The Proper Construction of cl 24(b) of the Facilities Deeds
136 By way of background, we note that Mineralogy accepts the primary judge's conclusion that the Facilities did not become fixtures and that they remained personalty (TEC Desert Pty Ltd and Another v Commissioner of State Revenue (Western Australia) [2010] HCA 49; (2010) 241 CLR 576).
137 The primary judge took the view that cl 24(b) was a linguistic nonsense and could not be read literally. He said that it was a nonsense to speak in terms of an obligation to operate and an obligation to maintain "vesting" in Mineralogy. Mineralogy did not challenge his conclusion concerning an obligation to maintain "vesting", but it did submit that he erred in viewing the function of operating as an obligation. We will return to this submission, but it is sufficient for us to indicate at this point that in the context of the Facilities Deeds we think the primary judge was correct.
138 The primary judge noted that cl 24(b) applied to Facilities and Facilities included both Shared Facilities and Company Facilities. But the primary judge said that cl 24(b) could not be construed as applying to existing facilities because there were no Facilities at the time the Facilities Deeds were executed.
139 The primary judge considered that there were three possible constructions of cl 24(b).
140 First, and this was close to the construction advanced by Mineralogy, cl 24(b) meant that the parties acknowledged that ownership of all future Facilities will vest in Mineralogy and that Mineralogy has the future right to operate and maintain all those Facilities ("first possible construction").
141 Secondly, and this was close to the construction advanced by the CITIC parties, cl 24(b) meant that the parties acknowledged that the possession of all future Facilities will vest in Mineralogy as needed for the discharge of its obligations to operate and maintain Shared Facilities ("second possible construction").
142 Thirdly, cl 24(b) meant that the parties acknowledged that the possession of all future Facilities will vest in Mineralogy as needed for the discharge of its obligations of operating and maintaining the Facilities which it is obliged to operate ("third possible construction").
143 The primary judge held that the first possible construction was the least plausible for eight reasons. A summary of his reasons is as follows:
(1) The second and third possible constructions are the closest to the actual language of the clause.
(2) If Mineralogy had the right to operate and maintain all Facilities, the scheme of the Facilities Deeds would leave significant gaps in relation to matters concerning the funding of expenses for the operation and maintenance of Company Facilities.
(3) If Mineralogy had the right to operate and maintain all Facilities, the scheme of the Facilities Deeds would leave significant gaps in relation to matters concerning access for emergency works and access to information.
(4) Clause 24(b) is expressed as an acknowledgement, rather than a clause creating rights.
(5) It makes no sense for the parties to acknowledge that Mineralogy has ownership of all the Facilities and for both parties to acknowledge that Mineralogy has a right to operate and maintain the Facilities.
(6) There would be considerable uncertainty if cl 24(b) meant that ownership of the Company Facilities transferred from the CITIC parties to Mineralogy in circumstances where there is no provision which establishes when ownership of Company Facilities would pass to Mineralogy.
(7) The place in the Facilities Deeds in which cl 24 appears, and the regime for the funding of the operations of Shared Facilities, militates against Mineralogy's construction.
(8) A construction which recognises the nature of cl 24(b) as acknowledging an obligation upon Mineralogy (to be found elsewhere in the Facilities Deeds), but not creating a right, is also consistent with the structure of the Facilities Deeds in relation to Shared Facilities.
144 As to the second and third possible constructions, the primary judge considered the third possible construction to be the best construction. He acknowledged that there were significant indicators in the Facilities Deeds that the use of the defined term "Facilities" in cl 24(b) might not be decisive and that the Facilities Deeds did not always employ a careful technique of exclusive use of defined terms. He said that although it was possible to construe the word "Facilities" as meaning only "Shared Facilities", it was still a significant step to take in the construction of a legally drafted instrument to give one defined term a meaning as if it were a different defined term.
145 The primary judge referred to the use of the word "acknowledge" in cl 24(b) and said that there were at least three different circumstances in which the cl 24(b) acknowledgement will relevantly operate to recognise Mineralogy's right to possess the Facilities for the purposes of other clauses. He said that two of the three circumstances involved Company Facilities which are as follows:
(1) Where the Company (at the time of the Facilities Deeds a subsidiary of Mineralogy) develops Company Facilities and Mineralogy agrees to operate and manage them for the subsidiary or where the Company's rights have been suspended under subcl 14.5 of the Facilities Deeds.
