RECCE PHARMACEUTICALS LTD -v- IAN DAVID BROWN [2022] WASCA 66 (13 June 2022)

1. Recce contends that the terms and conditions which govern the performance shares, properly construed, do not entitle the claimants to convert the performance shares into ordinary shares.

2. In the alternative, Recce contends that the terms and conditions which govern the performance shares contain an implied term to the effect that conversion was subject to the holders of the performance shares having 'materially contributed' to the achievement of the performance milestone.

4 Recce accepts that, absent such a construction or the implication of such an implied term, the claimants are entitled to convert the performance shares into ordinary shares - albeit complaining that that the claimants did not contribute to Recce's attainment of the performance milestones.[1]

5 For the reasons that follow, both of Recce's contentions fail. The master was correct to hold that Recce was obliged to convert the C and D class performance shares into ordinary shares notwithstanding that the respondents as holders of the performance shares had ceased to be directors or key management personnel of Recce at the time that the performance milestones were satisfied. The appeal must be dismissed.

6 There was no dispute between the parties as to the relevant facts.[2] In recounting the facts the master adopted what was stated in the claimants' written submissions.[3] What follows is taken from that exposition and is amplified by uncontradicted affidavit evidence and the relevant documents where appropriate.

7 Recce was incorporated in 2007. It describes itself as an early-stage pharmaceutical company engaged in the development of a new class of antibiotics to address antibiotic resistant bacteria. From about June 2015 Recce took steps to list on the Australian Securities Exchange (ASX). On 13 January 2016 Recce was admitted to the official list of the ASX. The performance shares the subject of the litigation were issued in the interim in the circumstances detailed below.

8 In June 2015 Recce sought approval to issue performance shares to its then shareholders (not merely its then directors and key management personnel) ahead of an initial public offering.

9 It is convenient, at this juncture, to refer to some of the regulatory context. At the relevant time ASX Listing Rule 6.1 provided, in substance, that the terms that applied to each class of a listed entity's equity securities must, in the ASX's opinion, be appropriate and equitable - necessitating, among other things, that the rights and obligations attaching to a listed entity's securities be fair to new and existing security holders. ASX Guidance Note 19 (GN-19) was introduced by the ASX to assist listed entities in structuring the terms of performance shares to comply with the ASX Listing Rules.[4] In that regard GN-19 informed entities that the ASX strongly recommended that entities proposing to issue performance shares apply to the ASX for in-principle advice that the terms of any performance shares will satisfy Listing Rule 6.1 before the entity issues the shares or enters into any legally binding agreement to do so.[5]

10 GN-19 differentiated between a 'performance share' and a 'performance option' or a 'performance right'. It described the term 'performance share' as:

[A] generic term referring to a share that has limited rights unless and until a nominated performance milestone is achieved, but that converts into a given number of ordinary shares with all the usual rights attached if and when the milestone is achieved.[6]

11 In outlining some of the reasons for issuing performance shares, GN-19 stated that performance shares are sometimes issued to directors, senior managers or contractors as a means of incentivising them to achieve a particular performance milestone. The ASX accepted that appropriately framed performance shares can benefit listed entities and their security holders. Accordingly, the ASX was willing to allow them, provided that the performance shares complied with the Listing Rules.[7]

12 GN-19 identified base requirements for all performance shares[8] and what would be taken into account in determining an appropriate number of performance shares.[9] Then, in addressing appropriate and equitable performance milestones, GN-19 stated:

To meet the requirements of Listing Rules 6.1 and 12.5 or Listing Rule 1.1 condition 1, the performance milestone attached to a performance share must be appropriate and equitable. ASX considers that this requires the following:

(1) there must be an appropriate link between the performance milestone and the transaction or purpose for which the performance share is to be issued;

(2) the performance milestone must be clearly articulated by reference to objective criteria so that investors and analysts can readily understand, and have reasonable certainty as to, the circumstances in which the performance milestone will be taken to have been met;

(3) the number of ordinary shares into which the performance share will convert if the relevant milestone is achieved must be fixed or calculated by reference to a formula that delivers a fixed outcome ...; and

(4) the performance share must have an expiry date by which the relevant milestone is to be achieved and, if the milestone is not achieved by that date, either the performance share must be cancelled or bought back for no or nominal consideration only or else the total number of performance shares on issue must convert into a nominal amount of ordinary shares only.[10] (footnotes omitted) (emphasis added)

13 Examples were given of performance milestones that the ASX considered inappropriate. They included the issue of performance shares to a director where the milestone to be achieved was that the director simply hold office until a nominated date. This was inappropriate because it rewarded the director for doing nothing more than staying in office and therefore was not a meaningful performance hurdle.[11]

ASX has no objection, in an appropriate case, to having a performance milestone related to the market price of an entity's securities. Care, however, needs to be taken in framing the milestone so that it is appropriate and equitable, noting that:

• security prices can be affected by macroeconomic factors, market sentiment and other matters unrelated to the performance of the entity;
• security prices can fluctuate significantly over a short period and achieving a nominated hurdle briefly before the price falls back below that hurdle may not be a fair measure of sustainable performance; and
• security prices may be susceptible to manipulation, especially in the case of thinly traded securities or if measured at a single point in time (for example, at the close of trading on a particular day).

For these reasons, ASX recommends that a security price hurdle attached to a performance share should be based on volume weighted average market price over a reasonable period (for example, over 20 consecutive trading days on which the entity's securities have actually traded).[12] (footnotes omitted)

15 GN-19 notified market participants that the ASX generally imposed a condition that an entity obtain approval from ordinary shareholders to the issue of any proposed performance shares.[13]

16 Returning to the factual narrative, on 5 June 2015 Recce issued a notice of extraordinary general meeting seeking shareholder approval for various matters. These included that approval be given for the company to issue performance shares to shareholders on the terms and conditions set out in an accompanying explanatory statement. The explanatory statement stated that the performance shares would only be issued to shareholders as at 5 June 2015. Recce proposed to issue four classes of performance shares - one performance share in each class for every four ordinary shares held - with each class having a separate milestone event triggering conversion from a performance share to an ordinary share.

The purpose of the issue of the Performance Shares is to reward the initial investors in the Company.[14]

18 Subject to any changes required by the ASX, the terms and conditions of the performance shares included conversion rights as follows (cl k):

A Performance Share in the relevant class will convert into one Share upon achievement of:

(i) Class A: the volume weighted average price of Shares as traded on ASX over 20 consecutive trading days on which the Shares are traded) [sic] is not less than $0.30 within 5 years from the date of issue of the Performance Shares (Milestone).

(ii) Class B: the Company is awarded the US Food and Drug Administration's (FDA) Investigative New Drug (IND) status (or European equivalent - European Medicines Agency (EMEA)) within 5 years from the date of issue of the Performance Shares (Milestone).

