Alliance Craton Explorer Pty Ltd v Quasar Resources Ltd - [2010] SASC 266

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
ALLIANCE CRATON EXPLORER PTY LTD v QUASAR RESOURCES LTD
[2010] SASC 266
Judgment of The Honourable Justice Sulan
27 August 2010
MEETINGS - CONDUCT OF BUSINESS - CHAIRMAN
MEETINGS - CONDUCT OF BUSINESS - MOTIONS AND RESOLUTIONS
Whether tape recordings of Management Committee meetings of a joint venture are prohibited pursuant to Listening and Surveillance Devices Act 1972 - whether a ruling made by the chairman and resolution passed by the Management Committee that meetings are not permitted to be electronically recorded are valid - plaintiff's claim dismissed.
Listening and Surveillance Devices Act 1972 (SA) s 4, s 7; Acts Interpretation Act 1915 (SA) s 4, referred to.
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; Thomas & Anor v Nash [2010] SASC 153; Byng v London Life Assurance [1990] 1 Ch 170, applied.
August Investments Pty Ltd v Poseidon (1971) 2 SASR 60, distinguished.
Violi v Berrivale Orchards (2000) 99 FCR 580; Marsden v Amalgamated Television Services Pty Ltd [2000] NSWSC 465; Kelly v Wolstenholme (1991) 4 ACSR 709; McKerlie v Drillsearch Energy Ltd (2000) NSWLR 673; Wishart v Henneberry (1962) 3 FLR 171; Australian Olives Ltd v Livadaras (2008) 68 ACSR 29; North-West Transportation Company v Beatty [1887] 12 AC 589; Harkness v Commonwealth Bank of Australia Ltd (1993) 32 NSWLR 543.; R v Smith & Turner (1994) 64 SASR 123; Clarke v Edwards [2007] SADC 49, considered.

ALLIANCE CRATON EXPLORER PTY LTD v QUASAR RESOURCES LTD
[2010] SASC 266
Civil

SULAN J: These proceedings arise out of a Joint Venture Agreement between the plaintiff, (“Alliance”) and the defendant (“Quasar”). The joint venture relates to the Beverly Uranium Mine described as the Four Mile Uranium Project. Alliance asserts a right to tape-record meetings of the Management Committee. The issues at trial are whether tape-recording of meetings by the joint venture parties is prohibited under the Listening and Surveillance Devices Act 1972 (SA) (“the Act”), and whether, a ruling made by the Chairman of the Committee that business transacted at the meetings be not permitted to be tape‑recorded, and a resolution passed by the Committee to that effect, are valid.
Alliance seeks the following declarations:
1.A declaration that the purported ruling of the Chairman that minutes of the meetings of the joint venture held on 25 November 2008 will not be recorded was ultra vires, void and of no effect and is not binding on Alliance or its representatives;
2.A declaration that the purported resolution of the joint venture, being the tape recording of a meeting held on 2 April 2009, and the future meetings of the joint venture was proposed and passed for an improper purpose, and is void, of no effect and is not binding on Alliance or its representatives;
3.A declaration that Quasar has no power to prevent duly appointed representatives of Alliance from making a tape recording of business transacted and…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2010] SASC 266
Decision Date: 27 August 2010

CaseChat Overview and Summary

The plaintiff, Alliance Craton Explorer Pty Ltd, initiated legal proceedings against the defendant, Quasar Resources Ltd, concerning the recording of Management Committee meetings of a joint venture. The central issue in the case was whether the recording of these meetings was permissible under the Listening and Surveillance Devices Act 1972. Alliance sought declarations asserting that a ruling made by the Chairman prohibiting the recording of meetings was invalid and that the subsequent resolution passed by the Management Committee was void. They also sought declarations affirming their right to record meetings. The court had to determine the validity of the Chairman's ruling and resolution, as well as the broader issue of whether the prohibition on recording was lawful under the Act.

The court examined the authority of the Chairman and the Management Committee to make decisions regarding the conduct of meetings, including the prohibition on electronic recordings. The court found that the committee had the inherent power to make decisions on matters incidental to the conduct of meetings, which included the ability to prohibit recording. The court held that this power was not overridden by any express provision in the Joint Venture Agreement. The court also considered the evidence presented by Alliance, which aimed to show that their intent in recording the meetings was to obtain a more accurate account of the discussions, not to delay the proceedings. The court rejected the suggestion that Alliance had ulterior motives and found that their primary intent was to ensure detailed and accurate minutes.

Based on the findings, the court concluded that the ruling by the Chairman and the resolution passed by the Management Committee were valid. Therefore, Alliance's claims were dismissed, and judgment was entered in favor of Quasar Resources Ltd. The court's decision upheld the authority of the Management Committee to regulate the conduct of their meetings, including the prohibition of electronic recordings, unless expressly stated otherwise in the Joint Venture Agreement.