(2) Mineralogy may need an acknowledgement that it has possession of the Facilities in circumstances in which all buildings and structures must be removed from the site at the completion of operations under the mining lease.
146 Mineralogy challenged these two circumstances. It submitted that they were not made out and that the choice for the primary judge was between the first and second possible constructions, and that he should have chosen the first possible construction because the second possible construction would mean that, having regard to other clauses in the Facilities Deeds, cl 24(b) was otiose. In their Notice of Contention, the CITIC parties also attacked the primary judge's preference for the third possible construction. Their case was that the best construction was the second possible construction.
147 Before indicating our views as to the proper construction of cl 24(b), it is convenient to summarise the respective submissions of the parties.
148 First, Mineralogy submitted that when construing cl 24(b), the primary judge erred in not taking into account "relevant background". The "relevant background" consisted of factual matters which established (so Mineralogy argued) that the obvious commercial intent of Mineralogy and, therefore, its subsidiaries at the time of entry into the Facilities Deeds was to ensure that Mineralogy could best realise the value of its assets by being able to offer guaranteed and effective access to the Port to third parties, regardless of the timing and sequence of the sale of interests and the construction of facilities. Mineralogy submitted that it could objectively be expected that the subsidiaries, or the rights which they held, would be sold to third parties. The submission was that given that there were six possible producers and exporters of iron ore products, it was commercially sensible that there was a single owner and a single operator of the Port Facilities when constructed. The effect of the Facilities Deeds (so it was argued) was that Mineralogy was to be that owner and operator. To support these submissions, Mineralogy relied on the evidence of Mr Robinson (affidavit sworn on 17 April 2015 paragraphs 9-35), and Mr Cribbes (affidavit sworn on 17 April 2015 paragraphs 10-43). We can indicate at this stage that we have considered that material. It does not seem to us to go beyond findings made by the primary judge and a good deal of it addresses events after the Facilities Deeds were entered into. We do not think that the material assists in resolving the issue of construction. We note, for what it is worth, that the primary judge did take into account as part of one of his eight reasons, the fact that it must have been contemplated at the time of the Facilities Deeds that the cost of building the Facilities would be hundreds of millions of dollars (at [429]).
149 Secondly, Mineralogy submitted that the Facilities Deeds addressed Shared Facilities in cll 18 to 23 and it addressed Company Facilities in cl 24. It submitted that the proper construction of cl 24(b) is that the ownership of the Facilities vested in Mineralogy and that the right to operate the Facilities (with the right to possession to enable that right to be exercised) and the concomitant obligation to maintain the Facilities vested in Mineralogy. Mineralogy submitted that such an interpretation is consistent with the background context and commercial purpose of the Facilities Deeds.
150 Mineralogy submitted that the primary judge's construction of cl 24(b) was erroneous for three reasons. First, it submitted that his Honour's construction (i.e., the third possible construction) involved reading words into the clause. Secondly, the primary judge's construction meant that the clause had no work to do because it depended on an obligation to operate and maintain arising elsewhere under the Facilities Deeds and no such obligation was to be found. Thirdly, Mineralogy submitted that his Honour's construction effectively removed the words "the Facilities … vest" from cl 24(b).
151 In addition to these general submissions, Mineralogy attacked a number of the primary judge's eight reasons.
152 Mineralogy submitted that the primary judge's second reason for adopting the construction he did, that is to say, that if Mineralogy had the right to operate and maintain all Facilities, the scheme of the Facilities Deeds would leave significant gaps in relation to matters concerning the funding of expenses for the operation and maintenance of Company Facilities, was erroneous because it did not take into account cll 5, 7, 8, 9, 15 and 24(e) of the Deeds. Mineralogy submitted that these clauses provide for the entitlement of Mineralogy to require payment of Administration Costs, for budgeting and for repayment of surplus funds. Furthermore, it is said that his Honour did not have regard to paragraph (g) of the "Administration Costs". Mineralogy submitted that the "funding regime is practical and workable on the basis that Mineralogy is to operate all Facilities". We have already rejected Mineralogy's submission about paragraph (g) of the definition of Administration Costs.
