PT Thiess Contractors Indonesia v PT Arutmin Indonesia [2015] QSC 123

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - INTERPRETATION OF MISCELLANEOUS CONTRACTS AND OTHER MATTERS - where the parties entered into a deed of settlement and termination - where the defendant was required to make payments to the plaintiff under the deed - where the payment mechanisms of the deed provided for payments by a bank pursuant to a cash distribution agreement between the defendant and the bank - where payments were not made in accordance with the deed - whether the defendant is liable to make the payments

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - PENALTIES AND LIQUIDATED DAMAGES - GENERAL PRINCIPLES - where the parties entered into a deed of settlement and termination - where the deed provides for payment of interest on amounts not paid at a rate of 10.4 per cent per annum - where, after a further period of non-payment, the interest rate increases to 18 per cent per annum thereafter - whether the increase in interest rate from 10.4 per cent to 18 per cent is a penalty

Amalgamated Investment & Property Co Ltd (in liq) v Texas Commerce International Bank [1982] QB 84, applied

Andrews v Australian and New Zealand Banking Group Limited (2012) 247 CLR 205; [2012] HCA 30, applied

Associated Investment Underwriters (NZ) Ltd (in liq) v MacKenzie and Dominion Mutual Insurance Association [1932] NZLR 221, cited

Astley v Weldon [1801] EngR 108; (1801) 2 Bos & P 346; 126 ER 1318, referred to

Atia v Nusbaum [2011] QSC 44, applied

Atlas Tiles Ltd v Briers (1978) 144 CLR 202; [1978] HCA 37, cited

Australian and New Zealand Banking Group Limited v Cawood [1987] 1 Qd R 131, followed

Bay Bon Investments Pty Ltd v Selvarajah [2008] NSWSC 1251, referred to

Beil v Mansell (No 2) [2006] 2 Qd R 499; [2006] QSC 199, applied

Blatch v Archer [1774] EngR 2; (1774) 1 Cowp 63; 98 ER 969, referred to

Blundell v Musgrave (1956) 96 CLR 73; [1956] HCA 66, cited

Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600; [1982] HCA 53, cited

British Transport Commissioner v Gourlay [1956] AC 185; [1955] UKHL 4, considered

Cassegrain v Gerard Cassegrain & Co Ltd (2015) 316 ALR 111; [2015] HCA 2, cited

Coulls v Bagot's Executor and Trustee Co Ltd (1967) 119 CLR 460; [1967] HCA 3, cited

Cullen v Trappell (1980) 146 CLR 1; [1980] HCA 10, cited

Daniels (formerly practising as Deloitte Haskins & Sells) v Anderson (1995) 37 NSWLR 438, cited

David Securities Pty Ltd v Commonwealth of Australia (1990) 23 FCR 1; [1990] FCA 186, followed

Demetrios v Gikas Dry Cleaning Industries Pty Ltd (1991) 22 NSWLR 561, cited

Duke Group Ltd (in liq) v Pilmer [1999] SASC 97; (1999) 73 SASR 64, cited

Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165; [2001] HCA 31, cited

Vickers v Taccone [2005] NSWSC 578, cited

Peet v Richmond (No 2) [2009] VSC 585, cited

Millington v Waste Wise Environmental Pty Ltd [2015] VSC 167, cited

Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79; [1915] UKHL 1, considered

European Asian Bank Aktiengesellschaft v Katsikalis [1988] 1 Qd R 45, followed

Grocon Constructors (Qld) Pty Ltd v Juniper Developer No 2 Pty Ltd & Anor [2015] QSC 102, referred to

Hart v McDonald (1910) 10 CLR 417; [1910] HCA 13, considered.

Jolley v Mainka (1933) 49 CLR 242; [1933] HCA 43, considered

Kellas-Sharpe & Ors v PSAL Ltd [2013] 2 Qd R 233; [2012] QCA 371, followed

Lordsvale Finance BLC v Bank of Zambia [1996] QB 752, applied

McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457; [1933] HCA 25, followed

McLeary v Swift [2012] NSWSC 1403, considered

McLeary v Swift [2014] NSWSC 1414, cited

Miliangos v George Frank Textiles Ltd [1976] AC 443, considered

Neilson v Overseas Projects Corporation of Victoria Ltd & Anor (2005) 223 CLR 331; [2005] HCA 54, followed

Ogilvie v Adams [1981] VicRp 92; [1981] VR 1041, cited

Paciocco v Australia & New Zealand Banking Group Ltd [2014] FCA 35, referred to

Paciocco v Australia & New Zealand Banking Group Ltd [2015] FCAFC 50, followed

Pilbrow v Pilbrow's Atmospheric Railway Co [1848] EngR 155; (1848) 5 CB 440, cited

Provan v HCL Real Estate (1992) 24 ATR 238, considered

Re United Railways of Havana and Regla Warehouses Ltd [1961] AC 1007, considered

Scott v Lord Ebury (1866-1867) LR 2 CP 255, cited

Slade v Morley Yelv 21; [1792] EngR 2268; 80 ER 15, Moo KB 433; [1688] EngR 537; 72 ER 677, cited

Sunbird Plaza Pty Ltd v Maloney (1989) 166 CLR 245; [1988] HCA 11, referred to

Swift v Mcleary [2014] NSWCA 52, cited

Tahiri v Minister for Immigration and Citizenship (2012) 293 ALR 526; [2012] HCA 61 followed

Tekno Autosports Pty Ltd [2014] FCA 774, cited

White v Verkouille [1990] 2 Qd R 191, followed

Whitlam v Insurance Australia Group Ltd (2005) 214 ALR 703; [2005] NSWSC 200, considered

Wolmershausen v Gullick [1893] 2 Ch 514, cited

Young v Queensland Trustees Ltd (1956) 99 CLR 560; [1956] HCA 51, cited

Foreign Judgments Act 1991 (Cth), s 6(11)(a)

Sale of Goods Act 1896 (Qld), s 3(1)

Uniform Civil Procedure Rules (Qld), r 947E(c)(vii)

**[1] Jackson J: The plaintiff claims the sum of US$265,290,655 plus interest. The sum is alleged to be owing as a debt under a written contract in the form of a deed inter partes. The contract is styled "Deed of Settlement and Termination" ("DOSAT") and is dated 23 December 2013.

[2] The plaintiff is styled "PSC" in the DOSAT and other related contracts. The defendant is styled "Company" in the same series of contracts. There is another party to the DOSAT, PT Indocoal Kalsel Resources ("Kalsel"), but it is unnecessary to consider it further.

[3] The defendant is the operator of a number of coal mines on South Kalimantan in Indonesia. The plaintiff supplied services to the defendant for the operation of the mines described as construction, mining, washing and materials handling services and all plant, equipment, facilities, services, materials, supplies, labour and management required to carry out the Services.

[4] Their relationship was governed by a number of relevant contracts and was affected by the defendant's rights and obligations as owner or operator of the mines under Indonesian Law.

[5] On 19 May 2000, the defendant and the plaintiff entered into a long term operating agreement for mining services whereby the plaintiff provided "Services" to the defendant at the defendant's coal mines ("OAMS").

[6] On 6 July 2005, the existing parties varied, and Kalsel acceded to, the OAMS pursuant to a deed of accession and variation. At the same time, the parties entered into another contract styled, the "Strategic Agreement", to govern aspects of their dealings.

[7] On 9 February 2009, the parties entered into the amended and restated operating agreement for mining services ("AROAMS"), which amended and restated the terms of the OAMS. At the same time, the parties entered into the Deed of Amendment and Restatement of the Strategic Agreement ("DARSA"), which amended and restated the terms of the Strategic Agreement.

[8] On 27 June 2007, the defendant and other parties, including Standard Chartered Bank and Bank of New York Mellon, entered into a contract styled the "Cash Distribution Agreement ("CDA").

[9] At least from 2012, the relationship of the parties deteriorated to the point where, in April 2013, the plaintiff's provision of the Services to operate the mines at Senakin and Satui came to a standstill.

[10] The plaintiff started a number of proceedings in this court referred to in the recitals to the DOSAT. They are proceeding numbers BS11698/12, BS5460/13 and BS5461/13. The defendant counter-claimed in proceeding number BS11698/12. As well, the defendant started proceeding number BS3007/13 in this court. The plaintiff counter-claimed in that proceeding. Collectively, the proceedings are identified as the "Court Proceedings" in the DOSAT.

[11] As well, both the plaintiff and the defendant have proposed claims in relation to the operating year notices for the 2010, 2011, 2012 and 2013 years and in respect of alleged breaches of the CDA. One point of dispute was the plaintiff's suspension of the Services under the AROAMS on 26 April 2013. During the 2013 financial year, the plaintiff threatened to start proceedings in the Commercial Court of the High Court of Justice of England and Wales and made other potential claims in relation to "Principal Contractor Claim Confirmations" ("PCCCs") issued by the defendant under the CDA. All those proposed claims were styled the "Proposed Claims" in the DOSAT.

[12] The recitals to the DOSAT provide that the parties have agreed fully and finally to settle both the Court Proceedings and the Proposed Claims in accordance with its terms. They also provide that, subject to performance of the terms of the DOSAT, the parties agree that the AROAMS will terminate early, in accordance with the terms of the DOSAT. Third, they provide that the parties agree that the defendant will acquire certain plant and equipment related to coal processing and port operations from the plaintiff and either acquire the remaining plant and equipment from the plaintiff or procure a buyer ("Buyer") to acquire the remaining plant and equipment from the plaintiff.

[13] An important point to be drawn from this simplified summary is that the purpose of the DOSAT is to operate as a compromise of the parties respective rights, so as to finalise both their existing and any other possible disputes and to bring an end to their contractual relationship.

[14] Because it will become important to an understanding of some of the provisions of the DOSAT, it is appropriate to briefly describe parts of the operation of the CDA.

[15] The AROAMS provides for the plaintiff to make payment claims for each month it supplies Services for each of the Senakin, Satui and Mulia mines. The payment claim is to be made by the 7th day of the following month. There is a process for the defendant to make a written statement called a "Payment Confirmation", that states the amount of the "Services Fee" for the month, and sets out details of any amendment to the amounts claimed. Clause 7.6 provides that the defendant "shall pay" the amount claimed by the plaintiff less any erroneously included or disputed or set-off amounts.

[16] However, in practice, the procedure for payment of sums payable under the AROAMS is progressed and processed under the CDA. Three business days before the 15th day of the month of the claim, the plaintiff lodges a "Principal Contractor Claim" or "PCC" under the CDA. No later than the 22nd day of the month of the claim the defendant may issue and lodge a "Principal Contractor Claim Confirmation" or "PCCC", setting out its response to the PCC. If the plaintiff objects to the PCCC it may lodge a "Notice of Objection". This process identifies relevant sums derived from the PCC, either to be paid or to be quarantined until resolved.

[17] The plaintiff is not a party to the CDA. However, the AROAMS is a contract to which the CDA applies.

[18] The CDA provides for a number of accounts and sets of accounts to be established by the Singapore Branch of the Standard Chartered Bank ("SCB"). The structure contemplates that funding of payments to be made will be sourced, at least in part, from the defendant's coal sales. The proceeds of sales are to be deposited into accounts described as the "Arutmin Collection Accounts".

[19] Another set of accounts is known as the "Arutmin Thiess Operational Accounts". They receive distributions from the Arutmin Collection Accounts. They include accounts described as the "Arutmin Thiess Primary Accounts". The plaintiff has a first priority charge over those accounts. The CDA also provides for an account referred to as the "Arutmin Thiess Payment Account". It is owned or held by the plaintiff.

[20] When a payment is made to the plaintiff under the mechanism of the CDA, a transfer is made by SCB from the Arutmin Thiess Primary Accounts to the Arutmin Thiess Payment Account.

[21] Under the CDA, there is an alternative process for payment to that started by the plaintiff lodging a PCC. Instead, the plaintiff and the defendant may give a joint notice to the Banks known as a "Joint Principal Contract of Payment Notice" or "JPCPN". A JPCPN specifies an amount for a "Confirmed Principal Contractor Payment". A JPCPN is required to be lodged two business days before the due date in any month.

[22] If a JPCPN is received by SCB in time, the CDA provides that SCB must transfer the amount of the Confirmed Principal Contractor Payment from the Arutmin Thiess Primary Accounts to the Arutmin Thiess Payment Account. At that point, payment is received by the plaintiff.

[23] Clause 7 of the CDA provides for a scheme of priority of payments. Where there are insufficient funds deposited into the Arutmin Collection Accounts to make a payment, payments are made in accordance with those priorities. As it applies to the AROAMS and to other contracts, the CDA thus provides a mechanism for payment in accordance with those rules as between the plaintiff and other contractors or creditors. It also provides for the pro-rating of payments which rank in equal priority.

[24] As previously mentioned, from 26 April 2013 one subject of dispute between the plaintiff and the defendant was the plaintiff's suspension of the Services under the AROAMS. On 18 September 2013, the plaintiff obtained an interlocutory injunction restraining the defendant from itself performing the work of the Services to be provided under the AROAMS and from using certain plant and equipment owned or leased by the plaintiff.

