RE SUMMIT RESOURCES (AUST) PTY LTD [2012] WASC 125 (12 April 2012)

(i) Supreme Court of Western Australia Proceeding Numbered CIV 2021 of 2006 be dismissed; and

(ii) there be no order as to costs.

1. Alternatively, the plaintiff have leave to file a notice of discontinuance in the Supreme Court of Western Australia Proceeding Numbered CIV 2021 of 2006.

2 In order to set the scene for an explanation of the nature of these proceedings, and of the relief which is sought by SRA, it is necessary to recite a litany of litigation of which these proceedings are (hopefully) the final verse.

3 SRA is a wholly owned subsidiary of Summit Resources Ltd (Summit). Summit is a public company listed on the Australian Stock Exchange. By an agreement dated 16 January 2001, SRA entered into a joint venture with the company formerly known as Resolute Ltd (Resolute) for the purpose of exploring and, if feasible, developing and mining tenements located near Mount Isa in Queensland where uranium had been discovered. Resolute was a publicly listed company.

4 There are provisions in the joint venture agreement conferring preemptive rights for the acquisition of a party's interest in the joint venture by the other in the event of a proposed sale of that interest to a third party (cl 14.2). Those provisions do not apply to an assignment of an interest to a related party of the assignor (cl 14.1).

5 During 2005, Resolute resolved to dispose of its interests in uranium resources by assigning those interests to another corporate entity, some of the shares of which were to be offered to the public and which was to be listed on the Australian Stock Exchange. To that end, in September 2005, Valhalla Uranium Ltd (Valhalla) was incorporated. In early November 2005, Resolute entered into an agreement with Mount Isa Uranium Pty Ltd (MIU) for the acquisition by MIU of Resolute's interest in the joint venture. MIU is a wholly owned subsidiary of Valhalla.

6 On 7 November 2005, Valhalla issued a prospectus offering up to 20,000,000 of its shares to the public at an issue price of 40 cents each. The prospectus noted that if the offer was fully subscribed (as it ultimately was), 99,999,999 shares in Valhalla would be issued to Resolute (in addition to the one share that it already held) as consideration for the assignment of uranium assets controlled by Resolute to Valhalla. Accordingly, after the public placement, Resolute controlled a little over 80% of the issued capital of Valhalla.

7 After the issue of the prospectus, solicitors acting on behalf of Summit and SRA wrote to Resolute asserting that Resolute had committed material breaches of the joint venture agreement by providing information which was confidential to the joint venture partners to Valhalla for inclusion in the prospectus.

8 However, undaunted, during December 2005, Resolute formally assigned its interest in the joint venture to MIU. SRA was given notice of the assignment.

9 In July 2006, Paladin Energy Ltd (formerly known as Paladin Resources Ltd) (Paladin), a publicly listed company, announced a takeover bid for all the shares in Valhalla. That bid was ultimately successful, and the takeover was achieved in late 2006. In the meantime, however, SRA asserted that there had been further disclosures of confidential information in connection with Paladin's bid for Valhalla.

10 In the latter part of 2006, SRA commenced proceedings and successfully obtained orders for preaction discovery against Resolute and MIU, requiring those parties to provide discovery of documents containing information relating to the joint venture which had been disclosed to any third parties. Following the provision of that discovery, and after receiving the advice of Senior Counsel, SRA commenced action CIV 2021 of 2006 against Resolute and MIU (the SRA proceedings).

11 In those proceedings, SRA claimed that by reason of material breaches of the joint venture agreement in the form of disclosure of confidential information, SRA was entitled to acquire MIU's interest in the joint venture at a price to be agreed, or in default of agreement, at a price equal to 85% of the value of MIU's interest. The right to acquire was claimed pursuant to the default provisions of the joint venture agreement.

12 On the day SRA commenced the SRA proceedings, it purported to serve default notices on Resolute and MIU as required by the default provisions of the joint venture agreement.

13 The SRA proceedings were entered into the Commercial and Managed Cases List and were managed by me. The proceedings had reached the point where trial dates in September 2007 had been tentatively allocated. However, in February 2007, Paladin announced an offer to acquire all the shares in Summit. In early March 2007, the Board of Summit announced that it would be recommending that shareholders reject Paladin's offer. Around this time, Summit pursued negotiations with the company formerly known as Areva NC (Australia) Pty Ltd (Areva), an Australian subsidiary of a large French company engaged in all aspects of uranium mining and processing in many countries of the world. Those negotiations resulted in agreements being entered into between Summit and Areva in early April 2007. However, shortly after those agreements were entered into, Paladin increased its offer for shares in Summit. The Board of Summit thereafter announced that they would be recommending to shareholders that they accept Paladin's increased offer and later announced publicly that Summit would not proceed with the agreements into which it had entered with Areva. Those agreements were conditional upon, among other things, the approval of Summit's shareholders.

14 Areva then moved to acquire a little over 10% of the issued shares of Summit on market. That stake was sufficient to prevent Paladin acquiring the proportion of Summit's shares which it needed to proceed to compulsory acquisition of all of Summit's shares. Areva also commenced proceedings before the Takeovers Panel with respect to Paladin's takeover of Summit and although successful, failed to obtain relief which prevented Paladin's takeover bid proceeding.

15 Paladin's bid for Summit was substantially successful, and it acquired a little over 80% of the issued shares in Summit. Board control of Summit changed, and thereafter decisions were made by officers of Summit to the effect that the SRA proceedings would be compromised. It is to be noted that at this point Resolute was no longer a party to the joint venture. The parties to the joint venture, SRA and MIU, had by now each become subsidiaries of Paladin (although SRA was not, and is not now, a wholly owned subsidiary of Paladin).

16 During June and July 2007, negotiations were conducted by representatives to each of the parties to the SRA proceedings. Those negotiations culminated in the execution of a deed of settlement and release which compromised the SRA proceedings (the deed of release). It will be necessary to return to the terms of the deed of release in more detail later.

17 Pursuant to the terms of the deed of release, on 3 August 2007, solicitors for the parties to the SRA proceedings executed a memorandum consenting to orders being made pursuant to O 43 r 16 of the Rules dismissing the action with no order as to costs.

18 The circumstances in which that memorandum was filed and brought to the attention of the court are set out in my judgment in Areva NC (Australia) Pty Ltd v Summit Resources (Australia) Pty Ltd [2007] WASC 207. By those proceedings, which were commenced two days prior to the execution of the memorandum of consent orders dismissing the SRA proceedings, Areva sought orders pursuant to s 247A of the Act authorising its representatives and legal advisers to inspect and make copies of certain books in order that Areva might consider the merits of seeking leave to intervene in the SRA proceedings pursuant to s 237 of the Act, and effectively take over the prosecution of those proceedings.

19 As my reasons for granting that application record, at the time it commenced the proceedings under s 247A, Areva sought an undertaking from Summit and SRA to the effect that they would not enter into any final and binding compromise of the SRA proceedings until Areva had the opportunity to inspect the books and records of Summit and SRA. Areva requested that the undertaking be provided not later than 2.00 pm eastern standard time on Friday 3 August 2007.