153 Mineralogy submitted that the primary judge's fourth and fifth reasons for the construction he adopted, that is to say, that cl 24(b) is expressed as an acknowledgement rather than a clause creating rights and that Mineralogy's construction should be rejected because there would be no need for both parties to acknowledge Mineralogy's rights, involved error because those reasons rely on the word "acknowledge" and that word does not speak against Mineralogy's construction of cl 24(b).
154 Mineralogy submitted that the primary judge's sixth reason, that is to say, that there would be considerable uncertainty if cl 24(b) meant that ownership of Company Facilities transferred from the CITIC parties to Mineralogy, raises a difficulty which is more apparent than real. Mineralogy submitted that at the latest at a time when the Facilities are ready to be operated in any fashion, the ownership of them will have vested in it as well as the right to operate the Facilities.
155 Mineralogy submitted that the primary judge's seventh reason, being the place where cl 24(b) appears in the Facilities Deeds, is of no moment and the related matter of the scheme of funding as set out in the Facilities Deeds had already been addressed.
156 Mineralogy submitted that the primary judge's eighth reason, that is to say, to construe cl 24(b) as referring to an obligation to operate in certain circumstances because that is consistent with Mineralogy's obligation to operate the Shared Facilities, does not withstand scrutiny because the "right" to operate the Facilities can be characterised as a right even if it is subject to an obligation to operate the Facilities efficiently and with reasonable care.
157 Mineralogy submitted that the terms of cl 25 support its construction of cl 24(b) insofar as it deals with the "right" to operate the Facilities. We can say at this stage that we reject this submission. If anything, cl 25 might be taken to support the assumption that the Companies are operating the Company Facilities. It is consistent with the notion that Mineralogy would be operating the Port which is the subject of the aspirational statement in cl 24(a1), and where the Port was in essence a multi-user facility.
158 The CITIC parties made a number of submissions in response to Mineralogy's submissions. By way of background, they asked the Court to note that the primary judge held that there is "considerable ambiguity" in the Facilities Deeds, "particularly in crucial subclauses of cl 24" (at [365]) and that it was common ground at trial that the Facilities in issue (i.e., those in the Circled Area) were not Shared Facilities (at [32]).
159 The CITIC parties submitted that the primary judge did not ignore considerations of commercial inconvenience. He took into account the fact that Facilities could move from being Company Facilities to be Shared Facilities (at [465]-[467]). The CITIC parties submitted that Mineralogy's construction would lead to the highly uncommercial result that Company Facilities costing billions of dollars would come into the ownership and exclusive operation of Mineralogy, even though fully paid for by Sino Iron and Korean Steel, in consequence of a clause which is at the very least ambiguously worded and which involves the linguistic nonsense of the "vesting" of "operations and maintenance".
160 The CITIC parties submitted that all three possible constructions of cl 24(b) involved reading words into the clause and submitted that the primary judge was, in fact, correct in concluding that Mineralogy's construction involved doing the greatest violence to the language of the clause.
161 The CITIC parties submitted that Mineralogy had provided no answer to the primary judge's third reason and that its response to the primary judge's fourth and fifth reasons was "exiguous in the extreme". They pointed out, correctly in our view, that in relation to the Shared Facilities the drafters of the Facilities Deeds used clear and unmistakeable language when addressing issues of ownership on the one hand, and operation and maintenance on the other hand. Subclause 18.3 addressed the issue of the ownership of Shared Facilities directly and subcl 22.1 addressed the issue of the operation and maintenance of the Shared Facilities, again, directly. Furthermore, in addressing the topic of Mineralogy securing title, the Facilities Deeds use the words "owned" and "ownership" (subcll 2.2 and 2.3) when that was the concept which the parties had in mind.
