Wellington v Huaxin Energy

CONTRACTS - GENERAL CONTRACTUAL PROVISIONS - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - IMPLIED TERMS - GENERALLY - whether implied duty to cooperate existed - whether implied duty to cooperate required defendants to undertake further work - where plaintiffs failed to establish breach of the implied duty to cooperate

CONTRACTS - GENERAL CONTRACTUAL PROVISIONS - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - IMPLIED TERMS - GENERALLY - whether implied duty to undertake detailed and reliable exploration work existed - where the term was not 'so obvious' it goes without saying - where the circumstances yielded a number of possible alternatives

CONTRACTS - GENERAL CONTRACTUAL PROVISIONS - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - whether plaintiffs' entitlement to issue of Third Tranche Shares and Third Tranche Options persisted after Third Milestone Date - where ongoing duty inconsistent with express term in Agreement - where inconsistent with Third Milestone Date constituting a "sunset date"

Mineral Resources Act 1989 (Qld), s 133, s 137, s 137A, s 141

Ansett Transport Industries v Commonwealth [1977] HCA 71; (1977) 139 CLR 54, cited

Australis Media Holdings Pty Ltd & Ors v Telstra Corporation Ltd (1998) 43 NSWLR 104, cited

BP Refinery (Western Port) v Hastings Shire Council (1977) 180 CLR 266, considered

Bruce v Tyley [1916] HCA 34; (1916) 21 CLR 277, cited

Butts v O'Dwyer [1952] HCA 74; (1952) 87 CLR 267, cited

Campbell v BackOffice Investments Pty Ltd (2008) NSWCA 95, cited

Castlemaine Tooheys Ltd v Carlton & United Breweries 10 NSWLR 468, cited

Chaplin v Hicks [1911] 2 KB 786, cited

Clark v Macourt [2013] HCA 56; (2013) 253 CLR 1, cited

Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337, considered

Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 253 CLR 169, considered

Elders IXL Ltd v National Employers' Mutual General Insurance Association Ltd (1988) 5 ANZ Ins Cas 60-847, considered

Fink v Fink [1946] HCA 54; (1946) 74 CLR 127, cited

Grieve v Enge [2006] QCA 213, cited

Hamlyn & Co v Wood & Co [1891] 2 QB 488, cited

Jackson Nominees Pty Ltd v Hanson Building Products Pty Ltd [2006] QCA 126, cited

Kennedy v Vercoe [1960] HCA 64; (1960) 105 CLR 521, cited

Kosho Pty Ltd v Trilogy Funds Management Ltd [2013] QSC 135, cited

Longdon v Kenalda Nominees Pty Ltd [2003] VSCA 128, cited

Luxor (Eastbourne) Ltd v Cooper [1941] AC 108, cited

Mackay v Dick (1881) 6 HL (Sc) 251, considered

Marks and Spencer plc v BNP Paribas Securities Services [2015] UKSC 72; [2016] AC 742, cited

Marmax Investments Pty Ltd v RPR Maintenance Pty Ltd [2015] FCAFC 127; (2015) 237 FCR 534, cited

McRae v Commonwealth [1951] HCA 79; (1951) 84 CLR 377, cited

McWilliam v McWilliams Wines Pty Limited [1964] HCA 6; (1964) 114 CLR 656, cited

Meehan v Jones [1982] HCA 52; (1982) 149 CLR 571, cited

Meyers v Griffiths [1948] St R Qd 216, cited

Milne v Municipal Council of Sydney [1912] ArgusLawRp 43; (1912) 14 CLR 54, cited

Norton v Angus [1926] HCA 35; (1926) 38 CLR 523, cited

Ogdens Ltd v Nelson [1904] 2 KB 410, cited

Perri v Coolangatta Investments Proprietary Limited (1982) 149 CLR 537, cited

Principal Properties Pty Ltd v Brisbane Broncos Leagues Club Ltd [2017] QCA 254, cited

Prosperity Advisers Pty Ltd v Secure Enterprises Pty Ltd t/as Strathearn Insurance Brokers [2012] NSWCA 192, cited

Quinn Villages Pty Ltd v Mulherin [2006] QCA 433, cited

R v Paddington & St Marylebone Rent Tribunal [1947] KB 984, cited

Raging Thunder Pty Ltd v Bank of Western Australia Ltd [2012] QSC 329, cited

Ray v Davies [1909] HCA 51; (1909) 9 CLR 160, cited

Reigate v Union Manufacturing Co (Ramsbottom) Ltd [1918] 1 KB 592, cited

Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596, considered

Sellars v Adelaide Petroleum NL (1994) 179 CLR 332, cited

Shell UK Ltd v Lostock Garage Ltd [1977] 1 All ER 481, cited

Shirlaw v Southern Foundries (1926) Ltd [1939] 2 All ER 113, cited

Sino Iron Pty Ltd v Palmer (No 3) [2015] QSC 94; [2015] 2 Qd R 574, cited

Stirling v Maitland [1864] EngR 752; (1864) 5 B & S 840, cited

Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 236 CLR 272, cited

The Moorcock (1889) 14 P.D., 64, cited

Waterways Authority of New South Wales v Coal & Allied (Operations) Pty Ltd [2007] NSWCA 276, cited

Williamson & McGillivray v JIA Holdings Pty Ltd [2011] QCA 346, cited

WIN Corp Pty Ltd v Nine Network Australia Pty Ltd [2016] NSWCA 297; (2016) 341 ALR 467, cited

Wolfe v Permanent Custodians Ltd [2013] VSCA 331, cited

[1] The plaintiffs claim damages for breach of contract or a declaration that the contract is still on foot and capable of future performance. The proceeding arises from the sale by the first and second plaintiffs, Owen Reginald and Roxanne Wellington, and Ronald Fox, (who was later replaced by the third plaintiff) as the "Vendors", to the second defendant, as the "Purchaser", and Blackwood Coal Pty Ltd (which was later replaced by the first defendant) of an exploration permit for coal, EPC 1802, and the related environmental authority and mining information as property ("the Assets").

[2] On 1 July 2009, Mr Wellington applied for an exploration permit for coal ("EPC") over an area of 130 sub-blocks on the Series B Clermont - Block Identification Map in the area of coal resources in Queensland known as the Galilee Basin. The area of the 130 sub-blocks, totalling approximately 45,000 hectares, is located approximately 150 kilometres south of Charters Towers.

[3] On 6 July 2010, the original Vendors entered into a heads of agreement for the sale with the Purchaser and Blackwood Coal Pty Ltd ("Heads of Agreement").

[4] On 29 October 2010, EPC 1802 was granted to Mr Wellington.

[5] On 17 November 2010, the Vendors, the Purchaser and Blackwood Coal Pty Ltd entered into a contract styled the Tenement Sale Agreement, in substitution for the Heads of Agreement ("Tenement Sale Agreement").