[25] At the time of making the DOSAT, the background facts known to the parties included that the defendant was not producing coal for sale from the Senakin, Satui or Mulia mines. They were aware that no proceeds of sale of coals from those mines were flowing into the Arutmin Collection Accounts under the CDA. It does not appear, however, whether there were proceeds of sale of product from any other mines or other income which may have been paid into those accounts, or what the parties' awareness was about those matters.

[26] For the purposes of this proceeding, the parties agree a number of facts as known to both parties at the time of execution of the DOSAT as follows.

[27] The defendant's principal business was the operation of coal mines at Senakin, Satui, Mulia, Asam-asam, Kintap and Batulicin in Indonesia. It operated them under a concession from the Indonesian Government styled a "CCOW".

[28] The plaintiff provided mining services in relation to the Senakin (partially), Satui and Mulia mines.

[29] All coal in the ground is owned by the Indonesian government. The CCOW granted the right to mine the coal to the defendant. The defendant's principal source of revenue was the proceeds of sale of coal from the mines.

[30] The proceeds of sale of coal from the mines for which the plaintiff provided mining services were paid into the Collection Accounts under the CDA and were to be distributed according to the mechanisms of the CDA.

[31] The plaintiff and the defendant fell into dispute concerning, amongst other things, whether there had been proper compliance with the mechanisms of the CDA. The plaintiff suspended operations under the AROAMS in around April 2013 after which production of coal stopped from the mines where the plaintiff provided mining services and the defendant's revenue from coal sales from those mines ceased.

[32] In around September 2013, the injunction issued by this court together with the suspension in April 2013 effectively prevented the defendant from performing productive work at those mines, by itself or others.

[33] There was no possibility that money that the defendant might derive from the proceeds of sale of coal from the Senakin and Satui (or Mulia) mines would be sufficient to pay the money that the DOSAT provided would be paid within the time frames provided.

[34] The principal dispute between the parties turns on the proper construction of and the operative effect to be given to cl 1.6 of the DOSAT. That clause provides for the timing of and the mechanism for payments to be made under the DOSAT. However, other clauses are the principal operative provisions of the DOSAT. They provide for the compromise of the disputes, the terms on which the parties' relationship was to terminate and the sale of the plaintiff's inventory and plant and equipment to the defendant or a buyer. They also provide for the payments that are intended to settle all those subject matters. Three of those clauses and categories of payment are particularly relevant.

"In full and final settlement of the Court Proceedings and the Proposed Claims, the Company will pay to the PSC the Claims Settlement Sum of US$37,500,000, in accordance with cl 1.6".

**[36] That and the other payments will also result in mutual releases from the Court Proceedings, Proposed Claims and other Claims.

"The Company will pay to the PSC, an Early Termination Sum of US$62,540,655, in accordance with cl 1.6".

**[38] That payment is a specific part of the consideration for the plaintiff's agreement to terminate the AROAMS early. It also includes an amount for the defendant to purchase the plaintiff's inventory of particular items of equipment.

[39] The AROAMS is to terminate on payment of all amounts payable under the DOSAT. On termination, the parties agree to mutually release each other from claims related to the AROAMS or the Services.

[40] Third, cl 5 provides for the defendant to purchase six different categories of plant and equipment for the total sum of US$175,250,000. The defendant itself is to be the purchaser or, in some respects, a "Buyer" in lieu of the defendant may become the purchaser. By overlaying the relevant parts of cl 5, the simplified operative text is that:**

"The Company [or the Buyer in lieu of the Company] will purchase the ... plant and equipment ... [and] ... the purchase price of the ... plant and equipment is [fixed and agreed at] [US$sum] ... and the Company [or the Buyer in lieu of the Company] will pay this amount to the PSC in accordance with cl 1.6 ..."

**[41] As appears, each of the payment obligations is to pay "in accordance with cl 1.6".

"1.6 Timing and Mechanism for Payments under this Deed

With the exception of the payment due in November and December 2013 and marked 'Nov-13' and 'Dec-13' in the Schedule of Payments at Schedule 1, the Company will ensure that all amounts payable to the PSC under this Deed are paid to the PSC by 2:00pm on the relevant date specified in the Schedule of Payments at Schedule 1. For the avoidance of doubt, where only a month and year is specified in Schedule 1, it is deemed to mean the last Business Day of the relevant month.

On or before 31 December 2013, the Company will pay a minimum of US$10,000,000 and up to US$20,000,000 to the PSC by electronic funds transfer against the payments due in November and December 2013 and marked 'Nov-13' and 'Dec-13' in the Schedule of Payments at Schedule 1. The balance of the payments due in November and December 2013 will be paid along with the payments due in January 2014 and marked Jan-14 in the Schedule of Payments at Schedule 1.

All other amounts payable to the PSC under this Deed by the Company will be paid through the payment mechanisms of the AROAMS and the Cash Distribution Agreement and will be Priority Contractor Payments. The requisite paperwork to make this happen is attached to this Deed at Schedule 2 and is in the form of JPCPNs under the CDA. These will be executed by the authorised signatories (for the purposes of the CDA) at the time of execution of this Deed and will be issued to the Cash Management Agent and SCB in place of monthly claims for the relevant months. There are four JPCPNs for the month of December 2013 (payable in January 2014).

The first one is for the amount of US$62,619,636 ('Version A'), which will be used if the Company makes a payment of US$20,000,000 on or before 31 December 2013 and if a Buyer purchases the inventory and plant and equipment in lieu of the Company in accordance with clauses 4.2c, 5.4 and 5.6 and payment is received by 21 January 2013.

The second one is for the amount of US$72,619,636 ('Version B'), which will be used if the Company makes a payment of US$10,000,000 on or before 31 December 2013 and if a Buyer purchases the inventory and plant and equipment in lieu of the Company in accordance with clauses 4.2c, 5.4, 5.5 and 5.6 and payment is received by 21 January 2013.

The third one is for the amount of US$256,984,688 ('Version C'), which will be used if the Company makes a payment of US$20,000,000 on or before 31 December 2013 and if payment is not received from the Buyer by 21 January 2013 (in which case, the Company itself will purchase all inventory and plant and equipment).

The fourth one is for the amount of US$266,984,688 ('Version D'), which will be used if the Company makes a payment of US$10,000,000 on or before 31 December 2013 and if payment is not received from the Buyer by 21 January 2013 (in which case, the Company will itself purchase all inventory and plant and equipment).

Under no circumstances shall the aggregate amount payable to the PSC by the Buyer and/or the Company for the purchase of the said inventory (excluding processing and port) and plant and equipment (excluding processing and port) exceed $194,365,052 in accordance with clauses 4.2c, 5.4, 5.5 and 5.6.

No party will unilaterally amend, adjust or setoff against any of the JPCPNs (or any other payment under this Deed) referred to in this clause nor will any party interfere or seek to interfere in any way with the due payment in accordance with Schedule 1 and the JPCPNs referred to in this clause.

Any amounts payable by the Buyer, as procured as by the Company, under this Deed will be paid by way of telegraphic transfer to the nominated account of the PSC by 2:00pm on the relevant date specified in the Schedule of Payments at Schedule 1.

If the Nov-13 and Dec-13 payments referred to in Schedule 1 are not paid in full by 31 December 2013, then any amounts that remain unpaid on 31 December 2013 will be paid to the PSC forthwith (as provided for above) and interest amount will become payable on the difference between the amounts referred to in Schedule 1 for Nov-13 and Dec-13 (US$54,750,000) and the amount paid to the PSC by the Company on or before 31 December 2013 from the date payment was due in accordance with Schedule 1 until full payment is received at a rate of 10.4% per annum (increasing to 18% per annum from 15 February 2014 for any amounts still not paid). If the Company does not pay to the PSC at least US$10,000,000 before 31 December 2013, then the Company will be in substantial breach of this Deed and the PSC may, at its own election and without notice, terminate this Deed and retain any amount paid under this Deed as a termination fee."

Any amounts unpaid and owed in accordance with Schedule 1 of this Deed to the PSC after 31 January 2014 - the scheduled date for complete payments set out in Schedule 1 (by the Company and/or by the Buyer) ("Overdue Amount") - will be subject to interest payments, which shall be paid by the Company to the PSC monthly, at a rate of 10.4 per cent per annum and interest will apply from 1st February 2014 until the date payment is made.

If an Overdue Amount is not paid in full to the PSC by 16th March 2014 (by the Company and/or by the Buyer) then the Overdue Amount will be subject to interest payments, which shall paid by the Company to the PSC monthly, at a rate of 18 per cent per annum and interest at this rate will apply from 17th March 2014 until the date payment is made.

[44] The texts of cl 1.6 and cl 1.7 operate upon the "Schedule of Payments at Schedule 1". That schedule is set out below:

**[45] The JPCPN for the amount of US$266,984,688, Version D provides as follows:

Joint Principal Contractor Payment Notice in respect of Principal Contractor Claim Number 163

Amended and Restated Operating Agreement Mining Services

In accordance with the Amended and Restated Operating Agreement Mining Services between the Company and PT Thiess Contractors Indonesia dated 9 February 2009 and clause 10.1(vi) of the Cash Distribution Agreement dated 27 June 2008, we hereby jointly confirm payments and transfers as follows:

c) The Total Principal Contractor Claim Amount: 266,984,688

d) The Confirmed Principal Contractor Payment: 259,722,724

f) The Confirmed Principal Contractor Withholding Tax: (7,261,964)

i) The Confirmed Priority Contractor Payment: 259,722,724

j) The Confirmed Non Priority Contractor Payment: Nil

The Joint Principal Contractor Payment Notice sets out the basis of distribution of the Total Principal Contractor Claim Amount as set out in the abovementioned Principal Contractor Claim.

[46] Neither party submitted that the fact that the DOSAT is dated 23 December 2013 explains the exception, in the first paragraph of cl 1.6, of the payment due in November 2013 from the requirement that the defendant will ensure that all amounts payable to the plaintiff under the DOSAT are paid by 2:00pm on the relevant date specified in Schedule 1. It is clear enough, in my view, that the exception of the payments due in November and December 2013 operates to permit payment to be made in accordance with the second paragraph of cl 1.6.

[47] Next, the second paragraph of cl 1.6 operates to require payment of the amount of US$10,000,000 or US$20,000,000 by 31 December 2013. Although that paragraph refers to a minimum of US$10,000,000 "and up to" US$20,000,000, the attached JPCPNs contemplate that the amount to be paid would either be US$10,000,000 or US$20,000,000. It is not necessary to explore this variance in the text further.

[48] Third, the amount of the balance of the payments due in November and December 2013 were to be paid by 2:00pm on 31 January 2014, along with the payments due in January 2014 marked in Schedule 1. That was a total of US$54,750,000, less a minimum of US$10,000,000. That payment did not occur.

[49] Fourth, the amount of US$222,234,688, including US$1,694,033 for Interim Works, was to be paid as part of the January amounts. They were to be paid by the defendant, or a Buyer in lieu, as to part of the amount of US$194,365,052 for plant and equipment, including inventory. If the payer was the defendant, that sum was to be paid by 2:00pm on 31 January 2014. That payment did not occur.

[50] Under Schedule 1, the only amount that was to be paid after 31 January 2014 was the amount of US$1,410,644 in February 2014 for Interim Works. All other sums were to be paid by 31 January 2014.

[51] The plaintiff's claim for US$265,290,655 is calculated as follows:**

**[52] The principal dispute emerges from the text of the third paragraph of cl 1.6. It provides that "all other amounts payable to the PSC under this Deed by the Company will be paid through the payment mechanisms of the AROAMS and the Cash Distribution Agreement" (emphasis added). It also provides that "the requisite paperwork to make this happen is attached ... at Schedule 2 ... and is in the form of JPCPNs under the CDA".

[53] If the payment of US$10,000,000 is treated as having been made on or before 31 December 2013 (it was in fact paid late), cl 1.6 provides that the JPCPN to be used is Version D, because no payment was received from a Buyer by 21 January 2013. In that case, the defendant was to purchase all inventory and plant and equipment.

[54] From that factual context, it can be seen that the reference in the third paragraph of cl 1.6 to "all other amounts" which will be paid through the payment mechanisms of the AROAMS and the Cash Distribution Agreement includes the amount claimed by the plaintiff, before interest. As appears above, that amount was made up of the Claims Settlement Sum, the Early Termination Sum, including the inventory, and the purchase prices of the plant and equipment.

[55] The defendant's principal contention is that because of the text of cl 1.6 highlighted above, the plaintiff's only right was to submit a relevant JPCPN such as Version D, putting Interim Works to one side. The defendant submits that, having paid the minimum amount of US$10,000,000, it has no obligation to pay any sum outside the payment mechanism of the CDA.

