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[2011] NSWCA 276
Court of Appeal (NSW)
2011-08-16
Allsop P, Meagher JA, Brereton J
Original judgment source is linked above.
Judgment 1ALLSOP P and MEAGHER JA: The appellant, Hill End Gold Limited ("HEG"), brought proceedings in the Equity Division seeking a declaration that it held certain mining tenements free of any interest held by the respondent, First Tiffany Resource Corporation ("Tiffany"), a Canadian corporation. The primary judge (Brereton J) dismissed the proceedings with costs. His Honour was correct to do so. The appeal should be dismissed with costs. 2The proceedings before the primary judge had a significant number of issues that were not canvassed on appeal. Two issues only were agitated on appeal by HEG: first, the question whether Tiffany had repudiated the operative contractual arrangement between it and HEG (there being two possible posited contractual arrangements); and, secondly, if it had not, what was the correct contractual arrangement between the parties. The resolution of this second issue has particular significance to the parties because the content of the contractual trigger to mark the commencement of Tiffany's responsibility to pay money towards the development of the mining tenements may be different under the two posited arrangements. It was common ground at the appeal that the trigger for that obligation was the provision by HEG to Tiffany of a "feasibility study". The alternative contractual arrangements posited affected, it was argued, the content and meaning of the term "feasibility study" thus altering the basis upon which Tiffany would be required to contribute. At the trial it was argued by HEG that, on one view of the governing arrangements, a suite of documents furnished by it to Tiffany in September 2003 constituted a feasibility study, thus triggering Tiffany's obligation to contribute. That position was not maintained on appeal. 3It is only strictly necessary for this Court to answer the first question. If Tiffany had repudiated its obligations, HEG was entitled to the declaration sought; if not, the proceedings were correctly dismissed, it being agreed that on any view the documents provided in September 2003 did not constitute a feasibility study. Because the second issue involved an important element governing the continuing relationship of the parties and, it was submitted, the primary judge had fallen into error in identifying the correct contractual arrangement, HEG contended that this Court should correct that error notwithstanding that it was not necessary for it to do so to dispose of the appeal. 4For the reasons later expressed, we are of the view that the primary judge correctly concluded that Tiffany did not repudiate its contractual obligations. As to the second point, we do not see any error in the approach or conclusion of the primary judge.
The relevant facts 5Prior to 1982, Silver Orchid Pty Limited ("Silver Orchid") held the relevant mining tenements. Ultimately, HEG obtained its interest in the tenements through Silver Orchid in 1999. To the extent that Silver Orchid had transferred some of its interests to Tiffany prior to HEG taking Silver Orchid's interest, it (HEG) recognised that it was bound accordingly. Thus, it is necessary to understand the events concerning Silver Orchid and Tiffany (and others so far as relevant to their relationship) and the tenements. At the outset, however, it is to be recognised that as the events unfolded in later years (such as in 2005 and 2006) when the parties were in conflict over the issues, many years had passed since the events in question, and, further, that those controlling HEG in those later years did not take part in the events of the 1980s or 1990s. 6On 18 March 1982, Silver Orchid transferred an undivided one half interest in the tenements to Tiffany. The consideration for the transfer was the issue of shares in Tiffany to Silver Orchid. The written agreement embodying this transfer in 1982 contemplated the execution of a joint venture agreement in a form said to be annexed. No annexure and no executed agreement has been found. 7Clauses 12 and 13 of this March 1982 agreement provided for financial obligations of Tiffany in the exploration and development of the tenements, as follows: "[12] Tiffany hereby agrees to expend on exploration and development not less than $400,000 [C] on properties held or acquired under this Agreement within a twelve month period from the date of closing together with a further $1,200,000 [C] within twenty-four months of the date of this agreement. [13] Subject to Tiffany expending the amounts specified in paragraph 12 hereof, Tiffany shall expend such further amounts required to produce a feasibility study on the said property." 8This March 1982 agreement was amended on 10 June 1982 to provide for a transfer from Silver Orchid of a 20 per cent free carried interest in the tenements (rather than an undivided one half interest) in consideration of the issue of the shares in Tiffany. The amendment removed the obligation of Tiffany to contribute to exploration and development costs in the manner set out in cll 12 and 13 of the March 1982 agreement. 