(iii) Class C: the Company is granted FDA's phase 1 approval (or European equivalent - European Medicines Agency (EMEA)) within 10 years from the date of issue of the Performance Shares (Milestone).

(iv) Class D: the Company is granted FDA's phase 2 approval (or European equivalent - European Medicines Agency (EMEA)) within 10 years from the date of issue of the Performance Shares (Milestone).[15] (original emphasis)

19 The extraordinary general meeting was held on 30 June 2015. At that time the ASX was still reviewing the proposed resolutions in relation to the performance shares. The chairperson of the meeting informed shareholders that it was possible that Recce might be required to amend the resolutions both as to eligibility and the period for satisfaction of the C and D class performance share milestones. The shareholders nevertheless agreed to proceed with the resolutions knowing that Recce may have to make amendments as required by the ASX. The shareholders passed a resolution approving the issue of the performance shares to shareholders on the terms and conditions set out in the explanatory statement.

20 Before the extraordinary general meeting, Recce had sought the ASX's in principle advice that the ASX would approve the terms of the proposed performance shares as being appropriate and equitable for the purpose of the ASX Listing Rules. Recce did so by its solicitors' letter dated 24 June 2015. In that letter, Recce, by its solicitors, explained that the shares presently on issue were primarily held by directors and other key personnel (those persons or their associated entities holding some 85.5% of the shares on issue with the 14.5% balance held by 21 seed investors). The letter stated that the purpose of the issue of the performance shares was primarily to incentivise the directors and key management personnel to achieve the performance milestones. However, the company also proposed to extend the issue of the performance shares to all other seed capital investors so that the issue was equitable to all investors that had supported the company by providing funding prior to listing on the ASX.[16]

21 On 17 July 2015 the ASX informed Recce's solicitors that the ASX preferred the proposed performance shares to have:[17]

1. An expiry date no longer than 5 years after the date of issue.

2. Alternative milestones for the C and D class performance shares.

22 On 27 July 2015 Recce proposed different performance criteria for the C and D class performance shares being:[18]

1. C class performance shares: The volume weighted average price of Recce's ordinary shares as traded on the ASX over 20 consecutive trading days was to be not less than $0.60 (with the milestone event to be satisfied within 5 years from the date of the issue of the performance shares).

2. D class performance shares: The volume weighted average price of Recce's ordinary shares as traded on the ASX over 20 consecutive trading days was to be not less than $1.20 (with the milestone event to be satisfied within 5 years from the date of the issue of the performance shares).

23 On 17 August 2015 the ASX informed Recce, by Recce's solicitors, of the terms and conditions on which the ASX would be likely to confirm that the proposed terms of the performance shares were appropriate and equitable for the purposes of ASX Listing Rule 6.1. The solicitors passed that on to Recce the next day. In the email that accompanied the ASX's letter Recce's solicitors said that, although not expressly stated in the ASX's letter, the ASX would only permit the performance shares to be issued to 'directors and key management personnel' rather than general seed capital shareholders.[19] That was consistent with the ASX's letter of 17 August 2015. In its letter the ASX noted that Recce was proposing to issue performance shares in four classes 'as a means to incentivise the directors and key management personnel to achieve particular performance milestones'.[20]

24 In subsequent correspondence, received by Recce's solicitors after the issue of the C and D class performance shares, the ASX confirmed its position that it was not appropriate that performance shares be issued to seed capital investors as 'there is no performance element that they can influence or achieve in their position as they are neither vendors nor management nor employees'.[21]

25 Recce's directors executed a circular resolution to issue A and B class performance shares to its directors and key management personnel on 19 August 2015.[22] The following day, on 20 August 2015, the directors executed a circular resolution to issue C and D class performance shares to the directors and key management personnel.[23] The circular resolution recited the shareholder approval and changed performance milestones following the ASX consultation. It also recited that:

ASX advised the Company that the Performance Shares could only be issued to directors and key management personnel. This is a variation from what was originally proposed by the Company ie to issue Performance Shares to all shareholders of the Company that were on the Company's share register as at 5 June 2015.[24]

(1) That the Company issue 8,754,423 Class C performance shares:

(a) to Directors and Key Management Personnel as listed per Attachment 1; and

(b) the terms and conditions for these Performance Shares are as per Attachment 2.

(2) That the Company issue 8,754,423 Class D performance shares:

(a) to Directors and Key Management Personnel as listed per Attachment 1; and

(b) the terms and conditions for these Performance Shares are as per Attachment 2.[25]

27 The 'Directors and Key Management Personnel' as listed in attachment 1 included the claimants (although some of the performance shares were to be issued to associated entities). Those mentioned included:

1. Mr Brown[26] - Mr Brown was a non-executive director of Recce appointed on 23 June 2015. Mr Brown was to be issued with 56,250 C class performance shares and 56,250 D class performance shares.

2. Michael Aarons[27] - Mr Aarons was employed by Recce as laboratory manager from 1 July 2015. Mr Aarons was to be issued with 718,749 C class performance shares and 718,749 D class performance shares in his capacity as trustee of the Aarons Superannuation Fund and a further 234,375 C class performance shares and 234,375 D class performance shares in his capacity as trustee of the IMS Pacific Trust. Also, an entity associated with Mr Aarons, Antarctica Pacific Pty Ltd,[28] was to be issued with 234,375 C class performance shares and 234,375 D class performance shares.

3. Dongke Zhang[29] - Mr Zhang was a non-executive director of Recce appointed on 23 June 2015. Mr Zhang was to be issued with 56,250 C class performance shares and 56,250 D class performance shares.

4. Peter Williams[30] - Mr Williams was employed by Recce as its chief financial officer from 19 May 2015 and appointed as company secretary on 3 June 2015. Mr Williams was to be issued with 56,250 C class performance shares and 56,250 D class performance shares.

28 The rights attaching to the performance shares to be issued were set out in the terms and conditions in attachment 2 to the directors' resolution. Relevantly, the performance shares were non-transferable (cl (g)). As to conversion, the terms and conditions stated:

(l) (Conversion on achievement of milestone) Subject to paragraph (m), a Performance Share in the relevant class will convert into one Share upon achievement of:

(iii) Class C: the volume weighted average price of Shares as traded on ASX over 20 consecutive trading days on which the Shares are traded is not less than $0.60 within 5 years from the date of issue of the Performance Shares (Milestone).

