific agreement to revert to the previous regime was necessary. 25 Requirement for writing. The 1992 Act provides (by s 160(1)) that a legal or equitable interest in a mining authority may not be created or disposed of except by instrument in writing. HEGL contends that this means that the 1982 Agreement could be revived only if there were a written instrument recording an agreement that it was to be reinstated upon termination of the 1983 Joint Venture Agreement. I disagree; it is the instrument that creates the interest that must be in writing, and in the events that have transpired the relevant instruments are the 1982 Agreement and the transfers pursuant to it, all of which are in writing. Despite HEGL's submission to the contrary, there is no basis for importing into s 160(1) a requirement that the requisite written instrument postdate the 1992 Act. There is no non-compliance with s 160(1). 26 HEGL further argued that Schedule 6, clause 47 of the 1992 Act demonstrated that instruments executed but not approved by the Minister before the commencement of the 1992 Act were not intended to have any further effect. That clause provided: Any instrument that had been approved by the Minister under section 107 of the Mining Act 1973 … before the commencement of this Act is taken to have been registered under section 161 of this Act. 27 An explanatory note provided: This item inserts a saving provision with respect to certain instruments under the Mining Act 1973… The provision relates back to the date of commencement of the Mining Act 1992. 28 However, the clause deals with deemed registration, not with the requirement for writing, nor with an instrument's force and effect. It does not reveal an intention that the only pre-1992 Act instruments that could have ongoing effect were those that had been approved under the 1973 Act. All that clause 47 does is give the benefits of registration to an instrument which has been the subject of an antecedent s 107 approval. There is no reason why an instrument in writing made before the commencement of the 1992 Act, but not approved by the Minister under s 107 of the 1973 Act, could not be registered under the 1992 Act by complying with the procedures for registration under that Act, as distinct from deemed registration under clause 47. 29 Conclusion. Accordingly, pursuant to the 1982 Agreement, Tiffany acquired a 20% free-carried interest in the tenements. That this was reduced to 15% pursuant to the arrangements between BNP, Silver Orchid and Tiffany made in 1993 and effected by 1995 is not controversial. 30 That Tiffany had acquired a 20% free-carried interest was, until recently, also uncontroversial. Thus BNP issued an "Offering Memorandum" dated 1 July 1993, to raise funds, which included the following: Silver Orchid currently owns an 80% interest in the holdings. In March 1982, First Tiffany Resource Corporation ("Tiffany") acquired a 20% free-carried interest in the holdings. Tiffany is an Alberta corporation currently not trading due to filing deficiencies. In view of the potential activity, Tiffany sold 25% of its 20% position, or 5% of the carried interest to BNP in consideration of the property expenditures by BNP. Upon exercise of the option the ownership in the holdings will be: BNP 45% Silver Orchid 40% Tiffany 15% 100% 31 Res judicata. Moreover, on 7 February 1997, the Mining Warden's Court heard and decided an application by Nugget Resources Inc against Silver Orchid and Tiffany. The Warden determined, inter alia, that the non-contributing legal and equitable interests were Nugget Resources 5% and Tiffany 15%, and that the contributing interests (after application of the dilution provision) were Nugget Resources 62.96% of 80%, and Silver Orchid 37.04% of 80%. Although Nugget Resources had also originally sought a determination by the Warden that Tiffany's non-contributing interest converted to a contributing interest when a bankable feasibility study for production was completed, it did not press that claim. Thus - in proceedings to which Silver Orchid, Nugget Resources and Tiffany were parties - the Mining Wardens Court determined that Tiffany had a 15% non-contributing (that is, free-carried) interest, and did so on the application of Nugget Resources. 32 Where a cause of action has been determined in a final judgment of a competent tribunal between the same parties or their privies, the matter is res judicata [Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 3) [1970] Ch 506, 538; Chamberlain v Deputy Commissioner of Taxation (ACT) (1988) 164 CLR 502; Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630, 640 (Lord Denning MR)], because the claim has passed into judgment [Blair & Perpetual Trustee Co Ltd v Curran (1939) 62 CLR 464, 532 (Dixon J); Port of Melbourne Authority v Anshun (1981) 147 CLR 589, 611 (Brennan J)]. It is not in doubt or dispute that the Mining Warden's Court was a competent tribunal. The proceedings before the Warden were on the same cause of action - a claim for determination of the various interests in the tenements - and the Warden's decision was determinative of the interest of Tiffany, at the suit of HEGL's predecessor in title. 