[56] The reference in the third paragraph of cl 1.6 to the payment mechanism of the AROAMS may relate to the Interim Works. Clause 7.3 of the AROAMS provides that in consideration of the plaintiff providing the Services in accordance with the AROAMS the defendant agrees to pay the Services Fee. Clause 7.4 provides for the plaintiff to make a monthly "Payment Claim" for the Services Fee. None of that has anything to do with payment of the Claims Settlement Sum, the Early Termination Sum (including the price of the inventory) or the prices for the plant and equipment under the DOSAT. None of those sums depended on any work being done by the plaintiff or the value of the work under the AROAMS. As there is no claim for payment for Interim Works now made, that aspect of cl 1.6 may be put to one side.

[57] Let it be assumed, for present purposes, that the plaintiff had issued Version D to the Cash Management Agent and SCB earlier than two days before the end of January 2014. Let it also be assumed that no sum was deposited into the Arutmin Thiess Payment Account. That is to say, the plaintiff received nothing. These are not the true facts. But they serve to test the question of construction raised by the defendant.

[58] The defendant submits that payment through the mechanisms of the CDA involves the execution of Version D as a JPCPN and giving it as a joint notice under cl 10.1(vi) of the CDA. As previously mentioned, 2 business days prior to the end of the month of January 2014, the defendant and the plaintiff could have elected to give a joint notice in the form of a JPCPN to the Cash Management Agent (Bank of New York Mellon) and SCB. The defendant submits that giving a JPCPN constitutes the whole of its obligation to pay "all other amounts" under the DOSAT. The CDA "takes care of the rest."

[59] How this works was not explained. But on the face of it, the consideration moving from the plaintiff under the DOSAT is exchanged for the execution of the promise to give a joint notice in the form of Version D to SCB (and the Cash Management Agent), subject to the operation of some other terms of the DOSAT. They include that:**

(a) under cl 1.6 of the DOSAT if the November 2013 and December 2013 payments referred to in Schedule 1 are not paid in full by 31 December 2013, interest became payable on the shortfall at 10.4 per cent per annum;

(b) also under cl 1.6 of the DOSAT, if the shortfall is not paid by 15 February 2014, the interest rate from that date increased to 18 per cent per annum;

(c) under cl 1.7 of the DOSAT, any amounts unpaid and owed in accordance with Schedule 1 after 31 January 2014 ("Overdue Amount") will be subject to interest payments to be paid monthly at a rate of 10.4 per cent per annum;

(d) also under cl 1.7 of the DOSAT, if an Overdue Amount is still not paid by 16 March 2014 by the defendant, it will be subject to interest payments at the rate of 18 per cent per annum; and

(e) further under cl 1.7 of the DOSAT, if an Overdue Amount is still not paid by 30 April 2014 by the defendant, it will be subject to interest payments and the plaintiff may call on the corporate guarantee referred to in cl 1.8.

**[60] As well, under cl 2.2 of the DOSAT, payment in full of the Claims Settlement Sum, the early Termination Amount and all other sums payable to the plaintiff under the DOSAT, including the purchase of plant and equipment, is a condition precedent to the plaintiff's release of the defendant from all liabilities in respect of all Claims arising from the Court Proceedings and the Proposed Claims. There is a similar provision in cl 4.3 of the DOSAT for the agreement to terminate the AROAMS and the DARSA on 31 January 2014, to operate as and when payment is made of the sums payable under that clause.

[61] The defendant submits, in effect, that the plaintiff conditionally agreed to compromise the Court Proceedings and the Proposed Claims, agreed to transfer the inventory and plant and equipment to the defendant (or some of it to a Buyer), agreed to the terminate the AROAMS and DARSA and agreed to release and discharge the defendant from all liabilities other than breaches of the DOSAT itself, in exchange for no actual payment or any right to payment as against the defendant, beyond the minimum initial amount of US$10,000,000.

[62] It is a consequence of the defendant's preferred construction that if the defendant does not cause amounts to be paid into the Collection Accounts to be distributed to the Arutmin Primary Accounts, the plaintiff has no right to payment as against the defendant. The defendant does not accept that it was obliged to the plaintiff to make any payment into the accounts under the CDA so as to fund payments under the DOSAT, either within a reasonable time or at all. It denies the plaintiff's allegation that on the proper construction of the DOSAT, the defendant was required to ensure that there were sufficient funds held by SCB on account of the defendant to enable SCB to transfer the amount of the payments to the plaintiff in accordance with the CDA. It did refer to the provision in cl 2.2 of the CDA that the defendant agrees, in effect, to ensure that all of its income and revenue including the proceeds it obtains from the sale of coal are paid into the Collection Accounts established and managed under the CDA. But the plaintiff is not a party to the CDA.

[63] The defendant submits that its preferred construction should be adopted because the parties were aware of the mechanisms for payments to be made under the CDA and that payments were to be made from the proceeds of sale of coal from the mines. However, the agreed facts include that there was no possibility that coal sales from the Senakin, Satui or Mulia mines could do that in the times provided for under Schedule 1.

[64] The plaintiff urges a contrary construction of cl 1.6. It submits that the promises in cls 2.1, cl 4.1 and cl 5 that the defendant "will pay" the relevant sums and amounts, all in accordance with cl 1.6, are informed by the provision in the first paragraph of cl 1.6 that the defendant "will ensure that all other amounts payable to the [plaintiff] under this Deed are paid to the [plaintiff] by 2:00pm on the relevant date ...". The plaintiff submits that the promise to ensure payment reinforces that the promises that the defendant "will pay" in the operative clauses are promises to make the payments, not just a promise to execute documents in the form of a JPCPN to be submitted to SCB, without any further obligation to see that the payments are made.

[65] The plaintiff further submits that conclusion is reinforced by the language of cl 1.7 that "any amounts unpaid and owed in accordance with Schedule 1 of this Deed to the [plaintiff] after 31 January 2014 ... will be subject to interest payments, which shall be paid by [the defendant] to the [plaintiff] monthly, at a rate ... until the date payment is made."

[66] I note that under the fourth paragraph of cl 1.7 the AROAMS and DOSAT continue in full force and effect until the sums due under the DOSAT are fully paid.

[67] In my view, the defendant's preferred construction should be rejected. It is singularly unbusinesslike. The whole purpose of the DOSAT was to resolve and to bring the disputes and the relationship between the parties to an end.

[68] The defendant's preferred construction does neither of those things, unless a condition, that there are sufficient proceeds of sales of coal paid into the Collection Accounts and then distributed to the Arutmin Thiess Primary Accounts, is first satisfied.

[69] The defendant's preferred construction operates so that the plaintiff takes the commercial risk whether or not the defendant causes amounts to be deposited into the Arutmin Collection Accounts or the Arutmin Thiess Primary Accounts sufficient to meet the promises of payment made under the DOSAT.

[70] The defendant supports its preferred construction by submitting that the agreement for performance of Interim Works under the DOSAT shows that the parties intended that the resumption of mining operations would provide cash flow for the payments that were to be made. That submission should be rejected. No such common intention or knowledge was proved. The Interim Works provided for under the DOSAT were necessarily of a limited kind, given their agreed value. Whether or not they may have released some coal from the halted production process so as to be available for sale is not clear.

[71] In any event, the parties have agreed for the purposes of this proceeding that there was no possibility that monies which the defendant might derive out of the proceeds of sale from the suspended mining operations would be sufficient to pay the monies provided for by the DOSAT within the times provided. Thus it cannot be shown that it was a common understanding that the Interim Works would enable the payments provided for in Schedule 1 to be made.

[72] Otherwise, the defendant's preferred construction relies principally on the effect of the text in cl 1.6 that all other amounts "will be paid through the payment mechanisms of the AROAMS and the Cash Distribution Agreement." As a separate piece of text, the question is whether those words provide, as the defendant submits, only for a right to a chance of payment, rather than an agreed method to achieve a promised payment. In support of its preferred construction, the defendant deploys a range of subsidiary or supporting points.

[73] It submits that the provision in cl 1.6 for the plaintiff to terminate the DOSAT if the initial payment of at least US$10M was not made on time is to be contrasted with the absence of any right to terminate for failure to pay "all other amounts". The plaintiff is entitled to interest on such amounts if not paid on time. This is said to indicate an awareness and acceptance that the payments of "all other amounts" might not be made on time. In my view, these points are of no importance. First, the initial payment may have been viewed as being an important first step, or earnest of future performance. Second, under cl 8.3 of the DOSAT, time was of the essence, so the assumption that the plaintiff would have no future right to terminate for failure to make payments of other amounts on time is not established. Third, these points do not go directly to whether the plaintiff's only right to payment for "all other amounts" is to submit a JPCPN under the CDA.

[74] Next, the defendant submits that cl 1.6 only provides for one means of payment of the sums which constitute "all other amounts" - through the mechanisms of the CDA - and there is no basis in the text or context of the DOSAT to construe or infer an obligation to make payments directly to the plaintiff. I do not agree. As previously mentioned, there are a number of indications in the text of the DOSAT that the defendant promises that the agreed payments will be made. Also, the context in no way suggests that the purpose of the DOSAT in relation to the payments is that the defendant is not to be personally liable for the agreed payments.

[75] The defendant also submits that its construction is preferable because it provides for a mechanism by which withholding tax is deducted and paid as contemplated by cl 1.5 of the DOSAT. I accept that Version D of the JPCPN (and the other versions) provides for the amount of withholding tax to be deducted from the payment to be made to the plaintiff and that the CDA provides for the payment of withholding tax. But, in my view, that facility does not speak to whether or not the defendant promises to make the payments for "all other amounts".

[76] The defendant further submits that the context and the commercial background of the DOSAT are consistent with the parties adopting an established means of payment through the AROAMS and the CDA. I agree. Once it is appreciated that the defendant had promised under the CDA to pay all its income into the Collection Accounts, there was every reason for the parties to adopt the mechanisms of the CDA as a basis for payments. But the defendant's preferred construction goes much further than that. It is founded on the conclusion that the defendant does not promise to make the agreed payments. That is, the defendant only promises to agree to the plaintiff lodging a JPCPN under the CDA for those payments but it is not obliged further in respect of them. By way of contrast, the plaintiff's right to payment of the Services Fee under the AROAMS does not depend on the CDA. It is expressly provided for by cl 7.3 of the AROAMS.

[77] The defendant submits that this is not a case where on its preferred construction the obligation to make a payment is conditional upon performance of a step which was within its power to perform. I do not agree. In my view, the utility of the mechanism under the CDA depended on the defendant performing the step of causing sufficient money to be deposited into the accounts under the CDA to fund the payments of "all other amounts". Similarly, in my view, payment under the mechanisms of the CDA was payment out of a fund which it was in the defendant's power to create, by causing the required funds to be deposited. For the same reason, because the defendant did not place the accounts in funds, it should be seen to be in default to the extent that the use of the contemplated mechanism of the CDA for payment failed.

[78] The defendant also relied on the charge that the plaintiff has over funds in the Arutmin Thiess Primary Accounts under the CDA. That security operates upon an amount that is distributed to the Arutmin Thiess Primary Accounts from the Collection Accounts but not paid to the Arutmin Thiess Payment Account.

[79] This argument relates to the operation of the JPCPNs under the DOSAT and the CDA. Version D provides, in part:

"c) The Total Principal Contractor Claim Amount 266,984,688

f) The Confirmed Principal Contractor Withholding Tax (7,261,964)

i) The Confirmed Priority Contractor Payment 259,722,724

[80] Nothing in Version D would engage the provisions for distribution to the Arutmin Thiess Primary Accounts but not result in a payment to the Arutmin Thiess Payment Account of the Confirmed Contractor Priority Payment of $259,722,724 and payment of the Confirmed Principal Contractor Withholding Amount. There is no apparent reason why the plaintiff would have relied on the possibility of security over a sum distributed to the Arutmin Thiess Primary Accounts for the payments required under Version D (or the other JPCPNs). It is not an apparent explanation for the parties' agreement in cl 1.6 that all other amounts to be paid would be paid through the payment mechanisms of the CDA.

[81] Lastly, the defendant relied on the decision of the High Court in Hart v McDonald.[1] In that case, the buyer of equipment to be used to produce butter promised to pay the price from the proceeds of sales of butter produced by using the equipment. The High Court held that there was a condition precedent to the seller's right to be paid, that a reasonable time had elapsed for the butter to be produced. In my view, the circumstances in that case do not assist in the present case. The defendant submits that the circumstances in the present case were that coal could not be sold because the plaintiff had suspended the Services provided under the AROAMS and had obtained an injunction preventing the defendant from performing the Services. In other words, and consistently with the agreed facts, it is not shown that the parties expected that the defendant's income from coal sales would fund the agreed payments within the agreed times. There is no factual basis to support an implied condition precedent of the kind that was found in Hart.

[82] The plaintiff relied on a number of cases that consider the operation of different payment mechanism provisions.[2] It is not usual in business for a supplier to agree that payment for goods or services supplied will only be made if the buyer's business is successful enough. But it depends on the terms of the contract. Somewhat similar considerations can come into play where a price fixing mechanisms fails.[3] However, in construing the DOSAT, it would be an error to pay too much attention to other particular cases as comparators.