(iv) Class D: the volume weighted average price of Shares as traded on ASX over 20 consecutive trading days on which the Shares are traded is not less than $1.20 within 5 years from the date of issue of the Performance Shares (Milestone).[31] (original emphasis)

29 Clause (m) is immaterial to the issues on the appeal.

30 The conversion terms and conditions went on to provide:

(n) (Redemption if Milestone not achieved) If the relevant Milestone is not achieved by the required date, then each Performance Share in that class will be automatically redeemed by the Company for the sum of $0.00001 within 10 Business Days of non satisfaction of the Milestone.

(o) (Conversion procedure) The Company will issue the Holder with a new holding statement for any Share issued upon conversion of a Performance Share within 10 Business Days following the conversion.

(p) (Ranking upon conversion) The Share into which a Performance Share may convert will rank pari passu in all respects with existing Shares.[32]

31 A, B, C and D class performance shares were issued to the claimants on or about 20 August 2015. On 1 September 2015 Recce informed its shareholders that, based on the ASX's advice, only directors and executive staff could be the recipients of the performance shares. The issue of the performance shares was then referred to in Recce's annual reports and various ASX lodgements between 2016 and 2019.

32 Recce achieved the A class performance shares milestone at a time when the relevant claimants all continued in their respective positions as directors or key management personnel. Recce converted the claimants' A class performance shares into ordinary shares. Thereafter the claimants ceased their roles with Recce. Mr Brown and Mr Zhang resigned as directors on 8 April 2016. Mr Aarons' employment was terminated on 16 September 2016. Mr Williams' position as company secretary and chief financial officer was terminated on 27 November 2017.

33 Recce announced on 26 June 2020 that it had achieved the C class performance shares milestone. On 17 August 2020 Recce announced that it had achieved the D class performance shares milestone.

34 The ASX announcement of 26 June 2020 asserted that the C class performance shares held by former directors and key management personnel were ineligible for conversion. In correspondence Recce informed the claimants that it considered it was a requirement of the performance shares that the relevant director or key management person continue to be employed by the company to be eligible for conversion of the performance shares. In subsequent correspondence solicitors for Recce stated that:

Having regard to the terms of the Issuing Resolution, properly construed as a whole and in the circumstances in which it was passed, it was an implied term of the Performance Shares that they would only be eligible for conversion so long as the holder of those Performance Shares:

(a) continued to be employed by or hold office with (as applicable) the Company at the time the relevant milestone is achieved; and/or

(b) caused or materially contributed to the Company achieving the relevant milestone.[33]

35 Recce advanced a similar position in letters to the claimants dated 21 August 2020 in which it contended that the performance milestones under the D Class performance shares issued to the claimants were incapable of being satisfied.

36 The claimants issued an originating process invoking the court's jurisdiction under the Corporations Act 2001 (Cth) seeking orders that Recce convert the C and D class performance shares to ordinary shares.

37 Recce advanced two legal arguments in opposition to the relief sought by the claimants. First, applying what it said were orthodox principles of construction, Recce said that, properly construed, the performance shares required 'performance' by the holders thereof up to or around the point in time when the performance milestone was reached. Without such performance there was no right of conversion. Second, if such a condition did not arise on the proper construction of the terms and conditions, Recce submitted that it should be implied. Recce said that, in the alternative to its construction argument, the terms governing the performance shares contained an implied term to the effect that performance had to be provided by the holders of the performance shares up to or around the point in time when the performance milestone was reached.

38 The master rejected both arguments.[34]

39 The master referred to ASX Listing Rule 6.1 and GN-19.[35] He observed that nowhere did the Guidance Note refer to actual performance by the individuals to whom the shares are issued. In the master's view, the term 'performance' referred to the shares rather than the performance of the holders of the shares. Thus, if - as was the position in this case - the performance milestone had been achieved, the holder of the performance shares was entitled to the conversion of the shares into ordinary shares.[36]

40 As to Recce's alternative contention, the master held there was no warrant for implying the suggested implied term. The master said that the conditions for implying a term did not exist. He identified issues in stating a term that was both clearly expressed and yet reasonable and equitable. The master concluded that the difficulties in implying a term were manifest and obvious, holding that no term could be implied.[37]

41 There are two grounds of appeal. They reflect the basis on which Recce opposed the relief sought by the claimants before the master. Recce contends that:

1. The master erred in construing the rights attached to the performance shares in that the master should have held that the conversion rights only crystallised on performance having been provided by the holder up to or around the point in time when the performance milestone (ie the achievement of the share price) had been reached (ground 1).

2. The master erred in holding that there was no warrant for implying a term in that, having accepted that there needed to be an appropriate nexus between the performance milestone and the conduct being rewarded, the master should have found there was an implied term to the effect that the holders of the performance shares had to have materially contributed to the achievement of the performance milestone (ground 2).

42 In support of its grounds of appeal, Recce largely repeats the substance of its submissions before the master. It is convenient to summarise those submissions when addressing the grounds.

Disposition: Ground 1 - the proper construction of the conversion right The parties' submissions

43 Recce advanced a construction of the terms of the C and D class performance shares whereby the 'Holder' of the performance shares needed to continue to be a director or key management personnel of Recce until the performance milestone was achieved.[38] It was said that each 'Holder' (a defined term in cl (b) of the terms and conditions in attachment 2) was identified and occupied a position either as director or key management personnel of Recce.[39]

44 This also followed, according to Recce, from the alleged express purpose of the performance shares - that being to incentivise the Holders so that they, individually and collectively, would contribute to the success of the company as reflected in the achievement of the increase in the trade-weighted share price.[40] The intention of incentivising and rewarding the directors and key management personnel was said to be relevant at both the date of conferral and the date of conversion.[41] Recce argued that to construe the terms in any other way would be to defeat its intention in issuing the shares, ignore the purpose and object of the transaction, remove the element of incentivisation, allow the holder to be rewarded for nothing thereby serving a non-commercial purpose, and read down the term 'performance' inconsistently with the terms of GN-19.[42] Recce also relied on observations of Lander J in Biodiesel Producers Ltd v Stewart.[43]

45 In Biodiesel Producers Ltd v Stewart Lander J stated:

The very purpose of performance shares, in my opinion, is to induce the person to whom the shares are given to perform. That was the purpose for their issue in this case because it was important for the applicant to have those who had the responsibility of managing the applicant achieve the performance criteria. The performance shares were issued with the objective intention that the performance criteria in the performance shares would be met by the holders of the performance shares themselves. That means that the respondents had to cause the applicant to achieve the performance milestones.[44]

46 As well as relying on a like purpose, in terms of relevant context, Recce pointed to the modification to the terms of issue of the performance shares as required by the ASX in-principle approval. The issue of the performance shares was limited to directors and key management personnel even though Recce had originally intended to include all initial shareholders (see [16], [17], [20], [23] - [25] above). In particular, Recce relied on the recital [45]produced at [25] above.45