33 HEGL argued that the order of the Warden's Court was not a "judgment" for the purposes of the doctrine of res judicata, but only an "order". Proceedings are frequently finally disposed of by "order" rather than "judgment"; indeed very commonly so in Equity. The characterisation of the Court's formal determination as an "order" as opposed to a "judgment" is immaterial [Linprint Pty Ltd v Hexham Textiles Pty Ltd (1991) 23 NSWLR 508, 515]. Any judicial decision - judgment, order or award - that finally grants relief or remedy to a party, is a "judgment" for relevant purposes [Spencer-Bower and Turner, The Doctrine of Res Judicata, 2nd edn (1969), [431], cited in Maganja v Arthur (1984) 3 NSWLR 561, 565]. Relevantly, a mere declaration can be a final judgment [Spautz v Butterworth (1996) 41 NSWLR 1, 20]. It may be otherwise where enforceability of the decision depends on its formal registration in another tribunal [cf Maganja v Arthur, 565], but in the context of the Warden's Court that applies only in respect of orders for payment of money, which this was not. The Warden's order was a judicial decision, binding on the parties [Mining Act 1992, s 297], granting relief to a party, akin to a declaration, and thus was a judgment for the purposes of res judicata. 34 HEGL argued that because Mining Act 1992, s 297 expressly made orders of the Mining Warden's Court binding only on the parties, and did not refer to their successors or privies, its jurisdiction did not extend to successors or privies of the parties. This misconceives the doctrine, which depends on the competence of the original Court to decide the case before it, not on its competence to bind privies. If a court decides a cause of action between parties so as to found a res judicata, then the parties' privies cannot relitigate the matter [Ramsay v Pigram (1968) 118 CLR 271, 279; Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 853, 910]. HEGL's claim to its interest - and that Tiffany has none - arises through or under Nugget Resources, from which HEGL acquired its interest, after the order was made [see also Gleeson v J Wippell & Co Ltd [1977] 1 WLR 510, 515; Powell v Wiltshire [2005] QB 117]. HEGL was, for relevant purposes, a privy of Nugget Resources. 35 HEGL next responded that the decision of the Warden was not one "on the merits", because Tiffany did not file a defence or play an active role in the proceedings. It is true that the extent of Tiffany's interest does not appear to have been a matter of contention in the proceedings, although Mr McAlpine did give evidence. But while an interlocutory judgment, or one that disposes of proceedings for non-compliance with a self-executing order, may not found a res judicata, it is not necessary that all matters decided have been in dispute between the parties, and it suffices if the decision establishes the legal consequences of facts which are not in dispute [DSV Silo - und Verwaltungsgesellschaft mbH v Sennar (Owners) (The Sennar (No 2))[1985] 1 WLR 490, 493-4]. Indeed, a decision "on the merits" includes one following admission or compromise [Kok Hoong v Leong Cheong Kwen Mines Ltd [1964] AC 993, 1010], as well as one following trial - including a trial in which one party leads no evidence [SCF Finance Co Ltd v Masri (No 3) [1987] QB 1028; Barber v Staffordshire County Council [1996] 2 All ER 748; Linprint Pty Ltd v Hexham Textiles Pty Ltd (where a judgment obtained by the plaintiff when the defendant did not appear was held to be a final judgment, notwithstanding that it might be set aside)]. The Warden's decision was, in this sense, plainly one "on the merits" - as distinct, for example, from an interlocutory one, or one which dismissed the proceedings for default: it determined the matters tendered for decision. 36 The order of the Mining Warden's Court decided the existence and extent of Tiffany's interest as at 1997. The decision was made in proceedings to which the current parties, or their privies, were party: Silver Orchid and Nugget Resources were HEGL's predecessors in title. The Court was one of competent jurisdiction. It is no more open to HEGL to contend now that in 1997 Tiffany did not have a 15% free-carried interest, than it would be for Tiffany to contend, in the face of the Warden's decision, that it still had a 20% interest. The matter is res judicata. Because the Warden's order expressly determined the extent of Tiffany's interest, the case is more properly seen as one of res judicata than of issue estoppel. 37 It is unnecessary to resolve Tiffany's additional argument that, because Nugget Resources could have raised in the proceedings in the Mining Warden's Court the contention that (at least after termination in or about 1987 of the 1983 Joint Venture Agreement) Tiffany had no interest in the tenements, but did not do so, and also because that contention is directly inconsistent with the order of the Mining Warden's Court, HEGL is precluded from advancing it in these proceedings [Port of Melbourne Authority v Anshun, [38], [40]-[43]. Acceptance of that argument would involve extending the Anshun doctrine to privies, a step that should be left to a case in which it is necessary [cf Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (Receivers and Managers Appointed) (in liq) (1993) 43 FCR 510, 538-9]. 38 HEGL also advanced, in several ways, an argument that Tiffany was not entitled to maintain its interest because it had repudiated any obligation to contribute at all, having pleaded that there was an agreement (and alternatively an understanding) which, at least as between Tiffany and HEGL, made no provision for Tiffany's interest ever to become contributory - neither upon completion of a feasibility study nor some other trigger. HEGL advanced this "repudiation" argument in connection with its argument (which I reject below: see [58]-[60]) that there was a "Post Joint Venture Agreement" whereby the parties agreed to preserve the definition of feasibility study from the 1983 Joint Venture Agreement, which was said to have been repudiated; and in answer to Tiffany's alternative claim that there was a conventional estoppel that it had a 15% free-carried interest, by way of contending that there would be no detriment in permitting departure from the conventional assumption, as Tiffany had no intention of contributing and would therefore never have a valuable interest. 