[6] On 13 December 2010, the cash component of the consideration payable under the Tenement Sale Agreement was paid.

[7] On 9 May 2011, the parties varied the terms of the Tenement Sale Agreement by a contract styled the Amended and Restated Tenement Sale Agreement ("Amended and Restated Tenement Sale Agreement").

[8] On 28 October 2011, the parties to the Amended and Restated Tenement Sale Agreement and the first defendant, then named Cuesta Coal Ltd, entered into a contract that was called the "Cuesta Deed" in evidence and submissions, varying the parties to the contract up to that time by substituting the first defendant for Blackwood Coal Pty Ltd, and varying the consideration payable to the Vendors for purchase of the Assets ("Cuesta Deed").

[16] The central issue in dispute turns on the operation of clauses 4.1(1)(b)(iii) and 4.2(2) of the final contract. They provide as follows:

(1) The consideration for the purchase of the Assets is:

(b) Subject to Completion occurring, any necessary shareholder approvals being obtained (including approvals required under the ASX Listing Rules), the Vendors entering into any restriction agreement required by the ASX under the ASX Listing Rules and doing anything else required in accordance with the ASX Listing Rules:

(iii) the issue of the Third Tranche Shares and Third Tranche Options by Cuesta to the Vendors on the date that is:

(A) 10 Business Days after the Third Milestone occurred if Cuesta is listed on the ASX as at the date the Third Milestone occurred; or

(B) 10 Business Days after the Third Milestone occurred and the Purchaser receives a valuation from an Independent Expert which is carried out in accordance with clause 4.1(2) if Cuesta is not listed on the ASX as at the date the Third Milestone occurred...

4.2 Failure to Meet Second Milestone and Third Milestone

(2) If the Purchaser fails to meet the Third Milestone by the 5th anniversary of the grant of the Tenement (Third Milestone Date) but a Competent Person infers the existence of a Measured Mineral Resource with an estimated tonnage of at least 40,000,000 but less than 100,000,000 tonnes of coal in the Tenement Area as at the Third Milestone Date, then Cuesta must issue the Third Tranche Shares and the Third Tranche Options to the Vendors (adjusted on a pro rate basis) on the date that is

(a) 10 Business Days after the Third Milestone Date if Cuesta is listed on the ASX at the time; or

(b) 10 Business Days after the Third Milestone Date and the Purchaser receives a valuation from an Independent Expert which is carried out in accordance with clause 4.1(2) if Cuesta is not listed on the ASX at the time."

[17] The relevant defined expressions in those clauses are as follows:

"(53) Third Milestone means the date a Competent Person infers the existence of a Measured Mineral Resource with an estimated tonnage of 100,000,000 tonnes or more of coal in the Tenement Area;

(54) Third Milestone Date has the meaning given to it in Clause 4.2(2);

(55) Third Tranche Option means that number of Cuesta Options equal to the number to Third Tranche Shares;

(a) if Cuesta is listed on the ASX as at the date the Third Milestone occurs and:

(i) the volume weighted average trading price of fully paid ordinary shares in Cuesta for the 10 Business Days immediately preceding the date the Third Milestone occurs is above the Listing Price, the number of fully paid ordinary shares in cuesta equal to N, as set out below:

(ii) the volume weighted average trading price of fully paid ordinary shares in Cuesta for the 10 Business Days immediately preceding the date the Third Milestone occurs is equal to or below the Listing Price the number of the fully paid ordinary shares in Cuesta equal to N, as set out below:

Where VWAP means the volume weighted average trading price of fully paid ordinary shares in Cuesta for the 10 Business Days immediately preceding the date the Third Milestone occurs; or

(b) if Cuesta is not listed on the ASX as at the date the Third Milestone occurs that number of ordinary shares in the capital of Blackwood Coal which represents a value of $3,000,000 as determined by the Independent Expert in accordance with clause 4.1(2);"

[18] The plaintiffs allege:

• (a) first, that it was an implied term of the final contract that the first defendant owed a duty of cooperation that required it to do all things necessary to give the plaintiffs the benefit of the Amended and Restated Tenement Sale Agreement and not to do anything that would derogate from the benefit of the Amended and Restated Tenement Sale Agreement ("implied duty of cooperation"); and
• (b) second, that it was an implied term of the final contract that the first defendant would obtain detailed and reliable exploration sampling and testing information gathered through appropriate techniques from locations spaced closely enough to confirm the geological and grade continuity of the coal deposit within the EPC 1802 area sufficient for a Competent Person to undertake an analysis to calculate the measured mineral resource, provide that information to the Competent Person and obtain from the Competent Person the relevant calculation ("detailed and reliable exploration implied term").

[19] It is not in dispute that, after the second defendant carried out exploration work on EPC 1802 necessary to be able to make the ASX announcement on 29 October 2013, a Competent Person estimated an Inferred Mineral Resource of 364.1 Mt. After that, however, the second defendant did not carry out further exploration work, by way of drilling, sampling or testing, to further upgrade the mineral resource.

[20] The plaintiffs allege that was in breach of both the alleged implied terms.

[21] The defendants deny that any implied duty to cooperate required them to do any drilling, sampling or testing and deny that the detailed and reliable exploration implied term was a term of the final contract.

[22] Alternatively to their claim for damages for breach of the implied duty to cooperate or breach of the detailed and reliable exploration implied term, the plaintiffs allege that if the second defendant, or its successor in title, meets the Third Milestone within a reasonable time the plaintiffs will be entitled to issue of the Third Tranche Share and the Third Tranche Options under cl 4.1(b)(iii) of the final agreement.

Commercial purpose, genesis, background, context and the market of the final agreement

[23] The application for the permit that became EPC 1802 contained a proposed work program as follows:

Initial exploration on the project will take approximately 1-2 years to complete and will consist of the following program;

• Collection and correlation of all historical data into a modern data package
• Access and compensation agreements
• Scout rotary drilling to determine the presence of coal seams
• Design detail drill evaluation programs
• Carry out preliminary resource drilling programs

Assuming the first phase study is favourable the second phase (years 3-4) of exploration will incorporate the following;

• Resource modelling and mine design
• Coal separation test work
• Engineering design
• Environmental Impact Study
• Project Economics with a goal of proceeding to a Mining Lease Application

It is proposed that the term of the EPM is for five years. The proposed exploration programme and budget is as follows:-

[24] The application for EPC 1802 was made under the Mineral Resources Act 1989 (Qld) ("MRA").

[25] Section 133(f)(i)-(ii) provided that an application for an exploration permit had to be accompanied by a statement specifying a description of the program of work proposed to be carried out under the authority of the exploration permit if granted and specifying the estimated human, technical and financial resources proposed to be committed to exploration work during each year of the exploration permit.