20 At about 1 pm eastern standard time on Friday 3 August 2007, Summit announced that SRA had agreed with Resolute and MIU to settle the SRA proceedings. At about the same time, the memorandum of consent orders to which I have referred was lodged at the Central Office of the court. That memorandum was brought to my attention a little before 2.15 pm (Western Standard Time) on 3 August 2007. I endorsed the memorandum 'orders in these terms', signed and dated it and directed that it be returned to the Central Office so that orders might be extracted in due course.

21 About an hour later, a facsimile from solicitors acting on behalf of Areva was brought to my attention, in which those solicitors foreshadowed a claim for injunctive relief restraining the extraction of any orders dismissing or discontinuing the SRA proceedings. In the light of that communication, I directed that no orders giving effect to the memorandum which had been lodged be settled or extracted until further order.

22 On 6 August 2007, Areva commenced proceedings against SRA, Resolute, MIU and Summit seeking a variety of forms of relief, including relief pursuant to s 237 of the Act, granting Areva the authority to intervene and effectively take over responsibility for the conduct of the SRA proceedings on behalf of SRA (the Areva proceedings). When those proceedings were mentioned before me on 6 August 2007, I made orders to the effect that no order dismissing the SRA proceedings be settled, signed or sealed until either judgment in the Areva proceedings or further order.

23 The trial of the Areva proceedings was heard by me during May and June 2009. I reserved my decision. After completing my reasons for decision, the parties were advised of the date upon which my decision would be delivered. My associate was advised by the parties that the Areva proceedings had been settled, that it would be inappropriate for my reasons to be delivered, and that memoranda executed by the representatives of the parties providing for the disposition of those proceedings by consent would be filed in due course. My reasons for decision were not delivered, and in due course, orders were made by consent dismissing Areva's claims. It appears from the evidence in these proceedings that the agreement which resulted in the compromise of Areva's proceedings involved a payment of $2.5 million to Areva, being a 'break fee' due to Areva pursuant to the agreements entered into between Areva and Summit in April 2007 prior to Summit's change of position in relation to the Paladin bid, and a further payment of $2,000,000.

24 There were many issues raised in the course of the Areva proceedings. Amongst them was Areva's assertion that entry into the deed of release compromising the SRA proceedings constituted a contravention of s 208 of the Act. That assertion arose in response to a contention by the parties to the SRA proceedings who were respondents to the Areva proceedings, to the effect that Areva either could not or should not be granted leave to intervene in the SRA proceedings and take over the conduct of those proceedings on behalf of SRA because SRA's causes of action had been compromised and released. Areva contended that because the deed of release was entered into in contravention of s 208 of the Act, the court could and should recall the orders which I had made dismissing the SRA proceedings by consent, and could and should grant orders restraining the parties from implementing or relying upon the deed of release, thereby preserving SRA's capacity to pursue the SRA proceedings by means of Areva taking over effective conduct of those proceedings on behalf of SRA. Areva asserted that the court's powers to effectively set aside the deed of release derived from a number of sources, including the power to grant relief under s 233 of the Act, as a consequence of conduct preceding entry into the deed of release which Areva asserted was oppressive to, unfairly prejudicial to, or unfairly discriminatory against the minority shareholders of Summit, of which Areva was the minority shareholder holding the largest parcel of shares.

25 Because of the overlap between the issues which arose in the Areva proceedings, and the issues which underpin the present proceedings, it is appropriate to set out the statutory scheme regulating the conferral of financial benefits upon related parties by public companies, and to indicate its application to the circumstances of the present proceedings.

Part 2E.1 of the Act

26 The provisions of pt 2E.1 of the Act that are relevant to these proceedings are as follows:

(1) For a public company, or an entity that the public company controls, to give a financial benefit to a related party of the public company:

(i) obtain the approval of the public company's members in the way set out in sections 217 to 227; and

(ii) give the benefit within 15 months after the approval; or

(b) the giving of the benefit must fall within an exception set out in sections 210 to 216.

(a) the giving of the benefit is required by a contract; and

(b) the making of the contract was approved in accordance with subparagraph (1)(a)(i) as a financial benefit given to the related party; and

(c) the contract was made:

(i) within 15 months after that approval; or

(ii) before that approval, if the contract was conditional on the approval being obtained;

member approval for the giving of the benefit is taken to have been given and the benefit need not be given within the 15 months.

(1) If the public company or entity contravenes section 208:

(a) the contravention does not affect the validity of any contract or transaction connected with the giving of the benefit; and

(b) the public company or entity is not guilty of an offence.

...

(2) A person contravenes this subsection if they are involved in a contravention of section 208 by a public company or entity.

...

(3) A person commits an offence if they are involved in a contravention of section 208 by a public company or entity and the involvement is dishonest.

Member approval is not needed to give a financial benefit on terms that:

(a) would be reasonable in the circumstances if the public company or entity and the related party were dealing at arm's length; or

(b) are less favourable to the related party than the terms referred to in paragraph (a).

...

216 Court order

Member approval is not needed to give a financial benefit under an order of a court.

27 In addition, s 103(2) reinforces s 209 by providing that an act, transaction, agreement, instrument, matter or thing is not invalid merely because of a contravention of s 208 and s 209 of the Act (amongst other sections).

28 SRA is an entity controlled by a public company, namely Summit. Paladin was a related party of Summit at the time the deed of release was executed because Paladin controlled Summit (s 228(1) of the Act). Paladin also ultimately controlled MIU, which was therefore also a related party of Summit (s 228(4) of the Act). The members of Summit did not give their approval to the entry into the deed of release. Accordingly, if the deed gave a financial benefit to MIU, entry into the deed constituted a contravention of s 208 of the Act, unless one of the exceptions set out in s 210 s 216 applied.

29 Areva contended that another reason entry into the deed of release contravened s 208 of the Act was that Resolute was also a related party of Summit at the time the deed of release was executed. The basis for that assertion was an allegation that Resolute was acting in concert with MIU and/or Paladin in negotiating and entering into the deed of release, with the result that s 228(7) of the Act applied to render Resolute a related party of Summit. It is difficult to see how s 228(7) could have any application to the circumstances preceding the entry into the deed of release, even if it is assumed that Resolute was acting in concert with MIU and/or Paladin. However, it is sufficient to note that in these proceedings there is no evidence to the effect that Resolute was so acting, nor has it been contended that Resolute was a related party of Summit at the time the deed of release was entered into.

30 In the Areva proceedings, the respondents asserted that the exception provided by s 210 of the Act applied, because entry into the deed of release would have been reasonable in the circumstances if SRA and MIU had been dealing at arm's length. However, SRA has not advanced a similar contention in these proceedings. Rather, the proposition that s 210 of the Act may not apply so as to exclude the operation of s 208 is implicit in SRA's commencement and pursuit of these proceedings.