39 In the course of the hearing, Tiffany did not maintain the position that its interest would never become contributory, but accepted that there was a trigger which could make its interest a contributory one. Repudiation is not lightly to be inferred, and I would not regard Tiffany's assertion in the pleadings that its interest would never become contributory as conveying that it would not perform its obligations under any relevant agreement, once its proper construction was determined. Moreover, in the view I have taken, it has not been necessary to rely on any "Post Joint Venture Agreement", nor on any conventional estoppel; thus the issue does not arise. Tiffany's rights do not depend on any agreement capable of repudiation. The dispute is not about enforcement of contractual obligations, but the extent and nature of an interest of a proprietary nature. At the highest, Tiffany might have been denied relief whilesoever it refused to perform obligations on which its interest was conditional, but even that does not arise: as explained below (see [72]-[73]), upon the free-carried interest becoming contributory, Tiffany does not become obliged to contribute, but has an election to maintain its interest by contributing, or otherwise to exit from the venture. 40 I conclude, therefore, that - subject to whether it has subsequently become contributory, and if so the consequence of not contributing - Tiffany had a 15% free-carried interest in the tenements.

Has Tiffany's free-carried interest become contributing? 41 The second issue is whether that interest has become a contributing one. HEGL contends that it has, upon delivery of a suite of documents in September 1983, which are said to constitute a feasibility study within the meaning of the 1983 Joint Venture Agreement. Tiffany disputes this, on the bases, first, that the 1983 Joint Venture Agreement definition of feasibility study is not applicable; and secondly, that if applicable the suite of documents does not satisfy it. Thus there are two concepts in issue: the first is, in what circumstances would the free-carried interest become contributory; and the second, whether those circumstances have been satisfied. 42 It is inherent in the concept in the mining industry of a free-carried interest that it will in certain eventualities become a contributory interest, and typically this is upon completion of a feasibility study that shows that development will be commercially viable. Each party tendered expert evidence as to the specialised meaning, in the mining industry, of the term "feasibility study". It is uncontroversial that expert evidence is admissible for the purpose of illuminating the meaning of specialised terms [R v Patents Appeal Tribunal; Ex parte Baldwin & Francis Ltd [1959] 1 QB 105], though not to construe the parties' agreement. The experts conferred and produced a joint report; each (Mr Ryan for HEGL and Mr Dunlop for Tiffany) was cross-examined. Their evidence established, inter alia, that a "free-carried interest" was triggered by an event upon which it ceased to be "free-carried" and became contributory, and that the trigger was conventionally if not invariably a feasibility study showing that development would be a commercial proposition. They identified a distinction, understood in the industry, between a "feasibility study" and a "pre-feasibility study", and agreed that conventionally it was a feasibility study, not a pre-feasibility study, that was the trigger for a free-carried interest. However, although that might be useful background, that must yield to any definition adopted by the parties. 43 The 1982 Agreement envisaged that a Joint Venture Agreement to be executed upon closing would govern Tiffany's participation in development, but no such joint venture agreement was then executed. However, the 1983 Memorandum Agreement established that Tiffany would be entitled to maintain its 20% interest (1) when an economic feasibility study was provided to it (2) by paying its 20% share of the cost of bringing the properties into production. Under the 1982 Agreement, therefore, the trigger was "an economic feasibility study". (HEGL submitted that this was contrary to Tiffany's pleaded position - that there was no trigger for its free-carried interest to become contributory - and that as Tiffany had not sought to explain how such a trigger was agreed, adverse inferences should be drawn against Tiffany on the basis that it feared to address the arrangements between the parties in this regard, invoking Commercial Union Co of Aust Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389, 418. However, the basis for that conclusion is plain enough - it was introduced by the 1983 Memorandum, and revived by the termination of the 1983 Joint Venture Agreement. Just what adverse inference might have been drawn is not apparent). 44 The experts were agreed, however, that the suite of documents provided by HEGL to Tiffany in September 2003 did not constitute a feasibility study within the conventional meaning of that term. HEGL did not contend to the contrary. However, HEGL contended that the applicable definition was that contained in the 1983 Joint Venture Agreement, and that the suite of documents delivered in September 2003 complied with that definition. It is therefore necessary to consider, first, whether (notwithstanding the termination of the 1983 Joint Venture Agreement) the definition of feasibility study contained in it remained applicable, and secondly, if so, whether the suite of documents delivered in September 2003 satisfied the requirements of that definition. For the reasons that follow, in my opinion the definition did not remain applicable; but had it done so, the documents did not meet its requirements. 