[26] Section 137(1) empowered the Minister to grant an application for an exploration permit, with or without conditions, or to refuse it. However, it was a condition of the grant of the application that the Minister has approved the program of work that accompanied the application - see s 133(f)(i). Under s 137(3) the Minister must consider several matters when deciding whether to approve a program of work and under s 137A(h), when an exploration permit is granted, it must state the program or work and the studies to be carried out under it.

[27] Lastly, under s 141(1)(a), an exploration permit is subject to a condition that the holder shall carry out such programs of work and such studies for the purposes for which the exploration permit was granted and in accordance with the MRA and the conditions of the exploration permit and for no other purpose. Under , the holder must provide the Minister with reports containing prescribed information, which then included information about compliance with the program of work and its results - see s 13A of the now repealed (Qld).

[31] Three other relevant terms defined in the final contract are:

"(33) 'Inferred Mineral Resource' has the meaning defined in the JORC Code.

(36) 'JORC Code' means the Australasian code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2004 Edition) published by The Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia and any revisions to or replacements of, it.

(39) 'Measured Mineral Resource' has the meaning defined in the JORC Code."

[32] The JORC Code sets a required minimum standard for public reporting and also recommends its adoption as a minimum standard for other reporting. The 2004 edition JORC Code was replaced by the 2012 edition JORC Code. Although it is a code for public reporting, it does not provide for the manner in which a Competent Person estimates a mineral resource. Thus, the words "JORC Compliant" should be interpreted to mean "reported in accordance with the JORC Code and estimated (or based on documentation prepared) by a Competent Person, as defined by the JORC Code". Figure 1 of the 2012 edition JORC Code illustrates that as the level of geological knowledge and confidence for a mineral deposit increases, utilising exploration results and other techniques, a mineral resource may be found to be an "inferred" mineral resource, then upgraded to "indicated" mineral resource and then further upgraded to a "measured" mineral resource. As this case is concerned with the question of upgrading an inferred mineral resource to a measured mineral resource, some of the underlying concepts and requirements may be simplified in these reasons. One underlying concept is that the portions of a deposit that do not have reasonable prospects for eventual economic extraction must not be included in a "mineral resource".

[33] The plaintiffs' starting point in the present case is that from 29 October 2013 EPC 1802 contained an "Inferred Mineral Resource" of 364.1 Mt. As defined in the 2012 edition JORC Code, an "Inferred Mineral Resource" is:

"That part of a mineral resource for which quantity and grade (or quality) are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade (or quality) continuity. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.

An inferred mineral resource has a lower level of confidence than that applying to an indicated mineral resource and must not be converted to an ore reserve. It is reasonably expected that the majority of inferred mineral resources could be upgraded to indicated mineral resources with continued exploration."

[34] Second, the 2012 edition JORC Code defines an "indicated mineral resource" as:

"That part of the mineral resource for which quantity, grade (or quality), densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit.

Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes, and is sufficient to assume geological and grade (or quality) continuity between points of observation where data and samples are gathered.

An indicated mineral resource has a lower level of confidence than that applying to a measured mineral resource and may only be converted to a probable ore reserve."

[35] Third, the definition in the 2012 edition JORC Code of "measured mineral resource" is:

"That part of a mineral resource for which quantity, grade (or quality), densities, shape and physical characteristics are estimated with confidence sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation of the economic viability of the deposit.

Geological evidence is derived from detailed and reliable exploration, sampling and testing gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes, and is sufficient to confirm geological and grade (or quality) continuity between points of observation where data and samples are gathered.

A measured mineral resource has a higher level of confidence than applying to either an indicated mineral resource or an inferred mineral resource. It may be converted to a proved ore reserve or under certain circumstances to a probable ore reserve."

[36] As defined, the crux of the distinction between an indicated mineral resource and a measured mineral resource lies in the degree of confidence. Thus, for an indicated mineral resource, the data must be such "as to allow confident interpretation of the geological framework and assume continuity of mineralisation", whereas for a measured mineral resource, the data must be such as "to leave no reasonable doubt, in the opinion of the Competent Person determining the mineral resource, that the tonnage and grade of the mineralisation can be estimated to within close limits, and that any variation from the estimate would be unlikely to significantly affect potential economic viability". The measured mineral resource category requires "a high level of confidence in, and understanding of, the geological properties and controls of the mineral deposit".

[37] Clauses 42 to 44 of the 2012 edition JORC Code relate specifically to the public reporting of coal resources. They provide that for guidance on the estimation of coal resources, readers are referred to the 'Australian Guidelines for Estimating and Reporting of Inventory Coal, Coal Resources and Coal Reserves' as published from time to time by the Coalfields Geology Council of New South Wales and the Queensland Resources Council. The 2003 edition of those guidelines deals with the estimation of coal resources from points of observation or "POB". Paragraph 4.5.3 provides that measured coal resources may be estimated using data obtained from POBs normally less than 500 metres apart, but the distance may be extended if there is sufficient technical justification to do so; for example, if supported by geostatistical analysis.

[38] It is not in dispute in the present case that, to the date of the trial, the exploration and drilling program carried out by the first defendant in the relevant areas of EPC 1802 constituted a total of up to 45 drill holes of which 6 are POB quality. The POBs are spaced between 3000 and 4000 metres apart. That exceeds the maximum spacing that is permissible to estimate or determine a measured mineral resource.

[39] The plaintiffs' expert, Troy Turner, proposes that a drilling program of 21 x 63 millimetre dome and core holes and 21 pilot open chip holes would be required to "convert" (upgrade) the most prospective zone of the current 364.1 Mt Inferred Mineral Resource area on EPC 1802, in the Yellow Jacket area of the EPC, to approximately 100 Mt of Measured Mineral Resource. The proposed area was described in the evidence of the case as the "100 Mt polygon". I will describe this proposed drilling program as the "21 hole exploration program". The defendants' experts agreed that the 21 hole exploration program is a reasonable approach to a first stage of drilling with the intention to define a Measured Mineral Resource, but reserved whether further in-fill drilling or possibly step-out drilling and drilling into adjacent areas may be required. However, the plaintiffs contend, for the purposes of their case, that it was the 21 hole exploration program that the first defendant failed to carry out, in breach of the implied duty to cooperate or the detailed and reliable exploration implied term.

[41] The common starting point for the parties' submission on the implied duty to cooperate is the statement of Mason J in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd:[1]

"But it is common ground that the contract imposed an implied obligation on each party to do all that was reasonably necessary to secure performance of the contract. As Lord Blackburn said in Mackay v Dick...:

'... as a general rule ... where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect.'

It is not to be thought that this rule of construction is confined to the imposition of an obligation on one contracting party to co-operate in doing all that is necessary to be done for the performance by the other party of his obligations under the contract. As Griffith CJ said in Butt v M'Donald...:

'It is a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his part to enable the other party to have the benefit of the contract.'