31 In the Areva proceedings, SRA and Summit properly disavowed any reliance upon s 216 of the Act based upon the orders which I had made after receiving the memorandum of consent orders, because the court had not been advised at the time those orders were sought that reliance was to be placed upon s 216 of the Act for the purpose of overcoming any contravention of s 208.

32 As I have noted, following the agreement to settle the Areva proceedings, memoranda signed by the parties consenting to orders dismissing those proceedings were filed. I made orders by consent to that effect pursuant to O 43 r 16.

33 It is to be remembered that I had made orders dismissing the SRA proceedings by consent on 3 August 2007, although I had ordered that those orders not be extracted until judgment in the Areva proceedings (which had now been resolved by agreement) or until further order. Following the settlement of the Areva proceedings, the parties to the SRA proceedings advised the court that they wished the restrictions which I had placed on the extraction of those orders to be lifted so that they could be extracted.

34 However, because of the assertions which had been made in the Areva proceedings to the effect that entry into the deed of release of the SRA proceedings constituted a contravention of s 208 of the Act, and the further assertion that the making of court orders giving effect to the deed of release would have the effect of relieving the parties to the contravention of any of the possible consequences of such a contravention, by bringing their actions within the scope of s 216 of the Act, I caused the parties to be notified that I would not give directions enabling the orders dismissing the SRA proceedings to be extracted without first receiving submissions from the parties as to the effect of those orders under the Act.

35 I then arranged for the SRA proceedings to be relisted before me for further directions. At that hearing, I was advised by counsel for SRA that consideration was being given to the commencement of proceedings for the grant of leave to give effect to the deed of release, and an adjournment was sought in order that a decision might be taken by SRA as to the course to be followed. In that context, no submissions were put with respect to the legal effect of the orders which I had made in July 2007 dismissing the SRA proceedings. I made directions establishing a timetable for the commencement of proceedings seeking the grant of leave to give effect to the deed of release, and these proceedings were commenced in accordance with that timetable.

36 I have already set out the relief which is sought in these proceedings. Affidavits have been filed on behalf of the plaintiff setting out the history to which I have referred. In addition, an affidavit has been filed attaching a number of documents which were said to be confidential, and in respect of which orders suppressing publication were sought and granted. Those documents include a brief to counsel, Mr Charles Scerri QC, and Mr Scerri's written advice with respect to SRA's prospects of success in the SRA proceedings. I made orders suppressing publication of Mr Scerri's opinion because its publication could be disadvantageous to SRA and Summit if, somehow, the SRA proceedings were continued. However, the tenor of Senior Counsel's advice has been disclosed by SRA in written and oral submissions which have not been the subject of any confidentiality order. SRA submits that the advice of Mr Scerri QC provides support for its contention that the SRA proceedings had no realistic prospect of success. That contention is said to support two alternative conclusions. First, it is said that neither entry into the deed of release, nor giving effect to its terms by the making of orders dismissing the SRA proceedings by consent would constitute the giving of a financial benefit to MIU, because SRA's claims have no value, and their pursuit would most likely result in costs being incurred, and adverse costs orders made against SRA. Alternatively, the fact that the SRA proceedings had no realistic prospect of success is said to justify the making of orders by the court which would bring the compromise of the SRA proceedings within the scope of s 216 of the Act, and therefore beyond the scope of s 208, because those orders would not cause any prejudice to the interests of Summit or its shareholders.

37 After the commencement of these proceedings, I made directions with respect to the provision of notice of these proceedings to the minority shareholders of Summit. Pursuant to those directions, letters were sent to all minority shareholders advising of the commencement of the proceedings, the general nature of the proceedings, and giving notice of the steps which should be taken if any shareholder wished to appear and be heard in relation to the relief sought. Directions were also made to enable the confidential documents to which I have referred to be provided to any shareholder giving consideration to intervening in these proceedings on terms which protected the confidentiality of those documents. Public announcements were also made by Summit to the Australian Stock Exchange with respect to these proceedings.

38 In the result, although a number of shareholders appear to have taken an interest in the proceedings, only one shareholder appeared and opposed the relief sought by SRA. That shareholder is Revelation Special Situations Fund Ltd (formerly known as Osmiun Special Situations Fund Ltd) (Revelation). Revelation holds 11,110,332 shares in Summit, which represents 5.09% of the issued capital of Summit. Revelation is the third largest shareholder in Summit, after Paladin, which controls more than 80% of Summit's issued share capital, and Areva, which through its subsidiaries continues to hold around 10% of the issued capital in Summit.

39 The affidavit evidence before me discloses communications between the solicitors representing Summit and the solicitors representing Revelation with respect to the provision of information to Revelation in relation to the relief sought in those proceedings. Requests were also made for discussions with a view to resolving Revelation's objections. However, Revelation maintained its objections and ultimately requisitioned an extraordinary general meeting of Summit (under s 249D of the Act), which was held on 3 November 2011 in conjunction with Summit's annual general meeting. Revelation gave notice that it required the following resolution to be put to the extraordinary general meting which it requisitioned:

That, for the purposes of section 208 of the Corporations Act 2001 (Cth), approval is given in connection with the giving of financial benefits by Summit Resources (Aust) Pty Ltd to Mt Isa Uranium Pty Ltd, in relation to the settlement of litigation proceedings pursuant to a deed of settlement and release executed by those parties and of Resolute Pty Ltd on or about 2 August 2007.

40 The resolution was put, and a poll taken. An announcement made by Summit following the extraordinary general meeting records that a total of 190,205,706 votes were recorded on the poll (representing 87.25% of the total shares on issue in Summit). Of the votes cast, 178,968,440 were recorded in favour of the resolution, and 11,232,368 votes were recorded against the resolution, with 4,898 votes recorded as abstentions. Accordingly, of the votes cast, 94.092% were recorded in favour of the resolution, 5.905% against the resolution and 0.003% were recorded as abstentions.

41 It is apparent from these figures that Paladin voted for the resolution, and accounted for all but 56,758 votes cast in favour of the resolution. Revelation voted against the resolution, and accounted for all but 122,036 of the votes cast against the resolution.

42 Plainly, Summit is unable to rely upon the passage of the resolution for the purposes of s 208 of the Act, given that an interested party, Paladin, voted. Further, having regard to the fact that there are more than 200,000,000 shares of Summit on issue, the numbers of shareholders voting for and against the resolution put to the extraordinary general meeting other than Paladin and Revelation are not significant.

Does s 216 confer jurisdiction on the court?

43 The terms of the originating process, and of some of the written submissions filed on behalf of SRA, can be read as suggesting that s 216 of the Act confers a general jurisdiction on the court to make orders that would have the effect of excluding the operation of s 208. However, in the course of oral argument, senior counsel for SRA disavowed any submission to that effect. Nor did counsel for Revelation contend that s 216 conferred jurisdiction on the court.