162 The CITIC parties submitted that the primary judge's seventh reason could not be swept aside as being of no real consequence because the point in time at which ownership passed was highly significant for the purposes of insurance and legal liability. Nor was the primary judge wrong to consider the position or place of cl 24 in the Facilities Deed; that was an entirely orthodox approach. Furthermore, the primary judge was correct to rely on the gaps in the funding regime if cl 24(b) was construed so as to give Mineralogy the right to operate (and obligation to maintain) Company Facilities. Those gaps were as follows:
(1) the Sinking Fund established pursuant to cl 6 may only be used for Shared Facilities;
(2) the budget for Administration Costs must include the proportion and amount of proportion of the contribution of Companies and Third Parties for the next Production Year (subcll 7.2(d) and 7.2(e));
(3) the formula for determining the contributions to the Administrative Fund and the Sinking Fund set out in subcl 8.2 only applied on the basis that the Facilities are Shared Facilities as indicated by the variable TV and its definition; and
(4) refunds of overpayments are expressly dealt with in the Facilities Deeds but only in relation to Shared Facilities (cl 10).
163 In addition to these matters, counsel for the CITIC parties made the following points in the course of his oral submissions. First, where a clause or provision in a contract is poorly drafted as in this case, a court will pay rather less attention to the precise words of the clause or provision (BS & N Ltd (BVI) v Micado Shipping Ltd (Malta) (The 'Seaflower') [2001] CLC 421 at [82] per Jonathan Parker LJ). Secondly, cl 24(b) contains an acknowledgement by the parties and does not operate "by way of a contractual promissory provision". The clause does not create any new or different rights. Thirdly, cl 24(b) is concerned with vesting in possession, not ownership, and it is related (inevitably) to the particular purpose of operation and maintenance. The possession is co-extensive in amplitude and temporal dimension with the function of operation and maintenance. The obligation to operate and maintain Shared Facilities is contained in subcl 22.1. Fourthly, the function of operation may be an obligation in the sense of being more burdensome than advantageous, and in fact is expressed in that way in subcl 22.1 and cl 23. Fifthly, cl 24(e) refers to "Facilities" but this must mean "Shared Facilities" having regard to the subject matter of the clause. Subclause 32.2(b) is another example of the use of the word "Facilities" when plainly (having regard to the definition of User) what is meant is "Shared Facilities". Clause 24(a2) appears to be directed to Shared Facilities, although it may be accepted that cl 24(d) may apply to Company Facilities. Sixthly, the Facilities Deeds provide for circumstances where "Company Facilities" may become "Shared Facilities" (subcll 3.3(c), 8.7) and this may account for the use of the word "Facilities" when, in fact, "Shared Facilities" is meant. Seventhly, cl 25 far from supporting Mineralogy's submission that it has the right to operate and maintain the Port or facilities at the Port supports the conclusion that the Company operates and maintains the Company Facilities. The reference to "Scheduling" relates to water movements, not, it seems, to terminal activities on land. Moreover, it connotes more of the scenario where the Port is a multi-user facility. Eighthly, the Facilities Deeds in subcl 19.1 confers a right on the Company to use the Shared Facilities. It is significant there is no such express right in the case of Company Facilities, which would be necessary if Mineralogy's construction was correct. The reason that there is no need for an express right is because the ownership and right to operate Company Facilities remained with the Company. Ninthly, cll 5 to 25 of the Facilities Deeds all relate to Shared Facilities. It is true that there are some clauses or subclauses within that group which are capable of applying to both (e.g., cl 5), but read in context, the clauses are, in fact, restricted to Shared Facilities. Finally, the CITIC parties submitted that it is telling that the Facilities Deeds deal expressly with express rights and obligations with respect to Shared Facilities (subcl 19.2 provision of information; subcl 22.3 Company performing urgent repairs), but not Company Facilities.
164 These then were the respective submissions of the parties.
165 In our opinion, the primary judge was correct to conclude that cl 24(b) was a linguistic nonsense and could not be given its literal meaning. It is true, as counsel for the CITIC parties appeared to accept, that the function of operating will not always be characterised as an obligation. There may be cases in which it is more properly seen as a right. However, this is not such a case. The function of operating is clearly an obligation in the case of Shared Facilities (see cll 22 and 23), and as Company Facilities may become Shared Facilities there is no reason to think that the parties contemplated that Mineralogy would have a right to operate Company Facilities, but not an obligation to do so when the same Facilities became Shared Facilities. We agree with the primary judge that it does not make sense to speak in terms of obligations vesting in another party when one would more naturally say that they were imposed on the other party. In those circumstances, we think the primary judge was correct to consider the non-literal senses in which cl 24(b) might be read.