47 In support of its preferred construction, Recce pointed to the usage of the words 'Director/Key Management Personnel' in the directors' resolution and attachment 1 to the resolution. The performance shares were issued to the holders as 'Directors and Key Management Personnel' as listed in attachment 1 because they held a particular designation. Recce contended that, read and construed objectively, the intention was that the holder must remain within those positions up to the time the relevant performance milestone was met.[46] Accordingly, the status-based entitlement - being a director or key management personnel - was both an enabling criterion for the issue of the performance shares and a pre-condition for their conversion.[47]

48 Recce contended that the same result could be achieved by reading in words to the terms and conditions governing the performance shares. For example, in dealing with certain rights at cl (b) of the terms and conditions, Recce invited the addition of the words 'being a director/Key Management Personnel' after the introduction of the defined term 'Holder'. Alternatively, Recce said that cl l (see [28] above) should be read:

... a Performance Share in the relevant class held by a Director / Key Management Personnel will convert ...[48] (Recce's emphasis)

49 Recce criticised the master's analysis as being too narrow in restricting performance to achievement of the milestone event, ignoring the surrounding circumstances and, in looking only at the meaning of the word 'performance', inconsistent with the correct legal approach to the interpretation that attached to the performance shares.[49] In terms of surrounding circumstances, Recce relied on its dealings with the ASX, the terms of GN-19 (in particular that there should be an appropriate nexus between the performance milestone in question and the conduct being rewarded) and the status requirement that the recipients of the performance shares occupy substantive positions as either directors or key management personnel.[50] Recce sought to emphasise that the expressed sole purpose of the performance shares, as set out in its application to the ASX for in-principle approval, was to incentivise the directors and key management personnel to achieve the performance milestones.[51] Recce also said that the master did not refer to, or apply, orthodox principles of contractual interpretation as it relied on in the court below.[52]

50 The claimants supported the construction of the terms and conditions attaching to the performance shares as found by the master. They submitted that the performance milestone described in the terms and conditions attached to the C and D class performance shares were clear and unambiguous and capable of one meaning only. The master was said to have correctly found that the trigger for conversion was simply achievement of the performance milestone.[53]

1. The master should not have considered extrinsic materials when constructing the conversion rights because no ambiguity was or could properly be identified.[54]

2. Recce's preferred construction was not 'commercial' in that it was prejudicial to the rights of the holders of the performance shares by rendering conversion discretionary in the hands of Recce.[55]

52 In referring to applicable principles of construction, Recce observed that:

1. A company's constitution has effect as a contract between itself and each member, director and company secretary and between the members themselves.[56]

2. The general principles of construction of commercial contracts are applicable to corporate constitutions.[57]

53 Those propositions were not in dispute on the appeal. It should, however, be recognised that the court is not concerned with the construction of Recce's constitution. Rather, the relevant instrument is the 'Terms and Conditions of Performance Shares' being attachment 2 to the directors' circular resolution dated 20 August 2015 pursuant to which the C and D class performance shares were issued.[58] In recognition of this, Recce suggested that the court was not constrained to merely apply contractual construction principles. Recce argued that there was greater flexibility in interpreting the rights attaching to the performance shares as the provision of the performance shares was more closely aligned to a bequest made under a will than a bargain struck between two parties each providing consideration. As developed, the argument was that Recce's solitary intention was the critical consideration because the court was identifying and effectuating the intention of the company as donor of the performance shares. Recce contended that it would be unduly restrictive to treat the instrument as a contractual document in respect of which the court had to divine the intentions of the contracting parties.[59]

54 According to senior counsel for Recce, while the task of construction remained one of objective determination relying on text, context and purpose, there was greater scope for the court to interpret the relevant instrument in a way that cohered with the underlying purpose of the transaction.[60]

55 We do not accept that some unique or distinctive approach to construction applies to an instrument of the type that is currently before the court. So far as the terms and conditions in attachment 2 to the directors' circular resolution constitute a unilateral instrument, it is one that is just as analogous to a declaration of trust as it is to a bequest by will. In Byrnes v Kendle, Heydon and Crennan JJ said that the rules for the construction of contracts apply also to trust instruments.[61] In that regard it is established that, in relation to trusts as in relation to contracts, the search for intention is only a search for the intention as revealed in the words used amplified by the facts known to the relevant parties.[62] In other words, the relevant intention is manifested by the declaration; there is no requirement for inquiry into the subjective intention of the settlor.[63] The expressed intention is found in the meaning of what was said, not what the declarant meant to say.[64]

56 In contending for a different approach to construction - one more 'closely aligned' to the principles concerning the construction of wills - Recce's written submissions contended that those principles are broader as the court 'is not seeking to discern the agreed intention between two or more parties but, instead, is attempting to identify and effectuate the intention of the donor'.[65] It is accepted, however, that in the context of interpreting a will, the court is not concerned with the subjective or 'real' intention of the deceased. The court is concerned with the intention of the deceased as revealed in the words of the will. As was said long ago by Lord Wensleydale in Abbott v Middleton:

The question in expounding a will ... 'is not what the testator meant, but what is the meaning of his words'. The use of the expression that the intention of the testator is to be the guide, unaccompanied with the constant explanation, that it is to be sought in his words, and a rigorous attention to them, is apt to lead the mind insensibly to speculate upon what the testator may be supposed to have intended to do, instead of strictly attending the true question, which is, what that which he has written means ... It is now, I believe, universally admitted, that in construing that writing the rule is to read it in the ordinary and grammatical sense of the words, unless some obvious absurdity, or some repugnance or inconsistency with the declared intentions of the writer, to be extracted from the whole instrument, should follow from so reading it. Then the sense may be modified, extended or abridged, so as to avoid those consequences, but no farther.[66]

57 Accordingly, in terms of identifying intention for the purpose of the task of construction, there is commonality of approach in construing an instrument, be it a contract, a deed of trust or a will. The question for consideration is not what the parties or party meant to say, but rather is what is the objective meaning to be attributed to the words the parties or party used to express what was agreed or provided for. That, in our view, is the proper approach to construing the terms and conditions attaching to the performance shares. Those terms and conditions are a commercial instrument. The general principles to be applied in construing commercial instruments are well established[67] and do not require detailed elaboration for the proper disposition of this appeal.

58 In broad summary, the text used is to be interpreted objectively by considering what the language adopted would mean to a reasonable person in the position of the parties or party. The text used is to be considered in its relevant context, including the surrounding circumstances known to the parties or party at the time of the transaction, and having due regard to the purpose or object of the transaction as revealed by the text and context.