Orders

Orders of the court

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Background

Background to the litigation

Alliance seeks the following declarations:1.A declaration that the purported ruling of the Chairman that minutes of the meetings of the joint venture held on 25 November 2008 will not be recorded was ultra vires, void and of no effect and is not binding on Alliance or its representatives;2.A declaration that the purported resolution of the joint venture, being the tape recording of a meeting held on 2 April 2009, and the future meetings of the joint venture was proposed and passed for an improper purpose, and is void, of no effect and is not binding on Alliance or its representatives;3.A declaration that Quasar has no power to prevent duly appointed representatives of Alliance from making a tape recording of business transacted and of statements made between representatives of the parties at management committee meetings;4.A declaration that Alliance has the right to make a tape recording of management committee meetings.Background facts On 30 August 2002, Alliance and Heathgate Resources Pty Ltd, entered into a Joint Venture Agreement (“JVA”) in respect of an exploration licence located near Arkaroola in the north west of Curnamona Craton, South Australia. By a Deed of Assignment and Assumption dated 17 December 2002, Heathgate assigned its rights and obligations under the JVA to Quasar, and consequently references in the JVA to “Heathgate” are to be read and understood as references to “Quasar”. The JVA conferred upon Quasar, a discretion to make a decision to mine by giving not less than 30 days’ written notice to Alliance, together with a preliminary development, mining, processing and production program and budget.[1] [1] Clause 10.1 of the JVA. The parties agreed that if Quasar decided to commence a commercial mining operation this would be governed by a separate agreement. It is a further term of the JVA that, pending execution of a Mining Joint Venture Agreement, the JVA will govern the conduct of the parties during the development and mining phases of the Joint Venture. On 22 September 2008 Quasar gave notice of its decision to mine. Quasar was then required to submit a program and budget to the committee for approval. At that stage, Alliance and Quasar had not entered into a further agreement, nor had they defined the area to be designated as the Mine Development Area. Pursuant to the JVA, the parties had agreed upon a Management Committee, which was to be established as soon as practicable after the date when the decision to mine had been made. One representative from each joint venturer was to cast a number of votes at each Management Committee meeting on the basis of one vote for each percentage point of the interest held by that joint venturer.[2] Quasar’s and Alliance’s interest in the joint venture was 75 per cent and 25 per cent respectively. The JVA provides that all Management Committee decisions shall be made by a simple majority of votes.[3] [2] Clause 11.2(a) of the JVA.[3] Clause 11.2(b) of the JVA. There are no provisions in the JVA which touch on the issues raised in the present dispute. The JVA does not contain any provision permitting or prohibiting the electronic recording of meetings. It contains no provision about the powers of the Chairman of the Management Committee. There is no provision regulating the preparation, regulation, recording or retention of the minutes.

Evidence

Evidence Before The Court

I conclude that Alliance has a number of lawful interests which it can protect. The meetings of the Management Committee operate within a commercial setting in which the commercial interests of the joint venturers are of central importance. The meetings take place pursuant to one or more contractual agreements for the purpose of carrying those agreements into effect. Motions agreed or passed at meetings, and other decisions reached, affect the substantive rights and obligations of the parties. Accordingly, it is for the protection of the interests of both joint venturers that there is an accurate record kept of communications at the meetings. These lawful interests do not in my view undermine the operation of s 4 of the Act. Rather, the recording of the discussions at the meetings ensure that there is an accurate record of the discussions leading up to the recorded decisions of the joint venture. They agreed to the nature of the business transacted at the meetings, and the obligations on the representatives of each party to report back to their respective superiors where there is a legitimate interest in having an accurate record of the discussions. It is not difficult to imagine the situation that senior personnel of one or other joint venturer might seek an explanation as to how a resolution was arrived at and what those at the meeting contemplated when they proposed and voted upon a resolution. If the resolution is ambiguous discussions leading to it may assist in interpreting it and how it is to be implemented. Evidence at trial as to Alliance’s purpose Counsel for Quasar asserts that Alliance’s purpose in seeking to tape record the Management Committee meetings was not to obtain an accurate record of the meetings. He asserts that debate during the meetings about whether the program and budget complied with the JVA was no more than a delay tactic by Alliance to give it time to raise substantial funds. Counsel for Alliance contends that this submission should be rejected. He submits that no such purpose has been pleaded by Quasar and that the evidence clearly establishes that Alliance’s purpose was not to delay the approval of the program and budget but rather to obtain an accurate record of the meetings. I reject the submission that Alliance intended to delay the approval of the program and budget by entering into a dispute about the tape recording of the meetings. The evidence at trial is not sufficient to establish that Alliance had an ulterior motive in seeking to tape record the meetings. Ms Gail Owen, the partner who was instructed to advise Alliance, gave evidence. I was impressed by her evidence. She gave her evidence in a straightforward manner. She had a good recall of matters upon which she was asked. I accept her evidence as reliable. She attended a number of meetings of the Management Committee as legal adviser to Alliance. In cross-examination, Ms Owen stated that Alliance’s purpose in tape recording the meetings was to obtain more detailed minutes. She articulated Alliance’s concern that the minutes reflected Quasar’s slant and did not accurately reflect the exchanges which took place at the meetings. She stated that she therefore wanted the minutes to contain sufficient detail to be a proper representation of what had actually occurred.

Decision

Reasons for decision

I find that the committee, in the absence of an express provision in the JVA to the contrary, had the inherent power to make a majority ruling on matters incidental to the manner in which meetings are conducted. This extends to the power to preclude a party from taking an electronic recording of the meeting. Conclusion It follows that the plaintiff’s claim is dismissed. There will be judgment for the defendant.

Ratio Decidendi

Legal Principle Established

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