Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Citation : BULLION MINERALS LTD -v- FEWSTER [2007] WASC 100

Contracts - General contractual principles - Whether oral agreement amounted to legally binding contract - Whether parties intended to be legally bound - Whether agreement so uncertain as to be void

Procedure - Application to amend pleadings after trial - Introduction of an alternative cause of action on appeal - No opportunity for parties to lead evidence - Complex evidential and legal matters - Leave to amend pleadings refused

Equity - Remedies - Specific performance - Lack of certainty

Mining Act 1978 (WA), s 119(2)

First Appellant : Mr K J Martin QC & Mr M L Bennett & Mr T O Coyle

Second Appellant : Mr K J Martin QC & Mr M L Bennett & Mr T O Coyle

Second Respondent : Mr D R Williams QC & Mr S Ellis

Fourth Respondent : Mr D R Williams QC & Mr S Ellis

1 JUDGMENT OF THE COURT: This appeal raises issues of contractual intention and certainty. There are other subsidiary issues.

2 The first appellant is a public company. In 2005, it held mining tenements entitling it to explore for gold, uranium, nickel and base metals in various parts of Australia.

3 In May 2006 there was a reorganisation of the first appellant. It changed its name from Bullion Minerals Ltd to Uranium Equities Ltd. Because the parties continue to refer to it as 'Bullion', we will, for the sake of consistency, do the same.

4 The managing director of Bullion during 2005 was Mr Andrew Bantock, a chartered accountant. Its chairman was then Mr Timothy Goyder, who had over 30 years' experience in the exploration and resources industry. Mr Anthony Kiernan, a solicitor, and Mr Douglas Stewart, a geologist, were non-executive directors of Bullion. Another geologist, Mr John McIntyre, was employed by Bullion as its exploration manager.

5 During 2005, the first and second respondents, Mr and Mrs Fewster, were the directors of, and sole shareholders in, the third respondent, Eaglefield Holdings Pty Ltd (Eaglefield). Mr Fewster is a geologist who, prior to 2005, had acquired a number of mining tenements. He also had considerable experience in forming joint venture arrangements with mining companies. Mr Fewster was the sole director of the fourth respondent, Narnoo Mining Pty Ltd (Narnoo Mining). He held the only share issued in that company on trust for a family trust of which his family were the sole beneficiaries.

6 Eaglefield was the owner of what was described as the Narnoo Project. This was a multi-commodity resource project located in the Eastern Goldfields, some 240 kms from Kalgoorlie. It consisted essentially of two exploration licences and three applications for exploration licences (tenements) covering, in aggregate, some 900 square kms of land. The tenements spanned a sedimentary basin known as the Narnoo Basin. The Narnoo Basin contained a rock deposit described as the Mulga Rock Deposit or MRD. This contained lignite/sandstone-hosted uranium, scandium, nickel and cobalt deposits. The MRD was divided up into three areas identified respectively as Ambassador, Emperor and Shogun. The Narnoo Basin also contained lignite, an oily young coal used primarily for electric power generation.

7 Bullion learned of the Narnoo Project. On about 2 March 2005, Mr Bantock telephoned Mr Fewster. He told Mr Fewster that Bullion might be interested in acquiring the project. Mr Fewster responded by saying that he was not interested in selling his interest in the project. However, he said that he was considering whether to go into a joint venture with a company needing a secure supply of uranium. He agreed to send, and subsequently sent, an email to Mr Bantock attaching an overview of the project.

Negotiations between 22 March and 20 June 2005

8 On 22 March 2005, Mr Bantock and Mr Fewster met at Bullion's offices. On the following day, Mr Bantock sent a letter to Mr Fewster by email. In it, he said that Bullion and Eaglefield shared the objective of establishing a Western Australia owned and operated minerals company to develop the Narnoo polymetallic deposit. He said that Bullion was flexible concerning the structure of the project. He made a number of suggestions in that respect.

9 The trial judge found (Bullion Minerals Ltd v Fewster [2007] WASC 100 [43]) that Mr Bantock's proposal contained four key points. The first was that 'Fewster/Eaglefield' was to establish a new unlisted public company, perhaps to be known as West Australian Resources and Energy (WARE). The second was that WARE would acquire all of the assets of the Narnoo Project. The third was that Bullion would pay to 'Fewster/Eaglefield' $2.5 million and subscribe $10 million to WARE in return for a 50% interest in that company. The fourth was that the board of WARE would comprise Mr Fewster, his nominee, Mr Bantock and Mr Goyder.

10 Mr Bantock also suggested that a suitable shareholders' agreement would be put in place, with Bullion as manager. The agreement 'would feature common protective clauses and pre-emptive right terms and would be subject to 50-50 decision-making in all areas'. The sum of $10 million, to be invested by Bullion through subscription for shares in WARE, would be used to complete the first phase of feasibility work on the project. Bullion was to fund the next stage (anticipated to require up to a further $10 million) entirely, subject to the achievement of agreed progress in the first phase. Mr Bantock anticipated that, on completion of the second phase, the project would have progressed to bankable or near bankable standard. He said that further capital requirements for development of the project would be discussed and the best value option adopted. He went on to say that the parties 'might also have provided within our shareholders agreement for optional exit of either party, pursuant to agreed benchmarks and buy-out mechanisms, in anticipation of this plan'.

11 Mr Fewster responded to this letter by a letter dated 29 March 2005. In it, he said that he found the 'funding format' proposed by Bullion unattractive. He set out a number of what he regarded as key parameters. One of these was that the $25 million value put upon the project was too low.

12 On 9 May 2005, Mr Fewster sent an email to Mr Bantock in which he said that he was moving towards a decision on how to progress the Narnoo Project. The more material part of the email reads as follows:

The ball-park terms that we are looking at for equity in the Narnoo Project are something along the lines of (all amounts A$:)

For an initial 25% equity in the unlisted public company (let's call it Newco for now) that will hold all aspects of the project excluding scandium (ie U, Ni, Co, Au, oil etc are in; ownership of all Sc would remain with the vendor):

1. Payment of $250,000 cash non-refundable deposit for a 2 months due diligence period, then
2. Payment of a further $1,000,000 cash to the vendor and subscribe for $15,000,000 shares in Newco (funding for 2-3 years to do FS [feasibility study] on Ambassador, plus progress the Au and oil projects),
3. You have the option to subscribe for 50% of subsequent issues, up to a maximum of 35% of Newco (I suspect only one additional raising will be required to get into production, whereupon we would still like to be holding >50%). The second raising would most likely be an IPO [initial public offering] on the ASX. I would expect a market cap of >$300 M at listing (by comparison with Paladin and Summit).
4. You appointment [sic] of one non exec director (board to be non exec chair, your non exec and two executives),
5. You to hold a first right of refusal over any farm-out of U exploration prospects.

These terms are without prejudice and subject to execution of a formal Heads of Agreement and payment of the deposit.

13 Mr Fewster had, by then, consulted with Mr Phillip Golding, a chartered accountant. He had sought advice from Mr Golding concerning taxation aspects of a possible deal of the kind that he had identified. He received some preliminary advice on 13 May 2005. Subsequently, on 16 May 2005, Mr Bantock and Mr Fewster discussed the proposal that had been put up by the latter on 9 May.

14 On the following day, Mr Bantock sent Mr Fewster an email which attached a letter dated 17 May 2005. This set out the structure of a potential agreement for the development of the mineral deposits. In the letter, Mr Bantock set out the key objectives that had been identified and possible means of achieving them. These involved a number of variations to the initial proposal, including variations to the amount and structure of the consideration to be provided by Bullion.

15 On 20 May 2005, Mr Fewster emailed Mr Bantock a revised summary of the Narnoo Project. In his response, also by email dated 20 May, Mr Bantock suggested that Mr Fewster might retain the oily lignite rights, to the extent that these were clearly separable from the other polymetallic resources. He said that this might help bridge the gap between the parties on the issue of pricing. Mr Fewster responded to this email on the same day. He said that he was still not happy with the revised deal that had been proposed, but that he had been thinking about a structure 'where the different commodities that can be separated either by way of conversion to [mining leases] or other methods be placed in separate company structures, with differing levels of ownership'.

16 On 20 June Mr Fewster emailed Mr Bantock a final version of the Narnoo Project summary. On the following day the two men met. Mr McIntyre was also present for part of the meeting, which lasted for about four hours. Mr Fewster showed Mr Bantock a document which suggested that Eaglefield would convey the tenements to Narnoo Mining, save that a subsidiary of Eaglefield would retain all scandium rights. A second subsidiary, to be called Lignite Co, would have the right to acquire the interest in the lignite by payment of an amount equal to twice past exploration expenditure. A company described as Newco would own 80% of Narnoo Mining. Bullion would hold a 50% interest in Newco. Mr Fewster would have a 50% interest in Newco and also a 20% interest in Narnoo Mining. Mr Bantock told Mr Fewster that he would consider the proposed structure before reverting to him.

17 On the following day Mr Fewster forwarded a draft confidentiality agreement to Mr Bantock. This was designed to ensure the confidentiality of information concerning the project to be provided to Bullion by Eaglefield. Mr Bantock executed it on behalf of Bullion on that day.

18 The confidentiality agreement covered all information, common knowledge and know-how not in the public domain relating to the tenements. Bullion was required to keep the information confidential. It was not to cause or permit the disclosure of any of it to any person other than its employees and consultants, or employees and consultants of its associates. Clause 6 of the agreement provided that Bullion was not, at any time during the term of the agreement, to make use of the information in any manner whatsoever, or to derive any personal benefit from its use or application except as otherwise agreed by Eaglefield. The agreement also provided that Bullion, and any associate, agreed not to obtain, or seek to obtain, any interest or right in ground contained within the tenement area during a two-year period while Eaglefield held the tenements, except with the written permission of Eaglefield.

19 Confidential information was supplied by Eaglefield to Bullion some two days later.

20 On 22 June, Mr Bantock emailed a letter to Mr Fewster. He also sent a memorandum entitled 'Establishment of Energy and Minerals Australia Ltd (EMA) to develop the Narnoo Polymetallic Resource; A partnership between Bullion ... and Eaglefield ... ; Outline of Principal Terms of Co-investment'. The covering email summarised the effect of Bullion's proposal as follows (where 'BLN' is referred to in any emails or other documents this is a reference to Bullion):

[A] progressive earn-in rather than 50% up front;

$100,000 cash to yourself on signing Heads of Agreement;

$400,000 cash + 4,000,000 BLN shares to yourself on signing the Shareholders/Subscription Agreements (ie. total of approx $1.0M value at that point). (You participate in BLN uplift through the shares);

$15M for 50% of the Narnoo deposit (ex Lignite/Scandium) including a further $1.5M cash/shares to you;

Eaglefield reverts to 60% interest in Narnoo on +45,000t U JORC Measured/Indicated; and

Joint management and control within a complementary team.

21 The outline of principal terms runs to four pages. The first of the suggested terms reads as follows:

A co-investment structure will be agreed up-front between the parties and documented in a Heads of Agreement or similar document that sets out the principal terms, subject to relevant due diligence and a jointly developed, professionally structured and compiled business plan.

22 The last page of the outline consisted of a diagram setting out the final ownership structure. This was said, in the body of the outline, to be 'subject to tax advice with a prime objective being to achieve the best outcome for Eaglefield'. The last term outlined in the memorandum read as follows:

It is agreed that whilst the Scandium and Lignite Rights (clawed back on basis suggested in diagram and to the extent readily separable from the uranium rights) are held by Eaglefield, Eaglefield and EMA will share information arising from their respective exploration and development activities.

23 On 13 July 2005, Mr Fewster received a memorandum of preliminary advice from Mr Golding. In his memorandum, Mr Golding said that his advice should not be relied upon to affirm the tax consequences of the overall proposed structure for the project that had been identified to him. He also said that, once Mr Fewster had resolved the commercial parameters of the proposed deal, tax issues should be reviewed cohesively and comprehensively.

24 On 22 July 2005, Mr Fewster and Mr Chris Davis (a business associate of his) met with Messrs Bantock and Goyder at Bullion's offices. During the meeting Mr Fewster put forward a further proposal. This was that the consideration to be provided by Bullion should comprise 4 million fully paid ordinary shares in that company, $500,000 in cash and 4 million options to acquire shares in Bullion at a price of 15 cents to 20 cents per share. He proposed that there should be two further tranches of options. The first tranche would comprise 5 million options. These would only be capable of exercise at a price of 20 cents per share upon Bullion's market capitalisation exceeding $50 million. The second tranche of 10 million options would be capable of exercise at a price of 20 cents per share upon the making of a decision to mine, in circumstances in which the resource at the Ambassador deposit exceeded an in-ground value of $1 billion. Mr Fewster proposed that there should be a new company in the structure. This would have an optional right to earn 50% of the interest in the project. He said that these arrangements would be tax effective from his perspective. Messrs Goyder and Bantock suggested to Mr Fewster that he might want to talk to Bullion's tax advisers in order to help him finalise the structure. He declined that offer and said that his proposal had been looked over by his tax advisers.

25 During the meeting Messrs Goyder and Bantock proposed to Mr Fewster that they should prepare a heads of agreement that embodied the concepts discussed at the meeting. Mr Fewster agreed that this should be done.

26 On 25 July, Mr Bantock prepared an annotated diagram and bullet point description of the deal proposed by Mr Fewster. He did so, in part, in order to provide drafting instructions for Mr Kiernan so that Mr Kiernan might prepare written heads of agreement. Mr Bantock's notes recorded, diagrammatically, that Eaglefield would retain ownership of all scandium, lignite and sedimentary exhalative gold (sedex) prospects.

27 At around this time, Mr McIntyre advised Mr Fewster to peg a number of gaps between the tenements. The need to do so arose because, in 2000, the Australian government had changed the way that latitude and longitude were measured. That had the consequence that the latitudinal/longitudinal coordinates, prior to the change, were some 150 metres different from those after the change. That, in turn, meant that some tenements either overlapped slightly or had a gap between them. The gaps between the tenements were referred to as graticular gaps. The information concerning these gaps had been supplied by Eaglefield to Bullion as part of the confidential information.

28 On 27 July 2005, Mr Kiernan drafted the heads of agreement. This identified the parties to that document as Bullion, Mr Fewster, Narnoo Mining, Eaglefield and 'Newco Pty Ltd'. The recitals to the draft heads of agreement recorded, amongst other things, that Narnoo Mining was, or was entitled to be, the legal and beneficial owner of the tenements; that Newco and Narnoo Mining had agreed to enter into a joint venture for the exploration, development and mining of the tenements on the terms and conditions set out; that Mr Fewster was the legal and beneficial owner of the Newco shares; and that Mr Fewster had agreed to sell them to Bullion on the terms and conditions set out in the draft agreement. The draft runs to around 10 pages. It is unnecessary, for present purposes, to recite its contents.

29 On 29 July 2005, Mr Fewster met with Messrs Bantock and Goyder at Bullion's offices. By then a further version of the draft heads of agreement had been prepared (29 July draft). This time, the parties were identified as Bullion, GE Resources Pty Ltd (GER), Narnoo Mining, Eaglefield, Mulga Rock Mining Pty Ltd and Mr and Mrs Fewster. GER was wholly owned by Bullion. Mulga Rock Mining Pty Ltd was a company to be formed or acquired. The recitals read as follows:

1. Narnoo Mining is or is entitled to be the legal and beneficial owner of the Tenements.
2. The Tenements were at one stage held upon trust for Narnoo Mining by Eaglefield.

1. Mulga Rock Mining and Narnoo Mining are parties to the Option Agreement which includes as a provision the agreement of Mulga Rock Mining and Narnoo Mining to enter into a joint venture for the exploration, development and mining of the Tenements on the terms and conditions herein set out ('Joint Venture').

1. Mr Fewster is the legal and beneficial owner of the Mulga Rock Mining Shares.
2. Mr Fewster has agreed to sell and GER has agreed to purchase the Mulga Rock Mining Shares on the terms and conditions herein set out.
3. In consideration of all parties agreeing to enter into this Agreement:

(i) BLN has agreed to guarantee all obligations of GER hereunder; and

(ii) Mr Fewster and Mrs Fewster have agreed to guarantee all obligations of Narnoo Mining and Eaglefield hereunder.

30 The definition section of the 29 July draft contained, amongst others, definitions of 'Definitive Feasibility Study', 'Reserved Minerals' and 'Other Minerals'.

31 The term 'Other Minerals' was defined as meaning 'all minerals, ores and concentrates other than uranium and the Reserved Minerals'.

32 The words 'Definitive Feasibility Study' were defined to mean a report of the commercial and technical feasibility of mining and producing uranium in significant quantities. That definition went on to provide that the report was to include, in reasonable detail:

(i) an estimate of reserves;

(ii) a description of the suggested methods of extraction;

(iii) a description of proposed processing and waste disposal;

(iv) an economic evaluation including an estimate of the capital expenditure requirements and operating costs and a comparative analysis of the effect of various assumptions, financing costs, operating costs and taxation; and

(v) an estimate of operating levels, environmental costs, shut down and reclamation and rehabilitation costs.

33 The term 'Reserved Minerals' was defined as meaning:

[s]candium, lignite and sedimentary exhalative gold in those areas marked by cross-hatching in Annexure 'A' hereto to the extent that these Reserved Minerals are clearly separable in a geological, exploration and development sense, from the underlying uranium resource.

There was, in fact, no annexure A to the 29 July draft.

34 Clauses 2, 3 and 4.1 of the draft read as follows:

2.0 NATURE OF THIS AGREEMENT

2.1 Nature

The Parties acknowledge that this Agreement contains only the essential commercial elements of the transaction contemplated hereunder and that more formal and comprehensive legal agreements will be prepared evidencing the matters herein no later than the shareholder's meeting of BLN as referred to in clause 3.1. These more formal legal agreements shall comprise a sale and purchase of shares (for the Mulga Rock Mining Shares) and a mining and exploration joint venture (for the Joint Venture) and contain such provisions including representations and warranties as may be found in formal legal agreements for the type of transactions contemplated herein.

2.2 Binding Nature of this Agreement

(a) Until such time as the more formal legal agreements referred to in clause 2.1 are executed this Agreement (being titled Heads of Agreement) is binding on all parties hereto and supersedes and replaces all previous agreements, arrangements and understandings in relation to the subject matter thereof.

(b) Until such time as the conditions in clause 3.1 are satisfied (or the Agreement is terminated through lack of satisfaction):

(i) none of Mr Fewster, Narnoo Mining or Eaglefield will discuss with any external parties any transaction in relation to the Mulga Rocks (Narnoo) Uranium Project without the prior consent of GER; and

(ii) Mulga Rock Mining and Narnoo Mining agree there will be no variation made to the terms of the Option Agreement and the Joint Venture as expressed herein.

3.0 CONDITIONS PRECEDENT

3.1 Conditions

This Agreement is conditional upon:

(i) such consents and approvals as may be necessary being obtained on terms and conditions satisfactory to GER to give full force and effect thereto including but not being limited to the approval of the shareholders of BLN under ASX Listing Rules and as may be required under the Mining Act; and

(ii) Mulga Rock Mining and Narnoo Mining not varying the terms of the Joint Venture and with GER approving the terms and conditions of the formal Joint Venture agreement to be prepared pursuant to clause 2.1.

3.2 (a) If the conditions in clause 3.1 are not satisfied within 90 days (of such later date as may be agreed as between GER and Mr Fewster) then either party may terminate this Agreement.

(b) Each Party shall use its best endeavours to have the conditions in clause 3.1 satisfied insofar as carriage of the same can be undertaken by them.

4.0 SALE AND PURCHASE OF MULGA ROCK MINING SHARES

4.1 Sale and Purchase

Mr Fewster agrees to sell and GER agrees to purchase free of all encumbrances and third party interests the Mulga Rock Mining Shares for the Purchase Price and on the terms and conditions herein set out.

35 Clause 5 of the draft agreement read as follows:

5.0 JOINT VENTURE ESTABLISHED UNDER THE OPTION AGREEMENT

5.1 Establishment of Joint Venture

Narnoo Mining and Mulga Rock Mining confirm they have agreed to establish the Joint Venture immediately upon exercise by Mulga Rock Mining of the option granted to it pursuant to the Option Agreement and to avoid any doubt the principal terms of that Joint Venture are set out in this clause 5.

5.2 Joint Venture

The Joint Venture will be established and commenced as and from the date Mulga Rock Mining exercises the Option Agreement and as and from commencement the respective Joint Venture Interests will be:

5.3 Mulga Rock Mining to Sole Fund Joint Venture Expenditure

(a) Mulga Rock Mining shall sole fund all Joint Venture Expenditure up to completion of a Definitive Feasibility Study.

(b) Whilst Mulga Rock Mining remains sole contributor to Joint Venture Exploration expenditure it shall expend such sums as are necessary to maintain the Tenements in good standing pursuant to the Mining Act or any other appropriate legislation or laws.

(c) If following completion of a Definitive Feasibility Study the parties to the Joint Venture do not make a Decision to Mine for Uranium, Mulga Rock Mining will continue to meet such Joint Venture Expenditure as is necessary to maintain the Tenements in good standing up to an amount equal to 10% of its Joint Venture Expenditure up until completion of the Feasibility Study. Following Mulga Rock Mining funding the further Joint Venture Expenditure as set out in this sub clause (c), the parties to the Joint Venture shall contribute to Joint Venture Expenditure in accordance with their then respective Joint Venture Interests.