166 We think the primary judge identified the three possible constructions of cl 24(b). The parties to the appeal have not suggested any further possible construction.
167 In our opinion, the primary judge was correct to conclude that the first possible construction required the greatest degree of change to the language of the clause. It is not simply a matter, as Mineralogy argued, of adding the word "and" between "the Facilities [and] the Facilities operation and maintenance". That still leaves problems. It is, as we have previously said, a nonsense to speak in terms of the vesting of an obligation to operate and maintain Facilities, so the clause has to be read as involving a right. And there also needs to be an explication of the meaning of the vesting of the Facilities to mean ownership. By contrast, there is relatively little change required to give effect to the second and third possible constructions. As the primary judge said, what is required is a little punctuation and a coordinating conjunction: "The parties acknowledge that the Facilities, for the Facilities['] operation and maintenance[,] shall vest in Mineralogy".
168 The primary judge's first reason supported his conclusion that the first possible construction was the least plausible.
169 The primary judge's second reason for concluding that the first possible construction of cl 24(b) was the least plausible was that if Mineralogy had the right to operate and maintain all Facilities, the scheme of the Facilities Deeds would leave significant gaps in relation to matters concerning the funding of expenses for the operation and maintenance of Company Facilities. We agree with the two examples given by the primary judge. They are first, that if Mineralogy had the right to operate Company Facilities one would expect that it would have the right to recover for the costs of doing so and that would bring with it an obligation to keep separate records and to account, as it does in the case of Approved Shared Facilities. There is no obligation to keep separate records and account in the case of Company Facilities. Secondly, there is no obligation on Mineralogy to refund overpayments in the case of Company Facilities.
170 The primary judge's third reason for concluding that the first possible construction was the least plausible is a similar point to the second reason but dealing with different subject matter, namely, the obligation on the Company to provide necessary information to Mineralogy about the use of a Facility (subcl 19.2) and the Company's ability to carry out emergency repairs to a Facility (subcl 22.3). Both these matters are dealt with expressly in the case of Shared Facilities, but are not addressed in the case of Company Facilities. We think that these are relevant considerations in favour of the primary judge's conclusion.
171 The primary judge's fourth reason placed considerable weight on the fact that cl 24(b) used the words acknowledge and vest. In our respectful opinion, he was correct to do so and this is a powerful reason in favour of his conclusion. We start with the word, vest.
172 The word vest is a word of elastic import as Williams J said in The City of Perth v Crystal Park Limited and Another (1940) 64 CLR 153 ("The City of Perth v Crystal Park Limited"). As an examination of the judicial dictionaries and the authorities show, the word takes its meaning from the context in which it appears and may mean no more than conferring such rights as may be necessary to perform a duty (Saunders JB, Words and Phrases Legally Defined (3rd ed, Butterworths, 1990) Vol 4, pp 389-391; James JS, Stroud's Judicial Dictionary of Words and Phrases (5th ed, Sweet & Maxwell Limited, 1986) Vol 5 pp 2791-2794; Bradford v Mayor &c of Eastbourne [1896] 2 QB 205 at 211 per Lord Russell CJ and at 215 per Wills J; The City of Perth v Crystal Park Limited at 168 per Williams J; Marks v Trustees Executors and Agency Company Limited and Others (1948) 77 CLR 497 at 507 per Williams J).
173 The word acknowledge would ordinarily mean to recognise a matter otherwise established. As the primary judge said, there are good reasons to think that that is how it is used in cl 24(b) and that it was not used to confer rights on Mineralogy to the Company Facilities either of a right to operate or the right to ownership. The Company's right to use Shared Facilities is expressly conferred in the Facilities Deeds (cl 19). The right to ownership of the Shared Facilities is expressly conferred by the Facilities Deeds (subcl 18.3). The Company Facilities were likely to cost a Company billions of dollars and if the parties intended ownership of the Company Facilities, then one would have expected the parties to expressly say so.