9The June 1982 amended agreement also contemplated the execution of a joint venture agreement in a form said to be annexed. Again, no such annexure has been discovered and the primary judge found that it probably never existed. 10It was common ground between the parties that a "free carried interest" was one which entitled the holder to an interest in the tenements without any obligation to fund exploration. At some point, generally by reference to the preparation of a feasibility study, the holder of a free carried interest would become obliged to contribute to further development costs. There was also no disagreement between the parties that a failure of a holder of a free carried interest to contribute if and when obliged would lead to the loss or forfeiture of its interest. In the present dispute, the asserted repudiation by Tiffany was said to have that effect. In the resolution of this case, there is no need to analyse the juridical mechanism of the loss of the interest in this regard. 11On 18 January 1983, Mr C L McAlpine an officer (President) of Tiffany prepared a file note that recorded a discussion between him and Mr R B Cleaver, an officer (said by the note to be President) of Silver Orchid. The note was signed by Mr Cleaver and Mr McAlpine on 20 January 1983. 12The note recorded that in December 1982 Mr McAlpine had advanced Can$31,000 to Silver Orchid which had used the sums for covering immediate payments due on the tenements. The note continued: "For making the advance, which is now considered to be non-repayable, Tiffany Resource Corporation will be entitled to the right to maintain its 20% interest in the Hill End properties when an economic feasibility study is received by Tiffany paying its 20% share of the funds required to bring the property or properties into production." 13The agreement evidenced by that note was sometimes referred to as the "1983 Memorandum Agreement" and we will refer to it by that name in these reasons. 14Mr Cleaver was a director of First Tiffany from 1984 to 2009 and a director of Silver Orchid from 1977 to 2009. He was also managing director of and had a controlling interest in Silver Orchid (although the period to which those facts pertain was not expressly stated in his affidavits). Mr McAlpine was a director of First Tiffany from 1982 to 2009. 15The notes to Tiffany's financial accounts for the year ended 30 June 1984 recorded that this agreement was that: "In 1983 the Corporation advanced $31,000 to a shareholder, Silver Orchid Pty. Ltd. ('Silver Orchid'), to fund its operations relating to the Hill End gold properties in consideration for an agreement with Silver Orchid that the Corporation's interest in such properties would not be subject to dilution. This non-interest bearing advance was repaid during 1984." 16It is unnecessary to explore the precise terms of the arrangement in early 1983. 17In August 1983, Silver Orchid and Tiffany entered into a joint venture agreement with Northern Gold NL ("Northern") for the exploration and development of the tenements (the "1983 JVA"). (The document containing the 1983 JVA also provided for another joint venture over another area that involved a fourth party, McAdam Mining Corporation Limited. It is unnecessary for the purposes of this appeal to refer to this other agreement any further.) It was agreed that at the commencement of the joint venture the interests would be: Northern 60 per cent, Tiffany 20 per cent and Silver Orchid (referred to in the document as "Silver") 20 per cent. Clauses 4.1 and 4.2 of the 1983 JVA provided for the costs of exploration and development to be paid by Northern up to the completion of a "Feasibility Study" (as defined therein). The clauses provided for more than one feasibility study; but, on the completion of the first Feasibility Study further exploration and development costs (including of further feasibility studies) were to be borne by Northern, Silver Orchid and Tiffany in the proportions of 60 per cent, 20 per cent and 20 per cent respectively. The resolution of this dispute does not require consideration of the operation of cll 4.1 and 4.2, other than noting various of the definitions in the agreement made relevant. The definitions of "Feasibility Study", "Mineral Deposits" and "Mineral Product" were as follows: "'Feasibility Study' means 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. ... 'Mineral Deposit' means a deposit of minerals estimated to contain proven, probable or possible reserves of one or more Mineral Products in sufficient volume and of 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. ... 'Mineral Product' means all minerals, metals and/or ores which contain mineral matter or substances." 18Clause 4.5 provided for the superseding and replacement of all prior agreements by the 1983 JVA, as follows: "This Agreement supersedes and replaces all other agreements arrangements or understandings formal or informal heretobefore 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 herewith 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 fulfilled." 