(d) The expenditure by Mulga Rock Mining as referred to in clause 5.3(c) above which is in addition to what would have been its obligation based on its then Joint Venture Interest shall be a debt due and owing to it by the other parties to the Joint Venture and recoupable by it from income received by the Joint Venture or from any party thereto in dealing with its Joint Venture Interests.

5.4 Reserved Minerals

The Joint Venture excludes the Reserved Minerals and unless Mulga Rock Mining and Narnoo Mining agree otherwise Mulga Rock Mining shall acquire no rights in relation to the Reserved Minerals irrespective of any expenditure undertaken in relation to the Tenements by Mulga Rock Mining.

5.5 Mulga Rock Mining to be Manager

Mulga Rock Mining shall be the Manager of the Joint Venture and shall have such rights and obligations of a Manager of a Joint Venture of this type including but not being limited to:

• during the period it is the sole contributor to Joint Venture Expenditure, the right to conduct all activities in its discretion provided it conducts these activities in a prudent and responsible manner
• prior to establishing the Management Committee referred to in clause 5.6 the obligation to consult with and provide details to Narnoo Mining on at least a monthly basis details of all proposed exploration and development programs
• be entitled to a charge for recovery of administrative and overhead expenses of 12.5% of expenditure

5.6 Other Terms of the Joint Venture

Mulga Rock Mining and Narnoo Mining agree that the more formal Joint Venture Agreement referred to in clause 2.1 will be entered into containing the usual terms and conditions including warranties as to title and the like however to avoid any doubt that more formal agreement must contain the following further provisions:

• establishment of a Management Committee following completion of the Definitive Feasibility Study with votes in that Committee in accordance with the respective Joint Venturers' Interest
• pre-emptive rights and to avoid any doubt a change of control of any party to the Joint Venture shall be a deemed disposal
• dilution provisions
• that after a Definitive Feasibility Study is completed the participants in the Joint Venture will contribute to Joint Venture Expenditure in accordance with their then applying Joint Venture Interest subject to the funding arrangements in clause 5.3(c) and also subject to the right to have their respective Joint Venture Interest diluted in accordance with the usual formula found in such joint ventures and for the purpose of the dilution provisions the deemed expenditure of each of the parties shall be an amount equal to all sums expended by Mulga Rock Mining prior to the Definitive Feasibility Study
• an area of influence and also provisions requiring a party that acquires an interest in any mining tenement falling within that area of influence to offer the interest acquired to the Joint Venture at cost.

5.7 Decision to Mine for Uranium

The Joint Venture Agreement shall contain provisions enabling the Joint Venture to make a Decision to Mine for Uranium following completion of a Definitive Feasibility Study and also allowing a participant in the Joint Venture to sole risk Mining on any Production Area if the other members of the Joint Venture do not wish to participate. Usual terms and conditions that would apply to a Joint Venture of this type given the scenario in relation to sole risking of Mining shall be included.

A participant in a Decision to Mine for Uranium shall contribute to all relevant capital and operating expenditure in accordance with its Joint Venture Interest.

5.8 Withdrawal

At any time prior to the completion of a Definitive Feasibility Study Mulga Rock Mining may withdraw from the Joint Venture by written notice to Narnoo Mining but subject to it having met, on a pro rata basis, expenditure requirements to maintain the Tenements in good standing. Upon such withdrawal Mulga Rock Mining shall retain no interest whatsoever in the Tenements or the Joint Venture.

5.9 Minerals other than Uranium and Reserve Minerals

Mulga Rock Mining is entitled to make a Decision to Mine for Other Minerals at any time prior to it earning its Joint Venture Interest herein and if doing so the following shall apply:

(i) Mulga Rock Mining shall meet all costs and expenses in relation thereto but not being limited to capital and operating expenses;

(ii) after reimbursement to Mulga Rock Mining of all expenses incurred by it in relation to the Mining and exploration of these Other Minerals the net proceeds shall be divided equally as between Mulga Rock Mining and Narnoo Mining.

Such decision shall be made in consultation with Narnoo Mining and shall not harm the value of the uranium resource or unreasonably interfere with the exploration, development and Mining thereof.

5.10 Put and Call on Joint Venture Interests

(a) Upon Mulga Rock Mining completing a Definitive Feasibility Study for uranium then Narnoo Mining has the right but not the obligation to put an offer to Mulga Rock Mining for Mulga Rock Mining to acquire Narnoo Mining's Joint Venture Interest at a specified price, satisfied by shares in BLN (based on the preceding 5 days volume weighted average price on ASX) ('the Price').

(b) If Narnoo Mining does this then Mulga Rock Mining may accept or reject this offer within 30 Business Days of receiving the same.

(c) If Mulga Rock Mining does not accept the offer to sell made by Narnoo Mining then, Narnoo Mining will purchase Mulga Rock Mining's Joint Venture Interest at the Price within 30 Business Days of Mulga Rock Mining's non acceptance and for this purpose the Price will be the cash equivalent of 95% of value of the shares in BLN comprising the Price in sub clause 5.10(a).

(d) Settlement of any accepted offer referred to in this clause 5.10 shall take place within 45 Business Days of such offer having been accepted.

36 At the trial, there was a dispute as regards the date upon which Mr Fewster was first given a copy of the 29 July draft. The trial judge accepted the evidence of Messrs Bantock and Goyder in that respect. He found that the draft was given to Mr Fewster during the meeting on 29 July 2005.

37 On 2 August 2005, Mr Fewster and Mr Davis met with Mr Michael Bowen and Mr Grant Paterson. Both were solicitors. Mr Bowen was a partner of the firm Hardy Bowen. Mr Paterson was employed by that firm. The two solicitors represented a company known as KTL Technologies Ltd (KTL). Mr Bowen outlined to Messrs Fewster and Davis a proposal that KTL wished to put to Mr Fewster for the acquisition of the Narnoo tenements. In the course of the meeting, Mr Bowen suggested to Mr Fewster that convertible preference performance shares (CPPSs) might be a tax effective means of structuring a transaction between KTL and Mr Fewster's companies.

38 On 4 August Mr Fewster met with Messrs Bantock and Goyder at Bullion's offices. Mr Fewster said that the current proposal, as reflected in the 29 July draft, would not be effective for tax purposes and he consequently proposed an alternative structure involving the issue to him of CPPSs. He suggested that a number of his entities would receive various elements of the consideration payable. Messrs Bantock and Goyder told him that it was a matter for him who should be the recipients of the consideration and that, so long as Bullion acquired 50% of the project, the nomination of recipients was of no concern to them. Mr Fewster explained that the appropriate structure was being driven by his need to manage his tax position. He suggested that the CPPSs be issued by way of three tranches. The third of these would be subject to Bullion retaining the sedex and lignite rights. He also proposed that a 'rights and usage agreement' be entered into by a subsidiary of Narnoo Mining, which would hold the lignite and sedex assets.

39 During the meeting, Mr Fewster made a number of handwritten changes to the wording of the 29 July draft. After the meeting, Mr Bantock prepared a document entitled 'Discussion with M Fewster: Changes to HOA'. This was prepared for Mr Kiernan so that he would know what changes were required to be made to the heads of agreement to reflect the discussion between the parties. This document, which was handwritten, encompassed some 3 1/2 pages. It recorded, amongst other things, that Mulga Rock Mining was no longer involved, that Bullion would instead acquire a 50% interest in the tenements and that 50% of the lignite/sedex rights on the tenements might be held by another subsidiary of Narnoo Mining. It said, in this last respect:

[I]f [Bullion] does not elect to keep those rights after Dec[ember] 2007, those rights might pass across to Narnoo (not sure how this works in practice - he is getting advice on this). He favours the concept of a 'Rights and Usage Agreement'.

40 The memorandum also informed Mr Kiernan of the changes to the consideration. The consideration now comprised $500,000 in cash, 1.5 million options, 1 million fully paid ordinary shares, three annual payments of $600,000 and 9 million CPPSs, which would automatically convert to fully paid ordinary shares in Bullion on a one-to-one basis upon Bullion's market capitalisation exceeding $20 million. A further 10 million CPPSs were automatically to convert to fully paid ordinary shares in Bullion on a one-to-one basis upon the happening of any feasibility study establishing a 'JORC [Joint Ore Reserves Committee] standard resource'. Another 25 million CPPSs would automatically convert on 31 December 2007 if Bullion elected to keep the 50% interest in the lignite and sedex.

41 The memorandum introduced, for the first time, the concept of a pre-feasibility study. This was to be a study, executed to an appropriate professional standard by Bullion (subject to checking by an external professional in respect of key resource aspects), 'to determine resources to measured, indicated, inferred status under JORC'.

42 Finally, so far as is presently relevant, the note recorded that Bullion was to fund the whole of the project through to a decision to mine.

43 At the same time as he was negotiating with Bullion, Mr Fewster had also been negotiating with other parties in respect of the Narnoo Project. His negotiations with KTL had reached the stage at which he had sent an email to KTL, on 3 August 2005, attaching what he described as an outline of a heads of agreement. He invited KTL to give him 'a yes or no or maybe on the proposal' by 2 pm on Thursday 4 August 2005.

44 On 5 August 2005, Mr Fewster telephoned Mr Bantock and told him that he had received offers from other companies. Later that day, Mr Bantock and Mr Goyder had a discussion with Mr Fewster over the telephone. The trial judge found that they told Mr Fewster, in effect, that the deal that had been put to him was based on the structure that he had wanted and that they could vary the proposal according to his wishes. Mr Fewster responded by saying that he was unsure what he wanted to do. He said that he would 'sleep on it'.

45 On 6 August 2005 Mr Bantock drafted a letter to Mr Fewster. In it, he set out the key components of what he described as 'an outstanding model for corporatisation'. One of these key components was that the other components had been structured in a tax effective way, subject to further professional advice to be obtained by Mr Fewster. He concluded by saying that Bullion had booked a spot at a forthcoming uranium conference. He suggested that it would be fun for him and Mr Fewster to take the podium together and present their development agenda. This letter was never sent. It was overtaken by a series of telephone conversations.

46 The first of these took place when Mr Fewster telephoned Mr Bantock at about 11.30 am on that day. In his evidence at the trial, Mr Bantock said that, during the telephone conversation, Mr Fewster said words to the effect that he wanted to do a deal that day and that, if Bullion accepted, on that day, the terms proposed by him, he would stop negotiating with other parties and the deal would be done. Mr Fewster outlined the principal terms of his proposal.

47 When commenting on this telephone call, the trial judge said that he accepted that the broad effect of the discussion was as Mr Bantock described it. However, he added that Mr Bantock (whose evidence he generally, but not always, preferred over that of Mr Fewster) had merely stated the effect of what had been said. The trial judge went on to mention [303] that, during the course of cross-examination, Mr Bantock's evidence had been that he clarified with Mr Fewster that what Mr Fewster was proposing was that 'this is the deal and if we accept it, then the deal is done'. He said that Mr Fewster responded by saying, 'Yes. I will stop talking to other parties. You can go ahead and get your trading halt. We're done'. The trial judge said, of this response, that it was 'consistent with [Mr] Fewster making a commitment to cease discussions with the other parties with whom he had been negotiating and negotiate exclusively with Bullion to conclude an agreement in relation to the tenements and the project'.

48 After this telephone conversation, Mr Bantock convened an urgent meeting of Bullion's board. The trial judge found that the most reliable guide to the contents of the telephone conversation between Mr Bantock and Mr Fewster was the minutes of that meeting. Physically present at the meeting were Mr Goyder, Mr Bantock and Mr Kiernan. Mr Stewart was present by telephone, but only for part of the meeting. Because the minutes are of critical importance, we will set them out in full. We will do so in two parts. The first part of the minutes reads as follows:

Mr Bantock briefed the Board on recent discussions concerning the potential acquisition of a 50% interest in the Mulga Rock Uranium-Polymetallic Project.

Messrs Bantock and Goyder had discussed with the vendor, Mr Mike Fewster, a potential investment over the preceding few days, concluding on the previous afternoon. These discussions had outlined a number of transaction structures and arrangements, including the invitation for Mr Fewster and another nominee to join the Board of Bullion, should a deal be concluded.

Earlier this morning, Mr Fewster had telephoned Mr Bantock and advised of the deal structure which, if agreed to by Bullion, Mr Fewster would commit to, today.

Mr Bantock outlined the principal terms of that structure as follows:

• Cash payment of $1.1 million, up front (to be characterised as for purchase of intellectual property relating to the project, including Mr Fewster's master's thesis);
• 1 million Bullion f.p.o. shares, up front;
• 1.6 million $0.20 5-year Bullion options, up front;
• 25 million Convertible Preference Performance Shares (CPPS), which convert to 25 million Bullion f.p.o. shares upon Bullion's market capitalisation exceeding A$30 million;
• 20 million CPPS, which convert to 20 million f.p.o. Bullion shares upon Bullion electing to retain lignite/sedex minerals rights beyond 31 December 2007;
• each tranche of CPPS will be subject to a 2-year voluntary escrow period;
• Mr Mike Fewster and Mr Chris Davis are to join Bullion's Board;
• Bullion is to fund all project expenditure through to Decision to Mine;
• The minimum expenditure requirement of $2 million per annum would apply in the period prior to Bullion producing a PFS;
• two further cash payments are to be made to Mr Fewster or his nominee of $600,000 each on 1 July 2006 and 1 July 2007.

Mr Bantock outlined the reasons for development of the deal in the above principal structure, as explained to him by Mr Fewster, and concluded by reiterating that, whilst Bullion may seek a slightly different structure in a number of the elements, it was time to make a decision as to whether to commit or not, given Mr Fewster's undertaking that if Bullion agreed to deal today, then the deal would be done. Mr Bantock commented that Mr Fewster was waiting for his call.

The Board then discussed the merits of investing in the Mulga Rock Project. Mr Stewart outlined his view from the technical review undertaken by the Company's Exploration Manager Mr John McIntyre. Messrs Goyder and Bantock outlined their commercial view developed over the preceding months of involvement with Mr Fewster and the project.

Mr Stewart left the meeting owing to a pressing commitment, on the undertaking that he would be briefed on the outcome of the meeting, prior to Bullion committing to the deal.

Mr McIntyre joined the meeting by teleconference and was asked for his view of the project. Mr McIntyre outlined his endorsement of the decision to invest, providing a summary of due diligence by Bullion's technical personnel. The Board thanked Mr McIntyre for his input and Mr McIntyre left the teleconference.

The Board further discussed the investment opportunity and IT WAS RESOLVED that, subject to the final agreement of Mr Stewart, the Company would commit to the proposal put by Mr Fewster.

49 The second part of the minutes reflects the contents of a further telephone call with Mr Fewster which took place during the course of the board meeting. That part of the minutes reads as follows:

Mr Fewster then joined the meeting by teleconference.

Mr Bantock outlined that, as he had explained to Mr Fewster in their previous telephone discussion earlier in the morning, the Board of Bullion had met to consider the deal put by Mr Fewster. He then summarised the deal put by Mr Fewster this morning, as outlined above.

Mr Bantock stated each principal point to the deal and sought and received for each point Mr Fewster's understanding and agreement of the point. He also confirmed that the above comprised the principal points of the deal. It was then clarified that the basis of future dealing was that if Mr Bantock telephoned Mr Fewster later in the day saying that Bullion accepted his deal, then the deal outlined above would be done.

The Board explained to Mr Fewster that it awaited a further conversation with Mr Stewart before this confirmation would be made. Mr Fewster agreed and the Board assured Mr Fewster that Bullion looked forward to working as his partner to optimise the project and develop an outstanding uranium business.

Mr Bantock then summarised the process from here, being that subject to Mr Bantock confirming Bullion's acceptance of the deal, Bullion would request a trading halt on the ASX from Monday 8 August 2005, which under the Listing Rules could last for two days. It was expected that the agreed deal would be summarised in a bulletpoint list, which Messrs Bantock and Fewster would review by Monday lunchtime, after which the Heads of Agreement embodying the agreed deal would be prepared, concurrent with the relevant stock exchange announcement, over the course of Monday afternoon and Tuesday. On this basis, it was hoped that Bullion's ASX trading halt would cease on Tuesday, with the public announcement of the deal being released on the Wednesday morning. Mr Bantock stated that he would work on the bullet points over the weekend, and Mr Kiernan stated he would update the previous draft Heads of Agreement to incorporate today's changes pursuant to the agreed deal.

Each party wished the other well and Mr Fewster left the teleconference.

Mr Bantock undertook to the meeting that he would update Mr Stewart with the further outcome of the meeting and, upon receiving his confirmation of agreement to the deal, would contact Mr Fewster to advise of Bullion's commitment.

50 The trial judge found that the minutes were also the most reliable guide to the contents of the second telephone conversation with Mr Fewster [105]. He added later that, during the meeting, the board was made aware that the proposed transactions excluded scandium [227].

51 In his evidence at the trial (seemingly accepted by the trial judge: [24], [296]), Mr Kiernan recalled that, during the conversation with Mr Fewster that took place during the course of the board meeting, someone said words to the effect that they should aim to execute the heads of agreement by the following Tuesday evening in order to allow the trading halt to be lifted by Wednesday morning.

52 At about 5 pm, Mr Bantock telephoned Mr Fewster and told him that he expected to speak with Mr Stewart shortly and (as the trial judge put it) 'to confirm with Fewster his agreement with Bullion' [115]. Mr Fewster said that he was going to a soccer match, but that Mr Bantock could contact him on his mobile telephone in order to confirm their agreement. During the conversation, Mr Fewster asked Mr Bantock to confirm an aspect of the deal that had previously been raised but had not yet been included in the draft heads of agreement or discussed in the telephone conversation earlier that day. This was Mr Fewster's request that Bullion commit to a minimum expenditure requirement of $750,000 in relation to the lignite/sedex minerals area of the tenements by 31 December 2007. Mr Bantock said that this had previously been discussed and that it should consequently be included in the draft heads of agreement.

53 After this conversation, Messrs Goyder and Bantock telephoned Mr Stewart. Mr Stewart had, by then, spoken to Mr McIntyre. Mr Stewart said that he 'agreed the agreement should proceed' (trial judge's reasons [118]).

54 Mr Bantock then telephoned Mr Fewster, who was at the soccer match (soccer telephone conversation). He used a speaker phone, in the presence of Mr Goyder. There was some dispute at the trial concerning what was said during this conversation. However, the trial judge found that Messrs Bantock and Goyder conveyed to Mr Fewster that Bullion 'accepted the deal that Fewster had proposed earlier in the day and that Bullion would proceed with that deal' [120]. The trial judge also accepted Mr Bantock's evidence that, during this conversation, Mr Fewster said words to the effect that Messrs Bantock and Goyder should be delighted, but that he was also delighted and that they should crack open a bottle of champagne to celebrate the deal. Mr Bantock concluded the telephone conversation by arranging for the three of them to meet at Bullion's offices on the Monday morning at 9.30 am.

55 On the following day Mr Bantock prepared a handwritten bullet point list headed 'Agreement for the Development of the Mulga Rocks Uranium-Polymetallic Project'. While drafting the list, Mr Bantock telephoned Mr Fewster to clarify a point. He ended the telephone call by confirming to Mr Fewster that, on the basis of their agreement, Bullion would be placed in a trading halt on the following morning.

56 The bullet point list prepared by Mr Bantock includes the following:

• HOA to be followed by a full agreement ASAP.
• Agreement is subject to necessary consents per the ASX rules and Mining Act. All parties to use best endeavours to get these.

57 On the morning of 8 August, Mr Bantock wrote to the Stock Exchange requesting a trading halt in respect of Bullion's shares. He said, in his evidence at the trial, that, by the time that Bullion halted trading in its shares, a process had been put in place by which the deal that had been done would be concisely summarised in the bullet points; the heads of agreement would be prepared; and then, once the heads of agreement had been signed, Bullion would be in a position to make an announcement prior to the opening of trading on the Wednesday.

58 On the same morning, Mr Fewster sent an email to KTL in which he said:

Events have moved fast down here, and I regret to inform you that I have agreed to basic terms with a Perth-based company, with the intention of executing a Heads in a few days. An announcement should be out on Wednesday.

However, if for some reason the deal is not concluded, I will contact you again, and we can pick up discussions again.

59 Mr Fewster arrived at Bullion's offices at about 9 am that day. He had discussions with Mr McIntyre and Mr Stewart. Mr Davis met with Mr Bantock at about the same time. Mr Bantock told Mr Davis that Bullion had done a deal with Mr Fewster and that it was in a trading halt. He discussed with Mr Davis a number of matters relating to the heads of agreement. The two men also discussed Mr Davis' future employment with Bullion.

60 At about 10.30 that morning, Mr Bantock asked Mr Fewster to join him in the boardroom for the purpose of working through the bullet point list with himself and Mr Goyder. He gave each of them a copy of that list (first bullet point list). The three men worked through the list. A number of changes were made, resulting in the preparation of a second draft (second bullet point list).

61 There was a good deal of dispute concerning what was said during the process of working through the first bullet point list. The trial judge said, in this respect [141] - [143]:

I accept the evidence of Fewster to the extent that on that Monday the parties discussed some items on the first bullet point list, some items were changed and others were left without Fewster saying that he was finally satisfied with the terms in which it was stated. I am not satisfied that Fewster said words to the effect that the second list of bullet points accurately reflected the agreement they had made.