44 The position adopted by both counsel is plainly correct. There are many sections of the Act which confer upon a court the power to make orders modifying what would otherwise be the effect of the Act. An obvious example is s 1322, which expressly confers upon the court a power to make a variety of orders which would have the effect of modifying rights or obligations otherwise created by the Act. Such provisions confer upon the court a jurisdiction which it would not otherwise possess. Other obvious examples of provisions which confer upon the court a jurisdiction which would not otherwise exist include s 1323 and s 1324, which confer upon the court jurisdiction to make orders prohibiting or restraining persons from doing acts or things which would involve a contravention of the Act, or in certain circumstances, such as a pending investigation, prosecution or civil proceeding. Another obvious example is the jurisdiction conferred upon the court by s 233, to which I have already referred, which jurisdiction is enlivened by what may be loosely described as oppressive conduct. Each of these sections, and many others in the Act, confer upon the court a jurisdiction which the court would not otherwise possess.

45 However, s 216 is not a provision of this character. It does not purport to confer jurisdiction on the court which it does not otherwise possess. Rather, the section provides that if a financial benefit is given under an order of a court, member approval is not required. The jurisdiction of the court to make an order which has the effect of giving a benefit that would otherwise fall within s 208 of the Act must be found elsewhere.

46 In its originating process, in addition to s 216, SRA refers to O 23 r 2 of the Rules and to the court's inherent jurisdiction as alternative sources of jurisdiction for the grant of the relief sought. Order 43 r 16 might be added if it is thought necessary to identify a specific rule of court enlivening the court's jurisdiction to grant the relief sought, given the memoranda which have been filed by the parties consenting to orders dismissing the SRA proceedings with no orders as to costs. However, as the SRA proceedings have regularly invoked the jurisdiction of the court, there is no issue as to the jurisdiction of the court to make orders dismissing or disposing of those proceedings by discontinuance, or to give directions enabling the orders which have been made dismissing the SRA proceedings to take effect. However, in the originating process in these proceedings, the relief sought goes somewhat further, by seeking an order that SRA 'be permitted to give effect to the deed of settlement and release' by instructing its solicitors to sign a memorandum of consent orders to be provided to the court.

47 I am quite unable to see any basis upon which SRA needs the permission of the court to instruct its solicitor to file documents giving effect to the compromise of the proceedings, nor can I see any basis upon which the court would have jurisdiction to purport to give such permission. Even if the grant of relief in those terms could be said to fall within the inherent jurisdiction of the court, which I very much doubt, I cannot see any basis upon which it would be appropriate to exercise that jurisdiction in the circumstances of this case, given my conclusion that s 216 of the Act does not embody a legislative intention that the court should have a general power to exempt a public company from the need to comply with s 208 of the Act.

48 Two conclusions follow from this consideration of the nature and effect of s 216 of the Act. First, while the section does not confer upon the court a jurisdiction which it does not otherwise possess to make orders which have the effect of taking matters that would otherwise involve a contravention of s 208 beyond the scope of that section, the fact that an order of the court made in the exercise of its general jurisdiction would have that effect may be very relevant to the court's decision to make such an order. Chapter 2E of the Act manifests a legislative intention to protect the interests of shareholders when financial benefits are conferred upon related parties by public companies. The fact that an order of the court might have the effect of depriving shareholders of the protections provided by the Act may be relevant to the exercise of any discretion which the court may have as to whether orders should be made, or as to the terms in which orders should be made.

49 Second, because s 216 only applies to obviate the need for member approval if the relevant financial benefit is given 'under an order of the court', the operation and effect of s 216 of the Act may depend critically upon an analysis of the relevant financial benefit, and whether that benefit can be said to be 'given' under an order of the court. Put more directly in terms of this case, I have concluded that the only orders which the court could or should make are orders dismissing or discontinuing the SRA proceedings or directions giving effect to such orders, because s 216 does not confer jurisdiction to make any other orders. Section 216 would only apply to orders of that kind if their effect is to give a financial benefit to MIU. But that is a different question to the question of whether entry into the deed of release gave a financial benefit to MIU. As will be seen, the legal effect of orders dismissing the SRA proceedings may well turn upon the effect of the deed of release. That is because if the effect of the deed of release was to extinguish any and all causes of action which SRA had in relation to the SRA proceedings, it is difficult, if not impossible, to see how the making or implementation of orders bringing those proceedings to an end could result in the conferral of a financial benefit on MIU. Put another way, if the relevant financial benefit given to MIU was the extinguishment of any claim by SRA to an order that MIU assign its interest in the joint venture to SRA, that financial benefit was obtained by entering into the deed of release, not by orders of the court which simply give effect to the fact that SRA has surrendered its rights. In that circumstance, s 216 of the Act would have no application. I will return to this issue in due course.

The contentions of the parties SRA's contentions

50 SRA's principal argument is based upon the contention that the SRA proceedings have no realistic prospect of success. As I have noted, SRA contends that if this proposition is accepted, s 208 of the Act has no application because dismissal of the SRA proceedings does not confer a financial benefit on MIU because it is not at any significant risk in those proceedings. Alternatively SRA submits that even if dismissal of the SRA proceedings is considered to constitute the conferral of a financial benefit on a related party which would require member approval but for s 216, orders of the court should be made because the court can be satisfied that the orders have no adverse effect upon the shareholders of SRA, given that SRA's cause of action is of no significant value, and its pursuit would inevitably result in SRA incurring legal costs that would not be recovered.

51 Further, although not prominent in its written submissions, during oral argument counsel for SRA adopted an argument which had been put in the Areva proceedings, to the effect that orders of the court dismissing the SRA proceedings would not enliven the operation of s 216 of the Act, because they would not involve the conferral of a financial benefit upon MIU, any such benefit having been acquired by MIU through its entry into the deed of release.

52 Revelation does not squarely join issue with SRA's contentions based upon its poor prospects of success in the SRA proceedings. This is perhaps understandable, given Revelation's limited knowledge of those proceedings, and the issues arising in those proceedings. Revelation does however point to previous public statements made by Summit, presumably based upon counsel's advice, which were bullish as to SRA's prospects of success, and to the inevitable uncertainty and unpredictability of litigation.

53 Revelation puts three additional contentions. First, it submits that ch 2E of the Act reflects a legislative intention to protect shareholders in public companies by prohibiting the conferral of benefits upon related parties without the approval of disinterested shareholders. It submits that the effect of the relief sought by SRA would be to deprive the minority shareholders in Summit of that protection, and that no adequate justification has been proffered by Summit for this course. Put shortly, Revelation submits that Summit should be compelled to place its proposal to terminate the SRA proceedings before a meeting of disinterested shareholders convened and conducted in accordance with s 217 s 227 of the Act.

54 Second, Revelation points to the extraordinary general meeting held on 3 November 2011, and in particular relies upon the fact that only 56,758 votes were cast in favour of the resolution put before that meeting by disinterested shareholders, whereas 11,232,368 votes were cast against the resolution, with the result that 99% of the voting disinterested shareholders voted against the resolution approving termination of the SRA proceedings.