It is easy to imply a duty to co-operate in the doing of acts which are necessary to the performance by the parties or by one of the parties of fundamental obligations under the contract. It is not quite so easy to make the implication when the acts in question are necessary to entitle the other contracting party to a benefit under the contract but are not essential to the performance of that party's obligations and are not fundamental to the contract. Then the question arises whether the contract imposes a duty to co-operate on the first party or whether it leaves him at liberty to decide for himself whether the acts shall be done, even if the consequence of his decision is to disentitle the other party to a benefit. In such a case, the correct interpretation of the contract depends, as it seems to me, not so much on the application of the general rule of construction as on the intention of the parties as manifested by the contract itself."

[42] The plaintiffs' case is that the duty to cooperate was imposed by implication upon the first defendant for the plaintiffs to have the benefit comprised in the Third Tranche Shares and Third Tranche Options to be issued, by doing acts such as the 21 hole exploration program to enable an assessment by the Competent Person that the contractual threshold of 100 Mt of measured mineral resource was present or, if not, that an amount of 40 Mt or greater was present.

[43] Against that, the defendants make a number of submissions. First, they submit that the final agreement contains terms that define the parties' rights and obligations relating to cooperation and benefit. In particular, they submit that the existence or application of an implied duty to cooperate in the circumstances of the present case is negated by there being an inconsistent express term in cl 15.1 of the final contract that provides:

"Other than as set out in this document, each party must, at its own cost from time to time, do all things (including executing all documents) necessary to give full effect to this Agreement."

[44] Such a term is often termed a further assurance clause. Simplifying, the defendants submit that cl 15 covers the ground which might be covered by the implied duty to cooperate and therefore excludes it.

[45] In support of that contention, the defendants rely on a statement by Young CJ in Campbell v BackOffice Investments Pty Ltd,[2] that where there is an express term in a contract, it is almost impossible for the court to imply a term that operates in the same area, referring to Castlemaine Tooheys Ltd v Carlton & United Breweries.[3] Neither of those cases concerned a further assurance clause in a contract of sale of land or similar. In Campbell, the difficulty was that the implied duty to cooperate was said to contractually oblige Campbell, personally, as joint managing director of a company, to cause the company to make payments to BackOffice Investments under a services agreement. But under that agreement, the obligation to make and the entitlement to receive those payments were expressly provided for as between different parties that did not include Campbell, personally. In Castlemaine Tooheys, the question was whether an alleged implied term against a vendor acting to reduce the value of the goodwill sold to the purchaser was inconsistent with an express term of the contract under which the parties turned their minds as to what the vendor could do and could not do in restraint of trade in relation to the hotels it sold to the purchaser. Young CJ took the view that the relevant clause was not inconsistent with the suggested implied term,[4] but the Court of Appeal disagreed.[5]

[46] Of passing interest in the present case is that in Castlemaine Tooheys a further assurance clause was relied upon by the purchaser as a source of the vendor's alleged obligation to do necessary or appropriate things to enable the purchaser to receive the full benefit and advantage of the assets and business acquired under the contract and as requiring the vendor to refrain from conduct that would depreciate those benefits and advantages. It was held that the operation of a further assurance clause is "to assure", meaning to transfer property, and that did not extend to conduct in restraint of trade of the vendor after the transfer was made.

"Mason J thereby distinguished between acts according to whether they are necessary to the performance of a party's fundamental obligations under the contract. There is a duty to co-operate in the doing of acts which are necessary to the performance of such obligations. But a duty to co-operate in the doing of acts which are not necessary to the performance of fundamental obligations has to be found in "the intention of the parties as manifested by the contract itself", that is by a term implied in fact."[9] (emphasis added)

[53] The defendants submit that by those words, I am bound to apply the requirements in law for a "term implied in fact" to the contention that the alleged implied duty of cooperation required the second defendant to carry out work such as the 21 hole exploration program.

[54] Generally speaking, subsequent cases, at intermediate appellate court level, have referred to Jackson Nominees with approval.[10] However, they have not expressly referred to the particular passage relied upon by the defendants, although a couple of single judge decisions have cited it.[11] But no subsequent case has analysed the operation of the duty to cooperate through the legal test for a "term implied in fact".

[55] Under the Australian common law, the legal taxonomy that has developed for the implication of terms in a contract is reflected in a classification that distinguishes among different classes of implied terms. For this purpose, I consider that I am bound by the judgment of the plurality in Commonwealth Bank of Australia v Barker,[12] who said:

"Courts have implied terms in contracts in a number of ways:

• in fact or ad hoc to give business efficacy to a contract;
• by custom in particular classes of contract;
• in law in particular classes of contract; or
• in law in all classes of contract.

Implication of a term in fact in a contract, by reference to what is necessary to give it business efficacy, was described in Codelfa as raising issues 'as to the meaning and effect of the contract'. Implication is not 'an orthodox exercise in the interpretation of the language of a contract, that is, assigning a meaning to a particular provision'. It is nevertheless an 'exercise in interpretation, though not an orthodox instance'. The implication of terms in fact was also characterised in Attorney General of Belize v Belize Telecom Ltd as an exercise in construction. Lord Hoffmann, delivering the judgment of the Privy Council, said (at [22]):

'... it is not enough for a court to consider that the implied term expresses what it would have been reasonable for the parties to agree to. It must be satisfied that it is what the contract actually means.'

The distinction thus drawn is appropriate even though the scope of the constructional approach adopted by Lord Hoffmann has been debated."[13]

[56] Later in those reasons, the plurality discussed the implication of terms in law in contracts generally, that can also be characterised as rules of construction, referring to the statement of Mason J in Secured Income set out above.[14] The plurality continued:

"It has also been argued that some 'terms' said to be implied in law are in fact rules of construction and that all implied 'terms' of universal application fall into that category. The application of that proposition to what has been treated as a contractual duty to cooperate is considered below. Debates about characterisation have attracted persuasive protagonists on both sides. They involve taxonomical distinctions which do not necessarily yield practical differences. Those debates are not concerned with the distinct question whether, and when, implication of a term is to be regarded as an exercise in the construction of a contract or class of contract."[15]

"In Byrne v Australian Airlines Ltd, McHugh and Gummow JJ emphasised that the 'necessity' which will support an implied term in law is demonstrated where, absent the implication, 'the enjoyment of the rights conferred by the contract would or could be rendered nugatory, worthless, or, perhaps, be seriously undermined' or the contract would be 'deprived of its substance, seriously undermined or drastically devalued'. The criterion of 'necessity' in this context has been described as 'elusive' and the suggestion made that 'there is much to be said for abandoning' the concept. Necessity does, however, remind courts that implications in law must be kept within the limits of the judicial function. They are a species of judicial law-making and are not to be made lightly. It is a necessary condition that they are justified functionally by reference to the effective performance of the class of contract to which they apply, or of contracts generally in cases of universal implications, such as the duty to cooperate. Implications which might be thought reasonable are not, on that account only, necessary. The same constraints apply whether or not such implications are characterised as rules of construction."[16] (footnotes omitted)