45 The 1983 Joint Venture Agreement provided the following definition of "feasibility study": 'a geological, metallurgical, engineering and economic evaluation of any Mineral Deposit in order to determine the merits of implementing further appraisal and development of the Mineral Deposit, such evaluation being on a scale which will provide sufficient information - (i) to indicate clearly whether the Mineral Deposit can be made commercially viable; and (ii) to allow the parties to approach banks and other financial institutions in order to raise funds to finance the further appraisal and development of the Mineral Deposit.' 46 This definition is also informed by that of 'Mineral Deposit', which was defined as: 'a deposit of minerals estimated to contain proven, probable or possible reserves of one or more Mineral Products in sufficient volume and of a sufficient grade to be capable of being the subject of a commercially viable extraction operation having regard to the estimated costs of establishing such operation and of bringing the deposit into production and to the then current market price of the Mineral Product or Products which can be won from such deposit'. 47 In turn, 'Mineral Product' was defined as: 'all minerals, metals and/or ores which contain mineral matter or substances.' 48 HEGL's contention that the 1983 Joint Venture Agreement definition of "feasibility study" survived termination of the agreement in which it was contained was advanced on the basis that so much was expressly or implicitly agreed upon termination of the 1983 Joint Venture Agreement. At first sight, this argument is not without substantial evidentiary support. 49 Mr McAlpine agreed that Mr Reveleigh's letter on behalf of HEGL of 9 September 2003, calling for payment of Tiffany's contribution, raised very serious issues for Tiffany, and that he then set about understanding the historical relationship between Tiffany and HEGL. Tiffany responded to HEGL on 21 October 2003, to the effect that no feasibility study had been completed, and requesting a copy of the clause in the relevant contract said to support the demand. On 18 November 2003, HEGL replied, asserting that under the 1982 Agreement the "free-carried interest" conferred entitlements only in respect of exploration and gave Tiffany no rights, or rights considerably less than a 15% contributing interest, in respect of any development, but offering Tiffany the opportunity to elect to participate in development by paying its first call, and stating that if it declined to do so its interest in the area subject to development would extinguish. HEGL's reply did not invoke, or rely on, the 1983 Joint Venture Agreement, or the definition in it. 50 Mr McAlpine responded on behalf of Tiffany on 7 January 2004, observing that he had located copies of the 1982 Agreement, and that Schedule D was not attached to it; and referring to the Northern Gold prospectus of September 1983, which referred to the 1983 Joint Venture Agreement and its reference to a feasibility study. Mr McAlpine then set out the definition of feasibility study from the 1983 Joint Venture Agreement, and concluded: I believe, therefore, that a Feasibility Study, as defined, has not been provided to Tiffany and until such study is delivered, Tiffany is not required to contribute to the development, as requested.

51 Mr McAlpine agreed this was a highly considered response, into which Mr Cleaver had had input and on which they both agreed. He accepted that to his mind the 1983 Joint Venture Agreement did the work that Schedule D to the 1982 Agreement would have done had it existed, and that as at 7 January 2004 he believed that the trigger for the free-carried interest was provided by the definition of "feasibility study" in the 1983 Joint Venture Agreement. He agreed that he (on behalf of Tiffany) had come to an arrangement with Mr Cleaver (on behalf of Silver Orchid) to the effect that the 1983 Joint Venture Agreement definition of feasibility study would continue to provide the trigger. He accepted that he had decided that, after the departure of Northern Gold and McAdam from the 1983 Joint Venture Agreement, the definition of feasibility study would continue to be the trigger, that he had probably discussed that proposition with Mr Cleaver, and that Mr Cleaver did not demur from it. 52 However, on 20 August 2004, HEGL responded that, as Tiffany had elected not to contribute, its interest in the area the subject of development was extinguished. It rejected the argument that the 1983 Joint Venture Agreement could shed light on the "free-carried interest" - for the reason that that agreement had been terminated by March 1990, prior to the acquisition by HEGL of its interest in 1993. 53 HEGL sought advice from senior counsel, which was furnished on 12 January 2005; a copy was also provided to Tiffany. On the basis of the (incomplete) documentation briefed, counsel concluded that the concept of a feasibility study being the trigger for Tiffany's interest to become contributory was not contractually founded, and that the trigger was the intention of HEGL to proceed to development coupled with the legal power to do so. Counsel further concluded that, as no such joint venture agreement as contemplated by the 1982 Agreement was ever made, Tiffany in the circumstances had no right to participate in development.