59 At this point it is convenient to deal with two of the respondent's supplementary arguments (see [51] above).

60 The master was not in error in having regard to extrinsic materials when construing cl (l) of the terms and conditions attaching to the performance shares. Evidence of surrounding circumstances was admissible to assist in the interpretation of the instrument even if no ambiguity in meaning could properly be identified. Ordinarily the process of construction is possible by reference to the instrument alone. Indeed, as was said by French CJ, Nettle and Gordon JJ in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd, where an expression is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances cannot be adduced to contradict that plain meaning.[68] But, as their Honours went on to say:

[S]ometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating'.[69]

61 Such surrounding circumstances may assist in identifying the purpose or object of the transaction.[70] Accordingly, evidence which facilitates an understanding of the genesis of the transaction, and the background, context and market in which the parties or party to a commercial instrument are operating, is relevant to the proper construction of the instrument irrespective of whether the court is confronted with a constructional choice.[71] It was on this basis that the master received and had regard to the extrinsic evidence that Recce relied on. Doing so was consistent with principle.

62 As to the respondent's argument that Recce's construction was not 'commercial', it should be remembered that while a commercial instrument ought to be construed so as to avoid it making commercial nonsense or working commercial inconvenience, commercial common sense is a topic on which reasonable minds may differ and in respect of which an imputed consensus may be impossible.[72] For that reason alone the court should be careful before departing from the natural meaning of a provision merely because it might be thought to conflict with notions of commercial common sense. The court must also be astute not to confuse commercial common sense with each party's differing commercial interests - the latter often informing the parties' respective contentions as to what is or is not a construction that produces a commercial result.

63 The limits of commercial common sense as a guide to construction were described by Gibbs J (as his Honour then was) in a well-known passage in Australian Broadcasting Commission v Australasian Performing Right Association Ltd:

If the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, 'even though the construction adopted is not the most obvious, or the most grammatically accurate'... [73]

64 Accordingly, commercial purpose - as perceived by the court - cannot override the words of the instrument where those words are clear. The court is not able to disregard clear words. Nor, under the guise of construction, may the court re-write an instrument.[74]

65 The construction of cl (l) of the terms and conditions attaching to the performance shares (as found in attachment 2 to the directors' circular resolution) involves a determination of the meaning of the words of the instrument by reference to their text, context and purpose. The starting point is the language used in the provision, which must be read and construed in the context of the instrument as a whole. In particular, one starts by identifying the possible meanings that the words chosen by the parties can bear.

66 The text of cl (l) is reproduced at [28] above.

67 The immediate purpose or object of cl (l) is to provide for the circumstances in which the various classes of performance shares will convert to ordinary shares. It is, however, possible to identify a broader purpose. Clause (l) nominates the applicable performance milestones for the conversion of the performance shares into ordinary shares. In issuing the performance shares, and nominating the performance milestones in cl (l), Recce manifested a purpose or object of rewarding the holders of the performance shares for the achievement of the milestones - thereby encouraging the holders to act so that Recce's share price increased to not less than $0.60[75] (as to the C class performance shares) or $1.20[76] (as to the D class performance shares).

68 That broader purpose is apparent from: (1) the nature of the performance shares (including their lack of commercial value in the absence of achievement of the relevant performance milestone); (2) the circumstance that the performance shares were issued to directors or key management personnel or entities associated with directors or key management personnel (directors and key management personnel being persons who, in the ordinary course, might be expected to contribute positively to Recce's financial position and prospects so as to increase its share price); and (3) the permissible use of performance shares in the regulatory environment of GN-19 (Recce objectively evincing an intention to comply with such permissible use given its modification to the proposed issue of the performance shares post-consultation with the ASX).

69 In identifying the purpose of cl (l) it is not necessary to rely on Biodiesel Producers Ltd v Stewart. Identification of the purpose or object intended to be secured by a commercial instrument is to be inferred from the express or implied terms of the instrument and any admissible evidence as to the surrounding circumstances. It must be ascertained objectively, and is revealed by the text and structure of the instrument facilitated by an understanding of the genesis of the transaction, its background, the context and the market in which it operates, rather than being derived from any assumption about the desired or desirable reach of the operation of the relevant provisions. It cannot be assumed that the purpose identified in Biodiesel Producers Ltd v Stewart, based on the terms of the performance shares and surrounding circumstances in that case, applies equally to the present case. That is all the more so given the different nature of the 'performance criteria' that were to be satisfied in Biodiesel Producers Ltd v Stewart.[77]

70 In terms of context, speaking broadly, the terms and conditions attaching to the performance shares fall into two categories. Attachment 2 to the circular resolution deals first with the rights attaching to the performance shares (see cl (a) - cl (k)). By cl (k) the performance shares only have the rights as are so expressly provided and rights provided by law which cannot be excluded. Attachment 2 then deals with conversion of the performance shares (cl (l) - cl (p); see also cl (i)).

71 As to the rights attaching to the performance shares:

1. Clause (a) confirmed that each performance share was a share in the capital of Recce.

2. Clause (b) conferred certain rights on the holder of each performance share and introduced the defined term 'Holder' as being the holder of a performance share. The rights expressly conferred by cl (b) were limited. Holders had the right to receive notices of and to attend general meetings. Holders also had the right to receive financial reports and accounts as circulated to ordinary shareholders.

3. Clause (c) - cl (g), cl (j) and cl (k) identify rights to which a Holder was not entitled. These include, as already mentioned, a right of transfer (cl (g)). Accordingly, the Holder will remain the owner of the performance shares until conversion or redemption. Clause (i) confirmed that the performance shares would not be listed for quotation on the ASX.

72 The provisions as to conversion have been reproduced at [28] - [30] above. Importantly, cl (l) provided for conversion on achievement of the relevant performance milestone. No further action was required on the part of the Holder. Similarly, if the milestone was not met by the required date, the performance shares were to be automatically redeemed by a nominal payment (cl n). Various obligations arose for Recce after conversion, ie the issue of holding statements to Holders (cl (o)), application for official quotation of the ordinary shares arising from conversion (cl (i) and the ranking of such shares (cl (p)).

73 Clause (l) does not, on its face, contain any requirement for conversion to the effect that the Holders of the performance shares continue in office as directors or key management personnel until the time of achievement of the relevant performance milestone.