[58] The defendants submit that the consequence of the proposition that acts which are not necessary to the performance of a party's fundamental or essential obligations must be justified as a "term implied in fact" is that the obligation to do such acts must pass through the gateway of the principles enunciated in 1977 in BP Refinery (Western Port) v Hastings Shire Council,[17] as accepted in Codelfa Construction Pty Ltd v State Rail Authority (NSW),[18] as to an alleged term implied in fact that:

(2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;

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

(5) it must not contradict any express term of the contract."[19]

[59] The defendants submit that the court is bound to approach the requirements of the implied duty to cooperate in that way in the present case. They also submit that the court is bound to follow the statement of McHugh JA in Elders IXL Ltd v National Employers' Mutual General Insurance Association Ltd,[20] that:

"Where a person promises that he will pay money or confer a benefit the fulfilment of which is dependent upon the existence of a state of affairs or condition, a term that the promisor will do nothing to put an end to that state of affairs or condition will only be implied where the promisee has already given consideration for the promise and the promisor has a present obligation to fulfil the promise."

[60] Neither side of the present dispute focussed on cases of authority that consider the obligation of a promisor to do acts in relation to the satisfaction of a contingent condition to the performance of a contract, either as a matter of the implied duty to cooperate or as a term implied in fact.

[61] For example, in Grieve v Enge,[21] purchasers sought specific performance of a contract of sale of land where they had failed to notify satisfaction of the finance condition within the time stipulated. The reason for their failure was that the vendor had refused permission for the purchasers' financier's valuer to inspect the property in order to value it. That was held to be a breach of the implied duty to cooperate or the correlative obligation to refrain from doing anything which would prevent completion of the contract. On appeal, it was held that obtaining finance was inextricably linked to the purchasers' performance of the contract by payment of the purchase price and that the vendor was obliged to permit access for the purpose of the valuation, because of the "implication of the general duty to cooperate".[22]

[62] Further, the judgments in a number of other cases in the High Court decided before Secured Income recognised implied obligations on parties to do things of different kinds in reliance upon Lord Blackburn's formulation of the duty to cooperate in Mackay v Dick.[23] So, in Ray v Davies,[24] Isaacs J would have implied an obligation for the purchaser under a contract of sale to execute a mortgage if the vendors arranged for a loan on the terms stated in the contract.[25] In Milne v Municipal Council of Sydney,[26] Barton J implied an obligation on the part of the Council to allow the other party to do the work that it had promised to do at fixed rates for a 12 month period.[27] In Bruce v Tyley,[28] both Barton and Isaacs JJ considered that where B agreed with A to do certain works and B sub-contracted with C for C to do part of the works, B was under an implied obligation to C to do all that was necessary on B's part to enable C to do the sub-contracted work. And in , Isaacs J held that, under a contract of sale of perpetual leases where the transfer of the leases was by statute subject to the Minister's approval, each of the parties was impliedly obliged "to do all that was reasonable" to secure the lawful transfer.

"if a party enters into an arrangement which can only take effect by the continuance of a certain existing state of circumstances, there is an implied engagement on his part that he shall do nothing of his own motion to put an end to that state of circumstances, under which alone the arrangement can be operative."[49]

[77] Many cases involve terms implied of that kind and it would not be profitable to essay them. Again, in my view, the limits of the operation of that statement of principle depend on the context of the class of contract[50] or particular terms of the contract.

[78] Last in these general submissions, the defendants submit that the implied duty to cooperate only operates with respect to matters that the contract requires to be done. Another way in which the point was put is that for the implied duty to cooperate to be engaged one must find something that the contract requires to happen.

[79] The defendants advanced the argument in relation to the final contract in two ways. First, that in the absence of a term requiring the performance of exploration work such as the 21 hole exploration program, the implied duty to cooperate does not assist the plaintiffs. Second, the plaintiffs' chance of entitlement to receive the Third Tranche Shares and Third Tranche Options, which depended on satisfaction of the condition as to the Measured Mineral Resource contained in the Third Milestone, was not something that the contract required to happen. Therefore, there could be no implied duty to cooperate so as to give the chance any particular likelihood of success by doing any of the further exploration work required for satisfaction of the condition. In my view, at those levels of generality, the submissions should not be accepted.

[80] These general submissions drew again on the judgment of P McMurdo J in Jackson Nominees, as well as Australis Media Holdings Pty Ltd & Ors v Telstra Corporation Ltd,[51] Campbell v BackOffice Investments Pty Ltd,[52] Wolfe v Permanent Custodians Ltd[53] and Marmax Investments Pty Ltd v RPR Maintenance Pty Ltd.[54]

[81] Perhaps the strongest statement on this point, and one that is relied on heavily by the defendants, was made in Australis Media where the court said that:

"Leaving aside fiduciary obligations... there cannot be a duty to cooperate in bringing about something which the contract does not require to happen."[55]

[82] In my view, that statement does not mean that, where an obligation of one party to perform is conditional upon a contingency which requires action by that party before the contingency can be satisfied, the conditional obligation is something which the contract does not require to happen. The point is illustrated by drawing on some of the cases already discussed involving contracts for the sale of land as examples. First, where a purchaser's obligation to complete, by payment of the purchase price, is subject to finance satisfactory to the purchaser, the purchaser is obliged to apply for finance and to consider bona fide (or bona fide and reasonably) whether the finance offered is satisfactory.[56] Second, if a purchaser's obligation to complete is subject to a condition that the purchaser sells the purchaser's own house first, there is an implied obligation to take reasonable steps to do so.[57] Third, where both parties' obligations to complete are subject to a condition that the Minister consents to or approves of the sale, there is an implied obligation on both parties to do that which is reasonable to obtain the consent.[58] Although similar examples of conditional obligations could be multiplied, in my view, those cases are enough to show that it would be an error to regard the statement in Australis, relied upon by the defendants, as withdrawing all conditional obligations from the scope of the implied duty to cooperate because the contract does not require the conditional obligation to be performed unless the contingent condition is satisfied.

[83] In addition to the arguments already considered, the defendants submit that there are other reasons why, under the terms of the final contract in this case, properly construed, the second defendant was at liberty to decide not to do any further exploration work.

[84] First, the defendants submit that, on any view, the plaintiffs' entitlement to the Third Tranche Shares and Third Tranche Options was dependent on an uncertain chance that might never mature. To the extent that any entitlement depended on the performance of exploration work that yielded information that would enable a Competent Person to make the required assessment of 100 Mt (or, if not that, 40 Mt or more) of measured mineral resource, before the period for the condition to be fulfilled expired, it is obviously correct that the plaintiffs' entitlement, if any, was a matter of chance, not certainty. But, in my view, that does not gainsay that the plaintiffs were at risk of the first defendant deciding not to do any further exploration so as to preclude the possibility of the condition being fulfilled and thereby reduce the chance to nil.