I do not place any weight on the statement in Bantock's original witness statement ... that he asked Fewster in respect of each point on the bullet point list words to the effect: 'did the words used in that bullet point reflect Fewster's understanding of our agreement?' Nor do I accept Bantock's evidence that: 'Where he [Fewster] felt that the point had not represented the agreement, he advised of this and amendments were made'. Bantock's evidence in his responsive statement shows that Bantock asked whether Fewster agreed with the point on the bullet point list not whether Fewster agreed that the point represented the agreement.

The parties were engaged in a process of discussing terms to be incorporated into a heads of agreement. They were not engaged in a discussion about what had been agreed on 6 August or at an earlier time.

62 It is necessary to set out the more material elements of the second bullet point list. These were as follows:

• Bullion will acquire a 50% interest in all mineral rights except Scandium at the Mulga Rocks uranium-polymetallic project from commencement. This will comprise a direct interest in the subject tenements other than the Lignite/Sedex rights that may be in a purpose specific company (see below).

• Bullion will operate the joint venture and fund all tenement costs (including minimum expenditure commitment and do all required to keep in good standing), exploration, evaluation and development work through to a decision to mine. (This point also triggers the 'gelignite clause' - see below.)
• Bullion and Mike Fewster will work in partnership to optimise the project and develop a significant uranium-polymetallic business, founded on applying the right resources, the right people and appropriate capital funding.
  • Consideration:
    • 1M f.p.o. BLN shares (to Mike and Suzanne Fewster, for intellectual property including thesis, maps, plans, other assets)
    • 1.6M $0.20 BLN options - 5 year term (1M to M & S Fewster, 0.6M to Chris Davis) (to Mike and Suzanne Fewster, for intellectual property including thesis, maps, plans, other assets).
    • $1.1M (GST exclusive) cash up front, payable:

$0.15M (non-refundable deposit) on signing Heads of Agreement (paid to M Fewster)

$0.95M within 2 business days after BLN shareholders meeting that approves the deal (and 5 business days prior to the requirement to provide application monies pursuant to the placement)

For purchase of M Fewster Intellectual Property, including thesis, maps, plans, other assets

• 25M unlisted Convertible Preference Shares, which convert to f.p.o. BLN shares on a 1:1 basis upon BLN's market capitalisation exceeding $30M (based on listed issued capital prior to the conversion and the last 5 days ASX volume weighted average price).

(Professional advice may change the number, description or characterisation of these, but the end result will be 25M f.p.o. BLN shares.)

• 20M unlisted Convertible Preference Performance Shares, which convert to f.p.o. BLN shares on a 1:1 basis where:

- BLN elects on or before 31 December 2007 to exercise its right to keep the Lignite/Sedex rights (ie: its 50% interest in these 'Reserved Minerals').

(Professional advice may change the number, description or characterisation of these, but the end result will be 20M f.p.o. BLN shares.)

• Approval of the deal is expected by BLN shareholders at a General Meeting required to be called pursuant to ASX rules and the Corporations Act. This meeting will be expedited, but is expected to require 45-60 days from date of signing of the HOA.
• Two further cash payments of $600K (GST exclusive) each on 1/7/06 and 1/7/07, to be paid for M Fewster I.P. or to Eaglefield for administration of the project. Payable even if BLN has withdrawn from the JV.
• Placement
  • By separate agreement a placement will be made to Mike Fewster, his family and others of 8M BLN f.p.o. shares at $0.125 per share. This is subject to approval of the deal at the above General Meeting. (M & S Fewster will subscribe directly or indirectly for 5M of these shares.)
  • An additional 2M shares at $0.125 per share will be placed to parties nominated by BLN.
• Board
  • Mike Fewster and Chris Davis will be invited to join the BLN board immediately after the General Meeting that approves the deal.
• Sedex/Lignite
  • Mike Fewster will provide a map showing the previously explained geographical position of the subject Sedex/Lignite rights. Whilst BLN will have Uranium rights in all tenements, it must declare its decision by 31 December 2007 on whether it wishes to keep the Sedex/Lignite rights. Keeping them triggers the 20M CPPS (see above).
• Bullion to fund the project 100% through to Decision to Mine.
  • Decision to Mine to be a unanimous decision.
  • Both parties will make reasonable good faith endeavours to arrange cost effective and appropriate project financing for development of the project.
  • Unanimous decision relief clause will work on the basis that if Eaglefield/Fewster do not agree, BLN can arrange the finance, adding a 1.5% margin to the cost of finance. Narnoo Mining will contribute up to a maximum of 60% of its share of net cash return to servicing the debt arranged and put in place for the project (including the margin). This ratio of cash distribution will determine the maximum extent of debt that may be taken on and therefore the equity requirement. (Dilution applies where either party does not contribute its share of the equity requirement determined per the above, but the 'gelignite clause' applies prior to the equity contribution requirement applying.)
  • Following the Decision to Mine, if the 'gelignite clause' (see below) has not been exercised, or has been exercised without ownership changing hands, the JV will move to a mining JV phase.
  • Either (a) Government prohibition on Uranium mining, or (b) Native title issues, will be 'force majeure' events that preclude a Decision to Mine to be declared. If that happens, BLN can drop its expenditure requirement to the things required to keep the tenements in good standing.
• A minimum expenditure requirement of $2.0M per annum will apply for the period until BLN has delivered a PFS. The $2.0M requirement will have an anniversary date, being the date we sign the Heads of Agreement. (Hence $2.0M per annum spend to PFS before BLN can withdraw with no interest.)
• A minimum expenditure requirement of $750K applies for the Sedex/Lignite areas prior to the 31 December 2007 decision date (ie in addition to the above).

• 'Death Trigger': If BLN goes into insolvency then Eaglefield/Fewster/Narnoo get the right to buy back the 50% interest for $1.

- Voluntary administration/receivership only triggers this if they continue for more than 6 months.

- Only hold off death trigger in voluntary administration/receivership if voluntary administrators/receivers keep the tenements in good standing.

• PFS: Defined as a study executed to an appropriate professional standard by BLN, to determine resources to measured, indicated, inferred status under JORC. External competent professional sign-off on key resource aspects.

(ie Chris Davis to manage from within BLN - does not have to carry the expense of wholly external production.)

• Contribution to costs from Scandium revenue: Scandium rights always remain 'outside the deal'.

(a) Based on the non-Scandium revenue pit optimisation, Mike Fewster will agree to pay recovery costs through the mill + 10% - to a maximum of $10 per kg of Scandium recovered in concentrate (or higher - if proved by an independent expert).

(b) Beyond the above, Mike Fewster may nominate a Scandium Value to be included in a mine optimisation. When mining occurs pursuant to this optimisation, Mike will pay that amount on delivery of the subject concentrate.

(c) Mike Fewster may also further nominate if additional mining is required to access Scandium - rich area not 'carried' by the 'all minerals' optimisation, in which case Fewster/Eaglefield will pay this cost plus ... 10%.

• Heads of Agreement to be followed by a full agreement as soon as possible, but no later than the General Shareholders Meeting, comprising:

• Agreement is subject to necessary consents per the ASX rules and Mining Act. All parties to use best endeavours to get these.
• Pre-emptive rights shall apply to sale by either party of their rights per the agreement, throughout.
• The 'gelignite clause' is triggered after a Decision to Mine is made and obliges Narnoo to put an offer to BLN. See attached mark-up from the previous draft Heads of Agreement.

• Standard representations and warranties will be made by Mike Fewster in relation to the project and interests being acquired by BLN.
• For the duration of the JV, each party shall jointly own the I.P. and minerals data.
• If BLN does not elect to keep the Sedex/Lignite assets after 31 December 2007, it shall hand over all relevant data to Mike Fewster. If subsequent to this Mike Fewster wants to sell those rights to third party, BLN shall have a right to match any offer (provided that is not a related party).
• Clause 5.9 per the first draft Heads of Agreement previously circulated will apply re mining other minerals (ie other than Ambassador, Emperor or a $1B JORC resource). However, only the costs of that resource are to be recovered prior to profit distribution.
• The decision to mine trigger needs to be either (a) for mining of Ambassador or Emperor polymetallic resource or (b) another resource valued at over A$1B in-situ value of at least JORC Standard Inferred Resources.

• If BLN withdraws from the JV it remains liable for rehabilitation requirements imposed to that point.

63 During his discussions at Bullion's offices, Mr Fewster was asked by Mr McIntyre in whose name the graticular gap block tenements should be pegged. It was agreed that they should be pegged in the joint names of GER and Narnoo Mining. Mr McIntyre said that he would issue instructions accordingly. Those applications were lodged at the Department of Industry and Resources later that day.

64 After meeting with Bullion's representatives, Mr Fewster went to the offices of Hardy Bowen. He had retained that firm earlier that day. He discussed the second bullet point list with Mr Paterson. During this discussion, Mr Paterson received an email from Mr Kiernan attaching a redraft of the heads of agreement (8 August draft). Until that time the only draft of the heads of agreement that had been seen by Mr Fewster was the 29 July draft. The email from Mr Kiernan mentioned that the 8 August draft had not yet been reviewed by Bullion.

65 Later that evening, Mr Bantock spoke to Mr Fewster on the telephone. Mr Fewster told him that Mr Paterson had raised three major points concerning the second bullet point list and the 8 August draft. The first major point related to a requirement that Bullion should obtain an independent expert's report to accompany the notice of meeting for its shareholder's meeting that would have to be called in order to approve the deal. The second related to the need for a prospectus. Mr Fewster could not remember what the third point had been. However, the importance of this conversation rests in the fact that, having identified these points to Mr Bantock, Mr Fewster asked him to ask Mr McIntyre to 'pull' the tenement applications in respect of the graticular gap blocks. Mr Bantock said that he would ask Mr McIntyre to do so but that he doubted whether it was possible. It turned out that it was not possible to do this.

66 On the morning of 9 August, Mr Fewster met with Mr Paterson. He told Mr Paterson that the draft heads of agreement was very brief and did not properly reflect his understanding of the transaction in four respects. The first was that the transaction was to be a farm-in and not a sale. The second was that the purchase price to be paid in the short term was for intellectual property. The third was that Bullion would have a right to farm-in to the exploration licences but would not acquire an interest unless and until it completed its funding obligations. The fourth was that the interest would be transferred by way of security, with a charge back to Mr Fewster.

67 Later that morning, Messrs Paterson, Davis, Bantock, Kiernan and Goyder met at Bullion's offices. Mr Fewster joined the meeting shortly after it began. Mr Paterson said that, while he did not propose to comment on each clause of the draft heads of agreement, there were several high level issues that had to be resolved before the parties could move forward. Some discussion followed.

68 That afternoon, Mr Kiernan emailed to Mr Paterson a redraft of the heads of agreement (9 August draft). In the email by which he sent the draft, addressed to Mr Paterson and Mr Fewster, Mr Kiernan said:

Enclosed is Draft 2 (marked up) of the HOA following our meeting this morning) and my further review with BLN.

Andrew Bantock and Tim Goyder haven't seen this draft as yet so there may be some minor changes but for current purposes please work on this one.

Annexure A (the Reserved Minerals map) needs to be added. This will require John McIntyre (of BLN) and Mike F [Fewster] to discuss the map Mike sent to John. I have added Annexure B being the option terms.

I understand Mike is seeing Phil Golding tomorrow and that he has requested Grant [Paterson] to forward a copy of this draft to Golding for review prior to that meeting ... so could you do that please.

It may help Golding if Grant gave him a run through on the structure via phone as well.

I look forward to your comments.

69 The 9 August draft runs to some 20 pages. It marked up the changes that had been made from the 8 August draft that had been sent to Mr Paterson on the previous day. Clauses 2 and 3 of the draft read as follows:

2.0 NATURE OF THIS AGREEMENT

2.1 Nature

The Parties acknowledge that this Agreement contains only the essential commercial elements of the transaction contemplated hereunder and that more formal and comprehensive legal agreements will be prepared evidencing the matters herein as expeditiously as possible but in any event no later than the shareholder's meeting of BLN as referred to in clause 3.1. These more formal legal agreements shall comprise:

(i) a sale and purchase agreement for the Tenement Interest and for the Information; and

(ii) mining and exploration joint ventures for the Narnoo Joint Venture and the Reserved Minerals Joint Venture

and shall contain such provisions including representations and warranties as would usually be found in formal legal agreements for the type of transactions contemplated herein.

2.2 Binding Nature of this Agreement

(a) Until such time as the more formal legal agreements referred to in clause 2.1 are executed this Agreement (being titled Heads of Agreement) is binding on all parties hereto and supersedes and replaces all previous agreements, arrangements and understandings in relation to the subject matter thereof.

(b) Until such time as the conditions in clause 3.1 are satisfied (or the Agreement is terminated through lack of satisfaction of the said conditions):

(i) none of Mr Fewster, Narnoo Mining or Eaglefield will discuss with any external parties any transaction in relation to the Mulga Rocks (Narnoo) Uranium and Polymetalic Project without the prior consent of GER; and

(ii) Narnoo Mining and Newco agree there will be no variation made to the terms of the Reserved Minerals Agreement.

3.0 CONDITIONS PRECEDENT

3.1 Conditions

This Agreement is conditional upon such consents and approvals as may be necessary being obtained to give full force and effect thereto including but not being limited to the approval of the shareholders of BLN under ASX Listing Rules, Section 611 of the Corporations Act and as may be required under the Mining Act.

3.2 (a) If the conditions in clause 3.1 are not satisfied within 120 days (or such later date as may be agreed as between GER and Mr Fewster) then either of GER or Mr Fewster may terminate this Agreement.

(b) Each Party shall use its best endeavours to have the condition in clause 3.1 satisfied insofar as carriage of the same can be undertaken by them.

70 On the afternoon of 9 August, Mr Paterson emailed a copy of the 9 August draft to Mr Golding. At about 6.15 that evening, Mr Golding telephoned Mr Paterson while Mr Fewster was still in his office. Mr Golding said that he had serious concerns with respect to the proposed structure of the transaction. He said that it would not result in the recipient of the CPPSs obtaining tax relief. As a result of what he had been told by Mr Golding, Mr Fewster estimated that the tax liability resulting from the deal would be in the order of $3 million, as opposed to an anticipated tax liability of $300,000.

71 Early on the following morning Mr Fewster telephoned Mr Bantock. He told him that there was a fatal flaw in the transaction contained in the 9 August draft. This was that it would not entitle the recipient of the CPPSs to tax relief. He said that he, Mr Paterson and Mr Golding were meeting that morning to consider other options.

72 After meeting with Mr Golding, Messrs Fewster and Paterson met with Messrs Bantock and Goyder at Bullion's offices. Mr Paterson said that there were problems with the current proposal. He suggested means by which Mr Fewster's tax difficulties might be overcome. He said that Mr Fewster had always understood that the proposed transaction was subject to legal and tax advice and that his preliminary tax advice was that the proposed transaction could not be done due to adverse tax consequences. Messrs Goyder and Bantock said that they were willing to consider variations to the agreement, but that they considered that there was already a binding agreement in place.

73 Later that afternoon Mr Kiernan prepared and emailed to Mr Paterson a further amended draft of the heads of agreement (10 August draft).

74 On the morning of the following day, 11 August, Messrs Fewster and Paterson met with Messrs Bantock, Goyder and Kiernan. Mr Paterson put forward new proposals that were materially different from those that had previously been discussed. Mr Kiernan said that there was already an agreement in place. Mr Paterson responded by saying that that was not Mr Fewster's position. It was agreed that Mr Fewster would develop a further proposal in writing for consideration by Bullion on a without prejudice basis.

75 On Friday 12 August Mr Paterson emailed to Mr Kiernan a new proposal. Bullion declined to countenance it on the grounds that it was uncommercial.

76 On the next day, Mr Bantock sent a without prejudice email to Mr Fewster. In it, Mr Bantock reiterated that there was an agreed deal in place. However, he indicated a willingness to look for a mutually acceptable solution to the problems that had been raised by Mr Fewster.

77 Mr Fewster replied by email on Sunday 14 August. His email read, in part, as follows:

I entered into negotiations with you with the full intent of concluding a deal, but that deal was simply unobtainable.

Our discussions last weekend only set a starting point from which to commence negotiations (ie the consideration and some other broad issues). To suggest that it represented a binding agreement is nonsense. We both knew that a deal was going to be subject to working through the maze of taxation and regulatory issues that would emerge as we proceeded. There was also a great deal of mechanical detail that had to be resolved for such a complex deal to work; recovery of the reserve minerals and scandium etc. I still don't fully understand how the mythical Newco was to fit into the deal!

78 This last comment related to the introduction, in the 8 August draft, of the entity described as Newco Pty Ltd. We have said that this company was to have entered into an agreement with Narnoo Mining concerning the lignite and sedex, defined in the draft as 'Reserved Minerals'. The 8 August draft contemplated that Narnoo Mining and Newco would enter into an agreement by which Newco obtained the exclusive right to explore, mine and treat the reserved minerals. It also contemplated that a joint venture would be established between Newco and GER for the exploration, development and mining of the reserved minerals. The draft defined the expression 'Reserved Minerals Agreement' as meaning:

the Agreement dated ** as between Narnoo Mining and Newco pursuant to which Narnoo Mining granted to Newco the exclusive right to explore, mine and treat the Reserved Minerals.

79 On 15 August 2005 Bullion lodged caveats over the tenements. These were supported by a statutory declaration in which Mr Bantock said that Bullion claimed a 50% interest in the tenements pursuant to an oral agreement made between it and Mr Fewster, on behalf of Eaglefield and Narnoo Mining, on 6 August and an oral agreement between it and Mr Fewster (presumably acting in the same capacities) at a meeting on 8 August.

80 On or about 16 August 2005 Bullion and GER lodged additional applications for prospecting licences in the name of GER. These related to the graticular gap block tenements. For the purpose of lodging these applications, the two companies used confidential information that had been supplied by Eaglefield to Bullion.

81 On 19 August 2005 Mr Bantock wrote to Mr Fewster asserting that a binding agreement had been reached in the terms reflected in the bullet point list 'agreed and retained' by each of them in the meeting on Monday 8 August.

82 On 29 August 2005 Bullion commenced the proceedings which have culminated in this appeal.

83 The primary case advanced on behalf of Bullion at the trial was that an enforceable agreement was made upon its acceptance, in the last of the telephone conversations on Saturday 6 August 2005, of the offer that had earlier been made by Mr Fewster on behalf of himself and the other defendants. This was the offer that was said to have been made during his telephone conversation with Mr Bantock at about 11.30 that morning. Bullion contended that the terms of the agreement were essentially those set out in the first bullet point list. It contended, in the alternative, that the agreement was made on the afternoon of 8 August 2005, upon the terms recorded in the second bullet point list.

84 In either case the agreement was said to have been one that falls within the first of the categories described in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353, 360 (Dixon CJ, McTiernan and Kitto JJ). This is the category in which the parties have finally agreed upon their bargain and intend to be immediately bound by it but propose to restate it in a fuller and more precise form in a later document. Bullion contended, in the alternative, that the agreement was one falling into the so-called fourth category of immediately binding contracts, being one in which the parties intend to be bound immediately by the terms upon which they have agreed, but expect to make a further contract in substitution for the first containing, by consent, additional terms: Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622, 628. Bullion sought declarations accordingly. It also sought orders for specific performance of the agreement and payment of equitable damages for delay or, alternatively, damages.

85 The respondents disputed that any binding contract was made. They raised four principal contentions. The first was that finality in negotiations had never been achieved. The second was that, in any event, negotiations had been conducted on the basis that the parties would not be bound until such time as the respondents had obtained favourable taxation advice, which did not happen. The third was that the parties had not intended to be bound until the heads of agreement had been executed. The fourth was that, in any event, the agreement was uncertain because essential terms of the arrangement between the parties had not been agreed as at 6 August or 8 August 2005.

86 In arguing that essential terms had not been agreed between the parties, the respondents relied primarily upon four contentions. These were as follows.

87 The first concerned the reserved minerals in respect of which, they said, final agreement had not been reached on or before 6 August or on or before 8 August 2005.

88 The second contention was that it had been essential to prepare the Narnoo joint venture mining agreement and the reserved minerals joint venture agreement at the same time as the heads of agreement, but that neither of these had been prepared.

89 The third contention was that the parties had not reached agreement on the definition of a pre-feasibility study by 6 or 8 August. That definition was said to be significant because cl 5.3 of the 8 August draft provided that, until GER had prepared a pre-feasibility study, it should contribute no less than $2 million per annum to the joint venture expenditure commencing from the date of execution of the heads of agreement. A similar clause appeared in the 9 August draft.

90 The fourth contention was that no agreement had been reached on the question of who would retain the rights to the scandium, that mineral having been excluded from the proposed agreement between the parties. Clause 7.3(a) of the 9 August draft provided that ownership of the scandium rights was retained by Narnoo Mining. However, if the so-called 'gelignite clause' (cl 5.9) was triggered, GER could acquire Narnoo Mining's joint venture interest. That clause was to the effect that, upon a decision to mine, Narnoo Mining would put an offer to GER with respect to the acquisition, by GER, of Narnoo Mining's joint venture interest at a specified price. The respondents argued that scandium was consequently wrongly included in the heads of agreement, contrary to the parties' intention that it would be separately dealt with.

91 A number of other contentions were raised on behalf of the respective parties concerning the question whether any binding agreement was made. These are not presently material.

92 The respondents raised two alternative contentions in case the court should find that there was a binding contract. The first was that performance of the contract was subject to them obtaining expert advice that the tax implications of the proposed arrangements were favourable. They said that advice to the contrary was received. The second was that specific performance of the contract could, or should, not be ordered.