[83] In my view, the difficulty in construing the present contract is not great. An objective approach is required, having regard to the relevant genesis, background, context and market, so as to understand the surrounding circumstances known to the parties and the commercial purposes to be secured by the DOSAT. By the text of the relevant provisions of the DOSAT, did they intend that the plaintiff's only right to payment, for each of the "all other payments" (referred to in the third paragraph of cl 1.6), was that provided for under the mechanisms of the CDA? Did they intend that the plaintiff's entitlement to be paid could only be carried into effect by a JPCPN given under the DOSAT and CDA? Did they have that intention, knowing that if, for any reason, the requisite funds are not distributed to the Arutmin Thiess Primary Accounts for transfer to the Arutmin Thiess Payment Account, the plaintiff would have no right to payment from the defendant?

[84] In my view, the answer to those questions is a resounding "no". A reasonable businessperson would not have understood cl 1.6 to mean those things. The primary promises are that the defendant "will pay" the relevant sums. Although that is to be "in accordance with cl 1.6", where cl 1.6 stipulates the timing and amounts of the payments to be made, cl 1.6 also provides that the defendant "will ensure" that amounts payable "are paid" and cl 8.3 of the DOSAT makes time of the essence for the relevant payments. Notwithstanding that the mechanisms of the CDA are to be used for the payments of "all other amounts", the defendant's promise is that the payments will be made.

[85] In context, the word "ensure" in cl 1.6 connotes a promise to pay. In part, it might have operated as a guarantee of payments to be made by a Buyer, if one had been introduced. But that did not happen.[4] On the facts, it does not signify a promise as surety, because the primary obligor is the defendant, not a third party. It does not signify a promise of indemnity for loss, because the promise is that the payments will be made. The defendant submits that the words "are paid to the PSC by 2:00pm on the relevant date" connote a promise as to when the payments will be made. But the distinction is one without a difference, if the defendant is making a promise that the payments will be made on time. The defendant's case is that the CDA "ma[d]e automatic provision for the payment" and "lodgement of appropriate documentation under the CDA constitutes the whole of its obligation. The CDA takes care of the rest." If the CDA does that, the defendant did not explain the commercial purpose of the express promise in cl 1.6 to ensure that all amounts are paid on the relevant date.

[86] To succeed on the argument for its preferred construction, the defendant needs the provision in cl 1.6 that amounts are to be paid "through the payment mechanisms of" the CDA to negate the ordinary meaning of the words "the Company will ensure" in cl 1.6 and the ordinary meaning of the words "the Company will pay" in the operative provisions in cls 2.1, 4.1 and 5. In my view, they do not.

[87] Clause 1.6 also provides for interest to be paid, as does cl 1.7. Those provisions operate on the footing that payments provided for by Schedule 1, but not made, are "due" or "unpaid and owed" or become "overdue". Further, cl 1.8 contemplates a corporate guarantee to secure the payment of all amounts "due" under the DOSAT. Those clauses do not refer to amounts not yet distributed to the Arutmin Thiess Primary Accounts or not yet transferred to the Arutmin Thiess Payment Account. The defendant's submissions accept that where the payments provided for in Schedule 1 are not made in accordance with mechanisms of the CDA those amounts are subject to interest payments, but do not explain why interest is payable by the defendant monthly although "all other amounts" are not payable by the defendant.

[88] In my view, the promise to ensure that all other amounts payable are paid by the stipulated time is a contractual promise by the defendant to see that the promised payments are made. In my view, it should be read in conjunction with the provisions in cls 2.1, 4.1 and the various parts of cl 5 that the defendant will pay relevant sums, as constituting a promise by the defendant to pay those sums as debts due and owing at the relevant dates.

[89] The plaintiff's claim is for failure to pay a promised amount of United States dollars. That follows from the statement of claim. In par 4, the plaintiff alleges that the defendant covenanted and agreed to pay the claimed amounts. Paragraphs 8 and 9 allege that the defendant has paid only the amount of US$10,000,000. Paragraph 11 alleges that the plaintiff's claim is for principal and interest due under the covenants of the DOSAT.

[90] A claim for a money amount alleged to be due and owing under a contract is in law a claim for a debt. The defendant submits that the plaintiff's claim is limited to one made in debt. However, I found some of its submissions on this point, or the significance of the distinctions it sought to make, difficult to follow.

[91] First, the distinctions between the old forms of action in debt and indebitatus assumpsit are irrelevant for present purposes. It matters not whether the plaintiff's claim is characterised as based on a breach of contract by wrongful withholding of money that the defendant promised to pay to the plaintiff or a claim upon the contract for a promise to pay made under seal. The defendant did not seek to re-argue Slade's Case.[5] Although both sides made lengthy submissions about the nature of a claim in debt, by reference to the leading cases including Young v Queensland Trustees Ltd[6] and Ogilvie v Adams,[7] I find it unnecessary to expand on that topic at all.

[92] Neither side made submissions about the nature of a claim for an amount owing in a foreign currency or the court's ability to give judgment expressed in a foreign currency. In Jolley v Mainka,[8] Dixon J, in a statement that was obiter, analysed a claim for foreign currency thus:

"But, if the obligation undertaken was to pay or deliver foreign money or coins in use as money, not being lawful money of the Kingdom, no debt was created. An action for their recovery lay, but it was necessary to bring it in the detinet and not in the debet and detinet, that is, it was in the nature of detinue and not of debt proper. Further, it appears to have been considered that the obligation could not be discharged except according to its tenor - see Ward v Kidswin (or Kedgwin)."

[93] Against that, in Miliangos v George Frank Textiles Ltd,[9] Lord Wilberforce analysed the early cases in some detail and said that the cases up to Ward v Kidswin in 1626:

"...allow[ed] claims to be made and enforced in various forms and showing a good deal of flexibility, or blurring, in the forms of action, debt, detinet, debt in the detinet, debt and detinet, being among the forms admitted... The most respectful adherent to tradition and legal history can find nothing decisive here."[10]

[94] From the late nineteenth century until the 1970s, it was thought that the court could not pronounce a judgment for a money sum in a foreign currency.[11] As Lord Denning described it in Re United Railways of Havana and Regla Warehouses Ltd:[12]

"If the trust company had sought to recover judgment in the United States, it would, I presume, have been able to sue there for a debt in dollars. But it cannot sue here in debt. There is no sterling debt. Its claim must be in damages. It must claim damages for breach of contract because of the non-payment of dollars in the United States."[13] (emphasis added)

[95] It is unnecessary to further consider the extent of the accuracy of that statement of law when it was made in 1961. At common law, it is no longer the position in this country. In Australian and New Zealand Banking Group Limited v Cawood[14] and European Asian Bank Aktiengesellschaft v Katsikalis[15] this court accepted, contrary to United Railways of Havana, that it could pronounce judgment in a foreign currency upon a claim to recover a loan made in a foreign currency. Recent statute law relating to the registration of foreign judgments also proceeds on that basis.[16] Such a claim is not distinguishable in nature from the plaintiff's claim in this case; as a further example, Miliangos v George Frank Textiles Ltd[17] was a claim for the price of goods sold in a foreign currency.

[96] Second, although the promises of payment made in cl 5 of the DOSAT are for the purchase of plant and equipment, it is clear that the sums are to be paid before the plaintiff is required to transfer title or to deliver the plant and equipment to the defendant.

[97] An agreement to sell is one form of "contract of sale of goods"[18] within the meaning of the Sale of Goods Act 1896 (Qld). Under s 30 of that Act, "unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions" of such a contract. Where they are the conditions, on the failure of the purchaser to complete an executory contract, the vendor is not entitled to sue for the purchase money as a debt.[19] But the parties may agree otherwise. At common law, that rule is also "excluded whenever a contrary intention is shown by the express terms of the contract".[20]

[98] Not all of the sums to be paid under the DOSAT claimed by the plaintiff are payments of the price for an agreement to sell goods. The payments provided for in cls 2.1 and 4.1 are not, except for the amount of US$23,523,052 for inventory included in the Early Termination Sum under cls 4.2c and 4.6. However, the payments provided for in cls 5.1, 5.2, 5.3, 5.4, 5.5 and 5.6 are all sums the defendant "will pay" as "the purchase price" of plant and equipment the defendant "will purchase" under those clauses.

[99] In each instance, the requirement is that the payment be made "in accordance with cl 1.6". Clause 1.6 provides for specific times by which the payments are to be made and does not provide for the exchange or delivery. Instead, for example, cl 5.3 provides for the plaintiff to pay out the residuals on the Schedule 9 leased equipment "upon full payment", not before. Clause 5.6 makes similar provision for the Schedule 12 leased equipment. Further, cls 5.2, 5.3, 5.5 and 5.6 specifically provide for vesting in the defendant of title to the plant and equipment to which they relate "upon full payment".

[100] In my view, those provisions are an agreement that delivery of the goods and payment of the price are not concurrent conditions.

[101] Notwithstanding these points, the defendant seeks to draw a distinction between the payments promised under the DOSAT and an obligation to pay a debt or a liquidated amount. The defendant submits that it is not open on the express words of the DOSAT to construe cls 1.6 or 1.7 as creating a liability to pay a fixed or quantifiable sum as a debt or liquidated demand. But this point is just a restatement of its preferred construction argument. Next, the defendant submits that the claim is not for a debt or sum certain because, in practice, it is tied to coal sales. This, too, is not separate from the defendant's preferred construction argument.

[102] Third, the defendant submits that the amount of the alleged debt or liquidated demand is uncertain because of the need to calculate withholding tax.

[103] The defendant relies on cl 1.5 of the DOSAT. That clause provides:

"1.5.Amounts Stated in Deed Exclude VAT but include WHT

All amounts stated in this Deed exclude VAT, PPN or any other sales related taxes or duties that may be payable but includes all taxes or duties relating to income. If any VAT, PPN or other sales related taxes or duties are payable they will be paid to the PSC by the Company together with the corresponding payment. If any VAT, PPN or other taxes or duties are required to be withheld or remitted by the PSC and if the Company has not paid them to the PSC then the Company will pay them to the PSC within 7 days of demand for payment by the PSC, subject to the PSC providing all necessary documentation in support of its demand.

Any payment made by the Company to the PSC will be released after deduction of WHT as per the applicable Law in force."

[104] The defendant submits that the requirement that any payment to the plaintiff is to be released after deduction of WHT as per the applicable law in force makes the sum to be paid uncertain.

[105] In my view, withholding tax is a deduction to be made from some of the amounts to be paid. For example, a specific sum is set out in Version D as the Confirmed Principal Contractor Withholding Tax set out previously. But nothing makes the amount uncertain.

[106] The defendant also refers to several cases that consider the appropriate way to deal with the incidence of particular taxes in different contexts in giving judgment for a money sum amount. However, none of those cases was concerned with a contention that the incidence of tax destroys or affects the nature of a claim in debt and they do not need to be dealt with at this point.

[107] In my view, the defendant's argument on this point should be rejected. The requirement to observe a law requiring a deduction to be made from any actual payment does not affect the obligation to pay an agreed amount so as to destroy its character as a debt or liquidated demand upon which the obligee may sue. No authority was cited to suggest that it did.

[108] Fourth, the defendant submits that the provision in cl 1.6 that in no circumstances shall the aggregate amount payable to the plaintiff for the purchase of inventory and plant and equipment exceed $194,365,052, in accordance with clauses 4.2c, 5.4, 5.5 and 5.6, renders the amount to be paid uncertain. The argument has two steps. The first step is that $194,365,052 is an amount in Australian dollars. In my view, that is incorrect. I deal with the argument on that point later. But even if I am wrong, the second step is that the Australian dollar amount will fluctuate as against the US dollar amounts payable with the movement of the currency exchange rate between the US dollar and the Australian dollar. I found this point impossible to follow. The cases dealing with giving judgment in Australian dollars for an amount expressed in a foreign currency or giving judgment for a money sum expressed in a foreign currency were not referred to. In my view, the submission should be rejected.

[109] I reject the defendant's submissions that the plaintiff's claim in debt must be dismissed because it is not for an amount in the nature of a debt or a liquidated demand.

Failure to lodge the JPCPN as a condition precedent

[110] The defendant pleads that there are a number of conditions precedent to any obligation to pay the amounts claimed.

[111] First, par 4(b)(v) of the defence alleges that by cl 4.2(d) of the DOSAT it is a condition precedent to payment of the Early Termination Sum that the plaintiff provide reasonable details of the improvements to fixed infrastructure.

[112] However, the defendant did not allege that the plaintiff failed to provide the details in the defence or submit that the condition was not satisfied.

[113] Second, par 4(f)(iv) of the defence alleges that on the proper construction of cl 5.4 of the DOSAT, payment of the purchase price for Other Ancillary Plant and Equipment was subject to a condition precedent that the plaintiff provide a register in MS-EXCEL format by 1 December 2013.

[114] However, the defendant did not allege in the defence that the plaintiff failed to provide the register or submit that the condition was not satisfied.

[115] Third, par 5(b) of the defence alleges that by cl 1.5 of the DOSAT the plaintiff must make a demand for payment (for VAT, PPN or other taxes or duties) and provide the defendant with all necessary documentation in support of its demand.

