Amalgamated Scottish Oil Ltd v Premier (Perth Basin) Ltd
[2000] WASC 269
•8 NOVEMBER 2000
AMALGAMATED SCOTTISH OIL LTD -v- PREMIER (PERTH BASIN) LTD & ANOR [2000] WASC 269
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2000] WASC 269 | |
| 08/11/2000 | |||
| Case No: | CIV:2392/1998 | 11 & 23 OCTOBER 2000 | |
| Coram: | MASTER BREDMEYER | 23/10/00 | |
| 8 | Judgment Part: | 1 of 1 | |
| Result: | Application allowed | ||
| PDF Version |
| Parties: | AMALGAMATED SCOTTISH OIL LTD PREMIER (PERTH BASIN) LTD PREMIER OIL AUSTRALIA PTY LTD |
Catchwords: | Contract Enforcement of compromise agreement withdrawing a court action |
Legislation: | Supreme Court Act 1935 (WA), s 24(7) |
Case References: | Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 Ellwood v Darling Downs Investments Pty Ltd (1987) 75 ALR 47 General Credits (Finance) Pty Ltd v Fenton Lake Pty Ltd [1985] 2 Qd R 6 Spunwill Pty Ltd v BAB Pty Ltd (1994) 36 NSWLR 290 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
PREMIER (PERTH BASIN) LTD
First Defendant
PREMIER OIL AUSTRALIA PTY LTD
Second Defendant
Catchwords:
Contract - Enforcement of compromise agreement withdrawing a court action
Legislation:
Supreme Court Act 1935 (WA), s 24(7)
Result:
Application allowed
(Page 2)
Representation:
Counsel:
Plaintiff : Mr P G Clifford
First Defendant : Mr K R Jagger
Second Defendant : Mr K R Jagger
Solicitors:
Plaintiff : Haydn Robinson
First Defendant : Freehills
Second Defendant : Freehills
Case(s) referred to in judgment(s):
Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Case(s) also cited:
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423
Ellwood v Darling Downs Investments Pty Ltd (1987) 75 ALR 47
General Credits (Finance) Pty Ltd v Fenton Lake Pty Ltd [1985] 2 Qd R 6
Spunwill Pty Ltd v BAB Pty Ltd (1994) 36 NSWLR 290
(Page 3)
1 MASTER BREDMEYER: This is an application by the defendants to enforce a compromise agreement to discontinue the action.
2 That agreement is contained in a letter of offer from the plaintiff to the defendants of 7 April 2000 which was accepted by fax of the same date. The offer on the last page had a place for AWE (Perth Basin) Ltd and Premier Oil Australia Pty Ltd to sign. They were the two offerees. In addition to the faxed letter of acceptance signed by Mr Rick Frith (the Engineering/Production Manager). Mr Frith also signed on behalf of the two companies the last page of the offer letter. I will refer to the offer and acceptance as "the Agreement".
3 I consider the court has jurisdiction under s 24(7) of the Supreme Court Act 1935 (WA) to enforce the Agreement in a summary way.
4 I asked for, and have heard, separate argument on Mr Frith's authority to sign on behalf of the two defendant companies. I am satisfied that he had authority to sign.
5 Each side has put before me extrinsic evidence in the form of correspondence and phone calls to help me interpret the Agreement. The plaintiff has filed an affidavit of Mr Tchacos and the defendants, an affidavit of Mr Phillips. I consider all this evidence inadmissible on the principles of Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337. The agreement is not ambiguous or susceptible of more than one meaning.
6 General principles for the interpretation of a contract are set out in Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109 - 110:
"It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered
(Page 4)
- to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, 'even though the construction adopted is not the most obvious, or the most grammatically accurate', to use the words from earlier authority cited in Locke v Dunlop (1888) 39 Ch D 387, at p 393, which, although spoken in relation to a will, are applicable to the construction of written instruments generally; see also Bottomley's Case (1880) 16 Ch D 681, at p 686. Further, it will be permissible to depart from the ordinary meaning of the words of one provision so far as is necessary to avoid an inconsistency between that provision and the rest of the instrument. Finally, the statement of Lord Wright in Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503, at p 514, that the court should construe commercial contracts 'fairly and broadly, without being too astute or subtle in finding defects', should not, in my opinion, be understood as limited to documents drawn by businessmen for themselves and without legal assistance (cf Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429, at p 437."
7 I consider the defendants' submissions on the construction of this Agreement are correct. The compromise part of the Agreement is found in cl 3, especially in cl 3(b). That spells out the terms of the compromise which include:
" ... the Parties ... have agreed to settle the Action on the following terms:
(i) By consent of the Parties, the Supreme Court order that the Action be discontinued with no order as to costs.
(ii) ... "
- That clause is expressed to be:
"Subject to the acceptance of this Offer by Premier".
On the plain and ordinary meaning of the words, the "Offer" refers to the plaintiff's offer to buy the Assets as set out in cl 1 and the acceptance of that Offer by the first defendant, now called AWE (Perth Basin) Ltd. The Offer by cl 5 was open for acceptance until 5.00 pm Perth time on Monday 10 April 2000. That offer was accepted by fax of 7 April, sent by
(Page 5)
- Mr Frith: see page 33 of the affidavit of Mr Tchacos, which also attached the last page of the Agreement signed by him on behalf of the two defendant companies.