54 HEGL commenced the present proceedings by summons filed on 31 October 2005, seeking a declaration that Tiffany had no interest in the relevant tenements. A statement of claim pleading the cause of action said to support that relief was filed on 2 March 2006. In general terms, it asserted that, in the absence of the joint venture agreement contemplated by the 1982 Agreement, Tiffany's interest was only in "exploration", and evaporated upon commencement of development. 55 Tiffany filed and served a defence on 26 May 2006, asserting that it retained an undivided 15% free-carried interest until the completion of a "feasibility study" within the meaning of that expression in the 1983 Joint Venture Agreement, pursuant to an agreement allegedly made in about 1987 by which the 1983 Joint Venture Agreement was terminated, on terms inter alia that its 20% free-carried interest would become contributory upon the completion of a feasibility study as defined in the 1983 Joint Venture Agreement ("the 1987 Termination Agreement"). The defence was verified by Mr McAlpine, who appreciated the significance and seriousness of doing so, and that it was a considered view, which he believed to be true. 56 Subsequently, on 12 January 2007, Tiffany's then solicitors, Deacons, provided to HEGL's solicitor, Ian Congdon, a signed but unfiled amended defence and cross-claim ("the first proposed amended defence and cross-claim"), verified by Mr McAlpine, which descended to far greater detail than its predecessor, and:

· claimed a declaration that Tiffany was not required to contribute unless and until a feasibility study, within the meaning of the 1983 Joint Venture Agreement, was produced; · particularised the contention that Tiffany's interest was non-contributing until a feasibility study, within the meaning of the 1983 Joint Venture Agreement, was completed, by reference to the 1983 Memorandum, of which HEGL had until then been unaware; · asserted that the 1987 Termination Agreement contained a term to the effect that: Upon completion of a feasibility study in relation to any or all of the 1982 lease holdings (as defined in the 1983 joint venture agreement), and not earlier, [Tiffany] could be required to contribute to the costs of development of those 1982 lease holdings that are the subject of a feasibility study.

· particularised the 1987 Termination Agreement as partly oral, partly written, and partly implied, and insofar as it was oral to be comprised by conversations between Mr Cleaver on behalf of Tiffany, Mr Cleaver also on behalf of Silver Orchid, and Mr Maguire on behalf of Northern Gold (to which conversations HEGL was not party and of which it had no knowledge). 57 This pleading was subsequently amended, and the 1987 Termination Agreement did not form part of Tiffany's ultimate case.

58 At first sight, the foregoing amounts to not unimpressive evidence of an agreement, implied if not express, that upon termination of the 1983 Joint Venture Agreement and reviver of the 1982 Agreement, the definition of feasibility study in the 1983 Joint Venture Agreement was to be retained. Mr Weber SC secured some apparently spectacular concessions. Indeed, Mr McAlpine agreed to the proposition that the definition of feasibility study was helpfully set out in the 1983 Joint Venture Agreement and took the argument as to what was a feasibility study out of the question. However, while it may have done so for the purpose of the 1983 Joint Venture Agreement, it did not do so for the purpose of the 1982 Agreement, as clarified by the 1983 Memorandum. Thus, Mr McAlpine's "concession" does not really advance the case. 59 On the other hand, the ordinary effect of termination of the 1983 Joint Venture Agreement would be that the definition it contained would no longer be applicable. Whether there was a contract made in or after 1987 between Tiffany and Silver Orchid providing that despite termination of the 1983 Joint Venture Agreement, its definition of feasibility study would remain applicable, depends on what happened in 1987, viewed objectively, in light of all the circumstances. There is a high degree of improbability that, in circumstances where the termination of the 1983 Joint Venture Agreement appears to have been informal, if not casual (arising from the departure of Northern Gold and McAdam), the remaining parties Silver Orchid and Tiffany would have turned their minds to preserving the definition of feasibility study from it. The evidence that they did so is supposition and reconstruction only. Although Tiffany once contended that there was an agreement - particularised as partly oral, partly written and partly implied - to terminate the 1983 Joint Venture agreement on terms inter alia that its 20% free-carried interest would become contributory upon the completion of a feasibility study as defined in the 1983 Joint Venture Agreement, save for a letter on behalf of Northern Gold confirming its withdrawal and that it no longer had any interest in the tenements, no written agreement to that effect has been suggested, let alone produced. There is no direct evidence of any contemporaneous communication evidencing any such agreement; the evidence is of assertions in correspondence in and after early 2004, many years after the relevant events, at a time when the parties were in dispute. The theory of the 1987 Termination Agreement espoused in them was developed in and after late 2003, in response to HEGL's assertion that the free-carried interest had become contributory, and in order to demonstrate that it had not, at