[116] However, leaving aside the subject of withholding tax, the defendant did not allege in the defence that there was any failure to make a demand within the meaning of this provision or submit that any condition in relation to it was not satisfied.

[117] Fourth, par 11(a)(iii) of the defence alleges that the obligation to pay amounts through the mechanism of the AROAMS and the CDA required the plaintiff and the defendant to execute and provide a JPCPN to SCB in accordance with the CDA.

[118] In the result, only the last point was apparently pressed by the defendant.

[119] The parties did execute Version D of the JPCPNs attached to the CDA. But they did not provide it to SCB.

[120] On 21 January 2014, there was an Arutmin-Thiess Project Management Group Meeting held between the parties under the AROAMS. Mr Jain on behalf of the defendant requested that the plaintiff not present a JPCPN under the CDA to SCB in accordance with the DOSAT as there was no money in the CDA bank accounts. He said that the defendant could arrange payment by separate means. He asked whether that was acceptable to the plaintiff.

[121] On 22 January 2014, in a telephone conversation between Mr Jain and Mr Sijercic on behalf of the plaintiff, Mr Sijercic said that the plaintiff would not submit the JPCPN as requested by the defendant.

[122] On 29 January 2014, Mr Jain sent an email to Mr Olsen stating that the defendant planned to pay the remaining sum owed under the DOSAT by the end of February 2014.

[123] Clause 1.6 required that the parties or either of them lodge a JPCPN under the CDA for the payments that were to be made on or after 31 January 2014. In my view, the defendant's conduct in requesting that a JPCPN not be lodged and in representing that payment would be arranged by separate means sought to vary or depart from those agreed arrangements.

[124] If the proper construction of cl 1.6 is that lodgement of a JPCPN is a condition precedent to the plaintiff's entitlement to be paid any other amount than the minimum of US$10,000,000 or US$20,000,000, the condition is one capable of variation by the parties. Further, if it is a condition solely for the benefit of the defendant (in my view it is not), it is capable of being waived by the defendant.

[125] On the facts, the parties plainly agreed to vary the operation of the provisions for lodgement of a JPCPN at the end of January 2014, or the defendant elected to waive the condition. The defendant did not plead the variation as a variation of the terms of the DOSAT. Instead it alleged that the same facts amounted to a basis for an estoppel precluding the defendant from relying on any requirement or failure to lodge a JPCPN. But in this sort of context, as Lord Denning said in Amalgamated Investment & Property Co Ltd (in liq) v Texas Commerce International Bank:[21]

"To use the phrase of Latham CJ and Dixon J in the Australian High Court in Grundt Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 the parties by their course of dealing adopted a 'conventional basis' for the governance of the relations between them, and are bound by it. I care not whether this is put as an agreed variation of the contract or as a species of estoppel. They are bound by the 'conventional basis' on which they conducted their affairs. The reason is because it would be altogether unjust to allow either party to insist on the strict interpretation of the original terms of the contract when it would be inequitable to do so, having regard to dealings which have taken place between the parties."[22]

[126] The plaintiff alternatively alleges and submits that if the proper construction of cl 1.6 is that lodgement of the JPCPN is a condition precedent to the plaintiff's entitlement to be paid, the failure of the condition was brought about by the defendant's default in failing to place the CDA accounts in funds and the defendant is thereby precluded from relying on the failure of the condition.

[127] The plaintiff further alternatively alleges and submits that it was an implied term of the DOSAT that the defendant would place the CDA accounts in funds to make the payments required under cl 1.6. and that the defendant's failure to place the CDA accounts in funds to meet the JPCPN was a breach of the implied term. Accordingly, the plaintiff alleges that the defendant's breach of contract in failing to place the CDA accounts in funds caused the plaintiff to lose the amounts of the payments that were to be made.

[128] In my view, it is unnecessary to resolve these alternative arguments as I have found that either the parties expressly agreed to vary the arrangement or the defendant expressly waived any condition requiring the lodgement of a JPCPN.

[129] As an alternative defence or partial defence, the defendant alleges and submits that the provision in cl 1.6 of the DOSAT that:**

"[u]nder no circumstances shall the aggregate amount payable to the PSC by the Buyer and/or the Company for the purchase of the said inventory (excluding processing and port) and plant and equipment (excluding processing and port) exceed $194,365,052 in accordance with clauses 4.2c, 5.4, 5.5 and 5.6,"

**has the effect that the aggregate amount payable under those clauses is no more than $194,365,052 Australian dollars.

Wherever in this Deed provision is made for the payment by one Party to another, such payment shall be made in US dollars."

[131] As well, each of the amounts referred to in cls 4.2c (US$23,523,052), 5.4 (US$8,578,000), 5.5 (US$64,022,000) and 5.6 (US$98,242,000) of the DOSAT is a sum expressed in United States dollars. The sum of those amounts is 194,365,052. Further the amount of 194,365,052 represents the sum of the amounts shown in the second last column of Schedule 1 to the DOSAT, as set out above, and appears as the grand total of these amounts in Schedule 1. All the amounts expressed in Schedule 1 are of United States dollars.

[132] All of those factors contextually support the construction that the amount of $194,365,052 is an amount of United States dollars.

[133] The defendant submits that it should be construed as Australian dollars, because the letters "US" do not appear in front of $194,365,052, whereas elsewhere in cl 1.6 they do. The defendant also relies on s 9 of the Currency Act 1965 (Cth). Under that section, unless a contract, agreement or deed relating to money is "made, executed, [or] entered into... according to the currency of some country other than Australia" it is made, executed or entered into according to the currency of Australia...".

[134] In my view, by cl 1.4, the DOSAT was clearly made according to the currency of the United States of America. All the matters of context mentioned above reinforce that conclusion. Once they are acknowledged, the defendant's contention that the amount of $194,365,052 is an amount in Australian dollars is seen to be baseless.

[135] As previously set out, both cl 1.6 and 1.7 provide for the payment of interest.

[136] Clause 1.6 provides for interest on the November and December payments due under Schedule 1. From the date payment was due, the unpaid amount of those payments bears interest at 10.4 per cent per annum. From 15 February 2014, the rate increases to 18 per cent per annum.

[137] Clause 1.7 provides that any amount unpaid and owed in accordance with Schedule 1 after 31 January 2014 is called an "Overdue Amount". It "will be subject to interest payments". The interest payments shall be paid "monthly, at a rate of 10.4 per cent per annum". Interest will apply from 1 February 2014 until the date payment is made. However, if an Overdue Amount is not paid in full by 16 March 2014, it will be subject to interest payments, which shall be paid monthly, "at a rate of 18 per cent per annum and interest at this rate will apply from 17th March 2014 until the date payment is made".

[138] The defendant contends that each of the provisions for the payment of interest at the rate of 18 per cent per annum is a penalty and unenforceable.

[139] The defendant is a major coal producing and exporting company in Indonesia. It has coal reserves of 397 million tonnes and probable coal resources of 2,377 million tonnes, excluding reserves.

[140] Although the defendant is a corporation, it is not a publicly listed company. It is described by its Chief Financial Officer as a joint venture between PT Bumi Resources Tbk and Bhira Investments Ltd. Their shareholdings in the defendant are held in the ratio of 70:30. PT Bumi Resources is Indonesia's largest thermal coal producer and exporter through its controlling interests in PT Kaltim Prima Coal and the defendant. Bhira Investments is a subsidiary of Tarta Power Company. Tarta Power Company Ltd is an Indian integrated power company.

[141] There are loans between the defendant and BT Bumi Resources. The defendant's financial statements are prepared and published on a consolidated basis. As at 31 December 2012 PT Bumi Resources owed approximately US$102,000,000 to the defendant.

[142] The terms of the DOSAT were negotiated between Mr Munro and Mr Olsen on behalf of the plaintiff and Mr Rathod and Mr Jain on behalf of the defendant. Mr Rathod was the President Commissioner of the Board of Commissioners of the defendant. He was also a Commissioner of the Board of Commissioners of PT Bumi Resources. He took the lead role in the negotiations for the defendant. Mr Munro took the lead for the plaintiff.

[143] During the course of the negotiations the defendant had access to and obtained legal advice from its in-house legal team.

[144] On 12 November 2013, Mr Munro sent an email to Mr Rathod attaching a draft of the DOSAT. It contained a statement about the claimed settlement sum that the plaintiff "also expects to be paid interest on the outstanding amounts at 18 per cent per annum commencing from 1 December 2013 until payment is made in full."

[145] On 18 November 2013, at a meeting between Mr Munro and Mr Olsen for the plaintiff and Mr Rathod and Mr Jain for the defendant, there was negotiation about the interest rate.

[146] Mr Munro's evidence was that Mr Rathod said words to the effect that he considered that the [18 per cent] interest rate was too high. Mr Munro said to Mr Rathod words to the effect that, based on the rates that Bumi was paying to other lenders, a rate of 18 per cent should apply to overdue amounts under the settlement deed. He said that the Thiess group's expectation is a return of at least 10.4 per cent on overdue payments. He says that Mr Rathod raised a concern about paying 18 per cent interest if the defendant was only slightly delayed in making payment. He says that they discussed and agreed that a reduced rate could apply for any immaterial delays but that he insisted on 18 per cent for material delays. He says the word penalty was not used by any person at the meeting. I generally accept his evidence to this extent.

[147] Mr Rathod and Mr Jain's evidence supports a substantial part of Mr Munro's account. According to them, either Mr Rathod or Mr Jain started negotiations as to the interest rate for a default by saying words to the effect that 18 per cent was too high. Mr Rathod says that Mr Munro made reference to the level of interest payable on the Country Forest Ltd Facility 2009 by PT Bumi Resources in the discussion. The rate of interest payable on that facility was subject to an overall internal rate of return of 19 per cent comprising interest (12 per cent per annum), premium, other amounts payable and a make-whole amount to provide the overall internal rate of return. Mr Munro said to Mr Rathod that the plaintiff's group expectation was for a return of at least 10.4 per cent per annum on overdue payments. Mr Rathod said to Mr Munro that he wanted a lower default rate of interest in the event that the defendant was only a few days late in payment. Mr Rathod suggested 10.4 per cent if payment was made within 45 days of 1 February 2014 and at 18 per cent thereafter.

[148] Although he did not say it to Mr Rathod, Mr Munro's view at the time was 18 per cent per annum more accurately reflected the costs and risks that the plaintiff would be exposed to for delay. Also, he did not want the defendant to owe the plaintiff money at a lower interest rate than it owed money to other creditors or lenders. That would make it more attractive to the defendant to pay lenders or creditors other than the plaintiff. Of course, the plaintiff would be an unsecured creditor. The defendant objected to the admissibility of Mr Munro's evidence as to his subjective view or intention.

[149] It is necessary to make a number of detailed findings about the application and content of the penalty doctrine to the interest provisions in cls 1.6 and 1.7 of the DOSAT and relevant surrounding facts. However, it may be helpful to begin with a summary of the important findings.

[150] The penalty doctrine operates both as a principle or rule at common law and as a principle or doctrine of equity, but there is no difference in their application to the present facts.

[151] Second, it is well established and uncontroversial that:

"a provision, that, if there be a failure in punctual payment, the rate of interest is increased with effect over the period in respect of which the interest is charged, has been regarded as a penalty ...".[23]

[152] Third, the reason is that "an increased interest rate type provision is always a penalty because by virtue of the increase it operates in terrorem to enforce punctual payment."[24]

[153] Fourth, the cases distinguish between a retrospective increase in the interest rate and a term which only prospectively increases the rate of interest from the date of default.[25] The latter type of term is not subject to automatic avoidance.