55 Revelation's third contention points to the general history of the matters which preceded these proceedings, and in particular, the bullish public statements made by Summit with respect to its prospects of success in the SRA proceedings prior to its takeover by Paladin, and the circumstances in which the deed of release was entered into, and the memorandum of consent orders provided to the court, at a time when the largest minority shareholder, Areva, was actively taking steps to prevent that course of action. That history is said to give rise to a reasonable doubt that the dismissal of the SRA proceedings may not be in the best interests of the shareholders of Summit as a whole, with the consequence that the court should not take any step which would have the effect of depriving the minority shareholders of the opportunity of expressing their view in the course of a meeting of disinterested shareholders convened pursuant to s 217 s 227 of the Act.

The operation of s 216 of the Act in this case

56 As I have indicated, the question before the court is not whether the court should exercise a power to dispense with Summit's obligation to comply with s 208 of the Act. The question is whether the court should exercise jurisdiction which it undoubtedly has to order the dismissal of the SRA proceedings, or to give directions enabling orders which have been made to that effect to be extracted, having regard to the effect which such an order might have on Summit's obligations under the Act, and upon the rights of minority shareholders. For the reasons I have already given, in that context it is essential to carefully analyse the effect of orders dismissing the SRA proceedings, in order to determine whether a financial benefit to a related party which would otherwise fall within the scope of s 208 of the Act is being 'given' under those orders.

57 In the unusual circumstances of this case, the appropriate starting point for this analysis is a consideration of the current rights and obligations of the parties to the SRA proceedings, having regard to the deed of release, and the memoranda of consent orders which have been filed and served.

58 The parties to the deed of release are the parties to the SRA proceedings. The deed of release is set out as attachment 'MR3' to the affidavit sworn by Mr Randall on 27 May 2011. The deed contains recitals outlining those proceedings, and recording that the parties had agreed to settle them on the basis that each party bears its own costs of those proceedings. The deed contains mutual releases between the parties to the proceedings and their related parties, releasing and discharging all claims, actions, demands, suits or proceedings of any kind in respect of the subject matter of the SRA proceedings or anything related to those proceedings. The deed also contains mutual covenants not to sue or take any action in respect of any of the released claims. The deed also contains a covenant by each party to the effect that it will execute a minute of consent orders in the form attached to the deed. That minute proposed orders to the effect that the action be dismissed with no order as to costs. The minute executed by the parties to the SRA proceedings and lodged with the court on 3 August 2007 was in the form of the schedule to the deed. The deed contains a further covenant by Resolute and MIU to procure entities who were not parties to the SRA proceedings, but against whom discovery orders had been made in those proceedings, to execute a minute of consent orders in the form of another minute attached to the deed agreeing to vacate any orders for costs made in their favour in those proceedings.

59 It is of some significance to note that upon execution the deed operated immediately and unconditionally. Although the deed imposed obligations with respect to the execution of documents for the purpose of obtaining orders from the court the mutual releases and discharges of claims are not expressed by the deed to be dependant or conditional upon the making of any such orders. There is a species of compromise agreement in which release of the claim or cause of action compromised is dependent upon performance of the promises made in the compromise agreement. However, the deed of release between the parties to the SRA proceedings is not a member of that species.

60 A classic statement of the distinction between the two categories of compromise agreement is to be found in British Russian Gazette & Trade Outlook Ltd v Associated Newspapers Ltd [1933] 2 KB 616, 644 (Scrutton LJ). In the vernacular applied to agreements of compromise, the deed of release, and the agreement which it effected, is an 'accord and satisfaction', rather than an 'accord executory'. The distinction between the two is that in the former category of agreement, the agreement extinguishes the previous cause of action, and replaces it with a cause of action arising from the promise received in return for the release. However, in the case of an 'accord executory', the cause of action is not extinguished until the promise of the recipient of the release has been performed: see McDermott v Black [1940] HCA 4; (1940) 63 CLR 161, 184 185 (Dixon J). In Osborn v McDermott (1998) 3 VR 1, it is suggested that there are two classes of compromise which do not extinguish the original cause of action - the accord executory, which does not constitute a contract and is unenforceable, and an accord and conditional satisfaction, which gives rise to an enforceable contract, but does not extinguish the original cause of action until performed (10 11): see also National Australian Bank v Pollak [2001] FCA 1408 [26] (Madgwick J). That distinction is not material to this case as the deed of release is clearly expressed as an unconditional accord and satisfaction. As Dixon J points out in McDermott v Black, historically there have been differences between courts of common law and courts of equity as to the procedures adopted with respect to the pleading of agreements of compromise (186 188), but since common law and equity have long been fused in Western Australia, those historical distinctions are of no continuing relevance.

61 It follows that upon execution of the deed of release, any causes of action which SRA had for breach of the joint venture agreement and which were the subject of the SRA proceedings were released forthwith, and replaced by the rights created by the deed, including the right to insist upon execution of memoranda which would likely have the effect of resulting in the dismissal of the proceedings with no order as to costs. Those memoranda have in fact been executed, and lodged with the court. While the deed no doubt gives rise to continuing obligations, including an obligation on the part of SRA to no longer assert the causes of action released, any and all steps and actions required to be undertaken by the parties to the deed have been performed.

62 Excluding from present consideration SRA's contentions with respect to the weakness of its claims in the SRA proceedings, it can safely be concluded that the deed of release conferred a financial benefit upon MIU. 'Financial benefit' is expressly given a broad interpretation by s 229 of the Act. Prior to the takeover of Summit by Paladin, SRA was strenuously asserting its claim to be entitled to an assignment of MIU's interest in the joint venture at a price discounted below market value. The effect of the deed of release was to extinguish any claim which SRA had to such an assignment. The extinguishment of that claim meant that MIU's interest in the joint venture was no longer under threat. Plainly the elimination of that threat would have been of financial benefit to MIU.

63 No different conclusion is reached if one assumes that SRA had no realistic prospect of success in the SRA proceedings. Under ch 2E of the Act, and in particular s 208 of the Act, the focus is upon the financial benefit received by the related party of the public company, not upon the value of anything foregone by the public company in conferring that benefit. Put another way, in the present case the question is not whether entry into the deed of release resulted in a net loss of value to SRA, but rather, whether entry into the deed of release conferred a financial benefit upon MIU. The SRA proceedings had not been summarily dismissed on the grounds that they did not give rise to an arguable cause of action, nor does SRA submit that they were so hopeless as to be vulnerable to summary dismissal on such a ground. So long as SRA retained its causes of action, MIU had some vulnerability to SRA's assertion of its entitlement to an assignment of MIU's interest in the joint venture. It seems more likely than not that the mere assertion of that claim by SRA was of financial disadvantage to MIU. Further, as long as SRA retained those causes of action, MIU would be obliged to incur legal costs resisting SRA's claims, part of which would be unlikely to be recovered, even in the event of an ultimate costs order in MIU's favour. The extinguishment of SRA's causes of action removed any financial disadvantage suffered by MIU as a result of the claim to a right to an assignment of its interest in the joint venture, and removed MIU's obligation to continue funding the costs of its defence of the SRA proceedings.