a time when Tiffany was searching for a definition of feasibility study, in order to refute the claim that a feasibility study had been provided. At that time, and for that purpose, the 1983 Joint Venture Agreement seemed to provide a useful definition. But it was not necessary for Tiffany to consider whether it was in fact the applicable definition. It is unsurprising that the legal basis of Tiffany's interest was not fully understood; as appears from the above, the commercial history was complex. In my view, the opinions advanced and positions adopted in and after 2004 are of little utility in determining how the parties' intention would have been understood in 1987, when the 1983 Joint Venture Agreement was terminated. They were reconstructions, made 17 years after the relevant events, and in the light of such documents as were available, for the purpose of establishing that what HEGL had produced was not a feasibility study. 60 Accordingly, I do not accept that the definition of feasibility study contained in the 1983 Joint Venture Agreement somehow survived termination of that Joint Venture Agreement so as to continue to define the feasibility study that provided the relevant trigger notwithstanding the termination of the 1983 Joint Venture Agreement and the revival of the 1982 Agreement. Rather, that trigger was the "economic feasibility study" referred to in the 1983 Memorandum Agreement, and (as recorded above) on no view did the September 2003 suite of documents amount to that. 61 But lest I be wrong in that conclusion, I shall consider the subsequent question, namely whether the material provided by HEGL in September 2003 constituted a feasibility study as defined in the 1983 Joint Venture Agreement. 62 The experts agreed that the suite of documents "satisfies the wording of sub-clauses 1.1(i), (i) & (ii) at page 4 of the Agreement, insofar as the geological, metallurgical, engineering and economic studies satisfied the requirement that they be "evaluations"". They proceeded to record that in one respect they were not agreed: "The disagreement relates to the understanding of the intent or interpretation of the definition clause relating to a Feasibility Study". In that respect, Mr Ryan "found" that the work undertaken by HEGL provided sufficient information to satisfy the relevant clauses, whereas Mr Dunlop was more persuaded by the view that the clause contemplated a feasibility study, not a pre-feasibility study. They differed as to whether the definition in the 1983 Joint Venture Agreement called for a feasibility study (as Mr Dunlop thought) or a pre-feasibility study (as Mr Ryan suggested), but I agree with Mr Weber SC's submission, for HEGL, that what was called for by that clause is in that respect a matter of construction, for the court, and not a matter for expert evidence. Here, the parties provided their own definition of what was required, and it is that definition that must be applied. 63 However, I do not accept the next step in Mr Weber SC's argument, namely that once it is accepted that the contractual definition provides the test, the experts' agreement contained in par [2.11] of their Joint Report dictates that the documents provided constitute a feasibility study as defined. That submission overlooks the significant qualification and limitation to their agreed opinion, italicised in the extract set out in [62] above. 64 Although I entirely accept that the question is not whether the definition called for a feasibility study or a pre-feasibility study as conventionally understood, it is necessary to consider what were the minimum requirements of the feasibility study for which it stipulated. This is informed by the text of the definition, the associated definition of "Mineral Deposit", and the commercial context. Significant features of the definition include, not only that the study include 'a geological, metallurgical, engineering and economic evaluation of any Mineral Deposit', but also that such evaluation:

· identify a deposit of minerals estimated to contain proven, probable or possible reserves of one or more Mineral Products in sufficient volume and of a sufficient grade to be capable of being the subject of a commercially viable extraction operation; · address the merits not only of further appraisal but also of development; · provide sufficient information to indicate clearly whether the Mineral Deposit can be made commercially viable; · for that purpose, have regard to the estimated costs of bringing the deposit into production and to the then current market price of the Mineral Product which can be won; and · be such as to allow the parties to approach banks and other financial institutions in order to raise funds to finance further appraisal and development. 65 Thus a compliant feasibility study would have to show that an extraction operation (not merely further exploration) was commercially viable, and be of sufficient quality to obtain finance from a lending institution. The commercial context - that in order to fund development, finance would be required, and in particular that a feasibility study would trigger an obligation on Tiffany to contribute, when it was known to the parties that Tiffany did not itself have sufficient funds to do so and would therefore need to borrow - supports a construction that contemplates a "bankable" feasibility study. 