[154] Fifth, where automatic avoidance does not apply, the questions are whether the secondary stipulation of the higher interest rate is in the nature of security for and in terrorem of the satisfaction of the primary stipulation and the secondary stipulation imposes an additional detriment that is out of all proportion to the loss suffered by the obligee on the failure of the primary stipulation, or that is inordinate or extravagant or oppressive.[26]

[155] Sixth, the dichotomy of penalty and a genuine pre-estimate of damage is central to the operation of the penalty doctrine in its correct understanding. However:**

"The object and purpose of the doctrine of penalties is vindicated if one considers whether the agreed sum is commeasured with the interest protected by the bargain: Andrews (HC) at [75]; Dunlop at [91]-[93]; Clydebank at [15]-[17], [19] & [20]; Public Works Commission v Hills at 375-376. This is not to say that the inquiry is unconnected with recoverable damages; but the question of extravagance and unconscionability by reference, as Lord Dunedin said in Dunlop, to the greatest loss that could conceivably be proved to have followed from the breach, is to be understood as reflecting the obligee's interest in the due performance of the obligation; Public Works Commission v Hills at 375-276."[27]

"The requirement for extravagance and unconscionability and its distinction from a genuine pre-estimate of damage must require the latter concept to be a broad objective one, not limited to a clause expressly said to be a genuine pre-estimate of damage or containing a sum actually fixed in amount by reference to contemporaneous considerations concerned with such. Rather, if extravagance and unconscionability, on the one hand, and a genuine pre-estimate, on the other, are to operate as the relevant universe of discourse, the latter must be a descriptive phrase used to explain a sum paid upon breach of a term or pursuant to a collateral stipulation upon the failure of the primary stipulation that is not extravagant and not out of all proportion to the compensation for the breach or failure of the stipulation. The penal character of the provision is derived from the extravagance of the relationship between the payment and the possible loss capable of compensation. If there is no such extravagance present, the provision failure of which (by breach or not) admits of compensation is taken to be a genuine pre-estimate of damage, and not penal in character. This is so, even if the parties do not express the clause to be an agreed pre-estimate of damage and even if the parties did not negotiate or set the amount payable by reference to an estimate of damage."[28]

[157] Seventh, the onus to prove extravagance and exorbitance lies on the defendant.[29] The defendant submits that the correct approach is informed by the principle stated by Lord Mansfield in Blatch v Archer,[30] namely that "all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted".[31] They also rely on the similar approach of White J in Bay Bon Investments Pty Ltd v Selvarajah.[32]

[158] Eighth, the increased interest rate terms in cl 1.6 and 1.7 are not explained by the cost to the plaintiff of recovering the payments due or the cost of administering the debt in default. If recovery is assumed, they are not explained by the expectation of the plaintiff of the internal rate of return to be made on its funds. However, the plaintiff was not in the business of lending money. And default in payment affected the plaintiff's risk of recovery. Meanwhile, the plaintiff remained under and subject to the rights and obligations of the AROAMS and the DARSA. And an interest rate of 18 per cent was less than the cumulative internal rate of return being paid by PT Bumi Resources on the Country Forest Ltd Facility 2009.

[159] Finally, in those circumstances, the question is whether the defendant has discharged the onus of proving that the sum stipulated for is extravagant and unconscionable in amount in comparison to the greatest loss that could conceivably be proved or follow from the breach. In discharging that positive burden of proof, it is for the defendant to show that the rate of 18 per cent is an amount of that character, in the circumstances. In my view, the defendant did not discharge that onus.

[160] In the context of a commercial loan, terms that provide for a difference between the rate of interest to be paid if repayment is made on time, on the one hand, or late, on the other hand, are common. Such a term may be called an "increased interest rate term."

[161] The increased interest rate terms in cls 1.6 and 1.7 of the DOSAT do not operate in the context of a commercial loan. Instead, they operate in a two-stepped way. The first step is that if an agreed payment is not paid on the agreed date, interest is to be paid on it and the interest rate is 10.4 per cent per annum. The second step is that after a stated further period of non-payment, the interest rate from then (but not before) is 18 per cent per annum. Under cl 1.6, the further period of non-payment is to 14 February 2014 for the agreed payments to which it applies. Under cl 1.7, the further period of non-payment is to 16 March 2014 for the Overdue Amount to which it applies.

[162] In Queensland, the starting point to consider an increased interest rate term is Kellas-Sharpe v PSAL Ltd.[33] The claim in that case was to recover principal and interest under a short term commercial loan agreement. The increased interest rate term provided that the interest rate was 5 per cent per annum but that the lender would accept interest at 4 per cent per annum while the borrower is not in default. I will describe this as a "concessional interest rate term". The borrower's ground of appeal was that the Court of Appeal should decline to follow two centuries of case law that a concessional interest rate term does not attract the doctrine of penalties. The Court of Appeal held that it would not depart from such long-standing authority, particularly where it had been accepted by the High Court. As well, Gotterson JA expressed concern that the appellant's challenge to the application of the doctrine of penalties to a concessional interest term:

"...would challenge, if indirectly, the traditionally accepted limb of the rule that an increased interest rate type provision is always a penalty because, by virtue of the increase it operates in terrorem to enforce punctual payment."[34]

"Just as the doctrine now treats as a penalty and void a provision in which the rate of interest is increased upon a failure to pay promptly - independently of the actual rates of interest specified, their relativity with each other or their relationship to the lender's costs and potential loss exposure, so also a provision in which the reduced rate of interest is accepted for prompt payment would fall to be treated as a penalty and void - again, independently of the actual rates of interest specified, their relativity with each other or their relationship to the lender's costs and potential loss exposure."[35] (emphasis added)

[164] In support of that statement of the law, Gotterson JA had earlier referred to Astley v Weldon[36] and David Securities Pty Ltd v Commonwealth of Australia.[37]

[165] The defendant submits that, in accordance with the relevant principles drawn from Kellas-Sharpe, cls 1.6 and 1.7 operate as increased interest rate terms upon a failure to pay promptly with the consequence that, independently of the actual rates of interest specified, the 18 per cent increase is a penalty and void.

[166] However, in my view, that submission should be rejected. The reason is that the increase to 18 per cent under cl 1.6 and cl 1.7 does not operate retrospectively, but only prospectively, from expiry of the relevant further period of non-payment as stated above. There is a distinction to be drawn between prospective and retrospective increased interest rate terms.

[167] The distinction was recognised in David Securities Pty Ltd v Commonwealth of Australia.[38] The decision of the Full Court of the Federal Court of Australia in that case was overturned on appeal, but not on this point. First, a passage originally from that case that I have already set out above bears repeating, with appropriate emphasis:**

"On the other hand, a provision, that, if there be a failure in punctual payment, the rate of interest is increased with effect over the period in respect of which the interest is charged, has been regarded as a penalty."[39] (emphasis added)

"But what of a provision whereby the increase in the interest rate operates only from the date of default in payment, so that it does not extend back over the period in respect of which there accrued the primary interest which was not paid when it (and the principal) was due for payment? There is a long line of authority which indicates that the additional interest will not be considered as a penalty, but rather as a liquidated satisfaction fixed and agreed on by the parties as compensation for the lender being kept from his money."[40] (emphasis added)

**[169] The distinction has been recognised in other jurisdictions. It was discussed in detail in Lordsvale Finance plc v Bank of Zambia.[41] Colman J identified cases dealing with prospective increased interest rate terms in England, Canada, the United States and Australia (David Securities). All of these cases support the existence of a distinction between prospective and retrospective increased interest rate terms. Ultimately, his Honour held that:

"If the increased rate of interest applies only from the date of default or thereafter there is no justification for striking down as a penalty a term providing for a modest increase in the rate. I say nothing about exceptionally large increases. In such cases it may be possible to deduce that the dominant function is in terrorem the borrower."[42] (emphasis added)

[170] The distinction has been applied in two recent Queensland cases. In Beil v Mansell (No 2),[43] Chesterman J applied it, and accepted Colman J's analysis.[44] The claim was to recover principal and interest upon a commercial loan made for a property development project. Under the prospective increased interest rate term, on default, the rate of interest payable on the unpaid amount increased from 16 per cent per annum to 25 per cent per annum. His Honour said:

"I am concerned with a "typical penalty case". I think I should accept what was said by the court in David Securities and by Colman J. in Lordsvale Finance as correct. Clause 5 of the agreement will not therefore be a penalty merely because it stipulates for a higher rate of interest to be paid in the event of default. If, however, the increase is other than modest and cannot be explained by the greater risk to the lender in recovering his loan by reason of the default, or the cost of administering the loan in default, then the increase will not be justifiable."[45] (emphasis added)

[171] To similar effect, in Atia v Nusbaum,[46] Boddice J held that:**

"...if the increase is other than modest and could not be explained by the greater risk to the lender in recovering the loan or the cost of administering the loan in default, the increase would not be justifiable and an obligation to pay it would constitute a penalty and be unenforceable."[47] (emphasis added)

**[172] The defendant submits that the increase from 10.4 per cent to 18 per cent under cl 1.6 and 1.7 is "other than modest". It also submits that unless the increase is explicable by damage likely to be suffered by the plaintiff, it is a penalty. The defendant submits that in David Securities an increase of 1.5 per cent and in Lordsvale an increase of 1 per cent were not penalties, but in Beil an increase of 9 per cent (from 16 per cent to 25 per cent) was found to be a penalty.

[173] In the present case, the defendant seeks to further develop the submission that the increase of 7.6 per cent (from 10.4 per cent to 18 per cent) is other than modest by reference to evidence that:**

(a) the plaintiff's group costs of borrowed funds were less than 6 per cent per annum and in the range of 1.79 per cent to a high rate of 5.17 per cent; and

(b) the plaintiff's group hurdle rate of return on funds to be invested for making investment decisions was a minimum of 10.4 per cent per annum.

**[174] In my view, three points should be made about these submissions. First, and most importantly, the defendant's submissions do not acknowledge the relevance of the risk to the plaintiff of not being able to recover the payments due under the DOSAT.

[175] Under cl 2.2 of the CDA, the defendant agreed with a number of banks to deposit all its relevant income into the Collection Accounts. If the agreed payments are not paid under the mechanisms of the CDA, no other source of funds is expressly identified as the source of the payments due under the DOSAT, with the exception that it was envisaged that the defendant might (or might not) source a Buyer of the plant and equipment who also might become responsible for a substantial part of the payments.

[176] In the background circumstances referred to in the recitals to the DOSAT, there were several proceedings on foot where the plaintiff claimed substantial sums alleged to be payable but unpaid by the defendant. The provision of the Services by the plaintiff under the AROAMS had been suspended since April 2013. The defendant had contended, unsuccessfully, that the AROAMS (and the plaintiff's entitlement to any payment under it) had been frustrated.

[177] Objectively speaking, if the payments due under the DOSAT were not paid, the risk to the plaintiff of not being paid was apparent. The plaintiff would be an unsecured creditor of the defendant. By definition, some of the defendant's usual sources of payments from coal sales would not be available, because of suspension of the Services at the Senakin, Satui and Mulia mines. Although the DOSAT is a contract made with the laws of Queensland as the governing law, the defendant does not carry on business here.

[178] Second, in my view, the plaintiff's costs of borrowed funds are not greatly relevant. The plaintiff is not a financier and its interest in receiving the payments due under the DOSAT was not the same as that of a commercial lender. It did not agree to lend money to the defendant. On the contrary, the plaintiff's business is that of a supplier of mining services or equipment in the conduct of mining and associated operations. It would not be expected that the plaintiff would borrow money to lend to others. Its cost of funds borrowed is not directly relevant in the way that it is in the case of a financier or lender.

[179] Third, for a similar reason, the plaintiff's hurdle rate of return is also not directly relevant. The funds which the plaintiff deploys and the risks it takes in using its capital to perform services under a contract like the AROAMS, for example, are funds deployed and risks undertaken in the business activities of the supplier of those services. They do not relate directly to the risks or returns on a settlement contract like the DOSAT. Nor do they represent the business risks of a commercial financier on loans in default. The plaintiff did not have the security that a commercial financier would usually have to protect against those risks.

[180] In my view, neither Lordsvale nor Beil is a sufficiently analogous case to the present to enable the court to reason by simply comparing the increases in rates in those cases with the increase in rate in this case. In my view, in law, the correct approach requires that the circumstances of the present case be analysed against the principles restated in Andrews v Australian and New Zealand Banking Group Limited.[48] Those principles were recently further explored in a banking context in Paciocco v Australia & New Zealand Banking Group Ltd.[49]

[181] In Andrews, the High Court affirmed the continuing relevance of the formulation of the distinction between a penalty and a genuine pre-estimate of damage by Lord Dunedin in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd.[50] They also affirmed the characterisation that a penalty is in the nature of a punishment for non-observance of a contractual stipulation.[51]

[182] Lord Dunedin's famous speech included, as a test to aid the task of "construction" of the relevant provision, that it will be held a penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivable be proved to have followed from the breach.[52]

[183] In Paciocco the primary Judge had found that a bank's late payment fee was a penalty.[53] The breach of contract or primary stipulation which engaged the customer's contractual liability to pay the fee was failure to pay the agreed minimum monthly payment on time. The collateral stipulation was the payment of the late payment fee. The primary Judge found that the collateral stipulation was to be viewed as security for, or in terrorem of, the satisfaction of the primary stipulation.[54]

[184] The question of penalty or not then fell to be assessed by reference to whether the collateral stipulation was extravagant, exorbitant or unconscionable. Her Honour rejected as irrelevant that the bank had made provision in its accounts for loss associated with the expected incidence of late payments, and other events of a similar kind, for the outcome that a proportion of "late payment" loans would not be recoverable.[55]

[185] On appeal, Allsop CJ rejected this approach. His Honour said:**

"Respectfully, I cannot agree with the primary judge's reasons for rejecting provisioning as a legitimate business cost for which the fee imposed on the (now riskier) customer can be seen to provide. Whilst risk is, of course, an indication of future loss, the requirement to manifest risk in the reality of present values (in the balance sheet and profit and loss account) makes the risk caused by late payment a legitimate object of commercial interest for protection by compensation. The fact that a countervailing entry will, or may, be made in the future should the risk be seen not to eventuate does not deny or make hypothetical the present impairment of value and worth - that is that a loss incurred. That a degree of risk is reflected in the interest rate charged on accounts does not deny the legitimacy of assessing the cost that flows from late payment and the impairment of the value of the assets and earnings thereby in any one period."[56]

[186] In the result, because the onus to prove extravagance and exorbitance lay on the borrowers,[57] Allsop CJ held that this and other similar points meant that:

"The above should not be taken to be, or reflect, a mechanical approach to the construction or characterisation of a provision as penal. Essential to the task is the conclusion that the provision provides for overcompensation which is extravagant, exorbitant or unconscionable in circumstances when the purpose of the provision is as set out by the High Court in Andrews (HC) at [10]: see [95] above. In any given case, what might be critical or decisive in the examination of all the circumstances might be (as here) the analysis of the extent of legitimate protection of the obligee's interest measured in the manner discussed in Dunlop, or (as in Fermiscan Pty Ltd v James [2009] NSWCA 355; 261 ALR 408) the clear contractual purpose of the coercion of performance by the payment or forfeiture of a large amount of money. One must examine all the circumstances. Here, given the nature of the relationship, the legitimate interest of ANZ and the correct analytical perspective, the fees were not demonstrated to be extravagant, exorbitant or unconscionable."[58] (emphasis added)

**[187] The plaintiff relies on two further evidentiary factors in this case. First, the sequence by which the parties agreed to the increased interest term in this case was not that they agreed an appropriate interest rate to apply on non-payment at the agreed time and then a higher rate if payment is not made within a further period. The sequence was that the plaintiff sought 18 per cent per annum as the interest rate to apply to all payments not made on time. As a matter of commercial negotiation, the defendant did not want to pay that rate. In the result, the lower rate of 10.4 per cent per annum was agreed because the defendant urged that it should not have to pay 18 per cent per annum if the payments were only made some days or weeks late. The structure of the negotiation could be said to support the view that the rate of 10.4 per cent was agreed commercially as a concessional rate for a short delay in payment.