64 I do not overlook the possibility that MIU may have a right to seek indemnity from Resolute in respect of losses incurred in relation to the SRA proceedings, under a Deed of Indemnity which was executed by Paladin and Resolute. However, the existence of an alternative avenue of redress for losses incurred does not mean that the elimination of any prospect of those losses is not a 'financial benefit', given the breadth of meaning given to that expression by the Act.

65 Accordingly, even if it is assumed that SRA's prospects of success were poor, it should nevertheless be concluded that MIU obtained a financial benefit through entry into the deed of release.

66 In these proceedings SRA does not assert that member approval to entry into the deed of release was not required because the transaction fell within s 210 of the Act. No other exception to the operation of s 208 of the Act has any possible application. Accordingly, it should be concluded that s 208 of the Act was contravened by entry into the deed of release.

The effect of contravention of s 208 of the Act

67 In order to assess whether orders dismissing the SRA proceedings would have the effect of giving a financial benefit to MIU, it is necessary to assess whether any action could be taken to prevent those orders being made or acted upon, having regard to my conclusion that entry into the deed of release contravened s 208 of the Act. Relevant to that question are the express provisions of s 103 and s 209 (which I have set out above), and the note to s 209(1) which provides that:

A Court may order an injunction to stop the company or entity giving the benefit to the related party (see section 1324).

68 In One.Tel Ltd (in liq) v Rich [2005] NSWSC 226, Bergin J held that at least some of the notes included within the Act should be taken to be part of the Act, rather than viewed as marginal notes [53]. It is unnecessary to determine whether the note contained within s 209 should be similarly treated, because s 15AB(1) and s 15AB(2)(a) of the Acts Interpretation Act 1901 (Cth) provide that the note may be used to interpret s 209(1) of the Act, confirm its ordinary meaning or to determine its meaning if it is ambiguous or obscure, even if it is held to be a marginal note.

69 There is arguably some tension in the authorities on the question of the consequences of a contravention of s 208 of the Act, having regard to the express provisions of s 103 and s 209. In Batoka Pty Ltd v Jackson (1998) 30 ACSR 67, Hansen J considered the effect of s 260D of the Corporations Law (Cth) (now repealed), the terms of which took virtually the same form as s 209 of the Act, except that s 209 of the Act refers only to public companies. In that case, the applicants sought an injunction requiring the respondents to effectively undo the transaction in question. In respect of that relief, Hansen J observed:

That relief is against the dictate of s 260D. In other words, the applicants ask the court to produce a state of affairs which Parliament has said is not to occur. The policy inherent in s 260D is plain: the financial assistance and any contract or transaction with it are to stand, thus providing certainty and protection of the interests of third parties ... Further, s 260D(2) specifies that relief of a personal nature may be obtained against a person involved in a contravention (80).

70 Hansen J rejected a submission that the power to grant an injunction pursuant to s 1324 overrode s 260D of the Corporations Law. In that context his Honour observed:

Doubtless the powers under s 1324 may be invoked at the time when a wrong is threatened but if the relevant act is the provision of financial assistance and it has been provided, as it has been in this case, the injunction making power in s 1324 is not available, in my opinion (81).

71 In HCK China Investments Ltd v Solar Honest Ltd [1999] FCA 1156, Hely J considered the effect of a number of provisions of the Corporations Law analogous to s 103 and s 209 of the Act. After referring to a number of authorities on the general question of statutory illegality of contract, his Honour observed:

Where the legislation in question expressly provides for the consequences of illegality upon contracts made or performed in breach of its terms, that legislative prescription is decisive: see Fitzgerald v Leonhardt Pty Ltd [1997] HCA 17; (1997) 189 CLR 215 at 242 3 per Kirby J.

There is now contained in the Corporations Law a comparatively sophisticated set of provisions as to the imposition of civil and criminal penalties upon persons involved in contraventions of the Law. The provisions of the Law to which I earlier referred are such that it would be inconsistent with the legislative scheme to treat the takeover agreement which I have found, to be illegal and void. The essential planks of the agreement are expressly preserved by s 615(6), s 260D and s 103(2); cf Batoka Pty Ltd v Jackson (1998) 30 ACSR 67 at 80.

For these reasons the Eutopia Agreement was neither void, nor unenforceable [146] [148].

72 In Westchester Pty Ltd v Triton Resources Ltd [2001] WASC 57, in the course of reasons relating to an application to strike out a pleading, Master Bredmeyer expressed the view that it was arguable that s 103(2) of the Law meant that an agreement in contravention of the Law was 'not automatically invalid because of the contravention, but may be if the court so decides' [12]. However, with respect, the master was only concerned with arguability, so that this observation should not be construed as a ruling upon the effect of s 103.

73 The observations of Master Bredmeyer were considered by the Court of Appeal of New South Wales in Winpar Holdings Ltd v Goldfields Kalgoorlie Ltd [2001] NSWCA 427. After referring to Batoka v Jackson and HCK China v Solar Honest, Giles JA, with whom Beazley JA and Davies AJA agreed, concluded that the effect of the statutory regime was that a transaction in contravention of the law could be restrained under s 1324 prior to its occurrence, but once made, the transaction was valid. Echoing the language of the earlier cases, his Honour observed:

The legislation gave those affected an opportunity to restrain the making of a contravening capital reduction, but once it was made preferred certainty over invalidity [60].

74 However, more recently, in Orrong Strategies Pty Ltd v Village Roadshow Ltd [2007] VSC 1, Habersberger J drew a distinction between invalidity and enforceability for the purposes of s 103 and s 209 of the Act. While he accepted that s 103 and s 209 preserved the validity of transactions undertaken in contravention of the Act, in his view those sections did not compel the court to enforce such agreements. In his view, if the court were obliged to enforce such agreements, the prohibitions contained in the Act would be ineffective [781]. Habersberger J placed reliance upon the views expressed by Master Bredmeyer in Westchester v Triton Resources, and distinguished the observations of Giles JA in Winpar Holdings v Goldfields Kalgoorlie, on the basis that the transaction in question had been effected [781]. In Orrong Strategies v Village Roadshow, the payments due under the agreement said to contravene the Act had not been made. Orrong sought enforcement of those agreements by judgment.

75 On one view, the decision of Habersberger J is generally consistent with earlier authority, by drawing a distinction between cases in which a contravening transaction is threatened, and cases in which the contravening transaction has been entered into and performed. Nothing in the decision in Orrong Strategies v Village Roadshow would suggest that in the latter case the injunctive power conferred by s 1324 could be used to undo a completed transaction.