93 They relied, in this second respect, upon s 119(2) of the Mining Act 1978 (WA). This provides that a legal or equitable interest in or affecting a mining tenement is not capable of being 'created, assigned, affected or dealt with, whether directly or indirectly, except by an instrument in writing' signed by the person dealing with the interest. They also contended that specific performance should not be ordered because they would suffer undue hardship, amounting to injustice, if such an order was to be made. They said that this was because, as a result of the capital reorganisation of Bullion in May 2006, the nature of the entity with which they were to have an ongoing relationship had substantially altered. They also said that the nature of the respondents' shareholding in Bullion, being part of the consideration received by them, had substantially altered. Finally, in this respect, they contended that specific performance should not be ordered because this would involve the court in a process of superintendence of performance of the agreements and also of the preparation of a series of complex agreements required by the agreement. They submitted that performance of those agreements would take place over a lengthy period, that it would involve, in part, an arrangement for personal services and that it would require close personal cooperation between the parties.

94 The respondents brought a counter-claim against the appellants. In it, Eaglefield claimed orders compelling Bullion to withdraw its caveats and forbidding it from lodging any further applications for exploration licences within the area of the tenements. Narnoo Mining claimed a declaration that Bullion had no caveatable interest in the exploration licences. It also sought orders that GER deliver to Eaglefield executed withdrawals of each of the applications that had been made for prospecting licences over the areas comprising the graticular gaps. Finally, Eaglefield contended that the appellants had breached the confidentiality agreement. It relied, in this respect, upon the fact that, in making the applications for tenements to cover the graticular gaps, GER and Bullion had used confidential information supplied by Eaglefield without its consent. It said that they had done so when they applied for the tenements in the joint names of GER and Narnoo Mining and also later when they applied for the tenements in GER's name alone.

95 The appellants answered this last claim by contending that the applications for prospecting licences were made from information that was within the public domain. They said that, in any event, the first application was lodged with Eaglefield's consent and the second was lodged pursuant to the terms of the binding agreement which, they said, had been made.

96 The parties agreed that the assessment of any damages should be left over until later.

97 The trial judge found that it was unlikely that the parties had intended to reach a binding oral agreement. One of the grounds relied upon by him in reaching that conclusion was that various issues had been left over for agreement. He identified a number of issues upon which he particularly relied.

98 The trial judge held, first, that the parties had not reached agreement on how the inclusion or exclusion of reserved minerals (the parties also referred to these as 'reserve minerals') would be dealt with. He found [222] that they were still discussing this on and after 8 August. He said that the fact that the parties negotiated these matters after 6 August, but before signing a heads of agreement, indicated that they regarded them as requiring agreement before concluding a legally binding agreement. He pointed, in this respect, to cl 2.1 of the 8 August draft. This was to the effect that the draft contained only the essential commercial elements of the contemplated transaction and that more formal and comprehensive legal agreements would be prepared. He said that it showed that the items referred to in the heads of agreement were regarded by the parties as essential. He went on to say [223] that the negotiations between the parties, and the form of the heads of agreement, demonstrated that the manner in which the sedex, lignite and scandium rights were to be included or excluded from the transaction was a necessary part of any agreement between them. However, he said, the parties did not reach agreement regarding the manner in which the sedex rights were to be dealt with.

99 The trial judge also mentioned ([232] and [263]) that cl 7.3(a) of the 9 August draft had provided for ownership of the scandium rights to be retained by Narnoo Mining notwithstanding that, if the provisions of the gelignite clause were triggered, GER would acquire Narnoo Mining. He said [263] that the inclusion of the gelignite clause (which he saw as important), in terms that did not reflect the earlier consensus in relation to the ownership of the scandium rights, was an indication that the parties were still negotiating the terms of their agreement.

100 Next, the trial judge found [233] that the allocation between the parties of the exploration costs for scandium had not been agreed by 6 August. He also said [233] that negotiations regarding the price per kilogram to be paid for scandium concentrate were ongoing. He commented that he would have expected that these matters would be agreed between the parties before they were willing to be legally bound. He found [235] that the heads of agreement, and the evidence given by Mr Kiernan, revealed that the parties considered that agreement on these matters was necessary before a concluded agreement could be finalised.

101 The trial judge also found [238] that the Narnoo Joint Venture Mining Agreement, dealt with in the heads of agreement as an essential matter, was meant to be prepared at the same time as the heads of agreement. He said that the terms of this agreement were important to the joint venturers and that, in the ordinary course of business, one would not expect parties to make an agreement that provides for the parties to hold tenements jointly, and for a decision to be made whether or not to mine them, without having agreed the principal terms of the proposed joint venture agreement. He mentioned [241] that the 8 August draft provided that Narnoo Mining and GER would establish the Narnoo joint venture immediately upon settlement and that the principal terms to be agreed in that respect were set out in cl 5 of the heads of agreement. However, he said, those principal terms remained to be agreed.

102 The trial judge made similar findings in respect of the Reserve Minerals Joint Venture Mining Agreement contemplated by cl 2.1 and cl 6 of the 9 August draft. He said the 8 August draft provided for the principal terms of the agreement, but that these terms had not been resolved between Mr Fewster and Bullion. He considered that the terms of the 8 August draft reflected that the parties required the principal terms of the reserve minerals joint venture to be agreed before making a concluded agreement [245].

103 Next, the trial judge found that the failure to agree upon the definition of a pre-feasibility study by 8 August was significant. He said [252] that the fact that the definition was referred to by the parties in their discussions and in the heads of agreement after 6 August indicated that they intended to reach consensus in respect of it before concluding a legally binding agreement.

104 In [271] to [275] of his reasons, the trial judge summarised his conclusions in respect of matters that had not been agreed, including, but not limited to, those identified above. He said:

There were a number of matters that the parties discussed but on which the parties had not reached agreement by 6 August. They had not reached agreement on the terms of the Narnoo Joint Venture Mining Agreement or the Reserve Minerals Joint Venture Mining Agreement. They had not reached agreement on how scandium would be dealt with in a mining and process operation. They had not reached agreement on how the inclusion or exclusion of reserve minerals would be dealt with. They had not reached agreement on the definition of a pre-feasibility study. The question is whether, in those circumstances, no binding agreement was intended unless and until agreement at least in relation to those matters was reached. I have discussed earlier in these reasons the manner in which the parties addressed these matters before 6 August and on 8 and 9 August. I find that the manner in which the parties negotiated those matters before 6 August and on 8 and 9 August shows that they regarded them as subjects requiring agreement before a binding agreement was concluded.

The parties did not expressly agree who was to be the recipient of the ordinary shares and options issued by Bullion, who was to be the recipient of the CPPSs nor who was to be the recipient of payments by Bullion. The failure to have reached express agreement on those matters does not preclude a legally binding agreement from having been made. Indeed, for the reasons I have expressed earlier I find that the parties intended, and should be taken to have intended, that the recipients of the shares, options, CPPSs and other considerations were to be Fewster or persons or entities nominated by him.

Kiernan included Mrs Fewster as a party to the transaction in the heads of agreement he drafted on 8 August. Fewster did not agree, or purport to agree on behalf of Mrs Fewster, that Mrs Fewster would be a party to the transaction. That does not prevent a legally binding agreement having been reached to which Mrs Fewster was not a party. However, the conduct of the parties in negotiating after 6 August and 8 August about who were to be the parties to the transaction is a relevant consideration. It tends against Fewster and Bullion having intended to make a concluded and legally binding agreement on 6 August or 8 August.

No agreement was reached in relation to pre-emptive rights. That does not, however, prevent a legally binding agreement having been reached that contained no pre-emptive rights.

The conduct of Kiernan, on behalf of Bullion, in preparing a draft heads of agreement which provided for the ownership of the scandium rights to be retained by Narnoo Mining notwithstanding that if the 'gelignite clause' was triggered, Bullion would acquire Narnoo Mining, also tends against the parties having reached a concluded and legally binding agreement on 6 August or 8 August. The fact that Kiernan drafted that provision after spending a substantial time with Bantock and Fewster whilst they went through the second list of bullet points suggests the parties were still negotiating.

105 The trial judge also relied on the magnitude and complexity of the subject matter of the agreement. He said, in this respect [276] - [277]:

The transaction negotiated between Fewster and Bantock was a complex one. It involved more than the sale or transfer of tenements for an agreed consideration. It also involved the formation of two joint ventures to explore, develop and, if it was subsequently decided to do so, mine the tenements. The negotiations involved treating some of the metals, ores or resources on the tenements differently. The negotiations involved discussions about exploration expenditure and the making of decisions to mine. The consideration to be received by Fewster or his entities included cash payments, shares in Bullion, options in Bullion and convertible preference performance shares in Bullion that would convert to fully paid ordinary shares upon the happening of various events. In short, the transaction or deal being negotiated was a complex one.

The consideration payable to Fewster outlined by Fewster on 6 August included a cash upfront payment of $1.1 million and two further cash payments of $600,000 each. The consideration further included shares, options and convertible preference performance shares in Bullion that would or might lead to Fewster being the major shareholder in Bullion. The first tranche of CPPSs would convert to Bullion fully paid ordinary shares upon Bullion's market capitalisation exceeding $25 million or $30 million. Fewster's proposal to Bantock on 6 August included a requirement for Bullion to make a minimum expenditure of $2 million per annum in the period prior to Bullion producing a pre-feasibility study. Those matters are an indication of the size and importance of the subject matter of the putative agreement. The magnitude and complexity of the proposed transaction makes it less likely that the parties intended to reach a binding oral agreement.

106 Finally, in this context, in the course of rejecting a contention that it had been a condition precedent to the formation of a concluded enforceable agreement that the respondents receive expert tax advice that the tax implications of the proposed deal were favourable to the respondents, the trial judge said [289]:

Nevertheless, the fact that the number, description and characterisation of the CPPSs were still to be resolved between Fewster and Bullion tends against the parties having intended to make a binding agreement on 6 or 8 August. That is because the existence of matters in which the parties have not reached agreement in their informal agreement renders it less likely that they intended immediately to be bound before the execution of a more formal agreement, in this case a heads of agreement. The number, description or characterisation of the CPPSs were not matters that could be unilaterally determined by Fewster.

107 The trial judge then turned his attention to the question whether the parties had intended to be bound only upon execution of the heads of agreement. He regarded it as significant [301] that, throughout the negotiations, the parties had contemplated that any agreement would be made by entering into a written heads of agreement. After analysing other evidence bearing upon this issue in [306], [314] - [315] and [318] - [319] (to which we will return later in these reasons), he concluded that the parties had not intended to reach a binding agreement before executing the heads of agreement.

108 After dealing with contentions that had been advanced on behalf of Bullion in support of its proposition that a binding agreement had been made, the trial judge arrived at the following overall conclusions in this respect [325] - [328]:

Conclusion - No binding agreement made on 6 August

On 6 August the parties had not reached agreement on important matters. The conduct of the parties in meeting on 8 August and further negotiating the terms of their proposed transaction and relationship is consistent with neither party having agreed or intended to be bound by terms agreed on or before 6 August.

The minutes of the meeting of directors of Bullion on 6 August record that the board discussed the investment opportunity and resolved that 'subject to the final agreement of Mr Stewart, the company would commit to the proposal put by Mr Fewster'. I find that on 6 August each of the parties agreed the consideration to be paid to Fewster and committed to negotiating the further matters that needed to be resolved in the expectation that an agreement would be concluded by the signing of a heads of agreement, but no concluded agreement was made on 6 August.

Was an agreement made on 8 August?

At about 10.30 am on Monday 8 August, Goyder, Bantock and Fewster met in the Bullion boardroom to go through the bullet point list that Bantock caused to be typed. At some time that morning Bantock gave Fewster and Goyder each a copy of the typed bullet point list. Bantock went through the list with Fewster. Bantock asked his secretary to affect changes to the bullet points that were discussed. A second list of bullet points was prepared.

However, nothing was done to conclude an immediately binding agreement. Neither Fewster nor Bantock signed the bullet points or stated words to the effect that the agreement was then made. To the contrary, the bullet points were to be provided to Kiernan for him to draw up a draft heads of agreement. The procedure that had been agreed on 6 August was that the heads of agreement would be completed during the trading halt and signed by Wednesday to enable the trading halt to be lifted. The parties intended that their agreement should be made by executing the heads of agreement. No binding agreement was made on 8 April.

109 The trial judge next dealt with the issue of uncertainty. He reached the following conclusions [334] - [336]:

I find that some of the matters on which the parties had not reached agreement, which I have set out earlier in these reasons, were matters which were required to be agreed before a legally binding agreement could come into effect. Those matters included the principal terms of the Narnoo Joint Venture Mining Agreement, the principal terms of the Reserve Minerals Joint Venture Mining Agreement, how scandium would be dealt with in a mining and process operation, how the inclusion or exclusion of reserve minerals would be dealt with and the definition of a pre-feasibility study.

The parties' conduct on 8 August and subsequently, shows that they considered those matters required agreement. Those matters were essential to the relationship between the parties. Whether the parties reached agreement upon such terms as are, in the circumstances, legally necessary to constitute a contract is not the same as, although in this case it is closely related to, the question of whether the parties intended to make a concluded agreement: see Australian Broadcasting Corporation v XIVth Commonwealth Games ... at 548 per Gleeson CJ.

The heads of agreement drafted by Kiernan, and considered by Bantock, on 8 and 9 August are a strong indication of the matters that were the terms necessary for an enforceable agreement to be made. Agreement was not reached on all of those terms. I find that the parties did not reach agreement on essential terms. Their transaction and future relationship would be unworkable without agreement having been reached on those terms.

110 Having found that there was no binding agreement, it was unnecessary for the trial judge to consider the availability of specific performance. However, he commented briefly, in this context, on the issues of certainty, hardship and s 119 of the Mining Act.

111 As to the issue of certainty, he said [338] that it was not feasible to pronounce upon whether or not the alleged agreement, if enforceable, was sufficiently certain to be enforceable by an order for specific performance. That was because this would make it necessary for him to consider different permutations of hypothetical findings, contrary to the findings that he had made. He also said [340], [342] that, having found that the agreement was too uncertain to be enforced, it was not practicable for him to consider whether an order for specific performance should be refused on the ground that the agreement would require constant supervision or on the ground that an order for specific performance would create such hardship as to render it unjust.

112 So far as s 119 of the Mining Act was concerned, the trial judge said that the primary relief sought by Bullion was that Mr Fewster execute the heads of agreement. This was a contractual right which did not depend upon Bullion having an interest in the tenements prior to the execution of the heads of agreement. Consequently, he said [349], s 119(2) did not preclude him from making an order for specific performance of the kind sought.

113 The trial judge considered it appropriate to make declarations that there was no enforceable agreement between the parties concerning the tenements or the project. He also found that the appellants had no caveatable interest in the tenements.

114 That left the question whether the confidentiality agreement had been breached. The trial judge found [362] that the lodging of the applications on 8 August in the joint names of GER and Narnoo Mining did not breach that agreement. This was because it had been agreed, earlier that day, that the tenements should be pegged in the joint names of GER and Narnoo Mining. However, he found that there was a breach in respect of the lodging of the later prospecting licence applications on 16 August 2005. He relied, in this respect [364], upon Mr Fewster's request on 8 August to Mr Bantock that he should ask Mr McIntyre to 'pull' the tenement applications. He said that this had made it plain that Mr Fewster did not consent to any subsequent prospecting licence applications being lodged in the area of the tenements by Bullion or GER, whether jointly with Eaglefield or alone. He also found [366] that, in using the respondents' confidential information to prepare and lodge those applications, Bullion had breached the confidentiality agreement.

Grounds of appeal, notice of contention and issues arising

115 It is convenient to divide the grounds of appeal, and the contentions raised by the notice of contention, into five parts.

116 The first of these encompasses grounds 1, 3 and 4 of the grounds of appeal and contentions 1 and 2 of the notice of contention. These address the question of whether the parties intended to make a legally binding agreement on either of 6 or 8 August 2005.

117 Next, ground 2 of the grounds of appeal raises the issue of certainty of the alleged agreement.

118 The third part comprises grounds 5 and 6 of the grounds of appeal and contentions 3 and 4 of the notice of contention. All of these raise issues concerning the availability of an order for specific performance of the agreement, if an agreement was made.

119 The fourth part consists of ground 7, which challenges the trial judge's finding that the confidentiality agreement was breached.

120 The fifth part deals with an alternative contention, made by grounds 8, 9 and 10, that the trial judge found, or should have found, that the parties had entered into a legally binding and enforceable 'Exclusive Negotiations Agreement' (ENA) on 6 August 2005 and that the respondents breached that agreement. No agreement of that kind had been pleaded in the statement of claim. However, the appellants contend that the trial judge should have made consequential orders allowing any necessary amendments to the statement of claim.

Did the parties intend to make a legally binding agreement on 6 or 8 August 2005?

122 Ground 1 contends that the trial judge should have found that, as a matter of 'mutual objective intent', a legally binding and enforceable agreement was made on 6 or 8 August 2005, by which the appellants acquired an immediate interest in the Mulga Rock tenements on terms pleaded in the statement of claim. The particulars to this ground rely upon four alleged errors. The first of these is that the trial judge erred in concluding that the outstanding issues concerning reserved minerals and scandium detracted from the conclusion that a binding agreement had been made. The second is that he erred in his conclusion that, because pleaded terms of the agreement were being discussed by the parties after 6 August 2005, this supported the conclusion that these were matters which the parties had intended to agree upon before being legally bound. The third error is said to consist of the trial judge's finding that, because the parties had not expressly addressed themselves to whether they had reached an immediately binding agreement, this detracted from the conclusion that they did so on 6 August 2005. The fourth error is said to consist of the trial judge's finding that the size and complexity of the proposed transaction detracted from a conclusion that an agreement was made on 6 or 8 August 2005.

123 Ground 3 contends that the trial judge should have found that the agreement was 'perfected' on 6 August 2005 by the appellants' acceptance, during the soccer telephone conversation, of the offer that had earlier been made by Mr Fewster on behalf of himself and the other respondents. There are extensive particulars to this ground. These refer to evidence which is said to support the ground.

124 Ground 4 contends, in the alternative, that the trial judge should have found that a binding agreement was concluded on 8 August 2005, during meetings between representatives of the appellants and the respondents, 'as set out in the "second bullet points" document of that day'.

125 Ground 1 of the notice of contention contends that, if the court should find that the parties entered into a legally enforceable agreement in the terms pleaded by the appellants or similar terms, the trial judge erred in failing to find that it was a condition precedent to the formation of that agreement that the respondents received expert advice that the tax implications of the transaction were favourable to them. As will be apparent, the tax advice received by the respondents was to the contrary.

126 Ground 2 of the notice of contention contends that, if the court should find that an agreement was entered into in the pleaded terms or similar terms, then the trial judge erred in failing to find that it was a condition precedent to the formation of the agreement that it be embodied in a written contract signed by the parties.

127 There is some overlap between the requirements of intention to create legal relations and certainty. If a contract is legally uncertain, this might indicate that the parties did not intend to create legal relations. A contract can be uncertain in various ways, one of these being incompleteness, in the sense that essential terms are lacking: Thorby v Goldberg [1964] HCA 41; (1964) 112 CLR 597, 603 (Kitto J); Godecke v Kirwan [1973] HCA 38; (1973) 129 CLR 629, 646 - 647 (Gibbs J). The overlap between intention and uncertainty is at its greatest in cases in which agreement on some matters is deliberately postponed. If what is postponed is essential to the agreement (itself a question that largely depends upon the intention of the parties), the agreement, to the extent that it has been reached, will be void. Also, the fact that essential terms have been left over for later agreement will militate against a finding that the parties intended to create contractual relations.

128 Traditionally, courts have applied the three categories identified in Masters v Cameron (360) (Dixon CJ, McTiernan and Kitto JJ), as follows:

(a) the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect;

(b) the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document; and

(c) the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.

129 A fourth category has since been added by McLelland J in Baulkham Hills (628), relying on Sinclair, Scott & Co Ltd v Naughton [1929] HCA 34; (1929) 43 CLR 310, 317. This is a variation of the first category. We have earlier mentioned that it is one in which the parties intend to be bound immediately by the terms which they have agreed upon, while expecting to make a further contract in substitution for the first contract containing, by consent, additional terms.

130 In Masters v Cameron (362) the court pointed out that the answer to the question of categorisation depends upon the intention disclosed by the language used by the parties. The court also said that no special form of words is essential in order that there shall be no contract binding upon the parties before the execution of their agreement in its ultimate shape.

131 Of course, the parties' intention must be objectively ascertained. This, in turn, requires consideration of the words used in the context in which they were used. So, for example, the high value of the subject matter might be relevant in determining whether there was an intention to be bound immediately or only after receiving professional advice: Sinclair Scott (316 - 317). Also, the complexity of the contemplated deal may make it less likely that the parties intended to commit to the contract by informal means although, in the end, the disclosed intention of the parties will be decisive: G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631, 634 - 635 (McHugh JA, Kirby P & Glass JA agreeing).