[188] The defendant submits that the evidence of the negotiation is not admissible on the question of whether the increased interest rate terms are a penalty because that question is one of construction of the contract and evidence of negotiations is irrelevant to a question of construction.

[189] In Paciocco, Allsop CJ dealt with the nature of the questions of extravagance and exorbitance as a matter of proof and the associated questions of construction. His Honour's description of the task of the court informs the answer to the present questions:**

"It is to be recalled that the task of the court is to assess whether the clause in question is penal in character. The task (or technique) is one of construction in a wide sense, falling to be decided by the meaning and content of the words and on the inherent circumstances of each particular contract, judged at the time of its making: Dunlop at 86-87. As discussed later, this involves the related tasks of ascription of meaning and content to the relevant clause by the process of contractual construction and interpretation, and also any necessary characterisation of the clause with that legal meaning in its full context. That is the technique; the requisite character involves the essential features of penalty: the secondary stipulation is, as a matter of substance, collateral or accessory to a primary stipulation in favour of the obligee and upon failure of which, the secondary stipulation imposes an additional detriment for the benefit of the obligee: Andrews (HC) at [10]; the secondary stipulation is in the nature

of security for, and in terrorem of, the satisfaction of the primary stipulation: Andrews (HC) at [10]; and (as an essential element) the secondary stipulation imposes an additional detriment that is out of all proportion to the loss suffered by the obligee on the failure of the

primary stipulation or that is inordinate or extravagant or oppressive: Ringrow [2005] HCA 71; 224 CLR 656 at [21], [28], and [32]. The adjectival description of the disproportion varies in expression in the cases, but for present purposes "extravagant", "exorbitant", "oppressive", "inordinate" and "unconscionable" can be seen to be broad synonyms: see Ringrow at 667-669, [26]-[32]. The question is to be assessed as at the time of entry into the contract. It is not a mechanical task."[59] (emphasis added)

**[190] In my view, it is an error to treat the question of inordinateness, extravagance or oppression as subject to the parol evidence rule as to the admissibility of extrinsic evidence for the construction of a contract in writing.[60]

[191] This is supported also, in my view, by Allsop CJ's lucid explanation of the relationship between extravagance and unconscionability on the one hand and a genuine pre-estimate of damage on the other as previously set out in my summary of findings on the penalty doctrine.

[192] Accordingly, in my view, it is relevant to take into account how the increased interest terms were agreed between the parties and evidence of that is admissible.

[193] The second evidentiary factor on which the plaintiff relies is that the purpose of Mr Munro in proposing 18 per cent per annum was that he did not want it to be more attractive to the defendant to pay any amounts they may owe to other creditors, including the lender for the Country Forest Facility, than to pay the payments due under the DOSAT.

[194] The defendant submits that the uncommunicated reason for the plaintiff's position in the negotiation is irrelevant and inadmissible. Alternatively, the defendant submits that it is evidence that proves that the increased interest rate terms were specifically intended by the plaintiff to coerce the defendant into making the payments due on time or at least within the further periods allowed before the rate of 18 per cent per annum became payable.

[195] In my view, although Mr Munro's intention was not communicated to the defendant, his reason for seeking 18 per cent is relevant and admissible. It goes to the protection of the plaintiff's interests. It was relevant to that protection that the plaintiff might be paid promptly, its association with the defendant ended, and the commercial risk of non-payment if the defendant was unable to pay at some time in the future resolved.

[196] Clause 1.5 of the DOSAT has been set out previously. The definition of "WHT" in cl 1.1 of the DOSAT is:

"'WHT' or 'Withholding Tax' means the Indonesian tax, not including PPN, required by Indonesian law to be withheld by the Company with respect to any payments made to the PSC."

[197] Each version of the JPCPNs in Schedule 2 to the DOSAT provides for a deduction of withholding tax. Version A and Version B were to be used if a Buyer purchased the inventory and plant and equipment in lieu of the defendant. In each of those versions, the amount of withholding tax to be deducted from the Total Principal Contractor Claim Amount is 10 per cent of that amount. Version C and Version D are to be used if there is no Buyer and the defendant purchases the inventory and plant and equipment. Accordingly, the Principal Contractor Claim Amount is increased by the purchase prices of those items. However, the amounts to be deducted for withholding tax do not change from Version A and Version B respectively. The inference is that it is not intended that withholding tax is to be paid on the purchases of the inventory and plant and equipment.

[198] If Version D were taken as a starting point of the amount owed by the defendant,[61] the question arises whether the judgment the plaintiff should obtain is the Total Principal Contractor Claim Amount, which I will call the "gross amount" or the balance of that amount after deducting the required amount of withholding tax, which I will call the "net amount"?

[199] The parties did not provide any comparable cases. They relied on cases dealing with the principle in British Transport Commissioner v Gourlay.[62] That was a claim for damages in tort. The question was whether the damages should be reduced to reflect that the plaintiff would have had to pay tax on the earnings he would have made had he not been injured. It was held that the plaintiff should have his damages assessed on the basis of what he has really lost, which was the amount after tax. An important factor was that the judgment for damages was itself exempt from tax.

[200] Subsequent Australian cases struggled over whether the appropriate judgment is a before tax amount or after tax amount.[63] However, these cases do not speak to the present question. I am not concerned with the assessment of damages. I am concerned with the promises under the DOSAT to pay amounts in United States dollars and the effect of cls 1.5, 1.6 and Schedule 2.

[201] Uninstructed by authority, it seems to me that the DOSAT makes specific provision for, and carries relevant implied promises about, the payment of withholding tax to the Indonesian revenue authority.

[202] First, payments made under the CDA in accordance with Version D clearly involve SCB remitting the agreed amount of WHT to an account to facilitate payment to the relevant authority. That is to say, the amount is not to be paid to the plaintiff so that the plaintiff can remit it. It is to be made by the defendant's bank to an account for payment to the Indonesian revenue authority. That is consistent with the general notion of withholding tax that it is a tax liability to be withheld by a payer from a payment made.

[203] Second, cl 1.5 operates consistently with that, in providing that any payment by the defendant to the plaintiff of an amount stated in the DOSAT will be released after deduction of WHT as per the applicable law in force.

[204] Let it be assumed that the defendant paid to the plaintiff the amount of the Confirmed Priority Contractor Payment under Version D, namely US$259,722,724 (or that amount less any amount for Interim Works), would the defendant's obligation to the plaintiff be discharged? That would depend on the operation of Indonesian law. If the defendant paid the Confirmed Principal Contractor Withholding Tax of US$7,261,964 to the Indonesian revenue authority, and the plaintiff were discharged from any liability for withholding tax, I would expect that the answer would be "yes". But what if that amount was not paid? Would the plaintiff be or remain liable to the Indonesian revenue authority?

[205] Clause 1.5 does not expressly provide that the defendant is obliged to pay the amount of any deducted withholding tax to the Indonesian revenue authority.

[206] Nevertheless, in my view, the promises to pay amounts, which by cls 1.5, 1.6 and Schedule 2 are to be made so that the WHT is deducted from the amounts to be paid to the plaintiff, are properly construed as promises to the plaintiff to pay part of the relevant amounts to the plaintiff and part of those amounts to the relevant Indonesian revenue authority. If that is the correct construction, the defendant is indebted to the plaintiff for the amount to be paid to it and contractually obliged to the plaintiff to pay the corresponding amount for withholding tax to the Indonesian revenue authority.

[207] A claim reflecting the contractual provisions so construed could have been framed for a judgment or order that the defendant pay the Confirmed Priority Contractor Payment to the plaintiff and that the defendant pay the Confirmed Principal Contractor Withholding Tax to the Indonesian revenue authority. The plaintiff's claim does not proceed on that basis.

[208] Instead, the plaintiff claims the gross amount of the Total Principal Contractor Claims Amount, less any amount for Interim Works, but including the agreed or any amount for WHT. It submits that judgment on that claim might be given with an additional order that:

"This judgment is subject to the condition that any payment made by the defendant to the plaintiff in compliance with the judgment must provide for deduction of any withholding tax in compliance with Indonesian law."

[209] The plaintiff did not point to any authority supporting a judgment in that form, except for UCPR 796. That rule does not assist. The defendant submits that because under cl 1.5 any payment to the plaintiff will be released after deduction of WHT as per the applicable law in force, the defendant is not bound to pay the gross amount to the plaintiff. It also submits that to require it to pay the gross amount to the plaintiff would require it to break the law of Indonesia. However, neither of the parties sought to adduce any evidence of Indonesian law. A foreign law must be proved as a matter of fact in this court, unless a presumption applies.[64]

[210] A convenient starting point is that a court administering purely common law principles had no power to make a conditional award or money judgment.[65]

[211] On the other hand, equity has the power to make conditional money and non-money orders in a variety of circumstances.

[212] One example is the equity of exoneration. Where a plaintiff is a co-surety with the defendant, the court may declare the plaintiff's right to contribution, and direct that upon the plaintiff paying her share of the debt to the principal creditor the co-surety is to indemnify the plaintiff against further payment or liability, and is by payment to the plaintiff or to the principal creditor or otherwise to exonerate the plaintiff from liability beyond the extent of his or her share.[66]

[213] Another example is the equity in cases of fraud where it is declared that on satisfaction of a judgment debt by a judgment debtor there is an equitable assignment of other rights of recovery vested in the judgment creditor.[67]

[214] Closer to the present problem, the court has considered how to deal with capital gains tax liability applying to an award of damages or compensation.[68] In Provan v HCL Real Estate[69] it was not clear whether the plaintiff would be liable to pay capital gains tax. Rolfe J said:

"In all these circumstances I consider the question for my decision is not whether as between the plaintiff and the taxation authorities, the plaintiff is liable to pay capital gains tax on the verdict, but whether, if the plaintiff is so liable he is entitled to recover the amount he is obliged to pay from the defendants. This approach, particularly in view of the way the case was argued, does not affront the principle that damages must be determined once and for all."[70]

"I declare that if the [plaintiff] is held liable to pay to the Commissioner of Taxation capital gains tax on the judgment, in circumstances the defendants acknowledge as constituting a proper defence by the [plaintiff] of any such claim made against him by the Commissioner of Taxation, he is entitled to be indemnified for such amount together with such costs..."[71]

**[216] Provan has been considered and applied on a number of occasions and similar non-money orders have been made in other cases.[72]

[217] Accordingly, it might have been possible, depending on the proof of Indonesian law, for the court to give judgment that a defendant pay a gross amount of promised payments to a plaintiff, but at the same time to declare that, if the defendant pays the amount of the tax required by Indonesian law to be withheld by the defendant with respect to any payment to be made to the plaintiff under the judgment, the plaintiff is not entitled to enforce the judgment beyond the difference between the amount of the judgment and the amount of the tax paid.

[218] But, in my view, the appropriate judgment in the present case must reflect the agreed rights and obligations of the parties as to withholding tax under cls 1.5, 1.6 and Schedule 2 of the DOSAT. In my view, read in the context of cl 1.6 and Schedule 2, cl 1.5 means that that the defendant is not to pay the gross amount of the payments that are due and payable to the plaintiff. The defendant is to pay the amount of the payments that are due net of withholding tax and to pay the withholding tax to the Indonesian revenue authority.