8 Clause 3 is self-contained. I note it concerns three companies, whereas the rest of the agreement concerns only the plaintiff and the first defendant. The second defendant is not a party to the offer to purchase the mining Assets. The settlement of the action is not expressed to be subject to the plaintiff's fulfilment of conditions precedent set out in cl 2(a) of the Agreement. The plaintiff's offer to purchase the Assets was subject to those conditions, but cl 3 is not.
9 I consider that cl 3 is operative. The one condition imposed in it ("Subject to the acceptance of this Offer by Premier") has been met. It matters not that later, on 28 April 2000, the plaintiff voided the purchase of the Assets part of the Agreement. One of the conditions precedent to that part of the contract was that the plaintiff's board of directors had to approve the transaction by 28 April. On that day they declined to give approval. The directors declined to approve the transaction because an explosion had occurred at the site of the Mt Horner mine on 19 April which had caused extensive damage and had shut down the facility. It is not stated in the letter, but it probably follows from the explosion, that the Assets were then worth much less than the purchase price of $250,000 agreed on 7 April.
10 The explosion and fire occurred on 19 April 2000. The plaintiff says this means the Agreement is frustrated and, once frustrated, neither party is bound by it. I consider that argument is untenable. The contract was not frustrated. The offer to purchase the Assets part of it was terminated under a condition precedent already mentioned. That, in turn, was triggered by the explosion. But it matters not. The non-approval by the directors did not need a trigger. The plaintiff's directors, for whatever reason, or for no reason, were entitled not to approve the purchase of Assets part of the Agreement.
11 The explosion had no legal effect on that part of the Agreement. It had no effect whatsoever on the cl 3 part of the Agreement involving, as I have stated, three parties. That was not an agreement for the purchase of oil or for oil-producing Assets.
12 The plaintiff has a further argument. It seeks to rely on some extrinsic evidence, namely a letter of Mr Tchacos of 5 April found at page 21 of his affidavit. I think it inadmissible but, in case I am wrong on that, I will consider it. Counsel for the plaintiff says it is admissible under an
(Page 6)
- exception to the rule that the court must look at the actual intention of the parties as expressed in the words used in the Agreement and not at their presumed intention based on extrinsic, oral or written, evidence. This exception is given by Mason J in Codelfa at 352:
"Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except insofar as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties' presumed intention in this setting. We do not take into account the actual intention of the parties and for the very good reason that an investigation of those matters would not only be time-consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.
There may perhaps be one situation in which evidence of the actual intention of the parties should be allowed to prevail over their presumed intention. If it transpires that the parties have refused to include in the contract a provision which would give effect to the presumed intention of parties in their position. It may be proper to receive evidence of that refusal. After all, the court is interpreting the contract which the parties have made and in that exercise the court takes into account what reasonable men in that situation would have intended to convey by the words chosen. But is it right to carry that exercise to the point of placing on the words of the contract a meaning which the parties have united in rejecting? It is possible that evidence of mutual intention, if amounting to concurrence, is receivable so as to negative an inference sought to be drawn from surrounding circumstances. See Heimann (1938) 38 SR (NSW) at 695.
The importance of this evolution of the law as it affects the construction of contracts is that it centres upon the presumed, rather than the actual intention of the parties. Once it is accepted that in the construction of the contract account is taken of the presumed intention of the parties it naturally follows that account should also be taken of their presumed intention when the court is called upon to decide whether a term is to be implied. The existence of the remedy of rectification and the
(Page 7)
- purpose which it serves makes it obvious that the actual intention of the parties cannot constitute the basis of an implied term."
13 The Judge in the second paragraph quoted is speaking of the common intention of the parties. If, for example, they have agreed not to put say cl A in a contract, the court should not go contrary to that and interpret the contract so as to include cl A. The letter from the defendant to the plaintiff of 5 April 2000, two days before the Agreement was signed, reads:
"Ian
You were correct, only one company has had a name change.
First paragraph should read:
1) Addition of a clause whereby Amsol unreservedly withdraws all legal action against AWE (Perth Basin) Ltd, ACN 009 362 645, (formerly known as Premier (Perth Basin) Ltd) and Premier Oil Australia Pty Limited, ACN 075 609 728, in relation to the previously considered acquisition of the Assets.
Regards,
RICK FRITH
Engineering/Production Manager"
14 The point has no substance. Certainly the clause was not put in the Agreement in those terms, but the wording of cl 3 is to the same effect. Therefore there was no need to use the wording contained in that letter. That is, in other words, the parties did not fail to put in a clause to that effect.
15 Secondly, if I am permitted to go into extrinsic evidence - which I consider I should not - then I would also refer to Mr Tchacos' letter on behalf of the plaintiff to the defendants of 5 April 2000, found at page 12 of Mr Tchacos' affidavit, which I quote:
"Further to your discussions with Kevan and myself, please find the attached offer letter. We have attempted to ensure that the legal action is suspended and falls away entirely once the Sales and Purchase Agreement ('SPA') is finalised (ie we have
(Page 8)
- finalised the deal), we envisage being able to provide a draft of the SPA by Friday and complete it during the early part of next week. Hence board approval on our side will only relate to the acquisition not the legal action which will have already been terminated.
I look forward to hearing from you as soon as possible."
16 He was ad idem with Mr Frith for the first defendant. The compromise Agreement stood alone. The legal action was to terminate on acceptance. It did not need the approval of the board of directors, whereas the purchase of the Assets did need the board's approval.
17 I will allow the application.
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