76 As I have already observed, in the present case, the parties to the deed of release had done all that they were obliged to do under its terms. The deed itself comprised the mutual waivers and releases, and the minutes consenting to orders of the court were all executed and provided to the court. There is no action remaining to be performed by any party to the deed of release which could be the subject of an injunction granted pursuant to s 1324 of the Act.

77 For these reasons I conclude that, notwithstanding my conclusion that s 208 of the Act was contravened by entry into the deed of release, the agreement effected by the deed of release is nevertheless valid, no party to these proceedings seeks or requires its enforcement, nor is there any action or step remaining to be taken under the terms of the deed which is amenable to the power of the court to grant injunctive relief.

78 In these circumstances, an order of the court dismissing the SRA proceedings by consent is nothing more than an administrative or mechanical step, giving effect to a result which became inevitable once the deed of release was entered into and fully performed. Any attempt by SRA to resuscitate its claims in the SRA proceedings could be summarily and easily resisted by each of Resolute and MIU, on the grounds that:

(a) such a step would be an abuse of process, given SRA's consent to the proceedings being dismissed;

(b) SRA has no arguable cause of action in the proceedings, having entirely released any and all relevant causes of action.

The overwhelming strength of those grounds makes it highly likely that the defendants to the SRA proceedings would obtain indemnity costs orders in their favour if SRA were so foolhardy as to attempt to take any further step in the SRA proceedings. The defendants are not therefore at any material risk in relation to legal costs, which would be removed by the making of orders dismissing the SRA proceedings.

79 It follows that, unlike entry into the deed of release, orders of the court dismissing the SRA proceedings give no financial benefit to MIU. Such orders would therefore have no impact or effect upon the operation of s 208 of the Act. This conclusion is unaffected by the merits of the SRA proceedings and depends entirely upon the effect of the deed of release.

80 The conclusion that orders dismissing the SRA proceedings would not confer a financial benefit upon MIU provides an answer to each of Revelation's contentions.

81 Revelation's first contention is that the court should not make orders which would have the effect of depriving the shareholders of Summit of the rights conferred by ch 2E of the Act. However, that submission falls away given my conclusion that the making or giving effect to orders dismissing the SRA proceedings would have no effect upon the rights of shareholders because those orders do not involve the giving of any financial benefit which would otherwise involve a contravention of ch 2E of the Act.

82 Further, and in any event, I accept SRA's submission that referring a decision as to whether the SRA proceedings should be compromised to a meeting of shareholders is impractical for two reasons. First, in order to make an informed decision, shareholders would need access to all the documents relating to a complex piece of commercial litigation, including the legal opinions expressed in relation to the litigation, disclosure of which could be prejudicial to SRA's position in the litigation if it is not compromised. Second, the complexity and legal nicety of the issues involved in the decision to compromise makes them an inappropriate topic for meaningful debate at a meeting of all disinterested shareholders.

83 Revelation's second contention relies upon the events which took place at the extraordinary general meeting held on 3 November 2011. However, those events are irrelevant given my conclusion that member approval is not required in respect of the making of orders dismissing the SRA proceedings, because those orders do not confer any financial benefit upon MIU. Further and in any event, I would not draw any conclusion of significance from the events which took place at the extraordinary general meeting, given the insignificance of the numbers of shares voted at that meeting, once the shares voted by Paladin and Revelation are excluded from consideration having regard to the magnitude of Summit's issued capital.

84 Revelation's third contention relies upon the various events which preceded the commencement of these proceedings and which are said to give rise to a question as to whether the compromise of the SRA proceedings is in the best interests of Summit and its shareholders as a whole. However, rightly or wrongly, and even though in contravention of s 208 of the Act, the SRA proceedings, and all of SRA's causes of action have been compromised and released. That compromise remains effective notwithstanding the contravention of s 208 of the Act, and nothing remains to be done by any party to the deed of release that could be the subject of any injunction or restraint. The only question before the court is whether orders should be made or extracted giving effect to a fait accompli.

85 Accordingly, Revelation's contentions do not provide any basis for declining to make or give effect to orders dismissing the SRA proceedings.

86 I have concluded that directions should be made giving effect to the orders dismissing the SRA proceedings irrespective of any assessment of the merits of those proceedings. However, as submissions based upon the poor prospects of success in those proceedings made up a large part of the argument advanced by SRA, I should record my conclusion that the SRA proceedings had no realistic prospect of success, in case the matter goes any further. My reasons for that conclusion will be set out in a short annexure, which will be published only to SRA and Revelation in the first instance. However, those reasons will be published generally as part of these reasons following the conclusion of any appeal from this decision, or the expiry of time limited for appeal without any appeal being brought.

87 It follows that I accept SRA's submission that orders dismissing the SRA proceedings on terms which avoids any adverse costs order against SRA are not prejudicial to the interests of Summit or its shareholders as a whole, but rather advance those interests. It would not ordinarily be appropriate for a court to apply considerations of this kind in deciding whether or not to make an order which would have the effect of obviating the need for member approval, thereby usurping the role of the disinterested shareholders in a general meeting. However, given the impracticalities which would attend a consideration of the issues which arise in this case by a general meeting of shareholders, had it been necessary to do so, I would have taken the lack of prejudice into account when deciding whether or not to make the orders sought.

88 For the reasons I have given, the only orders properly made are orders relating to the dismissal of the SRA proceedings. Those orders should be made in those proceedings, as those proceedings provide the source of the court's jurisdiction. It is neither necessary nor appropriate to make any substantive orders in these proceedings which will be dismissed.

89 As I have noted, on 3 August 2007, I did in fact make orders by consent dismissing the SRA proceedings. The orders which I subsequently made to the effect that those orders not be settled, signed or sealed should be revoked, with the consequence that the orders dismissing the SRA proceedings can now be extracted. I will stay the operation of these orders for 21 days, or if any appeal is brought within that time, until disposition of the appeal or further order.

90 SRA relied upon three causes of action in its amended statement of claim. The first concerned the allegation that Resolute breached the joint venture agreement by disclosing to Valhalla, a Related Company, confidential information which was then disclosed by Valhalla in its prospectus.

91 The first and most obvious problem placed in the path of this cause of action is the fact that disclosure to a Related Company is expressly excluded from the disclosures prohibited by cl 15 of the joint venture agreement. In order to overcome that obvious problem, SRA pleaded three terms which are said to be implied into the joint venture agreement to overcome the fact that, on its face, cl 15 entitled Resolute to disclose to Valhalla. The legal requirements which must be met before a court will imply a term into an agreement in circumstances in which the parties have not themselves expressed it are well known. They are to the effect that before the court will take the step of importing a term which the parties have not themselves expressed, it must be established that:

(b) it must be necessary to give business efficacy to the contract;

(c) it must be so obvious that 'it goes without saying';

(e) it must not contradict any express term of the contract.

See BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, 283 (Viscount Dilhorne, Lord Simon of Glaisdale & Lord Keith of Kinkel); Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337, 347 (Mason J, Stephen, Aickin & Wilson JJ agreeing), 404 (Brennan J).