66 Mr Ryan accepted that the reports did not enable the grade of gold to be tested, and opinions as to the extent of gold in the area were provisional and dependent on further testing. There was insufficient data in them upon which to base a resource estimate for the remaining gold reserves, or to define the limits of the mineralisation. The reports did not amount to a statement of an ore reserve or a mineral resource within the meaning of the JORC Code. The documentation proposed only further testing - bulk sampling - and not a commercial extraction operation. The results of the bulk sampling program proposed (but yet to be undertaken) would be important, indeed essential, information from which to evaluate the viability of a commercial extraction operation. It follows that the documents did not provide sufficient information to indicate clearly whether the Mineral Deposit could be made commercially viable. 67 The experts agreed that the studies were not up to date as at 2003, having been prepared in the late 1990s, and that the financial evaluation was well out of date and was not a current evaluation. The budget was based on costs in 1988, which were not valid for 2003. While it may have been an economic evaluation when it was done, it was not as at 2003. Mr Dunlop, who had expertise in the practices of banks in the mining sector at relevant times, was of opinion that the documentation furnished by HEGL was not "bankable", in the sense that it would not have been sufficient to approach financial institutions for funding for development. 68 In my view, the expert evidence establishes that the suite of documents delivered in September 2003 fell short of the requirements of the definition of feasibility study contained in the 1983 Joint Venture Agreement, read with the definition of "Mineral Deposit", in at least the following respects:

· The evaluations did not identify a "Mineral Deposit", as defined; · The evaluations did not provide sufficient information to indicate clearly whether the Mineral Deposit could be made commercially viable; · The evaluations did not have regard to current market price and current costs, when they were delivered in 2003; · The evaluations were insufficient to allow the parties to approach banks and other financial institutions in order to raise funds to finance further appraisal and development. 69 Accordingly, even if the definition in the 1983 Joint Venture Agreement were applicable, HEGL has not provided a feasibility study within that definition. On any view, Tiffany's free-carried interest has not become contributory. What is the effect of failure to contribute when duly called on to do so? 70 Although that conclusion renders it strictly unnecessary to resolve what would have been the consequences, had Tiffany's free-carried interest become contributory, of its failure or refusal to contribute, I shall, however, address it, albeit in less detail than might otherwise have been appropriate. 71 For Tiffany, Dr Stern submitted that - in the absence of any express provision governing the situation and providing, for example, for dilution or forfeiture of Tiffany's free-carried interest, and in the absence of evidence even of any assumption that the effect of failure to contribute when required to do so would be forfeiture or dilution - if Tiffany failed to contribute once its free-carried interest had become contributory, then the agreement would be at an end, but its interest would not be erased. 72 I am unable to accept this submission. It is inherent in the concept of a free-carried interest that, upon being triggered by (at least typically) a feasibility study, it becomes contributory. In effect, at that point the proprietor of the interest can elect between retaining an interest in the venture by contributing to development, or exiting by not doing so. In my view, this is reflected in clause 13 of the 1982 Agreement, which contemplated a joint venture agreement that would "permit Tiffany to participate in the development", and even more so in the 1983 Memorandum Agreement, which provided that Tiffany would be entitled to maintain its 20% interest in the Hill End mining tenements when an economic feasibility study is received by paying its 20% share of the funds required to bring the property or properties into production. It was implicit in the 1983 Memorandum that Tiffany would not be entitled to maintain its 20% interest once an economic feasibility study was provided to it unless it paid its 20% share of the cost of bringing the properties into production. Under the 1982 Agreement, once "an economic feasibility study" was provided, the interest became contributory and the consequence of non-contribution was that the interest could no longer be sustained. 73 In my opinion, therefore, failure to contribute when the obligation to do so is triggered would have the result that Tiffany would have no ongoing interest: in effect, failure to contribute would be an election not to maintain an interest in, or to exit from, the venture. Conclusion 74 For the foregoing reasons, I have reached the following conclusions. 75 Under the 1982 Agreement, Tiffany was intended to acquire a 20% free-carried interest in the tenements. 76 Non-satisfaction of the condition that made the 1982 Agreement subject to FIRB approval rendered the agreement voidable, not void. As neither party sought to rescind, but proceeded to completion, any right to rescind for want of such approval was lost. Moreover, FIRB's failure to make an order prohibiting Tiffany from acquiring a 20% free-carried interest in the tenements when the proposed acquisition came to attention in 1983, in connection with the 1983 Joint Venture Agreement, amounts to the approval of Tiffany's acquisition of a 20% free-carried interest in the tenements for the purposes of the 1982 Agreement, and satisfies the condition in clause 6 of the 1982 Agreement. 