132 The following extract from the judgment of Gleeson CJ in Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, 548 is relevant:

In a case where a court is required to make a judgment concerning the intention of the parties in relation to what might broadly be described as a Masters v Cameron ((1954) [1954] HCA 72; 91 CLR 353) dispute, it will normally be of importance that the court have an understanding of the commercial context in which the dispute arises, and a most significant feature of that context will relate to the subject which the parties regard, or would ordinarily be expected to regard, as matters to be covered by their contract. In some cases, such as transactions involving the sale and purchase of land, or leases, courts may properly feel well equipped to form a view on such matters without the need for much evidence. In many cases, however ... there is a need for evidence in one form or another as to what subjects would be regarded as requiring agreement between the parties. In this case the best evidence on that subject is to be found in the actual communications between the parties and, in particular, in the issues which they in fact addressed when they set about drafting their detailed contract.

It is to be noted that the question in a case such as the present is expressed in terms of the intention of the parties to make a concluded bargain: see, eg, Masters v Cameron (at 360). That is not the same as, although in a given case it may be closely related to, the question whether the parties have reached agreement upon such terms as are, in the circumstances, legally necessary to constitute a contract. To say that parties to negotiations have agreed upon sufficient matters to produce the consequence that, perhaps by reference to implied terms or by resort to considerations of reasonableness, a court will treat their consensus as sufficiently comprehensive to be legally binding, is not the same thing as to say that a court will decide that they intended to make a concluded bargain. Nevertheless, in the ordinary case, as a matter of fact and commonsense, other things being equal, the more numerous and significant the areas in respect of which the parties have failed to reach agreement, the slower a court will be to conclude that they had the requisite contractual intention.

133 Applicable principles were summarised by Kirby P in Geebung Investments Pty Ltd v Varga Group Investments No 8 Pty Ltd (1995) 7 BPR 14,551, 14569 - 14570. It is instructive to repeat pars 3, 4, 5, 6 and 8 of that summary:

1. The existence of matters of importance in which the parties have not reached consensus in their informal agreement will render it the less likely that they intended immediately to be bound before the execution of a formal document. Even where the parties have agreed on the 'major matters', their subsequent conduct may indicate that they did not intend to be bound until the other issues between them were resolved in a formal document (see in particular Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 at 361; Barrier Wharfs Ltd v W Scott Fell and Co Ltd [1908] HCA 88; (1908) 5 CLR 647 at 666; and Marek v Australasian Conference Association Pty Ltd [1994] 2 Qd R 521 at 528).
2. In order to determine in what areas the parties were, and were not, in agreement, and what matters they considered necessary in order for an agreement to exist, it is legitimate to examine their subsequent conduct. Where correspondence between the parties after an informal agreement refers to important terms and conditions not mentioned during that informal discussion, it may more readily be inferred that the earlier discussion was simply a preliminary negotiation and not a binding agreement.
3. Depending on the size, importance and complexity of the subject matter, the less formal the initial agreement, the less likely it will be that it was intended to be legally binding and enforceable. Thus, an oral discussion which contemplates a subsequent formal written agreement is less likely to have been intended to have been immediately binding.
4. It is necessary in every case to consider the nature and importance of the transaction which the parties contemplate. Where the agreement concerns a large sum, or concerns a significant transaction, it is less likely to have been intended to be presently binding.

1. Where a binding agreement is said to have been formed as a result of correspondence, it is necessary to look at that correspondence as a whole. It is wrong to isolate any part of the correspondence from the rest in order to prove or disprove the existence of a binding agreement. The same approach should be taken to the analysis of words and phrases within the correspondence. Reference to an 'agreement' having been reached does not necessarily prove the existence of a presently binding contract. Conversely, references to a 'proposed' agreement, and similar expressions, will not necessarily mean that no agreement presently exists. It is a question of how the words are to be interpreted in their context, and in the light of the correspondence, viewed as a whole.

134 In considering the appellants' contention that the requisite contractual intention was present in the present case, we propose first to consider what was agreed between the parties (whether in principle or otherwise), when it was agreed, and also what remained to be agreed by them. Then, we propose to consider the communications between the parties (including their attitude to the need for writing), looked at in the light of the commercial context and subject matter of the negotiations. We will also consider their subsequent conduct, to the extent that it is relevant and admissible. Finally, having regard for all of these considerations, we propose to consider whether or not any of the contentions made in this group of grounds has been made good and, if so, to what extent.

135 In par 7 of its statement of claim, as amplified by its further and better particulars, Bullion pleaded that an oral agreement was made on 6 August 2005 in the series of telephone calls that took place on that day. The terms of the agreement are fully pleaded. Essentially, these reflect what is set out in the second bullet point list, although there are some relatively minor differences.

136 The agreement that was said to have been made on 8 August is pleaded in par 8 of the statement of claim. That agreement is said to have been made in the course of the meeting at Bullion's offices between Messrs Fewster, Bantock, Goyder and Kiernan. Mr Fewster is alleged, during that meeting, to have '150% committed to the agreement which he described as a perfect outcome'. The agreement is said to have been oral. It is pleaded to have been made in identical terms to that pleaded in par 7 of the statement of claim. Bullion pleaded, in its further and better particulars, that, at the meeting on 8 August 2005 at its offices:

Andrew Bantock said words to the effect he had prepared a bullet point list summarising the main points of the previous discussions between the parties and the agreement made on Saturday. Andrew Bantock then said words to the effect that we should go through the list and confirm we have reached an agreement in these terms. For each provision of the agreement outlined in subparagraphs 7.1 to 7.4, 7.5.1, 7.5.2, 7.5.3, 7.5.7, 7.6 to 7.28 of the statement of claim, Andrew Bantock said in substance words to the effect this is my understanding of what we have agreed. The first defendant said in substance that he either agreed, that was the agreement or that was not the agreement. During the meeting, an amended bullet point list was prepared and presented to the first defendant. The first defendant [said] to Andrew Bantock words to the effect [that] the bullet point list accurately reflected the agreement made.

137 As we have mentioned, the trial judge did not accept Mr Bantock's evidence that Mr Fewster said that the second bullet point list accurately reflected the agreement that had been arrived at [142]. He accepted Mr Fewster's evidence that, on Monday 8 August 2005, the parties discussed some items on the first bullet point list, and that some were changed but others were left without him expressing final satisfaction with them [141]. We have also mentioned that, significantly, the trial judge found [143] that on 8 August the parties were in the process of discussing terms to be incorporated into a heads of agreement and were not engaged in a discussion about what had been agreed on 6 August or earlier.

138 The trial judge made no comprehensive finding of what had been agreed upon by the parties on 6 or 8 August 2005. The highest that his findings can be taken in this respect is that he accepted [105] that the most reliable guide to the contents of the telephone conversations that took place prior to, and during, the Bullion board meeting on 6 August were the minutes of that meeting. He accepted that these reflected some agreement between the parties, particularly as regards the consideration to be paid [326] (although he also found [104] that the minutes contained a 'truncated and incomplete account of the board meeting').

139 Counsel for the appellants relied heavily on these minutes in his submissions concerning the subject matter of the agreement for which he contended. He submitted that the minutes revealed agreement concerning the 'principal terms of [the deal] structure', encompassing the consideration to be provided, the composition of Bullion's board and the minimum expenditure requirement imposed upon Bullion in the period prior to its production of a pre-feasibility study.

140 Counsel for the appellants also contended that two additional points were subsequently agreed upon in the course of the soccer telephone conversation. The first of these concerned the areas in which Bullion (more accurately, GER) would have the right to acquire a 50% interest in sedex and lignite. He relied upon evidence that Mr Fewster had then explained to Mr Bantock that Bullion would acquire a 50% interest in areas north of Emperor and near Shogun, but not in areas west and north of Ambassador. The second additional point in respect of which agreement was said to have been reached during the soccer telephone conversation was that Mr Fewster's contribution to the recovery cost of scandium would be capped at a maximum of $10 per kilogram. Counsel for the appellant suggested that agreement on these two matters, taken together with the agreement reflected in the minutes, constituted the 'guts' of the agreement which, he said, was arrived at on 6 or 8 August.

141 Although the trial judge made few findings concerning what had been agreed, he made a number of findings in respect of matters that had not been agreed. We have said that the most important of these, in his opinion, related to the manner in which the scandium should be dealt with; the manner in which the reserved minerals should be dealt with; the terms of the two joint venture agreements that, he found, were intended to have been made simultaneously with the heads of agreement; and the definition of the pre-feasibility study. As will be apparent, other, less significant, matters were also found to have been left over for agreement.

142 In addition, a comparison between the second bullet point list and the final version of the heads of agreement reveals that Bullion (which had the responsibility of preparing the heads of agreement) made a number of changes to what had been recorded in the bullet points. The respondents have identified these in a schedule to their written outline of submissions. One example is that the final draft of the heads of agreement reflected that GER, rather than Bullion, was to acquire the 50% interest in the mineral rights and that GER and Narnoo Mining rather than Bullion, Narnoo Mining and Eaglefield, were to enter into the Narnoo joint venture agreement. Another example is that Bullion seemingly unilaterally changed the definition of 'BLN options' (the options to be provided in respect of the purchase of Bullion's shares) so as to include additional terms and conditions that are set out in annexure B to the heads of agreement. Similarly, the definition of 'BLN convertible preference shares' was unilaterally altered so as to provide, in the heads of agreement, that they were to carry no voting or dividend participation rights and no rights on the liquidation or winding up of Bullion.

Were the matters still to be agreed such as to make it unlikely that the parties intended to be bound by what they had agreed upon?

143 The next question is whether, having regard for the commercial context and subject matter of their negotiations, the matters left over for agreement were such as to make it unlikely that the parties intended to be bound until agreement had been reached in respect of those matters: Australian Broadcasting Corporation (548).

144 It is largely common cause between the parties that the matters primarily relied upon by the trial judge at [271] (mentioned earlier in these reasons) are the most important in this respect. We will consequently deal first with those matters.

145 Each of the first and second bullet point lists provided that the heads of agreement were to be followed by 'a full agreement as soon as possible, by no later than the General Shareholders Meeting', comprising the 'Sale Agreement', the 'Narnoo Joint Venture' and the 'Reserve Minerals Joint Venture'. It seems to us to be plain enough from this (and also from cl 2.1 of the 29 July draft of the heads of agreement) that the parties considered that full agreements in respect of each of those matters would be prepared at a later stage and not, as the trial judge found (at [238] and [242]), at the same time as the heads of agreement.

146 Moreover, the 29 July draft of the heads of agreement provided for the principal terms of the Narnoo Joint Venture in cls 5.2 to 5.5. While cl 5.6 identified other terms of the joint venture that would be included in the 'more formal Joint Venture Agreement', none of these seems to us to have been controversial. Rather, they appear to us to have been provisions of a kind which persons experienced in the mining industry and knowledgeable about joint venture agreements, as the parties were, would have thought to be unlikely to present any difficulty. We doubt that the parties would have regarded them as matters which should preclude them from agreeing to be bound with respect to more fundamental or contentious terms. These more subsidiary or less contentious matters encompassed such things as the establishment of a management committee; voting in accordance with the respective joint venturer's interest; pre-emptive rights; dilution provisions 'in accordance with the usual formula found in such joint ventures'; contributions to expenditure after completion of a feasibility study in accordance with their then joint venture interests, subject to the funding arrangements identified in cl 5.3(c) and subject also to the dilution provisions; and the creation of an area of influence in which no party could acquire a tenement without offering it to the Joint Venture at cost.

147 In contending that no binding agreement was made, counsel for the respondents placed some reliance upon the fact that there were ongoing negotiations between the parties as regards the terms of the Narnoo Joint Venture. He said that this was readily apparent from a comparison of the 29 July draft of the heads of agreement with the 9 August draft. There are two changes of particular significance.

148 The first of these is the change to cl 5.3, dealing with Joint Venture expenditure. As will be apparent, this change made that clause (requiring GER to fund all expenditure up to a decision to mine) expressly subject to cl 5.8, which gave to GER the right to withdraw at any time after completion of a pre-feasibility study. In the 29 July draft, Mulga Rock Mining (which, as we have said, was to be sold by Fewster to Bullion and operate the Joint Venture) could withdraw prior to a definitive feasibility study by written notice to Narnoo, provided it had met its obligations to maintain the tenements in good standing. That change to cl 5.3 lends little support to the respondents. The fact that the parties altered a proviso of this kind does not mean that they had not reached a binding agreement before doing so. Parties who have reached a final agreement are always able to negotiate variations or additions to it, should they choose to do so. There can be no suggestion that the right to withdraw after completion of a pre-feasibility study was essential to their agreement.

149 The second significant change is that to cl 5.10, the so-called 'gelignite' clause. The first bullet point list had provided that the gelignite clause was 'per Clause 5.10 of the first draft Heads of Agreement previously circulated'. This gave Narnoo Mining 'the right but not the obligation to put an offer to Mulga Rock Mining for Mulga Rock Mining to acquire Narnoo Mining's Joint Venture Interest ... '. The second bullet point list provided, in respect of the gelignite clause, that it was 'triggered after a Decision to Mine is made and obliges Narnoo to put an offer to BLN'. This change was reflected in cl 5.9 of the 9 August draft of the heads of agreement.

150 It is unclear precisely when, if at all, the change to the gelignite clause was agreed upon. The minutes of the board meeting of 6 August say nothing in respect of this clause. However, in his unsent letter dated 6 August 2005, Mr Bantock recorded that the parties had 'agreed the mechanism to reconsolidate the project to 100% corporate ownership post Decision to Mine, prior to project development'. This presumably refers to the gelignite clause in its amended form. Whatever may be the position in that respect, the letter suggests that Mr Bantock, at least, was under the impression that agreement had finally been reached in respect of that clause. However, even if he was wrong in that assumption, we are not persuaded that the subsequent amendment to that clause reflects a lack of intention to be bound prior to final agreement in respect of it.

151 The documentary evidence reveals nothing else that would suggest that, apart from the specific matters dealt with by them, the parties anticipated any difficulty in arriving at what were essentially standard joint venture terms and conditions.

152 That brings us to what was described as the outstanding agreement on the question of how scandium (a rare metal with properties similar to aluminium) would be dealt with in a mining and process operation.

153 The trial judge made two errors in this respect. The first of these arises out of his conclusion [232] that cl 7.3(a) of the final draft of the heads of agreement incorrectly provided for the ownership of the scandium rights to be retained by Narnoo Mining, notwithstanding that, if the 'gelignite' clause was triggered, Bullion (more precisely, GER) would acquire Narnoo Mining when this was 'not part of any concluded agreement'. He referred to this again at [263]. However, the gelignite clause (cl 5.9 of the 9 August draft heads of agreement) relates only to Narnoo Mining's 'Joint Venture Interest'. Because the intention of cl 7.3 was that the Narnoo Joint Venture did not encompass scandium within the tenements, the operation of cl 5.9 could not result in the acquisition by GER of any scandium. This error had some significance, having regard for the trial judge's finding [263] that:

[T]he inclusion of an important clause in the draft heads of agreement that did not reflect the earlier consensus in relation to the ownership of the scandium rights is an indication that the parties were still negotiating the terms of their agreement.

154 The second error related to the exploration costs for scandium. We have said that the trial judge found [233] that the allocation between the parties of exploration costs for scandium had not been agreed by 6 August 2005. He went on to say:

Although Bullion was to fund the project costs through to a decision to mine, there was no agreement as to funding the costs of exploration for scandium. One would expect these matters to have been agreed between parties before reaching a legally binding agreement.

The parties did not contemplate that Bullion would explore for scandium. The only eventuality that any agreement needed to provide for in this respect was what would happen if, in the course of exploring for and mining the minerals that were covered by the Joint Venture, scandium was encountered.

155 There were two other matters that the trial judge regarded as significant in this respect. The first is that there was ongoing discussion concerning the use of revenue from scandium to optimise open pit mining [227] - [231]. The second is that there was ongoing discussion concerning the manner in which the costs of recovery of scandium were to be borne [234] - [235].

156 Mr Fewster's evidence at the trial was that, at the meeting at Bullion's offices on 4 August 2005 (he mistakenly said that it had been on 5 August 2005), he made it plain that he would retain ownership of scandium in the project. However, he stipulated that, during the evaluation and development of the uranium resources, Bullion would be obliged to assay all samples of scandium collected, determine the scandium content in the uranium resources and include a process to recover scandium in any process design work. He also said that, if a mining operation was established on any uranium resource, the operator would have to include in the mill a circuit that would recover the associated scandium and produce a concentrate for subsequent collection by him. He said that, on collection, he (or his nominee) would pay mill recovery costs only, plus 10%, but that these would be capped at a maximum of $10 per kilogram of scandium. He said that Messrs Bantock and Goyder agreed to all of this. We have mentioned that his evidence was that this agreement was confirmed in subsequent telephone conversations on Saturday 6 August 2005.

157 However, Mr Fewster also said that on 8 August 2005 he and Mr Bantock discussed what he referred to as 'the second scenario'. This concerned a clause which, he said, he would like to have inserted into the heads of agreement. The clause was one that permitted him to instruct the operators of a uranium mine also to mine and process any proximal ore where scandium was the major commodity. He said that he would pay mining and recovery costs, plus 10%, in respect of any 'second scenario' scandium, less the proportion of cost (if any) ascribable to Bullion's recovery of uranium or other commodities. He said that Mr Bantock agreed to this. When he read the first bullet point list later that day, Mr Fewster saw that Mr Bantock had included a note regarding mine costs for the second scenario being optimised on the basis that all revenues and costs would be shared proportionately. He said that he was surprised, that evening, to read that the scandium clause had been significantly expanded in the second bullet point list so as to include a third scenario which had not been discussed or agreed.

158 The first bullet point list had read as follows, in this respect:

Contribution to costs from Scandium revenue: Scandium rights always remain 'outside the deal'. Mike Fewster will agree to:

(a) pay recovery costs through the mill + 10% - to a maximum of $10 per kg recovered, and

(b) if additional mining is required to access Scandium - pay additional mining costs + 10%.

In practice, this will mean that mining design will be optimised on the basis of all revenues (including Scandium) and mining costs shared proportionately.

Contribution to costs from Scandium revenue: Scandium rights always remain 'outside the deal'.

(a) Based on the non-Scandium revenue pit optimisation, Mike Fewster will agree to pay recovery costs through the mill + 10% - to a maximum of $10 per kg of Scandium recovered in concentrate (or higher - if proved by an independent expert).

(b) Beyond the above, Mike Fewster may nominate a Scandium Value to be included in a mine optimisation. When mining occurs pursuant to this optimisation, Mike will pay that amount on delivery of the subject concentrate.

(b)[sic] Mike Fewster may also further nominate if additional mining is required to access Scandium - rich area 'carried' by the 'all minerals' optimisation, in which case Fewster/Eaglefield will pay this cost plus ... 10%.

160 The 'third scenario' to which Mr Fewster referred was the scenario that, if Mr Fewster nominated a 'Scandium Value', then, as he put it, 'the size of the deposit that could be mined increased'. The importance of the third scenario was explained by Mr McIntyre in the course of his evidence at the trial (ts 459). He said that it would result in pit optimisation, because the design of the mine could then take into account revenue to be obtained from scandium that would be used to pay some of the mining expenses, thereby enabling the parties to expand the size of the overall resource that could be mined.

161 It seems plain enough from the evidence at the trial, and from what was set out in the first bullet point list, that there was no controversy concerning the first two scenarios dealing with the costs of recovering scandium in the process of recovering uranium and the costs of additional mining required to access nearby scandium. As will be apparent, in the former case Eaglefield was to pay the recovery costs through the mill plus 10% to a maximum of $10 per kilogram recovered (although, in the second bullet point list Mr Bantock had unilaterally added in a note that the maximum could be higher, if proved by an independent expert) and, in the second case, any additional mining costs plus 10%. However, the third scenario, as foreshadowed in the note added by Mr Bantock to the first bullet point list and as developed in the second bullet point list, had not been agreed.

162 In his evidence at the trial (par 173), Mr Fewster said that, during the course of his visit to Bullion's offices on 9 August 2005, he, Mr Stewart, Mr McIntyre and Mr Davis discussed a 'mechanism' for the third scenario. He said, in this respect:

Stewart, McIntyre, Davis and I discussed a mechanism for the Third Proposal. McIntyre and Stewart proposed that a value for scandium be nominated prior to the commencement of any mining operation, and any additional scandium produced by an enlargement of the pit be subject to payment of that price. I then said words to the effect that this would be of little use, as it was very unlikely that a market would exist for scandium pre mine development, so no price could be nominated. I then proposed that once the mining operations commenced a value for scandium could be nominated every six months. The operator would re-optimise the pit based on that value and any additional mineralisation subsequently mined due to that re-optimisation. Whatever scandium was delivered from that additional ore would be subject to the value assigned. Stewart and McIntyre said words to the effect that they agreed.

Therefore, as I have set out above, Stewart, McIntyre and I agreed for the first time that there would be a third class of scandium within the tenements; that produced by any increase in the size of a mine after a value greater than $10/kg was assigned, and a pit optimisation undertaken. At the meeting, McIntyre said that Kiernan could draft a clause to be inserted in a second draft of the HOA to cover this Third Scenario of scandium recovery. I said 'OK' or words to that effect.

164 As will be apparent, the 29 July draft of the heads of agreement contained no clause dealing separately with scandium (although scandium was dealt with together with the other 'reserved minerals'). However, by the time of the 9 August draft, cl 7.3 (headed 'Matters Relating to Scandium') read as follows:

(a) The Parties hereto acknowledge that all rights within the Tenements to scandium are to be retained by Narnoo Mining which is obligated to pay all exploration costs in relation thereto subject to the terms of this clause 7.3.