[219] By way of comparison, McLeary v Swift[73] was a case concerned with a contractual promise to pay another's tax liability to a revenue authority. The defendant in that case promised the plaintiff to pay a proportion of an assessment due by a third party to the ATO by the due date. Windeyer J applied the principle that: "[c]omplete and perfect justice to a promisee may well require that a promisor perform his promise to pay money or transfer property to a third party."[74] The court ordered the defendant to fulfil his obligations and to pay the proportion of the tax to the ATO.[75]

[220] As previously stated, the plaintiff in the present case does not claim such an order against the defendant. For present purposes, the point of interest is that the plaintiff's proposal to meet the requirements of cl 1.5 is that any payment made by the defendant to the plaintiff in compliance with the judgment must provide for deduction of any withholding tax in compliance with Indonesian law, but that the judgment should still be for the gross amount of the payments that are due.

[221] In my view, that proposal does not give effect to the provisions of cl 1.5. Consistently with that clause, there is no basis for the plaintiff to recover judgment for a money sum from the defendant as a debt in excess of the amounts of the payments net of withholding tax that are promised. The defendant's obligations, on the proper construction of the DOSAT, include a promise to pay the WHT to the Indonesian revenue authority. The plaintiff cannot unilaterally convert that obligation into an obligation to pay the gross sum to the plaintiff.

[222] The result, in my view, is that the judgment should be for the total amount of the Schedule 1 payments outstanding, US$265,290,655 less the amount of the deduction for withholding tax agreed in Version D, US$7,261,964, namely for US$258,028,691.

[223] The conclusion just reached could affect another question. As previously stated, cls 1.6 and 1.7 provide for the payment of interest on various amounts. There is a question whether interest should be calculated on the gross or the net amounts of the payments.

[224] Thiess submits that under cls 1.6, 1.7 and Schedule 1 of the DOSAT it is entitled to interest calculated in US dollars as follows:**

**[225] As at today, the total amount so calculated is US$63,331,720.

[226] The defendant did not submit that the calculation method is incorrect, if the plaintiff succeeds on the penalty argument.

[227] Nevertheless, on the construction of cls 1.5, 1.6 and Schedule 2 that I have accepted, the question arises whether interest should be calculated on the gross or net amounts. A comparable argument arose in Whitlam v Insurance Australia Group Ltd.[76] However, the resolution of such an argument requires some appreciation of the way in which the relevant law operates in respect of the payment in question. The parties did not prove how Indonesian law as to withholding tax operates on a payment of interest under a contract like the DOSAT. It would be an error to make any deduction from the interest agreed to be paid, on the basis that the parties have agreed that amount is to be paid by the defendant to the Indonesian revenue authority unless it appeared that under Indonesian law the amounts of interest payable are subject to withholding tax or the parties otherwise agree that they are.

[228] Accordingly, it does not appear that there should be a deduction from the amount of the agreed interest payments because of the operation of cl 1.5.

Interest on amounts in excess of the aggregate amount payable

[229] As can be seen, the plaintiff's calculation of interest makes no allowance for the effect of the provision in the eighth paragraph of cl 1.6 that:

"Under no circumstances shall the aggregate amount payable to the PSC by the Buyer and/or the Company for the purchase of the said inventory (excluding processing and port) and plant and equipment (excluding processing and port) exceed $194,365,052 in accordance with clauses 4.2c, 5.4, 5.5 and 5.6"

[230] I have previously rejected the defendant's submission that the aggregate amount payable is a sum of Australian dollars and found that it is a sum of United States dollars. It follows that the amounts of the payments provided in Schedule 1 for inventory and plant and equipment do not exceed $194,365,052.

[231] The defendant pleads and appears to submit that no interest is payable on any relevant part of the Overdue Amounts that is in excess of the aggregate amount payable for the purchase. But once it is accepted that $194,365,042 is an amount of United States dollars, there is no excess of the aggregate amount for the purchase claimed to be payable.

[232] The defendant did not submit that the aggregate amount payable excluded the payment of interest on any amount payable for the purchase up to and including $194,365,052.

[233] The result is that there should be judgment that the defendant pay to the plaintiff the sum of US$321,360,411 calculated as follows:

[234] That amount excludes the sum of US$7,261,964 which the defendant agreed to pay to the Indonesian revenue authority as withholding tax in Version D. I have formed no conclusion as to whether any other sum is payable to the Indonesian revenue authority by way of WHT, or by whom, for the amount of interest.

[1] [1910] HCA 13; (1910) 10 CLR 417.

[2] Associated Investment Underwriters (NZ) Ltd (in liq) v MacKenzie and Dominion Mutual Insurance Association [1932] NZLR 221, 223-224; Scott v Lord Ebury (1866-1867) LR 2 CP 255, 267, 268-9; Pilbrow v Pilbrow's Atmospheric Railway Co [1848] EngR 155; (1848) 5 CB 440, 469.

[3] For example, Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd [1982] HCA 53; (1982) 149 CLR 600.

[4] If it had, it might have been necessary to compare the principles discussed in Sunbird Plaza Pty Ltd v Maloney (1989) 166 CLR 245 with the provisions in cl 5 of the DOSAT for payment of the prices under the agreements to purchase the plant and equipment. It is unnecessary to do so, because no Buyer was introduced and having regard to the discussion as to the right to payment of the prices of the plant and equipment that appears below.

[5] [1598] EngR 39; (1602) 4 Co Rep 92b; 76 ER 1074; also reported as Slade v Morley Yelv 21; [1792] EngR 2268; 80 ER 15, Moo KB 433; [1688] EngR 537; 72 ER 677.

[6] [1956] HCA 51; (1956) 99 CLR 560.

[7] [1981] VicRp 92; [1981] VR 1041.

[8] [1933] HCA 43; (1933) 49 CLR 242.

[9] [1976] AC 443.

[10] [1976] AC 443, 466.

[11] The cases are analysed in Miliangos v George Frank (Textiles) Ltd [1976] AC 443, 460-462 and 466-467.

[12] [1961] AC 1007.

[13] [1961] AC 1007, 1068-1069.

[14] [1987] 1 Qd R 131.

[16] Foreign Judgments Act 1991 (Cth), s 6(11)(a) and Uniform Civil Procedure Rules (Qld), r 947E(c)(vii).

[17] [1976] AC 443.

[18] Sale of Goods Act 1896 (Qld), s 3(1) definition of "contract of sale".

[19] McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457, 475-476.

[20] McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457, 476.

[21] [1982] QB 84.

[22] [1982] QB 84, 121.

[23] Kellas-Sharpe & Ors v PSAL Ltd [2012] QCA 371; [2013] 2 Qd R 233, 247 [35], citing David Securities Pty Ltd v Commonwealth of Australia (1990) 23 FCR 1, 29.

[24] Kellas-Sharpe & Ors v PSAL Ltd [2012] QCA 371; [2013] 2 Qd R 233, 250 [47].

[25] Lordsvale Finance BLC v Bank of Zambia [1996] QB 752, 763-766; Beil v Mansell (No 2) [2006] QSC 199; [2006] 2 Qd R 499; Atia v Nusbaum [2011] QSC 44, [105]; Davids Securities Pty Ltd v Commonwealth Bank of Australia (1999) 23 FCR 1, 29.

[26] Paciocco v Australia & New Zealand Banking Group Ltd [2015] FCAFC 50, [95].

[27] Paciocco v Australia & New Zealand Banking Group Ltd [2015] FCAFC 50, [103].

[28] Paciocco v Australia & New Zealand Banking Group Ltd [2015] FCAFC 50, [25].

[29] Paciocco v Australia & New Zealand Banking Group Ltd [2015] FCAFC 50, [148].

[30] [1774] EngR 2; (1774) 1 Cowp 63; 98 ER 969. See also, for example, Cassegrain v Gerard Cassegrain & Co Ltd [2015] HCA 2; (2015) 316 ALR 111, 119 [37].

[31] [1774] EngR 2; (1774) 1 Cowp 63, 65; [1774] EngR 2; 98 ER 969, 970.

[32] [2008] NSWSC 1251, [51].

[33] [2012] QCA 371; [2013] 2 Qd R 233.

[34] [2012] QCA 371; [2013] 2 Qd R 233, 250 [47].

[35] [2012] QCA 371; [2013] 2 Qd R 233, 249 [45].

[36] [1801] EngR 108; (1801) 2 Bos & P 346; 126 ER 1318.

[39] David Securities Pty Ltd v Commonwealth of Australia (1990) 23 FCR 1, 29.

[40] David Securities Pty Ltd v Commonwealth of Australia (1990) 23 FCR 1, 30.

[41] [1996] QB 752.

[42] Lordsvale Finance plc v Bank of Zambia [1996] QB 752, 767C.

[43] [2006] QSC 199; [2006] 2 Qd R 499.

[44] Beil v Mansell (No 2) [2006] QSC 199; [2006] 2 Qd R 499, 508 [37].

[45] Beil v Mansell (No 2) [2006] QSC 199; [2006] 2 Qd R 499, 509 [41].

[46] [2011] QSC 44.

[47] Atia v Nusbaum [2011] QSC 44, [105].

[48] [2012] HCA 30; (2012) 247 CLR 205.

[49] [2015] FCAFC 50.

[50] [1914] UKHL 1; [1915] AC 79, 86-87.

[51] Andrews v Australian and New Zealand Banking Group Limited [2012] HCA 30; (2012) 247 CLR 205, 216, [9].

[52] Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1914] UKHL 1; [1915] AC 79, 86-87.

[53] Paciocco v Australia & New Zealand Banking Group Ltd [2014] FCA 35, [373], [376].

[54] Paciocco v Australia & New Zealand Banking Group Ltd [2014] FCA 35, [116].

[55] Paciocco v Australia & New Zealand Banking Group Ltd [2014] FCA 35, [150].

[56] Paciocco v Australia & New Zealand Banking Group Ltd [2015] FCAFC 50, [164].

[57] Paciocco v Australia & New Zealand Banking Group Ltd [2015] FCAFC 50, [148].

[58] Paciocco v Australia & New Zealand Banking Group Ltd [2015] FCAFC 50, [187].

[59] Paciocco v Australia & New Zealand Banking Group Ltd [2015] FCAFC 50, [95].

[60] See also Paciocco v Australia & New Zealand Banking Group Ltd [2015] FCAFC 50, [209], [211]-[212],[225]. This view was followed in Grocon Constructors (Qld) Pty Ltd v Juniper Developer No 2 Pty Ltd & Anor [2015] QSC 102, [116].

[61] As previously stated, the plaintiff's claim adjusts the Total Principal Contractor Claim Amount downwards to delete $1,694,033 for Interim Works.

[62] [1955] UKHL 4; [1956] AC 185.

[63] Atlas Tiles Ltd v Briers [1978] HCA 37; (1978) 144 CLR 202; Cullen v Trappell [1980] HCA 10; (1980) 146 CLR 1; Daniels (formerly practising as Deloitte Haskins & Sells) v Anderson (1995) 37 NSWLR 438, 586.

[64] Neilson v Overseas Projects Corporation of Victoria Ltd & Anor [2005] HCA 54; (2005) 223 CLR 331, 370, [115]; Tahiri v Minister for Immigration and Citizenship [2012] HCA 61; (2012) 293 ALR 526, [20]; White v Verkouille [1990] 2 Qd R 191, 197.

[65] Blundell v Musgrave [1956] HCA 66; (1956) 96 CLR 73, 94.

[66] Wolmershausen v Gullick [1893] 2 Ch 514, 529.

[67] Demetrios v Gikas Dry Cleaning Industries Pty Ltd (1991) 22 NSWLR 561, 574.

[68] The parties also relied on Whitlam v Insurance Australia Group Ltd [2005] NSWSC 200; (2005) 214 ALR 703 and Tekno Autosports Pty Ltd [2014] FCA 774, but it is not necessary to discuss them.

[69] (1992) 24 ATR 238.

[70] Provan v HCL Real Estate (1992) 24 ATR 238, 249.

[71] Provan v HCL Real Estate (1992) 24 ATR 238, 259.

[72] Duke Group Ltd (in liq) v Pilmer [1999] SASC 97; (1999) 73 SASR 64 (reversed on another ground in Pilmer v Duke Group Ltd (in liq) [2001] HCA 31; (2001) 207 CLR 165; Vickers v Taccone [2005] NSWSC 578; Peet v Richmond (No 2) [2009] VSC 585, Millington v Waste Wise Environmental Pty Ltd [2015] VSC 167, [47]-[60].

[73] [2012] NSWSC 1403; affirmed on appeal: Swift v Mcleary [2014] NSWCA 52.

[74] Coulls v Bagot's Executor and Trustee Co Ltd [1967] HCA 3; (1967) 119 CLR 460, 504.

[75] [2012] NSWSC 1403, [28]. There were later difficulties because the plaintiff, not the defendant, paid the relevant sum to the ATO: McLeary v Swift [2014] NSWSC 1414.

[76] [2005] NSWSC 200; (2005) 214 ALR 703.