URANIUM EQUITIES LTD v FEWSTER [2008] WASCA 33

URANIUM EQUITIES LTD v FEWSTER [2008] WASCA 33 - WASCA 2008 case summary — Zoe

[100]

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.

[127]

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).

[191]

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.

[198]

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.

[228]

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.

[365]

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.

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (403 paragraphs)

URANIUM EQUITIES LTD v FEWSTER [2008] WASCA 33 (22 February 2008)

Negotiations between 22 March and 20 June 2005

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?

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

Number, description and characterisation of CPPSs

Magnitude and complexity of the contemplated transaction

Conclusions as regards contractual intention

The proposed amendment to the statement of claim

Parties

Cases Cited (20)