[100] The second implied term of the final contract alleged by the plaintiffs is the detailed and reliable exploration implied term, namely that it was an implied term that the first defendant would obtain detailed and reliable exploration sampling and testing information gathered through appropriate techniques from locations spaced closely enough to confirm the geological and grade continuity of the coal deposit within the EPC 1802 area sufficient for a Competent Person to undertake an analysis to calculate the measured mineral resource, provide that information to the Competent Person and obtain from the Competent Person the relevant calculation.

[101] The plaintiffs allege that the detailed and reliable exploration term was breached by the failure to cause the 21 hole exploration program to be obtained, to provide the information obtained to the Competent Person and to obtain the Competent Person's calculation of the Measured Resource.

[102] The defendants submit that there was no detailed and reliable exploration implied term because none of the five requirements of the BP Refinery (Westernport) case is satisfied. They submit that:

• (a) the term is not reasonable and equitable because it is directed solely to the financial interests of the vendors in maximising their uncertain chance of a conditional benefit vesting and does not limit the obligation of the first defendant to cause reasonable exploration sampling and testing information to be obtained;
• (b) the term is not necessary to give business efficacy to the contract because the final contract is effective without it and the chance that the Vendors have of obtaining the Third Tranche Shares and Third Tranche Options on the Third Milestone being reached was not illusory;
• (c) the term is not so obvious that it goes without saying because if the second defendant and Blackwood Coal Pty Ltd had been asked to make an open ended commitment to exploration work over a period of 5 years regardless of market and economic conditions or their own commercial circumstances it is not at all obvious that they would have answered "yes";
• (d) the term is not capable of clear expression because of the imprecise terminology used, such as "detailed", "reliable", "appropriate" and "closely enough";

"Even so, there remains an insurmountable problem in saying that 'it goes without saying' that had the parties contemplated the possibility that their legal advice was incorrect and that an injunction might be granted to restrain noise or other nuisance, they would have settled upon the term implied by the Court of Appeal or that implied by the Arbitrator and by Ash J. at first instance. I doubt whether the fiction of treating the parties as reasonable and fair makes the problem any the less difficult. This is not a case in which an obvious provision was overlooked by the parties and omitted from the contract. Rather it was a case in which the parties made a common assumption which masked the need to explore what provision should be made to cover the event which occurred. In ordinary circumstances negotiation about that matter might have yielded any one of a number of alternative provisions, each being regarded as a reasonable solution."[70]

[106] In my view, the detailed and reliable exploration implied term in the present case fails for the same reason. In ordinary circumstances, negotiations about the extent of the exploration work that the second defendant would carry out or pay for might have yielded a number of alternative provisions, each being regarded as a reasonable solution. It is no answer to that weakness to say that without any implied term to do exploration work beyond the scope of the work program for EPC 1802, the Vendors were at a considerable risk that the second defendant would not do sufficient work to reach the Third Milestone in the five year period.

[107] The plaintiffs' alternative case to their claim for damages for breach of contract assumes that, as I have found, they fail to establish a breach of the duty to cooperate or that the detailed and reliable exploration program term was an implied term of the final contract. In those events, the plaintiffs contend that should the second defendant or its successor achieve the Third Milestone within a reasonable time, the plaintiffs will be entitled to issue of the Third Tranche Shares and the Third Tranche Options pursuant to cl 4.1(b)(iii) of the final contract. In other words, the plaintiffs contend that their right to issue persists even if the Third Milestone is not reached within the five year period from the grant of EPC 1802 that was the Third Milestone Date.

[108] It is necessary to set out the most relevant parts of the Heads of Agreement, Tenement Sale Agreement and the Amended and Restated Tenement Sale Agreement.

[109] The Heads of Agreement provided in Schedule 1, Item 2 for the key commercial terms of the future sale and purchase agreement. Paragraph (a)(vi) thereof provided:

"On the date which is 10 Business Days after delineation of a JORC measured resource of 100M tonnes of coal on the Tenement, the Purchaser must (subject to any necessary shareholder approvals and any necessary approval under Listing Rule 7.1) issue the Third Tranche Shares and options to the Vendors."

[110] No time limit was provided by which the delineation of a JORC "measured resource" of 100 Mt must be achieved.

[111] Clause 4.2 of the Tenement Sale Agreement provided:

"4.2 Failure to meet Second Milestone and Third Milestone

(1) If the Purchaser fails to meet the Second Milestone by the 3rd anniversary of granting of the Tenement (Second Milestone Date) but a Competent Person infers the existence of an Inferred Mineral Resource with an estimated tonnage of at least 60,000,000 but less than 100,000,000 tonnes of coal in the Tenement Area as at the Second Milestone Date, then Blackwood Coal must issue the Second Tranche Shares and the Second Tranche Options to the Vendors (adjusted on a pro rata basis) on the date that is

(a) 10 Business Days after the Second Milestone Date if Blackwood Coal is listed on the ASX at the time; or

(b) 10 Business Days after the Second Milestone Date and the Purchaser receives a valuation from an Independent Expert which is carried out in accordance with clause 4.1(2) if Blackwood Coal is not listed on the ASX at the time.

(2) If the Purchaser fails to meet the Third Milestone by 5th anniversary of granting of the Tenement (Third Milestone Date) but a Competent Person infers the existence of a Measured Mineral Resource with an estimated tonnage of at least 40,000,000 but less than 100,000,000 tonnes of coal in the Tenement Area as at the Third Milestone Date, then Blackwood Coal must issue the

(a) Second Tranche Shares and Second Tranche Options to the Vendors (adjusted on a pro rata basis);

(b) Third Tranche Shares and the Third Tranche Options to the Vendors (adjusted on a pro rata basis) on the date that is

(i) 10 Business Days after the Third Milestone Date if Blackwood Coal is listed on the ASX at the time; or

(ii) 10 Business Days after the Third Milestone Date and the Purchaser receives a valuation from an Independent Expert which is carried out in accordance with clause 4.1(2) if Blackwood Coal is not listed on the ASX at the time.

(iii) If after the pro-rata payments are issued and then the resource is further defined than the original agreement is still in force."

[112] The most relevant parts of clauses 4.1(b)(iii) and 4.2 of the final contract are set out in paragraphs [16] and [17] above.

[113] At least arguably, cl 4.2(2)(b)(iii) of the Tenement Sale Agreement had the effect that reaching the Third Milestone after the Third Milestone Date would entitle the vendors to issue any unissued pro rata amount of the Third Tranche Shares and Third Tranche Options before the milestone was achieved. In the absence of that provision, the natural and ordinary meaning of cl 4.2 is that, if the Purchaser failed to meet the Third Milestone by the fifth anniversary of the grant of the tenement, cl 4.2(2) only operated if a Competent Person inferred the existence of a Measured Mineral Resource with an estimated tonnage of at least 40 Mt, although less than 100 Mt as at the Third Milestone Date. That is, in the absence of cl 4.2(2)(b)(iii), cl 4.1(1)(iii) and 4.2(2) otherwise operated so that the Third Milestone Date was a "sunset date". If the Purchaser failed to meet the Third Milestone by that date and no Competent Person inferred the existence of a Measured Mineral Resource of at least 40 Mt as at that date, the Vendors would not be entitled to issue of the Third Tranche Shares or the Third Tranche Options, either entirely or adjusted on a pro rata basis.