19By May 1987, Northern had withdrawn from the 1983 JVA. It was common ground that this eliminated its interests in the tenements. The primary judge found (at [3] of his reasons) that by 1990 the 1983 JVA had been terminated. 20A central issue before the primary judge and on appeal was whether Silver Orchid and Tiffany upon and after the departure of Northern from the joint venture in 1987 formed a fresh contractual relationship which included as a term the definition of "Feasibility Study" in the 1983 JVA as a convenient identification of what had to be prepared to trigger Tiffany's obligation as a holder of a free carried interest to contribute to the further development costs. 21The primary judge held that upon the termination of the 1983 JVA, and at least by 1990, the agreement in existence immediately after January 1983, resulting from the 1983 Memorandum Agreement, revived. The revival of that agreement after the termination of the 1983 JVA was in contest before the primary judge but not on appeal. The primary judge also rejected the argument of HEG that there was a contract made in or after 1987 as to the event which triggered Tiffany's obligation to contribute to development costs being a Feasibility Study as defined in the 1983 JVA. Thus, the parties on appeal were agreed that the binding relationship between them upon the termination of the 1983 JVA was either that in place following the making of the 1983 Memorandum Agreement, incorporating the definition of feasibility study therein or a similar arrangement in which the definition of Feasibility Study in the 1983 JVA described the trigger for Tiffany to contribute to development costs. 22In a letter dated 25 June 1993 on letterhead of Big Nugget Partnership ("BNP") signed by Mr McAlpine and addressed to Mr Cleaver of Silver Orchid, Mr McAlpine recorded an offer made by telephone on that day to Mr Cleaver. The offer gave BNP the option to earn a 50 per cent undivided interest in the tenements that were owned by Silver Orchid. 23By letter agreement dated 4 August 1993, between Mr McAlpine and Mr Cleaver on behalf of Tiffany and two members of BNP, Tiffany agreed to sell BNP 25 per cent of its 20 per cent "free carried interest" in the tenements. 24The fact of those two agreements was described in an initial public offering prospectus issued by Nugget Resources Inc and dated 5 October 1994. The rights that had been acquired by BNP in 1993 were transferred to a private Alberta company called BNP Holdings Ltd by the BNP partners in return for shares in BNP Holdings. Thereafter Nugget Resources Inc entered into an agreement with the shareholders of BNP Holdings whereby the former acquired all of the issued and outstanding shares in BNP Holdings in exchange for shares in Nugget Resources Inc. 25By a further letter agreement dated 28 October 1994 between Nugget Resources Inc (a successor in title to BNP and a former holding company of HEG) and Tiffany signed by Messrs McAlpine and Cleaver on behalf of Tiffany, Tiffany agreed to sell to Nugget Resources Inc 25 per cent of its 20 per cent "free carried interest" in the tenements which was described as having been acquired by an agreement dated 18 March 1982 between Silver Orchid and Tiffany. It is not suggested that this 1994 agreement operated to reduce Tiffany's free carried interest below 15 per cent, notwithstanding that it was in the same terms as the letter agreement of 4 August 1993. 26On 12 April 1995 Nugget Resources Inc issued a press release in relation to exploration at Hawkins Hill (which was part of the tenements). In that release it announced the finalisation of a joint venture to be funded equally by Nugget Resources Inc and Silver Orchid. That release noted that "[Tiffany] has a free carried interest up to and including a feasibility stage" of 15 per cent. 27By letter dated 13 April 1995 addressed to Silver Orchid and signed on 2 May 1995 by Mr Cleaver on its behalf, Nugget Resources Inc obtained Silver Orchid's confirmation that it had earned the right to a 50 per cent undivided interest in Silver Orchid's Hill End tenements in accordance with the letter agreement of 25 June 1993 as extended by a letter dated 27 October and accepted by Mr Cleaver on behalf of Silver Orchid on 28 October 1994. 28By a deed of transfer dated 16 March 1999, Silver Orchid transferred all its legal and equitable interest in the tenements to Nugget Resources Australia Pty Limited, a wholly owned subsidiary of Nugget Resources Inc. At the same time, Nugget Resources Inc transferred to that subsidiary all its right, title and interest in and to those tenements. Nugget Resources Australia Pty Limited is now known as HEG. 29The reason that we have referred to these transactions in the 1990s is that each focuses upon the interests of Silver Orchid and Tiffany in the tenements. A number of the documents recording these transactions would have afforded an opportunity to record the existence of any agreement between Silver Orchid and Tiffany incorporating the definition of Feasibility Study in the contractual arrangements between them. None does so. The transactions recounted to this point in time also explain how HEG came to own the other 85 per cent interest in the tenements. 