(b) If there is a Decision to Mine made under either the Narnoo Joint Venture or the Reserved Minerals Joint Venture and Narnoo Mining requests the relevant Joint Venture to extend any mining pit for the purpose of recovering scandium, then Narnoo Mining will pay all recovery costs of scandium incurred through the mill plus a 10% charge but up to a maximum of $10.00 per kilogram of scandium recovered in concentrate.

(c) If in the Decision to Mine scenario in clause 7.3(a) Narnoo Mining nominates further scandium to be included in a mine optimisation then it shall upon the mining occurring pursuant to this optimisation pay all costs associated with the optimisation (insofar as it relates to scandium) on delivery to it of the scandium concentrate.

(d) Further, and in relation to a Decision to Mine scenario as referred to in 7.3(a), if Narnoo Mining requests the Mining to access a particular scandium rich area not being carried as such by the minerals the subject of the Decision to Mine then, the Mining will include this scandium rich area but at the cost of Narnoo Mining plus a 10% charge (of the costs).

(e) Cost and charges to the account of Narnoo Mining in this clause 7.3 shall be a debt due and owing to the relevant Joint Venture and payable at such times as specified above.

165 This clause consequently provided for all three scenarios, but, as we have said, these had not all been agreed upon by the latest date of the agreement asserted by the appellants. It is also unclear whether cl 7.3 accurately reflects what was agreed by the parties on 9 August. The parties were still discussing the appropriate wording of that clause on 10 August 2005. This is apparent from a memorandum prepared on that day by Mr Kiernan, who sent it to Mr Fewster and Mr Paterson. Paragraph 9 of the memorandum records that Bullion is still not satisfied that the 10 August draft 'accurately reflects the situation agreed as between BLN and Mike Fewster and is working on some rewording'.

166 It seems from the evidence that the scandium issue was a matter of significance to Mr Fewster, even if it was of less importance to Bullion. However, the absence of any agreement, by 6 August, in respect of the third scenario was not the only outstanding issue in this respect. There was also no (expressed) agreement concerning the required level of purity of the scandium to be processed or concerning the form in which the scandium was required. Without knowing what was comprehended by a kilogram of scandium, it was difficult to know what price would be paid for the processing of the scandium. Mr Fewster said that this was discussed on 8 August 2005, when he specified a '50% concentrate'. He said he had raised the issue with Mr Bantock and Mr Goyder the previous week, but that they had not responded to his request that the concentrate contain a minimum of 50% scandium at that time.

167 There were consequently significant unresolved issues. We doubt that these were such as to lead to the consequence that the agreement failed for uncertainty (the third scenario was an additional option which was not essential to the joint venture and it is probable that the other outstanding issues would have been regarded as inessential matters that would be resolved without difficulty). However, the fact that no final resolution was achieved by 6 August 2005 in respect of a matter that was obviously of significance to Mr Fewster is an indication that the parties did not then intend to be legally bound.

168 We have already mentioned that the trial judge erred in his conclusion [242] that the Reserved Minerals Joint Venture Agreement was meant to be prepared at the same time as the heads of agreement. Also, as with the Narnoo Joint Venture Agreement, it seems to us that the parties would have anticipated no difficulty in agreeing upon the more standard joint venture terms and conditions. However, the respondents contended that agreement on how the rights to the sedex and lignite were to be defined and dealt with was a critical component of any concluded agreement between the parties and that the terms for the division of the rights to the sedex and the lignite prospects within the tenements varied throughout the period of negotiations and were never settled: see the trial judge's comments at [201] of his reasons.

169 The trial judge found [218], in this respect, that the parties contemplated that there would be a Reserved Minerals Agreement in addition to the Reserved Minerals Joint Venture Agreement. He said that Bullion anticipated that the Reserved Minerals Agreement would be executed prior to the execution of the heads of agreement, but that no steps were taken to prepare or agree its terms. We have mentioned that he concluded that the parties had not agreed on how the inclusion or exclusion of reserved minerals would be dealt with and that they were still discussing this on and after 8 August [222]. We have also mentioned that he said that the fact that the parties continued to negotiate those matters after 6 August indicated that they regarded them as requiring agreement before a legally binding agreement would be made. Finally, so far as the trial judge's findings in this respect are concerned, we have said that he found that, because the heads of agreement drafted by Mr Kiernan on 8 August recorded (cl 2.1) that that agreement contained only the essential commercial elements of the contemplated transaction and, because the reserved minerals were one of the elements dealt with, it followed that the question of how the sedex, lignite and scandium rights were to be included or excluded from the transaction was a necessary part of any agreement between them [223].

170 In order to consider the appellants' submissions in respect of these findings, it is important to review, chronologically, the progress of the parties' negotiations with respect to the reserved minerals.

171 There are six classes of minerals within the tenements. These are uranium, unmineralised lignite, sedex, sandstone gold, proterozoic gold and scandium. In his notes of the meeting that took place on 22 July 2005 between himself, Mr Fewster, Mr Davis and Mr Goyder, a diagram drawn by Mr Bantock suggested that scandium, lignite and sedex prospects were to be dealt with separately from uranium. He also recorded that Eaglefield was to 'keep unmineralised lignite from the pit'.

172 In the draft heads of agreement prepared by him on 27 July 2005, Mr Kiernan introduced the phrase 'Reserved Minerals'. This phrase was defined to mean 'scandium, lignite and sedex gold in those areas marked by a cross-hatching in annexure A hereto'. As will be apparent, annexure A had not by then been prepared. Also, as we have mentioned, Mr Fewster was not given a copy of that draft.

173 In the draft heads of agreement prepared by Mr Kiernan dated 29 July 2005 (and in the 28 July draft, which was never given to Mr Fewster), the definition of 'Reserved Minerals' was expanded to mean 'scandium, lignite and sedimentary exhalative gold in those areas marked by a cross-hatching in Annexure A hereto to the extent that these Reserved Minerals are clearly separable in a geological, exploration and development sense, from the underlying uranium resource'. Once again, Annexure A was not prepared. Clause 5.4 of the 29 July draft provided that:

The Joint Venture excludes the Reserved Minerals and unless Mulga Rock Mining and Narnoo Mining agree otherwise Mulga Rock Mining shall acquire no rights in relation to the Reserved Minerals irrespective of any expenditure undertaken in relation to the Tenements by Mulga Rock Mining.

174 Until this point the parties had proceeded upon the basis that all of the unmineralised lignite and all of the sedex was to be 'outside the deal'. However, the combined effect of the definition of 'Reserved Minerals' and cl 5.4 was that Bullion acquired a 50% interest in all scandium and other lignite and sedex that was not 'clearly separable in a geological, exploration and development sense, from the underlying uranium resource'.

175 At the meeting on 4 August between Messrs Fewster, Bantock and Goyder, Mr Fewster proposed that Bullion should have an option to acquire a 50% interest in unmineralised lignite, sedex, sandstone gold and proterozoic gold. He saw this as a means of overcoming a conflict of interest that would arise if he was a member of Bullion's board and the board considered mining in the areas containing sedex and lignite. He suggested that this proposal, or any proposal derived from it, would require several rights usage agreements in order to deal with the recovery of those minerals. That was because Bullion would have an interest in some, but not all, of them at various points in time. In his re-drafted notes of that meeting (exhibit 24), Mr Bantock recorded that Mr Fewster was unsure of how the ownership of the lignite and sedex rights would be structured and that he was 'getting advice on this'.

176 In his evidence (although it is not clear whether or not the trial judge accepted it in this respect), Mr Fewster said that he put forward a further proposal in the course of the first of the telephone conversations that took place on 6 August 2005. This proposal was that Bullion would acquire, on issue of the first tranche of CPPSs, an immediate 50% share of mineral rights in the sedex gold prospects located close to the Emperor and Shogun uranium deposits. All of the sedex gold prospects north and west of the Ambassador uranium deposit were to remain excluded. However, during the soccer telephone conversation, it was proposed that Bullion would have the right, upon electing to issue a second tranche of CPPSs, to acquire a 50% interest in the remainder of the sedex and in all of the unmineralised lignite (in which it would have acquired no immediate interest). The relevant boundaries were to be depicted in a map to be prepared by Mr Fewster.

177 The trial judge made no specific finding whether or not he accepted all of Mr Fewster's evidence in this respect. However, he mentioned [210] - [212] that, when those matters were put to Mr Bantock in cross-examination, he said that he did not recall Mr Fewster saying these things. The trial judge went on to say:

I understood Bantock to mean that he did not remember Fewster saying those things, not that he denied that Fewster said them.

The trial judge noted that the minutes of the directors' meeting of 6 August do not mention a term concerning the division of sedex rights [213]. However, he said that they record that Mr Bantock outlined only the principal terms of the structure. These related primarily to the consideration to be provided by or payments to be made by Bullion.

178 The only references to lignite and sedex in the first bullet point list that was prepared on 7 August 2005 read as follows:

[The interest to be acquired by Bullion] will comprise a direct interest in the subject tenements other than the Lignite/Sedex rights that may be in a purpose specific company (see below).

...

[The tranche of 20 million convertible preference performance shares forming part of the consideration is to be provided if] BLN elects on or before 31 December 2007 to exercise its right to keep the Lignite/Sedex rights (ie: its 50% interest in these 'Reserved Minerals').

...

Mike Fewster will provide a map showing the previously explained geographical position of the subject Sedex/Lignite rights. Whilst BLN will have uranium rights in all areas, it must make a decision by 31 December 2007 to keep the Sedex/Lignite rights. Keeping them triggers the 20M CPPS (see above) ...

...

A minimum expenditure requirement of $750K on the Sedex/Lignite areas prior to the 31 December 2007 decision date.

...

If BLN does not elect to keep the Sedex/Lignite assets after 31 December 2007, it shall hand over all relevant data to Mike Fewster. If subsequent to this Mike Fewster wants to sell those rights to [a] third party, BLN shall have a right to match any offer.

179 It is not entirely clear what was comprehended by the use of the word 'keep' in the third line of the second quoted paragraph and in the fourth line of the third paragraph (and also by the use of the word 'retain', in this context, in the board minutes). Counsel for the respondents suggested that this was an error. He said that all that could be kept by GER (we have said that the parties appear to have referred to Bullion and GER interchangeably) was the limited interest that it had acquired immediately upon the issue of the first tranche of CPPSs. However, counsel for the appellants submitted, with some force, that the word is intended to refer to the unmineralised lignite and sedex rights that GER could acquire by its election to be made on or before 31 December 2007.

180 While there are some differences between the second and first bullet point lists concerning the lignite and sedex rights, these are not significant for present purposes.

181 It is consequently plain that, by 6 August 2005, the parties had done little to finalise the structure of their agreement concerning the sedex and lignite. What is clear is that they contemplated that the rights to these might be held in a 'purpose specific company'; that GER had a 50% interest in the identified lignite and sedex rights at least until it made a decision, on or before 31 December 2007, whether it wished to keep them; and that, if it decided to keep them, it would be obliged to provide the additional 20 million CPPSs. While the areas in which GER would acquire its 50% interest in the reserved minerals had not, by 6 August, been marked out in any map that had been shown to it, the topic had been discussed between the parties in the course of the soccer conversation. As we have said, Mr Fewster had then explained to Mr Bantock that Bullion would acquire a 50% interest in areas north of Emperor and near Shogun, but that it would have no interest in the lignite and sedex prospects west and north of Ambassador. The parties also agreed, during that conversation, that Bullion would also acquire the rights to minerals, other than scandium, under and to the east of the Ambassador uranium deposit.

182 The bullet point lists do not spell out, with any real clarity, what was to be the consideration for Bullion's acquisition of a 50% interest in the sedex and lignite (these having originally been outside the bounds of the joint venture), but this was presumably its agreement to spend a minimum of $750,000 in respect of the sedex/lignite areas prior to 31 December 2007 (this provision appears in each of the bullet point lists). Nor is it entirely clear just what the 'lignite/sedex rights' were, although it might be inferred from the first bullet point in each of the bullet point lists that these were rights in the tenements themselves.

183 Earlier, in his notes prepared on 5 August in respect of the meeting that had taken place on 4 August, Mr Bantock had written the following:

Mulga Rock mining no longer involved.

BLN will instead acquire a 50% interest in the subject tenements.

The Lignite/Sedex rights on the tenements apparently might be 50% held by another subsidiary of Narnoo Mining. Such that if [Bullion] does not elect to keep those rights after Dec[ember] 2007, those rights might pass across to Narnoo (not sure how this works in practice - he is getting advice on this.) He favours the concept of a 'Rights and Usage Agreement' per Nova Energy - see prospectus. (Emphasis in original)

Mr Bantock's notes also recorded that Mr Fewster was going to deliver a map with the relevant area marked 'in terms of the Lignite/Sedex rights'.

184 It consequently seems that there was agreement with respect to Bullion's interest in the lignite and sedex, subject to the production of a map that bore out what was later said by Mr Fewster in the course of the soccer telephone conversation.

185 It is also apparent that negotiations in this respect took a different turn after 6 August. We have said that, in the draft heads of agreement prepared on 8 August 2005, a company described as 'Newco Pty Ltd' was introduced. This draft bears a notation to the effect that the terms of the draft assume that Newco and Narnoo Mining had entered into 'the Reserved Minerals Agreement'. As we have said, that agreement is defined in the body of the draft as meaning 'the Agreement dated ** as between Narnoo Mining and Newco pursuant to which Narnoo Mining granted to Newco the exclusive right to explore, mine and treat the Reserved Minerals'.

186 Recital F of the 8 August draft provides that 'Narnoo Mining and Newco are parties to the Reserved Minerals Agreement pursuant to which Newco has the exclusive right to explore, mine and treat the Reserved Minerals within the Tenements'. Recital G provides that Newco and GER had 'agreed to enter into a joint venture for the exploration, development and mining of the Reserved Minerals on the terms and conditions herein set out ... '. Clause 6 deals with the Reserved Minerals Joint Venture and sets out what cl 6.1 described as 'the principal terms' of that joint venture. Clause 6.5 provides, in part, that the Reserved Minerals Joint Venture Agreement will contain 'the usual terms and conditions' but that it must contain the provisions there identified. These deal with matters of the kind to which we have earlier referred when considering cl 5.6 of the 29 July draft (which was largely repeated in the 8 August draft). The Reserved Minerals are once again defined to mean lignite and sedex in the areas marked on an attached plan, to the extent that they are clearly separable from the underlying uranium resource. As we have previously mentioned, no Reserved Minerals Agreement was ever prepared. Consequently, the conditions upon which Newco was to be given the exclusive right referred to had not been spelled out.

187 Moreover, as we have also said, the parties now contemplated that Newco would enter into a joint venture with GER for the exploration, development and mining of the reserved minerals. Clause 5.4 of the 9 August draft provides that, to avoid any doubt, the Narnoo Joint Venture excludes the reserved minerals. Clause 6.3 maintains GER's minimum expenditure commitment of $750,000. Clause 6.5 provides for agreement between GER and Newco that the Reserved Minerals Joint Venture Agreement would contain 'the usual terms and conditions including warranties as to title and the like', encompassing terms regarding the establishment of a management committee, pre-emptive rights, dilution provisions, contribution to expenditure and the creation of an area of influence. These are similar to the terms to which we have earlier referred in respect of the Narnoo Joint Venture contained in cl 5.6 of the 29 July draft. Clause 6.7 of the 8 August draft provides that, during December 2007, GER might withdraw from the Reserved Minerals Joint Venture by written notice to Newco, but subject to it having met the minimum expenditure commitment of $750,000. That clause also provides that, upon its withdrawal, GER would retain no interest whatsoever in the reserved minerals or the Reserved Minerals Joint Venture.

188 Under this draft of the heads of agreement, GER would have acquired an immediate interest in lignite and sedex wherever there was an underlying uranium resource, but no rights and usage agreement had been prepared, or even been mentioned in the draft.

189 On 9 August 2005 Mr Fewster produced a map of the kind that had earlier been contemplated. However, this did not show the areas of unmineralised lignite, or those containing additional sedex, in which Bullion would acquire a 50% interest on the issue of the second tranche of CPPSs.

190 The upshot of all of this is that, by the time of the preparation of the second bullet points list, a considerable degree of uncertainty remained in respect of the lignite and sedex. It was not clear what was the nature of the 50% interest acquired by Bullion. At that stage, also, the bullet point list reflected no agreement as to the identity of the proposed shareholders of the purpose specific company that would hold the rights to the minerals (other than that Bullion would be entitled, at least indirectly, to a 50% interest in the lignite and sedex) and no map of the areas concerned had yet been produced. Moreover, no real thought had seemingly been given to the terms of the agreement pursuant to which the purpose specific company would acquire the lignite/sedex rights or to the terms of the joint venture agreement that would then have to be made between Bullion and the new company.

191 If there was an intention to make a binding agreement on either of 6 or 8 August, the agreement so made might not have been void for uncertainty because of the failure to reach agreement in respect of what was arguably a severable part of the proposed arrangement. However, the absence of any agreement with respect to the matters to which we have referred (including the absence of a map - the oral description given during the course of the telephone conversation having been very general) seems to us to be a factor militating against the conclusion that the parties intended to be bound by 6 or 8 August. Even though the lignite and sedex might have been a subsidiary issue (as counsel for the appellant described it), it was one that was obviously important to the parties, having figured in each of the bullet point lists and in the drafts of the heads of agreement.

192 We have said that the trial judge regarded the definition of a pre-feasibility study as having been a matter of significance to the parties [252]. He found that no definition had been agreed by 6 or 8 August 2005. As will be apparent, the term 'pre-feasibility study' did not even appear in the 29 July draft, although a full definition of the term 'Definitive Feasibility Study' had been included in that draft (we have quoted it earlier in these reasons). However, because the proposal was then that the company to be known as Mulga Rock Mining (which, after being sold to GER, would enter into the joint venture with Narnoo Mining) would 'sole fund all Joint Venture Expenditure up to completion of a Definitive Feasibility Study' (cl 5.3(a)) and a decision to mine uranium would be made only after conducting the definitive study (cl 5.3(c) and cl 5.8), the parties presumably considered that there was no need for a pre-feasibility study.

193 Mr Bantock's notes of the discussions that took place on 4 August 2005 (which were never shown to Mr Fewster) reveal that he considered that the issue of a feasibility study needed to be covered. We have said that, in the drafting instructions dated 5 August 2005 which he gave to Mr Kiernan arising out of that discussion (exhibit 24), Mr Bantock raised the issue of a pre-feasibility study. We have also said that he suggested that this should be defined 'as a study executed to an appropriate professional standard by BLN, to determine resources to measured, indicated, inferred status under JORC. External competent professional sign off on key resource aspects (ie Chris Davis can manage from within BLN - does not have to carry the expense of wholly external production)'. By then, the alternative structure involving the issue of CPPSs had been put forward (during the discussion on 4 August 2005) and, as we have said, Mr Bantock's drafting instructions contemplated that the second tranche of CPPSs would convert to shares in Bullion once 'any feasibility study (ie PFS, DFS, BFS) establishes a JORC standard resource (ie measured, indicated or inferred) from any commodity to which BLN has a 50 $ [sic] interest pursuant to the deal' (emphasis in original).

194 However, among the principal terms of the structure identified by Mr Bantock at the board meeting on 6 August 2005 (as reflected in the minutes), was one to the effect that the second tranche of CPPSs would convert to shares 'upon Bullion electing to retain lignite/sedex minerals [sic] rights beyond 31 December 2007', rather than upon the completion of a satisfactory feasibility study of the kind mentioned in Mr Bantock's drafting instructions. The minutes are silent on the subject of a pre-feasibility study. They record that 'Bullion is to fund all project expenditure through to Decision to Mine'. Similarly, the first bullet point list records that Bullion was 'to fund the project 100% through to Decision to Mine'. However, under the heading 'Other Concepts', that document referred to the notion of a 'PFS' in identical terms to those appearing in the drafting instructions prepared on 5 August 2005.

195 It is unclear whether the parties had reached agreement, by 8 August 2005, on the question whether the resource was to have been proved by means of the feasibility study to a measured and indicated standard, or merely to an inferred or indicated standard (although Mr Bantock's drafting instructions appear to assume that any of these would suffice to trigger the conversion of the second tranche of CPPSs to shares). Notwithstanding this, the definition of 'PFS' remained unchanged in the second bullet point list.

196 The definition of a pre-feasibility study appears in cl 1.1 of the 8 August draft prepared by Mr Kiernan, and reads as follows:

'Pre-Feasibility Study' means a study undertaken to an appropriate professional standard to determine a resource to a measured, indicated or inferred status under the JORC Code with the said reserve being signed off by a competent (and unrelated to any of the parties hereunder) person (as that phrase is defined under the JORC Code) but assuming the minerals are legally able to be mined and that all native title and environmental issues offer no impediment to development and mining or have been fully satisfied.

It is apparent this definition is based substantially on the definition in the second bullet points, with the addition of references to native title and environmental impediments.

197 Its significance is apparent from cl 5.3(b) of the 8 August draft which, as will be apparent, provides that, until the pre-feasibility study has been prepared (and, again, nothing is said on the question whether the resource was to have been proved by reference to a measured and indicated standard or to an inferred or indicated standard), the contribution of $2 million per annum to the joint venture expenditure is to be made by GER. Also, by cl 5.8 GER was given an entitlement to withdraw from the joint venture at any time after completion of the pre-feasibility study provided that it had, by then, satisfied its expenditure obligations.