174 The primary judge's fifth reason is that if the clause was intended to confer the right of ownership on Mineralogy and the right to operate the Company Facilities, there would have been no need for both parties, and, in particular, Mineralogy to acknowledge that fact. We agree that that is a consideration, although we do not think that it is a particularly strong one.
175 We reject Mineralogy's criticism of the primary judge's sixth reason. It would be important to know precisely when ownership in the Company Facilities passed to Mineralogy (assuming it did pass). The Company Facilities would be very valuable assets and one would expect the parties to wish to avoid disputes and to know where they stood for the purposes of legal liability, insurance, accounting purposes and taxation, including depreciation, capital gains tax and the like. The matter is not addressed in the Facilities Deed. By contrast, the position with Shared Facilities is clear. Shared Facilities are Facilities identified in the Shared Facilities Register.
176 We reject Mineralogy's criticism of the primary judge's seventh reason. That reason has two aspects, namely, the place of cl 24 in the Facilities Deeds, and the regime for funding the operations of Shared Facilities.
177 When the primary judge refers to the place of cl 24 in the Facilities Deeds, he is referring not only to its physical place in the Facilities Deeds, but also to what it appears to deal with compared with the comprehensive provisions addressing Shared Facilities. Clause 24 appears to deal with a number of somewhat disparate matters broadly related to the topic of the operation of the Facilities; we would note though that we have put the heading to one side given subcl 1.3. Clauses 24(a1) and (a2) address the operation of the Port and contributions for the operation and then there is the clause in issue. Clause 24(c) makes it clear that the Company can register the Facilities Deeds and lodge a caveat to protect its interest. Clause 24(d) is a promise by the Company to comply with the By-Laws for the operation of the Cape Preston Port. Clause 24(e) addresses the Company's liability for operation and maintenance costs and the subject matter makes it clear that it relates to Shared Facilities.
178 By contrast with the one clause in cl 24 (i.e., cl 24(b)), the group of clauses, being cll 18 to 23, deals comprehensively with Shared Facilities, including the costs of Shared Facilities (subcl 18.1), the ownership of Shared Facilities (subcl 18.3), the Company's right to use Shared Facilities (cl 19) and Mineralogy's obligation to operate and maintain Shared Facilities (cl 22). One would expect a similar regime adapted to Company Facilities if the parties contemplated that Mineralogy both owned and had the right to operate and maintain Company Facilities. For example, it would be a singular omission that there was no clause conferring on the Company a right to use the Company Facilities if Mineralogy both owned and had the right to operate and maintain Company Facilities.
179 We are not disposed to accept the submission of the CITIC parties that every aspect of cll 5 to 25 relates to Shared Facilities only. But we accept the primary judge's analysis of the scheme of funding for the Facilities. The key points made by the primary judge were as follows. First, the funding regime neither requires nor presupposes that Mineralogy will improve, operate or maintain any Company Facilities, and the assumption is that Mineralogy will not operate the Company Facilities. Secondly, although budgets are required for Approved Shared Facilities, there is no budget required or even contemplated for the costs of operating and maintaining a Company Facility. Thirdly, there is no provision for Mineralogy to recover costs spent on Company Facilities or to recover any deficiency in costs arising from Company Facilities operation. Finally, the proper construction of cl 24(e) is that the clause is simply to establish the ultimate responsibility of each Company under the provisions of the particular Facilities Deed for all operational costs and maintenance by reference to that Company's product capacity.
180 We reject Mineralogy's criticism of the primary judge's eighth reason. We agree that it is consistent with the provisions (cll 22.1 and 23) dealing with Mineralogy's obligation to operate and maintain Shared Facilities to construe cl 24(b) as referring to an obligation to operate and maintain, rather than a right to operate with a corresponding obligation to maintain.
181 One final submission of Mineralogy should be addressed. It overlaps with one of the grounds the CITIC parties raised in their Notice of Contention. Mineralogy submitted that the third possible construction of cl 24(b) is not open because there are no provisions in the other clauses of the Facilities Deeds which require Mineralogy to operate and maintain Company Facilities. It contends that the primary judge's examples of such other provisions are erroneous. Mineralogy submitted that if that be correct, then the choice is between the first and second possible constructions. It is said that the first possible construction is to be preferred because the second possible construction results in a clause which is otiose. Contrastingly, it is said that there is no need for a clause vesting possession of Shared Facilities in Mineralogy for the purposes of operating and maintaining Shared Facilities because there is an express clause requiring Mineralogy to operate and maintain the Shared Facilities and that obligation would carry with it a right to possession to carry it out.