74 In this respect, senior counsel for Recce was asked to identify the textual basis for Recce's preferred construction. Senior counsel pointed to two aspects of the circular directors' resolution providing for the issue of the performance shares. First, the word 'performance' in the phrase 'performance share'. It was said that the Holder had to be involved in performing tasks that would contribute to the achievement of the relevant milestone, there being a required nexus between the incentive provided by the shares and the achievement of the milestone. Second, the circumstance that the conferral of the right was in favour of a designated class of Holder, namely, individuals occupying a position as Recce director or key management personnel. It was contended that in so designating the persons who could qualify as a Holder, the terms and conditions attaching to the performance shares were imbued with an assumption that the Holders had, by occupying those roles, contributed to the achievement of the relevant milestone.[78]

75 In short, on Recce's argument, implicit in the word 'performance' - when read in the context of the designated class of director or key management personnel 'Holders' to be issued the performance shares - was a requirement that the Holders continue in their respective role as director or key management personnel until achievement of the relevant milestone. This was because such a Holder only obtained the shares (and the rights accruing in respect of the shares) as the Holder was a person who had performance obligations to Recce as director or key management personnel.[79]

76 The circular directors' resolution, and the attachment 2 terms and conditions applying to the performance shares, contain many references to the word 'performance' as part of the term 'performance shares'. But at no time is the word 'performance' used singly. So understood, the word 'performance' is descriptive of the shares. Moreover, so far as cl (l) might be thought to contain performance milestones (that being terminology employed in GN-19)[80] the relevant milestones were concerned with the performance of the volume weighted average share price of Recce's ordinary shares. In that sense, the performance milestone referred to the company's performance rather than the directors' or key management personnel's performance.

77 While, in the ordinary course, it might be expected that the directors' and key management personnel's actions would materially contribute to Recce's financial position and prospects, such actions could not be expected to be the sole contributing factor to Recce's performance. Recce's performance - in terms of its volume weighted average share price over 20 consecutive trading days - would not necessarily be expected to be attributable, either wholly or in part, to its directors' or key management personnel's performance of their duties and functions. Matters unrelated to an entity's performance such as macroeconomic factors and market sentiment may affect share price, as was recognised in GN-19 (see [14] above). In those circumstances we do not accept Recce's contention that the word 'performance' in the phrase 'performance share[s]' conveyed a requirement that there be a nexus between incentive and milestone in terms of the carrying out of tasks by the directors or key management personnel.

78 So far as Recce emphasises the word 'Holder' in suggesting that there is a textual foothold for its preferred construction, the term 'Holder' is not used in cl (l) in providing for the conversion of the C and D class performance shares on achievement of the relevant milestone. To the contrary, cl (1) is expressed in unqualified language: a performance share in the relevant class 'will convert' upon achievement of the specified milestone. Similarly, cl (n) provides for automatic redemption - without words of qualification - if the relevant milestone is not achieved by the required date.

79 In this respect the construction urged by Recce requires the court to read in words of implied limitation confining the circumstances in which conversion is to proceed - it adds a condition of continuation in office as director or key management personnel over and above the relevant milestone event. But there is, contrary to Recce's contention, no identifiable textual basis for the imposition of Recce's suggested condition in the terms and conditions attaching to the C and D class performance shares. For the reasons we have given, cl (l), in referring to 'performance', imports no such requirement; and the term 'Holder' does not even appear in cl (l).

80 This conclusion is, in itself, fatal to Recce's preferred construction. There are important limits on the extent to which evidence of surrounding circumstances can influence the proper construction of an instrument. Reliance on surrounding circumstances must be tempered by loyalty to the text. With limited exceptions - such as ex facie absurdity or mistake (none of which apply in the present case) - the contractual language cannot be construed as having a meaning that it cannot reasonably bear.[81]

81 There are additional difficulties with Recce's preferred construction:

1. An integral part of Recce's construction was that, when a performance shareholder ceased to hold office as director or key management personnel, the person ceased to be a Holder. Accordingly, all rights as such a Holder ceased[82] (or, as was said by senior counsel for Recce, the 'right evaporates' or 'is forgone').[83]

2. This would occur whenever the relevant person no longer occupied a position that qualified as meeting the criteria of 'director or key management personnel' before the achievement of the relevant performance milestone.[84]

3. The rights that so ceased were not only the right to attend general meetings and to receive notices and financial information.[85] They included the entitlement to receive the sum payable on redemption under cl (n) if the performance milestone was not achieved.[86]

82 Accordingly, on Recce's preferred construction, cessation of office as director or key management personnel precluded both conversion and redemption. The performance shares remained on issue but were legal nothings. This outcome is not conformable with the potential outcomes as are contemplated by the terms and conditions attaching to the performance shares read fairly and as a whole. The expectation as contemplated is either conversion or redemption; not indefinite continued existence, even if such continued existence is devoid of conferring any meaningful right.

83 Separately, a question might arise as to whether a person had ceased to qualify as 'key management personnel' where the person's role at Recce changed before achievement of the performance milestone. Recce suggested that it was enough if, as a matter of substance rather than form, the position occupied deserved the appellation of key management personnel.[87] Whether, in a particular situation, this was the case might well be a matter on which reasonable minds might legitimately differ. Such scope for uncertainty in the operation of a relatively simple mechanism of the kind provided for by the performance shares tells against Recce's preferred construction.

84 Recce's preferred construction also had potentially harsh consequences. It would deprive a Holder of the ability to convert when the director or key management personnel was terminated by Recce shortly before the achievement of the performance milestone, ie at a time when, in all likelihood, he or she had contributed to the achievement of the milestone. Senior counsel for Recce suggested that such an outlying event would not provide an appropriate circumstance to test Recce's preferred construction.[88] However, the same ought to be said of a potential scenario on which Recce relied to support its preferred construction - the circumstance where the relevant director or key management personnel resigned the day after the issue of the performance shares.[89] In this respect both the master's construction and Recce's preferred construction may result in a consequence which might be considered capricious, unreasonable, inconvenient or unjust. As such, in determining meaning the court is best served by an objective examination of the relevant text, context and purpose of the terms and conditions attaching to the performance shares rather than being distracted by the potential for the competing constructions to work commercial nonsense or inconvenience.

85 A further difficulty arose with Recce's construction so far as some of the Holders were related entities to the relevant director or key management personnel. For example, Mr Aarons (a laboratory manager) was designated in attachment 1 to the circular resolution as the person who was the 'Director/Key management personnel'. But one of the registered shareholders associated with Mr Aarons was a company named Antarctica Pacific Pty Ltd - which, as has been seen, was issued with 234,375 C class performance shares and 234,375 D class performance shares. In arguing for Recce's preferred construction, senior counsel for Recce was driven to the contention that the relevant 'Holder' was not Antarctica Pacific Pty Ltd (being the registered shareholder) but rather was Mr Aarons: only Mr Aarons was, and could cease to be, the relevant key management personnel of Recce. Thus, according to Recce, it was Mr Aarons (not Antarctica Pacific Pty Ltd) who was entitled to receive notices of and attend general meetings as well as the various financial information and reports circulated to ordinary shareholders.[90]

86 This reading has no support in the text of the terms and conditions attaching to the performance shares as found in attachment 2 to the directors' circular resolution. Read fairly and as a whole, the 'Holder' is the holder of (ie the person who has the ownership of) the relevant performance shares. That is confirmed by cl (j). Clause (j) provides that a performance share 'does not entitle a Holder (in their capacity as a holder of a Performance Share) to participate in' bonus issues or entitlement issues. Two things are obvious. First, the Holder is the holder of the performance share, ie the registered shareholder rather than the person identified as the director or key management personnel. Second, the Holder is a person who, but for cl (j), might anticipate being entitled to participate in new issues of capital. Accordingly, the Holder is the registered shareholder of the performance share rather than the director or key management personnel associated with the registered shareholder.