198 Mr Bantock plainly recognised the importance of the drafting of this definition. The heads of agreement prepared by Mr Kiernan on 9 August contained a clause to the effect that 'GER shall sole fund all Narnoo Joint Venture Expenditure up to a Decision to Mine but in any event shall sole fund all Narnoo Joint Venture Expenditure necessary to complete a Pre-Feasibility Study'. The trial judge noted, in that respect [251], that this clause bore an annotation, made by Mr Bantock, to the effect that it was very important that Bullion should not be trapped by an overly onerous definition of 'pre-feasibility'. This suggests that no final agreement had yet been reached in that respect. It also suggests that Mr Bantock regarded this as an issue in respect of which the parties might have different views (it was obviously in Mr Fewster's interest that the pre-feasibility study be as rigorous as possible, bearing in mind that the appellants were committed to funding the joint venture expenditure until a decision to mine or to withdraw).

199 In his evidence concerning the discussion of the definition of pre-feasibility study that took place on 9 August, Mr Bantock said (ts 321):

My view was that everyone had a different description of a feasibility study and there are different stages of feasibility studies, so probably rather than having a big descriptive sort of annexure on that, to have the key parts of it signed off by experienced external people meant that it would be clear as to what was a feasibility study standard. On the Tuesday Chris Davis had come to the meeting with Mr Fewster and Mr Paterson. A concept had been put forward that there should in fact be, you know, a more prescriptive definition of 'feasibility study'. We thought that wasn't unreasonable and agreed to that happening, to that change, and really it sort of gave Chris Davis something to do.

200 Mr Davis, having embarked upon this task on 9 August, sent an email to Mr Fewster and Mr Paterson on that day attaching, amongst other things, a Snowden study categorisation in respect of four 'estimate designations'. The second of these was a preliminary feasibility study. The document set out, under that heading, a number of matters ordinarily to be addressed by a study of that kind, including the degree of resource definition (said to be 'Indicated', rather than 'Measured and indicated' which was the required degree of resource definition in the case of a definitive feasibility study).

201 The importance of the definition of 'pre-feasibility study' was also recognised by Mr Paterson. In his written statement of evidence (par 19), he said that, at the meeting at Bullion's offices on 9 August 2005, he said 'words to the effect that the term "pre-feasibility study" needed to be defined with certainty so that there would be no ambiguity as to when Bullion had fulfilled its obligations'.

202 All of this evidence supports the proposition that final agreement was never reached as regards the content of the definition, albeit the parties came to regard it as a significant issue. However, the appellants' principal case is that agreement was reached between the parties on 6 August 2005. At that time, the parties appear to have focussed on Bullion's obligation to fund all project expenditure through to a decision to mine. It is consequently unlikely that they would then have regarded the definition of the pre-feasibility study as a matter of such significance that they would not have intended to be bound before reaching agreement in respect of it. This is supported by the fact that there is no reference to it in the minutes of the board meeting held on that day.

203 The failure to reach agreement on this issue consequently lends only limited support to the respondents' case.

What can be determined from the communications between the parties concerning the need for writing?

204 We have mentioned that the trial judge said that the existence of matters of importance on which the parties had not reached consensus in their informal agreement made it less likely that they intended immediately to be bound before the execution of the heads of agreement [319]. We have also mentioned that he found that on 6 August 2005 the parties had agreed the consideration to be paid and committed to negotiating the further matters that needed to be resolved in the expectation that an agreement would be concluded by the signing of a heads of agreement [326]. Finally, we have said that the trial judge found that the parties intended that their agreement should be made by executing the heads of agreement [328].

205 There is no doubt that the parties always contemplated that a written heads of agreement would be prepared. Mr Fewster made this plain in his email dated 9 May 2005. It was also made plain by Mr Bantock in his outline of principal terms emailed to Mr Fewster on 22 June 2005 (exhibit 49). We have said that the first draft of the heads of agreement was prepared by Mr Kiernan on 27 July 2005. As will be apparent, that was followed by a number of subsequent re-drafts of that document.

206 There are various indications that the parties intended to be bound only after executing a heads of agreement. Importantly, in his email sent to Mr Bantock on 9 May 2005, Mr Fewster said expressly that the terms proposed by him were 'subject to execution of a formal Heads of Agreement'. There is little to suggest that he changed his position in that respect, or that Mr Bantock disagreed with that proposition. The form of the draft heads of agreement suggests that it was intended to be executed. It was a document of some formality. So, for example, each draft had a number of recitals which, as will be apparent, did no more than set out the background to the operative clauses of each document. Also, from the very first draft of the heads of agreement, that document contained terms identifying the nature and effect of the document. The first draft contained the following provisions:

2.0 NATURE OF THIS AGREEMENT

2.1 Nature

The Parties acknowledge that this Agreement contains only the essential commercial elements of the transaction contemplated hereunder and that more formal and comprehensive legal agreements will be prepared evidencing the matters herein as expeditiously as possible. These more formal legal agreements shall comprise a sale and purchase of shares and a mining and exploration joint venture and contain such provisions including representations and warranties as may be found in formal legal agreements for the type of transactions contemplated herein.

2.2 Binding Nature of this Agreement

Until such time as the more formal legal agreements referred to in clause 2.1 are executed this Agreement (being titled Heads of Agreement) is binding on all parties hereto and supersedes and replaces all previous agreements, arrangements and understandings in relation to the subject matter thereof.

207 While this clause does not expressly provide that the agreement is not binding until it is executed (a provision that would be relatively unusual in written agreements), the language of the clause seems to us to support the proposition that this was the intention of the parties. No assistance can be derived by the appellants from the fact that the agreement is said to supersede all previous agreements, given that this clause was included before any agreement is said to have been reached. As will be apparent, cl 2 was repeated, with some amendments, in the 29 July draft. Similar provisions appeared in the subsequent drafts.

208 Also, as we have mentioned, cl 5.3 of the 9 August draft (and the second bullet point list) provided that, until GER had prepared a pre-feasibility study, it should contribute no less than $2 million per annum to the joint venture expenditure, commencing from the date of execution of the heads of agreement. This seems to us to indicate that the parties contemplated that they would be bound by the agreement only upon execution.

209 While there are indications which might, on one view, tend in the opposite direction, these seem to us to be equivocal.

210 The first of these is the language used in the minutes of the board meeting held on Saturday 6 August 2005. Those minutes refer repeatedly to Bullion's 'commitment' to a deal. There are also references to 'agreement' to a 'deal'. One of these was that, if Bullion 'agreed to the deal' on that day, then 'the deal would be done'. There are also references to 'the agreed deal'.

211 These references are capable of supporting an inference that a binding agreement had been made. However, they are also consistent with the notion that, although no legally binding agreement had been made, Bullion was prepared to negotiate for such an agreement within the parameters that had been identified and agreed upon, with the intention of executing a written heads of agreement incorporating all of these parameters, as well as any other terms that might subsequently be agreed upon. Certainly the words 'commit' and 'commitment' are capable of supporting that inference. Moreover, it is significant that the trial judge appears to have accepted the evidence of Mr Kiernan to the effect that, in the conversation with Mr Fewster that took place during the course of the board meeting, someone said words to the effect that they should aim to execute the heads of agreement by the following Tuesday evening in order to allow the trading halt to be lifted by Wednesday morning (see his reasons at [24] and [296]).

212 The soccer conversation was also equivocal notwithstanding that, as the trial judge found, Messrs Bantock and Goyder conveyed to Mr Fewster that Bullion 'accepted the deal' and 'would proceed with that deal'. Once again, it seems to us (as it did to the trial judge) that the use of these phrases is consistent with an intention to negotiate for a binding agreement incorporating the more fundamental matters that had been discussed and agreed upon in principle. The fact that Mr Fewster said that everyone should be delighted and that a bottle of champagne should be cracked open to celebrate the deal seems to us not to be determinative of anything. There is no doubt that, once agreement in principle had been arrived at in respect of the more fundamental provisions, the parties had a strong basis for going forward and no reason to think that heads of agreement would not soon be executed. That, in itself, was grounds for celebration. It is important to bear in mind, in this respect, the following comments made by Gleeson CJ in Geebung Investments (14,552):

As the decision in the Australian Broadcasting Corp case illustrates, the fact that the parties to negotiations have agreed upon the major matter under discussion, confidently believing that the remaining matters to be decided will be sorted out later between them or their lawyers, without any difficulty, can sometimes create a misleading appearance of consensus. Such parties may well believe that they have a 'deal' or a 'bargain', and speak and act accordingly, whilst at the same time knowing and intending that further and more detailed agreement is necessary. For that reason, conduct such as shaking hands, or using the language of agreement, can be ambiguous. The resolution of the ambiguity may require more detailed factual and legal analysis.

213 Nor does it seem to us that the appellants are assisted by the fact that, on 7 August 2005, Mr Bantock confirmed to Mr Fewster that Bullion would be placed in a trading halt on the following morning or by the fact that, on 8 August 2005, he wrote to the Stock Exchange requesting a trading halt in respect of Bullion's shares. Rather, the fact that Bullion did not immediately make an announcement to the Stock Exchange indicates that the parties did not consider that any binding agreement had then been reached. Rule 3.1 of the Stock Exchange Rules concerning continuous disclosure provides that, once an entity is or becomes aware of any information concerning it that a reasonable person would expect to have a material effect on the price or value of the entity's securities, the entity must immediately tell the Stock Exchange that information. However, r 3.1A provides that r 3.1 does not apply if a reasonable person would not expect the information to be disclosed, the information is and remains confidential and the information concerns an incomplete proposal or negotiation. Mr Bantock said in his evidence at the trial (ts 370) that, by the time at which trading in Bullion's shares was halted, a process had been put in place whereby there would be a trading halt, during which heads of agreement would be prepared and signed. Although he said that the heads of agreement would document 'the deal that had been done', it is significant that he also said that, after the heads of agreement had been prepared and signed, Bullion would be in a position to make an announcement prior to the opening of trading on the Wednesday.

214 Mr Fewster's email to KTL on 8 August 2005 seems to us to have been at least equivocal. In it, he said no more than that he had 'agreed to basic terms ... with the intention of executing a Heads in a few days'. His email also made it plain that, if for some reason the deal was not concluded, he would contact KTL again in order to resume negotiations with it. Similarly, the fact that, on 8 August, Mr Fewster felt able to retain KTL's former solicitors is indicative of nothing more than that he was no longer negotiating with KTL.

215 The subsequent conduct of the parties also seems to us to be inconsistent with the existence of a binding agreement.

216 We have said that the second bullet point list prepared by Mr Bantock differed, in a number of respects, from the first. Many of the changes made to that document arose out of discussions that had taken place on 8 August 2005. This lends some support to the suggestion that the parties did not consider that they were legally bound by what had been agreed on 6 August (although they could of course agree to be bound in circumstances in which they contemplated, not only that further terms might be added by negotiation, but that existing terms could be varied by agreement). It is plain from the evidence (and from the trial judge's unchallenged finding in this respect) that the amendments were not made solely because the first bullet point list did not accurately reflect the position at which the parties had arrived on 6 August.

217 Next, the fact that Mr Fewster asked Mr Bantock to have Mr McIntyre 'pull' the tenement applications in respect of the graticular blocks on the evening of 8 August 2005 is inconsistent with the notion that any binding agreement had been reached. The same is true of Mr Bantock's undertaking, without protest, to ask Mr McIntyre to 'pull' the tenements.

218 Also, in his email sent to Mr Paterson on 8 August attaching the 8 August draft of the heads of agreement, Mr Kiernan confirmed that 'the intention is to endeavour to execute this document on Tuesday which would necessitate an all-parties conference of some [sort] once you have had an opportunity to consider the draft'. That is more consistent with an intention to be bound only once the parties had considered the draft, agreed upon its terms, and then executed a final form of it, than with an intention immediately to be bound, but to record what was agreed in a subsequent heads of agreement.

219 We have said that Mr Kiernan sent the 9 August draft to Messrs Paterson and Fewster. In his covering email, Mr Kiernan said that Messrs Bantock and Goyder had not seen that draft as yet, that there might be some minor changes, but that Mr Fewster should 'work' on it. This, too, suggests the absence of any binding agreement. Also, we have earlier said that the existence of cl 2 and cl 5.3 of that agreement suggests that the parties did not intend that it would be binding until it was executed. It may also be significant that Mr Kiernan's covering email mentioned that Annexure A, the reserved minerals map, needed to be added and that it would be necessary for Mr McIntyre to discuss with Mr Fewster the map that had been sent by Mr Fewster.

220 While it is, of course, open to parties to an oral agreement to agree that it is to be replaced, first, by an executed heads of agreement and then by more detailed agreements, it is not apparent why they should have adopted such a convoluted course in this case. In any event, there is insufficient basis in the evidence for concluding that they intended to do so.

221 Finally, so far as subsequent conduct is concerned, the evidence revealed that negotiations continued between the parties, after 8 August, in respect of a number of the points identified in the second bullet point list. As we have earlier said, a comparison between the second bullet point list and the final version of the heads of agreement reveals that Bullion (which was responsible for preparing both documents) made a number of changes, in the final draft, to terms that had been set out in the second bullet point list. We have already provided examples of the changes made.

222 We have said that the fact of further negotiations is necessarily equivocal. If there was a binding contract it would have been one that fell within the fourth class of case mentioned in Baulkham Hills. The parties were always going to supplement, and probably vary, any agreement reached by them. However, the approach adopted by Bullion in making unilateral alterations to issues already documented is indicative of an ongoing series of negotiations conducted in an environment in which both parties assumed that neither would be legally bound until the terms of the heads of agreement had been finally agreed upon and the document had been executed. The same is true of Mr Paterson's evidence (in par 15 of his statement dated 15 November 2005) that, at the meeting at Bullion's offices on 9 August, he said words to the effect that he had met with Mr Fewster to review the second bullet point list 'and that there were several high level issues that had to be resolved before the parties could move forward'. He said that Mr Bantock 'replied with words to the effect that that was "ok"'. Mr Paterson's evidence was accepted, in general, by the trial judge (reasons [35]).

Number, description and characterisation of CPPSs

223 As we have mentioned, the trial judge regarded the fact that the number, description and characterisation of the CPPSs to be provided by way of consideration had yet to be resolved as tending against the existence of an intention to make a binding agreement on 6 or 8 August [289]. Although it seems to us that on 6 or 8 August these were not issues that would have been regarded by the parties as being likely to give rise to any difficulty, the fact that they had not finally been resolved by 8 August lends some support to the proposition that the parties did not then regard themselves as having reached any binding agreement.

Magnitude and complexity of the contemplated transaction

224 We have said that the trial judge relied, also, on the magnitude and complexity of the subject matter of the contemplated transaction in concluding that it was unlikely that the parties had intended to reach a binding oral agreement in respect of it [276] - [277]. Of course, where intention to be bound is established, effect must be given to it no matter how big or complex the proposed transaction might be: G R Securities (634) (McHugh JA). However, when the evidence concerning intention is equivocal, magnitude and complexity may be a factor, as the trial judge found [198]: Geebung Investments (14,569 - 14,570) (Kirby J); Sinclair Scott (316 - 317) (Knox CJ, Rich and Dixon JJ); Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd [1994] VicRp 55; [1994] 2 VR 106, 131 (Brooking J). In the present case the negotiations concerned a complex structure involving a number of contracting parties and different contractual regimes, depending upon the mineral or minerals to be mined in each case.

225 The respondents relied upon another point which, they submitted, was relevant to the issue of intention. This was that, while there was no evidence that the parties were aware of the existence of s 119(2) of the Mining Act, it is most unlikely that Mr Kiernan, at least, would not have known of that provision. The evidence at the trial revealed that he had many years experience as a lawyer working in the mining industry. If he knew of s 119 of the Mining Act, it is unlikely that he would have countenanced a binding agreement that was not in writing and, hence, that could give Bullion no direct interest in the tenements.

Conclusions as regards contractual intention

226 When regard is had for all of the circumstances to which we have referred, it seems to us that the trial judge was right in concluding that the inference that should be drawn, on the probabilities, is that the parties did not intend to be bound by anything said or done by them until such time as the heads of agreement had been executed. That is evident from the communications between the parties to which we have referred, from the form of the various drafts of the heads of agreement, from the fact that no Stock Exchange announcement was to be made until the heads of agreement had been executed and from the subsequent conduct of the parties.

227 Grounds 1, 3 and 4 of the grounds of appeal consequently fail. Although contention 2 of the notice of contention proved to be unnecessary, the trial judge having found that the parties intended not to be bound until they had executed written heads of agreement, that contention has been made out.

228 The appellants applied for leave to make amendments to the grounds of appeal and, as we have said, to Bullion's statement of claim. It is appropriate now to deal with these applications.

229 There is only one contentious amendment to the grounds of appeal. It relates to ground 1. As we have earlier mentioned, that ground, as it presently stands, is to the effect that the trial judge erred in failing to conclude that, 'as a matter of mutual objective intent', a legally binding and enforceable agreement was made between the parties on 6 or 8 August 2005 by which the appellants 'acquired an immediate interest in the Mulga Rock tenements'. The appellants want to amend that ground by deleting the word 'acquired' and substituting for it the words 'were to acquire upon the entry into a signed HOA'. That amendment affects the meaning of the word 'Agreement' wherever that word appears in the grounds of appeal. The amendment is designed, at least in part, to overcome the difficulty which the appellants would otherwise have in making out their contention that there was an enforceable oral agreement for the acquisition of an immediate interest in the tenements, when this was prohibited by s 119(2) of the Mining Act.

230 We have already concluded that the proper inference to be drawn from the evidence is that the parties did not intend to be bound by anything said or done by them until execution of the written heads of agreement, which never happened. It is consequently irrelevant whether or not the amendment is allowed. However, we will address that issue in any event.

231 The amendment was opposed by the respondents upon the ground that it was never pleaded at the trial that an agreement of the kind now contended for had been made. The appellants' contention, as pleaded and argued at the trial, was that an agreement had been made whereby the appellants acquired an immediate interest in the tenements. However, the respondents' contention at the trial was that the parties' negotiations were conducted upon the basis that they would not be legally bound other than by way of an executed agreement. There is no concrete suggestion that, if the argument now advanced by the appellants had been pleaded and run at the trial, any different evidence would have been led.

232 Counsel for the respondents also suggested that, had the issue been raised at the trial, Bullion would have been required to amend its statement of claim in order to identify the 'source' of what (on his understanding) was the alleged implied obligation to execute the heads of agreement. He contended that, had there been such a pleading, further particulars of it would have been sought.

233 It is not plain to us whether the appellants rely upon an express or implied term in this respect. Either way, it is plain from the evidence to which we have referred that the parties always contemplated that a written heads of agreement would be executed. The only issue at the trial in that respect was whether the parties intended to be bound before the document was executed. The appellants said that the parties did so intend and the respondents denied this. It is consequently difficult to see how the respondents can have been prejudiced in their conduct of the trial by the absence of a pleading of the kind said to have been necessary to support the amendment to ground 1.

234 No other form of prejudice has been pointed to by counsel for the respondents. In these circumstances, the amendment should be allowed. If necessary, an amendment could even now be made to the statement of claim to support the amendment to the grounds of appeal: Introvigne v Commonwealth [1980] FCA 107; (1980) 48 FLR 161, 169; Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1, 7 - 8; Water Board v Moustakas [1988] HCA 12; (1988) 180 CLR 491, 497.

235 We would also give the appellants leave to make the other, uncontentious, amendments to the grounds of appeal applied for by them.

The proposed amendment to the statement of claim

236 As we have earlier mentioned, Bullion wishes to amend its statement of claim so as to provide a basis for claims based on the 'exclusive negotiations agreement' or 'ENA' which, by ground 8, is said to have been found by the trial judge. We have also said that, by ground 9, the appellants make the alternative contention that the trial judge should have found that there was an agreement in the terms of the ENA. In either case the appellants contend, by ground 10, that there were implied terms of that agreement that Mr Fewster would co-operate in negotiations for a heads of agreement and that he would negotiate reasonably, in good faith.

237 No case of either kind was run by the appellants at the trial of the action. There was no pleading capable of supporting an agreement of the kind now asserted by these grounds. Nor was any submission made on their behalf that any such agreement existed.

238 By the proposed amendment to the statement of claim, Bullion seeks to introduce new paragraphs 13 to 17 by way of an alternative cause of action. It also seeks to introduce alternative claims for a declaration as to the existence of the ENA and for damages for breach of the ENA. The ENA is pleaded to have been made on Saturday 6 August 2005 in the course of the four telephone conversations that took place during that day. The agreement is alleged to have been made upon the following express terms:

13.1 The issue of the consideration to be received by the First Defendant [Mr Fewster] and entities associated with him (including the Second, Third and Fourth Defendants) for the disposal of a 50% interest in the Mulga Rock Tenements (components of this agreed consideration being those identified in sub-paragraph 7.5 of this Statement of Claim, and which are subsequently referred to herein as 'the Consideration Package') was finalised, subject only to some possible variation of the details of the CPPSs as a result of the First Defendant's tax advice;

13.2 the First Defendant would cease negotiations with other interested parties in respect of the Mulga Rock Tenements;

13.3 the First Defendant would inform other interested parties with whom he had been dealing in respect of the Mulga Rock Tenements, that he had 'done a deal', with the Plaintiff;

13.4 the First Defendant (with the major issue of the Consideration Package to be received by the First Defendant and his entities now resolved), would proceed to negotiate any limited remaining issues to finalise a Heads of Agreement document with the Plaintiff, under which the Plaintiff acquire [sic] a 50% interest in the Mulga Rock Tenements, in expectation that a Heads of Agreement document based upon the Consideration Package would be finalised and signed-off by no later than on Wednesday 10 August 2005.