30The current dispute between the parties began in 2003. As the primary judge found at [4] of his reasons: "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." 31By this time, HEG's officers, such as Mr Reveleigh who, as managing director, signed the letter dated 9 September 2003, had no familiarity with the underlying events of the 1980s and 1990s. On the other hand, during the period before 2003 in which the relevant transactions had occurred, both Mr McAlpine and Mr Cleaver were officers of Tiffany and Mr Cleaver was an officer of Silver Orchid. 32At the beginning of the dispute HEG was asserting that the time had come for Tiffany to contribute to further development costs because of the existence of a relevant feasibility study, and that any failure to do so would extinguish its 15 per cent (hitherto free carried) interest. Tiffany was denying that a completed feasibility study existed; it was not denying the premise that its free carried interest would cease to be free of any obligation to contribute to further development costs upon the completion of a feasibility study of some kind. That position changed in late 2007 and it was that change which was said to constitute the repudiatory conduct of Tiffany. 33On 18 November 2003, HEG, through Mr Reveleigh, sent a four page letter to Tiffany for Mr McAlpine's attention which set out Mr Reveleigh's detailed understanding of the history of the interests in the tenements. 34On 7 January 2004, Mr McAlpine replied, excusing his delay as "...as a result of my having considerable difficulty in finding various documents and agreements pertaining to the matters raised in your letter". In his response, he noted that the absence of Schedules to the 1982 agreement might be explained by the existence of the 1983 JVA. He then referred to the definition of "Feasibility Study" in that document to support his conclusion, as follows: "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." 35On 20 August 2004, HEG, through Mr Reveleigh, wrote to Tiffany stating that its failure to contribute to the development costs had extinguished its 15 per cent interest. 36On 9 May 2005, Mr Congdon, a solicitor acting for HEG, wrote to Tiffany, for the attention of Mr McAlpine. He advised Tiffany of advice that had been received from senior counsel that: "- there is no contractual foundation to the notion that the preparation of a feasibility study provides a trigger for your interest to become contributory;
Asserted repudiation 52The primary judge dealt with the repudiation argument at [38]-[39] of his reasons as follows: "[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 ... ) 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 ... , 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." 53We agree with the primary judge. The letter sent by the new solicitors for Tiffany was in the context of a debate being played out in litigation as to what the parties' rights and entitlements were in respect of a commercial history going back over 20 years. The circumstances of that commercial history were in some relevant respects uncertain as was the recollection of those involved. In addition, the commercial parties had not recorded all of their arrangements in writing and had not always done so with clarity. In that context the lawyers for the parties formulated various contentions as to the legal consequences which should follow from the incomplete and sometimes unclear material which was available. For Tiffany those alternative contentions included, as well as that its interest was unconditional, that any interest held was subject to a feasibility study trigger but not one which required a Feasibility Study as defined under the 1983 JVA. 54When looked at in the totality of the context it should not be inferred that by sending the letter and maintaining a position which included that its interest was unconditional Tiffany was repudiating its contractual obligations. In reaching that conclusion we do not suggest that a letter in litigation could not amount to a repudiation of a contract. The letter here should not, however, be so characterised. Rather, it was seeking to assert proprietary entitlements from an unclear body of history which was the subject matter of dispute between the parties. Ultimately the primary judge accepted one of the alternative formulations of Tiffany's position as to those entitlements. The context was the elucidation by the Court of the correct legal relationship between the parties. There was no suggestion at trial or on appeal that the assertion of position was other than bona fide. In our view, the primary judge was entirely correct to reject the repudiation argument. 55The repudiation argument was also made on the basis that the true contractual arrangement was as asserted by HEG, namely what was referred to as the 1987 Termination Agreement or Post Joint Venture Agreement. The conduct relied on was said to be the same. For the same reasons, that conduct was not repudiatory.