87 Enough has now been said of the terms and conditions attaching to the C and D class performance shares, and Recce's argument in support of its preferred construction, to reject Recce's construction in favour of the construction as found by the master.

88 The conversion right for the C and D class performance shares is found in cl (l) of attachment 2 to the circular directors' resolution. The language of cl (l) is plain and unambiguous. The text of cl (l) provides no support for Recce's preferred construction. It is not open on the text of cl (l), in the context of the instrument as a whole, to read and construe the conversion right as requiring that the Holder (let alone, in the case of a Holder being a related entity to one of the designated directors or key management personnel, the natural person associated with the Holder) continue in office as director or key management personnel of Recce to the point of achievement of the performance milestone. It is solely achievement of the stipulated milestone that conditions conversion of the performance shares.

89 The master's construction based on the plain meaning of the language of cl (l) is not inconsistent with the purpose of the provision as identified at [67] above. The Holders of the performance shares are rewarded for the achievement of the milestones as prescribed by cl (l); and, while they (or the natural person associated with them) are directors or key management personnel of Recce, the Holders are encouraged to act so that Recce eventually achieves the criteria. It is not to the point that it might be thought that Recce's contended for construction better achieves the purpose. To prefer Recce's construction as better giving effect to the purpose discerned by the court would be to disregard the clear words of cl (l) and amount to a judicial re-writing of the terms and conditions attaching to the performance shares.

90 In any event, as senior counsel for Recce observed on two occasions,[91] the terms and conditions applying to the performance shares provide for a relatively blunt instrument. Its bluntness is reflected in the circumstance that nothing in the terms attaching to the performance shares requires that the Holders had to have in fact materially contributed to the achievement of the relevant performance milestone. So far as the performance shares provided a relatively crude instrument to reward and encourage achievement of Recce's performance it is unsurprising that, with the benefit of hindsight in the events that have happened, Recce may now see the performance shares' simplicity and lack of sophistication as being imperfect.

Disposition: Ground 2 - the alleged implied term

92 Ground 2 was only faintly pressed. Senior counsel for Recce made no oral submissions in support of ground 2.[92] Recce's written submissions in support of ground 2 were brief.[93]

93 Recce relied on the standard principles for implication of a term in fact.[94] Recce complained that the master's reasoning for rejecting the suggested implied term was scarce and without consideration of its submission that it was the directors' and key management personnel's contribution to the performance milestones which rendered the shares available for conversion.[95] As to this, it may be accepted that the master's reasons for rejecting the suggested implied term were brief. So too it is the case that the master did not address any submission to the effect that it was the directors' and key management personnel's contribution to the performance milestones which rendered the shares available for conversion. However, the submission is based on a false premise. In dealing with Recce's contended for construction we have already explained how it is that Recce may achieve the performance milestones for conversion of the C and D class performance shares without the Holders materially contributing to that achievement (even if the relevant directors or key management personnel remained in office up to the time that the performance milestone was achieved).

94 Recce submitted that the implied term could have taken the form of the notional re-drafting alternatives recorded in [[48 (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the [instrument], so that no term will be implied if the [instrument] is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the [instrument].[100]

97 The master did not err in holding that the C and D class performance shares were not subject to an implied term to the effect that the holders of the performance shares had to have materially contributed to the achievement of the performance milestone. The alleged implied term does not fulfill the criteria referred to in BP Refinery (Westernport) Pty Ltd v Shire of Hastings in at least two respects (although, demonstrating the overlapping nature of the criteria, both matters also mean that the implied term is not so obvious that it goes without saying).

98 First, the suggested implied term is not reasonable and equitable. The implied term acts to impose an additional pre-condition to conversion of the performance shares. The potential difficulties in determining whether Recce directors or key management personnel who are holders of performance shares have materially contributed to the achievement of the relevant performance milestones are manifest. Those difficulties are magnified for a holder, such as Antarctica Pacific Pty Ltd, who is not itself a director or key management personnel. As such, the suggested implied term would be likely to expose the parties to the potential of litigation to test the satisfaction of the condition. The likely difficulty in the implied term's practical operation means that it is not reasonable or equitable.

99 Second, the suggested implied term is not necessary to give business efficacy to the instrument.

100 The circumstance that a contract is workable in the absence of a suggested implied term does not necessarily preclude a conclusion that it lacks business efficacy without the implied term. A contractual instrument may work perfectly well in the sense that the parties can perform their express obligations but the consequences would contradict what a reasonable person would understand the contract to mean.[101] Accordingly, a term may be commercially necessary even if a contract can operate without it. What is required is consideration of what would make the contract workable in a business sense.

101 The terms and conditions attaching to the performance shares are workable in a business sense without the addition of the suggested implied term. The express terms, properly construed, are not inconsistent with and give effect to the purpose of the performance shares as revealed by the text of the instrument and the surrounding circumstances (see [89] above). In the circumstances it cannot be said that the suggested implied term is necessary to give business efficacy to the instrument.

103 The master was correct to reject Recce's preferred construction and suggested implied term in finding that Recce was obliged to convert the claimants' C and D class performance shares into ordinary shares.

104 The appeal must be dismissed. The parties should now be heard as to the costs of the appeal.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] Appellant's submissions dated 11 September 2020 (in COR/98/2020) par 7 BAB 30. See also ts 17.

[2] Brown v Recce Pharmaceuticals Ltd [2020] WASC 393 (primary reasons) [2].

[4] GN-19 par 1. All references are to GN-19 as introduced on 28 April 2014 (being the version of GN-19 in force as at the time of the issue of the C and D class performance shares the subject of the litigation). It should be noted that there have been various amendments to GN-19 post-28 April 2014.

[14] Affidavit of J H B Graham affirmed 21 August 2020 attachment 'JHBG-7' GAB 628.

[15] Affidavit of J H B Graham affirmed 21 August 2020 attachment 'JHBG-7' GAB 630 - 631.

[16] Affidavit of J H B Graham affirmed 21 August 2020 attachment 'JHBG-9' GAB 639 - 642.

[17] Affidavit of J H B Graham affirmed 21 August 2020 attachment 'JHBG-10' GAB 645 - 646.