[114] Notably, whilst cl 4.2(2)(b)(iii) was a term of the Tenement Sale Agreement, it operated only "if after the pro rata payments are issued". In other words, if no Competent Person had inferred the existence of a Measured Mineral Resource of at least 40 Mt resulting in "pro rata payments" being "issued", then a further definition of the resource after the Third Milestone Date would not engage cl 4.2(2)(b)(iii).

[115] It is also notable that if the condition that pro rata payments had been issued was met and then the resource was further defined, the consequence was "than (sic) the original agreement is still in force". Although that language is inelegant, a fair construction is that it referred to the promise to issue of the Third Tranche Shares and Third Tranche Options.

[116] On making the Amended and Restated Tenement Sale Agreement, the parties deleted cl 4.2(2)(b)(iii). The ordinary meaning of cl 4.2, as then amended, does not include any express provision that would have the effect of extending the time by which the Vendors' right to issue of the Third Tranche Shares and the Third Tranche Options persists, if there is a further definition of the resource occurring after the Third Milestone Date.

[123] Because the plaintiffs have failed to establish that there was either a breach of the duty of cooperation or that the detailed and reliable exploration program term was an implied term of the final contract, the defendants must succeed on the claim in the proceeding for damages for breach of contract. Against the possibility of error being established on appeal, it is nonetheless appropriate to make brief findings on the issue of damages.

[124] The plaintiffs' case is that they suffered damages measured by a range of percentages of the value of the Third Tranche Shares and the Third Tranche Options. There is no dispute that the value of the Third Tranche Shares and Third Tranche Options was $2,540,607 at the date of the alleged breach of contract. There are two variables in the range of the damages claimed: first, the quantity of the Measured Mineral Resource that the Competent Person might have assessed as existing at or before the Third Milestone Date, from a minimum of 40 Mt to a maximum of 100 Mt, applied pro rata to the relevant value; second, the degree of the possibility that a particular quantity would have been assessed. The claim is accordingly made as follows:

[125] The plaintiffs submit that they are entitled to damages assessed by reference to the valuable commercial opportunity to receive the issue of the Third Tranche Shares and the Third Tranche Options that they would have received had the defendants performed the final contract and complied with the duty to cooperate, or observed the detailed and reliable exploration implied term. Accordingly, the value of the opportunity as at the date of the alleged breach of contract, at about the time of the expiration of the five year period is the amount of their damages.

[126] It is not in dispute that had the plaintiffs established a breach of contract, they would have been entitled, as the party injured, to an award of damages so as to put them in the same or an equivalent position as they would have been in if the contract had been performed.[72] It is also not in dispute that the damages in a case for loss of valuable commercial opportunity are to be assessed by reference to the principles established in Sellars v Adelaide Petroleum NL,[73] as recently applied in Principal Properties Pty Ltd v Brisbane Broncos Leagues Club Ltd.[74]

[127] The defendants' written submissions contend that the evidence does not establish the existence of the loss of a valuable commercial opportunity or its value, relying on Prosperity Advisers Pty Ltd v Secure Enterprises Pty Ltd t/as Strathearn Insurance Brokers[75] and Longdon v Kenalda Nominees Pty Ltd.[76] But in oral final submissions, the defendants conceded that the plaintiffs' lost commercial opportunity had some value. However, the extent of the value was strongly contested on the evidence.

[128] Relevant evidence was called from three expert witnesses. The plaintiffs rely upon the expert reports and evidence of Mr Turner, a geologist with over 20 years' experience, covering exploration resource geology and operations for coal and industrial minerals, including coal geology expertise and mining business management knowledge. The defendants rely on the expert reports and evidence of Mark Noppe, a geologist also of wide experience over 25 years, who has published in the area of ore reserve estimates and reporting. They also rely on James Knowles, a geologist of 21 years' experience in management and consulting roles, also with significant experience in coal resources and mining. In all, Mr Turner produced three reports, Mr Knowles produced two reports and Mr Noppe produced one report. As well, there were two joint expert reports, the first involving all three experts, and the second Mr Turner and Mr Knowles.

"While it would be reasonable to expect that the majority of the inferred mineral resources would be upgraded to measured mineral resources with continued exploration, due to the uncertainty of inferred mineral resources, it should not be assumed that such upgrading will always occur. There is therefore no certainty that the results from the proposed exploration program will result in the determination of a measured mineral resource from the current inferred mineral resource of at least 100,000,000 tonnes from the area of the proposed 21 hole exploration program or at least 40,000,000 from the alternative smaller area."

[141] The experts further agreed in the first joint expert report that the final determination of a Measured Mineral Resource will include the assessment to provide the required confidence in the quantity (thickness, volume, tonnage), grade (coal quality) and physical characteristics of the mineral resource. They further agreed that the final determination of any category of mineral resource, by a Competent Person, includes satisfaction of the requirement that there are reasonable prospects of eventual economic extraction and, that a summary of the assumptions applied is provided. That includes all matters likely to influence the prospect of economic extraction, including the approximate mining parameters. In Mr Knowles' opinion, the assumptions relating to the reasonable prospects for eventual economic extraction, including approximate mining parameters, will likely impact a future estimate of a measured mineral resource. However, in Mr Turner's opinion, those assumptions will only potentially impact the estimate.

[142] Mr Turner's third report addressed the likelihood of a Measured Mineral Resource of at least 40 Mt and up to 100 Mt being estimated, if the 21 hole exploration program were carried out. He expressed his opinion of those likelihoods in Table 1 to that report, which accords with the first two columns of the table of the plaintiffs' claim for damages set out above. Although he identified a number of different sources of information on which he relied in expressing those opinions, he accepted that the assessment was a subjective one. It is not an assessment made in accordance with the JORC codes, whether 2004 or 2012. It is not an assessment made in accordance with any industry standard or recognised method and, to that extent, is subjective.

[143] In Mr Knowles' second report, he opined that the opinions expressed in Mr Turner's third report are not supported by any process or analysis, and are highly subjective. He expressed the view that they did not reasonably consider the geology of EPC 1802. He further pointed out that, taking the Yellow Jacket area of the proposed 21 hole exploration program, approximately 100 Mt of the total Inferred Mineral Resource of 364.1 Mt for EPC 1802 was attributable to that area, so that converting that Inferred Mineral Resource to a Measured Mineral Resource of 40 Mt was a conversion rate of 33 percent for the relevant area, and converting it to a Measured Mineral Resource of 100 Mt was a conversion rate of 83 percent. In his opinion, those conversion rates were too high. Instead, he would have applied conversion rates of 10 percent, 20 percent or 30 percent as a reasonable range of possible outcomes.