77 If it were necessary to do so, I would conclude that approval was given by the Alberta Stock Exchange and the Alberta Securities Commission to the 1982 Agreement, but it suffices to conclude that it is not established that either the Exchange or the Commission failed to give the requisite approvals. 78 The repeal in 1992 of Mining Act 1973, s 107, meant that thereafter the absence of Ministerial approval no longer deprived the transfers of force and effect, and subject to any effect of the 1983 Joint Venture Agreement and its termination, Tiffany thereupon acquired a 20% free-carried interest. 79 Insofar as the 1983 Joint Venture Agreement superseded the 1982 Agreement, its termination revived the 1982 Agreement, under which the trigger was "an economic feasibility study", as conventionally understood. 80 The suite of documents provided by HEGL to Tiffany in September 2003 did not constitute an "economic feasibility study" as conventionally understood. HEGL did not contend to the contrary. 81 Insofar as the 1992 Act provides that a legal or equitable interest in a mining authority may not be created or disposed of except by instrument in writing, Tiffany's free-carried interest was created by the 1982 Agreement and the transfers pursuant to it, all of which are in writing. There is no requirement that the written instrument postdate the 1992 Act. There is no non-compliance with s 160(1). 82 Accordingly, pursuant to the 1982 Agreement, Tiffany acquired a 20% free-carried interest in the tenements. That this was reduced to 15% pursuant to the arrangements between BNP, Silver Orchid and Tiffany made in 1993 and effected by 1995 is not controversial. 83 Moreover, the order of the Mining Warden's Court decided that Tiffany had a 15% free-carried interest as at 1997. That decision was a final judgment of a competent court on the merits, determining the extent of Tiffany's interest as at 1997. HEGL is a privy of Nugget Resources (and of Silver Orchid), through which it derived its interest. The argument that HEGL now advances, that (at least after termination in 1987 of the 1983 Joint Venture Agreement) Tiffany had no interest in the tenements, is res judicata. 84 Although, at first sight, there is not unimpressive evidence of an agreement, implied if not express, that upon termination of the 1983 Joint Venture Agreement and reviver of the 1982 Agreement, the definition of feasibility study in the 1983 Joint Venture Agreement was nonetheless to be retained, that evidence is of opinions advanced and positions adopted in and after 2004, and of limited utility in determining how the parties' intention would have been understood in 1987, when the 1983 Joint Venture Agreement was terminated. There is a high degree of improbability that, in circumstances where the termination of the 1983 Joint Venture Agreement appears to have been informal if not casual, the remaining parties Silver Orchid and Tiffany would have turned their minds to preserving the definition of feasibility study from it. I do not accept that the definition of feasibility study contained in the 1983 Joint Venture Agreement somehow survived termination of that Joint Venture Agreement so as to continue to define the trigger under the otherwise revived 1982 Agreement, as clarified by the 1983 Memorandum Agreement - which referred to an "economic feasibility study" and provided the relevant trigger after the termination of the 1983 Joint Venture Agreement and the revival of the 1982 Agreement. 85 In any event, the suite of documents delivered in September 2003 fell short of the requirements of the definition of feasibility study contained in the 1983 Joint Venture Agreement, read with the definition of "Mineral Deposit", in at least the following respects:

· The evaluations did not identify a "Mineral Deposit", as defined; · The evaluations did not provide sufficient information to indicate clearly whether the Mineral Deposit could be made commercially viable; · The evaluations did not have regard to current market price and current costs, when they were delivered in 2003; · The evaluations were insufficient to allow the parties to approach banks and other financial institutions in order to raise funds to finance further appraisal and development. 86 Accordingly, even if the definition in the 1983 Joint Venture Agreement were applicable, HEGL has not provided a feasibility study within that definition. Thus on whichever view, Tiffany's free-carried interest has not become contributory. 87 HEGL's claim therefore fails. 88 If, contrary to my above conclusion, Tiffany's free-carried interest had become contributory, then failure to contribute would have the result that Tiffany would have no ongoing interest. The consequence of non-contribution was that the interest could not be sustained: in effect, failure to contribute would be an election not to maintain an interest in the venture, or to exit from it. 89 I order that the proceedings be dismissed, with costs. 90 I direct that this order not be entered for 14 days from this date

91 I grant leave to the parties to apply, by arrangement with my associate within seven days, for any alternative or additional order consequent upon this judgment and any alternative or special costs order, by lodging with my associate a document specifying the orders sought and an outline of the submissions relied on. **********

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