239 Paragraphs 15 and 16 plead the breach by the respondents of the ENA. The first of those paragraphs reads as follows:

1. On Wednesday 10 August 2005 at about midday, the First Defendant by his legal representative Paterson, communicated to the Plaintiff's representatives, in effect, that since a component of the Consideration Package (namely 25 million CPPSs, as referred to in sub-paragraph 7.5.4) was viewed by the First Defendant's tax adviser (Philip Golding) as not being eligible for relief against capital gains tax in the hands of a recipient, that 'the deal was dead'. From that time the First Defendant, on behalf of himself and all Defendants, unilaterally withdrew from further negotiations to finalise the Heads of Agreement as negotiated to that point, based around the Consideration Package, as required by the term of the ENA in sub-paragraph 13.4 above, thereby obstructing and preventing finalisation of a written agreement based upon the Consideration Package.

240 In Mostert v Durban Roodepoort Deep Ltd [2004] WASCA 309 [53] - [55] Le Miere J, with whom the other members of the court agreed, referred to two widely accepted principles, as follows:

First, where a point is not taken in the court below and evidence could have been given there which, by any possibility, could have prevented the point from succeeding, it cannot be taken afterwards: Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418 at 438; Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 at 7 - 8; Water Board v Moustakas [1988] HCA 12; (1988) 180 CLR 491 at 497; Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631 at 645; Chilcotin Pty Ltd v Cenelage Pty Ltd [1999] NSWCA 11 at [14]; Goldspar Australia Pty Ltd v Council of the City of Sydney [2001] NSWCA 246 at [22]. Similarly, the point cannot afterwards be taken where, if the point had been raised, the respondent might have conducted the case differently at trial: Multicon Engineering at 645; Chilcotin at [14]; Goldspar Australia at [22].

The second principle is that generally parties must be bound by the course they adopted at the trial: Metwally v University of Wollongong (No 2) (1985) 59 ALJR 481 at 483; Multicon Engineering at 645; Chilcotin at [15]. At least in part this principle is founded on public policy considerations favouring the finality of litigation and it may be that the appellant will not be permitted to make a new case on appeal even if the point is unaffected by possible further evidence or the way the opposing party would have conducted the case at trial: Chilcotin at [15]. The principle may come into play not only when the course taken at the trial was deliberate, but also if the appellant's conduct at the trial was affected by inadvertence: Chilcotin at [15].

In Multicon Engineering Mason P, with whom Gleeson CJ and Priestley JA agreed, said at 645 that a party does not have a right to insist that a new point may be decided on appeal simply because all of the facts have been established beyond controversy or the point is one of construction or of law, even constitutional law. That is because it remains a question of whether the appellate court 'may find it expedient and in the interests of justice to entertain the point': Water Board v Moustakas [1988] HCA 12; (1988) 180 CLR 491 at 497. Whether the appellant should be permitted to assert the error on appeal therefore requires attention to the conduct of the proceedings below.

241 The amendments proposed by Bullion, which were provided to the respondents on the very eve of the appeal hearing, are far-reaching. They plead an agreement of a different character to that originally contended for. No cross-examination of any witness was directed to the existence of an agreement of that kind and no evidence was led in respect of it. No submissions were advanced to the effect that any such agreement had been made. It was consequently not open to the trial judge to find that an agreement of that kind had been made. As we read his judgment, he did not make any such finding.

242 In asserting that the trial judge did so find, the appellants particularly rely upon what was said by him in [288], [306] and [314] of his reasons (they refer also to [107], [120], [311], [313] and [320]). Paragraphs [288] and [306] respectively read as follows:

On 6 August Fewster and Bullion agreed to something. Bullion says that it was an agreement for Bullion to pay the agreed amounts, shares and options to Fewster in consideration for an agreed interest in the tenements and project. The defendants say that Fewster agreed to stop negotiating with other parties and work exclusively with Bullion to finalising [sic] the terms of an agreement in relation to the tenements and the project.

...

There is no doubt that the parties agreed to something on 6 August. Fewster's agreement that Bullion call a trading halt on the Monday and his invitation to Bantock and Goyder to crack open a bottle of champagne to celebrate the deal shows that they all thought something significant had happened. The question is: what had they agreed? Did the parties to the putative contract intend to make a legally binding agreement for Fewster to sell an interest in the tenements and enter into a joint venture for the exploration, development and mining of the tenements as Bullion contends, or did they intend that Fewster would negotiate exclusively with Bullion to complete such an agreement on the basis that Fewster would receive the consideration agreed that day.

In the context of the prior negotiations, the size and complexity of the proposed transaction and relationship and what was said by Fewster and Bantock on 6 August, the statements that the deal would be done or was done are equivocal. It was understood and intended by Fewster, and what he said would have led a person in the position of Bantock to reasonably believe that Fewster agreed the consideration, would cease negotiating with other parties and would negotiate the terms of a heads of agreement in the expectation that it would be agreed and signed by the parties no later than the following Wednesday.

243 However, it is important, also, to have regard to what the trial judge said at [318] and [319] of the reasons, as follows:

I find that on 6 August the parties reached agreement on the consideration to be received by Fewster and agreed to negotiate an agreement by which Bullion would acquire an interest in the tenements and the project in the expectation that they would reach agreement on the other matters which required agreement. However, they did not intend, or should not be taken to have intended, that they were immediately legally bound on 6 August.

As I have said, the existence of matters of importance on which the parties have not reached consensus in their informal agreement will render it the less likely that they intended immediately to be bound before the execution of a formal document, in this case the heads of agreement. On 6 August there were still a number of matters of importance on which the parties had not reached agreement. They continued to negotiate those matters on 8 August, and indeed continued negotiations on 9 August. Their conduct in negotiating those matters indicates that they were matters which the parties regarded as requiring agreement before a binding agreement was concluded.

244 Counsel for the appellants suggested that what was said by the trial judge in these last two paragraphs should be taken to mean only that the parties did not intend to be immediately legally bound by the pleaded substantive agreement (as opposed to the ENA). He said that this consequently does not detract from the finding which, he asserted, was made by the trial judge in [288], [306] and [314] of his reasons. We are unable to accept this contention. We doubt that the trial judge turned his mind, at all, to the question whether the parties had intended to bind themselves to an agreement in the form of the ENA, or any similar agreement. There was no reason why he should have done so, given that no one had suggested that such an agreement existed. We do not read the trial judge as having used the word 'agreed' (or any similar word or words) in any of the paragraphs to which we have been referred in the sense of a legally binding agreement. All that seems to us to have been intended by that word or similar words was that the parties had arrived at a shared understanding on what they then saw as the most fundamental issue (being the consideration). They also reached an understanding that Mr Fewster would consequently cease negotiating with third parties in the expectation that the parties would, by the following Wednesday, have agreed upon all of the outstanding terms of the heads of agreement and that that document would, by then, have been executed.

245 Counsel for the appellants placed particular reliance upon the second sentence of [314]. However, when that sentence is read in its context, it should not be read as a positive finding that the parties intended to enter into a legally binding agreement with respect to further negotiation. Rather, it seems to us that the trial judge was intending only to emphasise a negative proposition, being that what had occurred on 6 August 2005 was not intended by Mr Fewster, and would not have led a person in the position of Mr Bantock reasonably to believe, that Mr Fewster agreed immediately to enter into a binding contract by which Bullion would acquire an interest in the tenements and project in return for the agreed consideration.

246 Similarly, although what was said by the trial judge in [318] and [319] is capable of being read as being a finding that the parties did not intend, and should not be taken to have intended, that they were immediately legally bound on 6 August to any form of agreement, this, too, was said in a context in which the trial judge did not turn his attention to any other form of agreement than that which had been contended for.

247 In any event, an agreement of the kind contended for by the appellants in the proposed amendment is not without its difficulties.

248 Essentially, the ENA is said to have been a form of hybrid agreement. The contention is that final agreement had been reached on some matters (primarily the consideration) and that the parties agreed to negotiate the remaining matters upon which agreement was required in order to finalise a heads of agreement. Counsel for the appellants contended that, under this hybrid agreement, the parties were not entitled (in the absence of further agreement permitting this) to revisit the substantive terms that had been agreed, although, if negotiations on the remaining matters failed, the agreed substantive terms would no longer be binding.

249 The appellants also contend that the following terms were implied by law into the hybrid agreement:

(1) Mr Fewster would 'cooperate in negotiations for finalisation of the remaining content of a Heads of Agreement document based around the Consideration Package, with [Mr Fewster] doing all things necessary on his part to enable [Bullion] to have the benefit of promises made under the ENA' (par 14.1 of the proposed amended statement of claim); and

(2) Mr Fewster 'would negotiate reasonably with [Bullion], alternatively reasonably and in good faith, in those negotiations, to conclude a Heads of Agreement document based around the Consideration Package' (par 14.2 of the proposed amended statement of claim).

Both implied terms were said by counsel for the appellants to have been breached by Mr Fewster's conduct in discontinuing negotiations on Wednesday 10 August 2005 on the basis that, as a result of the unfavourable tax advice that had been received by him, he no longer agreed to the previously agreed consideration package.

250 Agreements to negotiate in good faith have been the subject of considerable discussion in the United Kingdom, Australia and New Zealand: see, in the United Kingdom, Walford v Miles [1992] 2 AC 128; in New Zealand, Wellington City Council v Body Corporate 51702 [2002] NZCA 191; [2002] 3 NZLR 486 and, in Australia, Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1; Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104; Con Kallergis Pty Ltd v Calshonie Pty Ltd (1998) 14 BCL 201 and Jobern Pty Ltd v BreakFree Resorts (Victoria) Pty Ltd [2007] FCA 1066. Also relevant, in Australia, are Hooper Bailie Associated Ltd v Natcon Group Pty Ltd (1992) 28 NSWLR 194; Elizabeth Bay Developments Pty Ltd v Boral Building Services Pty Ltd (1995) 36 NSWLR 709; Aiton Australia Pty Ltd v Transfield Pty Ltd [1999] NSWSC 996; (1999) 153 FLR 236 and Laing O'Rourke v Transport Infrastructure [2007] NSWSC 723, all of which deal with agreements to negotiate in good faith with a view to resolving a dispute. These cases raise complex issues, none of which was mentioned, let alone debated, in the proceedings before the trial judge. For example, it has been questioned whether an agreement in the terms contended for is sufficiently certain to be enforceable (see, in this respect, Australis Media Holdings (126 - 129)). Also, it is questionable whether an agreement of that kind is capable of supporting an implied obligation to cooperate of the kind contended for (see Australis Media Holdings (124)).

251 More importantly perhaps, the answer to the question whether an agreement to negotiate is enforceable might vary according to the precise terms of the agreement and, as Hayne JA (Charles JA agreeing) pointed out in Con Kallergis (212), 'it is only when all the circumstances are known that it can be seen whether the obligations of the parties (described as "to negotiate") can be identified with certainty'. In that case, the Victorian Court of Appeal would not countenance the raising of a contention, not raised at the trial, that an agreement involving an obligation to negotiate was uncertain or incomplete. This was because the party seeking to uphold the agreement had been deprived of the opportunity to lead evidence about the circumstances said to give rise to the agreement.

252 Similarly, in this case, it seems to us that it is now too late to assert the existence of an agreement in the form of the ENA. The respondents have had no opportunity to lead any evidence bearing upon the terms of the alleged agreement, and hence on the question of certainty. For example, while there was evidence that the parties hoped and expected that they would reach agreement by Wednesday 10 August 2005, the evidence that was led does not seem to us to have gone so far as to establish whether or not there was any agreement concerning the time when the obligation to negotiate would cease to operate: see, in this respect, Walford (139 - 140) (Lord Ackner). Had the point been raised at the trial, evidence might have been led on behalf of the respondents in this respect. Nor have they had the opportunity to lead any evidence that might have been admissible in support of the proposition that there was no intention to be legally bound to continue to negotiate (although it seems unlikely that anything could have been added to the already extensive evidence of what was said and done at the material time). Finally, counsel for the respondents also asserted (without providing any particulars - not surprisingly, perhaps, as he had had very little time to consider the position) that, had an agreement of that kind been pleaded, the respondents might have wished to adduce evidence concerning the question whether or not the appellants negotiated in good faith.

253 In circumstances in which the respondents have never had the opportunity to lead any evidence concerning a contract of the kind now asserted, or as regards the circumstances of the alleged breach of that contract, and in which none of the considerable difficulties raised by the cases to which we have referred were debated, or could be debated in the absence of a full opportunity to lead evidence concerning them, it is inappropriate to allow the appellants to advance a contention of this kind for the first time on appeal.

254 We consequently refuse leave to make the proposed amendment to the statement of claim. That has the consequence that grounds 8, 9 and 10 of the grounds of appeal fail.

255 The only basis upon which the appellants challenge the finding of breach of the confidentiality agreement made by the trial judge is that set out in ground 7. This is to the effect that, because the pegging of the graticular gaps was done in accordance with the terms of the agreement reached on 6 or 8 August 2005, it could not have been done in breach of the confidentiality agreement. Our conclusion that no binding agreement was reached on 6 or 8 August 2005 necessarily has the consequence that ground 7 fails.

256 The conclusions at which we have arrived make it unnecessary for us to consider the remaining issues, being the issue concerning the certainty of the alleged agreement, the question whether, if there was an agreement, it was conditional upon the obtaining of tax advice satisfactory to the respondents and the issue whether or not this was a case in which specific performance of the alleged agreement should be ordered. However, we will comment briefly on each of those issues.

257 It is trite that, even when the requisite intention is present, a contract can fail for uncertainty. It is also trite that only the omission of an essential term will have the effect that a contract is so incomplete or uncertain as to render it invalid: Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101 [29] (Ipp J, with whom Pidgeon J agreed). We have said what is meant by the word 'essential' in this context. When dealing with the question of contractual intention, we have expressed opinions on the question whether or not terms left over for future negotiation were essential. We have concluded that, although some of the matters left over were indicative of a lack of intention to be bound, they were not such as to lead to a finding that, if the requisite intention was present, the contract failed for lack of certainty. As Lloyd LJ said in Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd's Rep 601, 619 there is no legal obstacle which stands in the way of the parties agreeing to be bound now while deferring important matters to be agreed later. He went on to say that it 'happens every day where parties enter into so-called "heads of agreement"'. While many of the matters left over in this case were important, none seems to us to have been essential to the efficacy of the alleged agreement, in the sense that the agreement could not be enforced without it. We would consequently not have found that the agreement, if made, failed for uncertainty.

258 The respondents' case at trial was that it was a condition precedent to the formation or performance of a binding agreement that the respondents received tax advice to the effect that the tax implications of the proposed deal were favourable to them in one important respect. This was that the recipient of Bullion's shares would be entitled to capital gains tax rollover relief in respect of those shares and, or alternatively, would not incur a significant tax liability in respect of the issue and/or conversion of those shares (trial judge's reasons [282]). In ground 1 of their grounds of contention the respondents contend that the trial judge erred in failing to find that there was such a condition precedent to the formation of the alleged agreement (although it seems that the contention was intended to encompass, as an alternative, the proposition that the condition precedent was one to the performance of the contract).

259 The trial judge found [284] that, prior to 6 August 2005, Mr Fewster and Bullion, through Mr Bantock, had an understanding that any agreement they negotiated was subject to obtaining tax advice in relation to the proposed arrangement. He also found [287] that each of Mr Fewster and Mr Bantock contemplated, on 6 August 2005, that Mr Fewster would obtain tax advice in relation to at least the number, description or characterisation of the CPPSs. He concluded [289] that, on 6 August 2005, the only qualification Mr Fewster made in respect of the consideration to be paid to him or his entities related to the number, description or characterisation of the CPPSs to be provided. He said, correctly, that this was reflected in the first and second bullet point lists.

260 The respondents contend that the trial judge should not have concluded that on, or at any time after, 6 August there was a change in the agreement or understanding regarding the obtaining of tax advice by Mr Fewster. They point to the fact that, although Mr Bantock might not have regarded the outstanding tax issues as important, Mr Fewster did, and Mr Bantock was aware of this. They submit that, viewed objectively, tax was 'fundamental to the transaction' and that the structure of the transaction was repeatedly altered during the course of the negotiations. They point to other aspects of the evidence which, they contend, suggest that both parties remained aware that Mr Fewster intended to obtain tax advice that was not limited to the number, description or characterisation of the CPPSs.

261 We are not persuaded that there is anything in the evidence that is sufficient to support the proposition that the parties agreed that the obtaining of favourable tax advice by Mr Fewster would be a condition precedent to the formation, or performance, of a binding agreement. It is true that, as the trial judge found, prior to 6 August each of Mr Fewster and Mr Bantock understood that any agreement was subject to the tax advice proposed to be obtained by Mr Fewster. However, as the trial judge pointed out, the structure of the consideration, at the time that the agreement was said to have been made, was that which had been put forward by Mr Fewster. He said nothing to suggest that he still wished to obtain tax advice on anything other than the number, description or characterisation of the CPPSs to be provided and, as the trial judge pointed out, this was reflected in the bullet point lists, which, as we have said, were prepared by Mr Bantock and reflect his understanding of the position at which the negotiations had arrived. It is also noteworthy that no condition of this kind found its way into any of the drafts of the heads of agreement, notwithstanding that each had a section dealing with conditions precedent.

262 It accordingly seems to us that the evidence fell short of establishing an agreed condition precedent of the kind contended for if, contrary to the conclusion at which we have arrived, there was an intention to be legally bound notwithstanding the absence of an executed document. Ground 1 of the grounds of contention has consequently not been made out.

263 The trial judge considered that it was not feasible to pronounce upon the question whether or not the agreement, if binding, was sufficiently certain to be made the subject of an order for specific performance. We have mentioned that he said that that was so because it would then be necessary to consider different permutations of hypothetical findings, contrary to those that he had made. He said the same [340] concerning the question whether the terms of the agreement were such as to require constant supervision of a kind making it undesirable to order specific performance.

264 He reached a similar conclusion in respect of the respondents' contention (which seems not to be without its difficulties) that the hardship that would be suffered by them, arising out of the changes that Bullion has undergone, would be such as to militate against an order for specific performance (these changes encompassed the sale by Bullion of mining assets other than its uranium assets, changes to its shareholding, a reduction in capital and changes to its board). The trial judge said, in that respect [342], that consideration of that issue would require him to hypothesize about what might be the facts and circumstances, contrary to those found by him, which would call for the court to consider whether or not to refuse an order for specific performance on the grounds of hardship and that it was inappropriate for him to undertake such a hypothetical task.

265 During argument in the appeal, counsel for the appellants put Bullion's claim for an order for specific performance upon a limited basis. He said that the proposed amendment to ground 1 of the grounds of appeal was designed to make it plain that the only form of specific performance sought by Bullion was an order requiring the respondents to execute heads of agreement reflecting the matters that, he contended, had been orally agreed upon. As Meagher R, Heydon D and Leeming M point out in Meagher, Gummow and Lehane's Equity Doctrines & Remedies (4th ed, 2002) [20-075]:

[I]f a contract requires the execution of a deed the performance of some provisions of which might, if the court were to compel their performance, require continual supervision, there is no objection on that ground to specific performance of the contract; all that such an order would require would be the execution of the deed; the subsequent enforcement of the deed would, of course, be another matter.

266 Because we have concluded that there was no binding agreement, no occasion arises for an order for specific performance. We should add, in any event, so far as the ENA is concerned, that no order was sought by the appellants for specific performance of that agreement, if it was found to exist. Senior counsel for the appellants accepted, in the course of oral submissions, that an agreement of that kind is not specifically enforceable.

Section 119 of the Mining Act

267 That leaves only the respondents' contention that if, contrary to the finding of the trial judge, the court was to find that the parties entered into a binding agreement, the trial judge erred in concluding that s 119(2) of the Mining Act did not preclude enforcement of it by way of specific performance. We have said that, having found that no binding agreement was made between the parties, it was not strictly necessary for the trial judge to consider the appellants' claim for specific performance. However, he went on to make the observations and findings in relation to s 119(2) that are challenged by the notice of contention.

268 We have concluded that the parties did not intend to be bound by anything said or done by them until such time as the heads of agreement had been executed. It is consequently unnecessary to determine the issues raised by the respondents' notice of contention in relation to s 119(2). We should add that some of the questions that seem to us to be material to those issues were not the subject of submissions at the hearing of the appeal. However, in finding it unnecessary to deal with the issues raised we should not be taken necessarily to agree with the trial judge's reasoning or conclusions in respect of them.

269 It follows from what we have said that the appellants should have leave to make the amendments sought by them in respect of par 1 of the grounds of appeal but that their application to amend Bullion's statement of claim in support of grounds 8, 9 and 10 of their grounds of appeal should be refused. It also follows from what we have said that none of grounds 1 and 3 to 10 of the grounds of appeal has been made out. It is unnecessary to reach any decision in respect of ground 2, given that we have found that the requisite contractual intention was lacking. However, for the reasons given, we doubt that, if there had been the requisite intention, the agreement would have failed for uncertainty.

270 Ground 1 of the respondents' notice of contention has not been made out. Ground 2 of the notice of contention, although unnecessary, has been made out. Ground 3 of the notice of contention falls away given that we have decided to allow the amendment to ground 1 of the grounds of appeal. It is unnecessary, in the circumstances, for this court to reach any decision in respect of ground 4 of the notice of contention.