182 We agree with the submission that Mineralogy's obligation to operate and maintain the Shared Facilities carries with it the right to possess such Facilities for those purposes and that the second possible construction results in cl 24(b) being confirmatory of a right inherent in other clauses of the Facilities Deeds. Nevertheless, such an approach by parties to significant commercial transactions is not unknown and, in our opinion, it is far from axiomatic that the parties would not take the opportunity to make express or, at least confirm, that Mineralogy had the right to possession of the Shared Facilities for the purpose of carrying out its obligations of operation and maintenance of those Facilities. In any event, the primary judge's conclusion (with which we agree) was, for the reasons he gave, that the first possible construction was less plausible than the second possible construction.
183 Mineralogy can only succeed on this aspect of its appeal if it can establish that the first possible construction of cl 24(b) is the proper construction of the clause. For reasons we have given, it cannot do that.
184 In the circumstances, it is not strictly necessary for us to consider whether the primary judge was correct in preferring the third possible construction over the second possible construction. However, the matter was argued and, as we have said, it was a ground in the Notice of Contention of the CITIC parties. In our view, contrary to the primary judge's conclusion, the second possible construction should be preferred over the third possible construction. We will address why we have taken this view.
185 First, the primary judge's starting point is that the parties have used the word, Facilities, which includes both Shared Facilities and Company Facilities. But in our view, the force of this point is weakened somewhat by the fact that the parties have not always used defined terms correctly. For example, it seems to us that in subcl 32.2(b), "Facilities" means Shared Facilities. That is well apparent from the subject matter of the clause.
186 Secondly, the primary judge said that the third possible construction would have work to do where Mineralogy and the Company subsequently agreed that Mineralogy would operate and maintain Company Facilities. Now it is certainly possible that Mineralogy and the Company could so agree, but we would be disposed to think that the right to possession for that purpose would result from any such subsequent agreement.
187 Thirdly, the primary judge said that the third possible construction would have work to do where the Company's rights have been suspended. He referred to subcl 14.5 of the Facilities Deeds which is in the following terms:
If Company fails to pay any amount to Mineralogy as required under this Deed, Company rights under this Deed shall be suspended and shall remain suspended for as long as such payments remain unpaid.
But we agree with the submission of the CITIC parties that in the case of a suspension of rights the operation of cl 24(b) would be altered by a subsequent event in any event.
188 Fourthly, the primary judge said that the third possible construction would have work to do if Mineralogy was required to remove a Company Facility in accordance with the obligation common in a mining lease and in s 114 of the Mining Act 1978 (WA) to remove all buildings and structures from the site at the completion of operations under the mining lease. If Mineralogy was required to remove a Company Facility, then this obligation would carry with it a concomitant right of possession to operate the Facility for that purpose. But there are two difficulties with this argument. First, if Mineralogy was required to remove a Company Facility, then the right to possession would seem to be inherent in the requirement without the need for the parties to address it in the Facilities Deed. Secondly, even if there was a need to operate a Company Facility as part of its removal, it would seem to be quite subsidiary to the act of removal. It is difficult to see that in any meaningful sense it involves an obligation to operate and maintain.
189 In the circumstances, we are of the opinion that of the second and third possible constructions, the second is the preferable construction. However, as we have said, a concluded view on this matter is nevertheless not strictly necessary, as we have found that the first possible construction, which was advanced by Mineralogy, should not be accepted in any event.
190 In summary, this aspect of Mineralogy's appeal must fail. It is not entitled to a declaration that it is the owner of the Facilities in the Circled Area. Further, insofar as the other alternative relief pursued in the Court below is pursued on appeal, it too must fail. The First Termination Notice is ineffective because it is based on obligations which do not exist. It is also ineffective for other independent reasons which we will set out when dealing with the Termination Notices.