[18] Affidavit of J H B Graham affirmed 21 August 2020 attachment 'JHBG-10' GAB 645 - 646.

[19] Affidavit of J H B Graham affirmed 21 August 2020 attachment 'JHBG-14' GAB 660.

[20] Affidavit of J H B Graham affirmed 21 August 2020 attachment 'JHBG-13' GAB 659.

[21] Affidavit of J H B Graham affirmed 21 August 2020 attachment 'JHBG-18' GAB 677.

[22] Affidavit of J H B Graham affirmed 21 August 2020 attachment 'JHBG-15' GAB 662 - 668.

[23] Affidavit of J H B Graham affirmed 21 August 2020 attachment 'JHBG-16' GAB 669 - 675.

[24] Affidavit of J H B Graham affirmed 21 August 2020 attachment 'JHBG-16' GAB 669 - 670.

[25] Affidavit of J H B Graham affirmed 21 August 2020 attachment 'JHBG-16' GAB 670.

[26] Mr Brown was the first named plaintiff in the proceedings below.

[27] Mr Aarons was the second and third plaintiff in the proceedings below in his capacities as trustee of the Aarons Superannuation Fund and the IMS Pacific Trust respectively.

[28] Antarctica Pacific Pty Ltd was the fourth named plaintiff in the proceedings below.

[29] Dongke Zhang was the fifth named plaintiff in the proceedings below.

[30] Mr Williams was the sixth named plaintiff in the proceedings below.

[31] Affidavit of J H B Graham affirmed 21 August 2020 attachment 'JHBG-16' GAB 674 - 675.

[32] Affidavit of J H B Graham affirmed 21 August 2020 attachment 'JHBG-16' GAB 675.

[33] Affidavit of J H B Graham affirmed 21 August 2020 attachment 'JHBG-24' GAB 690.

[38] Appeal ts 14 - 15; Appellant's submissions pars 21 - 23 WAB 13 - 15.

[40] Appeal ts 5 - 6, 24; Appellant's submissions par 21 WAB 14. See also par 13 WAB 10 - 11.

[41] Appeal ts 8 - 9; Appellant's submissions par 19 WAB 12.

[42] Appeal ts 5, 8 - 9; Appellant's submissions par 21 WAB 13 - 14. See also pars 15 - 17 WAB 11 - 12.

[43] Biodiesel Producers Ltd v Stewart [2007] FCA 722.

[44] Biodiesel Producers Ltd v Stewart [389].

[46] Appeal ts 8; Appellant's submissions par 23 WAB 14 - 15.

[47] Appeal ts 5 - 6, 8 - 9; Appellant's submissions par 18 WAB 12.

[48] Appellant's submissions par 24 WAB 15.

[49] Appellant's submissions pars 8 - 9 WAB 8 - 9.

[50] Appellant's submissions par 12 WAB 10.

[51] Appellant's submissions par 13 WAB 10 - 11.

[52] Appellant's submissions pars 10 - 11 WAB 9 - 10.

[53] Respondent's submissions pars 6, 7, 12, 16, 19, 20.1, 25, 29 WAB 23 - 28.

[54] Respondent's submissions par 28 WAB 28.

[55] Respondent's submissions fn 17 WAB 28.

[56] Corporations Act s 140(1).

[57] Oil Basins Ltd v Bass Strait Oil Company [2012] FCA 1122; (2012) 297 ALR 261 [32].

[58] See Affidavit of J H B Graham affirmed 21 August 2020 attachment 'JHBG-16' GAB 669 - 675.

[59] Appeal ts 31 - 34; Appellant's submissions pars 11, 20 WAB 10, 13.

[61] Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253 [102]; see also Blenkinsop v Herbert [2017] WASCA 87; (2017) 51 WAR 264 [106].

[62] Byrnes v Kendle [105] - [106], [113].

[63] Byrnes v Kendle [17] (French CJ).

[64] Byrnes v Kendle [53] (Gummow & Hayne JJ); [98] ‑ [99] (Heydon & Crennan JJ); Tokio Marine & Nichido Fire Insurance Co Ltd v Hans Bo Kristian Holgersson [2019] WASCA 114 [61] ‑ [63].

[65] Appellant's submissions par 20 WAB 13.

[66] Abbott v Middleton [1858] EngR 989; (1858) 7 HLC 68, 114 - 115; [1858] EngR 989; (1858) 11 ER 28, 46. See also: Currie v Glen [1936] HCA 1; (1936) 54 CLR 445, 458; Brennan v Permanent Trustee Co of New South Wales Ltd [1945] HCA 17; (1945) 73 CLR 404, 412.

[67] See eg Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35]; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 [46] - [52]. In this court see: Black Box Control Pty Ltd v TerraVision Pty Ltd [2016] WASCA 219 [42]; CA & Associates Pty Ltd v Fini Group Pty Ltd [2020] WASCA 31 [51] - [54]; JKC Australia LNG Pty Ltd v CH2M Hill Companies Ltd [No 2] [2020] WASCA 112 [67] - [72].

[68] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [48].

[69] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [49].

[70] Electricity Generation Corporation v Woodside Energy Ltd [35]; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [49] - [50].

[71] Huntingdale Village Pty Ltd (Receivers & Managers Appointed) v Corrs Chambers Westgarth [2018] WASCA 90 [37] (and see generally at [34] - [44]).

[72] Maggbury Pty Ltd v Hafele Aust Pty Ltd [2001] HCA 70; (2001) 210 CLR 181 [43].

[73] Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99, 109.

[74] Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd [2008] NSWCA 5 [38].

[75] Based on a volume weighted average price over 20 consecutive trading days on which the shares are traded.

[76] Again based on a volume weighted average price over 20 consecutive trading days on which the shares are traded.

[77] See Biodiesel Producers Ltd v Stewart [104], [106].

[80] GN-19 pars 3, 6, 8. See also the definition of 'performance share' as reproduced at [10] above.

[81] Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd [2014] WASCA 164; (2014) 48 WAR 261 [135]; Black Box v TerraVision [42](7); Electricity Generation and Retail Corporation trading as Synergy v EIT Kwinana Partner Pty Ltd [2022] WASCA 3 [236] ‑ [237].

[93] Appellant's submissions pars 27 - 31 WAB 16 - 17.

[94] Appellant's submissions par 27 WAB 16.

[95] Appellant's submissions par 28 WAB 16.

[96] Appellant's submissions par 29 WAB 16.

[97] Appellant's submissions par 30 WAB 16.

[98] Respondent's submissions pars 37, 39 WAB 29 - 31.

[99] Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337, 347.

[100] BP Refinery (Westernport) Pty Ltd v Shire of Hastings [1977] HCA 40; (1980) 180 CLR 266, 283.

[101] Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10; [2009] 1 WLR 1988 [23].