92 In the SRA proceedings those criteria would fall to be applied in a context in which the express terms of cl 15 specifically identify a circumstance in which a third party to whom disclosure is made is required to enter into a covenant to abide by the terms of the joint venture agreement prior to receiving the information. However, that obligation has not been expressly imposed by the parties upon a Related Company to which information is disclosed. While one can readily see the risk to the maintenance of confidence which the power to disclose to a Related Company creates if that Related Company is not required to abide by the terms of the joint venture agreement, it is also difficult to see, from the agreement itself, precisely how the parties would have expressed any restriction upon the power to disclose to Related Companies. Presumably, at the time of entering into the joint venture agreement, the parties contemplated that the right of disclosure to Related Companies would be exercised so that the Related Company could make use of the information disclosed. In this case, the information was used by the Related Company for the purposes of issuing a prospectus. It seems to me that there is nothing in the terms of the joint venture agreement which would clearly reveal the common intention of the parties to the effect that a related company could not use information provided to it for such a purpose. Put another way, it seems to me to be difficult to identify any terms having the effect for which SRA contended, that are so obvious that they go without saying and which are capable of clear expression. Nor does it appear to me that the construction for which SRA contended readily arises from the terms used in the agreement itself, given that there is an express provision restricting disclosure by third parties, but no such provision in relation to Related Companies. Indeed, it seems to me to be cogently arguable that the terms said to be implied relevantly contradict the express terms of the joint venture agreement.

93 The second problem which confronts this cause of action is that any breach was a breach committed by Resolute, not by MIU. If there was a notice of default served (which is another problem for SRA's case generally), on any view the time specified by the joint venture agreement within which the default was to be remedied before SRA obtained the option to acquire Resolute's interest had not expired before Resolute assigned that interest to MIU.

94 It also seems to me that there is a third difficulty in relation to this cause of action, which concerns the materiality of the breach alleged. At the time of entry into the joint venture agreement and at all material times thereafter, the parties to the joint venture have either been, or been controlled by, listed public companies (see ch 6CA of the Act). The provisions of the joint venture agreement should therefore be construed in a context in which it was the parties' expectation that they would be subject to the obligations of continuous disclosure imposed upon listed public companies. Although the precise content of the obligation of continuous disclosure has changed over time, and the parties might be taken to have assumed that the precise content of the obligation of public disclosure would continue to change over the life of their joint venture, in general terms they could be taken to have assumed that there would be an obligation to publicly disclose information that a reasonable person would expect to have a material effect on the price of securities in the relevant listed public entity. Pursuant to that obligation, it is of course common place for companies engaged in mineral exploration to provide details of their exploration activities to the market as and when those activities take place.

95 The material provided by Resolute to Valhalla and disclosed by Valhalla in its prospectus was material of that kind. It would only be information of a kind which the parties to the joint venture were not lawfully obliged to put in the public domain if it was information of a kind which a reasonable person would not expect to have an effect upon the market price for listed securities in the parties to the joint venture or their holding companies. But if it was information which would not be expected to have an effect upon the price of listed securities in the parties to the joint venture or their holding companies, it is difficult to see why and how disclosure of information of that level of banality could give rise to a 'material' breach in a context in which the consequences of material breach included potential loss of a party's interest in the joint venture at a 15% discount to true value. Accordingly, it seems to me that even if SRA were able to overcome the other hurdles in the path of this cause of action, there would be a significant obstacle in the path of establishing materiality of breach in relation to the information contained within the Valhalla prospectus.

96 The second cause of action asserted by SRA in the SRA proceedings concerned disclosure of the terms of the joint venture agreement itself. However, it is clear that the joint venture agreement was in the public domain as a result of lodgement with the Queensland Department of Natural Resources and Mines.

97 The third cause of action concerns alleged disclosure of confidential information to SXR and its advisor, Mincorp.

98 The evidence does not establish with great precision the information which is said to have been disclosed by MIU to Mincorp, and through Mincorp to SXR. Such evidence as there is suggests that it was information of a technical kind concerning the exploration of the Valhalla tenements and the analysis of the exploration results. Irrespective of the precise nature of the information disclosed, this cause of action faces the same conundrum which I identified in relation to the cause of action arising from the disclosure of the information which appeared in the Valhalla prospectus. If the information was of a kind that a reasonable person would think might affect the market in the securities of a publicly listed entity, it was information which Summit and the ultimate controller of MIU was legally obliged to place in the public domain. However, if the information was not of that character, it is difficult to see how its disclosure could be said to be a 'material breach', when that term is used in a context which gives rise to a default which could result in loss of a participating party's interest in the joint venture at a discount to value.

99 SRA faced another significant hurdle establishing that any breach by reason of disclosure to Mincorp and/or SXR was material. That is because such disclosure occurred only after execution of covenants by the entities receiving the information to the effect that it would be kept confidential, in accordance with the requirements of cl 15 of the joint venture agreement. Although SRA contended that execution of confidentiality deeds in these terms does not bring the disclosure within the terms of cl 15, because SXR was not a prospective acquirer of the joint venture interest, but rather a prospective acquirer of the shares in the ultimate holding company of the joint venture participant, the fact is that the parties receiving the confidential information had undertaken not to disclose it further, and there is no evidence to suggest that they breached those obligations. Nor is there any evidence to the effect that those entities used the information for any purpose other than to evaluate the prospect of making a bid for Valhalla. After reviewing the material SXR elected not to make a bid to acquire any direct or indirect interest in the joint venture. It therefore seems likely that disclosure of the information to Mincorp and SXR had no effect whatever upon the interest of SRA relating to the joint venture. It is therefore difficult to see how SRA could overcome the hurdle of showing that any breach by MIU was a 'material breach' within the meaning of the joint venture agreement.

100 Further, it might be assumed that the purpose of the disclosure to SXR and Mincorp was to enable SXR to consider whether to bid for shares in Valhalla, for the purpose of obtaining the best offer for those shares. This is in effect what SRA alleged in its statement of claim. However, if such a purpose had any effect at all on the value of SRA's interest in the joint venture, it would have had a positive flowon effect by encouraging SXR to bid.

101 It is also alleged that the disclosure to SXR was a breach of another term said to be implied into the joint venture agreement, this being a term to the effect that Resolute would not disclose any information in relation to the joint venture which was not in the public domain, to any person with the intention of, or for the purpose, or with the understanding that such disclosure would in fact have the effect of enabling circumvention of Summit's first right of refusal.

102 The first and obvious obstacle in the path of the success of this claim is that the implied term is said to apply to disclosures made by Resolute, but is said to have been breached by disclosures made by MIU. This obstacle appears to me to be insuperable.

103 Further and in any event, in my view, SRA would have considerable difficulty in implying a term to the effect alleged, having regard to the criteria that must be met for the implication of such a term, and to which I have already referred.

104 For these reasons, the SRA proceedings had no realistic prospects of success.