[1] [1979] HCA 51; (1979) 144 CLR 596, 607.

[2] (2008) NSWCA 95, [557].

[3] (1987) 10 NSWLR 468.

[4] (1987) 10 NSWLR 468, 496.

[5] (1987) 10 NSWLR 468, 496.

[6] (1987) 10 NSWLR 468, 483.

[7] (1881) 6 HL (Sc) 251.

[8] [2006] QCA 126.

[9] [2006] QCA 126, [50].

[10] WIN Corp Pty Ltd v Nine Network Australia Pty Ltd [2016] NSWCA 297; (2016) 341 ALR 467, [71]; Marmax Investments Pty Ltd v RPR Maintenance Pty Ltd [2015] FCAFC 127; (2015) 237 FCR 534, [139]; Williamson & McGillivray v JIA Holdings Pty Ltd [2011] QCA 346, [33]; Quinn Villages Pty Ltd v Mulherin [2006] QCA 433, [22]; Grieve v Enge [2006] QCA 213, [40].

[11] Kosho Pty Ltd v Trilogy Funds Management Ltd [2013] QSC 135, [132]; Raging Thunder Pty Ltd v Bank of Western Australia Ltd [2012] QSC 329, [76].

[12] [2014] HCA 32; (2014) 253 CLR 169.

[13] [2014] HCA 32; (2014) 253 CLR 169, 185-186, [21]-[22].

[14] [2014] HCA 32; (2014) 253 CLR 169, 187, [25].

[15] [2014] HCA 32; (2014) 253 CLR 169, 187, [24].

[16] [2014] HCA 32; (2014) 253 CLR 169, 187, [29].

[18] (1982) 149 CLR 337, 347.

[20] (1988) 5 ANZ Ins Cas 60-847, 75, 299.

[21] [2006] QCA 213.

[22] [2006] QCA 213, [35], [41] and [43].

[23] (1881) 6 HL (Sc) 251.

[24] [1909] HCA 51; (1909) 9 CLR 160.

[25] [1909] HCA 51; (1909) 9 CLR 160, 169-170.

[26] [1912] ArgusLawRp 43; (1912) 14 CLR 54.

[27] [1912] ArgusLawRp 43; (1912) 14 CLR 54, 69-70. It is notable that in the same case Griffith CJ found the same obligation by reference to The Moorcock (1889) 14 P.D., 64, 68 ie based on necessity to give business efficacy; [1912] ArgusLawRp 43; (1912) 14 CLR 54, 65-66.

[28] [1916] HCA 34; (1916) 21 CLR 277.

[29] [1916] HCA 34; (1916) 21 CLR 277, 285 and 287-288.

[30] [1926] HCA 35; (1926) 38 CLR 523.

[31] [1926] HCA 35; (1926) 38 CLR 523, 535.

[32] [1952] HCA 74; (1952) 87 CLR 267.

[33] [1952] HCA 74; (1952) 87 CLR 267, 280.

[34] [1964] HCA 6; (1964) 114 CLR 656, 661 and 663.

[35] [1960] HCA 64; (1960) 105 CLR 521, 526.

[36] (1982) 149 CLR 537.

[37] (1982) 149 CLR 537, 547, 553 and 566.

[38] [1982] HCA 52; (1982) 149 CLR 571.

[39] [1982] HCA 52; (1982) 149 CLR 571, 581, 590-591 and 597.

[40] [2015] UKSC 72; [2016] AC 742.

[41] [2015] UKSC 72; [2016] AC 742, 755, [21].

[42] Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596, 609.

[43] Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596, 605.

[44] (1988) 5 ANZ Insurance Cases 60-847, 75, 299.

[45] (1881) 6 HL(Sc) 251, 263.

[46] (1881) 6 HL (Sc) 251, 263.

[47] See also Hamlyn & Co v Wood & Co [1891] 2 QB 488. On the other side of a similar analysis, see Ogdens Ltd v Nelson [1904] 2 KB 410.

[48] [1864] EngR 752; (1864) 5 B & S 840.

[49] [1864] EngR 752; (1864) 5 B & S 840, 851-852.

[50] For example, in a contract of appointment of a commission agent for the sale of land, where there is no express term or terms to contrary effect, the principal may usually terminate the agency and withdraw the land from sale or sell the land otherwise: Luxor (Eastbourne) Ltd v Cooper [1941] AC 108; Meyers v Griffiths [1948] St R Qd 216.

[51] (1998) 43 NSWLR 104.

[52] [2009] HCA 25; (2009) 238 CLR 304, [170].

[53] [2013] VSCA 331, [28].

[54] [2015] FCAFC 127; (2015) 237 FCR 534.

[55] (1998) 43 NSWLR 104, 124.

[56] Meehan v Jones [1982] HCA 52; (1982) 149 CLR 571, 581, 590-591 and 597.

[57] Perri v Coolangatta Investments Proprietary Limited (1982) 149 CLR 537, 566.

[58] Butts v O'Dwyer [1952] HCA 74; (1952) 87 CLR 267, 280; McWilliam v McWilliams Wines Pty Ltd [1964] HCA 6; (1964) 114 CLR 656, 661.

[59] For examples, see Chaplin v Hicks [1911] 2 KB 786; Fink v Fink [1946] HCA 54; (1946) 74 CLR 127; and McRae v Commonwealth [1951] HCA 79; (1951) 84 CLR 377.

[60] (1982) 149 CLR 337, 352-353.

[61] Compare Sino Iron Pty Ltd v Palmer (No 3) [2015] QSC 94; [2015] 2 Qd R 574, [87]-[88] and Waterways Authority of New South Wales v Coal & Allied (Operations) Pty Ltd [2007] NSWCA 276, [238].

[62] For this discussion, I put to one side an argument by the plaintiffs that, on the proper construction of the final contract, the fifth anniversary of the grant of EPC 1802 does not operate as a sunset date.

[63] Treating the first defendant as the successor in title and interest to Blackwood Coal Pty Ltd's obligations.

[64] [1918] 1 KB 592, 605.

[66] [1977] HCA 71; (1977) 139 CLR 54, 62.

[67] [1977] 1 All ER 481, 488, 491, 494.

[68] [1947] KB 984, 990.

[69] (1982) 149 CLR 337.

[70] (1982) 149 CLR 337, 355-356.

[71] Compare Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337, 352-353.

[72] Clark v Macourt [2013] HCA 56; (2013) 253 CLR 1, 6 at [7]; Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 236 CLR 272, 286 at [13].

[73] (1994) 179 CLR 332.

[74] [2017] QCA 254, [12]-[13].

[75] [2012] NSWCA 192.

[76] [2003] VSCA 128.