What is the contractual agreement governing Tiffany's interest? 56The disposal of the repudiation argument and the acceptance on appeal of the fact that on no basis did the material provided in September 2003 amount to any kind of feasibility study, makes it, strictly, unnecessary to deal with the differences between the parties that were litigated before the primary judge about what is the correct legal and contractual framework binding them. In particular, the issue was as to the content and defining characteristics of the kind of Feasibility Study which would be the trigger for Tiffany to be subject to an obligation to contribute to the costs of further development of the tenements. 57The appellant requested this Court to examine in detail the primary judge's reasons for finding that by 1987 and after the termination of the 1983 JVA the governing contractual relationship was not some post termination agreement incorporating the definition of "Feasibility Study", but rather the revival of the arrangements between the parties as reflected in the 1983 Memorandum Agreement. The respondent, on the other hand, urged the Court to resist the call to engage in the provision of judicial advice. There is much force in the position taken by the respondent. If it were the case, however, that we were persuaded that the primary judge had in some fashion reached a conclusion not capable of being supported by the evidence there might be some utility in our saying so to avoid either a later injustice or the incursion of further legal costs. 58We have examined the significant body of material arising out of cross-examination which HEG pointed to below and points to on appeal as providing an evidential foundation for the existence of the 1987 Termination Agreement or Post Joint Venture Agreement. The evidence relied upon consisted of admissions made by Mr McAlpine and Mr Cleaver in cross-examination. We do not propose to lengthen these reasons by recording them in detail. They were referred to by the primary judge who carefully considered them. In addition, there were admissions from the conduct of Tiffany's case in which it had, until November 2007, maintained the position that there was an agreement reached after 1987 of the kind ultimately propounded by HEG. 59These matters were dealt with by the learned primary judge at [58]-[60], as follows: "[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." 60The attack made on this conclusion was both factual and legal. The strongest factual basis for it was that there was evidence given by Mr McAlpine in cross-examination that he had probably discussed the position with Mr Cleaver in about 1987. In Mr McAlpine's cross-examination the following appeared: "Q. What I want to suggest to you sir is after the departure of Northern Gold and McAdam from the 1983 joint venture that you decided that the helpful definition of the feasibility study would continue to be the trigger pursuant to which your company's free carried interest would change to a contributing interest, that's the case, isn't it? A. Yes it is. Q. You discussed that with Mr Cleaver, did you not? A. I probably did, I don't remember." It is dangerous, however, to take one answer out of context. Mr McAlpine had elsewhere in his evidence said that he had no discussion with Mr Cleaver about Tiffany's interest in the mining tenements following the withdrawal of Northern from the joint venture and that from about May 1987 until around 1990 he was not involved in any negotiations on behalf of Tiffany concerning its interests or any discussions with Mr Cleaver about the nature of those interests. The primary judge had the significant advantage of contemporaneity in his assessment of what the witnesses truly remembered. There were other parts of the transcript which threw real doubt upon the likelihood of any reliable or useful recollection by either Mr McAlpine or Mr Cleaver of an arrangement of the kind pleaded. 61HEG, using this material, submitted that, although it could not identify any particular occasion for offer and acceptance, from the body of evidence one could recognise the existence of contractual arrangements entered into by the parties. Particular reliance was placed upon cases such as Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Australia) Pty Ltd (1988) 5 BPR 11,110, at 11,117 per McHugh JA, Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; 53 NSWLR 153 at 179 [81] and Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; 117 FCR 424 at 525 [369]. It is undoubted that contractual arrangements do not only arise out of formal offer and acceptance. In some circumstances, it will be open to a court apprised of the commercial context and the acts, including words, of the parties to interpret the engagements of the parties to ascertain the existence and extent of a legal relationship. A relationship and a body of conduct may evince a clear mutual intention to be legally bound in a particular respect or a relationship or a document may be "instinct with an obligation", imperfectly expressed: Moran v Standard Oil Co 211 NY 187 at 198 per Cardozo J (Court of Appeals, 1914). 62Here, however, whilst it may have been convenient to adopt a definition of "Feasibility Study" drafted by experienced solicitors for the future relationship of Silver Orchid and Tiffany, there was no particular context which made adoption necessary or likely. Nor does the conduct which occurred in the following years enable a conclusion to be drawn that the parties either directed themselves to the question of the definition of feasibility study or that their mutual communings were such as to reveal an agreement for the adoption of the definition in the 1983 JVA. 63Far from concluding that there was any clear error in the primary judge's conclusion, we agree with it. One reason for our doing so is an acknowledgement of the advantage enjoyed by the primary judge in assessing the persons giving evidence as to their true likely recall of events so long ago. Another is the absence of any reference to an arrangement of the kind pleaded in any of the subsequent documentary material as well as the absence of any perceived need on the part of the parties to make such an arrangement upon the withdrawal of Northern from the 1983 Joint Venture. 64Further argument took place before this Court as to the evidence before the learned primary judge and the construction of the relevant provisions of the 1983 Memorandum Agreement and, specifically, the precise content of the phrase "economic feasibility study" in the 1983 Memorandum Agreement. It was not necessary for the primary judge to dispose of that question because his Honour found that the suite of documents provided in September 2003 did not constitute a "feasibility study" even adopting the 1983 JVA definition, a conclusion not contested on appeal. For that reason we do not need to comment upon that question of construction and it is not appropriate that we do so. 65For the above reasons the appeal should be dismissed with costs. 66HANDLEY AJA: I agree with Allsop P and Meagher JA.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 September 2011
Hill End Gold Ltd
First Tiffany Resource Corporation